Crown Fire Dynamics in Conifer Forests - Joint Fire Science Program

198 downloads 859 Views 2MB Size Report
For additional photography carried out on experimental basis, see Alexander and De ... Alberta School of Forest Science and Management, University of. Albert, Edmonton ..... Florida on March 12, 1935, travelled nearly 32 km in about. 6 hours ...
6\QWKHVLVRI.QRZOHGJHRI([WUHPH)LUH%HKDYLRU9ROXPH,IRU)LUH0DQDJHUV

&KDSWHU&URZQ)LUH'\QDPLFVLQ&RQLIHU)RUHVWV 0DUWLQ($OH[DQGHUDQG0LJXHO*&UX] $VIRUELJ¿UHVLQWKHHDUO\KLVWRU\RIWKH)RUHVW6HUYLFH D\RXQJUDQJHUPDGHKLPVHOIIDPRXVE\DQVZHULQJWKH ELJTXHVWLRQRQDQH[DP³:KDWZRXOG\RXGRWRFRQWURO DFURZQ¿UH"´ZLWKWKHRQHOLQHU³*HWRXWRIWKHZD\DQG SUD\OLNHKHOOIRUUDLQ´²1RUPDQ0DFOHDQ 

ZLQG ¿J$ RUGRZQVORSH$FURZQ¿UHLVGHSHQGHQW RQDVXUIDFH¿UHIRUERWKLWVLQLWLDOHPHUJHQFHDQGFRQWLQXHG H[LVWHQFH7KXVDFURZQ¿UHDGYDQFHVWKURXJKERWKWKH VXUIDFHDQGWUHHFDQRS\IXHOOD\HUVZLWKWKHVXUIDFHDQG FURZQ¿UHSKDVHVPRUHRUOHVVOLQNHGWRJHWKHUDVDXQLW ¿J %DQG& 7KHWHUP³FURZQLQJ´WKHUHIRUHUHIHUVWRERWK WKHDVFHQVLRQLQWRWKHFURZQVRIWUHHVDQGWKHVSUHDGIURP FURZQWRFURZQ )URPWKHSHUVSHFWLYHRIFRQWDLQLQJRUFRQWUROOLQJ ZLOG¿UHVRUXQSODQQHGLJQLWLRQVWKHGHYHORSPHQWDQG VXEVHTXHQWPRYHPHQWRIDFURZQ¿UHUHSUHVHQWVDKLJKO\ VLJQL¿FDQWHYHQWDVDUHVXOWRIWKHVXGGHQHVFDODWLRQLQ WKHUDWHRIDGYDQFHDQGWKHGUDPDWLFLQFUHDVHLQÀDPH VL]HDQGWKHUPDOUDGLDWLRQDVZHOODVFRQYHFWLYHDFWLYLW\ LQFOXGLQJ¿UHLQGXFHGYRUWLFHVDQGLQWXUQERWKVKRUWWR ORQJUDQJHVSRWWLQJSRWHQWLDO$VDFRQVHTXHQFHFURZQ ¿UHVDUHGDQJHURXVIRU¿UH¿JKWHUVWRWU\WRFRQWUROGLUHFWO\ E\FRQYHQWLRQDOPHDQV6XSSUHVVLRQDFWLRQVDQGRSWLRQV

,QWURGXFWLRQ 7KUHHEURDGW\SHVRI¿UHDUHFRPPRQO\UHFRJQL]HGLQ FRQLIHUGRPLQDWHGIRUHVWVRQWKHEDVLVRIWKHIXHOOD\HU V  WKURXJKZKLFKWKH\DUHVSUHDGLQJ ‡ *URXQGRUVXEVXUIDFH¿UH ‡ 6XUIDFH¿UH ‡ &URZQ¿UH *URXQGRUVXEVXUIDFH¿UHVVSUHDGYHU\VORZO\DQGZLWKQR YLVLEOHÀDPH+HDGLQJVXUIDFH¿UHVFDQVSUHDGZLWKWKH ZLQGRUXSVORSHDQGEDFNLQJVXUIDFH¿UHVEXUQLQWRWKH





0DUWLQ($OH[DQGHU'HSDUWPHQWRI5HQHZDEOH5HVRXUFHVDQG $OEHUWD6FKRRORI)RUHVW6FLHQFHDQG0DQDJHPHQW8QLYHUVLW\RI $OEHUW(GPRQWRQ$OEHUWD&DQDGD0LJXHO*&UX]%XVK)LUH '\QDPLFVDQG$SSOLFDWLRQV&6,52(FRV\VWHPV6FLHQFHV±&OLPDWH $GDSWDWLRQ)ODJVKLS&DQEHUUD$&7$XVWUDOLD

)LJXUH²9DULDWLRQVLQ¿UHEHKDYLRUZLWKLQWKHMDFNSLQHEODFNVSUXFHIXHOFRPSOH[IRXQGDWWKH,QWHUQDWLRQDO&URZQ )LUH0RGHOLQJ([SHULPHQWVWXG\DUHDQHDU)RUW3URYLGHQFH1RUWKZHVW7HUULWRULHV&DQDGD $ VXUIDFH¿UH % SDVVLYH FURZQ¿UHDQG & DFWLYHFURZQ¿UH)RUDGGLWLRQDOSKRWRJUDSK\FDUULHGRXWRQH[SHULPHQWDOEDVLVVHH$OH[DQGHUDQG'H *URRW  $OH[DQGHUDQG/DQRYLOOH  6WRFNVDQG+DUWOH\  DQG+LUVFKHWDO   

*(1(5$/7(&+1,&$/5(325731:*75

)LJXUH²&URVVVHFWLRQRIDVW\OL]HGZLQGGULYHQVXUIDFHKHDG ¿UHVSUHDGLQJEHKLQGDFRQLIHUIRUHVWFDQRS\RQOHYHOWHUUDLQ

)LJXUH²7\SHRI¿UHFODVVL¿FDWLRQVFKHPHEDVHGRQ9DQ :DJQHU¶V D WKHRULHVUHJDUGLQJWKHVWDUWDQGVSUHDGRIFURZQ ¿UHVLQFRQLIHUIRUHVWV

DWWKHKHDGRIWKH¿UHWHQGWREHVHYHUHO\UHVWULFWHGXQWLO WKHUHLVDPDMRUFKDQJHLQWKHSUHYDLOLQJIXHOZHDWKHURU WRSRJUDSKLFFRQGLWLRQV HJDGURSLQZLQGVSHHGDPDMRU IXHOGLVFRQWLQXLW\ $VDUHVXOWFURZQ¿UHVDUHFDSDEOHRI EXUQLQJODUJHWUDFWVRIIRUHVWHGODQGVFDSHWKHUHE\SRVLQJD WKUHDWWRSXEOLFVDIHW\DQGSURSHUWLHVSRWHQWLDOO\DGYHUVHO\ LPSDFWLQJRWKHUYDOXHVDWULVNDQGLQFUHDVLQJVXSSUHVVLRQ H[SHQGLWXUHV 3UROL¿FFURZQLQJLVDQHOHPHQWRUFKDUDFWHULVWLFRI H[WUHPH¿UHEHKDYLRULQFRQLIHUGRPLQDWHGIRUHVWFRYHU W\SHV7KLVFKDSWHUFRQVWLWXWHVDVWDWHRINQRZOHGJHVXP PDU\SUHSDUHGIRURSHUDWLRQDO¿UHPDQDJHPHQWSHUVRQQHO LQWKH8QLWHG6WDWHVFRQFHUQLQJRXUFXUUHQWXQGHUVWDQGLQJ RIWKHFKDUDFWHULVWLFVDQGSUHGLFWLRQRIFURZQ¿UHEHKDY LRULQVXFKIXHOFRPSOH[HV,QIRUPDWLRQRQFURZQ¿UH SKHQRPHQRORJ\LVGUDZQXSRQIURPDQXPEHURIVRXUFHV LQFOXGLQJUHOHYDQWREVHUYDWLRQVDQGGDWDIURP&DQDGDDQG $XVWUDOLD7KHG\QDPLFVRIFURZQ¿UHVLQWDOOEUXVK¿HOGV HJFKDSDUUDO DQGRWKHUIRUHVWW\SHV HJHXFDO\SW ZLOO QRWVSHFL¿FDOO\EHGHDOWZLWKKHUH)RUSUHVHQWSXUSRVHVLW LVDVVXPHGWKDWWKHUHLVDGLVWLQFWVHSDUDWLRQEHWZHHQWKH FDQRS\IXHOOD\HUDQGWKHJURXQGDQGVXUIDFHIXHOVE\DQ RSHQWUXQNVSDFHLQZKLFKODGGHURUEULGJHIXHOVPD\EH

SUHVHQW ¿J &HUWDLQDVSHFWVRIFURZQ¿UHEHKDYLRUDUH QRWDGGUHVVHGKHUHEXWFDQEHIRXQGLQRWKHUFKDSWHUVRIWKLV V\QWKHVLVGRFXPHQW HJKRUL]RQWDOUROOYRUWLFHVSOXPHRU FRQYHFWLRQGRPLQDWHGFURZQ¿UHVLQÀXHQFHVRIDWPR VSKHULFFRQGLWLRQVDORIW¿UHDWPRVSKHUHLQWHUDFWLRQV 

7\SHVRI&URZQ)LUHV 9DQ:DJQHU D SURSRVHGWKDWFURZQ¿UHVLQFRQLIHU IRUHVWVFRXOGEHFODVVL¿HGDFFRUGLQJWRWKHLUGHJUHHRI GHSHQGHQFHRQWKHVXUIDFH¿UHSKDVHDQGWKHFULWHULDFRXOG EHGHVFULEHGE\VHYHUDOVHPLPDWKHPDWLFDOVWDWHPHQWV ¿J +HUHFRJQL]HGWKUHHW\SHVRIFURZQ¿UHV ER[  $FFRUGLQJWR9DQ:DJQHU D WKHW\SHRIFURZQ¿UHWR EHH[SHFWHGLQDFRQLIHUIRUHVWRQDQ\JLYHQGD\GHSHQGVRQ WKUHHVLPSOHSURSHUWLHVRIWKHFDQRS\IXHOOD\HU ER[ DQG WZREDVLF¿UHEHKDYLRUFKDUDFWHULVWLFV ‡ ,QLWLDOVXUIDFH¿UHLQWHQVLW\ ‡ )ROLDUPRLVWXUHFRQWHQW ‡ &DQRS\EDVHKHLJKW ‡ &DQRS\EXONGHQVLW\ ‡ 5DWHRI¿UHVSUHDGDIWHUWKHRQVHWRIFURZQ FRPEXVWLRQ



6\QWKHVLVRI.QRZOHGJHRI([WUHPH)LUH%HKDYLRU9ROXPH,IRU)LUH0DQDJHUV

%R[

%R[FRQWLQXHG

&URZQ)LUH&ODVVL¿FDWLRQ

FRQVLGHUHGQHFHVVDU\IRUFURZQLQJ HJWDOORURSHQIRUHVWVWDQGW\SHV  VRWKDWHYHQXQGHUVHYHUHEXUQLQJ FRQGLWLRQV LHFULWLFDOO\GU\IXHOVDQG VWURQJVXUIDFHZLQGV DFWLYHFURZQ ¿UHVSUHDGLVQRWSRVVLEOHDOWKRXJK YLJRURXVKLJKLQWHQVLW\¿UHEHKDYLRU FDQRFFXU

)RUWKHORQJHVWWLPHRQO\WZRNLQGVRI FURZQ¿UHZHUHJHQHUDOO\UHFRJQL]HG QDPHO\³GHSHQGHQW´DQG³UXQQLQJ´ %URZQDQG'DYLV 9DQ:DJQHU D UHFRJQL]HGWKUHHFODVVHVRU W\SHVRIFURZQ¿UHV 3DVVLYH&URZQ)LUH 3DVVLYHRUGHSHQGHQWFURZQ¿UHVFDQ LQYROYHDSRUWLRQRUDOORIWKHFDQRS\ IXHOOD\HULQFRPEXVWLRQEXWWKHRYHU DOOUDWHRIVSUHDGLVODUJHO\GHWHUPLQHG E\WKHVXUIDFHSKDVH3DVVLYHFURZQ ¿UHVFRYHUDUDQJHLQ¿UHEHKDYLRU IURPPRGHUDWHO\YLJRURXVVXUIDFH ¿UHVZLWKIUHTXHQWFURZQLJQLWLRQ RFFXUULQJEHKLQGWKHVXUIDFHÀDPH IURQWXSWRKLJKLQWHQVLW\VXUIDFH ¿UHVVSUHDGLQJZLWKDQDOPRVWVROLG ÀDPHIURQWRFFXS\LQJWKHFDQRS\DQG VXEFDQRS\RUWUXQNVSDFHWKDWKDYH QHDUO\DFKLHYHGWKHFULWLFDOPLQLPXP VSUHDGUDWHIRUDFWLYHFURZQLQJ3DV VLYHFURZQ¿UHVFDQRFFXUXQGHUWZR EURDGVLWXDWLRQV)LUVWWKHFDQRS\ EDVHKHLJKWDQGFDQRS\EXONGHQVLW\ DUHFRQVLGHUHGRSWLPXPEXWIXHO PRLVWXUHDQGZLQGFRQGLWLRQVDUHQRW TXLWHVHYHUHHQRXJKWRLQGXFHIXOO ÀHGJHGFURZQLQJ ¿J% 6HFRQG WKHFDQRS\EDVHKHLJKWDQGFDQRS\ EXONGHQVLW\DUHUHVSHFWLYHO\DERYH DQGEHORZWKHWKUHVKROGVJHQHUDOO\

