Publicly available General Introduction to Deutsche Bank Quality of Life Markets 2007

11/14/2007

A General Introduction

Deutsche Bank’s Quality of Life MarketsTM

Quality of Life Indices® and index-linked securities

Keith Cunningham

(212) 250 8866

Guillermo MacLean

(212) 250 8866

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Disclaimer

This information is provided to you by Deutsche Bank and is not intended for trading purposes. This has

been prepared solely for informational purposes. It is not an offer, recommendation or solicitation to buy

or sell, participate in any trading strategy, nor is it an official confirmation of terms. It is based on

information generally available to the public from sources believed to be reliable. No representation is

made that it is accurate or complete or that any returns indicated will be achieved. Additional information

is available upon request.

Deutsche Bank transacts business with counterparties on an arm’s length basis and on the assumption

that each counterparty is sophisticated and capable of independently evaluating the merits and risks of

each transaction and that the counterparty is making an independent decision regarding any transaction.

There is no guarantee that a similar structure would have been available at any point in the past and that

such results could have been achieved.

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Why am I here?

Share Vision + What we are doing

My Vision about: Create a Better World

Create a marketplace for what a Better World means. A market for “Vision”

Create a marketplace for those who care about something (a “Vision”) to do more about it

(i.e. put money/actions where your mouth is)

Create a marketplace for those who believe they have a particular skill that can add significant

value to achieving a “Vision” to receive the resources for them to scale and achieve

Create a marketplace for people who see solutions where others see unsolvable problems

Create a marketplace where “a non-political/non-controversial Social result” can be a

profitable/economically viable pursuit (versus a martyrdom)

Create a marketplace where labels don’t matter as much as specific measurable results do

Create a marketplace where such people and organizations are seen as the most admired and

effective leaders/professionals

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Executive summary: A Market for Breakthroughs

A Deutsche Bank Quality of Life Index measures the progress (“Current State [C]”) between any Defined

“Starting State [A]” and another “Desired State [B]” of issues that affect the quality of life of our clients

Deutsche Bank’s GME – Structuring group then issues index-linked securities (and makes markets for

them) with one or more of many possible payout structures, bringing together (and meeting the different

needs of) multiple groups of people that have at least one thing in common: The achievement of a highly

ambitious/unprecedented Desired State [B]

The ultimate objective is to create a new market dynamic that will, directly or indirectly, significantly

increase the odds of achieving Desired State [B]. This new dynamic should allow an increase in focus,

financial resources, and non-financial/creative resources destined towards the ambitious objective [B].

Therefore, this new market should present a compelling value proposition to individuals, corporations,

endowments & foundations, development organizations, governments, non-profit non-governmental

organizations, social entrepreneurs. In general, for anyone who has a strong desire for an ambitious

“Desired State [B]” which can be described as “for the common good of any given community”

It is important to note that this new for-profit market is highly complimentary and supportive of any parties

currently involved in the pursuit of social causes. Revenues generated by Deutsche Bank will be highly

efficient and value enhancing for these parties, as compared to their current situation

Our clients can invest in an existing Quality of Life Market (off-the-shelve Desired State [B]), or can work

with us to sponsor and/or seed a new Market. Each new Quality of Life Index is co-sponsored with an

independent interested partner, and it is governed by an independent Quality Control Board, an

Ombudsperson, and an Arbitration Panel

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Deutsche Bank’s Quality of Life Indices (DBQoLs)

DB Quality of Life Index-linked Securities & Markets

Implementation Strategies and Value Propositions

Timeline of creating a Quality of Life Market

Sample of DB Quality of Life Markets under development

Deutsche Bank’s added value and revenue sources

Contact information

Contents

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Contact information

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Generic structure of a DB Quality of Life Index

A

B A Deutsche Bank Quality of Life Index measures the

progress (or “Current State [C]”) between any given

Defined “Starting State [A]” and another Defined

“Desired State [B]” of issues that affect the quality of

life of our clients

C

“Desired State [B]” should be:

