2. The CFA Institute Global Market Sentiment Survey is part of the Future of Finance initiative, a long- term global effort to shape a trustworthy, forward-thinking financial industry that better serves society. The initiative provides the tools to motivate and empower the world of finance to promote fairness, improved understanding, and personal integrity. Its success is driven by ongoing input from an advisory council of prominent global leaders and others in the financial community. ABOUT THE SURVEY The CFA Institute 2015 Global Market Sentiment Survey was created to seek input from CFA Institute members and to gather feedback on market sentiment, performance, and market integrity issues and to further our mission of promoting ethical and trustworthy investment markets. METHODOLOGY An online survey was conducted from 14 to 28 October 2014. All CFA Institute members globally (119,817) were invited to participate in the survey; 5,259 responded, for an overall response rate of 4% and a margin of error of ±1.3%.

3. CONTENTS 1234567812345678 Market Predictions Economic Outlook Employment Prospects Trust in Practitioners Market Integrity Market Structure The Way Forward: Implications for Action Respondent Profile

4. The United States and China remain the top picks for equity market performance in the coming year, as was the case in the 2014 survey. 1 MARKET PREDICTIONS Top Picks for Equity Market Performance:

5. MARKET PREDICTIONS

6. MARKET EuroStoxx 50 (SX5E) – As of 31 December 2015 Indicates Netherlands responses. Global Average for Predicted Close: 3,283 PREDICTIONS

7. Note: Total percentage may not add up to 100% due to rounding S&P 500 (SPX) – As of 31 December 2015 MARKET PREDICTIONS Indicates Netherlands responses. Global Average for Predicted Close: 2,066

8. Note: Total percentage may not add up to 100% due to rounding MARKET PREDICTIONS Nikkei 225 (NKY) – As of 31 December 2015 MARKET PREDICTIONS Indicates Netherlands responses. Global Average for Predicted Close: 16,428

9. MARKET PREDICTIONS US Treasury 30-year yield (%) – As of 31 December 2015 MARKET PREDICTIONS Indicates Netherlands responses. Global Average for Predicted Close: 3.46%

10. MARKET PREDICTIONS Crude Oil Brent ($US/bbl) – As of 31 December 2015 MARKET PREDICTIONS Indicates Netherlands responses. Global Average for Predicted Close: 91

11. Comex Gold ($US/t oz) – As of 31 December 2015 MARKET PREDICTIONS Indicates Netherlands responses. Global Average for Predicted Close: 1,216

12. Investment professionals surveyed are cautious about prospects for global economic growth in 2015. ECONOMIC 2 OUTLOOK POSITIVE GLOBAL FACTORS: CENTRAL BANK POLICIES, JOB CREATION, AND CONSUMPTION 2015 Expected Global and Local GDP Growth Rates (Top 2 responses by market)

13. ECONOMIC OUTLOOK Biggest Positive Impact on Your Local Market in 2015 (Top 2 responses by market)

14. Although the world economy is expected to grow, optimism is tempered by concerns about the potential for continued weakness in developed economies as well as the ongoing effects of political instability. GLOBAL RISKS Biggest Risk to Global Markets in 2015 *Both responses shown when top choices are within margin of error. ECONOMIC OUTLOOK

15. Of the CFA Institute members surveyed, 57% said that attempts by central banks to end quantitative easing will have a negative impact on their local market, down from 68% last year. 51% forecast the effect of energy prices caused by global unrest in Ukraine and the Middle East will negatively impact their local market. LOCAL RISKS Biggest Risk to Your Local Market in 2015 *Both responses shown when top choices are within margin of error. ECONOMIC OUTLOOK

16. UNDERESTIMATED RISKS 1.Political risks, including secessionist and nationalistic movements (35%) 2.Demographic trend of aging populations (20%) Michael H/Getty Images ECONOMIC OUTLOOK

17. EMPLOYMENT 3 PROSPECTS Opportunities for investment professionals in India and China brighten. Local Market Employment Outlook

18. TRUST IN 4 PRACTITIONERS Factors Contributing Most to Lack of Trust in the Finance Industry Lack of Ethical Culture within Financial Firms Poor Government Regulation and Enforcement Market Micro Structure I don’t think there is lack of trust in the finance industry Other

19. Firm-level Action Most Needed to Improve Investor Trust and Confidence (Top 2 Responses by Market) Better Alignment of Compensation with Investor ObjectivesZero Tolerance Policy by Top Management for Ethical BreachesIncreased Adherence to Ethical Codes & Standards

20. MARKET 5 INTEGRITY 28% OF MEMBERS HAVE A POSITIVE OUTLOOK ON MARKET INTEGRITY, UP FROM 21% IN 2014. Members rank the most serious issues facing global markets as market fraud, such as insider trading (25%—similar to last year), and the integrity of financial reporting (24%). Political risks, including secessionist and nationalistic movements Impact from the demographic trend of aging populations Pension plan shortfalls and low levels of retirement savings Data privacy and cyber threats Climate change and environmental issues Other Most Underestimated Risk to Global Markets

21. Perspective on Integrity of Global Capital Markets

22. Ranking of Most Serious Ethical Issue Facing Local Market in Coming Year Note: Total percentage may not add up to 100% due to rounding Misaligned incentives of investment management services Mis-selling by financial advisers Market fraud Market trading practices Integrity of financial reporting Disclosure/use of financial derivatives