$FWLYH&URZQ)LUH $FWLYHRUUXQQLQJFURZQ¿UHVDUH FKDUDFWHUL]HGE\WKHVWHDG\DGYDQFH PHQWRIDWDOODQGGHHSFRKHUHQWÀDPH IURQWH[WHQGLQJIURPWKHJURXQG VXUIDFHWRDERYHWKHWRSRIWKHFDQRS\ IXHOOD\HU ¿J& 7KHVXUIDFH DQGFURZQSKDVHVDUHLQWLPDWHO\ OLQNHGEXW¿UHSURSDJDWLRQLVODUJHO\ GHWHUPLQHGE\WKHFURZQSKDVH7KH VSUHDGRIDFWLYHFURZQ¿UHVUHTXLUHV  UHODWLYHO\GU\DQGSOHQWLIXOVXUIDFH IXHOVWKDWDOORZIRUWKHGHYHORSPHQW RIDVXEVWDQWLDOVXUIDFH¿UH  ORZWR PRGHUDWHO\KLJKFDQRS\EDVHKHLJKW DQG  DIDLUO\FRQWLQXRXVFURZQOD\HU RIPRGHUDWHWRKLJKFDQRS\EXONGHQ  VLW\ !NJP DQGORZWRQRUPDO IROLDUPRLVWXUHFRQWHQW ,QGHSHQGHQW&URZQ)LUH $QLQGHSHQGHQWFURZQ¿UHQRORQJHU GHSHQGVLQDQ\ZD\RQWKHVXUIDFH SKDVHVSUHDGLQJDKHDGRIWKHVXUIDFH SKDVHLQWKHFURZQIXHOOD\HUHQWLUHO\



*(1(5$/7(&+1,&$/5(325731:*75

%R[FRQWLQXHG

%R[FRQWLQXHG

RQLWVRZQ6WDQGFRQGLWLRQVIDYRU LQJDQLQGHSHQGHQWFURZQ¿UHDUH DFRQWLQXRXVFURZQOD\HURIORZWR PRGHUDWHFDQRS\EXONGHQVLW\DQGDQ DEQRUPDOO\ORZIROLDUPRLVWXUHFRQ WHQW)RUDWUXO\LQGHSHQGHQWFURZQ¿UH WRGHYHORSRQÀDWWRSRJUDSK\ZRXOG UHTXLUHYHU\VWURQJVXVWDLQHGZLQGV ,QPRXQWDLQRXVWHUUDLQVORSHVWHHS QHVVZRXOGQRGRXEWFRPSHQVDWHIRUD OHVVHUYHORFLW\ 7KHYDVWPDMRULW\RIFURZQLQJ IRUHVW¿UHVVSUHDGHLWKHUDVSDVVLYH RUDFWLYHFURZQ¿UHVHDFKFRQWUROOHG E\DGLIIHUHQWVHWRISURFHVVHV9DQ :DJQHU  DFNQRZOHGJHGWKDWWKH FRQFHSWRIDWUXO\LQGHSHQGHQWFURZQ ¿UHDVDVWDEOHSKHQRPHQRQRQOHYHO WHUUDLQLVGXELRXVEXWWKDWLW³PD\VWLOO KDYHYDOXHLQURXJKRUVWHHSWHUUDLQ DQGDVDVKRUWWHUPÀXFWXDWLRQXQGHU WKHPRVWH[WUHPHFRQGLWLRQV´,QGHHG WKHUHDUHUHSRUWVRIWKHÀDPHVLQWKH FURZQH[WHQGLQJWRPDKHDG RIWKHVXUIDFHEXUQLQJLQPRPHQWDU\ EXUVWVDQGRIFURZQ¿UHVVSUHDGLQJXS VWHHSSDUWLDOO\VQRZFRYHUHGVORSHV LQWKHVSULQJ 0RWWXVDQG3HQJHOO\  7KHVHLQFLGHQWVPLJKWSRVVLEO\ JLYHWKHDSSHDUDQFHRIEHLQJHYLGHQFH IRULQGHSHQGHQWFURZQ¿UHV+RZHYHU WKHUHLVQRVWHDG\VWDWHSURSDJDWLRQ

DVVHHQZLWKSDVVLYHDQGDFWLYHFURZQ ¿UHV ,WLVZRUWKZKLOHQRWLQJWKDWWKH FRQFHSWRISDVVLYHFURZQLQJLPSOLHV DQHOHPHQWRIIRUZDUGPRYHPHQWRU SURSDJDWLRQRIWKHÀDPHIURQW7KH LQFLGHQWDOLJQLWLRQRIDQLVRODWHGWUHH RUFOXPSRIWUHHVZLWKWKHÀDPHV VSUHDGLQJYHUWLFDOO\IURPWKHJURXQG VXUIDFHWKURXJKWKHFURZQ V ZLWKRXW DQ\IRUPRIIRUZDUGVSUHDGIROORZLQJ GRHVQRWFRQVWLWXWHSDVVLYHFURZQLQJ )ODPHGHIROLDWLRQRIFRQLIHUWUHHVE\ ZKDWDPRXQWVWRVWDWLRQDU\WRUFKLQJ RU³FURZQLQJRXW´HVSHFLDOO\FRPPRQ GXULQJWKHSRVWIURQWDOFRPEXVWLRQ VWDJHIROORZLQJSDVVDJHRIWKHVXUIDFH ¿UHJHQHUDOO\GRHVQRWJHQHUDWHDQ\ NLQGRIKRUL]RQWDOVSUHDG 6FRWWDQG5HLQKDUGW  FODLPHG WKDWWKHSRVVLELOLW\H[LVWVIRUDVWDQG WRVXSSRUWDQDFWLYHFURZQ¿UHWKDW ZRXOGRWKHUZLVHQRWLQLWLDWHDFURZQ ¿UH7KH\UHIHUUHGWRWKLVVLWXDWLRQDV D³FRQGLWLRQDOVXUIDFH¿UH´/DWHURQ 6FRWW  WHUPHGWKLVD³FRQGLWLRQDO FURZQ¿UH´7RRXUNQRZOHGJHQR HPSLULFDOSURRIKDVEHHQSURGXFHGWR GDWHWRVXEVWDQWLDWHWKHSRVVLEOHH[LV WHQFHRIVXFKDVLWXDWLRQDWOHDVWDVD VWHDG\VWDWHSKHQRPHQRQ



6\QWKHVLVRI.QRZOHGJHRI([WUHPH)LUH%HKDYLRU9ROXPH,IRU)LUH0DQDJHUV

7KH¿UVWWKUHHTXDQWLWLHVGHWHUPLQHZKHWKHUDVXUIDFH ¿UHZLOOLJQLWHFRQLIHURXVIROLDJH7KHODVWWZRGHWHUPLQH ZKHWKHURUQRWDFRQWLQXRXVÀDPHIURQWFDQEHVXVWDLQHG LQWKHFDQRS\IXHOOD\HU7KHLQLWLDOVXUIDFH¿UHLQWHQVLW\ DQGUDWHRI¿UHVSUHDGDIWHUWKHRQVHWRIFURZQFRPEXVWLRQ ZRXOGLQWXUQLQFOXGHWKHHIIHFWVRIZLQGVSHHGVORSH VWHHSQHVVIXHOGU\QHVVDLUWHPSHUDWXUHUHODWLYHKXPLGLW\ DQGIXHOFRPSOH[FKDUDFWHULVWLFV([DPSOHVRIKRZFDQRS\ EDVHKHLJKWDQGFDQRS\EXONGHQVLW\&%'YDU\ZLWKWUHH DQGVWDQGFKDUDFWHULVWLFVLVSUHVHQWHGKHUHIRUSRQGHURVD SLQHLQ¿JXUHVDQG $OELQLDQG6WRFNV  FRQVLGHUHGWKHIDFWRUV LQFOXGHGLQ:DJQHU¶V D SURSRVHGFULWHULDIRUWKHVWDUW DQGVSUHDGRIDFURZQ¿UHDV³KHXULVWLFDOO\YDOLG´6XEVH TXHQWH[SHULHQFHDQGDQDO\VLVKDVVKRZQERWKWKHVWUHQJWKV DQGOLPLWDWLRQVRIKLVDSSURDFK &UX]HWDOF D  )LJXUH²&DQRS\EDVHKHLJKWIRUSRQGHURVDSLQHVWDQGVDVD IXQFWLRQRIDYHUDJHVWDQGKHLJKWDQGEDVDODUHDDFFRUGLQJWR&UX] HWDO D 7KHUHJUHVVLRQHTXDWLRQXVHGWRSURGXFHWKLVJUDSK LVQRWYDOLGIRUWUHHKHLJKWVRIOHVVWKDQP

&URZQ)LUH,QLWLDWLRQ )RUDFURZQ¿UHWRVWDUWDQLQWHQVHVXUIDFH¿UHLVJHQHUDOO\ UHTXLUHG7KHTXHVWLRQVWKHQEHFRPH+RZGRZHGH¿QH¿UH

)LJXUH²&DQRS\EXONGHQVLW\ $ DQGFDQRS\IXHOORDG % IRUSRQGHURVDSLQHVWDQGVDVDIXQFWLRQRIVWDQGGHQVLW\DQGEDVDODUHD DFFRUGLQJWR&UX]HWDO D  

*(1(5$/7(&+1,&$/5(325731:*75

%R[

%R[FRQWLQXHG

&DQRS\)XHO&KDUDFWHULVWLFVLQ 9DQ:DJQHU¶V D &URZQ)LUH ,QLWLDWLRQDQG3URSDJDWLRQ0RGHOV &DQRS\%DVH+HLJKW &DQRS\EDVHKHLJKW &%+ UHSUHVHQWV WKHPHDQKHLJKWIURPWKHJURXQGVXU IDFHWRWKHORZHUOLYHFURZQEDVHRIWKH FRQLIHUWUHHVLQDIRUHVWVWDQG ¿J  &DQRS\EDVHKHLJKWLVGHSHQGHQWRQWKH PHDQWUHHKHLJKWDQGOLYHVWHPGHQVLW\ ¿J /DGGHURUEULGJHIXHOV HJ ORRVHEDUNDQGGHDGEROHEUDQFKHVRQ WUHHEROHVOLFKHQVVKUXEVDQGVPDOO FRQLIHUV LQWKHVSDFHEHWZHHQWKH JURXQGVXUIDFHDQGWKHFDQRS\³PXVW SUHVXPDEO\EHSUHVHQWLQVXI¿FLHQW TXDQWLW\WRLQWHQVLI\WKHVXUIDFH¿UH DSSUHFLDEO\DVZHOODVWRH[WHQGWKH ÀDPHKHLJKW´ 9DQ:DJQHUD  8QIRUWXQDWHO\RXUDELOLW\WRDVVHVVODG GHURUEULGJHIXHOHIIHFWVRQFURZQ¿UH LQLWLDWLRQUHPDLQVTXDOLWDWLYH 0HQQLQJ DQG6WHSKHQV 

UHSUHVHQWVWKHTXDQWLW\RIFURZQIXHO W\SLFDOO\FRQVXPHGLQDFURZQ¿UH SULQFLSDOO\QHHGOHIROLDJH%RWKWKH &%'DQG&)/DUHLQWXUQIXQFWLRQV RIVWDQGVWUXFWXUHFKDUDFWHULVWLFV ¿J   )ROLDU0RLVWXUH&RQWHQW )ROLDUPRLVWXUHFRQWHQW )0& UHSUH VHQWVDZHLJKWHGDYHUDJHRUFRPSRVLWH PRLVWXUHFRQWHQWIRUWKHYDULRXVQHHGOH DJHVIRXQGZLWKLQWKHFDQRS\IXHOOD\HU 1HHGOHVGHFUHDVHLQPRLVWXUHFRQWHQW ZLWKDJHIROORZLQJWKHLULQLWLDOÀXVKLQJ .H\HV  6RPHUHVHDUFKHUVVXFKDV6FRWWDQG 5HLQKDUGW  KDYHDSSOLHGGLIIHUHQW FULWHULDWRWKH&%+&)/DQG&%' LQSXWVLQWKHLUXVHRI9DQ:DJQHU¶V D PRGHOV &UX]DQG$OH[DQGHU LQSUHVV +RZHYHUVWULFWO\VSHDN LQJVXFKDGKRFDGMXVWPHQWVRUPRGL ¿FDWLRQVDUHQRWFRPSDWLEOHZLWKWKH XVHRIWKHVHPRGHOV6WLOORWKHUVKDYH LQVRPHFDVHVUHFRPPHQGHGRUDSSOLHG SRWHQWLDOO\XQUHDOLVWLFDOO\ORZYDOXHV RI)0& &UX]DQG$OH[DQGHU  9DUQHUDQG.H\HV  KDYHRXWOLQHG RWKHUIDXOW\DVVXPSWLRQVDQGFRP PRQHUURUVUHJDUGLQJPRGHOLQJLQSXWV LQYROYHGLQVLPXODWLQJ¿UHEHKDYLRU SRWHQWLDO

&DQRS\%XON'HQVLW\ &DQRS\EXONGHQVLW\ &%' UHSUHVHQWV WKHDPRXQWRIDYDLODEOHFURZQIXHO ZLWKLQDXQLWYROXPHRIWKHFDQRS\ &DQRS\EXONGHQVLW\LVFRPSXWHGE\ GLYLGLQJWKHFDQRS\IXHOORDG &)/  E\WKHFDQRS\GHSWK ¿J ZKLFK UHSUHVHQWVWKHDYHUDJHWUHHKHLJKWRI WKHVWDQGPLQXVWKH&%+7KH&)/



