cfa 2011 annual report
TRANSCRIPT
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2011 Annual Report
Our work.
Our voice.
Our community.
Worldwide.
This document in PDF ormat
represents the CFA Institute
2011 annual report online at
annualreport.cainstitute.org.
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About CFA Institute
CFA Institute a global, not-or-prot proessional association administers the Chartered Financial
Analyst (CFA) and Certicate in Investment Perormance Measurement (CIPM) curricula and
examination programs worldwide. We publish research, conduct proessional development programs,
and set voluntary, ethics-based proessional and perormance reporting standards or the investment
industry. CFA Institute is aliated with 135 proessional societies in 58 countries/territories and
operates CFA China, a member service initiative in Beijing and Shanghai.
We oer a range o educational and career resources or investment proessionals and are a leading
voice on global issues o airness, market eciency, and investor protection.
CFA Institute Mission
To lead the investment proession globally by setting the highest standards o ethics, education, and
proessional excellence.
Our Vision
Our vision builds on our belies that:
Financial markets should be equitable, free, and efcient so that every investor has a chance to earn
a air return;
The interests of the ultimate investor must take precedence over the interests of all other market
participants; and
High ethical principles and self-regulatory standards are as important to market efciency and
airness as rules and regulations.
Emerging Latin American Opportunities
In recent years, CFA Institute has recognized the great potential in the developing economies o
Latin America and is making a long-term investment in this region o the world. These countries have
experienced a wave o democratization and open-mindedness in government, and many countries
have started to view opportunities in a new way. The establishment o common market areas,
combined with government interest in ree markets and modernization, has made this part o the
world an important region or the global investment community and CFA Institute.
As in other developing markets, the opportunity or CFA Institute is to acilitate growth in the region
by educating knowledgeable and ethically centered investment proessionals through the CFA
Program. By educating investment proessionals in these countries, we can help raise standards in the
investment management proession and encourage urther development o capital markets grounded
in global best practice. This will bring strength to these economies and help build markets that will
attract investors and increase the growing importance o Latin America in the world economy.
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The Latin American ofce o CFA Institute is located in Buenos Aires, Argentina.
Recognizing that we are grossly underrepresented in the region, CFA Institute initiated its rst Latin
American strategy two years ago. Our strategy calls or building awareness o CFA Institute and the
CFA Program and attracting more CFA candidates. We have received strong media attention rom
respected outlets over the past year, almost tripling media coverage rom scal year 2010 to 2011.
Our staff has spent quite a bit of time establishing and deepening relationships with Latin American
regulators, employers, and universities. We have a dozen CFA Program Partners, prestigious
universities that embed 70 percent o the CFA Program into their curricula and work with us on
providing leadership in investment management education and supporting our members proessional
development through education. Our work with these universities includes the CFA Institute Research
Challenge, an initiative described in this annual report. And we are working closely with our member
societies in Argentina and Uruguay, Brazil, and Mexico.
We are also encouraging the adoption o the Global Investment Perormance Standards throughout
the region. In September o 2011, Procapitales, a Peruvian organization, was approved as the rst
country sponsor in Latin America.
The volunteer work o our members in Latin America is greatly appreciated, especially in places
such as Colombia, Chile, Peru, and Central America, where CFA Institute member societies have yet
to be established.
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Sustainability
To succeed in todays economy, organizations
are instituting business approaches that
generate long-term customer and employee
value. The sustainability approach ocuses not
only on green strategies aimed at the natural
environment, but also takes into consideration
all aspects o how a business operates in social,
cultural, and economic environments. It is a
holistic approach that considers the longevity
o an organization and ties its goals to the
goals o the societies and environments in
which it operates.
At CFA Institute, a group o 40 sta members volunteered over the past year to consider the benets
o and opportunities to engage in a sustainability initiative. The committee identied ways the
organization can take a long-term view o nancial, social, and environmental sustainability. The team
is working on an action plan inormed by hundreds o objectives, strategies, activities, and metrics.
Goals either underway or under consideration include measuring and reducing the organizations
carbon ootprint, improvements related to procurement and post-use disposition, and product
delivery options. Sustainability is also a ocus or the design o a new building that will serve as the
international operations hub o CFA Institute.
The CFA Institute Research Challenge
The CFA Institute Research Challenge is a
global annual competition that provides
university students with unparalleled real-world
experience in equity research and company
analysis. The Challenge offers students a unique
opportunity to learn rom leading industry
experts and their peers rom the worlds top
business schools. This educational initiative is
designed to promote ethical and proessional
standards as well as the best practices in equity
research among the next generation o analysts
through hands-on mentoring and intensive training in company analysis and presentation skills.
Politecnico di Milano rom Italy was named the winner o the th annual CFA Institute Research
Challenge. Regional competitions took place in the Americas, Asia Pacic, EMEA, and New York to
determine the our teams that competed in the Global Finale, which was held in April 2011 in Omaha,
Nebraska, USA. Warren Buett served as keynote speaker at the event and students participated in an
extended Q&A session with him. The winning team (pictured above let to right: Marco Jean Aboav,
Initiatives
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Global Investment Perormance Standards
In the early 1990s, CFA Institute created and
began administering the Global Investment
Perormance Standards (GIPS standards) a
set o standardized, industry-wide ethical
principles that provide investment rms with
guidance on how to calculate and report their
investment results to prospective clients. We
partner with local country sponsors around the
world to promote and maintain the relevance
o the GIPS standards. The success o the
Standards is the result o an alliance among
experts within the global investment industry
and partnerships with country sponsors.
During the past year, the latest edition o the GIPS standards became eective 1 January 2011,
representing the most comprehensive review and revision o the Standards to date. Thirty-our
countries have been ocially endorsed as GIPS Country Sponsors, rmly establishing the GIPS
standards as the premier global investment perormance standard. Already the 2010 Standards have
been translated into Spanish, Japanese, and Korean with additional translations in Russian and
German expected soon. Peru became the 34th GIPS Country Sponsor in September 2011 and the
rst in Latin America. Industry organizations in Argentina, Brazil, Chile, Colombia, and Mexico have
expressed interest in bringing the GIPS standards to their respective countries as the global expansion
and adoption o the GIPS standards continues.
Steano Vigan, Anna Belli, Nicol Rolando, Francesca Maria Claudio, Giacomo Saibene, Andrea Dal
Santo, CFA) overcame tough competition rom the University o Southern Caliornia, representing the
Americas Region; Rutgers University rom the New York Region; and Thammasat University (Bangkok,
Thailand) rom the Asia Pacic Region. In honor o this great achievement, the team rom Politecnico
di Milano received US$10,000 or their university.
The sixth Research Challenge, which runs until April 2012, is expected to attract over 3,000 students
globally and 700 universities rom over 50 countries. This year, more than 100 CFA Institute
member societies will participate with approximately 2,200 volunteers supporting all aspects o the
competition. Local challenges will be held or the rst time in Colombia, Central America, Vietnam,
Jordan, Egypt, Lebanon, and Kenya.
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CFA Program Partners
Over the past ve years, through the
CFA Program Partners initiative, we have
partnered with 137 globally diverse, high-
prole institutions to bring the CFA Program
Candidate Body o Knowledge and the
organizations Code o Ethics and Standards
o Proessional Conduct to university students
around the world. At the close o scal year
2011, 33 partners are located in Asia Pacic;
47 are in Europe, the Middle East, or Arica;
and 46 are based in North America. With the
organizations increased commitment in Latin America, we are now partnering with 11 institutions
throughout that region.
Recognition as a CFA Program Partner signals to students and the marketplace that the university
curriculum is closely tied to proessional practice and prepares students to sit or the CFA exams,
which include the study o ethics and proessional conduct. Beyond incorporating the Candidate
Body o Knowledge into their degree programs, CFA Program Partners enjoy a position o thought
leadership in the proession and agree to contribute to CFA Institute strategic objectives, such as
meeting the lielong learning needs o our members. The initiative contributes to our organizations
ability to deliver on its mission to develop and promote the highest educational, ethical, and
proessional standards in the investment industry.
A new initiative the CFA Program Associates was recently announced and will allow CFA Institute
to introduce the CFA Program to more students by engaging with a broader array o universities.
The CFA Program Partners initiative is part o the organizations University Relations department.
