1. CFA Institute The CFA ® Program Philip J. Young, Ph.D., CFA ----- College of Business & Public Affairs Career Day March 2005

2. CFA Institute The CFA ® Program A self-study, distance learning-based program that takes a generalist approach to security analysis and portfolio management and emphasizes the highest ethical and professional standards.

3. CFA Institute Member and Candidate Growth Note: CFA Candidates as of 15 September 2004

4. CFA Institute The CFA Charter Growing Non-US Numbers. Other = Latin America, Africa, & Middle East

5. CFA Institute The CFA ® Program EXAMINATIONS CURRICULUM BODY OF KNOWLEDGE  JOB ANALYSIS GRADING MINIMUM PASSING SCORE (MPS) CCC COE Practitioners at every step of the process

6. CFA Institute Job Analysis EXAMINATIONS CURRICULUM BODY OF KNOWLEDGE  JOB ANALYSIS GRADING MINIMUM PASSING SCORE (MPS) CCC COE Practitioners at every step of the process

7. CFA Institute Job Analysis  Determines topics taught in the CFA Program  Conducted every five years: next in 2005-2006  Involves investment practitioners worldwide: Regional Expert Panels and member surveys  What knowledge and skills are expected of a candidate for an entry-level position?

8. CFA Institute Body of Knowledge  EXAMINATIONS CURRICULUM BODY OF KNOWLEDGE  JOB ANALYSIS GRADING MINIMUM PASSING SCORE (MPS) CCC COE Practitioners at every step of the process

9. CFA Institute Body of Knowledge  Portfolio Management Investment Tools Asset Valuation Ethical and Professional Standards Quantitative Methods Economics Financial Statement Analysis Corporate Finance Analysis of Equity Investments Analysis of Debt Investments Analysis of Derivatives Analysis of Alternative Investments

10. CFA Institute Curriculum EXAMINATIONS CURRICULUM BODY OF KNOWLEDGE  JOB ANALYSIS GRADING MINIMUM PASSING SCORE (MPS) CCC COE Practitioners at every step of the process

11. CFA Institute Curriculum Developed by Candidate Curriculum Committee CCC); over 130 people involved world wide; extensive review; each level consists of 18 study sessions in CFA Institute-produced study guides Exam Topic Focus Learning Focus ITools, Inputs, and Professional Standards Knowledge and Comprehension IIAsset Valuation and Related Professional Standards Analysis and Application IIIPortfolio Management and Related Professional Standards Synthesis and Evaluation

12. CFA Institute Curriculum  Readings are drawn from a variety of materials, both CFA Institute-developed and other  Each reading has learning outcome statements (LOS): “The candidate should be able to…”  Each LOS has one or more command words, which indicate type of learning expected: “discuss, calculate, contrast”  LOS are NOT a proxy for examination questions, but ARE the best guide for candidate study

13. CFA Institute Curriculum 2003 Exam 2004 Exam 2005 Exam

14. CFA Institute Study Requirements Estimated minimum study time required per Level  Level I – 15 hrs per week for 18 weeks  Level II – 15 hrs per week for 18 weeks  Level III – 15 hrs per week for 18 weeks Suggest one week of study per study session through late April to allow the final month for review.

15. CFA Institute Examinations EXAMINATIONS CURRICULUM BODY OF KNOWLEDGE  JOB ANALYSIS GRADING MINIMUM PASSING SCORE (MPS) CCC COE Practitioners at every step of the process

16. CFA Institute Examinations Based on assigned readings and LOS; over 50 people involved; each exam is six hours in length ExamFormatDevelopment and Review I100% multiple Choice Written by professional staff and consultants Internal and external review II100% item setWritten by Council of Examiners (COE) Internal and external review, including global III50% item set 50% essay

17. CFA Institute Examinations  Level I only  December 3  December 4 - Eastern Asia & Oceania 2005 Examination dates  Level I, II & III  June 4  June 5 - Eastern Asia & Oceania