23. Globally Effective Risk Oversight Wanted. Globally, 28% of members indicated that improved regulation and oversight of global systemic risk is the regulatory or industry action most needed in the coming year to help improve investor trust and market integrity. 68% cited need for better bank board risk management 68% called for a requirement that banks impair troubled credit holdings on a more consistent and timely basis 67% cited increased coordination of monitoring systemic risk 66% better risk disclosure REGULATORY REFORMS ARE NEEDED TO PREVENT FUTURE FINANCIAL CRISES MARKET 6 STRUCTURE

24. Regulatory or Industry Actions Most Needed in the Coming Year to Help Improve Investor Trust and Market Integrity Note: Total percentage may not add up to 100% due to rounding Improved auditing practice and standards Improved corporate governance practices Improved enforcement of existing laws and regulations Improved market trading rules on transparency and frequency of trades Improved regulation and oversight of global systemic risk Improved transparency of financial reporting and other corporate disclosures MARKET STRUCTURE

25. OUR FINDINGS SHOW THAT THE MOST IMPORTANT AREAS FOR FIRMS TO FOCUS ON ARE: Better alignment of compensation with investor objectives Zero-tolerance policy by top management for ethical breaches Increased adherence to ethical codes and standards OUR FINDINGS SHOW THAT THE MOST IMPORTANT AREAS FOR REGULATORS TO ADDRESS ARE: Improved regulation and oversight of global systemic risk Improved transparency of financial reporting and other corporate disclosures globally Improved enforcement of existing laws and regulations at the local level Improved corporate governance practices locally THE WAY FORWARD: 7 IMPLICATIONS FOR ACTION

26. REGIONAL RESPONSE 52% AMERICAS (AMER) 30% EUROPE, MIDDLE EAST AND AFRICA (EMEA) 18% ASIA PACIFIC (APAC) TOP MARKETS 1,956 572 264 144 143 139 138 131 123 111 108 102 94 79 USA CANADA UK CHINA INDIA GERMANY SWITZERLAND SOUTH AFRICA FRANCE HONG KONG AUSTRALIA NETHERLANDS SINGAPORE JAPAN BRAZIL PRIMARY INVESTMENT PRACTICE (TOP 5) EQUITIES 33% FIXED INCOME 17% PRIVATE 4% DERIVATIVES 4% REAL ESTATE 3% JOB FUNCTIONS (TOP 5) PORTFOLIO MANAGER 20% RESEARCH ANALYST 12% CONSULTANT 6% FINANCIAL ADVISER 6% CHIEF-LEVEL EXECUTIVE 6% NOTE: TOTAL PERCENTAGE MAY NOT ADD UP TO 100% DUE TO ROUNDING YEARS WORKING IN THE INVESTMENT INDUSTRY 3% NOT APPLICABLE 21% > 20 YEARS 14% 16–20 YEARS 17% 11–15 YEARS 33% 6–10 YEARS 12% ≤ 5 YEARS RESPONDENT 8 PROFILE

27. RESOURCES Improving Regulation and Shareholder Rights Proxy Access in the United States: Revisiting the Proposed SEC Rule Non-Preemptive Share Issues in Asia: Role of Regulation in Investor Protection Review of and Comment on SEC Strategic Plan: Fiscal Years 2014–2018, Review of and Comment on SEC Strategic Plan: Fiscal Years 2014–2018, a comment letter to the US SEC ESMA Market Abuse Regulation Delegated Acts (ESMA/2014/808), ESMA Market Abuse Regulation Delegated Acts (ESMA/2014/808), a comment letter to the European Securities and Markets Authority Removal of Certain Reference to Credit Ratings and Amendment to the Issuer Diversification Requirement in the Money Market Fund Rule, Removal of Certain Reference to Credit Ratings and Amendment to the Issuer Diversification Requirement in the Money Market Fund Rule, a comment letter to the US SEC Reducing Global Systemic Risk CFA Institute cosponsors the Systemic Risk Council to address systemic issues. Systemic Risk Council Financial Reporting Transparency Financial Crisis Insights on Bank Performance Reporting, Part 1 and Part 2 Part 1 Part 2 Forward-Looking Information: A Necessary Consideration in the SEC’s Review on Disclosure Effectiveness Financial Reporting Disclosures: Investor Perspectives on Transparency, Trust, and Volume Disclosure Initiative: Proposed Amendments to IAS 1Disclosure Initiative: Proposed Amendments to IAS 1, a comment letter to the International Accounting Standards Board Proposed Statement of Financial Accounting ConceptsProposed Statement of Financial Accounting Concepts, a comment letter to the Financial Accounting Standards Board Improving Enforcement Redress in Retail Investment Markets: International Perspectives and Best Practices Investment Firm Best Practices CFA Institute continues to administer and update the GIPS standards to provide best practices for investment performance reporting. GIPS standards The Asset Manager Code of Professional Conduct now has 1,000+ firms that claim compliance, with assets under management of more than US$8 trillion. Asset Manager Code of Professional Conduct Investment professionals can share the Statement of Investor Rights with clients to show their commitment to aligned incentives. Statement of Investor Rights

28. The Future of Finance Starts with You. cfainstitute.org/futurefinance @CFAInstitute @MarketIntegrity #FutureFinance