In scal year 2011, this team increased the number o CFA Program Partners, and brought the CFA
Institute Research Challenge and Executive Education partnerships into its old. University Relations
is also taking advantage o social networks to more ully engage prospective CFA candidates through
the Research Challenge and the CFA Program Partners initiative. Pictured above are Lakshmi Bohjraj,
MBA, (let) o Cornell University and Douglas Foster, PhD, o the Australian National University. Both
universities are CFA Program Partners.
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Career Resources
Although hiring in the nancial services
industry has rebounded and job postings on
the CFA Institute JobLine have increased, the
need or career resources remains strong. In FY
2011, CFA Institute enhanced its career services
oerings by initiating career management and
job search-ocused webinars and podcasts
or members and candidates. Specically,
we hosted ve webinars which are available
to replay and produced nine podcasts o
interviews with recruiters and career coaches.
Employers have told us that strong communication skills are a key consideration when interviewing
and hiring nance proessionals. For this reason, several o our new oerings ocus on interviewing,
persuasion, presentation, and communication skills. Other resources cover resume writing, working
with recruiters, using social media or career management, and navigating generational dierences in
the workplace.
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Views o Leadership
Daniel S. Meader, CFA
Chair, Board o Governors
As this years chair, I have been asked by our membership to lead an organization that continues to
exhibit great passion or its work through the eorts o volunteers and sta around the world. As a
longtime volunteer or CFA Institute and my local society based in Texas, I applaud all o you who are
ullling our global mission by building local communities o investment proessionals and impacting
the development o markets in your countries. Our community o more than 100,000 members is
growing and with this growth we are playing a greater role in the global capital markets.
Its not the same world it was just ve years ago. As citizens, investors, and investment proessionals,
we are acing a new reality. From all corners o the world, market volatility is shaking investor
condence and risk tolerance thresholds. These conditions, in turn, inspire investors to seek more rom
their investment managers even as we must all adjust our expectations to the reality o lower return
markets. Finally, investment managers are under increased scrutiny to deend the value o their eorts
or the client. This chain reaction leaves many o us looking in the mirror and wondering i we are truly
adding value to our clients and putting the clients interest ahead o our own.
Its not the same world it was just ve years ago. As citizens,
investors, and investment proessionals, we are acing a new reality.
Given this dicult environment serious investment proessionals can turn to CFA Institute. With our
commitment to thought leadership and lielong learning, we advance a vibrant and dynamic global
body o knowledge that provides education and insight to the investment industry. I encourage you to
learn more about the CFA Institute Global Body o Knowledge which is available on our website, ree
o charge.
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Our challenge as an organization and as a community is to lead the investment proession globally
by setting the highest standards o ethics, education, and proessional excellence. The tasks at hand
vary rom country to country, but the commitment to our mission is the same everywhere in the world.
With the engagement o 135 member societies worldwide, we are building a network o competent
investment proessionals, giving voice to the issues o the day, and preparing the next generation to
lead the proession.
Certainly our industry is under stress and there will be dicult times ahead. Even as our member and
candidate populations grow we must challenge ourselves to meet these tough times with a spirit o
innovation and a continued commitment to our belies. Perhaps Steve Jobs said it best. Find what you
love and do what you believe is great work and the only way to do great work is to love what you do,
so keep looking and dont settle. And so, I say to you now, here at CFA Institute we keep striving to
accomplish our mission and we wont settle.
With each member society I visit, I am energized by the dedication and passion o members who
take the time to give back to their proession. In a perect world I would be sitting across rom you
at the kitchen table saying thank you or your devotion to the high standards o our proession and
or conducting yourselves in an ethical manner. I urge you to reach out to the leaders in your local
community to share our mission with them. To all investment proessionals around the world, I hope
you will reach out to CFA Institute or education and guidance as we work to achieve our mission o
providing air and transparent markets or all investors. As always, your board o governors welcomes
your inquiries and ideas.
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John Rogers, CFA
President and Chie Executive Ofcer
It is my pleasure to report that the past year has been one o great progress in delivering on the
mission o our organization. In this years annual report, Id like to ocus on our work as education
leaders within the investment proession, our voice in regulatory and policy arenas, and our growing
worldwide community.
The investment proession continues to be deeply aected by the allout rom the 2008 global
nancial crisis. Investment proessionals around the world are working to regain the trust o investors.
Many rms and their employees have been displaced due to challenging economic conditions. Volatile
markets create anxiety or investors and investment proessionals alike.
The need or globally relevant and high-quality proessional
accreditation in investments is important. And that is why the CFA
Institute long-term strategy includes program innovations that make
investment education more accessible.
In such times, the value o truly relevant proessional education and credentials comes to the ore.CFA Institute is committed to the highest standards o excellence, rigor, and relevance in nancial
education. Our programs and credentials, led by the Chartered Financial Analyst designation,
are known worldwide as both challenging and relevant. And, through conerences, lectures, and
publications, our members are oered thousands o hours o continuing education opportunities to
keep their knowledge current.
Along with education, proessional ethics are at the heart o the CFA Institute mission. Our 100,000
plus members renew their pledge to practice ethically every year and are subject to rigorous standards
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o practice, with a proessional conduct program in place to deal with violations. Many actors
contribute to the creation o an ethical proession, including advocacy or airness and transparency
in global capital markets. Over the years, CFA Institute has served as a trustworthy and insightul
participant in regulatory and policy discussions around the world. The voice o our members carries
weight in these circles and we use that platorm judiciously and in keeping with our mission.
The need for globally relevant and high-quality professional accreditation in investments is important.
And that is why the CFA Institute long-term strategy includes program innovations that make
investment education more accessible. At the same time, this strategy raises industry standards in
ethics and proessional competence. We are currently working on a certicate program that will serve
existing demand or undamental investment knowledge among industry participants at all levels.
We expect that by promoting common understanding o how the industry works and the essential
elements o ethical conduct, this program will increase proessional excellence in the industry.
I encourage you to read this years annual report to learn more about CFA Institute. In pursuit o
our mission to lead the investment proession globally by setting the highest standards o ethics,
education, and proessional excellence CFA Institute is nancially healthy and investing in the uture.
Please take a moment to view the video o our Chie Financial Ocer, Tim McLaughlin, to learn about
our operating results or the most recent scal year.
I thank our sta and volunteers or their many contributions and I thank all o our members or
upholding the high standards o our proession.
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Kurt Schacht, JD, CFA
Managing Director, Standards and Financial Market Integrity Division
As we know, the nancial services industry continues to struggle with its reputation. Whether its the
2008 nancial crisis, the Mado scandal, or a variety o other ethical shortcomings, the perception
o our industry has never been more challenged. I there were ever a time or an ethical champion in
our industry it is now. Thanks to the eorts o many sta and CFA Institute volunteers, our progress in
becoming that champion continues to fourish.
Here are just a few examples of our strong and collective voice. First, as global regulatory reform
enters the rule-making phase, many important questions remain: Will proposed reforms reduce
systemic risk? Will they close gaps in regulation? Will reorm eorts be collaborative worldwide, or
will we continue to be highly ragmented? Over the past year, we have oered regular commentary on
these and other issues aected by the rule-making process.
I there were ever a time or an ethical champion in our industry
it is now. Thanks to the eorts o many sta and CFA Institute
volunteers, our progress in becoming that champion continues to
fourish.
And, thanks to member surveys, weve heard your concerns as well. Youve told us that derivatives
regulation and mis-selling by nancial advisers are key issues in nearly all markets. Your insights have
shaped our response to the debates concerning OTC derivatives manager registration, creating a
better early warning system to detect and mitigate speculative bubbles such as sub-prime. We
continue to engage in the global debate over convergence to IFRS nancial reporting standards and
the challenge o many regional dierences.
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In our codes and standards area, we are promoting additional guidance or applying the Global
Investment Perormance Standards, or GIPS, to alternative investment space, including hedge unds.
Most importantly, we are asking or your help in promoting our Asset Manager Code o Proessional
Conduct. Its based on exactly the same ethical principles that apply to us as individual CFA
charterholders, but at the rm level.
Finally, better awareness o CFA Institute positions and standards o proessional conduct is important
generally to the goal o creating markets and products that serve the best interest o clients and
the public.
We have added sta and resources globally to help achieve this goal. In Washington, London, Brussels,
Hong Kong, and other regulatory centers around the world, we continue to expand the reach and
impact o CFA Institute.
