Sie sind auf Seite 1von 182

Technical Report Documentation Page

1. Report No. 2. Government Accession No. 3. Recipient’s Catalog No.



4. Title and Subtitle 5. Report Date
EVALUATING PERFORMANCE-BASED TEST AND May 1999
SPECIFICATIONS FOR SULFATE RESISTANCE IN CONCRETE Revised December 2000

7. Author(s) 6. Performing Organization Code

John B. Stephens and Ramón L. Carrasquillo 8. Performing Organization Report No.


Research Report 1706-3

9. Performing Organization Name and Address 10. Work Unit No. (TRAIS)

Center for Transportation Research


The University of Texas at Austin
3208 Red River, Suite 200 11. Contract or Grant No.
Austin, TX 78705-2650
Project 0-1706

12. Sponsoring Agency Name and Address 13. Type of Report and Period Covered
Research Report (8/97-5/99)
Texas Department of Transportation
Research and Technology Transfer Section/Construction Division 14. Sponsoring Agency Code
P.O. Box 5080
Austin, TX 78763-5080

15. Supplementary Notes


3URMHFW FRQGXFWHG LQ FRRSHUDWLRQ ZLWK WKH 86 'HSDUWPHQWRI7UDQVSRUWDWLRQ)HGHUDO+LJKZD\$GPLQLVWUDWLRQDQG
WKH7H[DV'HSDUWPHQWRI7UDQVSRUWDWLRQ

16. Abstract

This research project involved an experimental evaluation of the sulfate resistance of various concretes and mortars for
the purpose of establishing performance-based specifications for the durability of concrete against sulfate attack. The
research is the test program portion of a long-term project that aims to establish performance-based specifications for
durability for concrete mix designs for the Texas Department of Transportation. The test program described in this report
consisted of two phases. The first phase was an investigation of the potential use of the standardized test, ASTM C1012-
95, as a performance test. Plain portland cement mortars and mortars with cement-mineral admixture combinations were
tested using three ASTM C150 types of cement, two types of fly ash, and a ground granulated blast furnace slag. The
second phase involved evaluating experimentally the effect of permeability on the sulfate resistance of concrete for the
purpose of determining the proper approach for specifying permeability for sulfate resistance. Concrete permeability
was varied by testing different types of cement and cement-mineral admixture combinations, by using different water-to-
cementitious material ratios for each cement combination, and by using various curing procedures. In the first phase
mortar bars and in the second phase concrete cylinders were immersed in sulfate solution to simulate sulfate exposure.

17. Key Words 18. Distribution Statement


No restrictions. This document is available to the public through
Sulfate attack, sulfate resistance, portland cement
the National Technical Information Service, Springfield, Virginia
concrete
22161.

19. Security Classif. (of report) 20. Security Classif. (of this page) 21. No. of pages 22. Price
Unclassified Unclassified
182

Form DOT F 1700.7 (8-72) Reproduction of completed page authorized


EVALUATING PERFORMANCE-BASED TEST AND SPECIFICATIONS FOR
SULFATE RESISTANCE IN CONCRETE

by

John B. Stephens and Ramón L. Carrasquillo

Research Report Number 1706-3

Research Project 0-1706


Optimization of Concrete Mix Designs for Durability

Conducted for the


TEXAS DEPARTMENT OF TRANSPORTATION
in cooperation with the
U.S. DEPARTMENT OF TRANSPORTATION
FEDERAL HIGHWAY ADMINISTRATION
by the
CENTER FOR TRANSPORTATION RESEARCH
Bureau of Engineering Research
THE UNIVERSITY OF TEXAS AT AUSTIN

May 1999
Revised: December 2000
iv
DISCLAIMERS

The contents of this report reflect the views of the authors, who are responsible for the
facts and the accuracy of the data presented herein. The contents do not necessarily reflect
the official views or policies of the Federal Highway Administration or the Texas
Department of Transportation. This report does not constitute a standard, specification, or
regulation.
There was no invention or discovery conceived or first actually reduced to practice in
the course of or under this contract, including any art, method, process, machine,
manufacture, design or composition of matter, or any new and useful improvement thereof,
or any variety of plant, which is or may be patentable under the patent laws of the United
States of America or any foreign country.

NOT INTENDED FOR CONSTRUCTION, BIDDING, OR PERMIT PURPOSES

Ramón L. Carrasquillo, P.E. (Texas No. 63881)


Research Supervisor

ACKNOWLEDGMENTS

The authors acknowledge the support of TxDOT Project Director E. Lukefahr of the
Construction Division. Also appreciated is the support provided by the other members of the
project monitoring committee, which includes T. Ahmed (FHWA), L. Bobrowski (AUS), W.
Cox (BRG), J. Cravens (FHWA), J. Hunt (DAL), G. Lankes (CST), M. Ralls (BRG), and J.
Seiders (CST).

Research performed in cooperation with the Texas Department of Transportation and the
U.S. Department of Transportation, Federal Highway Administration.

v
vi
Table of Contents

Chapter One: Introduction 1


1.1 Purpose of Work 1
1.2 Background 1
1.3 Project Description 2
1.4 Objectives 3
1.5 Scope 4

Chapter Two: Literature Review 7


2.1 Introduction 7
2.2 Mechanism of Sulfate Attack 7
2.3 Factors Affecting Concrete Resistance to Sulfate Attack 10
2.3.1 Chemistry of Portland Cement 10
2.3.2 Concrete Permeability 12
2.3.3 Mineral Admixtures 14
2.4 Current Guidelines and Specifications for Sulfate Resistant Concrete 19
2.4.1 ACI and UBC Guidelines 19
2.4.2 Current Practice of the Texas Department of Transportation 21
2.5 Available Performance Tests for Evaluating Sulfate Resistance 22
2.5.1 ASTM C452-95 23
2.5.2 ASTM C1012-95 24
2.5.3 USBR 4908 25
2.6 Proposed Performance-Based Specifications for Sulfate Resistance 26

Chapter Three: Experimental Program 31


3.1 Introduction 31
3.2 Phase 1 Testing Program 31
3.2.1 Materials 32
3.2.2 Mix Proportioning 34


vii
3.2.3 Mixing, Placement, and Curing Procedures 36
3.2.4 Testing Procedures 38
3.3 Phase 2 Testing Program 39
3.3.1 Materials 40
3.3.2 Mix Designs 42
3.3.3 Mixing, Placement, and Curing Procedures 44
3.3.4 Sulfate Exposure Testing Procedures 48
3.3.5 Permeability Testing Procedures 50

Chapter Four: Test Results 51


4.1 Introduction 51
4.2 Phase 1 Test Results 51
4.2.1 Mix Results and Fresh Mortar Properties 51
4.2.2 Compressive Strength Results 52
4.2.3 Sulfate Expansion Results for Plain Portland Cement Mortars 56
4.2.4 Sulfate Expansion Results for Mortars with Mineral Admixtures 58
4.3 Phase 2 Test Results 66
4.3.1 Mix Results and Fresh Concrete Properties 67
4.3.2 Compressive Strength Results 68
4.3.3 28-Day Permeability Results 70
4.3.4 Initial Sulfate Expansion and Mass Change Results 72

Chapter Five: Discussion and Analysis 75


5.1 Introduction 75
5.2 Discussion of Phase 1 Test Results 75
5.2.1 Effects of Cement Chemistry on Sulfate Resistance 75
5.2.2 Effects of Mineral Admixtures on Sulfate Resistance 79
5.2.3 Final Evaluation of ASTM C1012-95 86
5.2.4 Implications of Results Concerning Specifications 89


viii
5.3 Discussion of Phase 2 Test Results 91
5.3.1 Effects of Mix Properties and Curing Conditions on Compressive Strength 91
5.3.2 Effects of Mix Properties and Curing Conditions on Permeability 97
5.3.3 Implications of Results Concerning Specifications 103

Chapter Six: Conclusions and Recommendations 107


6.1 Introduction 107
6.2 Conclusions 107
6.2.1 Conclusions from Phase 1 Test Results 107
6.2.2 Conclusions from Phase 2 Test Results 108
6.3 Recommendations 110
6.3.1 Recommendations Based on Phase 1 Results 110
6.3.2 Recommendations Based on Phase 2 Results 111

References 113

Appendix A: Mix Proportions for Phase 1 Mortars 117

Appendix B: Mix Proportions for Phase 2 Concretes 121

Appendix C: Compressive Strength Results for Phase 1 Mortars 125

Appendix D: Sulfate Expansion Results for Phase 1 Mortars 129

Appendix E: Compressive Strength Results for Phase 2 Concretes 135

Appendix F: Initial Sulfate Expansion and Mass Change Results for Phase 2
Concretes 139

ix
x
 
 
 

&KDSWHU2QH,QWURGXFWLRQ

 3XUSRVHRI:RUN
7KLVUHVHDUFKLQYROYHGDQH[SHULPHQWDOHYDOXDWLRQRIWKHUHVLVWDQFHRIYDULRXVPRUWDU
DQG FRQFUHWH PL[HV WR VXOIDWH H[SRVXUH IRU WKH SXUSRVH RI HVWDEOLVKLQJ SHUIRUPDQFHEDVHG
VSHFLILFDWLRQV IRU GXUDELOLW\ 7KH ILUVW SRUWLRQ RI WHVWLQJ LQYROYHG WKH H[DPLQDWLRQ RI D
SHUIRUPDQFH WHVW IRU HYDOXDWLQJ PRUWDUV¶ UHVLVWDQFH WR VXOIDWH DWWDFN 7KH DFFXUDF\ DQG
FRQVLVWHQF\ RI WKH WHVW DV ZHOO DV LWV FRUUHVSRQGLQJ SHUIRUPDQFH FULWHULD ZHUH LQYHVWLJDWHG
7KH VHFRQG SRUWLRQ RI WHVWLQJ LQYROYHG DQ LQYHVWLJDWLRQ RI WKH LQIOXHQFH FRQFUHWH
SHUPHDELOLW\ KDV RQ VXOIDWH UHVLVWDQFH $OWHUQDWLYHV IRU VSHFLI\LQJ SHUPHDELOLW\ ZHUH
H[DPLQHG
7KH WHVW SURJUDP LV SDUW RI D ORQJWHUP SURMHFW WKDW LQYROYHV WKH GHYHORSPHQW RI
SHUIRUPDQFHEDVHG VSHFLILFDWLRQV IRU GXUDEOH FRQFUHWH IRU WKH 7H[DV 'HSDUWPHQW RI
7UDQVSRUWDWLRQ 7['27 ,QSUHYLRXVUHVHDUFKQHZVSHFLILFDWLRQVIRUHYDOXDWLQJWKHVXOIDWH
UHVLVWDQFH RI FRQFUHWH ZHUH SURSRVHG  7KLV UHVHDUFK LQYHVWLJDWHG WKH DFFXUDF\ RI WKH
SHUIRUPDQFH WHVW DQG SHUIRUPDQFH FULWHULD UHFRPPHQGHG LQ WKRVH SURSRVDOV WR HQVXUH WKH
VSHFLILFDWLRQV SURYLGH DQ HIIHFWLYH JXLGHOLQH IRU HYDOXDWLQJ WKH ORQJWHUP GXUDELOLW\ RI
FRQFUHWHDJDLQVWVXOIDWHDWWDFN

 %DFNJURXQG
,QDWLPHZKHQDVLJQLILFDQWDPRXQWRIIXQGVLQWKHWUDQVSRUWDWLRQLQGXVWU\DUHJRLQJ
WRZDUGUHSDLULQJUHWURILWWLQJDQGUHKDELOLWDWLQJFXUUHQWFRQFUHWHLQIUDVWUXFWXUHLWKDVEHFRPH
FULWLFDO WKDW HQJLQHHUV HPSKDVL]H GXUDELOLW\ DQG ORQJWHUP SHUIRUPDQFH LQ DOO QHZ
FRQVWUXFWLRQ SURMHFWV  *XLGHOLQHV QHHG WR EH GHYHORSHG WR HQVXUH WKDW QHZ PDWHULDOV
WHFKQRORJLHVWHVWPHWKRGVDQGFRQVWUXFWLRQSUDFWLFHVFDQEHXWLOL]HGWRSURGXFHKLJKTXDOLW\
ORQJODVWLQJ FRQFUHWH VWUXFWXUHV  &XUUHQWO\ HQJLQHHUV DUH OLPLWHG E\ WKH SDUDPHWHUV DQG
JXLGHOLQHV WKDW ZHUH GHYHORSHG VHYHUDO \HDUV DJR  6SHFLILFDWLRQV KDYH QRW LQFRUSRUDWHG WKH
QHZWHFKQRORJLHVWKDWKDYHFRPHDERXWLQWKHFRQFUHWHLQGXVWU\GXULQJWKHODVWIHZGHFDGHV
7['27UHFRJQL]HGWKLVOLPLWDWLRQDQGDVDUHVXOWEHJDQDUHVHDUFKHIIRUWWRGHYHORSDQHZ
VHWRIJXLGHOLQHVDQGVSHFLILFDWLRQVIRUSURGXFLQJGXUDEOHFRQFUHWH

 1
,Q GHYHORSLQJ QHZ VSHFLILFDWLRQV 7['27 ZDQWHG D FKDQJH LQ WKH DSSURDFK WDNHQ
WRZDUGV ZULWLQJ JXLGHOLQHV IRU GXUDELOLW\ RI FRQFUHWH PL[ GHVLJQV  &XUUHQW 7['27
VSHFLILFDWLRQV IRU FRQFUHWH FRQVWUXFWLRQ GR QRW DGGUHVV WKH SURSHUWLHV RI FRQFUHWH WKDW PRVW
GLUHFWO\DIIHFWGXUDELOLW\,QVWHDGWKHVHUHOHYDQWSURSHUWLHVDUHDGGUHVVHGE\LQGLUHFWPHDQV
)RU H[DPSOH WKH SHUPHDELOLW\ RI FRQFUHWH LV FRQVLGHUHG WR EH RQH RI WKH PRVW LPSRUWDQW
SURSHUWLHVDIIHFWLQJFRQFUHWHGXUDELOLW\8QGHUWRGD\¶VVSHFLILFDWLRQVLIDQHQJLQHHUQHHGHG
DORZSHUPHDELOLW\FRQFUHWHWRHQVXUHGXUDELOLW\LQDVHYHUHHQYLURQPHQWWKLVQHHGZRXOGEH
DGGUHVVHGE\NHHSLQJWKHPL[GHVLJQZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLREHORZDVSHFLILHG
PD[LPXPYDOXH7KHVSHFLILHGPD[LPXPZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLRVZHUHGHULYHG
QHDUO\\HDUVDJRIURPDFRUUHODWLRQWKDWZDVHVWDEOLVKHGEHWZHHQWKHZDWHUWRFHPHQWUDWLR
DQGSHUPHDELOLW\7KHSUREOHPZLWKXVLQJWKLVFRUUHODWLRQLQFXUUHQWVSHFLILFDWLRQVLVWKDWLW
GRHVQRWDFNQRZOHGJHDOOWKHIDFWRUVWKDWDIIHFWFRQFUHWHSHUPHDELOLW\LQWRGD\¶VFRQVWUXFWLRQ
LQGXVWU\,PSURYHGFHPHQWVFKHPLFDODQGPLQHUDODGPL[WXUHVDQGFRQVWUXFWLRQWHFKQLTXHV
DUHQRZDYDLODEOHVRWKDWORZSHUPHDELOLW\FDQEHDFFRPSOLVKHGLQPDQ\ZD\V
7KHJRDORIWKHQHZVSHFLILFDWLRQVLVWRDGGUHVVGXUDELOLW\QHHGVGLUHFWO\,IDFHUWDLQ
OHYHO RI SHUPHDELOLW\ LV UHTXLUHG VSHFLILFDWLRQV ZLOO SURYLGH D PD[LPXP DOORZDEOH
SHUPHDELOLW\YDOXH8VLQJDVSHFLILHGSHUIRUPDQFHWHVWHQJLQHHUVFDQPHDVXUHWKHFRQFUHWH
SHUPHDELOLW\ DQG YHULI\ WKDW LW PHHWV WKH MRE UHTXLUHPHQWV  7['27 DLPV WR HOLPLQDWH WKH
SUDFWLFH RI DFKLHYLQJ DGHTXDWH SHUPHDELOLW\ WKURXJK WKH PHDQV RI VSHFLI\LQJ LQGLUHFW OLPLWV
VXFK DV PD[LPXP ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLRV  7KHVH QHZ W\SHVRIVSHFLILFDWLRQV
DUH UHIHUUHG WR DV SHUIRUPDQFHEDVHG VSHFLILFDWLRQV  7KH VSHFLILFDWLRQV JLYH HQJLQHHUV WKH
IUHHGRPWRXWLOL]HDQ\WHFKQRORJLHVRUUHVRXUFHVDYDLODEOHWRSURGXFHDFRQFUHWHWKDWPHHWVRU
H[FHHGVGXUDELOLW\QHHGVIRUDJLYHQMREFRQGLWLRQ$OOWKHVSHFLILFDWLRQVUHTXLUHLVWKDWWKH
FRQFUHWH EH VKRZQ WKURXJK WHVWLQJ WR KDYH WKH SURSHUWLHV QHFHVVDU\ IRU DGHTXDWH
SHUIRUPDQFH

 3URMHFW'HVFULSWLRQ
7KLVUHVHDUFKLVSDUWRIDSURMHFWIXQGHGE\WKH7H[DV'HSDUWPHQWRI7UDQVSRUWDWLRQ
WLWOHG³2SWLPL]DWLRQRI&RQFUHWH0L['HVLJQVIRU'XUDELOLW\´7KHSURMHFW¶VXOWLPDWHJRDOLV
WKH GHYHORSPHQW RI SHUIRUPDQFHEDVHG VSHFLILFDWLRQV IRU FRQFUHWH VWUXFWXUHV DQG RWKHU

 2
 
 
 