(i) Highly ambitious or unprecedented

(ii) Measurable, and

(iii) The least controversial

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Possibilities of DB Quality of Life Indices®

are endless

Topics Sub-topics Geography/Segment

Health/Safety

Education

Economic/Wealth

Environment

Justice/Freedom

Cultural/Art

Increase in safety standards

Disease eradication

Increase in education levels

Art/cultural dissemination

Scientific development

Poverty reduction

Employment growth

Crime reduction

Culture preservation

Environmental planning/targets

Access to Justice

Peace

Municipal

State/National

Regional

Global

By any other segmentation

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Index design and governance

Deutsche Bank works with Founding Client/Partner/Contributor to design an index that is creative,

measurable, simple, transparent and effective for the objective

Once launched, each index should be calculated with little-to-none controversy throughout its life

In this sense, the index governance structure is meant only to become active in three cases

- It is no longer practical or economical to use original data sources,

- Any Index Stakeholder becomes concerned that the existing data sources have become

corrupted in such a way that violates the original intent of the index, or

- To make decisions in unforeseen circumstances,

In order to retain the original Spirit of the Index. The index governance structure includes

- A Measurement Quality Control Board,

- An Ombudsperson, and

- An Arbitration Panel

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Contact information

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Creating a market-dynamic

that works for the desired result

Deutsche Bank’s GME – Structuring group can issue a wide variety of DBQOL index-linked securities

with one or more of many possible payout structures

The idea behind the set of structures is to bring together (and meet the different needs of) multiple

groups of people that have at least one thing in common: The achievement of a highly

ambitious/unprecedented Desired State [B]

In order to start understanding the market dynamics that these securities could inject and immense

possibilities that they present, it is important to understand two extremes of the universe of potential

index-linked payout structures: Security #1 and #2

Security # Principal Is Desired State [B] met at Maturity? Payout at Maturity

1 $100 Yes 0

No ($100+$x)*(1+R)n

2 $x

f(Security 1’s

Principal)

Yes ($100+$x)*(1+R)n

No 0

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Two extremes of the universe of potential

index-linked payout structures

Deutsche Bank or

Alternative “Issuer” or “Vehicle” Security 1

Security 2

If Desired State [B]

is met then 5,

else 6

$100

$x

Y= ($100+$x)*(1+R)n

1

2

4

6

5

Investor 1

Investor 2

3

1. Investor 1 buys Security 1 at $100 with Maturity n=15. Security 1 is issued by TBD (DB or alternative “Issuer” or “Vehicle”).

Assets held in “Trust-like” vehicle, in some sort of principal protected structure (e.g. 15-year PPN + MSCI World)

2. Investor 2 buys Security 2 at $x with same Maturity Date as Security 1. Amount $x is presumably a function of Security 1’s value,

and at issue is expected to be a low percentage of Security 1’s value. Security 2 is issued by TBD

3. At or before Maturity, Security 1 and Security 2 have mutually excluding claims to Y, defined as $(100+x)*(1+R)n, where R is a rate

of return net of fees (TBD)

4. If Desired State [B] is met at or before maturity, then Security 2 has full claims to Y (5) , else Security 1 has full claims to Y (6)

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Contact information

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Two broad avenues

Current Deutsche Bank Quality of Life Markets under development include Global Infant and Child

Mortality-related, Global Sanitation-related, Latin-American Millennium Development Goals-related, and

more…

Deutsche Bank’s GME – Structuring can custom-design a new market that fits specifically the Desired

State [B] that a client wants to sponsor

Client

Participate and help

expand/reinforce

existing

Quality of Life Market

Custom design, sponsor,

and “launch” a new

Quality of Life Market

Customized,

innovative solution

to achieve

Desired State [B]

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Custom-designed solutions towards [B]

Deutsche Bank’s GME – Structuring designs solutions based on clients’ particular approach/situation

relative to Desired State [B], not based on their traditional classification. Some examples include:

Traditional

Classification

Common

objective

Particular approach/situation/context DB Quality of Life strategy/

Value proposition

Individual

Corporation

Endowment/

Foundation

Pension Fund

Institutional Investor

Hedge Fund

Development

Organization

Government

Non-Governmental

Organization

Social Entrepreneur

Manager/Technician

Venture Capitalist

….