Until next time, keep track o our global advocacy eorts online and at our new blog site Market
Integrity Insights. Remember, you are part o our important voice and we welcome your comments
and assistance.
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Nitin Mehta, CFA
Managing Director or Europe, Middle East, and Arica (EMEA)
Id like to share with you what CFA Institute is doing to create a global community o investment
proessionals.
Our association has come a long way since its inception over six decades ago. Today, we have
members, candidates, volunteers, and partners in more than 130 countries around the world, spread
rom New York to New Delhi, Santiago to Stockholm, Shanghai to Sydney, and beyond. In the process,
we have become a global organization. But perhaps even more importantly, we are now a global
community. Like other successul communities, we share a common mission, common values, and
many common experiences. Together, our collective purpose and eort benets us all.
Today, our community o over 300,000 members and CFA
Program candidates represents a thriving network with a wide reach.
Its the biggest global community o investment proessionals, and it
promises to grow bigger still.
We recognize that our network o member societies in over 50 countries provides or localcommunities. These societies which are part o the CFA Institute amily are led by dedicated
volunteers and sta. We work with them to meet with local employers, educators, and regulators
in order to address issues o local interest. Societies also provide opportunities to meet with other
community members at a variety o events. And with rapid advances in technology, we have new
opportunities or connecting members o our diverse community. Last year, we invested in social
media orums, such as Facebook, LinkedIn, Twitter, and blogs, to create virtual sub-communities, oten
ocused on specialist interests.
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Learning rom each other, discussing issues o common interest, and solving problems together this
has always been an important aspect o being a proessional. Perhaps the best example is provided
by our Annual Conerence. At the last one in May 2011, delegates rom around the world came to hear
some o the leading opinion-ormers in our industry. One speaker, in particular the governor o the
Central Bank o Nigeria, Mr. Lamido Sanusi spoke about the wide-scale changes he implemented
in the banking system following his appointment at the height of the global nancial crisis. His
intelligence, his boldness, and his ethical leadership stunned the audience. It was an electric speech.
At the end, a thousand delegates rose spontaneously and provided a rare standing ovation. As I
applauded and looked around, I was reminded o the power o the global community we had orged,
where like-minded proessionals come together and leave better inormed, challenged by resh ideas,
and with lasting new riendships.
Today, our community o over 300,000 members and CFA Program candidates represents a thriving
network with a wide reach. Its the biggest global community o investment proessionals, and it
promises to grow bigger still. We are working hard to strengthen it urther so that it becomes even
more valuable to our members. I hope you will join us in that mission with your participation.
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Thomas R. Robinson, PhD, CFA
Managing Director, Educational Division
In an ever-changing investment landscape, CFA Institute keeps you current and knowledgeable
through its certication programs, such as the CFA and CIPM Programs, and its lielong learning
programs, such as conerences, publications, webcasts, and podcasts. Each year we bring hundreds o
new programs to our members and others.
CFA Institute benets rom a continuous, global practice analysis that identies the knowledge, skills,
and abilities necessary to practice in todays environment. This inormation, gleaned rom ocus groups
comprised o members and employers, is combined with other input to dene the Global Body o
Investment Knowledge. The GBIK, as we call it, guides all o our educational programs. For example,
today more than 80% o the CFA Program curriculum has been custom written or CFA Institute. The
curriculum presents a global perspective that can be updated on a timely basis and keeps pace with
trends in practice. Ownership o this curriculum enables us to deliver it to candidates at a much lower
cost and in easy-to-access ormats, such as an e-book which can be used online, remotely on a laptop,
or even on an iPad.
The strength o our educational programs comes rom their
relevance to practicing investment proessionals today and we
appreciate the eorts o thousands o practitioner-members who
help make this possible.
The relevance o our bodies o knowledge enables us to reach investment proessionals, universities,
and regulators around the world. Many universities have adopted our bodies o knowledge as the basis
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for their curricula. Regulators often require or encourage investment professionals to participate
in the CFA Program. And commercial organizations have adopted the ramework o the GBIK as
their taxonomy.
Our fagship CFA Program continues to be strong. This scal year we had about 210,000 exam
registrations rom around the world a 5% increase over last year.
And our candidate population is truly global in nature. In scal year 2011, more than 40% o
registrations came rom the Asia Pacic region, more than 20% were rom the Europe, Middle East and
Arica region, and the balance came rom the Americas.
We are building awareness o our programs and standards through advertising and social media,
which allows us to distribute inormation in new and exciting ways. For example, i you are unable
to attend one o our conerences, you can ollow Twitter conerence eeds. You can also access
publications, webcasts, and podcasts rom these conerences on Facebook as well as through iTunes.
Weve heard rom employers and members that our standards and bodies o knowledge could be used
to provide other participants with an understanding o the essential components o investments, the
investment industry, and the importance o high ethical standards. CFA Institute sta, working with
members and societies, is tackling this need by creating and launching an Investment Fundamentals
certicate aimed at the wider investment industry. Unlike the CFA Program, the certicate will not lead
to a designation. Look or details on this in 2012.
The strength o our educational programs comes rom their relevance to practicing investment
proessionals today and we appreciate the eorts o thousands o practitioner-members who help
make this possible.
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Strategic Perspectives
Investment proessionals around the world rely on CFA Institute. Our bodies o knowledge, imparted
through the CFA Program and continuing education opportunities, help inorm the work o our
members. We speak on their behal in policy and regulatory circles as an advocate or investor
protection, market eciency, and airness. And we provide opportunities or investment proessionals
to learn rom each other, discuss issues o common interest, and contribute to solving the issues o
the day. This has always been an important aspect o being a proessional.
Our work
Jayesh Gandhi, CFA, believes the economic
growth in the world is shiting and will continue
to change in avor o emerging markets in
general and the BRICS countries, such as India,
in particular.
Our voice
Kerstin Dodel, CFA, says charterholders
need to bring attention to our role and
responsibilities towards investors, clients, the
nancial markets, and the economy as a whole.
We can impact change by giving voice to our
members and ocusing on important issues.
Our community
Olivia Engel, CFA, says being part o this
community makes her eel like it is her
responsibility and the responsibility o
members to not just blame the markets. She
believes members are the market.
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Jayesh Gandhi, CFA
Portolio Manager, Morgan Stanley, Mumbai, India
Ater ve years in the industry as an analyst, I recognized the need to enhance my knowledge o the
global investment management world. The CFA charter was my rst step.
The most important thing about the CFA charter is that you have to be sel motivated to do it. You
have to learn everything on your own and do it while on the job, so the motivation levels have to be
much higher compared to the average. And I was motivated: When I started the CFA Program in 1998,
I instantly loved the books. The curriculum and body o knowledge are just incredible.
I you like the subject and have passion or the knowledge, all you need is proper planning and
dedication to earn the charter. The way I managed it all was to work and study over the weekend,
which, o course, my wie did not like. But, she was supportive as she understood the importance o
this eort to my career.
As a lead portolio manager at Morgan Stanley Investment Management in Mumbai, India, I am
entrusted with pursuing and leading an independent investment strategy. Proessionally, the charter
has been important. Apart from the knowledge, it earns you respect and the standing required to
command a certain level o access to the organizations you want to be part o.
Indias progress in the nancial services industry is truly remarkable. India is now to the services sector
what China is to manuacturing. We are setting global standards in sotware services, telecom services,
and banking and nancial services, and we are a model or cutting costs and providing services at
price points that other countries are not able to aord.
I believe the economic growth in the world is shiting and will continue to change in avor o emerging
markets in general and the BRICS countries, such as India, in particular. It is up to Indias proessionals
to participate in shiting the wealth, improving the fow o capital, and increasing GDP through
Strategic Perspectives
Our work
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business growth. By taking advantage o the shit, we can improve the living conditions and the
welare o our people here. This is a big shit thats taking place in the world today.
In the context o this global shit, the CFA charter has become one o the most important, sought-ater
designations in the Indian nancial services industry. Its relevant and signicant because the global
nancial services industry is integrating at a ast pace. The charter provides nance proessionals with
relevant knowledge and access, as well as an understanding o the dynamism o the global nancial
markets and how to unction eciently in them. And they also stay current with the new products,
ideas, and orces changing the industry.
Jayesh Gandhi, CFA, an active volunteer or his member society.
