CFA Society of South Africa Bob Johnson, CFA, PhD Managing Director, CFA and CGIPS Programs Division

1. CFA Society of South AfricaBob Johnson, CFA, PhDManaging Director, CFA and CGIPS Programs Division December 2005

2. CFA Institute Member Organization with no corporate or political tie-ins: Offices in Charlottesville, Virginia; New York, Hong Kong, London Mission: To lead the investment profession globally by setting the highest standards of ethics, education, and professional excellence Members: 80,000 investment professionals in 120 countries; 84% hold the CFA charter Societies: 131 societies in 52 countries

3. Member Distribution

4. CFA Candidate Distribution

5. Strategic Objectives • Protect and build the CFA brand • Position the CFA Centre as a thought leader in setting ethical and professional standards • Reshape the organization to be more flexible and responsive…a more integrated CFA Institute/Society model • Leverage CFA Institute core competencies into new opportunities • Position CFA Institute as the respected leader in the field of education for investment professionals

6. Strategic Objectives • Protect and build the CFA brand

7. Inaugural CFA Examination—1963

8. CFA Examination 2004

9. Candidate Growth

10. South African Candidates and Members • In 2005 there were 1,811 candidates enrolled in the CFA Program in South Africa • 608 candidates enrolled for the exam tomorrow in Johannesburg • 810 CFA Institute members in South Africa • 762 active CFA charterholders in South Africa

11. “More often than not, the market simply votes with its feet - in some areas of financial services, for example, the highly regarded CFA (chartered financial analyst) qualification has become a much more important ticket to the top than the MBA.” • Business Day (South Africa) • 21 May 2004

12. “Becoming a CFA is now a passport for excellence and international mobility.” • Financial Times • 21 June 2004

13. “…there is increasing demand for qualifications that will travel. One of the most successful solutions has been the Chartered Financial Analyst certificate, a qualification popular among the investment banks that is roughly equivalent to a specialised postgraduate finance degree.” • Financial Times • 14 November 2005

14. “The CFA designation is the hallmark of excellence in the global investment community. It is well recognized that individuals who have earned the CFA charter have made personal commitments to an extensive study programme and to professional standards of behavior.” • Bermuda Sun • 29 October 2003

15. “The Chartered Financial Analyst (CFA) qualification is roughly equivalent to a specialised postgraduate degree, including a mixture of economics, ethics, law and accountancy. It is much liked by employers in financial services. Whereas there are tens of thousands of finance degrees available around the world, ranging from excellent to worthless, there is only one CFA…”

16. The successful candidate will take on a leadership role in developing the Finance Concentration and contributing to classes supporting the Chartered Financial Analyst (CFA) program.

17. The program also provides the background necessary for preparing for the CFA® exams

18. Regulator Recognition • New York Stock Exchange • UK Financial Services Authority • Hong Kong Securities & Futures Commission • State/provincial waivers around the world

19. Pass Rates • 2005 • Level I—36% • Level II—56% • Level III—55% • Historical Averages • Level I—49% • Level II—52% • Level III—67% Combined Pass Rates

20. The CFA® Program CCC COE CURRICULUM EXAMINATIONS GRADING BODY OF KNOWLEDGE Practitioners at every step of the process GLOBAL PRACTICE ANALYSIS MINIMUM PASSING SCORE (MPS) - BD OF GOVERNORS

21. Global Practice Analysis • Conducted every five years • Panels of employers and investment professionals assembled around the world • Panel results compiled and CBOK revised • Advisory Board of CFA charterholders reviews changes to CBOK and sets specifications for charterholder survey • Survey of CFA charterholders around the world (scheduled for January of 2006)

22. Curriculum Developed by Candidate Curriculum Committee (CCC); 150 people involved (all charterholders) from all over the world; extensive review; each level 18 study sessions in CFA Institute-produced study guides Study GuideTopic FocusLearning Focus Level I Investment Knowledge Tools and Ethical Standards Level II Asset Application Valuation and Ethical Standards Level III Portfolio Synthesis and Management Ethical Standards

23. Curriculum • Each study session is designed for flexible, self-directed study • Each reading has learning outcome statements (LOS): “The candidate should be able to…” • Readings are drawn from a variety of materials, both CFA Institute and other

24. CFA Examinations • Written and reviewed by CFA charterholder practitioners from all over the globe. • The Council of Examiners are subject matter experts who have been trained in question writing • Form of questions • Multiple Choice (Level I) • Item Set (Level II & III) • Constructed Response (Level III)

25. Examinations Developed by Council of Examiners (COE) – CFA charterholder practitioners and staff; over 80 people from all over the globe involved, extensive reviews; each exam 6 hours in length ExamTopicsFormat Level I All topics Multiple choice Level II All topics Item sets—100% Level III Portfolio Management Essays—50% Other topics Item sets—50%