Achieve

Desired

State [B]

Wants to spend/invest/”donate” contingent

upon satisfactory results (reaching [B])

Deutsche Bank works with clients to issue “Security 1”

linked to an existing Quality of Life Index or custom-design

a new one. Deutsche Bank will then help create this

Market by (i) raising more investor interest into that

security and (ii) Creating demand for corresponding

“Security 2”, and (iii) then constantly matching secondary

buyers and sellers

Believes to know the right implementation to

achieve [B], but lacks sufficient financial

resources to execute

Deutsche Bank will help identify existing appropriate

“Security 1”, “Security 2” or set of them, that can be used

directly or re-structured for this purpose

Believes a cause requires more human

talent/competition than currently applied to it,

more creative strategies applied to [B]

This market and targeted strategies create many

possibilities to recruit talent from any business/industry

Believes more buy-in is required by society

and/or governments to achieve cause

Customized strategies such as targeted selling of Security

2 can be implemented

Believes the achievement of the cause is a

win-win proposition, but social causes are not

its line of business

Deutsche Bank can structure notes in which balance sheet

or asset base is used in an efficient manner consistent

with organization’s mandate

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The bottom line value proposition: The Result

This new for-profit market is highly complimentary and supportive of any parties currently involved in the

pursuit of any Desired State [B] such as a social cause

Each new market’s unique strategies are designed to increase the total financial and non-financial

resources applied to it. Most importantly, to increase the odds of achieving Desired State [B] by a

multiple of 7 to 20 times the odds of accomplishing it without the Quality of Life Market

Desired State [B]

Increase the total

financial and non-Financial

resources towards

Desired State [B]

Increase the odds

of achieving

Desired State [B]

anywhere from 7 to 20 times

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Contact information

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Timeline of entire process of bringing to life each index

and index-linked securities..

Phase Timeline

1. Work with Client to Identify Quality of Life “Factor”

2. Create with Client appropriately-framed and governed DB Quality of Life Index

3. Seed “Incentive/Conditional/Prize Pool” (Security 1), define terms

4. Raise funds for Security 1 from other interested parties (non-seeding Investors)

5. Build “Venture/Management” interest (i.e. market Security 2)

6. Auction off Rights to interested bidders (i.e. issue Security 2)

7. Monitor performance/ make a secondary market for Securities 1 and 2

8. Maturity: Make corresponding payments

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Contact information

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Accelerate the Reduction of

Global Infant and Child Mortality

The Challenge: An estimated 10 million children 0-5 years old die every year. Most of them from

preventable diseases. This means that one out of every twelve children born annually is estimated to die

prior to turning five years of age

The context of the DB Quality of Life Market’s construction/ Sponsors: Deutsche Bank approached

Faculty from Harvard University’s School of Public Health/ JFK School of Government in order to create

Index. Hoping to launch a related market, also complimentary with Market being created with Ashoka

(the global association of the world’s leading social entrepreneurs) related to Global Sanitation

(Children’s deaths and lack of sanitation are highly correlated)

Desired State [B]: The desired state is to reduce mortality rates at least twice as fast on the next 15

years as any other previous fifteen year period in history

- Achieving this objective would mean saving the lives of an estimated 8 million children annually

- Furthermore, the externalities or implications of a world (and individual societies) that takes care

of its children, fulfills the basic human rights of health, appreciates life

Current Status:

- Building expressions of interest for “Security 1”-type

- Building expressions of interest for “Security-2”-type

- Open to partnership for more narrowly focused (regional/local)-related markets

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Solve the increasing

Global Sanitation Challenge

The Challenge: Front Page of The Lancet: “Adequate Sanitation is the most effective public health

intervention the international community has at its disposal. Yet 40% of the world’s population still lacks

access to a toilet”. For more than 1.1 billion people around the world, water is a constant concern. Where

will their next drink come from? Will it be clean? Will it last? Suitable sanitation facilities are in even

shorter supply. Basic human privacy and dignity are lost to 2.6 billion people who have no place to use

the bathroom. And these problems will get worse. In the near future, water scarcity will lead to even

greater suffering for the world's poorest.