6\QWKHVLVRI.QRZOHGJHRI([WUHPH)LUH%HKDYLRU9ROXPH,IRU)LUH0DQDJHUV

)LJXUH²&ULWLFDOVXUIDFH¿UHLQWHQVLW\IRUFURZQFRPEXVWLRQLQ DFRQLIHUIRUHVWVWDQGDVDIXQFWLRQRIFDQRS\EDVHKHLJKWDQGIROLDU PRLVWXUHFRQWHQWDFFRUGLQJWR9DQ:DJQHU D  

)LJXUH²+HDG¿UHUDWHRIVSUHDGDQGIXHOFRQVXPHGLQUHODWLRQ WRWKHW\SHRI¿UHDQGVL[GLVWLQFWOHYHOVRI%\UDP¶V D ¿UHOLQH LQWHQVLW\DVVXPLQJDQHWKHDWRIFRPEXVWLRQRIN-NJ

IURQW NJP DQGULVWKHUDWHRI¿UHVSUHDG PV  $OH[DQ GHU ,IZHDVVXPH+ N-NJWKHQWKHHTXDWLRQ IRUFDOFXODWLQJ¿UHOLQHLQWHQVLW\FDQDOVREHH[SUHVVHGDV IROORZV , îZî526  

LQWHQVLW\"DQG+RZLQWHQVHLVLQWHQVHHQRXJKZLWKUHVSHFW WRWKHFRQYHFWLYHDQGUDGLDWLYHHQHUJ\WUDQVIHUUHGXSZDUG WRWKHFDQRS\IXHOVQHFHVVDU\WRLQLWLDWHFURZQLQJ"7KH GLVWDQFHWKHFDQRS\IXHOOD\HU ¿J LVIURPWKHKHDW VRXUFHDWWKHJURXQGVXUIDFHZLOOGLFWDWHKRZPXFKHQHUJ\ LVGLVVLSDWHGEHIRUHUHDFKLQJWKHIXHOVDWWKHEDVHRIWKH FDQRS\)XUWKHUPRUHLIWKHPRLVWXUHFRQWHQWRIWKHFDQRS\ IXHOVLVKLJKJUHDWHUDPRXQWVRIHQHUJ\DUHUHTXLUHGWRUDLVH WKHWUHHIROLDJHWRLJQLWLRQWHPSHUDWXUH %\UDP D GH¿QHG¿UHOLQHLQWHQVLW\ ,N:P DV WKHUDWHRIKHDWUHOHDVHGIURPDOLQHDUVHJPHQWRIWKH¿UH SHULPHWHUDVFDOFXODWHGE\WKHIROORZLQJHTXDWLRQ , +îZîU  ZKHUH+LVUHJDUGHGDVWKHQHWORZKHDWRIFRPEXVWLRQ N- NJ ZLVDPRXQWRIIXHOFRQVXPHGLQWKHDFWLYHÀDPLQJ 

ZKHUH526LVWKHUDWHRI¿UHVSUHDGJLYHQLQPPLQ$ JUDSKLFDOUHSUHVHQWDWLRQRIWKLVUHODWLRQLVSUHVHQWHGLQ ¿JXUH:HQGHOHWDO  FRQFOXGHGWKDWWKHSURE DELOLW\RIEORZXS¿UHVGHFUHDVHGUDSLGO\ZKHQDYDLODEOHIXHO ORDGVZHUHOHVVWKDQNJP  8VLQJSK\VLFDOUHDVRQLQJDQGHPSLULFDOREVHUYDWLRQ 9DQ:DJQHU D SURSRVHGWKDWYHUWLFDO¿UHVSUHDG FRXOGRFFXULQDFRQLIHUIRUHVWVWDQGZKHQWKHVXUIDFH¿UH LQWHQVLW\ 6), DWWDLQVRUH[FHHGVDFHUWDLQFULWLFDOVXUIDFH LQWHQVLW\IRUFRPEXVWLRQ 6),FULWLFDON:P DVGLFWDWHGE\ WKHIROLDUPRLVWXUHFRQWHQW )0& DQGWKHFDQRS\EDVH KHLJKW &%+P DFFRUGLQJWRWKHIROORZLQJHTXDWLRQZKLFK LVJUDSKLFDOO\SUHVHQWHGLQ¿JXUH 6),FULWLFDO  î&%+î î)0&  

*(1(5$/7(&+1,&$/5(325731:*75

7DEOH²)LUHVXSSUHVVLRQLQWHUSUHWDWLRQVRIÀDPHOHQJWKDQG¿UHOLQHLQWHQVLW\

)ODPH OHQJWKD 0HWHUV  

)LUHOLQH LQWHQVLW\ N:P  

)LUHFDQJHQHUDOO\EHDWWDFNHGDWWKHKHDGRUÀDQNVE\SHUVRQVXVLQJKDQGWRROV+DQGOLQH VKRXOGKROGWKH¿UH

WR  

WR  

)LUHVDUHWRRLQWHQVHIRUGLUHFWDWWDFNRQWKHKHDGE\SHUVRQVXVLQJKDQGWRROV+DQGOLQHFDQ  QRWEHUHOLHGRQWRKROG¿UH(TXLSPHQWVXFKDVSORZVGR]HUVSXPSHUVDQGUHWDUGDQW  DLUFUDIWFDQEHHIIHFWLYH

WR 

WR 

)LUHVPD\SUHVHQWVHULRXVFRQWUROSUREOHPVWRUFKLQJRXWFURZQLQJDQGVSRWWLQJ&RQWURO HIIRUWVDWWKH¿UHKHDGZLOOSUREDEO\EHLQHIIHFWLYH

! 

! 

&URZQLQJVSRWWLQJDQGPDMRU¿UHUXQVDUHSUREDEOH&RQWUROHIIRUWVDWKHDGRI¿UHDUH LQHIIHFWLYH

)LUHVXSSUHVVLRQLQWHUSUHWDWLRQV 



D

%DVHGRQ%\UDP¶V D ÀDPHOHQJWK /P ¿UHOLQHLQWHQVLW\ ,N:P UHODWLRQ/  î ,  $GDSWHGIURP%XUJDQ

7KXVDFFRUGLQJWR9DQ:DJQHU¶V D WKHRU\RI FURZQ¿UHLQLWLDWLRQLI6),!6),FULWLFDOVRPHIRUPRI FURZQLQJLVSUHVXPHGWREHSRVVLEOHEXWLI6),6),FULWLFDO DVXUIDFH¿UHLVH[SHFWHGWRSUHYDLO ¿J ,QDSSO\LQJ WKLVFULWHULRQLWLVDVVXPHGWKDWDFRQLIHUIRUHVWVWDQGSRV VHVVHVDPLQLPXP&%'WKDWZLOODOORZÀDPHVWRSURSDJDWH YHUWLFDOO\WKURXJKWKHFDQRS\IXHOOD\HU 2QHRIWKHDSSHDOLQJDVSHFWVRIHT  LVLWVVLPSOLFLW\ EXWZLWKWKLVFRPHVDPDMRUXQGHUO\LQJDVVXPSWLRQ$FFRUG LQJWR9DQ:DJQHU D WKHYDOXHJLYHQLQHT  LV DQHPSLULFDOFRQVWDQWRI³FRPSOH[GLPHQVLRQV´+HGHULYHG WKLVYDOXHIURPDQRXWGRRUH[SHULPHQWDO¿UHLQDUHGSLQH SODQWDWLRQVWDQG VHH³&RPPRQDQG6FLHQWL¿F1DPHV´ VHFWLRQ ZLWK&%+RIPDQGD)0&RISHUFHQWDQG WKH6),ZDVDERXWN:PMXVWSULRUWRFURZQLQJ 9DQ :DJQHU 7KLVZLGHO\XVHGUHODWLRQUHSUHVHQWHGE\HT  WKHUHIRUHLQFRUSRUDWHVD¿[HGVHWRIEXUQLQJFRQGLWLRQV IXHOFKDUDFWHULVWLFVDQGVXUIDFH¿UHEHKDYLRU HJLQVWDQG ZLQGODGGHUIXHOVIXHOFRQVXPHGÀDPHGHSWKDQG VSUHDGUDWH 6XEVHTXHQWUHVHDUFKKDVVKRZQWKLVHPSLULFDO FRQVWDQWWREHDYDULDEOHTXDQWLW\GHSHQGHQWRQWKHVHIDFWRUV $OH[DQGHU&UX]HWDOD  )URP¿JXUHLWVKRXOGEHFOHDUWKDWWKHKLJKHUWKH &%+DQGRU)0&WKHPRUHLQWHQVHDVXUIDFH¿UHPXVW

)LJXUH²&ULWLFDOPLQLPXPVSUHDGUDWHIRUDFWLYHFURZQLQJLQD FRQLIHUIRUHVWVWDQGDVDIXQFWLRQRIFDQRS\EXONGHQVLW\DFFRUGLQJ WR9DQ:DJQHU D 

EHWRFDXVHFURZQLQJ,WLVZRUWKQRWLQJWKDWWKHÀDPHV RIDVXUIDFH¿UHGRQ¶WQHFHVVDULO\KDYHWRUHDFKRUH[WHQG LQWRWKHORZHUWUHHFURZQVWRLQLWLDWHFURZQLQJ $OH[DQGHU  7KHH[SHULPHQWDO¿UHXVHGE\9DQ:DJQHU D WR 

6\QWKHVLVRI.QRZOHGJHRI([WUHPH)LUH%HKDYLRU9ROXPH,IRU)LUH0DQDJHUV

SDUDPHWHUL]HKLVFURZQ¿UHLQLWLDWLRQPRGHOUHSUHVHQWHGE\ HT  ZRXOGIRUH[DPSOHKDYHKDGDÀDPHOHQJWKRIP DFFRUGLQJWR%\UDP¶V D IRUPXODOLQNLQJÀDPHOHQJWK WR¿UHOLQHLQWHQVLW\ WDEOH 

&URZQ)LUH3URSDJDWLRQ $VVXPLQJDVXUIDFH¿UHLVRIVXI¿FLHQWLQWHQVLW\WRLQLWLDWH DQGVXVWDLQFURZQFRPEXVWLRQIURPEHORZWKHTXHVWLRQ QRZEHFRPHV&DQDVROLGÀDPHIURQWGHYHORSDQGPDLQWDLQ LWVHOIZLWKLQWKHFDQRS\IXHOOD\HULQRUGHUIRUKRUL]RQWDO FURZQ¿UHVSUHDGWRRFFXU"9DQ:DJQHU D WKHRUL]HG WKDWDPLQLPXPÀRZRIIXHOLQWRWKHÀDPLQJ]RQHRID FURZQ¿UHLVUHTXLUHGIRUFRPEXVWLRQRIWKHFDQRS\IXHO OD\HUWRFRQWLQXH,QWKLVFRQFHSWXDOIRUPXODWLRQWKHÀDPH IURQWLVYLHZHGDVVWDWLRQDU\ZLWKWKHIXHOPRYLQJLQWRLW 9DQ:DJQHU D SURSRVHGWKDWDFULWLFDOPLQLPXP VSUHDGUDWHQHHGHGWRSUHVHUYHFRQWLQXRXVFURZQLQJ 526 FULWLFDOPPLQ FRXOGEHHVWLPDWHGRQWKHEDVLVRIWKHVWDQG¶V 

FDQRS\EXONGHQVLW\ &%'NJP XVLQJWKHIROORZLQJ VLPSOLVWLFHTXDWLRQ

526FULWLFDO ·&%'  $FFRUGLQJWRHT  526FULWLFDOLQFUHDVHVDVWKH&%' GHFUHDVHV ¿J +LJK&%'OHYHOVDUHDVVRFLDWHGZLWK GHQVHVWDQGVDQGORZYDOXHVZLWKRSHQVWDQGV ¿J  $FWLYHFURZQLQJLVSUHVXPDEO\QRWSRVVLEOHLID¿UHGRHV QRWVSUHDGUDSLGO\HQRXJKIROORZLQJLQLWLDOFURZQFRPEXV WLRQ$OELQL  YLHZHGWKLVFULWHULRQIRUDFWLYHFURZQ LQJDVD³OHDQÀDPPDELOLW\OLPLW´7KXVLID¿UH¶VDFWXDO 526DIWHUWKHLQLWLDORQVHWRIFURZQLQJZKLFKLVLQWXUQD IXQFWLRQODUJHO\RIWKHSUHYDLOLQJZLQGVSHHGRUVORSHLVOHVV WKDQ526FULWLFDODSDVVLYHFURZQ¿UHLVH[SHFWHGWRRFFXU ¿J  7KHHPSLULFDOFRQVWDQWJLYHQLQHT  ZDVGHULYHG ODUJHO\RQWKHEDVLVRIDVLQJOHH[SHULPHQWDOFURZQ¿UHLQ DUHGSLQHSODQWDWLRQVWDQGH[KLELWLQJD&%'RINJ P 9DQ:DJQHU +RZHYHUWKHUREXVWQHVVRIWKLV YDOXHKDVVLQFHEHHQFRQ¿UPHGRQWKHEDVLVRIDQDQDO\VLV RIDUHODWLYHO\ODUJHGDWDVHWRIH[SHULPHQWDOFURZQ¿UHV LQVHYHUDOGLIIHUHQWFRQLIHUIRUHVWIXHOFRPSOH[HV &UX] HWDO DQGDGHWDLOHGZLOG¿UHEHKDYLRUFDVHVWXG\ 