The Charter conveys that the holders have a body o knowledge, that they are considered experts
with knowledge o a particular eld. Even ater youve earned the charter, youre trained to take up
other studying while youre working, which I feel is very important. My job requires a fair amount of
learning and reading on a continuous basis to stay inormed about changing macroeconomic actors
in the world and a strategy to navigate through the turbulent nancial markets. My regular interaction
with the corporate and banking world also helps me to stay well inormed and ocused. CFA Institute
publications the Financial Analysts Journal and CFA Magazine are good resources.
Im also a ounding member and now serve on the Board o our Mumbai-based member society that
we call IAIP, the Indian Association o Investment Proessionals. I head the Programming Committee,
so that entails inviting experts rom various segments o the nancial markets to speak to our
members. And, as members, we also have the chance to learn rom each other.
All o this learning pays o in terms o my work perormance and the value I can bring to the
investment strategy I manage. The endeavor is to become one o the most trusted and respected
names in India in the area o investment management, which would be a very meaningul achievement.
Strategic Perspectives
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Kerstin Dodel, CFA
Financial Consultant, Chair, Advocacy Committee, German CFA Society, Siegenburg, Germany
The investment community has come under a great deal o scrutiny as a result o the credit crisis and
the global economic slowdown we are experiencing. As investment proessionals, we always need
to put the client rst, comply with the highest ethical standards we learned rom the CFA Program,
and never orget that our decisions might have a great impact not only on the client but also on our
proession and the economic environment in which we live and work.
As charterholders, we have a certain responsibility to get involved in our environment because the
charter represents a high level of professional qualication and it also stands for ethical behavior,
which or me includes the responsibility to act in the best interest o the investment community. It
takes all sorts o investment proessionals, clients, regulators, and private and institutional investors to
create capital markets that oer the possibility to earn a air return on investments on a sustainable
basis, and to do this with integrity and honesty. I am not a blind do gooder. I know that peoples
intrinsic motivation is to earn money, and this is ne with me, but this must be possible without doing
harm to other individuals, groups, markets, or the environment.
I am especially proud o my work or the German CFA Society (GCFAS) as a board member and
chair o our advocacy committee. In this role, I participate in working groups ocused on standard
setting and commenting on regulatory issues. In Germany, we promote dialogue among investors,
regulators, and nancial proessionals. We do this by organizing discussions, ostering communication
about theory versus practice, and also by bringing attention to ethical conduct and the integrity o
the capital markets. This is a long-term process, and the results are not always visible. Changing the
mindset o people is oten intangible.
My colleagues and I are working on several topics in the area o corporate, environmental, and
social governance (ESG). Why is it important? The majority o institutional owners believe that the
inclusion o ESG actors in the investment process constitutes a trustees duciary duty; the aim is to
Strategic Perspectives
Our voice
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develop investment strategies that generate both nancial rewards and sustainable values. In times o
increasing regulatory and environmental risk, ESG actors represent mispriced opportunities and risks
and can capture the next drivers o economic change.
We have held speaker events and media seminars on ESG and recently organized a traveling
conerence series in Germany and Switzerland. Materials or all events are available on the internet,
and we blog about this content as well. We were invited as experts to a roundtable by a well-
known German nancial newspaper to discuss the integration o ESG into the investment process.
We also participated in discussions and roundtables that contributed to the development o the
German Sustainability Code, which is now ready or review by the German Federal Government. The
code is a transparency instrument that makes sustainability eorts o companies visible, relevant,
and comparable.
Kerstin Dodel, CFA, at work in her ofce
The issue o improving the proessionalism o supervisory boards o listed companies is at the top o
the political agenda ater experiences with the subprime crisis and, especially in Europe, the recent
euro crisis. We are interested in increasing the qualications of supervisory boards in general and
voicing the need to expand the group o suitable candidates, by possible supervisory and diversity
mandates in the uture. The GCFAS encourages these initiatives, and we have placed some articles in
newspapers on this issue. We also are organizing a lecture event on this topic.
As charterholders, we need to understand these and other issues and bring attention to our role and
responsibilities toward others, investors, clients, the nancial markets, and the economy as a whole.
We need to act as good examples and inspire others. Personally, I like to create and drive a topic
agenda and work through the angles o a specic issue. I like to talk to people, present my views, and
generate interesting discussions that raise peoples awareness.
We can impact change in our countries and markets by giving voice to our members and ocusing on
specic, important issues.
Strategic Perspectives
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Olivia Engel, CFA
Head, Active Australian Equities, State Street Global Advisors, Sydney, Australia
As an investment proessional working in Sydney, the CFA charter speaks to me because it is in line
with my way o thinking, and maybe that is why I like the community because the people who are
drawn to it are those who really want to behave ethically and want the world to know that they are
ethical. This is really, truly important.
I like the act that CFA Institute and its culture always remind me o why our community is here
and what it is meant to be doing. I appreciate that the CFA charter is globally recognized. Having a
uniform, standard global qualication is benecial for employers as well as for people who want to
go overseas and have their qualications recognized. It is a win-win situation for both employee and
employer not to mention the broader implications or the investment industry as a whole.
As my career has progressed, I have discovered that despite having earned the charter in 2000,
while in my early 20s, I need to remain current on new market developments so I can answer those
unpredictable client questions that often arise. It isnt just what Ive learned as a CFA candidate
that keeps my perspective resh. The educational resources and events available to charterholders
and the opportunities to connect with other investment proessionals keep me on top o the latest
developments in an ever-changing industry. Ive met people I can really share investment ideas with.
I can talk about Australian equities, they can talk about U.K. equities, and were not competing in the
same market, so you dont eel like you have to hide anything.
The thing I love about investing is theres never really a right answer. Theres always another way o
approaching an idea, an investment program, or an investment issue. The market is always changing,
so theres always a new pattern or a new market reaction to observe to a particular set o economic
data. The market is ever-changing, so research is un in that you never eel like youre doing the same
old thing.
Strategic Perspectives
Our community
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I never thought Id want to be part o a club. Thats not what I had in mind, but I like how its turned
out. We go to society gatherings and conerences, and it does bring people together. You look at each
other and know youve all studied the same CFA exams; youve done that hard slog, and its this thing
you have in common. And not only that, Ive been surprised at how riendly and open this group o
people is. Even beore I joined the board o my local society, I always met great people at conerences.
Olivia Engel, CFA, on a day o in Sydney, Australia.
As part o this community, I dont eel like I am just working or the society as a volunteer or just
a proessional who happens to be viewing it rom the sidelines. Im probably one o the more
active people with regards to the CFA Program. Im a bit o an advocate in that sense. Im always
encouraging people to come along to our society seminars and get involved in that way. One o the
younger guys in my rm is thinking about doing the CFA Program, and so Im denitely giving him a
nudge in that direction.
Being part o this community makes me eel like it is my responsibility it is our responsibility not to
just blame the market. We are the market.
Strategic Perspectives
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CFA Institute is governed by its Board o Governors, which is composed o volunteers elected or
three-year terms. The 20102011 Board included 18 governors rom eight countries: Canada, China,
Japan, Singapore, Switzerland, the United Arab Emirates, the United Kingdom, and the United States.
Selection o governors is based on investment industry and leadership experience, participation in and
commitment to CFA Institute and its activities, and the degree to which a governor can represent the
geographic and proessional diversity o our membership.
Our Board o Governors is the highest governing authority o the organization and is responsible
or dening our vision, mission, and strategies. The board works closely with the Presidents
Council representatives, a leadership group o member volunteers rom our local societies, and the
organizations Leadership Team, a group o managing directors who oversee the achievement o
strategic objectives and the day-to-day work o our sta.
Our 18-member Board o Governors, composed o investment proessionals rom eight countries
Seated, let to right: James Jones, CFA; Beth Hamilton-Keen, CFA; Alan Meder, CFA, vice chair; Daniel
Meader, CFA, chair; Margaret Franklin, CFA, immediate past chair; John Rogers, CFA, President and
CEO; Jane Shao, CFA; and Giuseppe Ballocchi, CFA; Standing, let to right: Aaron Low, CFA; Frederic
Lebel, CFA; Mark Anson, CFA; Charles Yang, CFA; Pierre Cardon, CFA; Saeed Al-Hajeri, CFA; Jeffrey
Lorenzen, CFA; Attila Koksal, CFA; Matthew Scanlan, CFA; and Roger Urwin.