FRQFUHWHDSSOLFDWLRQVIRU7['27,QLWLDOUHVHDUFKIRUWKLVSURMHFWLQYROYHGWKHIRUPDWLRQRID
GXUDELOLW\ PRGHO WKDW RXWOLQHG WKH UHOHYDQW FRQFUHWH SURSHUWLHV WKDW DIIHFW HDFK DVSHFW RI
FRQFUHWH GXUDELOLW\ DQG VHOHFWHG WHVW SURFHGXUHV IRU HYDOXDWLQJ WKRVH SURSHUWLHV  7KURXJK D
OLWHUDWXUH UHYLHZ RI WKH VWDWH RI WKH DUW LQ WKH FRQFUHWH LQGXVWU\ D GXUDELOLW\ PRGHO ZDV
GHYHORSHGDGGUHVVLQJILYHDVSHFWVRIFRQFUHWHGXUDELOLW\IUHH]LQJDQGWKDZLQJVXOIDWHDWWDFN
DONDOLVLOLFDUHDFWLRQDEUDVLRQDQGFRUURVLRQRIUHLQIRUFLQJVWHHO
7KH QH[W VWDJH LQ WKH SURMHFW LQYROYHG YDOLGDWLQJ DQG UHILQLQJ UHFRPPHQGDWLRQV
SUHVHQWHGLQWKHGXUDELOLW\PRGHOWKURXJKDQH[SHULPHQWDOLQYHVWLJDWLRQ)RUWKLVSRUWLRQRI
WKH SURMHFW WKH WHVW SURJUDP IRU WKLV UHSRUW ZDV GHYHORSHG  7KH IRFXV RI WKH H[SHULPHQWDO
LQYHVWLJDWLRQ ZDV RQ WKH GXUDELOLW\ RI FRQFUHWH DJDLQVW VXOIDWH DWWDFN DV WKLV DUHD ZDV RQH
ZKHUH D UHODWLYHO\ QHZ WHVW ZDV SURSRVHG DQG ZKHUH WKH HIIHFWV RI FHUWDLQ SURSHUWLHV ZHUH
XQFOHDU5HVXOWVDQGFRQFOXVLRQVIURPWKLVWHVWSURJUDPVKRXOGOHDGWRWKHUHILQHPHQWRIWKH
GXUDELOLW\PRGHODQGDVWKHILQDOVWDJHFRPSOHWLRQRIWKHSHUIRUPDQFHEDVHGVSHFLILFDWLRQV

 2EMHFWLYHV
,Q GHYHORSLQJ WKH GXUDELOLW\ PRGHO IRU SHUIRUPDQFHEDVHG VSHFLILFDWLRQV WKH
UHVHDUFKHUVQRWHGWKDWRQHDVSHFWRIGXUDELOLW\IRUZKLFKLQYHVWLJDWLRQEH\RQGDVWDWHRIWKH
DUWOLWHUDWXUHUHYLHZDSSHDUHGWREHQHHGHGLQYROYHGWKHLVVXHRIVXOIDWHDWWDFN7KHJRDORI
WKLV UHVHDUFK LV WR SHUIRUP WKLV FRQWLQXHG LQYHVWLJDWLRQ LQ WKH IRUP RI D WZRSKDVH WHVWLQJ
SURJUDP
 7KH ILUVWSKDVHRIWKHWHVWSURJUDPLQYROYHGWKHHYDOXDWLRQRIWKH$PHULFDQ6RFLHW\
IRU 7HVWLQJ DQG 0DWHULDOV $670  VWDQGDUGL]HG WHVW $670 & 5HI   WLWOHG
³6WDQGDUG 7HVW 0HWKRG IRU /HQJWK &KDQJH RI +\GUDXOLF&HPHQW 0RUWDUV ([SRVHG WR D
6XOIDWH6ROXWLRQ´7KLVWHVWZLWKLWVZLGHUDQJHRIDSSOLFDELOLW\DQGUHODWLYHO\VKRUWGXUDWLRQ
KDV SURYHQ WR KDYH H[FHOOHQW SRWHQWLDO DV D SHUIRUPDQFH WHVW IRU HYDOXDWLQJ WKH DELOLW\ RI
PRUWDUV WR UHVLVW VXOIDWH DWWDFN  7KH WHVW KRZHYHU LV UHODWLYHO\ QHZ DQG LV QRW \HW ZLGHO\
XVHG LQ WKH LQGXVWU\  7KH REMHFWLYH RI WKLV ILUVW SKDVH LV WR H[DPLQH WKH UHOLDELOLW\ RI WKH
$670 & WHVW DQG LWV FRUUHVSRQGLQJ SHUIRUPDQFH FULWHULD  $ ZLGH UDQJH RI FHPHQW
W\SHV DQG FHPHQWPLQHUDO DGPL[WXUH FRPELQDWLRQV ZLOO EH WHVWHG WR GHWHUPLQH WKH WHVW¶V

 3
DELOLW\WRLGHQWLI\PRUWDUSURSHUWLHVDIIHFWLQJVXOIDWHUHVLVWDQFH7KHXOWLPDWHJRDOLVWRSURYH
LI $670 & LV DQ HIIHFWLYH WHVW WKDW FDQ EH XVHG ZLWK FRQILGHQFH E\ 7['27 DV D
SHUIRUPDQFHHYDOXDWLRQWHVWIRUVXOIDWHDWWDFN
 7KHVHFRQGSKDVHRIWKHWHVWSURJUDPLVDQHYDOXDWLRQRIWKHHIIHFWRISHUPHDELOLW\RQ
WKHFRQFUHWH¶VDELOLW\WRUHVLVWVXOIDWHDWWDFN:KLOHLWLVLQWXLWLYHWREHOLHYHSHUPHDELOLW\KDV
DQ HIIHFW RQ VXOIDWH UHVLVWDQFH DVLWPHDVXUHVWKHDELOLW\RIVXOIDWHLRQVWRSHQHWUDWHLQWRWKH
FRQFUHWH LW LV QRW FOHDU DV WR WKH LPSDFW WKH SURSHUW\ KDV RQ VXOIDWH UHVLVWDQFH  &XUUHQW
OLWHUDWXUH LV LQFRQFOXVLYH  6RPH UHVHDUFK KDV LQGLFDWHG ORZ SHUPHDELOLW\ LV QRW FDSDEOH RI
IXOO\ SUHYHQWLQJ VXOIDWH DWWDFN LQ FRQFUHWH KRZHYHU FXUUHQW VSHFLILFDWLRQV VWLOO UHTXLUH ORZ
SHUPHDELOLW\ FRQFUHWH IRU FRQFUHWH LQ VXOIDWH HQYLURQPHQWV E\ PHDQV RI OLPLWLQJ WKH
PD[LPXPZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLRV7KHJRDORIWKLVWHVWLQJSKDVHLVWRHYDOXDWH
DQG FRPSDUH WKH LQIOXHQFH RI FRQFUHWH SHUPHDELOLW\ DQG WKH FKHPLVWU\ RI WKH FHPHQWLWLRXV
PDWHULDOVRQWKHVXOIDWHUHVLVWDQFHRIFRQFUHWH,QIRUPDWLRQIURPWKLVH[SHULPHQWDWLRQZLOOEH
XVHGWRGHFLGHZKDWUHTXLUHPHQWVQHHGWREHPHWIRUSHUPHDELOLW\FRQFHUQLQJVXOIDWHDWWDFN
DQGKRZWKHVHUHTXLUHPHQWVFDQEHLQFRUSRUDWHGLQWRWKHSHUIRUPDQFHEDVHGVSHFLILFDWLRQV

 6FRSH
 7KH ILUVW SKDVH RI WKH WHVWLQJ SURJUDP UHSRUWHG KHUHLQ UHIHUUHG WR DV 3KDVH 
WKURXJKRXW WKH UHSRUW LQYROYHG WKH WHVWLQJ RI VHYHUDO GLIIHUHQW PRUWDU PL[HV XVLQJ WKH
VWDQGDUGL]HG WHVW $670 & ³6WDQGDUG 7HVW 0HWKRG IRU /HQJWK &KDQJH RI
+\GUDXOLF&HPHQW 0RUWDUV ([SRVHG WR D 6XOIDWH 6ROXWLRQ´  )RXU GLIIHUHQW FHPHQWV DOO
FRPPHUFLDOO\ SURGXFHG LQ WKH VWDWH RI 7H[DV ZHUH HYDOXDWHG WKHVH LQFOXGHG RQH $670
& 5HI   7\SH , FHPHQW WZR $670 & 7\SH ,,, FHPHQWV DQG RQH $670 &
7\SH9FHPHQW0RUWDUPL[HVZHUHDOVRPDGHZLWKPLQHUDODGPL[WXUHVDVHDFKFHPHQWZDV
FRPELQHGZLWKWKUHHGLIIHUHQWW\SHVRIPLQHUDODGPL[WXUHV2QH$670&ODVV) 5HI IO\
DVK RQH $670 &ODVV & 5HI   IO\ DVK DQG RQH JURXQG JUDQXODWHG EODVW IXUQDFH VODJ
**%)6  ZDV DGGHG LQ YDULRXV SHUFHQW YROXPHWULF UHSODFHPHQW OHYHOV  0RUWDU EDUV ZHUH
PDGHDQGVRDNHGLQDVXOIDWHVROXWLRQ([SDQVLRQPHDVXUHPHQWVZHUHWDNHQDQGFRPSDUHGWR
H[SDQVLRQFULWHULDUHFRPPHQGHGIURPH[SHULHQFH

 4
 
 
 

 7KH VHFRQG SKDVH UHIHUUHG WR DV 3KDVH  WKURXJKRXW WKH UHSRUW LQYROYHG WKH
HYDOXDWLRQ RI VHYHUDO FRQFUHWH PL[HV XVLQJ WKH 8QLWHG 6WDWHV %XUHDX RI 5HFODPDWLRQV WHVW
86%50HWKRG% 5HI WLWOHG³3URFHGXUHIRU/HQJWK&KDQJHRI+DUGHQHG&RQFUHWH
([SRVHG WR $ONDOL 6XOIDWHV´  7KH WHVW LQYROYHG VRDNLQJ FRQFUHWH F\OLQGHUV LQ D VXOIDWH
VROXWLRQDQGPHDVXULQJWKHOHQJWKDQGPDVVFKDQJHRIWKHVSHFLPHQV7KHSHUPHDELOLWLHVRI
WKHFRQFUHWHPL[HVZHUHPHDVXUHGXVLQJWKHVWDQGDUGUDSLGSHUPHDELOLW\WHVW$670&
 5HI   WLWOHG ³6WDQGDUG 7HVW 0HWKRG IRU (OHFWULFDO ,QGLFDWLRQ RI &RQFUHWH¶V $ELOLW\ WR
5HVLVW&KORULGH,RQ3HQHWUDWLRQ´7KHVDPHIRXUFHPHQWVXVHGLQ3KDVH H[FHSWRQHRIWKH
7\SH ,,, FHPHQWV  ZHUH WHVWHG  )RU VRPH FRQFUHWH PL[HV WKH WZR W\SHV RI IO\ DVK IURP
3KDVH  ZHUH EOHQGHG ZLWK WKH 7\SH ,,, FHPHQW  )RU HDFK FHPHQW RU FHPHQWIO\ DVK
FRPELQDWLRQ DW OHDVW WKUHH EDWFKHV ZHUH PDGH ZLWK GLIIHUHQW ZDWHUWRFHPHQWLWLRXV PDWHULDO
UDWLRV WR YDU\ WKH SHUPHDELOLW\ RI WKH PL[HV  $OVR VSHFLPHQV IURP HDFK EDWFK ZHUH FXUHG
XQGHU GLIIHUHQW WHPSHUDWXUH FRQGLWLRQV WR YDU\ WKH SHUPHDELOLW\ RI WKH KDUGHQHG FRQFUHWH
ZLWKLQWKHEDWFKHV2ZLQJWRWKHORQJWHUPQDWXUHRIWKLVSRUWLRQRIWKHWHVWLQJILQDOUHVXOWV
IRU 3KDVH  ZLOO QRW EH SUHVHQWHG LQ WKLV UHSRUW  2QO\ PL[ GHVLJQV FRPSUHVVLYH VWUHQJWKV
SHUPHDELOLW\ GDWD DQG LQLWLDO H[SDQVLRQ DQG PDVV FKDQJHV ZLOO EH UHSRUWHG DQG GLVFXVVHG
&RPSOHWHUHVXOWVDQGDILQDODQDO\VLVRIWKHLPSOLFDWLRQVRIWKLVWHVWLQJZLOOEHUHSRUWHGDWD
ODWHUWLPH
 )XWXUH ZRUN IRU WKLV SURMHFW ZLOO LQYROYH WKH ILQDOL]DWLRQ RI 3KDVH  UHVXOWV DQG WKH
GUDIWLQJRISHUIRUPDQFHEDVHGVSHFLILFDWLRQVIRUWKH7H[DV'HSDUWPHQWRI7UDQVSRUWDWLRQ


 5
 6
 
 
 

&KDSWHU7ZR/LWHUDWXUH5HYLHZ

 ,QWURGXFWLRQ
 %HIRUHSUHVHQWLQJWKHGHWDLOVRIWKHWHVWLQJSURJUDPLWLVLPSRUWDQWWRUHYLHZWKHVWDWH
RIWKHDUWUHJDUGLQJVXOIDWHDWWDFNDQGZKDWLVFXUUHQWO\EHLQJGRQHWRDGGUHVVWKHSUREOHPRI
VXOIDWHDWWDFNLQFRQFUHWHVWUXFWXUHV7KLVFKDSWHUGLVFXVVHVWKHPHFKDQLVPVRIVXOIDWHDWWDFN
WKH HIIHFWV RI UHOHYDQW FRQFUHWH SURSHUWLHV RQ VXOIDWH UHVLVWDQFH FXUUHQW VSHFLILFDWLRQV DQG
JXLGHOLQHVIRUSURGXFLQJVXOIDWHUHVLVWDQWFRQFUHWHDYDLODEOHWHVWVIRUH[DPLQLQJRUSUHGLFWLQJ
FRQFUHWHRUPRUWDUVXOIDWHUHVLVWDQFHDQGILQDOO\SURSRVHGSHUIRUPDQFHEDVHGVSHFLILFDWLRQV
0XFK RI WKH LQIRUPDWLRQ SUHVHQWHG KHUHLQ ZDV GHULYHG IURP WKH VWDWHRIWKH DUW OLWHUDWXUH
UHYLHZSHUIRUPHGLQDQHDUOLHUVWDJHRIWKLVSURMHFW 5HI 

 0HFKDQLVPRI6XOIDWH$WWDFN
,Q SUHYLRXV UHVHDUFK IRU WKH 7H[DV 'HSDUWPHQW RI 7UDQVSRUWDWLRQ 7LNDOVN\ DQG
&DUUDVTXLOOR GHILQHG VXOIDWH DWWDFN DV D VHULHV RI UHDFWLRQV WKDW PD\ RFFXU LQ KDUGHQHG
FRQFUHWH LQ WKH SUHVHQFH RI VXOIDWH LRQV 5HI    7KH SURGXFWV RI WKHVH UHDFWLRQV RFFXS\ D
JUHDWHU YROXPH WKDQ WKH KRVW UHDFWDQWV 5HI   DQG WKXV FDXVH DQ LQWHUQDO H[SDQVLRQ RI WKH
FHPHQWSDVWHDQGORFDOL]HGWHQVLOHVWUHVVHVLQWKHKDUGHQHGFRQFUHWH6XOIDWHDWWDFNXOWLPDWHO\
PDQLIHVWVLWVHOILQWKHIRUPRIFUDFNLQJVSDOOLQJDQGPDVVORVVDOORIZKLFKOHDGWRORVVRI
FURVV VHFWLRQ RU FRPSOHWH GHWHULRUDWLRQ RI WKH DIIHFWHG FRQFUHWH HOHPHQWV  1DWXUDOO\
RFFXUULQJ VXOIDWHV RI VRGLXP SRWDVVLXP FDOFLXP DQG PDJQHVLXP ZKLFK PD\ EH IRXQG LQ
VRLOVRUGLVVROYHGLQJURXQGZDWHUFDQDWWDFNFRQFUHWH7KHVHVXOIDWHVDUHDOZD\VSUHVHQWLQ
VHDZDWHU 5HI 
0RVW H[SHUWV EHOLHYH WKDW WKH IRUPDWLRQ RI HWWULQJLWH LQ KDUGHQHG FRQFUHWH LV WKH
SULQFLSDO FDXVH RI VXOIDWH DWWDFN  2WKHU K\SRWKHVHV UHJDUGLQJ WKH PHFKDQLVPV RI VXOIDWH
DWWDFN LQFOXGH GHWHULRUDWLRQ E\ PDJQHVLXP LRQV IURP PDJQHVLXP VXOIDWH WKH VZHOOLQJ RI
DOUHDG\IRUPHG HWWULQJLWH FU\VWDOV DV WKH\ DEVRUE ZDWHU WKH IRUPDWLRQ RI J\SVXP DQG WKH
VFDOLQJRIFRQFUHWHDVDUHVXOWRIVXOIDWHVDOWFU\VWDOOL]DWLRQ7KLVUHYLHZZLOOIRFXVRQZKDWLV

 7
FRQVLGHUHGE\PRVWWREHWKHSULPDU\PHFKDQLVPRIVXOIDWHDWWDFNQDPHO\WKHIRUPDWLRQRI
HWWULQJLWH
 ,Q RQH IRUP WKH SURFHVV RI HWWULQJLWH IRUPDWLRQ LQYROYHV D SURGXFW RI FHPHQW
K\GUDWLRQPRQRVXOIRDOXPLQDWHWUDQVIRUPLQJLQWRHWWULQJLWHLQWKHSUHVHQFHRIH[FHVVVXOIDWH
LRQV LQ KDUGHQHG FRQFUHWH  7KH YROXPH RI HWWULQJLWH IRUPHG LV DSSUR[LPDWHO\ WZLFH WKDW RI
WKH RULJLQDO PRQRVXOIRDOXPLQDWH 5HI    $ EHWWHU XQGHUVWDQGLQJ RI WKHVH WZR SKDVHV
PRQRVXOIRDOXPLQDWHDQGHWWULQJLWHDQGWKHUHDFWLRQVGHVFULEHGFDQEHREWDLQHGE\UHYLHZLQJ
WKHSURFHVVRIFHPHQWK\GUDWLRQ
 7KH ILYH SULPDU\ FRPSRXQGV WKDW FRQVWLWXWH SRUWODQG FHPHQW DUH WULFDOFLXP VLOLFDWH
&6  GLFDOFLXP VLOLFDWH &6  WULFDOFLXP DOXPLQDWH &$  WHWUDFDOFLXP DOXPLQRIHUULWH