$OH[DQGHU 7KHVHDQDO\VHVDOVRVXSSRUW$JHH¶V  DVVHUWLRQWKDWD&%'RIDERXWNJPFRQVWLWXWHV DVLJQL¿FDQWWKUHVKROGIRUDFWLYHFURZQ¿UHV)XUWKHUPRUH LWDSSHDUVIURPWKHIXQFWLRQUHSUHVHQWHGE\HT  DQGWKH DYDLODEOHHPSLULFDOHYLGHQFH ¿J WKDWDFWLYHFURZQ ¿UHVDUHXQOLNHO\WRRFFXUDW&%'OHYHOVEHORZDERXW NJPDOWKRXJKWKLVLVQRWWRVXJJHVWWKDWDYHU\YLJRURXV KLJKLQWHQVLW\SDVVLYHFURZQLQJLVQRWSRVVLEOH

&URZQ)LUH5DWHRI6SUHDG 6XUIDFH¿UHVVSUHDGLQJEHQHDWKFRQLIHUIRUHVWFDQRSLHV VHOGRPH[FHHGWRPPLQZLWKRXWWKHRQVHWRIFURZQLQJ LQVRPHIRUPRUDQRWKHU ¿J 7KHH[FHSWLRQVZRXOG LQYROYHRSHQVWDQGVZLWKDORZ&%' VD\OHVVWKDQ NJP RUFORVHGFDQRSLHGVWDQGVH[KLELWLQJDYHU\KLJK FDQRS\EDVHKHLJKW SHUKDSVWRPRUJUHDWHU LQZKLFK FDVHVSUHDGUDWHVPLJKWUHDFKDVKLJKDVPPLQZLWK DVVRFLDWHG¿UHOLQHLQWHQVLWLHVRIN:P *HQHUDOREVHUYDWLRQVRIZLOG¿UHVDQGGRFXPHQWDWLRQRI H[SHULPHQWDOFURZQ¿UHVLQGLFDWHWKDWDUDWKHUDEUXSWWUDQVL WLRQEHWZHHQVXUIDFHDQGFURZQ¿UHVSUHDGUHJLPHVLVIDU PRUHFRPPRQSODFHWKDQDJUDGXDOWUDQVLWLRQ 9DQ:DJQHU  :LWKWKHRQVHWRIFURZQLQJDWDPLQLPXPD¿UH W\SLFDOO\GRXEOHVRUHYHQWULSOHVLWVVSUHDGUDWHLQFRPSDUL VRQWRLWVSUHYLRXVVWDWHRQWKHJURXQGVXUIDFH 0F$UWKXU  7KLVVXGGHQMXPSLQWKH¿UH¶VUDWHRIVSUHDGRFFXUV DVDUHVXOWRI L WKHHQKDQFHGUDGLDQWKHDWLQJRZLQJWRWKH WDOOHUDQGGHHSHUÀDPHIURQWV LL WKHIDFWWKDWWKHZLQG VSHHGVMXVWDERYHWKHWUHHFDQRS\DUHWZRDQGRQHKDOIWR VL[WLPHVWKDWRIWKHZLQGVH[SHULHQFHGQHDUJURXQGOHYHO LQVLGHWKHVWDQG LLL LQFUHDVHGHI¿FLHQF\RIKHDWWUDQVIHU LQWRDWDOODQGSRURXVIXHOOD\HUDQG LY DQLQFUHDVHLQVSRW WLQJGHQVLW\DQGGLVWDQFHMXVWEH\RQGWKH¿UH¶VOHDGLQJHGJH 2QFHFURZQLQJKDVFRPPHQFHGD¿UH¶VIRUZDUGUDWH RIVSUHDGRQOHYHOWHUUDLQLVLQÀXHQFHGODUJHO\E\ZLQG YHORFLW\DQGWRDOHVVHUH[WHQWE\SK\VLFDOIXHOSURSHUWLHV DQGGU\QHVV&RQWLQXRXVFURZQLQJJHQHUDOO\WDNHVSODFH DWVSUHDGUDWHVEHWZHHQDERXWDQGPPLQ&URZQLQJ ZLOG¿UHVKDYHEHHQNQRZQWRPDNHPDMRUUXQVRIWR NPRYHUÀDWDQGUROOLQJWRJHQWO\XQGXODWLQJJURXQG

*(1(5$/7(&+1,&$/5(325731:*75

GXULQJDVLQJOHEXUQLQJSHULRGRURYHUPXOWLSOHGD\VDVVR YLYLGO\GHPRQVWUDWHGIRUH[DPSOHRQWKH5RGHR&KHGLVNL )LUHLQQRUWKHUQ$UL]RQDLQ-XQH 3D[WRQ $ ZLOG¿UHFURZQLQJWKURXJKVDQGSLQHIRUHVWVLQQRUWKFHQWUDO )ORULGDRQ0DUFKWUDYHOOHGQHDUO\NPLQDERXW KRXUVZLWKLQWHUYHQLQJVSUHDGUDWHVRIWRPPLQ )ROZHLOHU 'XULQJWKHPDMRUUXQRIWKH0DFN/DNH )LUHLQ0LFKLJDQWKDWRFFXUUHGRQ0D\WKHFURZQ ¿UHUDWHRIVSUHDGLQMDFNSLQHIRUHVWVSHDNHGDWQHDUO\ PPLQGXULQJDPLQLQWHUYDO 6LPDUGHWDO *UDVV ¿UHVKDYHEHHQUHSRUWHGWRVSUHDGDWWZLFHWKHVHUDWHVRQ OHYHOJURXQGDQGDUHWKXVFDSDEOHRIVSUHDGLQJWKHVDPH GLVWDQFHDVFURZQLQJIRUHVW¿UHVLQKDOIWKHWLPH &KHQH\ DQG6XOOLYDQ  ,QVRPHFRQLIHUIRUHVWIXHOW\SHVH[KLELWLQJGLVFRQWLQX RXVRUYHU\ORZTXDQWLWLHVRIVXUIDFHIXHOVVXUIDFH¿UH VSUHDGLVQHDUO\QRQH[LVWHQWHYHQXQGHUPRGHUDWHO\VWURQJ ZLQGV+RZHYHURQFHDFHUWDLQZLQGVSHHGWKUHVKROGLV UHDFKHGZLWKUHVSHFWWRDJLYHQOHYHORIIXHOGU\QHVVD GUDPDWLFFKDQJHWRFURZQ¿UHVSUHDGVXGGHQO\RFFXUV 7KLVW\SHRI¿UHEHKDYLRUKDVEHHQREVHUYHGLQSLQ\RQ MXQLSHUZRRGODQGVRIWKH:HVWHUQ8QLWHG6WDWHV %UXQHU DQG.OHEHQRZ DQGLQWKHVDQGSLQHIRUHVWVRI)ORULGD +RXJK IRUH[DPSOH7KHVDPHSKHQRPHQRQKDVEHHQ REVHUYHGLQFHUWDLQJUDVVODQGDQGVKUXEODQGIXHOFRPSOH[HV &KHQH\DQG6XOOLYDQ/LQGHQPXWKDQG'DYLV  6ORSHGUDPDWLFDOO\LQFUHDVHVWKHUDWHRIVSUHDGDQG LQWHQVLW\RIZLOGODQG¿UHVE\H[SRVLQJWKHIXHODKHDGRI WKHDGYDQFLQJÀDPHIURQWWRDGGLWLRQDOFRQYHFWLYHDQG UDGLDQWKHDW)LUHVDGYDQFLQJXSVORSHDUHWKXVFDSDEOHRI PDNLQJH[FHHGLQJO\IDVWUXQVFRPSDUHGWROHYHOWRSRJUDSK\ )RUH[DPSOHRQHZRXOGH[SHFWDFURZQ¿UHEXUQLQJRQD SHUFHQWVORSHWRVSUHDGDERXWWLPHVDVIDVWDVRQH RQOHYHOWHUUDLQIRUWKHVDPHIXHODQGZHDWKHUIXHOFRQGL WLRQV 9DQ:DJQHUE $VVORSHVWHHSQHVVLQFUHDVHV WKHÀDPHVWHQGWROHDQPRUHDQGPRUHWRZDUGWKHVORSH VXUIDFHJUDGXDOO\EHFRPLQJDWWDFKHGWKHUHVXOWEHLQJD VKHHWRIÀDPHPRYLQJURXJKO\SDUDOOHOWRWKHVORSH5RWKHU PHO  KDVVWDWHGWKDWDOWKRXJKWKHUHLVQRGH¿QLWLYH UHVHDUFKRQWKHVXEMHFWRIÀDPHDWWDFKPHQW³LWDSSHDUV IURPODEZRUNDQGGLVFXVVLRQVZLWKXVHUVWKDWWKHÀDPHV

EHFRPHDWWDFKHGQHDUSHUFHQWVORSHZLWKQRSUHYDLOLQJ ZLQG´7KHFULWLFDOYDOXHZLOODFWXDOO\GLIIHUGHSHQGLQJRQ WKHSUHYDLOLQJZLQGVWUHQJWK &KHQH\DQG6XOOLYDQ  DVZHOODVRQWKHIXHOW\SHFKDUDFWHULVWLFV7KHWLPHODSVH SKRWRJUDSK\WDNHQRIWKHUDSLGXSVORSHUXQVRQWKH 6KLS,VODQG)LUHLQFHQWUDO,GDKRDVVKRZQLQWKHYLGHR/RRN 8S/RRN'RZQ/RRN$URXQG 1DWLRQDO:LOG¿UH&RRUGL QDWLQJ*URXS FRQVWLWXWHVDJRRGH[DPSOHRIVXFK¿UH EHKDYLRU :LWKWKHH[FHSWLRQRIYHU\ORQJVORSHVVXFKDVIRXQG IRUH[DPSOHLQWKH6DOPRQ5LYHUFRXQWU\RIFHQWUDO,GDKR WKHUDWHRIDGYDQFHRIZLQGGULYHQFURZQ¿UHVLQPRXQWDLQ RXVWHUUDLQWHQGVRYHUWKHGXUDWLRQRIWKHLUUXQWREHZHOO EHORZZKDWZRXOGEHH[SHFWHGRQÀDWJURXQGHYHQXQGHU FULWLFDO¿UHZHDWKHUFRQGLWLRQV7KLVLVDUHVXOWRIWKHGHJUHH RIWHUUDLQH[SRVXUHWRWKHSUHYDLOLQJZLQGVZKLFKOLPLWV WKHIXOOHIIHFWLYHQHVVRIZLQGVSHHGRQ¿UHVSUHDGDVZHOODV GLIIHUHQFHVLQIXHOPRLVWXUHRZLQJWRDVSHFW 6FKURHGHUDQG %XFN +RZHYHUZKHQWKHDGYDQFLQJFURZQ¿UHIURQW HQFRXQWHUVDVLWXDWLRQZKHUHZLQGDQGWRSRJUDSK\UHVXOW LQDIDYRXUDEOHDOLJQPHQWVSUHDGUDWHVRIaPPLQDUH TXLWHHDVLO\SRVVLEOHIRUDEULHISHULRGRYHUVKRUWGLVWDQFHV ZLWKRQO\PRGHUDWHO\VWURQJZLQGV HJ5RWKHUPHODQG 0XWFK )LUHVSUHDGUDWHVLQJUDVVODQGDQGVKUXEODQG IXHOW\SHVDWHYHQWZLFHWKLVOHYHOFDQHDVLO\RFFXU %XWOHUHW DO5RWKHUPHO  ,WLVZRUWKKLJKOLJKWLQJWKHIDFWWKDWFURZQ¿UHUXQVLQ PRXQWDLQRXVWHUUDLQDUHQRWOLPLWHGWRMXVWXSVORSHVLWX DWLRQV&DVHVRIFURZQ¿UHVEXUQLQJGRZQVORSHRUFURVV VORSHXQGHUWKHLQÀXHQFHRIVWURQJZLQGVKDYHRFFXUUHGLQ WKHSDVW %\UDP0F$OSLQHHWDO 7KHPDMRUUXQ RIWKH'XGH)LUHLQQRUWKHUQ$UL]RQDRQ-XQHWKDW OHGWRWKHGHDWKVRIVL[¿UH¿JKWHUVLQYROYHGGRZQVORSHDQG FURVVVORSHVSUHDGDVDUHVXOWRIWKHVWURQJGRZQGUDIWZLQGV FDXVHGE\WKH¿UH¶VFROODSVLQJFRQYHFWLRQFROXPQ *RHQV DQG$QGUHZV 

&URZQ)LUH,QWHQVLW\DQG)ODPH=RQH &KDUDFWHULVWLFV :KHQDFRQLIHUIRUHVWVWDQGFURZQVDGGLWLRQDOIXHOLV FRQVXPHGSULPDULO\LQWKHIRUPRIQHHGOHIROLDJHEXWDOVR 

