IMPACTDeveloping World MarketsS O C I A L M E A S U R E M E N T A N D P E R F O R M A N C E S T R A T E G Y

750 Washington Blvd., 5th FloorStamford, Connecticut 06901, USA T: +1 203.655.5453F: +1 203.656.9528E: InvestorRelations@dwmarkets.com

www.dwmarkets.com

Investing for Impact

Contents

3 Letter from the Managing Partner

5 DWM: A Different Kind of Investment Firm

6 A Decade of Catalyzing Impact

9 Industry Collaboration & Initiatives

11 DWM’s Impact Committee

12 Social Impact Measurement & Analysis: Social IQSPre-Investment ProcessPost-Investment Process

16 Impact Performance: 2012 and Beyond

Developing World Markets: Investing for ImpactWith 2.7 billion people worldwide lackingaccess to formal financial services, the needseems insurmountable. However, DevelopingWorld Markets (DWM) is investing in asolution. We’re a different kind of investmentfirm. We’re serious about investing. We’reserious about impact.

For the past 10 years, DWM has been a leaderin investing private capital in microfinance andthe larger inclusive finance industry. We havefinanced over 140 financial institutions in morethan 40 developing countries, structuring andadvising on over $1 billion in microfinance andinclusive finance transactions. Our drivingpurpose as a firm is to provide market-levelfinancial returns to our investors and socialimpact through the investments we make. Weare striving to create measurable andsustainable impact at a global scale. And, webelieve that international capital marketsprovide the best solution to accomplish thisgoal.

Social impact has been at the core of ouractivities for the past decade, and we aredeveloping a more concerted effort to measureand demonstrate that impact. While financialreturns are relatively straightforward toquantify and report, social performance—theimpact of our investments on the livelihoodsand well-being of end-borrowers and theircommunities—can be more challenging. We

have made major strides over the past year inthis effort, including the creation of the firm'sImpact Committee and a more robust set ofmetrics to measure and analyze the impact ofour portfolio institutions.

We are dedicated to creating needed access tofinancial services for the base of the economicpyramid by linking microfinance and otherinclusive finance institutions to internationalcapital markets. In 2012 and beyond, we aim toinnovate the ways in which we pursue thismission. We plan to expand our impact bydeveloping new investment products to serve awider range of inclusive finance institutions,continually improving our social impactassessment and reporting processes, andcontributing to the development of a moreresponsible impact investing industry.

DWM has committed itself to a goal ofimproving the lives of 10 million families at thebase of the economic pyramid in developingcountries by 2020. It may be ambitious, but wehave a dedicated team of over 40 professionalsthat work every day to make this goal a reality.We’re serious about investing. We’re seriousabout impact.

Judy Kirst-KolkmanManaging Partner

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Jud Kirst Kolkman

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A Different Kind of

InvestmentFirm

Developing World Markets

� 15+ years of experience as emerging markets fund manager, including experience throughDeveloping World Markets, Inc.

� Structured and advised on $1 billion inmicrofinance and other inclusive financetransactions in the past 10 years

� Financed more than 140 inclusive financeinstitutions in over 40 emerging market countries

� Team of 40+ professionals with strong socialmission, speaking over 20 languages

� Focus on managing investments for institutionalinvestors globally

DWM is a global leader in inclusive finance investing. We structure and manage investment vehicles

that aim to produce market-level returns for investors and expand access to financial products and

services in the developing world.

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Core PurposeTo improve lives at the base of the world’seconomic pyramid by harnessing the powerof capital markets

GoalTo improve the lives of 10 million families at the base of the economic pyramid indeveloping countries by 2020

Firm Values� Social Change. We work to create equalityof opportunity, to alleviate poverty and toimprove the quality of life for those at thebase of the economic pyramid.

� Responsibility. We treat clients andstakeholders alike with fairness, respectand transparency.

� Innovation. We bring value to investorsand clients through constant innovationand creativity. Through our investments,we aim to create financial returns as wellas social impact.

� Disciplined Approach. We believe inapplying the highest professionalstandards to everything we do.

� Collaboration. We work together,enabling our team and our company tobetter achieve our core purpose.

A Decade of CatalyzingImpact For more than a decade, DWM has

been an innovative and responsible

participant in the impact investing

industry. Since structuring the first

international capital markets

transaction in microfinance in 2004,

we have been a leader in creating

investible solutions to meet the social

and economic needs of the

developing world.

1999DWM’s foundingpartners structurethe firm’s firstmicrofinance loanfund for Pro MujerNetwork throughDWM Inc.