&$)  DQG D VXOIDWH K\GUDWH FRPSRXQG FDOOHG J\SVXP & 6 +  WKDW LV DGGHG WR SRUWODQG
FHPHQWFOLQNHUVWRFRQWUROIODVKVHWWLQJ 7ULFDOFLXPVLOLFDWHDQGGLFDOFLXPVLOLFDWHHDFKUHDFW
ZLWK ZDWHU WR IRUP FDOFLXP VLOLFDWH K\GUDWH &6+  DQG FDOFLXP K\GUR[LGH DV VKRZQ LQ
(TXDWLRQVDQG 5HI &6+LVWKHSULPDU\ELQGLQJFRPSRQHQWRIK\GUDWHGSRUWODQG
FHPHQW&DOFLXPK\GUR[LGHLVDZDWHUVROXEOHE\SURGXFWWKDWKDVQRFHPHQWLWLRXVYDOXH

 &6  + o &6+  &+  
 WULFDOFLXP  ZDWHU  &6+  FDOFLXP
 VLOLFDWH      K\GUR[LGH

 &6  + o &6+  &+  
 GLFDOFLXP  ZDWHU  &6+  FDOFLXP
 VLOLFDWH      K\GUR[LGH

 $VHFRQGDU\ELQGLQJFRPSRQHQWLVIRUPHGIURPWKHK\GUDWLRQRIWULFDOFLXPDOXPLQDWH
DQGJ\SVXP7KH&$DQGJ\SVXPFRPELQHWRIRUPHWWULQJLWHDVVKRZQLQ(TXDWLRQ 5HI
 :KLOHWKLVIRUPDWLRQRIHWWULQJLWHLVDQH[SDQVLYHUHDFWLRQWKHH[SDQVLRQLVQRWKDUPIXO
LQIUHVKFRQFUHWHEHFDXVHWKHFRQFUHWHLVVWLOOSODVWLFDQGFDQDFFRPPRGDWHYROXPHFKDQJHV


 8
 
 
 

 &$  & 6 +  + o &$ 6 +   


 WULFDOFLXP  J\SVXP  ZDWHU  HWWULQJLWH 
 DOXPLQDWH

 7KH HWWULQJLWH IRUPHG LV VWDEOH RQO\ LQ KLJK FRQFHQWUDWLRQV RI VXOIDWH  $V K\GUDWLRQ
SURJUHVVHV WKH FRQFHQWUDWLRQ RI VXOIDWH GURSV DV J\SVXP LV FRQVXPHG  7KH HWWULQJLWH
EHFRPHV XQVWDEOH ZLWK WKLV GHFUHDVH LQ VXOIDWH FRQFHQWUDWLRQ DQG UHDFWV ZLWK WKH UHPDLQLQJ
&$ WR IRUP PRQRVXOIRDOXPLQDWH 7KLV UHDFWLRQ LV VKRZQ LQ (TXDWLRQ  5HI  
0RQRVXOIRDOXPLQDWHLVW\SLFDOO\DGRPLQDQWSRUWLRQRIWKHDOXPLQDWHFU\VWDOOLQHSKDVHVRIWKH
K\GUDWHGFHPHQWPDWUL[ 5HI 


 &$  &$ 6 +  + o &$ 6 +  


 WULFDOFLXP  HWWULQJLWH  ZDWHU  PRQR
 DOXPLQDWH      VXOIRDOXPLQDWH

 7KH FULWLFDO UHDFWLRQ WKDW GHILQHV VXOIDWH DWWDFN RFFXUV ZKHQ WKH FRQFUHWH LV LQ LWV
KDUGHQHGVWDWH,IKDUGHQHGFRQFUHWHLVH[SRVHGWRDQH[WHUQDOVRXUFHRIVROXEOHVXOIDWHLRQV
WKH FRQFHQWUDWLRQ RI VXOIDWHV LQ WKH FRQFUHWH SRUH ZDWHU PD\ LQFUHDVH  $V VXOIDWH LRQ
FRQFHQWUDWLRQ LQFUHDVHV WKH PRQRVXOIRDOXPLQDWH EHFRPHV XQVWDEOH DQG UHYHUWV EDFN WR
HWWULQJLWHDVVKRZQLQ(TXDWLRQ 5HI 


 &$ 6 +  & 6 +  + l &$ 6 +  


 PRQR  J\SVXP  ZDWHU  HWWULQJLWH 
 VXOIRDOXPLQDWH 

7KLV UHDFWLRQ LV WKH RQH WKDW PRVW FRPPRQO\ FDXVHV SUREOHPV EHFDXVH WKHHWWULQJLWH
SKDVHWKDWLVIRUPHGRFFXSLHVWZLFHWKHYROXPHRIWKHPRQRVXOIRDOXPLQDWHSKDVH:KHQWKH
YRLG VSDFHV LQ WKH SDVWH FDQQRW DFFRPPRGDWH DQ\ IXUWKHU H[SDQVLRQLQWHUQDOWHQVLOHVWUDLQV

 9
PD\ FDXVH FUDFNLQJ RI WKH KDUGHQHG FRQFUHWH  7KLV OHDGV WR WKH ORVV RI VHFWLRQ DQG
GHWHULRUDWLRQWKDWLVW\SLFDORIVXOIDWHDWWDFNLQFRQFUHWH

 )DFWRUV$IIHFWLQJ&RQFUHWH5HVLVWDQFHWR6XOIDWH$WWDFN
 6HYHUDO IDFWRUV DIIHFW WKH UHVLVWDQFH RI FRQFUHWH WR VXOIDWH DWWDFN  7KHVH IDFWRUV
LQFOXGH WKH FKHPLVWU\ RI WKH FHPHQWLWLRXV PDWHULDO WKH SHUPHDELOLW\ RI WKH FRQFUHWH WKH
FRQFHQWUDWLRQRIH[WHUQDOVRXUFHVRIVXOIDWHLRQVDQGWKHVHYHULW\RIWKHFRQFUHWHH[SRVXUHWR
WKHVXOIDWHHQYLURQPHQW7KHODVWWZRIDFWRUVVXOIDWHFRQFHQWUDWLRQDQGVHYHULW\RIH[SRVXUH
DUH ERWK JHQHUDOO\ GHFLGHG ZKHQ WKH ORFDWLRQ DQG W\SH RI FRQFUHWH DSSOLFDWLRQ DUH FKRVHQ
%DVHG RQ WKH HQYLURQPHQW HVWDEOLVKHG E\ WKHVH IDFWRUV WKH HQJLQHHU PXVW FRQWURO VXOIDWH
DWWDFN E\ FRQWUROOLQJ WKH ILUVW WZR IDFWRUV ² WKH SURSHUWLHV RI WKH FRQFUHWH  7KLV VHFWLRQ
UHYLHZV WKUHH PDMRU FRQFUHWH SURSHUWLHV WKDW LQIOXHQFH FRQFUHWH VXOIDWH UHVLVWDQFH  7KHVH
SURSHUWLHVDUHWKHFKHPLVWU\RIWKHSRUWODQGFHPHQWWKHSHUPHDELOLW\RIWKHFRQFUHWHDQGWKH
FKHPLVWU\DQGUHSODFHPHQWOHYHORIPLQHUDODGPL[WXUHV7KHVHDUHWKHSURSHUWLHVWKDWZLOOEH
HYDOXDWHGLQWKLVUHSRUW¶VWHVWLQJSURJUDP

 &KHPLVWU\RI3RUWODQG&HPHQW
7KHFRQFUHWHFKDUDFWHULVWLFZLWKWKHJUHDWHVWLPSDFWRQVXOIDWHUHVLVWDQFHLVJHQHUDOO\
FRQVLGHUHG WR EH WKH FKHPLVWU\ RI WKH SRUWODQG FHPHQW DV WKLV KDV D GLUHFW LPSDFW RQ WKH
FKHPLFDO UHDFWLRQV WKDW FDXVH VXOIDWH DWWDFN  7KH ILYH SULPDU\ FRPSRQHQWV RI SRUWODQG
FHPHQWDQGWKHLUFRQWULEXWLRQWRWKHSURFHVVRIVXOIDWHDWWDFNZHUHUHYLHZHGLQ6HFWLRQ

(TXDWLRQV   DQG  VKRZ WKDW WKH WULFDOFLXP DOXPLQDWH &$  DQG J\SVXP & 6 + 
FRPSRXQGVKDYHWKHODUJHVWLPSDFWRQVXOIDWHDWWDFNEHFDXVHWKH\DUHGLUHFWO\LQYROYHGLQWKH
IRUPDWLRQ RI HWWULQJLWH DQG PRQRVXOIRDOXPLQDWH LQ WKH IUHVK FRQFUHWH DQG WKH IRUPDWLRQ RI
HWWULQJLWH LQ WKH KDUGHQHG FRQFUHWH  0RVW UHVHDUFK WRGD\ LGHQWLILHV WULFDOFLXP DOXPLQDWH DV
WKH SULPDU\ PHDVXUDEOH FRPSRQHQW RI SRUWODQG FHPHQW WKDW LQIOXHQFHV VXOIDWH UHVLVWDQFH LQ
FRQFUHWH  7KH &$ FRQWUROV WKH DPRXQW RI PRQRVXOIRDOXPLQDWH WKDW LV IRUPHG LQ IUHVK
FRQFUHWHDQGWKXVWKHDPRXQWRIPRQRVXOIRDOXPLQDWHDYDLODEOHWRIRUPHWWULQJLWHLQKDUGHQHG

 10
 
 
 

FRQFUHWH UHVXOWLQJ LQ H[SDQVLYH LQWHUQDO YROXPH FKDQJHV DQG WKH GDPDJH WKDW FKDUDFWHUL]HV
VXOIDWHDWWDFN
,QWKH3RUWODQG&HPHQW$VVRFLDWLRQ 3&$ SXEOLVKHGDUHSRUW/RQJ7LPH6WXG\
RI&HPHQW3HUIRUPDQFHLQ&RQFUHWHWKDWHYDOXDWHGWZRIDFWRUVLQIOXHQFLQJVXOIDWHUHVLVWDQFH
FHPHQWFRQWHQWDQG&$FRQWHQWLQFHPHQW 5HI 3&$FRQFOXGHGWKDWIRUFRQFUHWHPL[HV
ZLWKLQWHUPHGLDWHRUORZFHPHQWFRQWHQWVOLPLWLQJWKHPD[LPXP&$FRQWHQWRIWKHFHPHQW
LPSURYHGUHVLVWDQFHWRVXOIDWHDWWDFN7KHUHVHDUFKVKRZHGWKDWFRQFUHWHPDGHZLWKFHPHQWV
KDYLQJ &$ FRQWHQWV JUHDWHU WKDQ  SHUFHQW SHUIRUPHG SRRUO\ ZKLOH FRQFUHWH ZLWK FHPHQWV
KDYLQJ&$FRQWHQWVRISHUFHQWRUORZHUSHUIRUPHGZHOO)XUWKHUVWXGLHVZHUHFRQGXFWHG
WR GLVWLQJXLVK EHWZHHQ JRRG DQG H[FHOOHQW SHUIRUPDQFH RI FRQFUHWH DV D IXQFWLRQ RI WKH
FHPHQW 5HI    3&$ UHVHDUFK VKRZHG WKDW IRU FRQFUHWH PDGH ZLWK ULFK FHPHQW FRQWHQWV
PL[HV FRQWDLQLQJ FHPHQWV ZLWK  SHUFHQW &$ DV FRUUHFWHG IRU PLQRU R[LGHV H[KLELWHG
EHWWHU SHUIRUPDQFH WKDQ RWKHU KLJK FHPHQW FRQWHQW FRQFUHWH  7KHVH 3&$ VWXGLHV VWDUWHG WR
HVWDEOLVKYDOXHVIRUOLPLWLQJWKH&$FRQWHQWRIFHPHQWVIRUXVHLQYDULRXVOHYHOVRIVXOIDWH
H[SRVXUH
,Q WKH FRQFUHWH LQGXVWU\ HDFK FHPHQW SODQW SURGXFHV D SRUWODQG FHPHQW ZLWK D
GLIIHUHQW UHODWLYH SURSRUWLRQ RI LWV ILYH SULPDU\ FRPSRXQGV  $670 6WDQGDUG 6SHFLILFDWLRQ
& 5HI   FODVVLILHV WKHVH SRUWODQG FHPHQWV LQWR ILYH W\SHV WKDW DUH UHFRJQL]HG
WKURXJKRXWWKHLQGXVWU\(DFKW\SHKDVUHTXLUHGFKHPLFDODQGSK\VLFDOFKDUDFWHULVWLFV7KH
QHHG IRU VXOIDWH UHVLVWDQFH LQ D FHPHQW LV DFNQRZOHGJHG LQ $670 & YLD WKH
HVWDEOLVKPHQWRIPD[LPXP&$FRQWHQWVIRUHDFKFHPHQWW\SH7KHOLPLWVDGGUHVVWKHIDFW
WKDW WKH &$ FRQWHQW LV WKH FULWLFDO SURSHUW\ RI WKH FHPHQW FKHPLVWU\ WKDW DIIHFWV VXOIDWH
UHVLVWDQFHLQFRQFUHWH7KH$670&OLPLWVDUHVKRZQLQ7DEOH
7KHWKUHHFHPHQWW\SHVWKDWDUHHYDOXDWHGLQWKLVWHVWSURJUDPDQGWKDWDUHJHQHUDOO\
FRQVLGHUHG ZKHQ FKRRVLQJ D FHPHQW IRU FRQFUHWH LQDVXOIDWHHQYLURQPHQWDUH7\SH,7\SH
,, DQG 7\SH 9 SRUWODQG FHPHQW  7\SH ,,, SRUWODQG FHPHQW LV D KLJK HDUO\ VWUHQJWK FHPHQW
:LWK LWV  SHUFHQW PD[LPXP &$ FRQWHQW LW LV FRQVLGHUHG XQVXLWDEOH IRU VXOIDWH
HQYLURQPHQWV7\SH,9SRUWODQGFHPHQWLVDORZKHDWRIK\GUDWLRQFHPHQWXVHGRQO\LQFDVHV
ZKHUH WKH JHQHUDWLRQ RI LQWHUQDO KHDW LV D FRQFHUQ VXFK DV LQ PDVV FRQFUHWH  :KLOH LWV

 11
PD[LPXP &$ FRQWHQW LV DFFHSWDEOH LWV OLPLWHG DYDLODELOLW\ DQG VORZ UDWH RI VWUHQJWK JDLQ
SUHFOXGHVLWIURPXVHLQPRVWVXOIDWHHQYLURQPHQWV

7DEOH±0D[LPXP&$&RQWHQWVIRU3RUWODQG&HPHQW 5HI 
$670&&HPHQW7\SH 0D[LPXP&$&RQWHQW
, ²
,, 
,,, 
,9 
9 


7\SH , SRUWODQG FHPHQW LV D JHQHUDOXVH FHPHQW WKDW LV ZLGHO\ DYDLODEOH  %HFDXVH
$670 & GRHV QRW OLPLW WKH &$ FRQWHQW RI WKLV FHPHQW PRVW 7\SH , FHPHQWV KDYH
KLJK &$ FRQWHQWV DQG DUH WKXV QRW VXLWDEOH IRU PRGHUDWH RU VHYHUH VXOIDWH HQYLURQPHQWV
&RPELQDWLRQVRIWKHFHPHQWZLWKPLQHUDODGPL[WXUHVKRZHYHUDUHVWLOOEHLQJFRQVLGHUHGDV
DQ RSWLRQ IRU FRQFUHWH LQ VXOIDWH HQYLURQPHQWV  7\SH ,, SRUWODQG FHPHQWV RU 7\SH ,,,
SRUWODQGFHPHQWVDUHFRQVLGHUHGWREHPRGHUDWHO\VXOIDWHUHVLVWDQWFHPHQWV$670&
OLPLWV WKH &$ FRQWHQWRIWKHVHFHPHQWVWRSHUFHQW7KLVOLPLWLVVLPLODUWRWKHSHUFHQW
SODWHDXIRUJRRGSHUIRUPDQFHWKDWWKH3&$UHVHDUFKHVWDEOLVKHGHDUOLHU7\SH,,FHPHQWVDUH
JHQHUDOO\XVHGE\WKH7H[DV'HSDUWPHQWRI7UDQVSRUWDWLRQLQDUHDVRISRWHQWLDOVXOIDWHDWWDFN
7\SH9SRUWODQGFHPHQWVDUHFRQVLGHUHGWREHKLJKO\VXOIDWHUHVLVWDQWFHPHQWV7KH$670
OLPLW RI  SHUFHQW IRU WKH 7\SH 9 FHPHQW¶V &$ FRQWHQW LV VLPLODU WR WKH  SHUFHQW YDOXH
GHWHUPLQHG E\ 3&$ IRU H[FHOOHQW SHUIRUPDQFH  2ZLQJ WR LWV ORZ DYDLODELOLW\ HVSHFLDOO\ LQ
7H[DVDQGWKXVKLJKFRVW7\SH9FHPHQWVDUHJHQHUDOO\UHVHUYHGIRUWKHH[WUHPHFDVHVRID
VHYHUHRUYHU\VHYHUHVXOIDWHHQYLURQPHQW

 &RQFUHWH3HUPHDELOLW\
:KHQ VXOIDWH DWWDFN ZDV ILUVW LGHQWLILHG LQ  E\ WKH 8QLWHG 6WDWHV %XUHDX RI
5HFODPDWLRQV 86%5  WKH RQO\ PHDQV RI FRQWUROOLQJ WKH DWWDFN ZDV E\ SURGXFLQJ ORZ

 12
 
 
 