6\QWKHVLVRI.QRZOHGJHRI([WUHPH)LUH%HKDYLRU9ROXPH,IRU)LUH0DQDJHUV

PRVVHVDQGOLFKHQVEDUNÀDNHVDQGVPDOOZRRG\WZLJV 7KHDGGLWLRQDOIXHOFRQVXPHGE\DFURZQ¿UHRZLQJWRWKH FDQRS\IXHOLQYROYHPHQWJHQHUDOO\DPRXQWVWRWR NJPGHSHQGLQJRQVWDQGFKDUDFWHULVWLFV LHDQLQFUHDVH LQIXHOFRQVXPSWLRQZLWKUHVSHFWWR¿UHOLQHLQWHQVLW\RI RQHTXDUWHUWRDGRXEOLQJLQWKHDPRXQW &RPELQHGZLWK WKHLQFUHDVHLQUDWHRI¿UHVSUHDGDIWHUFURZQLQJ¿UHOLQH LQWHQVLWLHVFDQHDVLO\TXDGUXSOHLQYDOXHZLWKLQDIHZ VHFRQGV HJIURPN:PWRN:P ,QVXFK FDVHVLVWKHUHDQ\ZRQGHUZK\VRPH¿UHVVHHPWROLWHUDOO\ ³EORZXS´" $¿UH¶VÀDPH]RQHFKDUDFWHULVWLFV LHGHSWKDQJOH KHLJKWDQGOHQJWK DUHDUHÀHFWLRQRILWVKHDWRUHQHUJ\ UHOHDVHUDWH$VWKH¿UHOLQHLQWHQVLW\RUUDWHRIHQHUJ\ UHOHDVHGSHUXQLWDUHDRIWKHÀDPHIURQWLQFUHDVHVEHFDXVH RIDIDVWHUUDWHRIVSUHDGDQGDODUJHUTXDQWLW\RIIXHOEHLQJ YRODWLOL]HGLQWKHÀDPLQJIURQWÀDPHVL]HRUYROXPH LQFUHDVHV)LUHOLQHLQWHQVLWLHVRIZLQGGULYHQFURZQ¿UHV FDQH[FHHGN:PIRUVLJQL¿FDQWSHULRGV $QGHUVRQ .LLODQG*ULJHO  7KHÀDPHGHSWK 'P RIDVSUHDGLQJZLOGODQG¿UH ¿J  LVDSURGXFWRILWV526DQGWKHÀDPHIURQWUHVLGHQFH WLPH W UPLQ ZKLFKUHSUHVHQWVWKHGXUDWLRQWKDWDPRYLQJ EDQGRU]RQHRIFRQWLQXRXVÀDPLQJFRPEXVWLRQSHUVLVWVDW RUUHVLGHVRYHUDJLYHQORFDWLRQ ' 526îWU 

5HVLGHQFHWLPHVDUHGLFWDWHGODUJHO\E\WKHSDUWLFOH VL]H V GLVWULEXWLRQORDGDQGFRPSDFWQHVVRIWKHIXHOEHG 5HVLGHQFHWLPHVIRUFRQLIHUIRUHVWIXHOW\SHVDWWKHJURXQG VXUIDFHDUHFRPPRQO\VHFWRPLQFRPSDUHGWRWR VHFLQIXOO\FXUHGJUDVVIXHOV$VVXPLQJW U PLQ LHVHF DVXUIDFH¿UHLQDFRQLIHUIRUHVWVSUHDGLQJDW PPLQZRXOGWKXVKDYHÀDPHGHSWKRIDURXQGP DFFRUGLQJWRHT  &URZQ¿UHVDUHFDSDEOHRISURGXFLQJ YHU\GHHSÀDPHIURQWV7KHGHSWKRIWKHEXUQLQJ]RQHLQWKH VXUIDFHIXHOVRIDFURZQ¿UHVSUHDGLQJDWPPLQZRXOG IRUH[DPSOHEHDURXQGP7KHÀDPHGHSWKRIDJUDVV ¿UHDGYDQFLQJDWWKLVUDWHZRXOGLQFRQWUDVWEHRQO\DERXWD WHQWKRIWKLVYDOXH5HVLGHQFHWLPHVZLWKLQWKHFDQRS\IXHO OD\HURIDFURZQ¿UHDUHDSSUR[LPDWHO\RQHKDOIWRRQHWKLUG



WKRVHH[SHULHQFHGDWJURXQGOHYHO $QGHUVRQ7D\ORU HWDO 7KLVLVUHÀHFWHGLQWKHJUDGXDOFRQYHUJHQFHRI WKHÀDPLQJ]RQHGHSWKZLWKKHLJKWHQGLQJLQWKHÀDPHWLS DERYHWKHWUHHFURZQV 7KHÀDPHIURQWRIDFURZQ¿UHRQOHYHOJURXQGDSSHDUV WREHURXJKO\YHUWLFDORUQHDUO\VR7KLVDSSHDUDQFHKDV OHGWRWKHSRSXODUSKDVH³ZDOORIÀDPH´ZKHQLWFRPHV WRGHVFULELQJFURZQ¿UHEHKDYLRU7\SLFDOO\WKRXJKWLOW DQJOHVDUHWRGHJUHHVIURPWKHYHUWLFDO7KHIDFWWKDW WKHÀDPHVRIDFURZQ¿UHVWDQGVRHUHFWLVDGLUHFWUHVXOWRI WKHSRZHUIXOEXR\DQF\DVVRFLDWHGZLWKWKHODUJHDPRXQW RIHQHUJ\UHOHDVHGLQWKHÀDPHIURQW ¿J& 5DGLDWLRQ IURPWKHFURZQ¿UHZDOORIÀDPHFDQSURGXFHSDLQIXOEXUQV RQH[SRVHGVNLQDWPRUHWKDQPIURPWKH¿UHHGJH $OELQL  *LYHQWKHGLI¿FXOW\RIJDXJLQJWKHKRUL]RQWDOGHSWKRI WKHEXUQLQJ]RQHLQDFURZQ¿UHÀDPHKHLJKWFRQVWLWXWHV DPRUHHDVLO\YLVXDOL]HGGLPHQVLRQWKDQÀDPHOHQJWK +RZHYHUHIIRUWVWRREMHFWLYHO\HVWLPDWHÀDPHKHLJKWVRI FURZQ¿UHVLVFRPSOLFDWHGE\WKHIDFWWKDWVXGGHQLJQLWLRQ RIXQEXUQHGJDVHVLQWKHFRQYHFWLRQFROXPQFDQUHVXOWLQ ÀDPHÀDVKHVWKDWPRPHQWDULO\H[WHQGVRPHPRUPRUH LQWRWKHFRQYHFWLRQFROXPQDORIWRQHVXFKÀDPHÀDVKZDV SKRWRJUDSKLFDOO\GRFXPHQWHGWKDWH[WHQGHGDOPRVW PDERYHWKHJURXQG 6XWWRQ 6XFKÀDVKHVFDQHDVLO\ UHVXOWLQRYHUHVWLPDWHVRIDYHUDJHÀDPHKHLJKWVZKLFKXVX DOO\UDQJHIURPDERXWWRPRQKLJKLQWHQVLW\FURZQ ¿UHV %\UDPE $YHUDJHÀDPHKHLJKWVRIFURZQ¿UHV DUHWKXVJHQHUDOO\UHJDUGHGDVEHLQJDERXWWZR ¿J&  WRWKUHHWLPHVWKHVWDQGKHLJKW

&URZQ)LUH$UHDDQG3HULPHWHU*URZWK )RUIRUHVW¿UHVRIWRGD\WREHFRPHODUJHWKH\W\SLFDOO\KDYH WRLQYROYHVRPHGHJUHHRIFURZQLQJ$FRPPRQD[LRPLV WKDWSHUFHQWRIDUHDEXUQHGLVJHQHUDOO\FDXVHGE\OHVV WKDQSHUFHQWRIWKH¿UHV:KHQDIRUHVW¿UHDWWKHYHU\ PLQLPXPGRXEOHVLWVVSUHDGUDWHDIWHUWKHRQVHWRIFURZQ LQJWKHDUHDEXUQHGIRUDJLYHQSHULRGZLOOEHDWOHDVWIRXU WLPHVZKDWZRXOGKDYHEHHQFRYHUHGE\DVXUIDFH¿UH,Q RWKHUZRUGVWKHDUHDEXUQHGLVSURSRUWLRQDOWRWKHUDWHRI

*(1(5$/7(&+1,&$/5(325731:*75

)LJXUH²6FKHPDWLFGLDJUDPRIDVLPSOHHOOLSWLFDO¿UHJURZWK PRGHO DIWHU9DQ:DJQHU 7KHSRLQWRILJQLWLRQLVDWWKH MXQFWLRQRIWKHIRXUDUHDJURZWK]RQHV

VSUHDGLQFUHDVH IROORZLQJWKHWUDQVLWLRQWRFURZQLQJ WR DSRZHURI 0F$UWKXU 7KXVLID¿UHWULSOHVLWV UDWHRIDGYDQFHDIWHUFURZQLQJWKHDUHDEXUQHGZLOOEH QLQHWLPHVWKHVL]HLWZRXOGKDYHEHHQKDGLWUHPDLQHGDVD VXUIDFH¿UH LH   2WKHUWKDQGU\DQGSOHQWLIXOIXHOVWKHSULQFLSDO LQJUHGLHQWVIRUPDMRUFURZQ¿UHUXQVDUHVWURQJVXVWDLQHG ZLQGVFRXSOHGZLWKH[WHQGHGKRUL]RQWDOIXHOFRQWLQXLW\ 7KH+D\PDQ)LUHWKDWRFFXUUHGDORQJWKH&RORUDGR)URQW 5DQJHIRUH[DPSOHEXUQHGFORVHWRKDGXULQJLWV PDMRUUXQRQ-XQHDQGHYHQWXDOO\JUHZWRQHDUO\ KDWRZDUGVWKHHQGRIWKHPRQWK *UDKDP  8QGHUIDYRXUDEOHFRQGLWLRQVFURZQ¿UHVRQOHYHOWRJHQWO\ XQGXODWLQJWHUUDLQKDYHEHHQGRFXPHQWHGWRFRYHULQH[FHVV RIKDLQDVLQJOHKRXUEXUQLQJSHULRG .LLODQG *ULJHO DQGXSWRDWKLUGWKDWPXFKLQPRXQWDLQRXV DUHDV $QGHUVRQ  $VVXPLQJFRQWLQXRXVIXHOVLQFOXGLQJQRPDMRUEDUULHUV WR¿UHVSUHDGDQGQRFKDQJHLQZLQGDQGIXHOPRLVWXUH FRQGLWLRQVWKHIRUZDUGVSUHDGGLVWDQFHRIDFURZQ¿UHFDQ

)LJXUH²/HQJWKWREUHDGWKUDWLRRIHOOLSWLFDOVKDSHG¿UHVRQ OHYHOWHUUDLQDVDIXQFWLRQRIZLQGVSHHGDVXVHGLQWKH&DQDGLDQ )RUHVW)LUH%HKDYLRU3UHGLFWLRQ6\VWHP )RUHVWU\&DQDGD)LUH 'DQJHU*URXS DQGLQ5RWKHUPHO¶V  JXLGHWRFURZQ ¿UHEHKDYLRULQUHODWLRQWRH[SHULPHQWDO¿UHDQGZLOG¿UHREVHUYD WLRQVJLYHQLQ$OH[DQGHU  DQG)RUHVWU\&DQDGD)LUH'DQJHU *URXS  7KH%HDXIRUWVFDOHIRUHVWLPDWLQJPRSHQ ZLQGVSHHGVLVSUHVHQWHGLQWDEOH

EHGHWHUPLQHGE\PXOWLSO\LQJLWVSUHGLFWHGUDWHRIVSUHDG E\DSURMHFWHGHODSVHGWLPH3URYLGHGWKHZLQGGLUHFWLRQ UHPDLQVUHODWLYHO\FRQVWDQWDQGWKH¿UHHQYLURQPHQWLV RWKHUZLVHXQLIRUPZLQGGULYHQVXUIDFHDQGFURZQ¿UHV W\SLFDOO\DVVXPHDURXJKO\HOOLSWLFDOVKDSH $OH[DQGHU $QGHUVRQ9DQ:DJQHU GH¿QHGE\LWVOHQJWKWR EUHDGWKUDWLR /%  ¿J ZKLFKLQWXUQLVDIXQFWLRQRI ZLQGVSHHG ¿J 7KH/%DVVRFLDWHGZLWKFURZQ¿UHV JHQHUDOO\UDQJHVIURPDOLWWOHOHVVWKDQWRDPD[LPXP RIDSSUR[LPDWHO\LQH[FHSWLRQDOFDVHV )ROZHLOHU  6LPSOHHVWLPDWHVRISRWHQWLDOFURZQ¿UHVL]HLQWHUPVRI DUHDEXUQHGDQGSHULPHWHUOHQJWKFDQEHPDGHRQWKHEDVLV RIWKHIRUZDUGVSUHDGGLVWDQFHDQG/% ¿J  7KLVVLPSOLVWLFSLFWXUHRI¿UHJURZWKDVGHVFULEHG KHUHLVDSSOLFDEOHWRFDVHVLQYROYLQJDSRLQWVRXUFHLJQLWLRQ HJDQHVFDSHGFDPS¿UHRUOLJKWQLQJ¿UHVWDUW RUSHUKDSV



6\QWKHVLVRI.QRZOHGJHRI([WUHPH)LUH%HKDYLRU9ROXPH,IRU)LUH0DQDJHUV

)LJXUH²$UHDEXUQHG $ DQGSHULPHWHUOHQJWK % RIDQHOOLSWLFDOVKDSHGFURZQ¿UHDVDIXQFWLRQRIIRUZDUGVSUHDGGLVWDQFHDQG ZLQGVSHHGRQOHYHOWHUUDLQ7KH%HDXIRUWVFDOHIRUHVWLPDWLQJPRSHQZLQGVSHHGVLVSUHVHQWHGLQWDEOH