2004Structures firstmicrofinancecollateralized loanobligation (CLO) inpartnership withBlueOrchard, whichchannels $87 millioninto microfinanceinstitutions andserves as a catalystfor other privatecapital flows into theindustry

Begins providingannual socialperformance data forinvestors

2006Structures secondmicrofinance CLOtotaling $60 million,becoming the firstmicrofinance CLO toreceive a rating by athird party riskassessment firm

Arranges the firstmajor direct equityinvestment in amicrofinanceinstitution by amainstream assetmanager, a $43million investmentby TIAA-CREF, aleading U.S. providerof retirement savingsproducts andservices, inProCredit Holdings

Improvesmethodology forannual collection ofportfolio companyand end-borrowerdata used to monitorthe socialperformance ofportfolio institutions

2011Signs UN Principlesfor Investors inInclusive Finance (UN PIIF)

ImpactAssets namesDWM in Global Top50 impact investmentmanagers

Launches The DWMMicrofinance Fund-J,the first mutual fundfocused on impactinvestments designedfor the Japanese retailmarket, raising $236million

Enhances socialquestionnaire,expanding set ofindicators andmapping with theGlobal ImpactInvesting Network’s(GIIN) ImpactReporting andInvestment Standards(IRIS) to better alignwith impact investingindustry standards

Designates an ImpactAnalyst and forms the firm's ImpactCommittee

Commits as a pioneerfund to the GlobalImpact InvestmentRating System(GIIRS), a third partyassessment of thesocial andenvironmental impactof a fund’s investments

2010Develops socialscorecard incollaboration withSNS AssetManagement andOikocredit to collectand analyze socialperformance data ofportfolio institutions

Incorporatesborrowerendorsement of theSmart Campaign’sClient ProtectionPrinciples into loanagreement

Begins encouragingmicrofinanceinstitutions toannually submit theSocial PerformanceStandards Report toMIX Market andacquire social ratings

2009Signs UN Principlesfor ResponsibleInvestment (UNPRI)

Launchesmicrofinance private equity fund,raising $82 millionand taking activeownership inmicrofinanceinstitutions

2008Endorses SmartCampaign’s ClientProtection Principlesand MFTransparency

Partners with SNSAsset Managementto launch SNSInstitutionalMicrofinance FundII, raisingapproximately $230million

2007Structures the firstinternational bondissuance for a singlemicrofinanceinstitution, raising$25 million forAccessBank inAzerbaijan

Partners with SNSAsset Managementto launch SNSInstitutionalMicrofinance Fund,raisingapproximately $215million6

The United Nations Principles for Responsible Investment (PRI), created in2005, provides a network of international investors with a framework of sixprinciples for incorporating environmental, social and governance issues intotheir decision-making and ownership practices. In 2011, the Principles forInvestors in Inclusive Finance (PIIF) were created as a distinct subset withinthe PRI Initiative, providing investors with a framework for responsibleinvestment focused on access to finance for poor and vulnerable populations.

DWM is a signatory to the PRI and an original endorser of the PIIF and submitsannual progress reports to each initiative for publication.

The Smart Campaign advocates a common code of conduct in themicrofinance industry, governing and establishing client protection safeguards.The Client Protection Principles (CPP) are the Campaign’s outlined minimumstandards that clients should expect to receive when doing business with amicrofinance institution.

DWM is an endorser of the Smart Campaign and our loan agreements requirethat portfolio companies be signatories of the CPP or take measures to do sowithin a reasonable time period.

Microfinance Information Exchange (MIX) provides objective, qualified andrelevant financial and social performance information and publications onmicrofinance institutions, covering approximately 2,000 institutions globally.

DWM encourages microfinance clients to annually submit the SocialPerformance Standards Report to MIX Market and acquire social ratings.

Supporting Industry Collaboration and Initiatives DWM has been and continues to be an early supporter of key industry initiatives. We collaborate with partnersto contribute to the development and standardization of a more transparent impact investing industry.

MFTransparency was established to serve as a platform for themicrofinance industry to publicly demonstrate its commitment topricing transparency, integrity and poverty alleviation. Endorsers ofMFTransparency publicly support the microfinance industry’s effort topresent information on credit products and pricing in a clear andconsistent fashion. MFTransparency has evaluated approximately 400institutions in 17 countries.

DWM is an endorser of MFTransparency.

The Global Impact Investing Network (GIIN) is a nonprofit organizationdedicated to increasing the effectiveness of impact investing throughcollaboration, research and advocacy.

GIIN has developed the Impact Reporting & Investment Standards(IRIS), an independent set of common metrics for impact reporting.

DWM contributes to GIIN publications and uses IRIS metrics in its socialperformance assessments of microfinance clients, contributing to astandardization of impact measurement in the industry.

Global Impact Investing Ratings System (GIIRS), a project of theindependent nonprofit B Lab, is a comprehensive and transparentsystem for analyzing and rating the social and environmental impact ofcompanies and funds. Ratings are subject to the GIIRS verificationprocess, which utilizes third party documentation review.