SHUPHDELOLW\ FRQFUHWH 5HI    ,Q WRGD\¶V LQGXVWU\ ORZ SHUPHDELOLW\ FRQFUHWH FDQ EH
SURGXFHG LQ VHYHUDO ZD\V  7KHVH PHWKRGV LQFOXGH UHGXFLQJ WKH ZDWHU FRQWHQW DQGRU
LQFUHDVLQJ WKH FHPHQW FRQWHQW VXFK WKDW WKH ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLR LV UHGXFHG
VHOHFWLQJ SURSHU PDWHULDOV DQG PL[ SURSRUWLRQV UHSODFLQJ D SHUFHQWDJH RI FHPHQW ZLWK D
PLQHUDO DGPL[WXUH XVLQJ DLU HQWUDLQPHQW DGHTXDWHO\ FRQVROLGDWLQJ WKH FRQFUHWH GXULQJ
SODFHPHQW DQG SURYLGLQJ SURSHU DQG HIIHFWLYH FXULQJ  7KH JRDO RI XVLQJ ORZ SHUPHDELOLW\
FRQFUHWHLVWRPLQLPL]HWKHSHQHWUDWLRQRIVXOIDWHLRQVLQWRWKHFRQFUHWH.HHSLQJWKHVXOIDWH
LRQ FRQFHQWUDWLRQ LQ WKH KDUGHQHG FRQFUHWH ORZ SUHYHQWV WKH GHOHWHULRXV IRUPDWLRQ RI
HWWULQJLWHIURPPRQRVXOIRDOXPLQDWHGHVFULEHGLQ(TXDWLRQ
 ,Q SUHYLRXV UHVHDUFK IRU WKH 7H[DV 'HSDUWPHQW RI 7UDQVSRUWDWLRQ )UHHPDQ PDGH
VRPH REVHUYDWLRQV DERXW WKH WUXH HIIHFW RI SHUPHDELOLW\ RQ WKH DELOLW\ RI FRQFUHWH WR UHVLVW
VXOIDWH DWWDFN 5HI    ,Q KLV WHVWLQJ )UHHPDQ PHDVXUHG GDPDJH UHVXOWLQJ IURP VXOIDWH
DWWDFN E\ ERWK OLQHDUH[SDQVLRQDQGPDVVORVVRIFRQFUHWHF\OLQGHUVEHLQJVRDNHGLQVXOIDWH
VROXWLRQ)RUPRVWUHVXOWVWKHFRPELQDWLRQRIOLQHDUH[SDQVLRQDQGPDVVORVVE\VSDOOLQJRI
WKHVSHFLPHQVUHYHDOHGSRRUSHUIRUPDQFH+RZHYHU)UHHPDQGLGREVHUYHWKDWIRUVRPHRI
WKH ORZ SHUPHDELOLW\ VSHFLPHQV OLWWOH H[SDQVLRQ RFFXUUHG EXW WKHUH ZDV VRPH PDVV ORVV
PHDVXUHG  )URP YLVXDO REVHUYDWLRQ RI WKH VSHFLPHQV )UHHPDQ QRWLFHG WKDW ZKLOH WKH ORZ
SHUPHDELOLW\ VSHFLPHQV ZHUH H[SHULHQFLQJ QR VLJQLILFDQW OLQHDU H[SDQVLRQ IURP VXOIDWH
DWWDFNWKHVSHFLPHQVGLGVXVWDLQGDPDJHIURPVXUIDFHVFDOLQJ)UHHPDQ¶VUHVHDUFKUHYHDOHG
WKDW ORZ SHUPHDELOLW\ LQ FRQFUHWH GRHV QRW QHFHVVDULO\ PDNH LW LPPXQH WR VXOIDWH DWWDFN DV
GDPDJH PD\ VWLOO RFFXU LQ WKH IRUP RI VXUIDFH VFDOLQJ  )UHHPDQ¶V ZRUN FRQILUPHG HDUOLHU
UHVHDUFK SHUIRUPHG E\ 7LNDOVN\ 5HIV    IRU 7['27 ZKLFK VKRZHG WKDW ORZ
SHUPHDELOLW\FRQFUHWHPD\VXIIHUIURPVXOIDWHDWWDFNGHVSLWHWKHDSSHDUDQFHRIKLJKTXDOLW\
7LNDOVN\ FRQFOXGHG WKDW D VXEVWDQWLDO UHGXFWLRQ LQ SHUPHDELOLW\ GRHV QRW QHFHVVDULO\ UHQGHU
FRQFUHWH UHVLVWDQW WR GHWHULRUDWLRQ LI WKH FKHPLVWU\ RI WKDW FRQFUHWH ZRXOG RWKHUZLVH EH
VXVFHSWLEOHWRDWWDFN 5HI 
 :KLOH PRVW UHVHDUFKHUV VWLOO DJUHH WKDW SHUPHDELOLW\ LV D SURSHUW\ WKDW GLUHFWO\
DIIHFWVWKHGXUDELOLW\RIFRQFUHWHDJDLQVWVXOIDWHDWWDFNLWLVXQFOHDUDVWRWKHOHYHORILPSDFW
SHUPHDELOLW\KDVRQVXOIDWHDWWDFN)UHHPDQ¶VDQG7LNDOVN\¶VUHVHDUFKERWKPDNHLWHYLGHQW

 13
WKDW ZKLOH ORZ SHUPHDELOLW\ LV D EHQHILFLDO FRQFUHWH DWWULEXWH LQ UHVLVWLQJ VXOIDWH DWWDFN
SHUPHDELOLW\DORQHFDQQRWSUHYHQWVXOIDWHDWWDFNLQFRQFUHWH7KHSXUSRVHRI3KDVHRIWKH
WHVW SURJUDP GLVFXVVHG KHUHLQ LV WR SURYLGH D EHWWHU XQGHUVWDQGLQJ RI KRZ QHFHVVDU\ RU
XQQHFHVVDU\ ORZ SHUPHDELOLW\ LV IRU SURWHFWLQJ FRQFUHWH DJDLQVW VXOIDWH DWWDFN  %RWK
7LNDOVN\¶V DQG )UHHPDQ¶V ZRUN ZHUH IRFXVHG RQ VWXG\LQJ WKH HIIHFWV RI IO\ DVK RQ VXOIDWH
UHVLVWDQFH DQG WKH GLVFRYHULHV UHODWHG WR SHUPHDELOLW\ ZHUH VHFRQGDU\ FRQFOXVLRQV GHULYHG
IURPWKHUHVHDUFK3KDVHSURYLGHVDVWXG\ZKHUHWKHSULPDU\IRFXVLVWKHHYDOXDWLRQRIWKH
HIIHFW SHUPHDELOLW\ KDV RQ WKH VXOIDWH UHVLVWDQFH RI FRQFUHWH ZLWK YDU\LQJ FHPHQWLWLRXV
FKHPLVWULHV

 0LQHUDO$GPL[WXUHV
7KH SRWHQWLDO EHQHILW RI DQ\ PLQHUDO DGPL[WXUH PXVW EH LQGLYLGXDOO\ GHWHUPLQHG DV
DGPL[WXUHV KDYH VKRZQ WR LQFUHDVH GHFUHDVH RU KDYH QR DIIHFW RQ WKH VXOIDWH UHVLVWDQFH RI
FRQFUHWH  7KH REYLRXV EHQHILWV RI PLQHUDO DGPL[WXUHV DUH WKH UHGXFWLRQ LQ FRQFUHWH
SHUPHDELOLW\DQGWKHUHSODFHPHQWRIWKHSRUWODQGFHPHQW/RZHULQJWKHSHUPHDELOLW\VORZV
WKH SHQHWUDWLRQ RI VXOIDWH LRQV LQWR KDUGHQHG FRQFUHWH ZKLOH UHSODFLQJ WKH SRUWODQG FHPHQW
UHGXFHVWKHSUHVHQFHRIFRPSRXQGVVXFKDV&$WKDWFDXVHHWWULQJLWHIRUPDWLRQ7KHPLQHUDO
DGPL[WXUHVPRVWIUHTXHQWO\H[DPLQHGIRUXVHLQVXOIDWHHQYLURQPHQWVLQFOXGHIO\DVKVLOLFD
IXPH DQG EODVW IXUQDFH VODJ 7KLV VHFWLRQ IRFXVHV RQ IO\ DVK DQG JURXQG JUDQXODWHG EODVW
IXUQDFH VODJ WKH WZR W\SHV RI PLQHUDO DGPL[WXUHV HYDOXDWHG LQ WKH WHVW SURJUDP IRU WKLV
UHSRUW
7KHHIIHFWRIIO\DVKDE\SURGXFWIURPWKHEXUQLQJRIFRDORQVXOIDWHDWWDFNKDVEHHQ
ZLGHO\UHVHDUFKHG7LNDOVN\¶VDQG)UHHPDQ¶VUHVHDUFKDW7KH8QLYHUVLW\RI7H[DVDW$XVWLQ
VWXGLHGWKHHIIHFWVRIIO\DVKRQVXOIDWHDWWDFNLQGHWDLODVWZHQW\IRXUIO\DVKHVIURPDURXQG
WKH8QLWHG6WDWHVZHUHHYDOXDWHGLQHDFKVWXG\ 5HIV 7KHILQGLQJVRIWKHVHVWXGLHVDUH
UHYLHZHGLQWKHIROORZLQJSDUDJUDSKV
7KHFKHPLFDOFRPSRVLWLRQRIDIO\DVKGHWHUPLQHVLWVDELOLW\WRLQFUHDVHGHFUHDVHRU
QRWFKDQJHWKHUHVLVWDQFHRIFRQFUHWHWRVXOIDWHDWWDFN7KHILYHFKHPLFDODQGPLQHUDORJLFDO
FRPSRQHQWV RI IO\ DVK WKDW DIIHFW VXOIDWH UHVLVWDQFH DUH FDOFLXP DOXPLQD LURQ R[LGHVLOLFD

 14
 
 
 

DQG VXOIDWH  7KH FDOFLXP FRQWHQW LV WKH PRVW LPSRUWDQW RI WKHVH ILYH FRPSRQHQWV  /RZ
FDOFLXPSR]]RODQLFIO\DVKHVDUHW\SLFDOO\GHVLJQDWHGDV$670&ODVV)IO\DVKHV7KHVHIO\
DVKHV DUH GHVFULEHG DV SR]]RODQLF EHFDXVH WKH\ SULPDULO\ K\GUDWH E\ UHDFWLQJ ZLWK WKH
FDOFLXPK\GUR[LGHIRUPHGIURPWKHSRUWODQGFHPHQW¶VFDOFLXPVLOLFDWHVDVVKRZQLQ(TXDWLRQ
DQG+LJKFDOFLXPSR]]RODQLFDQGFHPHQWLWLRXVIO\DVKHVDUHW\SLFDOO\GHVLJQDWHGDV
$670 &ODVV & IO\ DVKHV  7KHVH IO\ DVKHV DUH FHPHQWLWLRXV EHFDXVH WKH\ FDQ SURYLGH WKHLU
RZQVRXUFHRIFDOFLXPDQGWKXVK\GUDWHLQGHSHQGHQWRIWKHSRUWODQGFHPHQW,QJHQHUDOORZ
FDOFLXPIO\DVKHVKDYHEHHQVKRZQWRLPSURYHVXOIDWHUHVLVWDQFHZKLOHKLJKFDOFLXPIO\DVKHV
KDYHHLWKHUVKRZQOLWWOHLPSURYHPHQWRUGHFUHDVHGVXOIDWHUHVLVWDQFH
/RZ FDOFLXP $670 &ODVV ) IO\ DVKHV FKHPLFDOO\ LPSURYH WKH VXOIDWH UHVLVWDQFH RI
FRQFUHWHE\FRQVXPLQJFDOFLXPK\GUR[LGHDQGWKXVUHGXFHWKHSRWHQWLDOIRUWKHIRUPDWLRQRI
HWWULQJLWH&DOFLXPK\GUR[LGHLVWKHPDLQVRXUFHRIFDOFLXPLQFRQFUHWHIRUWKHIRUPDWLRQRI
HWWULQJLWH,QWKHSUHVHQFHRIVXOIDWHVFDOFLXPK\GUR[LGHFRQYHUWVWRJ\SVXPLQWKHKDUGHQHG
FRQFUHWH  7KLV J\SVXP WKHQ UHDFWV ZLWK WKH PRQRVXOIRDOXPLQDWH WR IRUP WKH H[SDQVLYH
HWWULQJLWHDVVKRZQLQ(TXDWLRQ/RZFDOFLXPIO\DVKHVUHGXFHWKHDYDLODELOLW\RIFDOFLXP
K\GUR[LGHEHFDXVHWKHIO\DVKUHDFWVZLWKLWLQWKHSR]]RODQLFUHDFWLRQVKRZQLQ(TXDWLRQ
5HI    7KH UHDFWLRQ IRUPV WKH VWDEOH VHFRQGDU\ ELQGLQJ FRPSRXQG &6+  7KH UHGXFHG
DPRXQWRIFDOFLXPK\GUR[LGHUHVXOWLQJIURPWKLVUHDFWLRQORZHUVWKHDPRXQWRIJ\SVXPWKDW
FDQEHSURGXFHGLQWKHKDUGHQHGFRQFUHWHDQGWKXVUHGXFHVWKHSRWHQWLDOIRUWKHIRUPDWLRQRI
HWWULQJLWH7KLVSURFHVVLVRIWHQUHIHUUHGWRDVSR]]RODQLFFRQVXPSWLRQ

 &O$P6Q  &+  +2 o &6+  
 IO\DVK  FDOFLXP  ZDWHU  
 FRPSRXQGV  K\GUR[LGH    


+LJK FDOFLXP $670 &ODVV & IO\ DVKHV DOVR SURYLGH SR]]RODQLF FRQVXPSWLRQ
KRZHYHU WKLV EHQHILW LV RIWHQ FRXQWHUDFWHG E\ WKH ODUJH DPRXQWV RI FDOFLXP WKH IO\ DVK
FRQWULEXWHV WR WKH FRQFUHWH  7KH XVXDO UHVXOW RI XVLQJ WKHVH IO\ DVKHV LV HLWKHU OLWWOH
LPSURYHPHQWRUHYHQUHGXFWLRQVLQWKHVXOIDWHUHVLVWDQFHRIWKHFRQFUHWH

 15
:KLOHWKHFDOFLXPFRQWHQWRIIO\DVKHVLVDPDMRUIDFWRULQIOXHQFLQJWKHHIIHFWRIIO\
DVKHV RQ D FRQFUHWH¶V VXOIDWH UHVLVWDQFH WKH DOXPLQD LURQ R[LGH VLOLFD DQG VXOIDWH
FRPSRXQGVLQIO\DVKDOVRFRQWULEXWH$OXPLQDPD\EHSUHVHQWDVSDUWRIWKHJODVV\SKDVHVRU
LQ VHYHUDO FU\VWDOOLQH SKDVHV  7KH JODVV\SKDVH DOXPLQDV W\SLFDOO\ QHJDWLYHO\ DIIHFW VXOIDWH
UHVLVWDQFHDVWKH\UHDFWZLWKFDOFLXPK\GUR[LGHWRIRUP&$+ZKLFKLVVXVFHSWLEOHWRDWWDFN
LQ VXOIDWH HQYLURQPHQWV +LJK FDOFLXP IO\ DVKHV FRQWDLQ PRUH JODVV\SKDVH DOXPLQDV WKDQ
ORZ FDOFLXP IO\ DVKHV EHFDXVH WKH DPRXQW RI DOXPLQD LQ WKH JODVV\ SKDVHV RI IO\ DVK LV
JHQHUDOO\SURSRUWLRQDOWRWKHDPRXQWRIDQDO\WLFFDOFLXPLQWKHIO\DVK 5HI 7KHHIIHFWRI
FU\VWDOOLQHSKDVH DOXPLQDV RQ VXOIDWH UHVLVWDQFH GHSHQGV RQ WKHLU IRUP  ,Q ORZ FDOFLXP IO\
DVK DOXPLQD RIWHQ WDNHV WKH FU\VWDOOLQH IRUP RI PXOOLWH ZKLFK LV VWDEOH LQ VXOIDWH
HQYLURQPHQWV  ,Q KLJK FDOFLXP IO\ DVKHV DOXPLQD PD\ EH SUHVHQW LQ WKH FU\VWDOOLQH IRUP

PHOLOLWH&$RU&$ 6 0HOLOLWHLVVWDEOHLQVXOIDWHHQYLURQPHQWVEXWWKH&$DQG&$ 6 
LQVRPHKLJKFDOFLXPIO\DVKHVPD\FRQWULEXWHWRWKHIRUPDWLRQRIHWWULQJLWH
5HVHDUFKHUV KDYH EHHQ GLYLGHG RQ WKH HIIHFW RI LURQ R[LGH LQ IO\ DVK RQ VXOIDWH
UHVLVWDQFH  .DORXVHN H[SODLQHG WKDW LURQ R[LGH FDQ H[LVW LQ WKUHH SKDVHV HDFK FRQWULEXWLQJ
GLIIHUHQWO\ WR VXOIDWH UHVLVWDQFH 5HI    5HDFWLYH SKDVHV RI LURQ R[LGH LPSURYH VXOIDWH
UHVLVWDQFH E\ IRUPLQJ QRQH[SDQVLYH LURQULFK HWWULQJLWH DQG UHGXFLQJ WKH SRWHQWLDO IRU WKH
IRUPDWLRQ RI H[SDQVLYH HWWULQJLWH  %\ FRPSDULVRQ WKH FU\VWDOOLQH SKDVH RI LURQ R[LGH
W\SLFDOO\KDVQRHIIHFWRQVXOIDWHUHVLVWDQFH)LQDOO\WKHJODVV\SKDVHRILURQR[LGHLIJUHDWHU
WKDQSHUFHQWRIWKHWRWDOLURQR[LGHPD\IRUPFDOFLXPIHUULWHK\GUDWHWKDWLVVXVFHSWLEOHWR
VXOIDWHDWWDFN
'XULQJWKHSR]]RODQLFUHDFWLRQVKRZQLQ(TXDWLRQWKHVLOLFDLQIO\DVKUHDFWVZLWK
FDOFLXP K\GUR[LGH IRUPLQJ D VWURQJHU DQG OHVV SHUPHDEOH FRQFUHWH  $OVR WKH VORZHU
SR]]RODQLFUHDFWLRQPD\VXUURXQGWKHUHDFWLYHDOXPLQDWHFRPSRXQGVIURPWKHIDVWHUFHPHQW
K\GUDWLRQ UHDFWLRQV ZLWK &6+  &6+ LVVWDEOHLQVXOIDWHHQYLURQPHQWVDQGWKXVSUHYHQWV
WKHIRUPDWLRQRIHWWULQJLWHE\LVRODWLQJWKHDOXPLQDWHFRPSRXQGVIURPVXOIDWHLRQV
6XOIDWH PHDVXUHG DV VXOIXU WULR[LGH LV WKH ILQDO FRPSRQHQW RI IO\ DVK WKDW DIIHFWV
VXOIDWH UHVLVWDQFH  /DUJH TXDQWLWLHV RI VXOIDWH LQ IO\ DVK PD\ EH EHQHILFLDO WR WKH VXOIDWH
UHVLVWDQFH RI FRQFUHWH EHFDXVH WKH FRQFUHWH LV VXSHUVXOIDWHG DQG WKH VXOIDWHV SURPRWH WKH