DEUHDFKLQDQHVWDEOLVKHGFRQWUROOLQHLQYROYLQJXQLGL UHFWLRQDOZLQGVDQGLVJHQHUDOO\OLPLWHGWRDWRKRXU SURMHFWLRQSHULRG7KLVDSSURDFKLVWKXVQRWDSSURSULDWHWR HVWLPDWLQJFURZQ¿UHJURZWKZKHQWKHSHULPHWHUEHFRPHV KLJKO\LUUHJXODULQVKDSHZLWKWKHSDVVDJHRIWLPHDVD UHVXOWRIFKDQJHVLQZLQGGLUHFWLRQIXHOW\SHVDQGWHUUDLQ FKDUDFWHULVWLFV HJ5RWKHUPHOHWDO  2QHSDUWLFXODUO\GDQJHURXVV\QRSWLF¿UHZHDWKHUVLWXD WLRQZRUWKKLJKOLJKWLQJZLWKUHVSHFWWRFURZQ¿UHEHKDYLRU LVWKHFDVHRIWKHGU\FROGIURQWDOSDVVDJH 6FKURHGHUDQG %XFN ,QWKH1RUWKHUQ+HPLVSKHUHZLQGVDKHDG RIDQDSSURDFKLQJGU\FROGIURQWJHQHUDOO\VKLIWIURPWKH VRXWKHDVWWRVRXWKDQG¿QDOO\WRWKHVRXWKZHVW$VWKHFROG IURQWSDVVHVRYHUDQDUHDZLQGVVKLIWUDSLGO\WRWKHZHVW WKHQQRUWKZHVW:LQGVSHHGVLQFUHDVHLQVWUHQJWKDVDIURQW DSSURDFKHVDQGXVXDOO\EHFRPHTXLWHVWURQJDQGJXVW\ ZKHQWKHIURQWSDVVHVRYHUDQDUHD7KLVFDQUHVXOWLQDORQJ FURZQ¿UHUXQLQDQRUWKQRUWKHDVWGLUHFWLRQIROORZHGE\D



¿UH¶VHQWLUHULJKWÀDQNFURZQLQJLQDQHDVWVRXWKHDVWGLUHF WLRQDWDQHYHQJUHDWHUUDWHRIVSUHDGDQGLQWHQVLW\ 'H&RVWH HWDO6LPDUGHWDO:DGHDQG:DUG 

&URZQ)LUH6SRWWLQJ$FWLYLW\ 6SRWWLQJRUPDVVHPEHUWUDQVSRUWFDQEHDQLPSRUWDQW PHFKDQLVPGHWHUPLQLQJDFURZQ¿UH¶VRYHUDOOUDWHRIVSUHDG XQGHUFHUWDLQFRQGLWLRQV,WVJHQHUDOHIIHFWRQFURZQ¿UH UDWHRIVSUHDGLVGHWHUPLQHGE\WKHGHQVLW\RILJQLWLRQVDQG GLVWDQFHVWKHVHLJQLWLRQVRFFXUDKHDGRIWKHPDLQ¿UH7KHVH WZRFKDUDFWHULVWLFVDUHLQWLPDWHO\OLQNHGZLWKGHQVLW\ W\SLFDOO\GHFUHDVLQJZLWKGLVWDQFHIURPWKHPDLQDGYDQFLQJ ÀDPHIURQW 7KHHIIHFWRIVSRWWLQJRQWKHRYHUDOOVSUHDGDQGJURZWK RIDZLOGODQG¿UHLVGHSHQGHQWRQWRSRJUDSK\DQGIXHO GLVWULEXWLRQ,QFHUWDLQIXHOW\SHVWKHSURSDJDWLRQRIDFWLYH FURZQ¿UHVLVOLQNHGWRKLJKGHQVLW\VKRUWUDQJHVSRW¿UHV RFFXUULQJXSWRPRUVRDKHDGRIWKHPDLQDGYDQFLQJ ÀDPHIURQWIROORZHGE\WKHLUVXEVHTXHQWFRDOHVFHQFH

*(1(5$/7(&+1,&$/5(325731:*75

)LJXUH²0LQLPXPVHSDUDWLRQGLVWDQFHUHTXLUHGIRUDQHZO\ LJQLWHGVSRW¿UHWRDYRLGEHLQJRYHUUXQE\WKHPDLQÀDPHIURQW RIDQDGYDQFLQJFURZQ¿UHDVDIXQFWLRQRIUDWHRIVSUHDGDQG LJQLWLRQGHOD\ DGDSWHGIURP$OH[DQGHUDQG&UX] ,JQLWLRQ GHOD\UHSUHVHQWVWKHHODSVHGWLPHEHWZHHQD¿UHEUDQGDOLJKWLQJ VXEVHTXHQWLJQLWLRQDQGWKHRQVHWRI¿UHVSUHDG

8QGHUVXFKFRQGLWLRQVWKHRYHUDOO¿UHVSUHDGLVGLFWDWHGE\ VSRWWLQJDVZHOODVUDGLDWLYHDQGFRQYHFWLYHKHDWWUDQVIHU PHFKDQLVPVDVVRFLDWHGZLWKWKHFURZQLQJSKDVH 7D\ORUHW DO ,QVLWXDWLRQVLQYROYLQJKHWHURJHQHRXVIXHOW\SH GLVWULEXWLRQVDQGFRPSOH[WRSRJUDSK\VSRWWLQJZLOODOORZ WKHPDLQDGYDQFLQJ¿UHIURQWWRTXLFNO\E\SDVVDUHDVZLWK ORZVSUHDGSRWHQWLDO HJGRZQVORSHUXQVSXUHKDUGZRRG VWDQGVLQVXPPHUGLVFRQWLQXRXVIXHOV WKHUHE\HIIHFWLYHO\ DGYDQFLQJWKHKRUL]RQWDOH[WHQWRIWKH¿UH¶V³KHDG´6SRW WLQJIURPFURZQ¿UHVLVDOVRHIIHFWLYHLQEUHDFKLQJPDMRU EDUULHUVWR¿UHVSUHDGLQFOXGLQJODUJHZDWHUERGLHVDQG RWKHUQRQIXHODUHDV HJURFNVOLGHVEDUUHQJURXQG  :KHQ¿UHHQYLURQPHQWFRQGLWLRQVDUHXQLIRUPDQG ZLQGVDORIWDUHIDYRUDEOHVSRWWLQJFDQFRQWULEXWHWRWKH RYHUDOOVSUHDGDQGJURZWKRIFURZQ¿UHVSURYLGHGWKHVSRW ¿UHVDUHDEOHWREXUQLQGHSHQGHQWO\RIWKHPDLQDGYDQF LQJ¿UHIURQW,QPRVWKLJKLQWHQVLW\ZLOG¿UHVWKDWLQYROYH

FURZQLQJVSRW¿UHVRULJLQDWLQJRXWDKHDGRIWKHDGYDQFLQJ ÀDPHIURQWDUHW\SLFDOO\RYHUUXQDQGWKXVLQFRUSRUDWHGLQWR WKHODUJHU¿UHSHULPHWHUEHIRUHWKH\DUHDEOHWRGHYHORSDQG VSUHDGLQGHSHQGHQWO\RURWKHUZLVHEHLQÀXHQFHGE\WKH PDLQ¿UH HJLQGUDIWZLQGV )RUDFURZQ¿UHVSUHDGLQJ DWDUDWHRIPPLQRUNPKDQGEXUQLQJXQGHUKRPR JHQHRXVIXHOZHDWKHUDQGWRSRJUDSKLFFRQGLWLRQVVSRWWLQJ GLVWDQFHVZRXOGGHSHQGLQJRQWKHLJQLWLRQGHOD\KDYHWR H[FHHGDSSUR[LPDWHO\WRP ¿J WRKDYHWKH SRWHQWLDOWRLQFUHDVHD¿UH¶VRYHUDOOUDWHRIVSUHDGWKURXJKD ³OHDSIURJ´W\SHRIHIIHFW,IWKHUHDUHVXI¿FLHQWVSRW¿UHVDW RUMXVWEH\RQGWKLVGLVWDQFHWKDWFDQUDSLGO\FRDOHVFHWKLV ³PDVVLJQLWLRQ´HIIHFWZLOOWHPSRUDULO\OHDGWRWKHIRUPDWLRQ RISVHXGRÀDPHIURQWVZLWKJUHDWO\LQFUHDVHGÀDPHKHLJKWV :DGHDQG:DUG  6SRWWLQJGLVWDQFHVRIXSWRDERXWNPDUHFRPPRQO\ REVHUYHGRQZLQGGULYHQFURZQ¿UHVLQFRQLIHUIRUHVWVEXW VSRWWLQJGLVWDQFHVFORVHWRNPKDYHEHHQGRFXPHQWHG DVZHOO6SRW¿UHGLVWDQFHVRIWRNPZHUHUHSRUWHGWR KDYHRFFXUUHGLQWKH1RUWKHUQ5RFN\0RXQWDLQVGXULQJ WKHDQG¿UHVHDVRQV7KHRFFXUUHQFHRIVSRWWLQJ GLVWDQFHVJUHDWHUWKDQNPUHTXLUHDVSHFL¿FFRPELQDWLRQ RIFRQYHFWLRQFROXPQVWUHQJWKDQGYHUWLFDOZLQGSUR¿OH)RU DYLDEOH¿UHEUDQGWRWUDYHOVXFKGLVWDQFHVDODUJHDPRXQWRI HQHUJ\QHHGVWREHUHOHDVHG DVVRFLDWHGZLWKWKHSRVWIURQWDO FRPEXVWLRQRIODUJHIXHOV WRWUDQVSRUWWKH¿UHEUDQGVDW VLJQL¿FDQWKHLJKWV6SRWWLQJGLVWDQFHVRIWKLVPDJQLWXGHDUH OLNHO\WREHDVVRFLDWHGZLWKLVRODWHGSHDNVRI¿UHLQWHQVLW\ VXFKDVWKRVHRFFXUULQJLQDQXSVORSHUXQWKDWZLOOLQMHFW ODUJHTXDQWLWLHVRI¿UHEUDQGVLQWKHSOXPH$QDWPRVSKHULF SUR¿OHZLWKYHU\VWURQJZLQGVDORIWLVDOVRQHFHVVDU\WR FRQVLGHUDEO\WLOWWKHFRQYHFWLRQFROXPQDQGDOORZIRU VLJQL¿FDQWGULIWRIWKH¿UHEUDQGDIWHULWOHDYHVWKHSOXPH 8QGHUH[FHSWLRQDOFLUFXPVWDQFHVVSRWWLQJGLVWDQFHVJUHDWHU WKDQNPKDYHEHHQGHVFULEHG(VSHFLDOO\QRWHZRUWK\LV WKHWRNPVSRW¿UHGLVWDQFHVDVVRFLDWHGZLWKWKH 6XQGDQFH)LUHLQQRUWKHUQ,GDKR $QGHUVRQ ZKLFK ZHUHTXLWHSRVVLEO\FDXVHGE\PDVVLYH¿UHLQGXFHGYRUWLFHV



6\QWKHVLVRI.QRZOHGJHRI([WUHPH)LUH%HKDYLRU9ROXPH,IRU)LUH0DQDJHUV

7DEOH±3UHGLFWHG¿QHGHDGIXHOPRLVWXUHFRQWHQW )')0  DVDIXQFWLRQRIDPELHQWDLUWHPSHUDWXUHDQGUHODWLYHKXPLGLW\ DVVXPLQJ!SHUFHQWVKDGLQJEHWZHHQ±KRXUV GXULQJ0D\±-XO\

 5HODWLYHKXPLGLW\ 3HUFHQW ± ± ± ± ± ± ± ± ± ± ± ± ± ± ± ±

$LUWHPSHUDWXUH ± ± ± ±                 

 'HJUHHV&HOVLXV                                                

!                

7KH)')0YDOXHVDUHXVHGLQWKH5RWKHUPHO  FURZQ¿UHUDWHRIVSUHDGPRGHODQG LQWKH&UX]HWDO  PRGHOVIRUSUHGLFWLQJFURZQ¿UHRFFXUUHQFHDQGFURZQ ¿UHUDWHRIVSUHDG$GDSWHGIURP5RWKHUPHO

0RGHOV6\VWHPVDQG2WKHU'HFLVLRQ$LGV IRU3UHGLFWLQJ&URZQ)LUH%HKDYLRU 5RWKHUPHO*XLGHWR3UHGLFWLQJ6L]HDQG%HKDYLRU RI&URZQ)LUHV 5RWKHUPHO  GHYHORSHGDPRGHOIRUSUHGLFWLQJVXUIDFH ¿UHUDWHRIVSUHDGDQGLQWHQVLW\WKDWVWLOOIRUPVWKHEDVLVIRU WKHYDVWPDMRULW\RIJXLGHVDQGFRPSXWHUL]HGGHFLVLRQVXS SRUWVIRUSUHGLFWLQJ¿UHEHKDYLRULQXVHWRGD\LQWKH8QLWHG 6WDWHV+HDFNQRZOHGJHGWKDWKLVPRGHOZDVQRWDSSOLFDEOH WRSUHGLFWLQJWKHEHKDYLRURIFURZQ¿UHVEHFDXVHWKHQDWXUH DQGPHFKDQLVPVRIKHDWWUDQVIHUEHWZHHQWKHWZRVSUHDG UHJLPHVZHUHTXLWHGLIIHUHQW,QWKHPLGWRODWHVWKH JHQHUDOJXLGDQFHWRJDXJLQJZKHWKHUFURZQLQJZDVSRVVLEOH RUQRWZDVWRXVHWKHSUHGLFWHGVXUIDFH¿UHOLQHLQWHQVLW\RU ÀDPHOHQJWK WDEOH 7KHUHZDVQRPHWKRGDWWKDWWLPH IRUSUHGLFWLQJWKHVSUHDGUDWHRIFURZQ¿UHVEXWE\WKHHDUO\ VWKHVXJJHVWLRQZDVEHLQJPDGHWRDVVXPHWKDWFURZQ