Governance
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In 58 countries, volunteers o 135 proessional member societies manage the daily activities o their
local organizations. At CFA Institute, we believe that eective societies enable us to achieve our
strategic objectives, and we engage with society leaders throughout the year. Member societies are
integral to the investment proession in many locations, with society leaders oten playing critical
leadership roles in their local investment communities.
Member Societies
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The Year in Summary
CFA Institute had a positive year in scal year 2011 and
maintained a ocus on sustainable nancial perormance
in support o advancing the mission o the organization.
To CFA Institute, sustainability is a natural evolution that
describes ethical corporate practice rom a broader, longer-
term view. Within this context, the organization is managed
with a ocus on nancial viability and robustness. This
includes eective business processes and operations; quality
inrastructure, including human capital, inormation tech-
nology, and physical environment; and an embedded risk
management culture that promotes risk awareness in pursuit
o our mission objectives. This broader view o sustainability
osters the longevity and health o our organization. It drives
investments in resource eciencies and corporate citizenship
while improving the corporate environmental ootprint.
In terms o nancial sustainability this year, the mission was
advanced through the delivery o a wide array o products
and services, and signicant investments were made in
inrastructure, such as the delivery o more localized ser-
vices through our regional oces. This included the launch
o a new call center in Asia Pacic, among other initiatives.
These investments will provide or a higher level o service
or members both now and into the uture. CFA Program
candidate registrations, which are the primary revenue stream
or CFA Institute, increased 4 percent rom last year to reach
nearly 210,000 registrations. The volume o those candidates
rst entering the CFA Program is a leading indicator o both
current and uture nancial perormance. These new Level I
enrollments increased 9 percent to over 82,000 in scal year
2011 and are expected to grow through scal year 2012.
Although a negative operating margin was initially expected
or scal year 2011, actual operating results have provided
both a positive operating margin and a positive cash fow or
the organization. Investment income and gains also exceeded
budgeted expectations, and nancial reserves are sucient
to provide or continuation o services in the event o a large-
scale disruption to the CFA Program. Overall, CFA Institute
is well positioned nancially to continue to protect and
enhance the CFA Program and to support increased levels
o member-ocused activities as development begins on the
next long-term strategic plan. This new strategic plan will
guide the organization toward scal year 2015 and beyond.
Timothy McLaughlin, CPA, CFA
Chie Administrative Ocer and Chie Financial Ocer
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About the Organization
CFA Institute is a global, not-or-prot organization and is
the worlds largest association o investment proessionals.
With over 100,000 members and 135 local member societ-
ies around the world, we are dedicated to developing and
promoting the highest educational, ethical, and proessional
standards in the investment industry.
We oer a range o educational and career resources,
including the Chartered Financial Analyst (CFA) and the
Certicate in Investment Perormance Measurement (CIPM)
designations, and are a leading voice on global issues
o airness, market eciency, and investor protection.
Although CFA Institute began operations primarily in the
United States and Canada many years ago, more than
one-third o members are now located outside North America
in over 130 countries. The global distribution o new candi-
dates entering the CFA Program in scal year 2011, with less
than one-third rom North America and almost one-hal rom
the Asia-Pacic region, is likely indicative o the uture mem-
bership composition o the organization.
FY90 FY95 FY00 FY05 FY11
60,000
75,000
90,000
105,000
120,000
45,000
30,000
15,000
Member growth
FY90 FY95 FY00 FY05 FY11
75,000
100,000
125,000
175,000
150,000
200,000225,000
50,000
25,000
10,000
Candidate registrations
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Our mission is to lead the investment proession globally by setting the
highest standards o ethics, education, and proessional excellence.
CFA Institute eects positive change in the global investment community
through its certication programs, education o investment proessionals,
and promulgation o standards intended to help create markets where
every investor has a air chance to earn a risk-appropriate return. We
measure our success by the achievement o mission objectives developed
within the ramework o our long-term Vision 2012 Strategic Plan.
At a high level, the ollowing charts show the basic sources o revenues
and the strategic allocation o ully allocated expenses or scal year
2011 (FY2011). Additional inormation on these strategic unding areas is
included later in this report.
Consolidated Financial Results
% Change
($ in millions) FY11 FY10 11 vs.10
CFA Program
Registrations 209,500 200,700 4%
CFA Institute Members 107,800 102,800 5%
Operating Revenues* $ 211.5 $ 193.1 10%
Operating Expenses 210.9 187.7 12%
Rounding Adj. (0.1)
Income From Operations 0.5 5.4 -91%
Realized Gains (Losses),
Interest and Dividends 9.2 7.6 21%
Change in Unrestricted Net
Assets rom Operations 9.7 13.0 -25%
Unrealized Gains (Losses)
on Investments 10.9 5.3 106%
Change in
Net Assets $ 20.6 $ 18.3 13%
*Includes net assets released rom program restrictions
Fiscal Year 2011 Financial Highlights
Note that portions o these expenses could easily be allocated to more
than one category, but here they have been assigned to the most readily
attributable strategic objective. For example, the Certication and
Certicate Programs category includes global aspects, and the Technology
and Global Capabilities and Relationships categories include eorts dedi-
cated to society support, advocacy, and other services.
In a mission-driven organization, nancial perormance exists to enable
mission achievement. The nancial inormation that ollows refects the
mission investments made this year and demonstrates the capacity to
make additional mission investments in the uture.
FY2011 Fully Allocated Operating
Expenses by Strategic Objective
*Includes curriculum-related expenses
FY2011 Revenues by Source
*Includes curriculum-related revenues
83% Certification and
Certificate Programs*
17% Members Dues, Events, and
All Other
40% Certification and
Certificate Programs*
8% Lifelong Learning
12% Technology
7% Advocacy and Professional
Conduct
19% Global Capabilities and
Relationships
14% Marketing, Society Support,
Career, and Other Services
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CFAInstitutemembershipincreased5percentinFY2011to107,800,
and the active charterholder member attrition o 3.6 percent is a slight
improvement rom 4.2 percent in FY2010.
HighercandidateandmembervolumesalongwithCFAProgram
pricing changes and a member dues rate adjustment approved by the
Board o Governors increased revenues by $18.4 million.
Incomefromoperationsdeclinedto$0.5millionwithgrowthinmission-
related activities and investments slightly outpacing revenue growth.
Oftotalinvestmentsof$226.3million,$216.0millionisavailablefor
contingency and business opportunity purposes, which is sucient to
provide or a multiple-year continuation o services in the event o a
large-scale disruption to the CFA Program.
ThestrongoverallnancialpositionofCFAInstituteprovidesasolid
oundation rom which to pursue mission objectives into the next long-
term strategic planning cycle rom FY2013 to FY2015 and beyond.
Revenues
CFAProgramrevenuegrowthisaresultofincreasedcandidatevolume
and normal program pricing infation adjustments.
Over4,300CFAProgramscholarshipswereawardedinFY2011tostudents,
regulators, educators, and others involved in the investment proession.
Totalmemberduesrevenueincreasedwithoverallmembershipgrowth
and the member dues rate increase approved in FY2010.
Worldwideeducationaleventsincludedconferencesforthersttimein
Latin America and increased revenues rom regional investment coner-
ences in the Middle East, Europe, and Asia.
CerticationandCerticateProgramsrevenueaccountsfor83percentof
total operating revenues, down slightly rom 85 percent last year primari-
ly as a result o the increased member dues rate and associated revenues.
Expenses
TheoveralldeclineinCerticationandCerticateProgramcostswas
due to the widespread adoption o electronic curriculum and the result-
ing decrease in physical distribution costs.
SubstantialtechnologyinvestmentsweremadetosupportMyCFA,
enhance member engagement, and improve the reliability, stability, and
scalability o the technology inrastructure.
Advocacyworkexpandedinaddressingissuesaffectingtheindustry,
and the Proessional Conduct Program increased expenses with higher
candidate and member volumes.
MarketingandGlobalCommunicationactivitiesexpandedrobustlyto
urther develop the CFA Institute brand and broaden recognition o the
CFA charter.
Thefocusonregionalserviceswasfurtherexpandedthroughincreased
capabilities and activities o the global oces.