 16
 
 
 

IRUPDWLRQ RI HWWULQJLWH ZKLOH WKH FRQFUHWH LV VWLOO SODVWLF  )O\ DVKHV ZLWK ORZ RU PRGHUDWH
TXDQWLWLHVRIVXOIDWHKDYHOLWWOHDIIHFWRQWKHVXOIDWHUHVLVWDQFHRIFRQFUHWH 5HI 
 6HYHUDO PHWKRGV KDYH EHHQ RIIHUHG WR SUHGLFW WKH HIIHFW RI IO\ DVKHV RQ WKH VXOIDWH
UHVLVWDQFH RI FRQFUHWH  'XQVWDQ SURSRVHG D VXOIDWH UHVLVWDQFH IDFWRU 5 WR GHWHUPLQH WKH
HIIHFWLYHQHVVRIGLIIHUHQWIO\DVKHV 5HIV 7KHIDFWRULVEDVHGRQWKHFKHPLVWU\RIWKH
IO\DVKDQGLVGHILQHGEHORZ


 5
&D2     
)H 2 

7KH SURSRUWLRQV RI FDOFLXP R[LGH &D2  DQG IHUULF R[LGH )H2  LQ (TXDWLRQ  DUH
H[SUHVVHGDVSHUFHQWE\PDVV7KHDELOLW\RIWKHIO\DVKWRUHVLVWVXOIDWHDWWDFNEDVHGRQLWV5
IDFWRUFDQEHGHWHUPLQHGXVLQJ7DEOH

7DEOH±5)DFWRUIRU6XOIDWH5HVLVWDQFHRI &RQFUHWHZLWK)O\$VK 5HI 
5IDFWRU 6XOIDWH5HVLVWDQFH
 *UHDWO\LPSURYHG
WR 0RGHUDWHO\LPSURYHG
WR 1RVLJQLILFDQWFKDQJH
! 5HGXFHG


'XQVWDQ¶V5IDFWRUSURYLGHVDFRQVHUYDWLYHPHWKRGIRUVHOHFWLQJIO\DVKHVIRUXVHLQ
FRQFUHWH LQ D VXOIDWH HQYLURQPHQW  7KH 5 IDFWRU KDV EHHQ VKRZQ WR EH WRR FRQVHUYDWLYH LQ
VRPHFDVHVDVVRPHIO\DVKHVWKDWGLGQRWPHHWWKH5IDFWRUOLPLWVWLOOSHUIRUPHGZHOOLQWHVWV
5HIV     7LNDOVN\ DQG &DUUDVTXLOOR 5HI   UHFRPPHQGHG DQ DOWHUQDWLYH PHWKRG IRU
VHOHFWLQJ IO\ DVKHV IRU SURGXFLQJ VXOIDWH UHVLVWDQW FRQFUHWH  7KH UHFRPPHQGDWLRQV DUH DV
IROORZV


 17
 )O\DVKPHHWLQJ$670&D 5HI DQGFRQWDLQLQJOHVVWKDQSHUFHQW&D2PD\
EHXVHGWRLPSURYHVXOIDWHUHVLVWDQFHRIFRQFUHWH

 )O\ DVK PHHWLQJ $670 & D DQG FRQWDLQLQJ EHWZHHQ  SHUFHQW DQG  SHUFHQW
&D2VKRXOGEHIXUWKHUH[DPLQHGXVLQJ86%5 5HI RU$670& 5HI
   7KH UHDFWLYLW\ RI WKH JODVV SKDVH GHWHUPLQHG E\ [UD\ GLIIUDFWLRQ 5HI   DQG EXON
FRPSRVLWLRQDQDO\VLV 5HI VKRXOGEHGHWHUPLQHGIURPWKHWHUQDU\GLDJUDPVKRZQLQ
)LJXUH7KHIO\DVKLVOLNHO\WRLPSURYHVXOIDWHUHVLVWDQFHLIWKHJODVV\SRUWLRQRIWKH
DVKOLHVLQWKHPXOOLWHRUXSSHUKDOIRIWKHDQRUWKLWHILHOGV)O\DVKZLWKWKHJODVV\SRUWLRQ
LQWKHJHKOHQLWHILHOGRUORZHUKDOIRIWKHDQRUWKLWHILHOGPD\GHFUHDVHVXOIDWHUHVLVWDQFH

 )O\ DVK FRQWDLQLQJ PRUH WKDQ  SHUFHQW &D2 PD\ QRW EH XVHG LQ FRQFUHWH H[SRVHG WR
VXOIDWH


6L2 


*HKOLQLWH

  $QRUWKLWH

0XOOLWH

  


&D2 $O2

)LJXUH±7HUQDU\3KDVH'LDJUDPIRU'HWHUPLQDWLRQRI6XOIDWH5HVLVWDQFHRI
)O\$VK 5HI 


7KH VHFRQG PLQHUDO DGPL[WXUH HYDOXDWHG LQ WKLV WHVW SURJUDP LV JURXQG JUDQXODWHG
EODVWIXUQDFHVODJ6ODJLVSULPDULO\FRPSRVHGRIFDOFLXPDOXPLQRVLOLFDWHJODVVZKLFKUHDFWV
ZLWKWKHFDOFLXPK\GUR[LGHIURPWKHK\GUDWLRQRISRUWODQGFHPHQW7KLVSR]]RODQLFUHDFWLRQ
ZKLFKLVVLPLODUWRWKHUHDFWLRQGHVFULEHGIRUORZFDOFLXPIO\DVKIRUPV&6+DQGRU&$

 18
 
 
 

+7KHUHDFWLRQUHGXFHVWKHDYDLODEOHFDOFLXPK\GUR[LGHDQGWKXVUHGXFHVWKHSRWHQWLDOIRU
HWWULQJLWHIRUPDWLRQ6ODJ¶VHIIHFWLYHQHVVLQLPSURYLQJVXOIDWHUHVLVWDQFHLVKLJKHVWDWOHYHOV
RI UHSODFHPHQW RI  SHUFHQW RU KLJKHU DV FDOFLXP K\GUR[LGH LV PRUH UDSLGO\ FRQVXPHG DW
WKHVHOHYHOV 5HI 

 &XUUHQW*XLGHOLQHVDQG6SHFLILFDWLRQVIRU6XOIDWH5HVLVWDQW&RQFUHWH
 7KLVVHFWLRQRXWOLQHVWKHFXUUHQWJXLGHOLQHVDQGVSHFLILFDWLRQVDYDLODEOHIRUHQJLQHHUV
WRXVHZKHQGHVLJQLQJDFRQFUHWHIRUXVHLQDVXOIDWHHQYLURQPHQW*XLGHOLQHVSURYLGHGE\
WKH$PHULFDQ&RQFUHWH,QVWLWXWH $&, DQGWKH,QWHUQDWLRQDO&RQIHUHQFHRI%XLOGLQJ2IILFLDOV
DQGVSHFLILFDWLRQVXVHGE\WKH7H[DV'HSDUWPHQWRI7UDQVSRUWDWLRQDUHUHYLHZHG

 $&,DQG8QLIRUP%XLOGLQJ&RGH 8%& *XLGHOLQHV
$&, &RPPLWWHH  $&, &RPPLWWHH  DQG WKH ,QWHUQDWLRQDO &RQIHUHQFH RI
%XLOGLQJ2IILFLDOVKDYHSURYLGHGJXLGHOLQHVIRUFDWHJRUL]LQJWKHVHYHULW\RIGLIIHUHQWVXOIDWH
HQYLURQPHQWVDQGIRUFKRRVLQJSURSHUPDWHULDOVDQGPL[SURSRUWLRQVIRUSURGXFLQJFRQFUHWHV
IRU WKRVH HQYLURQPHQWV  7KHVH JXLGHOLQHV KDYH EHHQ UHIHUHQFHG LQ VHYHUDO FRQFUHWH PL[
GHVLJQ JXLGHV VXFK DV WKH 3RUWODQG &HPHQW $VVRFLDWLRQ¶V 'HVLJQ DQG &RQWURO RI &RQFUHWH
0L[WXUHV 5HI   DQG $&, ± ³6WDQGDUG 3UDFWLFH IRU 6HOHFWLQJ 3URSRUWLRQV IRU
1RUPDO+HDY\ZHLJKWDQG0DVV&RQFUHWH´ 5HI 7KLVVHFWLRQIRFXVHVRQWKHJXLGHOLQHV
IRU PDWHULDO VHOHFWLRQ DQG SURSRUWLRQLQJ  *XLGHOLQHV SXEOLVKHG LQ $&,  ³%XLOGLQJ
&RGH 5HTXLUHPHQWV IRU 6WUXFWXUDO &RQFUHWH DQG &RPPHQWDU\´ 5HI   $&, 5
³*XLGH WR 'XUDEOH &RQFUHWH´ 5HI   DQG WKH  HGLWLRQ RI WKH 8QLIRUP %XLOGLQJ &RGH
5HI DUHVXPPDUL]HGLQ7DEOH
7KHPLOGVXOIDWHHQYLURQPHQWIRUWKHVHJXLGHOLQHVKDVVXOIDWHFRQFHQWUDWLRQVVRVOLJKW
WKDW VXOIDWH DWWDFN LV QRW D FRQFHUQ DQG JXLGHOLQHV IRU PDWHULDO VHOHFWLRQ DUH QRW QHFHVVDU\
)RUWKHPRGHUDWHHQYLURQPHQWVWKHW\SLFDO7\SH,,FHPHQWLVUHFRPPHQGHGIRUWKLVOHYHORI
VXOIDWH UHVLVWDQFH  +RZHYHU WKH JXLGHOLQHV DOVR DFNQRZOHGJH WKH EHQHILWV RI PLQHUDO
DGPL[WXUHV 7\SH ,3 06  DQG ,6 06  EOHQGHG FHPHQWV DUH UHFRPPHQGHG E\ $&,  DQG
WKH 8%&  $&,  GHVLJQDWHV WKUHH DGGLWLRQDO FHPHQWV WKDW FDQ EH XVHG LQ PRGHUDWH

 19
HQYLURQPHQWV ZKHUH WKH 7\SH 3 06  , 30 06  DQG , 60 06  EOHQGHG FHPHQWV DUH
DOORZHG$&,DOVRDOORZVWKHXVHRIDQ\FRPELQDWLRQRI7\SH,FHPHQWZLWKDPLQHUDO
DGPL[WXUHWKDWKDVEHHQSURYHQE\WHVWVWRSHUIRUPDWRUDERYHWKHOHYHORI7\SH,,FHPHQWV
7KH PL[ SURSRUWLRQV IRU D PRGHUDWH HQYLURQPHQW DUH OLPLWHG VXFK WKDW D ZDWHUWR
FHPHQWLWLRXV PDWHULDO UDWLR RI  RU OHVV LV UHTXLUHG LQ HDFK JXLGHOLQH WR HQVXUH WKH XVH RI
JRRGTXDOLW\FRQFUHWH$&,DQGWKH8%&DOVRGHVLJQDWHPLQLPXPFRPSUHVVLYHVWUHQJWK
UHTXLUHPHQWV IRU QRUPDO ZHLJKW DQG OLJKWZHLJKW DJJUHJDWH FRQFUHWH  )RU D PRGHUDWH
HQYLURQPHQW WKH WZR JXLGHOLQHV UHTXLUH D PLQLPXP FRPSUHVVLYH VWUHQJWK RI  03D
SVL 

7DEOH±0DWHULDODQG3URSRUWLRQ5HFRPPHQGDWLRQVIRU1RUPDODQG/LJKWZHLJKW
$JJUHJDWH&RQFUHWH6XEMHFWWR6XOIDWH$WWDFN 5HIV 

0LQLPXPI¶FIRU/LJKW
0D[LPXPZFE\ DQG1RUPDO:HLJKW
6HYHULW\RI
&HPHQW7\SH ZHLJKWIRU1RUPDO &RQFUHWH
(QYLURQPHQW
:HLJKW&RQFUHWH
SVL 
0LOG   
7\SH,,,3 06 ,6 06 3 06 
0RGHUDWH  
, 30 06 , 60 06 
6HYHUH 7\SH9  
7\SH9SR]]RODQRU
9HU\6HYHUH  
VODJ
 :KHQFKORULGHRURWKHUGHSDVVLYDWLQJDJHQWVDUHSUHVHQWLQDGGLWLRQWRVXOIDWHDORZHUZDWHUFHPHQW
UDWLRPD\EHQHFHVVDU\WRUHGXFHFRUURVLRQRIHPEHGGHGLWHPV
 $&,DQGWKH8%&GHVLJQDWHG7\SH,,,3 06 DQG,6 06 ZKLOH$&,UHFRPPHQGHGDOOVL[
FHPHQWW\SHVVKRZQLQWKHWDEOH$&,DOVRDOORZVDQ\EOHQGRI7\SH,FHPHQWDQGDJURXQG
JUDQXODWHGEODVWIXUQDFHVODJRUDSR]]RODQWKDWKDVEHHQGHWHUPLQHGE\WHVWVWRJLYHHTXLYDOHQWVXOIDWH
UHVLVWDQFH
 $&,DOVRDOORZVDQ\EOHQGRI7\SH,,FHPHQWDQGDJURXQGJUDQXODWHGEODVWIXUQDFHVODJRUD
SR]]RODQWKDWKDVEHHQGHWHUPLQHGE\WHVWVWRJLYHHTXLYDOHQWVXOIDWHUHVLVWDQFH
8VHDSR]]RODQRUVODJWKDWKDVEHHQGHWHUPLQHGE\WHVWVWRLPSURYHVXOIDWHUHVLVWDQFHZKHQXVHGLQ
FRQFUHWHFRQWDLQLQJ7\SH9FHPHQW
0LQLPXPVWUHQJWKUHTXLUHPHQWVRQO\GHVLJQDWHGLQ$&,DQGWKH8%&1RWHWKDWSVL 
03D


 20
 
 
 

)RU WKH VHYHUH HQYLURQPHQW WKH KLJKVXOIDWH UHVLVWDQW 7\SH 9 FHPHQW LV
UHFRPPHQGHGLQHDFKJXLGHOLQH$&,DFNQRZOHGJHVWKDWD7\SH,,FHPHQWLPSURYHGWR
WKH SHUIRUPDQFH OHYHO RI D 7\SH 9 FHPHQW E\ XVLQJ PLQHUDO DGPL[WXUHV LV DOVR DFFHSWDEOH
7KH PD[LPXP ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLR LQ HDFK JXLGHOLQH IRU D VHYHUH
HQYLURQPHQWLV$&,DQGWKH8%&UHTXLUHDPLQLPXPFRPSUHVVLYHVWUHQJWKRI
03D SVL IRUQRUPDODQGOLJKWZHLJKWFRQFUHWH)RUWKHYHU\VHYHUHHQYLURQPHQWHDFK
JXLGHOLQHUHFRPPHQGVD7\SH9FHPHQWDXJPHQWHGZLWKDSR]]RODQRUVODJDQGDPD[LPXP
ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLR RI   $&,  DQG WKH 8%& DOVR UHFRPPHQG D
PLQLPXPFRPSUHVVLYHVWUHQJWKRI03D SVL 

 &XUUHQW3UDFWLFHRIWKH7H[DV'HSDUWPHQWRI7UDQVSRUWDWLRQ
7KH7H[DV'HSDUWPHQWRI7UDQVSRUWDWLRQFXUUHQWO\FRQWUROVVXOIDWHDWWDFNLQWKHVWDWH
RI 7H[DV E\ FRQWUROOLQJ WKH FKHPLVWU\ RI WKH FHPHQWLWLRXV PDWHULDOV LQ DUHDV RI FRQFHUQ
7['27ILUVWHVWDEOLVKHGUHJLRQVLQWKHVWDWHZKHUHVXOIDWHVDUHNQRZQWREHDFRQFHUQ7KH
DUHDVRISRVVLEOHVXOIDWHDWWDFNZHUHGHWHUPLQHGE\H[SHULHQFHLQHDFKRIWKHGLVWULFWV7KH
7['27%ULGJH'HVLJQ*XLGHSURYLGHVDQLOOXVWUDWLRQRIWKHSRWHQWLDOVXOIDWHHQYLURQPHQWVDV
VKRZQLQ)LJXUH 5HI 7KHVKDGHGDUHDVRQWKHPDSUHSUHVHQWWKHDUHDVZKHUHVXOIDWH
DWWDFNLVDFRQFHUQ7KHFDYHDWWRWKHRULJLQDOILJXUHJLYHQEHORZWKHPDSJLYHVDQLGHDRI
WKHDFFXUDF\DQGVFRSHRIWKHGDWDLWSUHVHQWV
)RU WKH VKDGHG DUHDV RI WKH PDS LQ )LJXUH  ² DUHDV VXFK DV :HVW 7H[DV WKH
3DQKDQGOHDQGWKH*XOI&RDVW²7['27UHTXLUHVWKHXVHRI7\SH,,SRUWODQGFHPHQW7\SH
,, FHPHQW LV UHDGLO\ DYDLODEOH LQ PRVW RI 7H[DV DQG LV FRPPRQO\ XVHG LQ 7['27 SURMHFWV
7['27 DOVR DOORZV DQ RSWLRQDO VHFRQGDU\ SUHFDXWLRQ RI XVLQJ IO\ DVK ZLWK WKH 7\SH ,,
FHPHQW WR SUHYHQW VXOIDWH DWWDFN  7KH 7['27 VSHFLILFDWLRQV KRZHYHU DFNQRZOHGJH WKH
QHJDWLYHHIIHFWVRIKLJKFDOFLXPIO\DVKHVRQVXOIDWHUHVLVWDQFH,WHP  RIWKH7['27
6WDQGDUG6SHFLILFDWLRQVIRU&RQVWUXFWLRQDQG0DLQWHQDQFHRI+LJKZD\V6WUHHWVDQG%ULGJHV
GRHVQRWDOORZWKHXVHRIWKHW\SLFDOO\KLJKFDOFLXP$670&ODVV&IO\DVKHVZKHQ7\SH,,
FHPHQWVDUHUHTXLUHG 5HI 7H[DVVSHFLILFDWLRQVFXUUHQWO\QHYHUUHTXLUHWKHXVHRI7\SH
9FHPHQWV