DWM has been named a pioneer fund by GIIRS and will be one of thefirst funds to receive a GIIRS Impact Rating.8

DWM’s Impact CommitteeIn 2011, DWM designated an Impact Analyst to lead the firm’s Impact Committee, which was formed tocoordinate strategic efforts to promote and integrate social, governance and other impact considerationsacross DWM’s core business functions. Initiatives include: developing enhanced metrics for socialperformance analysis, monitoring data collection, and tracking and reporting social impact performance.The Committee is comprised of representatives across firm departments and is structured as follows:

Judy Kirst-KolkmanManaging Partner

Alexandra PopeImpact Analyst

Simone BalchDirector, Investor Development

Kathryn BarriosChief Credit Officer

Credit & RiskManagement

Debt OriginationFund

ManagementInvestor

DevelopmentLegal Private Equity

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Client Benefit and Welfare � Policies for the prevention of client over-indebtedness

� Code of conduct and client grievanceprocedures

� Transparency of costs to clients

� Non-financial products and services

� Women’s empowerment

Outreach and Targeting� Poverty levels of client base

� Client base in rural vs. urban areas

� Average initial loan size

Governance � Mission and vision

� Strategic plan and focus on social issues

� Orientation and experience ofboard and management team

� Salaries, remuneration and incentives

� Broad ownership base

Responsibility to Community

and Staff � Staff feedback and grievance procedures

� Staff appraisal and incentives

� Contribution to community projects

Environment � Internal environmental policies and conduct

� Environmental education and promotion

The scorecard generates an overall socialperformance score based on the followingweightings of key performance areas:

DWM’s Social IQS is a data-driven tool that uses approximately 50 indicators to evaluate a financialinstitution’s impact across the following five dimensions:

ENVIRONMENT

GOVERNANCE

OUTREACH& TARGETING

RESPONSIBILITY TO COMMUNITY & STAFF

CLIENT BENEFIT& WELFARE

25%

10%

5%

40%

20%

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Measurement & Analysis:DWM’s Social IQS DWM evaluates and monitors the socialperformance of our portfolio institutions usingDWM’s Social Impact Questionnaire andScorecard (Social IQS). Social IQS is used toanalyze institutions during the pre-investmentdue diligence process as well as on an annualbasis post-investment. Social IQS is comprised oftwo components—a questionnaire and ascorecard—which quantitatively and qualitativelymeasure an institution’s social performance andimpact.

DWM developed the questionnaire, mappingindicators to the Impact Reporting and

Investment Standards (IRIS), a framework oftransparent, credible and consistent social impactindicators. IRIS is an initiative of the GlobalImpact Investing Network (GIIN), which workstoward standardization of social reporting acrossthe industry.

The questionnaire feeds social performance datainto a scorecard. Developed in collaborationwith SNS Asset Management and Oikocredit, thescorecard is a quantitative impact measurementtool that produces a score on a scale of 0% to100%. The score is used as an overall indicator of the institution’s social impact.

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Pre-Investment ProcessDWM’s investment team evaluates the social impact of a potential investment during the pre-investmentdue diligence process. In addition to meeting DWM’s financial criteria, the financial institutions underconsideration must demonstrate high social values as well as a dedication to improving their social impactperformance. This analysis is done through both on-site and desktop due diligence.

Post-Investment ProcessOn an annual basis, DWM uses the Social IQS to collect social impact data from portfolio companies. Theresults are used to track trends among portfolio companies, identify strengths and weaknesses and reportback to investors.

Overall initial social

performance review

is conducted.

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Interviews are conducted

with senior and branch-

level management, loan &

recovery staff.

Random sampling of loan

portfolio and unannounced

borrower visits are made to

cross-reference employee

interviews.23

Investment Committee

reviews memo and makes

final investment decision

based on both social and

financial performance.

1 Institutions complete social

impact questionnaire.

Relationship managers review

and incorporate Social IQS

evaluation into investment

memo.The MIS aggregates all portfolio institutions’

information and is able to segment the data

based on various search criteria, such as

country, region, legal status and asset size.

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Relationship managers work with their

portfolio institutions to complete the

Social IQS within 120 days of December

31 each year.

Social performance data is entered into a unique man-

agement information system (MIS), designed by DWM

to manage and track social impact performance.

DWM uses the aggregate data

to benchmark and identify the

strengths and weaknesses of an

institution’s social performance.4DWM reports on the social

performance of its portfolio

institutions. Beginning in

2012, DWM will create

and distribute an annual

firm-wide social

performance report.

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On-Site Due Diligence Desktop Due Diligence

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Impact Performance:2012 and Beyond

� Expanding outreach and support to a wider rangeof inclusive finance clients to achieve their socialimpact goals through innovative funding products

� Enhancing and continually improving our socialperformance assessments and reporting

� Designing a specialized database to track andanalyze social performance data

� Developing and distributing annual socialperformance reports

� Contributing to a more responsible impactinvesting industry through participation incollaborative industry initiatives

In 2012 and the coming years, DWM aims to deepen and expand our impact by:

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