Operating Revenues Excluding Investments
% Change
($ in millions) FY11 FY10 11 vs.10
Certication and
Certicate Programs* $ 180.1 $ 168.3 7%
Certication
Program Scholarships (3.6) (3.4) 6%
Member Dues 28.2 22.1 28%
Lielong Learning, Ed
Products, and Other 6.7 6.0 12%
Research Foundation 0.1 0.1 0%
Total $ 211.5 $ 193.1 10%
*Includes curriculum
Includes net assets released rom program restrictions
Fiscal Year 2011 Financial Highlights
Fully Allocated Operating Expenses by
Strategic Objective
% Change
($ in millions) FY11 FY10 11 vs.10
Certication and
Certicate Programs* $ 85.1 $ 87.7 -3%
Lielong Learning 17.0 16.5 3%
Technology 24.9 18.8 32%
Advocacy and
Proessional Conduct 14.6 11.7 25%
Global Capabilities and
Relationships 39.8 28.2 41%
Marketing, Society
Support, Career and
Other Services $ 29.5 $24.8 19%
Rounding Adj 0.1
Total Expenses $210.9 $187.8 12%
*Includes curriculum-related expenses
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Cash Flow
Most revenues are generated in the rst hal o the annual operating
cycle and in advance o the cash outlays needed to support these sales.
As a result, aggregate expenses can be managed throughout the year
to ensure adequate cash fow to support organizational objectives while
maintaining an appropriate nancial position or the organization.
Becauseofthelackofpositiveyieldsavailablearoundthescalyear-
end or Treasuries with maturities ewer than 90 days, $25.9 million
was invested in Treasuries with maturities greater than 90 days and
was thus classied with short-term investments rather than cash.
This accounts or the apparent decline in year-end cash above and
the increase in Other Current Assets below.
Cash Flow
% Change
($ in millions) FY11 FY10 11 vs. 10
Cash Infows rom Operations $ 236.2 $ 215.0 10%
Cash Outlays rom Operations 213.0 189.5 12%
Rounding Adj (0.1)
Net Cash rom Operations 23.1 25.5 -9%
Net Cash rom Investing Activities (45.2) (20.9) 116%
Net Increase in Cash (22.1) 4.6 N/A
Cash, Beginning o Year 35.7 31.1 15%
Cash, End o Year $ 13.6 $ 35.7 -62%
Financial Position
Currentassetsaremanagedtocoveroperationalneeds,whereas
investments provide protection against business disruptions and provide
a unding source or large new and long-term business initiatives.
DeferredrevenueincreasedbecauseofthestrengtheninginnewLevelI
CFA Program candidate registrations or the December 2011 exam.
In accordance with U.S. GAAP, revenue collected or an exam oered the
ollowing scal year is deerred to that year. CFA Institute also applies
U.S. SEC SAB 104 and recognizes the one-time CFA Program enrollment
ees over 3.5 years: the mean time spent in the program by those candi-
dates who pass the Level III exam.
Cash and Investment Detail
Contingencyreservesareinplacetoprovideforoperationalcontinuity
in the event o a considerable disruption to normal business activities.
This reserve category has a unding target o 65 percent o the upcom-
ing scal year operating budget. Consideration is given to the allocation
Financial Position
% Change
($ in millions) FY11 FY10 11 vs.10
Cash and
Cash Equivalents $ 13.6 $ 35.7 -62%
Other Current Assets 45.5 14.5 214%
Total Current Assets 59.1 50.2 18%
Investments 226.3 198.2 14%
Net Equipment and
Improvements 15.0 16.6 -10%
Other Assets 1.6 1.4 14%
Total Assets $ 302.0 $ 266.4 13%
Accounts Payable $ 29.2 $ 22.0 33%
Deerred Revenue 118.4 111.2 6%
Other Liabilities 2.1 1.4 50%
Total Liabilit ies 149.7 134.6 11%
Net Assets 152.3 131.8 16%
Total Liabilities and
Net Assets $ 302.0 $ 266.4 13%
Cash and Investment Portolio Balance
($ in millions at air market value) % Change
FY11 FY10 11 vs.10
Operating Fund and
Short-Term
Investments $ 39.5 $ 35.7 11%
Contingency Reserve 158.5 144.3 10%
Business Opportunity
Reserve 57.5 44.3 30%
Rounding Adj. (0.1)
CFA Institute Subtotal 255.5 224.2 14%
Research Foundation* 9.6 8.8 9%
11 September
Scholarship Fund* 0.8 0.9 -11%
Total Cash, Short,
and Long-Term
Investments $ 265.9 $ 233.9 14%
*Please see notes to audited fnancial statements
or additional inormation
Fiscal Year 2011 Financial Highlights
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o contingency reserve investments to maintain purchasing power and
provide sucient liquidity to meet potential obligations, even in times
o general economic distress. Contingency reserves are invested in a
diversied indexed mutual und portolio consisting o 30 percent global
equity and 70 percent xed income.
Businessopportunityreservesconstitutetheremainderofinvestments
and serve as a unding source or long-term initiatives and potential
member benets. The primary investment goals o these reserves are to
und CFA Institute initiatives as appropriate, maintain purchasing power,
and grow reserves through capital appreciation. Business opportunity
reserves are invested in a diversied indexed mutual und portolio
consisting o 80 percent global equity and 20 percent xed income.
ThereservesareinvestedincompliancewiththeCFAInstituteInvest-
ment Policy Statement, which was developed by the CFA Institute
Investment Committee according to principles taught in the CFA
Program curriculum. The Investment Policy Statement is approved
by the Executive Committee o the CFA Institute Board o Governors
and can be ound on the CFA Institute website (www.cainstitute.org).
Reservesareevaluatedthroughouttheyeartoensurethattheapproxi-
mate targets o 65 percent o scal year operating expenses and 25
percent o scal year operating expenses are maintained or the contin-
gency reserve and business opportunity reserve, respectively.
Operating Expense Ratios
The ollowing expense ratios give additional insight into the aggregate
level o strategic investments made in FY2011 relative to the growth o
candidates, members, and organizational sta. Note that these gures
include both CFA and CIPM candidates and members.
Investmentsinexpandedglobalexamdevelopmentandsecurity
initiatives were made to urther strengthen the CFA Program in FY2011.
Lifelonglearninginvestmentspermemberdeclinedslightlyasincreases
in content production were oset by increased membership and
savings generated through electronic content delivery.
Technologycostspermemberandcandidateincreased25percent
with released enhancements to the My CFA web portal and additional
inrastructure investments.
Advocacyandprofessionalconductcostpermemberandcandidate
increased with additional global advocacy activities and higher
investigative and resulting caseload volumes or the Proessional
Conduct Program.
Operating Expense Ratios
(Includes allocated support expenses) % Change
FY11 FY10 11 vs10
Certication Development
and Administration Cost
per Registration* $ 239 $ 222 8%
Net Lielong Learning
Cost per Member $ 95 $ 102 -7%
Technology Cost
per Member
and Candidate $ 84 $ 67 25%
Advocacy and Proessional
Conduct Cost per Member
and Candidate $ 49 $ 41 20%
Global Capabilities and
Relationships Cost
per Member
and Candidate $ 134 $ 100 34%
Marketing and Stakeholder
Services Cost
per Member
and Candidate $ 99 $ 88 13%
CFA Registrations and
Members per
Sta Full-Time
Equivalent (FTE) 714 727 -2%
*Excluding curriculum cost o sales
Expenses partially oset by event and
publication revenues
Fiscal Year 2011 Financial Highlights
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Investmentinglobalcapabilitiesandrelationshipspermemberand
candidate increased 34 percent as new brand development campaigns
were launched and additional sta and resources were dedicated to
regional oces and initiatives.
CFAregistrationsandmembersperFTE(equivalentfull-timestaff
member) declined slightly as the organization realized ull-year stang
or positions lled in FY2010 and hired a number o new positions
in FY2011 while experiencing moderate member and candidate growth.
CFA Institute Strategic Investments
The nancial inormation that ollows provides additional insight into
mission investments made this year. This inormation and analysis are
provided to help CFA Institute stakeholders gain greater insight into
CFA Institute strategic priorities and operations.
As a mission-driven organization, our strategic success depends on
a strong platorm o enabling capabilities: nancial strength, great
people, operational excellence, and eective societies. Developing these
capabilities is an important component o our long-term strategic plan.
For this reason, additional inormation is provided in this section about
the investments made in these enabling capabilities.