 21

7KHVKDGHGDUHDVUHSUHVHQWNQRZQDUHDVRISRVVLEOHFRUURVLRQFDXVHGE\VXOSKDWHVRLOVRUVDOWZDWHU7KHUHPD\EHDUHDV
ZLWKLQWKHERXQGDULHVWKDWDUHIUHHIURPFRUURVLYHLQIOXHQFHDQGDUHDVRXWVLGHWKHERXQGDULHVWKDWDUHQRW&DUHIXO
FRQVLGHUDWLRQLVUHFRPPHQGHG

)LJXUH±³)LJXUHF3URWHFWLYH0HDVXUHV$JDLQVW&RUURVLRQIURP%HORZ´IURP
7['27%ULGJH'HVLJQ*XLGH 5HI 

 $YDLODEOH3HUIRUPDQFH7HVWVIRU(YDOXDWLQJ6XOIDWH5HVLVWDQFH
 7KH XOWLPDWH JRDO RI WKLV 7['27 SURMHFW LV WR FRQYHUW WKH W\SHV RI VSHFLILFDWLRQV
GHVFULEHG LQ 6HFWLRQ  LQWRSHUIRUPDQFHEDVHGVSHFLILFDWLRQVVRWKDWWKHUHOHYDQWFRQFUHWH
SURSHUWLHV WKDW DIIHFW VXOIDWH DWWDFN DUH LGHQWLILHG DQG SHUIRUPDQFH WHVWV DUH SURYLGHG WR
HYDOXDWHWKHVHSURSHUWLHVLQFRQFUHWH6HFWLRQKDVSURYLGHGDQRYHUYLHZRIWKHFRQFUHWH
SURSHUWLHV DIIHFWLQJ VXOIDWH DWWDFN LQ FRQFUHWH  7KLV VHFWLRQ ZLOO UHYLHZ WKH DYDLODEOH WHVWV
WKDW FDQ EH XVHG WR HYDOXDWH WKHVH SURSHUWLHV  7KH WHVWV WKDW ZLOO EH H[DPLQHG DUH $670
& ³6WDQGDUG 7HVW 0HWKRG IRU 3RWHQWLDO ([SDQVLRQ RI 3RUWODQG&HPHQW 0RUWDUV
([SRVHGWR6XOIDWH´ 5HI $670&³6WDQGDUG7HVW0HWKRGIRU/HQJWK&KDQJH
RI +\GUDXOLF&HPHQW 0RUWDUV ([SRVHG WR D 6XOIDWH 6ROXWLRQ´ 5HI   DQG 86%5 
³3URFHGXUHIRU/HQJWK&KDQJHRI+DUGHQHG&RQFUHWH([SRVHGWR$ONDOL6XOIDWHV´ 5HI 



 22
 
 
 

 $670&
7KH UDSLG PRUWDU EDU WHVW $670 & ³6WDQGDUG 7HVW 0HWKRG IRU 3RWHQWLDO
([SDQVLRQ RI 3RUWODQG&HPHQW 0RUWDUV ([SRVHG WR 6XOIDWH´ ZDV RULJLQDOO\ SXEOLVKHG DQG
DSSURYHG E\ $670 & WKH 6XEFRPPLWWHH IRU 6XOIDWH 5HVLVWDQFH LQ   7KH WHVW
PHWKRGLQYROYHVWKHPHDVXUHPHQWRIH[SDQVLRQRIPRUWDUEDUVPDGHIURPDFRPELQDWLRQRI
SRUWODQGFHPHQWDQGJ\SVXP7KHJ\SVXPLQWKHPRUWDUPL[SURYLGHVWKHVRXUFHRIVXOIDWH
WKDWLQVWLJDWHVUDSLGUHDFWLRQVLQWKHVSHFLPHQV7KHJ\SVXPDFFHOHUDWHVWKHGHYHORSPHQWRI
DQGLQFUHDVHVWKHDPRXQWRIHWWULQJLWHSURGXFHGLQWKHIUHVKDQGKDUGHQHGFRQFUHWHDQGWKXV
DFFHOHUDWHVWKHUHDFWLRQVW\SLFDORIVXOIDWHDWWDFN7KHWHVWPHWKRGKDVEHHQUHIHUUHGWRLQWKH
$670 VWDQGDUGV IRU SRUWODQG FHPHQW $670 & DV DQ RSWLRQDO PHDQV IRU HYDOXDWLQJ
VHYHUH VXOIDWHUHVLVWDQW SRUWODQG FHPHQWV  $670 & GHVLJQDWHV D PD[LPXP H[SDQVLRQ
OLPLWRISHUFHQWDWGD\VIRU7\SH9SRUWODQGFHPHQWV$6706XEFRPPLWWHH&
UHFRPPHQGVOLPLWVRISHUFHQWH[SDQVLRQDWGD\VIRUPRGHUDWHVXOIDWHUHVLVWDQW7\SH
,,FHPHQWVDQGSHUFHQWH[SDQVLRQDWGD\VIRUVHYHUHVXOIDWHUHVLVWDQW7\SH9FHPHQWV
5HI 
7KHPDMRUDGYDQWDJHRI$670&LVWKHVKRUWGXUDWLRQRIWKHWHVW7KHVXOIDWH
UHVLVWDQFHRIDPRUWDUFDQEHHYDOXDWHGLQDSSUR[LPDWHO\GD\V7KHPDMRUGLVDGYDQWDJHRI
WKHWHVWLVWKDWLWKDVVKRZQWREHLQDFFXUDWHZKHQXVHGIRUWHVWLQJPRUWDUVPDGHZLWKEOHQGHG
K\GUDXOLFFHPHQWVRUEOHQGVRIFHPHQWDQGDPLQHUDODGPL[WXUH7KHILUVWSUREOHPLVWKDWWKH
EOHQGHGFHPHQWVGRQRWGHYHORSHQRXJKPDWXULW\LQWKHGD\PHDVXUHGH[SDQVLRQSHULRG
6HFRQGO\ WKHWHVWGRHVQRWUHSUHVHQWILHOGFRQGLWLRQVEHFDXVHWKHJ\SVXPLQFRUSRUDWHGLQWR
WKH PL[ H[SRVHV WKH PRUWDU WR VXOIDWH DWWDFN LQ LWV IUHVK VWDWH EHIRUH K\GUDWLRQ KDV HYHQ
RFFXUUHG  7KLV LQWHUIHUHV ZLWK WKH QDWXUDO K\GUDWLRQ SURFHVV  2QH UHDFWLRQ WKDW WKH HDUO\
VXOIDWHH[SRVXUHHVSHFLDOO\DIIHFWVLVWKHSR]]RODQLFUHDFWLRQWKDWFKDUDFWHUL]HVWKHEHQHILWRI
PLQHUDODGPL[WXUHV²WKHSR]]RODQLFFRQVXPSWLRQVKRZQHDUOLHULQ(TXDWLRQ7KHUHLV
QRWLPHIRUWKHSRUWODQGFHPHQWK\GUDWLRQE\SURGXFWFDOFLXPK\GUR[LGHWREHDEVRUEHGE\
WKHPLQHUDODGPL[WXUH¶VSR]]RODQLFFRQVWLWXHQWVEHIRUHWKHSDVWHLVH[SRVHGWRVXOIDWHDWWDFN
5HI    7KH DGYDQWDJHV RI UHGXFHG SRWHQWLDO IRU HWWULQJLWH IRUPDWLRQ DQG ORZHUHG
SHUPHDELOLW\DUHPLQLPL]HG7KHVHIODZVLQWKHWHVWKDYHOHGUHVHDUFKHUVWROLPLWWKHVFRSHRI

 23
$670&7KHWHVWVKRXOGRQO\EHXVHGWRWHVWSODLQSRUWODQGFHPHQWPRUWDUVEHFDXVHWKH
WHVWGRHVQRWDFFXUDWHO\LGHQWLI\WKHEHQHILWVRIPLQHUDODGPL[WXUHV

 $670&
:LWK NQRZOHGJH RI WKH OLPLWV RI $670 & $670 6XEFRPPLWWHH & EHJDQ
UHVHDUFKLQJWKHGHYHORSPHQWRIDQHZSHUIRUPDQFHWHVWWKDWZRXOGEHDSSOLFDEOHWRSRUWODQG
FHPHQW EOHQGHG K\GUDXOLF FHPHQWV DQG EOHQGV RI SRUWODQG FHPHQW ZLWK SR]]RODQV DQGRU
VODJ  7KH VXEFRPPLWWHH OHG E\ FKDLUPDQ .DWKHULQH 0DWKHU LQLWLDWHG WZR FRRSHUDWLYH WHVW
SURJUDPV DW HOHYHQ GLIIHUHQW ODERUDWRULHV WR WHVW VHYHUDO W\SHV RI SRUWODQG DQG EOHQGHG
FHPHQWV 5HIV 7KHUHVXOWRIWKLVZRUNZDVWKHIRUPDWLRQDQGVWDQGDUGL]DWLRQRIWKH
PRUWDUEDUWHVW$670&LQ)RUWKHQHZWHVWWKHPHWKRGRIDGGLQJVXOIDWHLQWR
WKHPRUWDUGXULQJPL[LQJLVHOLPLQDWHG,QVWHDGVXOIDWHH[SRVXUHLVSURYLGHGE\LPPHUVLQJ
WKH PRUWDU EDUV LQWR D VXOIDWH VROXWLRQ DIWHU WKH PRUWDU KDV UHDFKHG D FHUWDLQ VWUHQJWK
%HJLQQLQJ VXOIDWH H[SRVXUH ZKHQ PRUWDUV DUH DW DQ HTXLYDOHQW VWUHQJWK YDOXH LV VDLG WR
VLPXODWH DFWXDO FRQFUHWH SUDFWLFH LQ WKDW FRQFUHWH LQ WKH ILHOG ZLOO W\SLFDOO\ EH DW
DSSUR[LPDWHO\ WKH VDPH VWUHQJWK ZKHQ VXOIDWH DWWDFN EHJLQV UHJDUGOHVV RI WKH FHPHQWLWLRXV
FKHPLVWU\ 5HI    7KH W\SH RI VROXWLRQ XVHG IRU WKH WHVW DQG WKH VWUHQJWK UHTXLUHPHQW KDV
YDULHG RYHU WKH \HDUV EXW WKH VXEFRPPLWWHH KDV FXUUHQWO\ VHWWOHG RQ XVLQJ D  PRODU
VRGLXPVXOIDWH 1D62 VROXWLRQDQGDVWUHQJWKUHTXLUHPHQWRI03D SVL EHIRUH
LPPHUVLRQ
7KURXJK DQDO\VLV RI WHVW UHVXOWV DQG FRUUHODWLRQ ZLWK $670 & OLPLWV $670
& ZDV DEOH WR HVWDEOLVK H[SDQVLRQ FULWHULD WR FRUUHVSRQG ZLWK WKH $670 & WHVW
7KHWHVWFULWHULRQUHTXLUHVDPD[LPXPH[SDQVLRQOLPLWRISHUFHQWDWGD\VRIVXOIDWH
VROXWLRQH[SRVXUHIRUPRGHUDWHVXOIDWHUHVLVWDQFHDQGDOLPLWRISHUFHQWDWGD\VIRU
VHYHUH VXOIDWH UHVLVWDQFH 5HIV     7KHVH H[SDQVLRQ OLPLWV ZHUH VXSSRUWHG E\ WKH WZR
RULJLQDOWHVWSURJUDPVDQGE\DWKLUGSURJUDPSHUIRUPHGE\WZHOYHODERUDWRULHVLQ-DQXDU\RI
 5HI    2X\DQJ FRPSXWHG H[SDQVLRQ OLPLWV IRU $670 & E\ FRUUHODWLQJ OLPLWV
ZLWKSHDNH[SHFWHGFRPSUHVVLYHVWUHQJWKVLQWKHEDUVDQGWKHFDOFXODWHGYDOXHVDJUHHGZHOO
ZLWK WKH YDOXHV HVWDEOLVKHG E\ $670 & 5HI    ,Q DOO WKH WHVWLQJ WKH WHVW DQG LWV

 24
 
 
 

FRUUHVSRQGLQJ FULWHULD ZHUH VKRZQ WR DFFXUDWHO\ HYDOXDWH WKH SHUIRUPDQFH RI PRUWDUV
FRQWDLQLQJSRUWODQGFHPHQWEOHQGHGFHPHQWVDQGEOHQGVRIFHPHQWZLWKPLQHUDODGPL[WXUHV
8QOLNH$670&UHVXOWVFRUUHODWHGZHOOZLWKILHOGDQGODERUDWRU\H[SHULHQFH7KHRQO\
GLVDGYDQWDJH RI $670 & LV WKDW WKH WHVW PD\ EH FRQVLGHUHG WR EH WRR VORZ WR EH DQ
DFFHOHUDWHG WHVW DV LW UHTXLUHV  PRQWKV EHIRUH VLJQLILFDQW UHVXOWV DUH REWDLQHG  7KH FOHDU
DGYDQWDJH RI WKH WHVW LV WKDW LW SURYLGHV D UHOLDEOH ZD\ IRU HQJLQHHUV WR HYDOXDWH WKH VXOIDWH
UHVLVWDQFHRIDOOW\SHVRIFHPHQWLWLRXVPDWHULDOFRPELQDWLRQV

 86%5
 %RWKWHVWVGHVFULEHGWKXVIDUHYDOXDWHWKHUHVLVWDQFHRIPRUWDUWRVXOIDWHDWWDFNDQGQRW
WKH DFWXDO FRQFUHWH  )RU HQJLQHHUV LQWHUHVWHG LQ EHWWHU UHSUHVHQWLQJ VHUYLFH FRQGLWLRQV E\
WHVWLQJ DFWXDO FRQFUHWH VSHFLPHQV WKH 8QLWHG 6WDWHV %XUHDX RI 5HFODPDWLRQ 86%5  KDV
SURYLGHG WKH VWDQGDUGL]HG WHVW 86%5  ³3URFHGXUH IRU /HQJWK &KDQJH RI +DUGHQHG
&RQFUHWH ([SRVHG WR $ONDOL 6XOIDWHV´ 5HI    7KH 86%5  SURFHGXUHV DUH VLPLODU WR
$670&LQWKDWWHVWVSHFLPHQVDUHVRDNHGLQDVXOIDWHVROXWLRQDIWHUWKHVSHFLPHQVKDYH
UHDFKHG D FHUWDLQ VWUHQJWK EXW WKH VSHFLPHQV LQ WKLV WHVW DUH FRQFUHWH F\OLQGHUV LQVWHDG RI
PRUWDUEDUV7KHH[SDQVLRQVRIWKHF\OLQGHUVDUHPHDVXUHGDVZHOODVWKHPDVVFKDQJHGXULQJ
LPPHUVLRQ  86%5  LV DSSOLFDEOH WR FRQFUHWH PL[HV FRQWDLQLQJ SRUWODQG FHPHQWV
EOHQGHGFHPHQWVRUEOHQGVRIFHPHQWDQGPLQHUDODGPL[WXUHV
7KHWHVWSURFHGXUHVSURYLGHWKUHHPHWKRGVLQZKLFKWKHW\SHRIVRDNLQJLVYDULHGIRU
HDFK PHWKRG 5HI    0HWKRG $ LQYROYHV FRQWLQXRXV VRDNLQJ RI WKH F\OLQGHUV LQ D 
SHUFHQW VRGLXP VXOIDWH 1D62  VROXWLRQ 0HWKRG % LQYROYHV FRQWLQXRXV VRDNLQJ LQ D 
SHUFHQW VRGLXP VXOIDWH VROXWLRQ DQG 0HWKRG & LV DVRDNLQJGU\LQJWHVWZKHUHWKHF\OLQGHUV
DUHDOWHUQDWHO\VRDNHGIRUKRXUVLQDSHUFHQWVROXWLRQDQGWKHQGULHGIRUKRXUVXQGHU
DIRUFHGDLUGUDIWRI ƒ&  ƒ) 0HWKRG%DQGWKHGU\LQJVRDNLQJ0HWKRG&DUHHTXDOO\
ULJRURXVWHVWVZKLOH0HWKRG$UHTXLUHVPRUHWLPHWRVKRZGHWHULRUDWLRQ0HWKRG%KDVEHHQ
IRXQGWREHDWUXHDFFHOHUDWHGWHVWZLWKQRDSSDUHQWLUUHJXODULWLHVLQWKHPHFKDQLVPVRIVXOIDWH
DWWDFN 5HI (YHQIRUWKHPRUHULJRURXVPHWKRGVWKH86%5WHVWUHTXLUHVDWOHDVW
WR  \HDUV EHIRUH DQ\ VLJQLILFDQW UHVXOWV FDQ EH REWDLQHG  7KHUH DUH FXUUHQWO\ QR ZLGHO\

 25
DFFHSWHG H[SDQVLRQ OLPLWV RU PDVV FKDQJH OLPLWV WKDW JR DORQJ ZLWK WKHVH SURFHGXUHV  7KH
PDLQDGYDQWDJHRIWKH86%5WHVWLVLWVIOH[LELOLW\,WFDQEHXVHGWRHYDOXDWHWKHHIIHFWV
RISHUPHDELOLW\PLQHUDODQGFKHPLFDODGPL[WXUHVDQGRWKHUPL[GHVLJQDOWHUQDWLYHVDVZHOO
DVYDULRXVFXULQJSURFHGXUHVRQWKHVXOIDWHUHVLVWDQFHRIFRQFUHWH