18. CFA Institute Grading EXAMINATIONS CURRICULUM BODY OF KNOWLEDGE  JOB ANALYSIS GRADING MINIMUM PASSING SCORE (MPS) CCC COE Practitioners at every step of the process

19. CFA Institute Grading ExamGrading Process I & IIMachine graded; extensive sampling III Item Sets – Machine graded; extensive sampling Essays – Graded by teams of charterholders; structured and detailed process; about 350 graders in 2005; grading for content and knowledge, NOT language or style Guiding philosophy – fairness and consistency

20. CFA Institute Minimum Passing Score EXAMINATIONS CURRICULUM BODY OF KNOWLEDGE  JOB ANALYSIS GRADING MINIMUM PASSING SCORE (MPS) CCC COE Practitioners at every step of the process

21. CFA Institute Minimum Passing Score  MPS for each level established by CFA Institute Board of Governors  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

22. CFA Institute Candidate Performance Candidates 2004 (June + December) Level I = 43,777 Level II = 23,896 Level III = 13,452

23. CFA Institute Declining Pass Rates – Why?  Decline in candidate preparation – 57% of Level I candidates studied < 200 hours  Fewer candidates indicate they are using the assigned curriculum – nearly 75% of candidates relied mainly on review courses or study notes and only 29% of Level I candidates purchased some or all of the assigned readings  Prep courses and study notes should be used as a supplement, not a substitute for the assigned readings

24. CFA Institute Candidate Progress For every 100 candidates that entered the CFA Program: In 1985 27 candidates had earned their charters within 5 years In 1996 22 candidates had earned their charters within 5 years Successful candidates average 4 years in the program.

25. CFA Institute The CFA® Program EXAMINATIONS CURRICULUM BODY OF KNOWLEDGE  JOB ANALYSIS GRADING MINIMUM PASSING SCORE (MPS) CCC COE Practitioners at every step of the process

26. CFA Institute CFA® Charter Benefits  Knowledge across core areas of the investment industry  Respect and credibility in the investment community  Career opportunities in a competitive environment  Accepted global and portable standard of competence and integrity

27. CFA Institute Earning Power - The CFA Premium The CFA Premium: US$40,000 Median Total Compensation for CFA Institute members with 10+ years experience Source: 2003 Compensation Survey $163,000 $203,000

28. CFA Institute Career Opportunities

29. CFA Institute CFA® Charter Requirements  Sequentially pass Level I, II, and III exams  Have 4 years of professional experience  Provide professional references (Level III)  Submit professional conduct statement  Apply for membership in CFA Institute and a local analysts’ society

30. CFA Institute Online Registration Candidates may now register online at www.cfainstitute.org/cfaprogram

31. CFA Institute Estimated Basic Costs for Level I (all amounts USD) *Assumes Registration and Enrollment received by 15 September 2004 **Sharing textbooks can reduce costs CFA® Program Costs Registration Fee to Enter CFA ® Program $375 Enrollment Fee for Level I Examination $360 Required Fees $735* Study Materials for Level I: Study GuideFree CFA Institute Publications $268 Primary Textbooks $427** Approximate Total Costs for Level I$1,430

32. CFA Institute 2005 Registration Deadlines Received byRequired Fees* 15 September 2004$735 15 February 2005$815 15 March 2005 $1,120 Final Deadline: All forms must be received by CFA Institute on or before 15 March 2005 *Includes registration fee that candidates pay only when first entering the CFA Program May/June administration

33. CFA Institute The CFA® Program

34. CFA Institute The CFA® Program Information Central CFA Institute 560 Ray C Hunt Drive PO Box 3668 Charlottesville, VA 22903 USA Telephone:(434) 951-5499 800-247-8132 Fax:(434) 951-5265 E-mail: info@cfainstitute.org Click on “CFA ® Program” www.cfainstitute.org