26. EXAMINATION ADMINISTRATION • In 2005, over 110,000 candidates • 184 exam sites in June in 89 nations • 48 exam sites in December • Candidates came from 144 nations

27. 2005 Grading Population • 321 graders • 27 countries • 2,389 total years graded • 145 senior graders

28. Minimum Passing Score • MPS for each level established by CFA Institute Board of Governors who are also CFA charterholders • Multiple inputs (standard setting, candidate performance statistics, quality of candidate responses, etc.) used to set the MPS • Passing rate for each level is a residual determined by each level’s MPS

29. Employer Outreach • Goals • Build wider recognition and appreciation of CFA Institute and what it means to hold the CFA charter • Encourage employers to: • Hire CFA charterholders • Cover the costs of CFA Program enrollment • Adopt CFA Institute standards as their own • Use what we learn in product and service development • Resources added for this effort • Peggy Eisen, CFA…Managing Director of Marketing • Chuck Tschampion, CFA…Director of Industry Outreach

30. University Outreach • Goals • Encourage universities to adopt a “CFA track” in their graduate and undergraduate degree programs • Serves as third-party endorsement of value of CFA Program • Get more universities to adopt CFA curriculum • Technology allows us to custom publish textbooks for specific uses • Promote the merits of the CFA Program to the next generation of investment professionals • Resources added for this effort • Bob McLean, CFA…Director of University Relations

31. Strategic Objectives • Position the CFA Centre as a thought leader in setting ethical and professional standards

32. Integrity

33. CFA Centre for Financial Market Integrity • Launched in November 2004 • Mission is to: • Be a leading voice on issues of fairness, efficiency and investor protection in global capital markets • Promote high standards of ethics, integrity, and professional excellence within the investment community • Distinct unit of CFA Institute • Advisory council chaired by John Neff, CFA

34. CFA Centre for Financial Market Integrity Capital Markets Policy Professional Standards Investment Performance Standards Corporate Governance Regulatory Outreach Financial Reporting Code of Ethics Trade Management Guidelines Asset Manager Code GIPS AIMR-PPS

35. CFA Centre Initiatives • CFA Institute Code of Ethics • Revisions take effect in January ‘06 • Asset Manager Code of Professional Conduct • Soft Dollar Standards • Trade Management Guidelines • Research Objectivity Standards • Issuer/Analyst Best Practices • Corporate Governance Manual • Business Reporting Model • Ethics Training (in beta test mode)

36. Strategic Objectives • Reshape the organization to be more flexible and responsive…a more integrated CFA Institute/Society model

37. Name Change

38. Branding Chaos

39. Branding Harmony

40. Member Communication

41. Strategic Objectives • Leverage CFA Institute core competencies into new opportunities

42. CGIPS Program • Certificate in Global Investment Performance Standards (CGIPS) • A specialty program for investment performance professionals • Independent of the CFA Program • Major Topic Areas • Ethical standards • Performance measurement, attribution, and appraisal • The GIPS standards, including the real estate provisions

43. Purpose of CGIPS Program • Professionalize the field of investment performance evaluation/presentation • Improve practitioners’ proficiency in applying analytical techniques and the GIPS standards • Recognize individuals who attain the highest achievement in the field

44. Who Should Participate in CGIPS? • Investment managers • Verifiers • Investment consultants • Plan sponsors • Custodial banks • Regulatory agencies • Software developers

45. To Earn the CGIPS Credential • Sequentially pass two computer-based examinations • Principles and Expert • Meet two-year experience requirement in performance-related positions • Agree to comply with the CGIPS Association Code of Ethics and Standards of Professional Conduct • Become a member of the CGIPS Association

46. Strategic Objectives • Position CFA Institute as the respected leader in the field of education for investment professionals

47. Education • Holistic approach to post-graduate education for the investment professional • Core generalist exam from practice analysis • Flexible professional development • By specialty track • Broad scope: our offerings plus links to others • Easy-to-use PD diary • Diverse offerings • Conferences and written proceedings • Webcasts • Publications (Financial Analysts Journal & CFA Digest) • Aspire to be the “go to” organization for you and your firm’s professional development?

48. Organizational Assets • No corporate interest group tie-ins • 80 years of societies—investment community • 60 years of luminaries in Financial Analysts Journal • 40+ years of CFA Program • 40+ years of Code of Ethics • Working relationship with regulators • We prefer self-regulation over regulation • Better for: • Investment firms • Regulators • Investors

49. What Can You Do? • Above all else—help us to maintain our excellent reputation • Be a part of this community—on your terms, but let us know that you’re connected • Volunteer—locally or on an advisory council • Respond to our surveys—it’s our best way to monitor your needs • Push your firms and your clients: • To hire CFA charterholders and members of CFA Institute • To calculate performance using GIPS • To adopt an asset manager code of ethics • Recruit young candidates—instill in them the importance of the CFA Program and its curriculum