 3URSRVHG3HUIRUPDQFH%DVHG6SHFLILFDWLRQVIRU6XOIDWH5HVLVWDQFH
7KHVWDWHRIWKHDUWOLWHUDWXUHUHYLHZSHUIRUPHGHDUOLHULQWKLVSURMHFWZDVIROORZHGXS
E\ D SURSRVDO IRU D QHZ IRUP RI VSHFLILFDWLRQV IRU WKH 7H[DV 'HSDUWPHQW RI 7UDQVSRUWDWLRQ
5HI    7KH JXLGHOLQHV DUH RXWOLQHG LQ 7DEOHV  DQG 7DEOH   7KH SURSRVHG
SHUIRUPDQFHEDVHG VSHFLILFDWLRQV SURYLGH D PHDQV IRU HYDOXDWLQJ WKH VHYHULW\ RI DQ
HQYLURQPHQW ZKHUH FRQFUHWH ZLOO EH LQ VHUYLFH DV ZHOO DV D PHDQV IRU HYDOXDWLQJ WKH
SURSHUWLHVRIDFRQFUHWHWRHQVXUHWKHGXUDELOLW\RIWKHFRQFUHWHLQLWVHQYLURQPHQW7KHIRFXV
RIWKLVVHFWLRQZLOOEHRQWKHVSHFLILFDWLRQVGHYHORSHGIRUHYDOXDWLQJFRQFUHWHSURSHUWLHVIRU
DSSOLFDWLRQLQDVXOIDWHHQYLURQPHQW

7DEOH±0L['HVLJQ3DUDPHWHUVIRU&RQFUHWH5HVLVWDQWWR6XOIDWH$WWDFN 5HI 
6HYHULW\RI(QYLURQPHQW &HPHQW7\SH 0D[LPXPZF
0LOG  
 
0RGHUDWH  7\SH,,  
6HYHUH 7\SH9 

9HU\6HYHUH 7\SH9SR]]RODQRUVODJ  
 $KLJKHUZDWHUFHPHQWUDWLRPD\EHSHUPLWWHGLIWKHSHUIRUPDQFHUHTXLUHPHQWVRI7DEOH
DUHPHWRUH[FHHGHG
 :KHQFKORULGHRURWKHUGHSDVVLYDWLQJDJHQWVDUHSUHVHQWLQDGGLWLRQWRVXOIDWHDORZHU
ZDWHUFHPHQWUDWLRPD\EHQHFHVVDU\WRUHGXFHFRUURVLRQRIHPEHGGHGLWHPV
 2UXVHDFRPELQDWLRQRIFHPHQWDQGPLQHUDODGPL[WXUHWKDWPHHWVRUH[FHHGVWKH
SHUIRUPDQFHRI7\SH,,FHPHQWDVWHVWHGE\$670&DQGWKHSHUIRUPDQFH
UHTXLUHPHQWVRI7DEOH
 2UXVHDFRPELQDWLRQRIFHPHQWDQGPLQHUDODGPL[WXUHWKDWPHHWVRUH[FHHGVWKH
SHUIRUPDQFHRI7\SH9FHPHQWDVWHVWHGE\$670&DQGWKHSHUIRUPDQFH
UHTXLUHPHQWVRI7DEOH
 8VHDSR]]RODQRUVODJWKDWKDVEHHQGHWHUPLQHGE\WHVWVWRLPSURYHVXOIDWHUHVLVWDQFHZKHQ
XVHGLQFRQFUHWHFRQWDLQLQJ7\SH9FHPHQW


 26
 
 
 

7DEOH±3HUIRUPDQFH&ULWHULDIRU6XOIDWH5HVLVWDQFHE\0RGLILHG$670& 5HI 

 5HVLVWDQFH/HYHO
3HUIRUPDQFH&ULWHULD 0RGHUDWH +LJK
([SDQVLRQ  
0DVV/RVV  

7KH SURSRVHG VSHFLILFDWLRQV DUH VLPLODU WR WKH $&, DQG 8%& JXLGHOLQHV GHVFULEHG
HDUOLHU  $&, &RPPLWWHH  ZDV FORVH WR WKH LGHD RI SHUIRUPDQFHEDVHG VSHFLILFDWLRQV LQ
WKHLU JXLGHOLQHV  7KH UHFRPPHQGDWLRQV SURYLGHG DQ RSWLRQ IRU WKH HQJLQHHU ZKHUH DQ\
FHPHQWLWLRXVPDWHULDOFRPELQDWLRQFRXOGEHXVHGDVORQJDVLWZDVWHVWHGDQGSURYHQWRZRUN
DV ZHOO DV RU EHWWHU WKDQ WKH UHFRPPHQGHG SRUWODQG FHPHQW W\SH  7KH SUREOHP LQ WKH
JXLGHOLQHZDVWKDWQRSDUWLFXODUWHVWZDVVSHFLILHGIRUGRLQJWKHVHHYDOXDWLRQV7KHSURSRVHG
VSHFLILFDWLRQV LQ 7DEOHV  DQG  SURYLGH WKH QH[W VWHS EHFDXVH D SHUIRUPDQFH WHVW KDV
EHHQ VHOHFWHG IRU HYDOXDWLQJ PRUWDUV  $670 & ZDV VHOHFWHG EHFDXVH RI LWV
DSSOLFDELOLW\ WR DOO W\SHV RI FHPHQWV DQG FHPHQWPLQHUDO DGPL[WXUH FRPELQDWLRQV DQG WKH
DYDLODELOLW\RIZHOOVXSSRUWHGSHUIRUPDQFHFULWHULDFRUUHVSRQGLQJWRWKHWHVW7KHH[SDQVLRQ
OLPLWVIRU$670&GLVFXVVHGLQ6HFWLRQZHUHLQFRUSRUDWHGLQWRWKHSHUIRUPDQFH
EDVHGVSHFLILFDWLRQVDVVKRZQLQ7DEOH
,Q GHYHORSLQJ WKHVH VSHFLILFDWLRQV WKH LGHD RI D PDVV ORVV FULWHULD FRUUHVSRQGLQJ WR
$670&ZDVDOVRSURSRVHG$VVKRZQLQ7DEOHLWZRXOGEHUHTXLUHGWKDWWKH
PRUWDU EDU WHVW VSHFLPHQV H[SHULHQFH QR ORVV RI PDVV DIWHU  GD\V RI VRDNLQJ LQ RUGHU WR
PHHW PRGHUDWH RU VHYHUH VXOIDWH UHVLVWDQFH OHYHOV  7KH EDVLV RI WKLV SURSRVDO FDPH IURP
)UHHPDQ¶V UHVHDUFK GLVFXVVHG HDUOLHU ZKHUH LW ZDV VKRZQ WKDW VRPH FRQFUHWH ZLWK ORZ
SHUPHDELOLW\PD\QRWVXIIHUGDPDJHIURPH[SDQVLRQKRZHYHUWKHFRQFUHWHPD\VXIIHUIURP
VXUIDFHVFDOLQJDQGWKXVH[SHULHQFHPDVVORVV
:KLOHWKHLGHDRILQFRUSRUDWLQJDGHYLFHIRULGHQWLI\LQJVXOIDWHGDPDJHIURPVXUIDFH
VFDOLQJLQSHUIRUPDQFHHYDOXDWLRQVLVJRRGIXUWKHULQYHVWLJDWLRQDQGVWXG\RIWKHSURFHGXUHV
RI $670 & LQGLFDWHV WKLV SDUWLFXODU SURSRVDO PD\ QRW ZRUN  2QH PDMRU SUREOHP
ZDV WKH IDFW WKDW VXUIDFH VFDOLQJ LV D W\SLFDO GDPDJH PHFKDQLVP LQ FRQFUHWH WKDW PD\ QRW
RFFXU LQ PRUWDUV  6XUIDFH VFDOLQJ RFFXUV ZKHQ WKH PRUWDU DORQJ WKH VXUIDFH RI D FRQFUHWH

 27
EUHDNVDZD\IURPWKHFRDUVHDJJUHJDWHDVWKHPRUWDUH[SDQGVRUGHWHULRUDWHV)UHHPDQZDV
WHVWLQJ FRQFUHWH VSHFLPHQV XVLQJ WKH 86%5  SURFHGXUHV DQG REVHUYHG WKLV W\SH RI
GDPDJH,QWKH$670&WHVWLWLVXQOLNHO\WKDWWKHPRUWDUEDUVZLOOGLVSOD\WKLVVDPH
W\SHRIGDPDJHEHFDXVHWKHUHLVQRFRDUVHDJJUHJDWHIURPZKLFKWKHVXUIDFHPRUWDUFDQEUHDN
DZD\$VHFRQGSUREOHPLVWKDWWKHPDVVORVVFULWHULDDUHJHQHUDOO\IRULGHQWLI\LQJSUREOHPV
ZLWKWKHUHVLVWDQFHRIORZSHUPHDELOLW\PRUWDUVWRVXOIDWHDWWDFN,QJHQHUDO$670&
FDQQRW EH XVHG WR WHVW ORZ SHUPHDELOLW\ PRUWDUV EHFDXVH PRUWDU SURSRUWLRQV DUH VHW
&KDQJLQJ WKH PRUWDU SURSRUWLRQV ZRXOG PDNH WKH H[SDQVLRQ OLPLWV LQDSSOLFDEOH  $ ILQDO
SUREOHPZLWKWKHPDVVORVVFULWHULDLVWKHGLIILFXOWLHVDPDVVORVVPHDVXUHPHQWZRXOGSUHVHQW
WRWKH$670&SURFHGXUHV&XUUHQWO\LQWKH$670&SURFHGXUHVPRUWDUEDU
VSHFLPHQV DUH NHSW IXOO\ VDWXUDWHG WKURXJKRXW FXULQJ VRDNLQJ LQ VXOIDWH VROXWLRQ DQG
PHDVXULQJOHQJWKFKDQJH$PDVVPHDVXUHPHQWFRXOGQRWEHPDGHIRUWKHEDULQLWVVDWXUDWHG
VWDWHEHFDXVHWKHEDUZRXOGQHHGWREHGULHGWRDVXUIDFHVDWXUDWHGGU\ 66' FRQGLWLRQ7KLV
GU\LQJZRXOGEHXQGHVLUDEOHDVWKHEDUVDUHH[WUHPHO\VHQVLWLYHWRPRLVWXUHFKDQJHDQGWKH
GU\LQJPD\FDXVHVKULQNDJHDQGLQWHUIHUHZLWKWKHEDUH[SDQVLRQ$OWHUQDWLYHVXJJHVWLRQVIRU
LQFRUSRUDWLQJ PDVV ORVV HYDOXDWLRQV LQWR VSHFLILFDWLRQV ZLOO EH SUHVHQWHG GXULQJ WKH ILQDO
FRQFOXVLRQVDQGUHFRPPHQGDWLRQVRIWKHSURMHFW
,Q DGGLWLRQ WR HYDOXDWLRQV RI WKH SHUIRUPDQFH RI WKH FHPHQWLWLRXV PDWHULDOV RI WKH
FRQFUHWH WKHVH VSHFLILFDWLRQV SURYLGH UHTXLUHPHQWV IRU WKH ZDWHUWRFHPHQWLWLRXV PDWHULDO
UDWLRVRIWKHFRQFUHWHWREHXVHGLQHDFKHQYLURQPHQW7KHVHZDWHUWRFHPHQWLWLRXVPDWHULDO
UDWLR OLPLWV ZHUH WDNHQ GLUHFWO\ IURP WKH $&, DQG 8%& UHFRPPHQGDWLRQV  7KH JRDO RI WKH
OLPLWV LV WR HQVXUH WKDW D PRGHUDWH RU ORZ SHUPHDELOLW\ FRQFUHWH LV XVHG LQ VXOIDWH
HQYLURQPHQWV  7KHUH LV D FRQFHUQ ZLWK WKHVH ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLR OLPLWV DV
TXHVWLRQV DULVH DV WR ZKHUH WKH YDOXHV FDPH IURP DQG ZK\ WKH\ DUH QHFHVVDU\  $QRWKHU
FRQFHUQ LV WKDW WKH YDOXHV GR QRW DGGUHVV WKH IDFW WKDW ORZ SHUPHDELOLW\ FDQ EH UHDFKHG LQ
VHYHUDO ZD\V  :LWK WKH HPHUJHQFH RI SR]]RODQV DQG VODJ RYHU WKH SDVW IHZ GHFDGHV KLJK
ZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLRVQRORQJHUQHFHVVDULO\PHDQKLJKSHUPHDELOLW\FRQFUHWH
$PRUHDSSURSULDWHSHUIRUPDQFHEDVHGFULWHULRQPD\EHWKHVSHFLILHGPD[LPXPSHUPHDELOLW\
YDOXHVWKDWWKHFRQFUHWHPXVWPHHW

 28
 
 
 

7KH QH[W JRDO LQ WKLV ORQJWHUP UHVHDUFK SURMHFW IRU WKH 7H[DV 'HSDUWPHQW RI
7UDQVSRUWDWLRQ LV WR UHILQH DQG LPSURYH WKH VSHFLILFDWLRQ SURSRVDO DQG YHULI\ WKDW WKH
JXLGHOLQHV ZRUN WKURXJK DQ H[SHULPHQWDO LQYHVWLJDWLRQ  7KH SURSRVHG VSHFLILFDWLRQV DQG
WKHLUFRUUHVSRQGLQJSUREOHPVGLVFXVVHGLQWKLVVHFWLRQKDYHOHGWRWKHIRUPDWLRQRIWKLVWHVW
SURJUDP  7KH ILUVW SKDVH RI WKH WHVW SURJUDP LQYROYHV HYDOXDWLQJ WKH DFFXUDF\ RI $670
&DQGLWVH[SDQVLRQFULWHULD7KHVHFRQGSKDVHLQYROYHVDQVZHULQJTXHVWLRQVDERXW
WKH LPSDFW RI ORZ SHUPHDELOLW\ DQG GHWHUPLQLQJ D SURSHU ZD\ WR VSHFLI\ SHUPHDELOLW\ IRU
FRQFUHWH WKDW LV GXUDEOH DJDLQVW VXOIDWH DWWDFN  7ZR TXHVWLRQV WKDW ZLOO EH DGGUHVVHG DUH
ZKHWKHU WKH ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLR LV DOZD\V GLUHFWO\ UHODWHG WR SHUPHDELOLW\
DQGZKHWKHULWLVWKHZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLRRUSHUPHDELOLW\LWVHOIWKDWLQIOXHQFHV
WKHVXOIDWHUHVLVWDQFHRIFRQFUHWH7KHXOWLPDWHJRDOLVWKHILQDOL]DWLRQRIWKHVHVSHFLILFDWLRQV
LQWRVRPHWKLQJ7['27FDQUHO\RQDVDJXLGHOLQHIRUHIILFLHQWO\SURGXFLQJFRQFUHWHUHVLVWDQW
WRVXOIDWHDWWDFN

 29


 30
&KDSWHU7KUHH([SHULPHQWDO3URJUDP

 ,QWURGXFWLRQ
7KH WHVWLQJ SURJUDP UHSRUWHG KHUHLQ LQYROYHG D WZRSKDVH LQYHVWLJDWLRQ RI VXOIDWH
DWWDFN LQ FRQFUHWH  7KH ILUVW SKDVH RI WKH SURMHFW 3KDVH  LQYROYHV WKH HYDOXDWLRQ RI WKH
PRUWDUEDUSHUIRUPDQFHWHVW$670&0RUWDUVZLWKYDU\LQJFHPHQWLWLRXVPDWHULDOV
ZHUHWHVWHGWRH[DPLQHWKHDFFXUDF\DQGFRQVLVWHQF\RIWKHWHVW3KDVHWHVWLQJEHJDQLQWKH
VXPPHURIDQGHQGHGLQWKHVSULQJRI7KHVHFRQGSKDVH3KDVHLQYROYHGWKH
H[DPLQDWLRQ RI WKH HIIHFW RI SHUPHDELOLW\ RQ WKH VXOIDWH UHVLVWDQFH RI FRQFUHWH XVLQJ WKH
86%5  0HWKRG % WHVWLQJ SURFHGXUH  1RQDLUHQWUDLQHG FRQFUHWHV ZLWK YDU\LQJ
FHPHQWLWLRXV PDWHULDOV DQG ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLRV ZHUH FXUHG XQGHU GLIIHUHQW
FRQGLWLRQVDQGWKHQWHVWHGWRVHHKRZWKHVHYDU\LQJSURSHUWLHVDIIHFWHGWKHSHUPHDELOLW\DQG
WKHVXOIDWHUHVLVWDQFHRIWKHFRQFUHWH7HVWLQJIRU3KDVHEHJDQLQWKHIDOORI/RQJ
WHUPUHVXOWVIRUWKLVWHVWLQJZLOOQRWEHREWDLQHGXQWLOWKHVSULQJRI$OOWHVWLQJIRUWKLV
SURMHFWZDVSHUIRUPHGDWWKH&RQVWUXFWLRQ0DWHULDOV5HVHDUFK*URXS &05* /DERUDWRU\LQ
WKH--3LFNOH5HVHDUFK&DPSXVRI7KH8QLYHUVLW\RI7H[DVDW$XVWLQ