¿UHUDWHRIVSUHDGZRXOGEHWZRWRIRXUWLPHVWKDWRIWKH SUHGLFWHGVXUIDFH¿UHUDWHRIVSUHDGRI$QGHUVRQ¶V   )LUH%HKDYLRU)XHO0RGHO 5RWKHUPHO  7KH¿UHVLQWKH*UHDWH[WHQGHGDEVWUDFW@,Q 0DVWHUV5(*DOOH\.(0'HVSDLQ'*HGV7KH ¶)LUHV,QSUHVV@(YDOXDWLQJ UHJUHVVLRQPRGHOHVWLPDWHVRIFDQRS\IXHOVWUDWXP FKDUDFWHULVWLFVLQIRXUFURZQ¿UHSURQHIXHOW\SHV LQZHVWHUQ1RUWK$PHULFD,QWHUQDWLRQDO-RXUQDORI :LOGODQG)LUH &UX]0*$OH[DQGHU0()HUQDQGHV3$0 'HYHORSPHQWRIDPRGHOV\VWHPWRSUHGLFWZLOG¿UH EHKDYLRXULQSLQHSODQWDWLRQV$XVWUDOLDQ)RUHVWU\ ± &UX]0*$OH[DQGHU0(:DNLPRWR5+D $VVHVVLQJFDQRS\IXHOVWUDWXPFKDUDFWHULVWLFVLQ FURZQ¿UHSURQHIXHOW\SHVRIZHVWHUQ1RUWK$PHULFD ,QWHUQDWLRQDO-RXUQDORI:LOGODQG)LUH±

&UX]0*$OH[DQGHU0(:DNLPRWR5+E $VVHVVLQJWKHSUREDELOLW\RIFURZQ¿UHLQLWLDWLRQEDVHG RQ¿UHGDQJHULQGLFHV)RUHVWU\&KURQLFOH± &UX]0*$OH[DQGHU0(:DNLPRWR5+F 'H¿QLWLRQRID¿UHEHKDYLRUPRGHOHYDOXDWLRQSURWRFRO DFDVHVWXG\DSSOLFDWLRQWRFURZQ¿UHEHKDYLRUPRGHOV ,Q2PL31-R\FH/$WHFKHGV)LUHIXHOWUHDWPHQWV DQGHFRORJLFDOUHVWRUDWLRQFRQIHUHQFHSURFHHGLQJV 3URF50563)RUW&ROOLQV&286'HSDUWPHQWRI $JULFXOWXUH)RUHVW6HUYLFH5RFN\0RXQWDLQ5HVHDUFK 6WDWLRQ± &UX]0*$OH[DQGHU0(:DNLPRWR5+ 0RGHOLQJWKHOLNHOLKRRGRIFURZQ¿UHRFFXUUHQFHLQ FRQLIHUIRUHVWVWDQGV)RUHVW6FLHQFH± &UX]0*$OH[DQGHU0(:DNLPRWR5+ 'HYHORSPHQWDQGWHVWLQJRIPRGHOVIRUSUHGLFWLQJFURZQ ¿UHUDWHRIVSUHDGLQFRQLIHUIRUHVWVWDQGV&DQDGLDQ -RXUQDORI)RUHVW5HVHDUFK± &UX]0*%XWOHU%:$OH[DQGHU0(D 3UHGLFWLQJWKHLJQLWLRQRIFURZQIXHOVDERYHDVSUHDGLQJ VXUIDFH¿UH3DUW,,0RGHOEHKDYLRUDQGHYDOXDWLRQ ,QWHUQDWLRQDO-RXUQDORI:LOGODQG)LUH± &UX]0*%XWOHU%:$OH[DQGHU0()RUWKRIHU -0:DNLPRWR5+E3UHGLFWLQJWKHLJQLWLRQRI FURZQIXHOVDERYHDVSUHDGLQJVXUIDFH¿UH3DUW,0RGHO LGHDOL]DWLRQ,QWHUQDWLRQDO-RXUQDORI:LOGODQG)LUH ± &UX]0*)HUQDQGHV30'HYHORSPHQWRI IXHOPRGHOVIRU¿UHEHKDYLRXULQPDULWLPHSLQH 3LQXV SLQDVWHU$LW VWDQGV,QWHUQDWLRQDO-RXUQDORI:LOGODQG )LUH± 'H&RVWH-+:DGH'''HHPLQJ-(7KH *DVWRQ)LUH5HV3DS6($VKHYLOOH1&86 'HSDUWPHQWRI$JULFXOWXUH)RUHVW6HUYLFH6RXWKHDVWHUQ )RUHVW([SHULPHQW6WDWLRQS



6\QWKHVLVRI.QRZOHGJHRI([WUHPH)LUH%HKDYLRU9ROXPH,IRU)LUH0DQDJHUV

'XSX\-/0RUYDQ'1XPHULFDOVWXG\RI DFURZQ¿UHVSUHDGLQJWRZDUGDIXHOEUHDNXVLQJD PXOWLSKDVHSK\VLFDOPRGHO,QWHUQDWLRQDO-RXUQDORI :LOGODQG)LUH±

*UDKDP57WHFKHG+D\PDQ)LUHFDVHVWXG\ *HQ7HFK5HS5056*752JGHQ8786 'HSDUWPHQWRI$JULFXOWXUH)RUHVW6HUYLFH5RFN\ 0RXQWDLQ5HVHDUFK6WDWLRQS

)DKQHVWRFN*57ZRNH\VIRUDSSUDLVLQJIRUHVW¿UH IXHOV5HV3DS31:3RUWODQG2586'HSDUWPHQW RI$JULFXOWXUH)RUHVW6HUYLFH3DFL¿F1RUWKZHVW)RUHVW DQG5DQJH([SHULPHQW6WDWLRQS

+DUWIRUG5$5RWKHUPHO5&)XHOPRLVWXUH DVPHDVXUHGDQGSUHGLFWHGGXULQJWKH¿UHVLQ DEVWUDFW@ ,Q(QJVWURP57*DOOH\.(0GH*URRW:- QG HGV3URFHHGLQJVRIWKH 7DOOWLPEHUV¿UHHFRORJ\ FRQIHUHQFH¿UHLQWHPSHUDWHERUHDODQGPRQWDQH HFRV\VWHPV7DOODKDVVHH)/7DOO7LPEHUV5HVHDUFK 6WDWLRQ

0XUSK\.5LFK76H[WRQ7$QDVVHVVPHQW RIIXHOWUHDWPHQWHIIHFWVRQ¿UHEHKDYLRUVXSSUHVVLRQ HIIHFWLYHQHVVDQGVWUXFWXUHLJQLWLRQRQWKH$QJRUD)LUH 7HFK3XEO5739DOOHMR&$86'HSDUWPHQWRI $JULFXOWXUH)RUHVW6HUYLFH3DFL¿F6RXWKZHVW5HJLRQ S 1DWLRQDO:LOG¿UH&RRUGLQDWLQJ*URXS/RRNXS ORRNGRZQORRNDURXQG>9+6YLGHRWDSHPLQXWHV@ 3XEOLFDWLRQ1)(6%RLVH,'1DWLRQDO)LUH (TXLSPHQW6\VWHP%RLVH,QWHUDJHQF\)LUH&HQWHU 1HOVRQ50-U%\UDP¶VHQHUJ\FULWHULRQIRU ZLOGODQG¿UHVXQLWVDQGHTXDWLRQV5HV1RWH,17 2JGHQ8786'HSDUWPHQWRI$JULFXOWXUH)RUHVW 6HUYLFH,QWHUPRXQWDLQ5HVHDUFK6WDWLRQS 3D[WRQ-7KHPRQVWHUUHDUHGKLVXJO\KHDG²WKH VWRU\RI5RGHR&KHGLVNL)LUHDQG¿UHDVDWRRORIQDWXUH 6QRZÀDNH$=&HGDU+LOO3XEOLVKLQJS 3HQFH0=LPPHUPDQ77KH:LOGODQG)LUH 'HFLVLRQ6XSSRUW6\VWHPLQWHJUDWLQJVFLHQFH WHFKQRORJ\DQG¿UHPDQDJHPHQW)LUH0DQDJHPHQW 7RGD\  ± 5HLQKDUGW('&URRNVWRQ1/WHFKHGV 7KH)LUHDQG)XHOV([WHQVLRQWRWKH)RUHVW9HJHWDWLRQ 6LPXODWRU*HQ7HFK5HS5056*752JGHQ87 86'HSDUWPHQWRI$JULFXOWXUH)RUHVW6HUYLFH5RFN\ 0RXQWDLQ5HVHDUFK6WDWLRQS 5RWKHUPHO5&$PDWKHPDWLFDOPRGHOIRU SUHGLFWLQJ¿UHVSUHDGLQZLOGODQGIXHOV5HV3DS,17 2JGHQ8786'HSDUWPHQWRI$JULFXOWXUH)RUHVW 6HUYLFH,QWHUPRXQWDLQ)RUHVWDQG5DQJH([SHULPHQW 6WDWLRQS 5RWKHUPHO5&+RZWRSUHGLFWWKHVSUHDGDQG LQWHQVLW\RIIRUHVWDQGUDQJH¿UHV*HQ7HFK5HS,17 2JGHQ8786'HSDUWPHQWRI$JULFXOWXUH)RUHVW 6HUYLFH,QWHUPRXQWDLQ)RUHVWDQG5DQJH([SHULPHQW 6WDWLRQS



6\QWKHVLVRI.QRZOHGJHRI([WUHPH)LUH%HKDYLRU9ROXPH,IRU)LUH0DQDJHUV

6FRWW-+5HLQKDUGW('$VVHVVLQJFURZQ¿UH SRWHQWLDOE\OLQNLQJPRGHOVRIVXUIDFHDQGFURZQ¿UH EHKDYLRU5HV3DS505653)RUW&ROOLQV&2 86'HSDUWPHQWRI$JULFXOWXUH)RUHVW6HUYLFH5RFN\ 0RXQWDLQ5HVHDUFK6WDWLRQS

5RWKHUPHO5&)LUHEHKDYLRUFRQVLGHUDWLRQVRI DHULDOLJQLWLRQ,Q0XWFK5:WHFKFRRUG3UHVFULEHG ¿UHE\DHULDOLJQLWLRQSURFHHGLQJVRIDZRUNVKRS 0LVVRXOD07,QWHUPRXQWDLQ)LUH&RXQFLO± 5RWKHUPHO5&3UHGLFWLQJEHKDYLRUDQGVL]HRI FURZQ¿UHVLQWKHQRUWKHUQ5RFN\0RXQWDLQV5HV3DS ,172JGHQ8786'HSDUWPHQWRI$JULFXOWXUH )RUHVW6HUYLFH,QWHUPRXQWDLQ5HVHDUFK6WDWLRQS

6LPDUG$-+DLQHV'$%ODQN5:)URVW-6 7KH0DFN/DNH)LUH*HQ7HFK5HS1& 6W3DXO0186'HSDUWPHQWRI$JULFXOWXUH)RUHVW 6HUYLFH1RUWK&HQWUDO)RUHVW([SHULPHQW6WDWLRQS

5RWKHUPHO5&0DQQ*XOFK)LUHDUDFHWKDW FRXOGQ¶WEHZRQ*HQ7HFK5HS,172JGHQ 8786'HSDUWPHQWRI$JULFXOWXUH)RUHVW6HUYLFH ,QWHUPRXQWDLQ5HVHDUFK6WDWLRQS

6WRFNV%-$OH[DQGHU0(:RWWRQ%06WHIQHU &1)ODQQLJDQ0'7D\ORU6:/DYRLH 10DVRQ-$+DUWOH\*50DIIH\0( 'DOU\PSOH*1%ODNH7:&UX]0*/DQRYLOOH 5$&URZQ¿UHEHKDYLRXULQDQRUWKHUQMDFNSLQH EODFNVSUXFHIRUHVW&DQDGLDQ-RXUQDORI)RUHVW5HVHDUFK ±

5RWKHUPHO5&+DUWIRUG5$&KDVH&+ )LUHJURZWKPDSVIRUWKH*UHDWHU86'$15&6@7KH 3/$176GDWDEDVHKWWSSODQWVXVGDJRY )HEUXDU\   9DQ:DJQHU&(+LVWRU\RIDVPDOOFURZQ¿UH )RUHVWU\&KURQLFOH±± 9DQ:DJQHU&()LUHEHKDYLRXUPHFKDQLVPVLQD UHGSLQHSODQWDWLRQ¿HOGDQGODERUDWRU\HYLGHQFH'HS 3XEO1R2WWDZD21&DQDGD'HSDUWPHQWRI )RUHVWU\DQG5XUDO'HYHORSPHQW)RUHVWU\%UDQFKS 9DQ:DJQHU&($VLPSOH¿UHJURZWKPRGHO )RUHVWU\&KURQLFOH± 9DQ:DJQHU&(D&RQGLWLRQVIRUWKHVWDUWDQG VSUHDGRIFURZQ¿UH&DQDGLDQ-RXUQDORI)RUHVW 5HVHDUFK± 9DQ:DJQHU&(E(IIHFWRIVORSHRQ¿UHVSUHDG UDWH&DQDGLDQ)RUHVWU\6HUYLFH%LPRQWKO\5HVHDUFK 1RWHV±

5HVHDUFK± YDQ:DJWHQGRQN-:%RWWL6-0RGHOLQJ EHKDYLRURISUHVFULEHG¿UHVLQ,Q(QJOLVK@ :DGH'':DUG'($QDQDO\VLVRIWKH$LU )RUFH%RPE5DQJH)LUH5HV3DS6($VKHYLOOH 1&86'HSDUWPHQWRI$JULFXOWXUH)RUHVW6HUYLFH 6RXWKHDVWHUQ)RUHVW([SHULPHQW6WDWLRQS :HEHU0*)LUHUHVHDUFKDQGWKHJOREDOYLOODJH )RUHVWU\&KURQLFOH± :HQGHO*:6WRUH\7*%\UDP*0)RUHVW IXHOVRQRUJDQLFDQGDVVRFLDWHGVRLOVLQWKH&RDVWDO3ODLQ RI1RUWK&DUROLQD6WQ3DS$VKHYLOOH1&86 'HSDUWPHQWRI$JULFXOWXUH)RUHVW6HUYLFH6RXWKHDVWHUQ )RUHVW([SHULPHQW6WDWLRQ :RWWRQ%0$OH[DQGHU0(7D\ORU6: 8SGDWHVDQGUHYLVLRQVWRWKH&DQDGLDQ)RUHVW)LUH %HKDYLRU3UHGLFWLRQ6\VWHP,QI5HS*/&;6DXOW 6WH0DULH211DWXUDO5HVRXUFHV&DQDGD&DQDGLDQ )RUHVW6HUYLFH*UHDW/DNHV)RUHVWU\&HQWUHS 