Note that portions o these expenses could easily be allocated to
more than one category, but here they have been assigned to the most
readily attributable strategic objective. For example, the Certication
and Certicate Programs category includes global initiatives, and the
Technology and Global Capabilities and Relationships categories include
eorts dedicated to society support, advocacy, and other services.
Certication and Certicate Programs
Curriculumcostofsalesexpensedecreased19percentasasign-
icant portion o candidates adopted the electronic (eBook)
version o the curriculum, thereby decreasing distribution expenses.
Additional negotiated fexibility with the publisher and improved
inventory practices also reduced the obsolete inventory write-down.
ExamDevelopmentexpandeditsglobal(non-U.S.)activities,
including exam writer and reviewer meetings and a standard-setting
workshop. The team also added writers and sta to increase capacity
and production.
ExamAdministrationexpensesincreasedrelativetoFY2010asthe
larger candidate population drove additional test administration and
Level III exam-grading expenditures.
Operating Expenses by Strategic Area
% Change
($ in Millions) FY11 FY10 11 vs.10
Certication and
Certicate Programs* $ 80.2 $ 81.5 -2%
Lielong Learning 12.6 12.9 -2%
Technology 21.6 15.2 42%
Advocacy and Proessional
Conduct 11.1 9.2 21%
Global Capabilities
and Relationships 32.7 24.0 36%
Marketing, Society
Support, Career, and
Other Services 23.3 19.4 20%
Support Services $ 29.4 $ 25.5 15%
Rounding Adj 0.1
Total Expenses $ 210.9 $ 187.8 12%
*Includes curriculum
Fiscal Year 2011 Financial Highlights
Certication and Certicate Programs
% Change
($ in Millions) FY11 FY10 11 vs.10
Curriculum Development $ 2.4 $ 2.4 0%
CFA Curriculum Production
and Distribution 29.8 36.6 -19%
Exam Development 7.5 7.0 7%
Exam Admin,
Grading and Other 40.7 35.5 15%
Rounding Adj (0.2)
Total Certication and
Certicate Programs $ 80.2 $ 81.5 -2%
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Lielong Learning
ContinuedemphasiswithinProductStrategytodevelopnewmember
products and provide relevant content or the My CFA member web
portal resulted in higher expenses in FY2011.
Expensesforeducationaleventsmanagedoutsidetheglobalofces
(shown above) decreased as responsibility or regional events was
transerred to the respective global oces. Worldwide, educational
events expenses increased 24 percent and were partially oset by a
13 percent increase in revenues.
Publicationsexpensesdecreasedasthecontinuedshifttoelectronic
publications reduced printing and postage expenditures.
Additionalinternalresourcesprovidedtosupportandoverseethe
Research Foundation resulted in a $0.2 million increase over last year.
Technology
GeneralInformationTechnologycostsgrewsubstantiallythisyearas
depreciation expenses related to the My CFA web portal were realized.
Higheroverallconsultingandstaffcostsassociatedwiththefurther
development o IT business unctionality and inrastructure also contrib-
uted to the increased IT costs.
ExpensesforWebStrategyandServicesincreasedinFY2011because
o increased activity levels in support o the My CFA web portal and to
implement other website enhancements.
Advocacy and Proessional Conduct
TheStandardsandFinancialMarketIntegrity(SFMI)divisioncontinued
the work o setting and advocating the adoption o the Code o
Ethics and Standards o Proessional Conduct, the Global Investment
Perormance Standards (GIPS), and numerous positions related to
capital market and nancial reporting policy. Increased expenses include
additional sta to support expanding global activities and costs o op-
erations in New York.
TheProfessionalConductProgram(PCP)andtheDisciplinaryReview
Committee (DRC) processed higher case volume and expanded sta in
response to global growth in both CFA Institute membership and the
CFA Program.
Lielong Learning
% Change
($ in Millions) FY11 FY10 11 vs.10
Product Strategy,
Development,
and Other $ 6.0 $ 5.7 5%
Educational Events 4.8 5.1 -6%
Publications 1.2 1.7 -29%
Research Foundation $ 0.6 $ 0.4 50%
Total Lielong Learning $ 12.6 $ 12.9 -2%
Technology
% Change
($ in Millions) FY11 FY10 11 vs.10
Inormation
Technology $ 18.6 $ 14.3 30%
Web Strategy
and Services $ 3.0 $ 0.9 233%
Total Technology $ 21.6 $ 15.2 42%
Fiscal Year 2011 Financial Highlights
Advocacy and Proessional Conduct
% Change
($ in Millions) FY11 FY10 11 vs.10
Standards and Financial
Market Integrity $ 7.9 $ 7.0 13%
Proessional Conduct
Program and DRC* $ 3.2 $ 2.2 45%
Total Advocacy and
Proessional Conduct $ 11.1 $ 9.2 21%
*Disciplinary Review Committee
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Global Capabilities and Relationships
Thelong-termstrategicplanfortheAsia-Pacicregionresultedin
increases in stang and capabilities to source and deliver timely and
locally relevant lielong learning content or members, among other
initiatives. Expenditures increased or regional education events as well
asfortheestablishmentofaHongKongcallcenterforcandidateand
member support.
TheEMEAregionalofcecontinuedtoexpanditscapacityandcap-
abilities or delivering greater local value or members. The expanded
team moved into new, larger oces in London and Brussels in order
to support uture growth.
LatinAmericaactivitiesandgrowthremainapriorityfortheorgan-
ization, and additional expenditures supported a Latin America
traveling conerence and additional outreach to regulators and societies
in the region.
GlobalCommunicationsexpandedbranddevelopmentactivitiesin
key markets and supported numerous awareness campaigns, including
private wealth and global employer awareness.
Marketing, Society Support, Career, and Other Services
Marketingactivitiesandsupportincreasedasglobalactivities
increased, including activities within market research, corporate sales,
and the development o global marketing products and collateral.
OverallSocietySupportincreased11percentrelativetoFY2010.
Additional support services provided to societies not captured in the
above gures include dues and event revenue transaction support, tech-
nology resources and support, and insurance services, among others.
These subsidies are designed to support the local delivery o education,
career development, and networking services to individual members.
ClientServicesincreasesincludedbankfeesformemberduesaswell
as additional membership retention activities.
Additionalresourcesweredevotedtostrengtheningsupportof
members seeking new career opportunities in a challenging global
economic environment.
Global Capabilities and Relationships
% Change
($ in Millions) FY11 FY10 11 vs.10
Asia Pacic
Regional Oce $ 8.1 $ 6.6 23%
EMEA Regional Oce 7.0 5.0 40%
Latin America Initiative 0.7 0.5 40%
Global Communications 13.9 9.0 54%
Industry and University
Relations $ 2.9 $ 2.8 4%
Rounding Adj 0.1 0.1
Total Global Capabilities
and Relationships $ 32.7 $ 24.0 36%
Fiscal Year 2011 Financial Highlights
Marketing, Society Support, Career, and
Other Services
% Change
($ in Millions) FY11 FY10 11 vs.10
Marketing $ 8.3 $ 6.3 32%
Society Support 9.4 8.5 11%
Client Services 5.1 4.3 19%
Career Services
and Other $ 0.5 $ 0.3 67%
Total Marketing, Society
Support, Career and
Other Services $ 23.3 $ 19.4 20%
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Support Services
% Change
($ in Millions) FY11 FY10 11 vs. 10
Board o Governors, Strategy,
and Executive $ 7.1 $ 6.9 3%
HumanResources 4.7 3.5 34%
Financial Operations 6.8 5.0 36%
Oce o General Counsel 3.3 3.7 -11%
Facility Rent, Planning and Operations 5.8 4.9 18%
Travel Support and Event Management $ 1.7 $ 1.4 21%
Rounding Adj 0.1
Total Support Services $ 29.4 $ 25.5 15%
Support Services
ExpensesfromtheHumanResourcesfunctionincreased34percent
in FY2011 because the organization executed a comprehensive global
HRstrategy,whichincludedhigherrecruitingcosts,increasedcorp-
orate training activities, and additional consulting costs. The higher
recruiting costs supported the signicant increase in hiring activity or
new positions.
OfceofGeneralCounsellitigationexpensesdecreasedrelative
to FY2010.