The context of the DB Quality of Life Market’s construction/ Sponsors: DB is working with Ashoka

(the global association of the world’s leading social entrepreneurs) and the Mannweiler Foundation inc.

(creators of the L3C concept) among others to design the appropriate DBQoL Indices and linked-

securities that may help this cause

Desired State [B]: TBD

Current Status:

- Working group with Ashoka to design appropriate DBQoL Indices

- Building expressions of interest for “Security 1”-type

- Building expressions of interest for “Security-2”-type

- Open to partnership for more narrowly focused (regional/local)-related markets

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Catching up with Latin-America’s

Millennium Development Goals and reaching further

The Challenge: Latin America, as a region, exhibits several areas of persistent underdevelopment

despite many years of free-market reform, economic growth and embracing of stable democracy.


the Inter-American Development Bank to explore ways to work together to enhance the pace of

development in Latin America

Desired State [B]: TBD (various being considered)

Current Status:

- Working group with President’s Office to propose initial $500m action plan to Board

- Building expressions of interest on regional Latin American issues

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Helping to create a common vision of

a first-world Peru, and channel the required resources

The Challenge: Peru, as a country, exhibits several areas of persistent underdevelopment despite

many years of free-market reform, economic growth and embracing of stable democracy.


Grupo Interbank to explore ways to work together and develop a market that works for developmental

causes in Peru

Desired State [B]: TBD (various being considered)

Current Status:

- Working group with Grupo Interbank designing relevant indices

- Building expressions of interest on country-specific Peruvian issues

- $50m already committed on behalf of Corporations and underwritten by Deutsche Bank

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Contact information

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Deutsche Bank’s GME – Structuring group is a for-profit entity and it has developed this capability in order to

support either for-profit and/or not-for-profit organizations in pursuit of objectives that are non-political and not

conflicting with our business practices

As stated previously, Deutsche Bank’s Quality of Life Markets are highly complementary and supportive of any

parties currently involved in the pursuit of social causes. Revenues generated by DB will be highly efficient and

value enhancing for these parties, as compared to their current situation

Each new market’s unique strategies are designed to increase the total financial and non-financial resources

applied to it. Most importantly, to increase the odds of achieving Desired State [B] by a multiple of 7 to 20 times

the odds of accomplishing it without the Quality of Life Market. No market is launched where Deutsche Bank is

not encouraged to do so by a reputable interested party

Deutsche Bank and partners have the potential to earn revenues on one or more of this market’s related

activities:

- Fees for raising funds for Securities 1 and 2

- Fees for making secondary markets for Securities 1 and 2

- Possibly, Fees from holding assets in DB or partner-issued securities

- Possibly, gains from principal investing on Securities 1 and/or 2

- Other

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Contact information

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Contact information

Contact your Deutsche Bank Representative to learn more or schedule a meeting,

or the following people:

GME – Structuring (Developers of Quality of Life Markets)

Keith Cunningham (212) 250-8866

Guillermo MacLean (347) 776-1404

Latin American-based (Investors, Corporates and

Governments (and DC-based Latin Multilaterals))

Ivan Santillan (212) 250-6324

US Endowments and Foundations

John Kidd (212) 250-9905

Cornelia Spiegel (212) 250-9905

German-speaking countries (Investors, Corporates and

Governments)

Jobst Hoyningen-Huene (4969) 910-46653

US Mid-size and small Endowments and Foundations

Sean Lane (212) 454-1985

US and Europe-based Investors in Emerging Markets

Rupert Hope (212) 250-6226

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Economy & Finance

Publicly available General Introduction to Deutsche Bank Quality of Life Markets 2007