6\QWKHVLVRI.QRZOHGJHRI([WUHPH)LUH%HKDYLRU9ROXPH,IRU)LUH0DQDJHUV

:HDWKHU6HUYLFH -RKQ6DOWHQEHUJHU )LUH:HDWKHU 6HUYLFHV3URJUDP0DQDJHU1RUWKZHVW*HRJUDSKLF $UHD&RRUGLQDWLRQ&HQWHU DQG-XOLD5XWKHUIRUG 1DWLRQDO:HDWKHU6HUYLFH 

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¿FDQWO\LPSURYHGWKHGRFXPHQW/LVWHGEHORZDUHWKH FKDSWHUUHYLHZHUV ‡

‡

(IIHFWVRI&RPSOH[7HUUDLQ²7RP5ROLQVNL )LUH :HDWKHU3URJUDP0DQDJHU6RXWKHUQ&DOLIRUQLD *HRJUDSKLF$UHD&RRUGLQDWLRQ&HQWHU DQG.HQQ 0F&DUW\ &DOLIRUQLD'HSDUWPHQWRI)RUHVWU\DQG )LUH3URWHFWLRQ  &ULWLFDO)LUH:HDWKHU3DWWHUQV²5LFN2FKRD 1DWLRQDO,QWHUDJHQF\)LUH&HQWHU3UHGLFWLYH 6HUYLFHVUHWLUHG +HDWK+RFNHQEHUU\ 1DWLRQDO

‡

)LUH,QWHUDFWLRQVDQG0DVV)LUHV²7ZRDQRQ\PRXV UHYLHZHUV

‡

&ROXPQ3OXPH'\QDPLFVDQG6SRW)LUHV²-RVHSK -&KDUQH\ 86)RUHVW6HUYLFH1RUWKHUQ5HVHDUFK 6WDWLRQ DQG'RQ+DLQHV 86)RUHVW6HUYLFHUHWLUHG  IRUSOXPHVHFWLRQ1LFKRODV*HOOLH $XVWUDOLDQ)LUH %HKDYLRU$QDO\VW DQG0DUW\$OH[DQGHU $OEHUWD 6FKRRORI)RUHVW6FLHQFHDQG0DQDJHPHQW8QLYHUVLW\ RI$OEHUWD(GPRQWRQ&DQDGD IRUVSRWWLQJVHFWLRQ

‡

9RUWLFHVDQG:LOGODQG)LUH²'RQ+DLQHVDQGWZR DQRQ\PRXVUHYLHZHUV

‡

&URZQ)LUH²'DYH7KRPDV 86)RUHVW6HUYLFH UHWLUHG 3KLOLS2PL 3URIHVVRU(PHULWXV&RORUDGR 6WDWH8QLYHUVLW\ &+RIIPDQ 8QLYHUVLW\RI,GDKR  DQG-.HUQ )ORULGD'LYLVLRQRI)RUHVWU\ 

7KHDXWKRUVDOVRWKDQN9LFWRULD:HUWKIRUKHUKHOSLQ ZULWLQJWKH¿QDOGRFXPHQWVXPPDU\DQGWR9LFWRULD:HUWK DQG/\QQ6XOOLYDQIRUHGLWLQJDQGIRUPDWWLQJWKHPDQX VFULSWLQSUHSDUDWLRQIRUSXEOLFDWLRQ

8QLW&RQYHUVLRQ)DFWRUVD 6,XQLW

0XOWLSOLFDWLRQIDFWRU

(QJOLVKXQLW

,QYHUVHIDFWRU

'HJUHHV&HOVLXV ƒ&  +HFWDUHV KD  .LORJUDPV NJ  .LORJUDPVSHUFXELF PHWHU NJP .LORJUDPVSHUVTXDUH PHWHU NJP .LORJUDPVSHUVHFRQG SHUVTXDUHPHWHU  NJVHFP .LORJUDPVSHUVTXDUH PHWHU NJP  +HFWRSDVFDOV K3D 

 ƒ)    

'HJUHHV)DKUHQKHLW ƒ)  $FUHV DF  3RXQGV OE  3RXQGVSHUFXELFIRRW OEIW 

ƒ&    



3RXQGVSHUVTXDUHIRRW OEIW 



 

3RXQGVSHUKRXUSHUVTXDUH IRRW OEKUIW





7RQVSHUDFUH WDF 





3RXQGVSHUVTXDUHLQFK OELQ 





*(1(5$/7(&+1,&$/5(325731:*75

6,XQLW

0XOWLSOLFDWLRQIDFWRU

.LORMRXOHVSHUNLORJUDP  N-NJ  .LORPHWHUV NP  .LORPHWHUVSHUKRXU  NPK  .LORZDWWVSHUPHWHU  N:P  0HJDZDWWV 0:  &HQWLPHWHUV FP  0HWHUV P  6TXDUHPHWHUV P 

   

0HWHUVSHUPLQXWH  PPLQ  0HWHUVSHUPLQXWH PPLQ  0HWHUVSHUVHFRQG PV  1XPEHUSHUKHFWDUH  1RKD 6TXDUHPHWHUVSHU KHFWDUH PKD

(QJOLVKXQLW %ULWLVKWKHUPDOXQLWVSHU SRXQG %78OE 0LOHV PL  0LOHVSHUKRXU PLK 

,QYHUVHIDFWRU   

    

%78VSHUVHFRQGSHUIRRW  %78VIW %78VSHUPLQXWH %78PLQ  ,QFKHV )HHW IW 

   

 

6TXDUHIHHW )HHWSHUPLQXWH IWPLQ 

 



&KDLQVSHUKRXU FKK 



 

)HHWSHUVHFRQG IWV  1XPEHUSHUDFUH 1RDF 

 



6TXDUHIHHWSHUDFUH IWDF 



D

)DFWRUVDUHJLYHQWRWKUHHVLJQL¿FDQWGLJLWV7RFRQYHUWDQ(QJOLVKXQLWWRD6WDQGDUG,QHUQDWLRQDG8QLWHV 6, XQLWPXOWLSO\E\WKH LQYHUVHIDFWRUJLYHQLQWKHULJKWKDQGFROXPQ

&RPPRQDQG6FLHQWL¿F1DPHVD &RPPRQQDPH 'RXJODV¿U (XFDO\SWXV -DFNSLQH /RGJHSROHSLQH 3RQGHURVDSLQH 5HGSLQH 6DQGSLQH  6LQJOHOHDISLQ\RQ 8WDKMXQLSHU :KLWHSLQH 6SUXFH

6FLHQWL¿FQDPH 3VHXGRWVXJDPHQ]LHVLL 0LUE )UDQFR (XFDO\SWXVVSS 3LQXVEDQNVLDQD/DPE 3LQXVFRQWRUWD'RXJODVH[/RXGHQ 3LQXVSRQGHURVD&/DZVRQ 3LQXVUHVLQRVD$LWRQ 3LQXVFODXVD &KDSPH[(QJHOP  9DVH\H[6DUJ 3LQXVPRQRSK\OOD7RUU )UpP -XQLSHUXVRVWHRVSHUPD 7RUU /LWWOH 3LQXVVWUREXV/ 3LFHDVSS

D

6RXUFH86'$15&6



$EVWUDFW :HUWK3DXO$3RWWHU%ULDQ(&OHPHQWV&UDLJ%)LQQH\0DUN$*RRGULFN 

6FRWW/$OH[DQGHU0DUWLQ(&UX]0LJXHO*)RUWKRIHU-DVRQ$0F$OOLVWHU



6DUD66\QWKHVLVRINQRZOHGJHRIH[WUHPH¿UHEHKDYLRUYROXPH,IRU¿UH

 

PDQDJHUV*HQ7HFK5HS31:*753RUWODQG2586'HSDUWPHQWRI $JULFXOWXUH)RUHVW6HUYLFH3DFL¿F1RUWKZHVW5HVHDUFK6WDWLRQS



7KH1DWLRQDO:LOG¿UH&RRUGLQDWLQJ*URXSGH¿QLWLRQRIH[WUHPH¿UHEHKDYLRU ()% LQGLFDWHV DOHYHORI¿UHEHKDYLRUFKDUDFWHULVWLFVWKDWRUGLQDULO\SUHFOXGHVPHWKRGVRIGLUHFWFRQWURO DFWLRQ2QHRUPRUHRIWKHIROORZLQJLVXVXDOO\LQYROYHGKLJKUDWHRIVSUHDGSUROL¿FFURZQ LQJVSRWWLQJSUHVHQFHRI¿UHZKLUOVDQGVWURQJFRQYHFWLRQFROXPQ3UHGLFWDELOLW\LVGLI¿FXOW EHFDXVHVXFK¿UHVRIWHQH[HUFLVHVRPHGHJUHHRILQÀXHQFHRQWKHLUHQYLURQPHQWDQGEHKDYH HUUDWLFDOO\VRPHWLPHVGDQJHURXVO\$OWHUQDWHWHUPVLQFOXGH³EORZXS´DQG³¿UHVWRUP´ )LUHPDQDJHUVH[DPLQLQJ¿UHVRYHUWKHODVW\HDUVKDYHFRPHWRXQGHUVWDQGPDQ\ RIWKHIDFWRUVQHFHVVDU\IRU()%GHYHORSPHQW7KLVZRUNSURGXFHGJXLGHOLQHVLQFOXGHGLQ FXUUHQW¿UH¿JKWHUWUDLQLQJZKLFKSUHVHQWVWKHFXUUHQWPHWKRGVRISUHGLFWLQJ()%E\XVLQJ WKHFURZQ¿UHPRGHOZKLFKLVEDVHGRQWKHHQYLURQPHQWDOLQÀXHQFHVRIZHDWKHUIXHOVDQG WRSRJUDSK\ &XUUHQWWUDLQLQJGRHVQRWLQFOXGHWKHIXOOH[WHQWRIVFLHQWL¿FXQGHUVWDQGLQJ0DWHULDO LQFXUUHQWWUDLQLQJSURJUDPVLVDOVRQRWWKHPRVWUHFHQWVFLHQWL¿FNQRZOHGJH1DWLRQDO)LUH 3ODQIXQGVKDYHVSRQVRUHGQHZHUUHVHDUFKUHODWHGWRZLQGSUR¿OHV¶LQÀXHQFHRQ¿UHEHKDYLRU SOXPHJURZWKFURZQ¿UHV¿UHG\QDPLFVLQOLYHIXHOVDQGFRQGLWLRQVDVVRFLDWHGZLWKYRUWH[ GHYHORSPHQW2IVLJQL¿FDQWFRQFHUQLVWKDWFKDUDFWHULVWLFIHDWXUHVRI()%GHSHQGRQFRQGL WLRQVXQGHWHFWDEOHRQWKHJURXQGUHO\LQJIXQGDPHQWDOO\RQLQYLVLEOHSURSHUWLHVVXFKDVZLQG VKHDURUDWPRVSKHULFVWDELOLW\ 2EYLRXVO\QRRQHFRPSOHWHO\XQGHUVWDQGVDOOWKHIDFWRUVFRQWULEXWLQJWR()%EHFDXVHRI JDSVLQRXUNQRZOHGJH7KHVHJDSVDVZHOODVWKHOLPLWDWLRQVDVWRZKHQYDULRXVPRGHOVRU LQGLFHVDSSO\VKRXOGEHQRWHGWRDYRLGDSSOLFDWLRQZKHUHWKH\DUHQRWDSSURSULDWHRUZDU UDQWHG7KLVV\QWKHVLVZLOOVHUYHDVDVXPPDU\RIH[LVWLQJH[WUHPH¿UHEHKDYLRUNQRZOHGJH IRUXVHE\¿UHPDQDJHUV¿UH¿JKWHUVDQG¿UHUHVHDUFKHUV 7KHREMHFWLYHRIWKLVSURMHFWLVWRV\QWKHVL]HH[LVWLQJ()%NQRZOHGJHLQDZD\WKDW FRQQHFWVWKHZHDWKHUIXHODQGWRSRJUDSKLFIDFWRUVWKDWFRQWULEXWHWRGHYHORSPHQWRI()% 7KLVV\QWKHVLVZLOOIRFXVRQWKHVWDWHRIWKHVFLHQFHEXWZLOODOVRFRQVLGHUKRZWKDWVFLHQFHLV FXUUHQWO\SUHVHQWHGWRWKH¿UHPDQDJHPHQWFRPPXQLW\LQFOXGLQJLQFLGHQWFRPPDQGHUV¿UH EHKDYLRUDQDO\VWVLQFLGHQWPHWHRURORJLVWV1DWLRQDO:HDWKHU6HUYLFHRI¿FHIRUHFDVWHUVDQG ¿UH¿JKWHUV,WZLOOVHHNWRFOHDUO\GHOLQHDWHWKHNQRZQWKHXQNQRZQDQGDUHDVRIUHVHDUFK ZLWKWKHJUHDWHVWSRWHQWLDOLPSDFWRQ¿UH¿JKWHUSURWHFWLRQ .H\ZRUGV([WUHPH¿UHEHKDYLRUIXHOV¿UHEHKDYLRU