FinancialOperationsexpensesincreasedprimarilybecauseofadd-
itional insurance coverage acquired during the scal year. Other cost
increases were made to maintain and develop nance capabilities,
such as risk management, procurement, and payroll, among others.
Fiscal Year 2011 Financial Highlights
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Risks
As a service organization, the dedication and expertise o
CFA Institute sta and volunteers embody the organizations
most valuable asset and remain an essential ingredient or
long-term success. As a result, CFA Institute has an exposure
to the risks associated with dependence on these individuals.
With the goal o maximizing return on mission and value or
its global membership, CFA Institute makes extensive invest-
ments in volunteer engagement and sta training, retention,
and succession planning.
CFA Institute continues to make investments in technology
and processes to connect with members and provide them
with lielong learning tools and content. This increasing
dependence on inormation technology to achieve strategic
objectives makes this area a critical risk actor or the organi-
zation as well.
Underlying the risk management process, CFA Institute
nancial reserves are structured to provide protection rom
possible disruptions that may aect candidate registrations.
To determine an appropriate reserve level, various scenarios
are considered, rom those o localized exam disruptions
(such as one caused by a communicable disease outbreak or
natural disaster) to the cancellation o an entire June exam.
Contingency reserve levels are estimated to provide or a
multiple-year operating buer during which time member
and other services are maintained while the organization re-
covers rom the disruption. Reserves are susceptible to market
fuctuations, and the potential impact o market volatility in
conjunction with large-scale business disruptions is consid-
ered in the ormulation o reserve investment policy. At the
time this report was published, the air value o reserve invest-
ments satises the targeted level or the contingency reserve.
CFA Institute supports a culture o inormed risk aware-
ness in pursuit o mission achievement. The organization
employs a ormalized enterprise risk management (ERM)
process across the organization that is designed to identiy
and understand potential risk scenarios that may prevent
or constrain the achievement o the organizations strategic
objectives. CFA Institute manages these risks using a return
on mission approach to provide reasonable assurance that
its objectives will be met within the limits o its risk tolerance.
A key component o that risk tolerance evaluation is main-
taining the appropriate level o comprehensive insurance
coverage. Formal risk management reports are generated
and periodically reviewed by senior management and the
Audit and Risk Committee o the Board o Governors.
The assessment o risks by country is a prominent component
o CFA Institute ERM activities. These eorts are designed to
better understand global operating environments and ocus
on regulatory, legal, and tax issues. Ultimately, the organiza-
tion recognizes it would be impossible to provide complete
assurance against all such potential risks, but the country risk
management process is intended to provide a reasonable
person approach to identiying and addressing risks in the
various countries where CFA Institute operates.
The CFA Institute business model continues to be primarily
dependent on CFA Program exam ees and related revenue,
which constitute approximately 83 percent o total operating
revenue (excluding investment income). This revenue is ully
susceptible to fuctuations in the number o CFA Program
candidates and, thereore, represents a sizeable risk to the
organization. New Level I candidate demand tends to be
the most elastic in response to industry conditions, whereas
candidates who have passed the Level I exam, and thus have
more eort and resources invested in the program, tend
to exhibit less demand elasticity as they move through the
remainder o the program.
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Conclusion
Initial expectations or FY2011 were or a signicant
strengthening o CFA Program registration volume because
o stabilization in the nancial markets and renewed
demand or educational oerings. Demand did increase,
and supported by strong growth in developing markets, the
organization realized 209,500 CFA Program registrations.
New Level I registrations increased 9 percent, with 82,300
new candidates, up rom 75,400 in FY2010. The organization
successully advanced the portolio o strategic initiatives
or the year and achieved both a positive operating margin
and cash fow rom operations.
Projecting the trends observed in FY2011 orward into
FY2012 resulted in a total orecast o 222,300 CFA Program
registrations, a 6 percent increase rom the prior year. Early
registrations or FY2012 currently trend to year-over-year
growth o approximately 5 percent.
CFA Institute remains well positioned, both nancially and
within the industry, to make the investments necessary to
achieve its Vision 2012 strategic objectives o delivering value
to its members, the investment proession, and broader soci-
ety through the combination o educated, ethical investment
proessionals and nancial markets that refect CFA Institute
belies. Although a continuation o recent volatility in global
nancial markets was experienced during FY2011, industry
practitioners the world over remained steadast in their com-
mitment to the CFA Program and the CFA Institute mission to
lead the investment proession globally by setting the highest
standards o ethics, education, and proessional excellence.
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Consolidated Financial Statements
Consolidated Statements o Financial Position
As o 31 August 2011 and 2010
(in thousands) 2011 2010
Assets
Current assets
Cash and cash equivalents $ 13,630 $ 35,698
Investments, current at air value 25,895
Accounts receivable, net 1,021 583
Prepaid expenses 7,196 6,631
Publication inventory 10,517 6,215
Other current assets 812 1,044
Total current assets 59,071 50,171Non-current assets
Investments, non-current at air value 226,298 198,238
Restricted cash 743 494
Property and equipment, net 8,231 6,800
Intangibles, net 6,720 9,942
Other non-current assets 941 717
Total non-current assets 242,933 216,191
Total assets $ 302,004 $266,362
Liabilities and net assets
Liabilities
Current liabilities
Accounts payable $ 29,152 $ 21,951
Current deerred revenue
Member dues 19,825 17,606
Subscriptions 195 194
Candidate ees 66,168 63,266
Program income and other 1,131 1,101
Total current deerred revenue 87,319 82,167
Total current liabilities 116,471 104,118
Non-current liabilities
Deerred revenue candidate ees 31,115 28,990
Deerred revenueother 9 14
Other non-current liabilities 2,063 1,482
Total non-current liabilities 33,187 30,486Total liabilities 149,658 134,604
Net assets
Unrestricted
Undesignated 150,621 129,945
Designated11 September Memorial
Scholarship Fund 775 863
Designatedother 950 950
Total net assets 152,346 131,758
Total liabilities and net assets $ 302,004 $266,362
The accompanying notes are an integral part o these consolidated fnancial statements
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Consolidated Financial Statements
Consolidated Statements o Activities
For the years ended 31 August 2011 and 2010
(in thousands) 2011 2010
Changes in net assets
Operating revenues
Candidate ees $ 130,000 $ 122,861
Educational products 52,137 47,199
Member dues and other 29,295 23,008
Contributions 23 33
Total operating revenues 211,455 193,101
Operating expenses
Program services
Certication and certicate programs 47,169 41,488
Educational content and products 49,485 55,520
Member and society services 19,670 16,188
Standards and Financial Market Integrity 8,025 7,007
International operations 12,659 11,199
Marketing and communications 23,923 14,793
Scholarships11 September Memorial Fund 123 149
Support services
Management and general 49,857 41,407
Total operating expenses 210,911 187,751
Income rom operations 544 5,350
Realized gains, interest and dividends 9,195 7,666Change in net assets rom operations 9,739 13,016
Other changes
Unrealized gains on investments 10,849 5,255
Change in net assets 20,588 18,271
Net assets, beginning o year 131,758 113,487
Net assets, end o year $ 152,346 $ 131,758
The accompanying notes are an integral part o these consolidated fnancial statements
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Consolidated Financial Statements
Consolidated Statements o Cash Flow, Direct Method
For the years ended 31 August 2011 and 2010
(in thousands) 2011 2010
Cash fows rom operating activities
Cash infows:
Candidate ees $ 135,045 $ 126,500
Educational products 51,567 47,060
Member dues, and society dues, and other 43,085 36,057
Contributions 35 33
Interest and dividends 6,460 5,348
Total cash infows 236,192 214,998
Cash outlays:
Program services
Certication and certicate programs 45,358 42,586
Educational content and products 52,173 53,288
Member dues, and society dues, and other 29,601 23,948
Standards and nancial market integrity 7,781 6,788
International operations 11,999 11,031
Marketing and communications 21,473 14,101
Scholarships11 September Memorial Fund 126 149
Support Services
Inormation technology 12,409 10,658
Financial operations and executive 15,325 11,439Facility, rent, planning and operations 5,047 4,201
Oce o general counsel 3,210 3,755
Humanresources 4,310 3,607
Travel support and event management 1,698 1,449
Publishing and content services 1,549 1,380
Fundraising 12 20
Other support services 975 1,086
Total cash outlays 213,046 189,486
Net cash provided by operating activities 23,146 25,512
Cash fows (used in) provided by inve