 3KDVH7HVWLQJ3URJUDP
3KDVH  LQYROYHG WKH WHVWLQJ RI WZHQW\IRXU GLIIHUHQW PRUWDUV DFFRUGLQJ WR $670
&  $670 & FRQVLVWV RI PHDVXULQJ WKH H[SDQVLRQ RIPRUWDUEDUVWKDWKDYH
EHHQ VRDNLQJ LQ D VRGLXP VXOIDWH VROXWLRQ  7KH H[SDQVLRQ DIWHU  GD\V RI VRDNLQJ LV WKH
FULWLFDO PHDVXUHPHQW EHFDXVH WKLV YDOXH LV XVHG DV D FULWHULRQ IRU GHWHUPLQLQJ VXOIDWH
UHVLVWDQFH
3ODLQ SRUWODQG FHPHQW PRUWDUV PRUWDUV ZLWK FHPHQW FRPELQHG ZLWK IO\ DVK DQG
PRUWDUVZLWKFHPHQWFRPELQHGZLWKVODJZHUHWHVWHGXVLQJ$670&)RXUFHPHQWV
WZRW\SHVRIIO\DVKDQGRQHJURXQGJUDQXODWHGEODVWIXUQDFHVODJ **%)6 ZHUHXVHG2QH
$670&7\SH,WZR7\SH,,,DQGD7\SH9SRUWODQGFHPHQWZHUHWHVWHG6L[PDWHULDO
FRPELQDWLRQV ZHUH HYDOXDWHG IRU HDFK FHPHQW  7KH FHPHQWLWLRXV PDWHULDO FRPELQDWLRQV
FRQVLGHUHGIRUHDFKFHPHQWDUHDVIROORZV

 

 3ODLQSRUWODQGFHPHQW

 3RUWODQG FHPHQW FRPELQHG ZLWK DQ $670 &ODVV ) IO\ DVK DW  SHUFHQW DQG 
SHUFHQWYROXPHWULFUHSODFHPHQW

 3RUWODQG FHPHQW FRPELQHG ZLWK DQ $670 &ODVV & IO\ DVK DW  SHUFHQW DQG 
SHUFHQWYROXPHWULFUHSODFHPHQWDQG

 3RUWODQGFHPHQWFRPELQHGZLWKDVODJDWSHUFHQWYROXPHWULFUHSODFHPHQW

 0DWHULDOV
7KHIROORZLQJVHFWLRQVSURYLGHLQIRUPDWLRQRQWKHPDWHULDOVXVHGLQWKHPRUWDUPL[HV
IRUWKLVSKDVH7KHSRUWODQGFHPHQWVILQHDJJUHJDWHDQGPLQHUDODGPL[WXUHVDUHGHVFULEHG
3RWDEOHZDWHUZDVXVHGIRUDOOPL[LQJ

3RUWODQG&HPHQW
 )RXUFRPPHUFLDOO\DYDLODEOHSRUWODQGFHPHQWVLQWKHVWDWHRI7H[DVZHUHHYDOXDWHGLQ
WKLVWHVWLQJSURJUDPRQH7\SH,WZR7\SH,,,DQGD7\SH9FHPHQW7KH7\SH,FHPHQWLV
IURP%XGDWKHWZR7\SH,,,FHPHQWVDUHIURP0LGORWKLDQDQG1HZ%UDXQIHOVDQGWKH7\SH
9FHPHQWFDPHIURP2GHVVD&KHPLFDODQDO\VHVIRUWKHIRXUFHPHQWVDUHSURYLGHGLQ7DEOH
  7KH GDWD SURYLGHG LQ WKLV WDEOH FDPH IURP PLOO FHUWLILFDWHV REWDLQHG IURP WKH FHPHQW
VXSSOLHUV$VSHFLILFJUDYLW\RIZDVDVVXPHGIRUSURSRUWLRQLQJIRUDOOWKHFHPHQWV$V
GHQRWHGLQWKHWDEOHWKH7\SH,,,FHPHQWIURP0LGORWKLDQZLOOEHUHIHUUHGWRDVWKH7\SH,,,
$ FHPHQWLQWKLVUHSRUWZKLOHWKH7\SH,,,FHPHQWIURP1HZ%UDXQIHOVZLOOEHUHIHUUHGWR
DVWKH7\SH,,, % FHPHQW
7KH PRVW LPSRUWDQW FKHPLFDO SURSHUW\ UHSRUWHG LQ 7DEOH  LV WKH WULFDOFLXP
DOXPLQDWH &$  FRQWHQW RI WKH FHPHQWV  7KH 7\SH , FHPHQW KDV QR$670&OLPLWIRU
&$ FRQWHQW WKXV WKH KLJK  SHUFHQW YDOXHLVDFFHSWDEOH7KH7\SH,,, $ FHPHQWKDVD
&$ FRQWHQW RI  SHUFHQW  7KLV YDOXH LV FRQVLGHUDEO\ ORZHU WKDQ WKH $670 &
PD[LPXPOLPLWRISHUFHQWIRU7\SH,,FHPHQWDQGLVMXVWDERYHWKHSHUFHQWOLPLWUHTXLUHG

 
IRU7\SH9FHPHQWV7KHSHUFHQW&$FRQWHQWRIWKH7\SH,,, % FHPHQWLVMXVWEHORZWKH
$670&OLPLWRISHUFHQWIRU7\SH,,FHPHQWV)LQDOO\WKH7\SH9FHPHQWPHHWVWKH
&$FRQWHQWOLPLWRISHUFHQWIRUVXOIDWHUHVLVWDQWFHPHQWEHFDXVHWKHFHPHQWFRQWDLQV]HUR
&$

7DEOH±&KHPLFDO3URSHUWLHVRI3RUWODQG&HPHQWV

3RUWODQG&HPHQWV
&HPHQW7\SH $670&  , ,,, $  ,,, %  9
1HZ%UDXQIHOV 2GHVVD
6RXUFH %XGD7; 0LGORWKLDQ7;
7; 7;
6LOLFRQ'LR[LGH 6L2     
$OXPLQXP2[LGH $O2     
)HUULF2[LGH )H2     
0DJQHVLXP2[LGH 0J2     
6XOIXU7ULR[LGH 62     
(TXLYDOHQW$ONDOLHV    
/RVVRQ,JQLWLRQ /2,     
,QVROXEOH5HVLGXH ,5     
'LFDOFLXP6LOLFDWH &6     
7ULFDOFLXP6LOLFDWH &6     
7ULFDOFLXP$OXPLQDWH &$     
 

)LQH$JJUHJDWH
 7KH ILQH DJJUHJDWH XVHG IRU PDNLQJ WKH PRUWDUV ZDV D JUDGHG 2WWDZD VDQG PHHWLQJ
WKH UHTXLUHPHQWV RI $670 & 5HI    $670 & UHTXLUHV WKDW PRUWDUV IRU
WKLV WHVW EH PDGH ZLWK WKLV ZHOOJUDGHG URXQGHG SDUWLFOH VDQG IURP 2WWDZD ,OOLQRLV  7KH
VDQGLVSUHGRPLQDWHO\JUDGHGEHWZHHQWKH2P 1R DQG2P 1R VWDQGDUG
VLHYH VL]HV VXFK WKDW D YHU\ ILQH ZHOOGLVWULEXWHG DJJUHJDWH LV FUHDWHG  7KH VDQG KDV D
VSHFLILFJUDYLW\RIDQGDQDEVRUSWLRQFDSDFLW\RISHUFHQW

0LQHUDO$GPL[WXUHV
 7KUHH GLIIHUHQW W\SHV RI PLQHUDO DGPL[WXUHV ZHUH XVHG LQPL[HVIRU3KDVHWHVWLQJ
$ORZFDOFLXP$670&ODVV)IO\DVKDKLJKFDOFLXP$670&ODVV&IO\DVKDQGDJURXQG

 
JUDQXODWHG EODVW IXUQDFH VODJ ZHUH XVHG  7KH $670 &ODVV ) IO\ DVK FDPH IURP 5RFNGDOH
7H[DVWKH$670&ODVV&IO\DVKFDPHIURP3DUULVK7H[DVDQGWKHVODJZDVREWDLQHGIURP
1HZ 2UOHDQV /RXLVLDQD  7KH FKHPLFDO DQG SK\VLFDO SURSHUWLHV RI WKH PLQHUDO DGPL[WXUHV
UHSRUWHGE\WKHVXSSOLHUVDUHVKRZQLQ7DEOH7KHUHOHYDQWFKHPLFDOFRPSRQHQWVIRUWKH
IO\ DVKHV UHJDUGLQJ VXOIDWH DWWDFN RI FRQFUHWH DUH WKH FDOFLXP R[LGH &D2  VLOLFRQ GLR[LGH
6L2  DOXPLQXP R[LGH $O2  DQG LURQ R[LGH )H2  FRPSRQHQWV  7KH 'XQVWDQ DQG
7LNDOVN\&DUUDVTXLOOR PHWKRGV IRU GHWHUPLQLQJ WKH HIIHFWLYHQHVV RI D IO\ DVK LQ LPSURYLQJ
VXOIDWHUHVLVWDQFHUHIHUWRWKHVHFKHPLFDOFRPSRQHQWVLQWKHLUDQDO\VLV

7DEOH±&KHPLFDODQG3K\VLFDO3URSHUWLHVRI0LQHUDO$GPL[WXUHV
$670&ODVV))O\ $670&ODVV&
0LQHUDO$GPL[WXUH **%)6ODJ
$VK )O\$VK
6RXUFH 5RFNGDOH7; 3DUULVK7; 1HZ2UOHDQV/$
6LOLFRQ'LR[LGH 6L2    
$OXPLQXP2[LGH $O2    
,URQ2[LGH )H2    
6L2$O2)H2   
&DOFLXP2[LGH &D2    
0DJQHVLXP2[LGH 0J2    
6XOIXU7ULR[LGH 62    
6XOILGH6XOIXU 6    
/RVVRQ,JQLWLRQ   
0RLVWXUH&RQWHQW   
5HWDLQHGRQ6LHYH   
6SHFLILF*UDYLW\   


 0L[3URSRUWLRQLQJ
7KH PL[ SURSRUWLRQLQJ IRU WKH PRUWDUV LV DV UHTXLUHG E\ $670 &
3URSRUWLRQLQJ FRQVLVWHG RI DGGLQJ RQH SDUW FHPHQW WR  SDUWV JUDGHG VWDQGDUG VDQG E\
ZHLJKW  )RU WKH SODLQ SRUWODQG FHPHQW PRUWDUV WKH SURFHGXUHV UHTXLUH D ZDWHUWRFHPHQW
UDWLRRIIRUQRQDLUHQWUDLQHGFHPHQWVDQGIRUDLUHQWUDLQHGFHPHQWV%HFDXVHDOO
WKHFHPHQWVXVHGLQWKLVWHVWSURJUDPDUHQRQDLUHQWUDLQHGFHPHQWVDZDWHUWRFHPHQWUDWLR
RIZDVXVHGIRUWKHVHPL[HV7KHEDVLFPL[SURSRUWLRQVIRUWKHSODLQSRUWODQGFHPHQW

 
PRUWDUVDUHVKRZQLQ7DEOH'HWDLOVIRUDOOWKHPL[HVSHUIRUPHGIRU3KDVHWHVWLQJDUH
SURYLGHGLQ$SSHQGL[$7KHDLUFRQWHQWIRUWKHPRUWDUVZDVDVVXPHGWREHSHUFHQW7KH
ZDWHU FRQWHQW LV EDVHG RQ WKH DVVXPSWLRQ WKDW WKH VDQG LV FRPSOHWHO\ GU\ DW WKH WLPH RI
PL[LQJDQGWKHVDQGKDVDQDEVRUSWLRQRISHUFHQW$OOEDWFKHVIRU3KDVHWHVWLQJZHUH
DSSUR[LPDWHO\FXELFPHWHUV FXELFIHHW 

7DEOH±0L[3URSRUWLRQVIRU3ODLQ3RUWODQG&HPHQW0RUWDUV

0DWHULDO &RQWHQW OE\G 


:DWHU 
3RUWODQG&HPHQW 
*UDGHG6DQG 
&RQYHUVLRQOE\G NJP


:KHQ PLQHUDO DGPL[WXUHV ZHUH XVHG D VSHFLILHG YROXPHWULF SHUFHQW RI WKH FHPHQW
ZDV UHSODFHG E\ DQ HTXLYDOHQW YROXPH RI WKH PLQHUDO DGPL[WXUH  7KH &ODVV ) IO\ DVK ZDV
XVHGWRUHSODFHDQGSHUFHQWRIWKHFHPHQWWKH&ODVV&IO\DVKZDVXVHGWRUHSODFH
DQGSHUFHQWRIWKHFHPHQWDQGWKHVODJZDVXVHGWRUHSODFHSHUFHQWRIWKHFHPHQW)RU
PRUWDUV ZLWK WKHVH EOHQGV RI SRUWODQG FHPHQW ZLWK IO\ DVK RU VODJ WKH UHTXLUHG ZDWHUWR
FHPHQWLWLRXV PDWHULDO UDWLR ZDV GHVLJQDWHG LQ WZR PDQQHUV  %RWK UHTXLUHPHQWV DLPHG DW
HQVXULQJ WKDW WKH IORZ DQG FRQVLVWHQF\ RI WKH PRUWDUV ZLWK DGPL[WXUHV ZDV VLPLODU WR WKH
SODLQSRUWODQGFHPHQWPRUWDUVZLWKZKLFKWKH\ZHUHEHLQJFRPSDUHG7KHIORZRIDPRUWDU
LV TXDQWLWDWLYHO\ GHWHUPLQHG XVLQJ D IORZ WDEOH WHVW WKDW SURGXFHV D IORZ QXPEHU  7KH WHVW
VHWXS LV GHVFULEHG LQ $670 & 5HI   DQG WKH SURFHGXUHV DUHGHVFULEHGLQ$670
& 5HI )RUGHWHUPLQLQJZDWHUFRQWHQWVIRUPL[HVFRQWDLQLQJDEOHQGRIFHPHQW
ZLWK D SR]]RODQ RU VODJ $670 & VWDWHV WKH ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLR
VKDOOGHYHORSDIORZZLWKLQHRIWKHIORZQXPEHUIRXQGIRUWKHSODLQSRUWODQGFHPHQWPRUWDU
ZLWK D  ZDWHUWRFHPHQW UDWLR  $OVR $670 & UHIHUV WR WKH $670 &
SURFHGXUHVZKHUHLWLVUHFRPPHQGHGWKDWWKHZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLRSURGXFHD
IORZQXPEHUZLWKLQWKHUDQJHRIH)RUWKLVWHVWLQJSURJUDPWKHJRDOZDVWRPHHWERWK

 
WKHVHUHTXLUHPHQWVZKHQSRVVLEOHWRHQVXUHWKHPRUWDUVZLWKDGPL[WXUHVFRPSDUHGZHOOZLWK
WKHLUSODLQSRUWODQGFHPHQWPRUWDUFRQWURODVZHOODVZLWKDOOWKHRWKHUPRUWDUVPDGHGXULQJ
WKH WHVW SURJUDP  7ULDO EDWFKHV ZHUH SHUIRUPHG IRU HDFK FHPHQWPLQHUDO DGPL[WXUH
FRPELQDWLRQWRGHWHUPLQHWKHZDWHUFRQWHQWQHHGHGWRSURGXFHWKHGHVLUHGIORZIRUHDFKPL[

 0L[LQJ3ODFHPHQWDQG&XULQJ3URFHGXUHV 
0RUWDUVZHUHPL[HGIROORZLQJWKHSURFHGXUHVRI$670& 5HI $WZR
VSHHGHOHFWULFDOO\GULYHQPHFKDQLFDOPRUWDUPL[HUZDVXVHG7KHPL[WXUHVZHUHPDGHXVLQJ
WKHIROORZLQJSURFHGXUHV

 3ODFHDOOWKHPL[LQJZDWHULQWKHERZO

 $GGWKHFHPHQWDQGPLQHUDODGPL[WXUHVWRWKHZDWHUDQGWKHQVWDUWWKHPL[HUDWWKH
VORZVSHHG0L[IRUVHFRQGV

 $GGWKHVDQGVORZO\RYHUDVHFRQGSHULRGZKLOHWKHPL[HUUXQVDWWKHVORZVSHHG

 6WRSWKHPL[HUDQGFKDQJHLWWRWKHPHGLXPVSHHG5XQWKHPL[HUIRUVHFRQGVDW
WKLVVSHHG

 6WRS WKH PL[HU DQG OHW WKH PRUWDU VWDQG IRU  PLQXWHV  4XLFNO\ VFUDSHWKHPRUWDU
IURPWKHVLGHVRIWKHERZODQGWKHPL[LQJSDGGOHEDFNLQWRWKHEDWFKIRUWKHILUVW
VHFRQGV)RUWKHUHPDLQGHURIWKHUHVWWLPHFRYHUWKHPL[LQJERZO

 )LQLVKE\PL[LQJIRUPLQXWHDWPHGLXPVSHHG


 $W WKH FRQFOXVLRQ RI PL[LQJ D IORZ WDEOH WHVW ZDV UXQ IROORZLQJ WKH SURFHGXUHV
GHVFULEHGLQ6HFWLRQRI$670&$IORZQXPEHUGHVFULELQJWKHFRQVLVWHQF\RI
WKH PL[ ZDV REWDLQHG  $IWHU UXQQLQJ WKH IORZ WHVW WKH WHVWHG PRUWDU ZDV UHWXUQHG WR WKH
PL[HU DQG WKH PL[HU ZDVUXQIRUDQRWKHUVHFRQGVDWPHGLXPVSHHGWRUHLQFRUSRUDWHWKH
PRUWDU
 7KHVSHFLPHQVUHTXLUHGIRU$670&DUHPP[PP[PP LQ[
LQ [ LQ  PRUWDU EDUV IRU H[SDQVLRQ PHDVXUHPHQWV DQG PP LQ  FXEHV IRU

 
FRPSUHVVLYHVWUHQJWKWHVWV6L[PRUWDUEDUVZHUHPDGHDORQJZLWKHLJKWHHQFXEHVIURPHDFK
EDWFK  6WHHO PROGV PHHWLQJ WKH UHTXLUHPHQWV RI $670 & 5HI   ZHUH XVHG IRU
FDVWLQJ WKH PRUWDU EDUV  7KH PROGV DUH GHVLJQHG VXFK WKDW PP LQ  VWDLQOHVV VWHHO
JDXJH VWXGV FDQ EH HPEHGGHG LQ HDFK HQG RI WKH EDUV  7KH VWXGV DUH DOLJQHG VXFK WKDW D
JDXJHOHQJWKRIDSSUR[LPDWHO\PP LQ EHWZHHQJDXJHVWXGHQGVH[LVWV%UDVVFXEH
PROGVPHHWLQJWKHUHTXLUHPHQWVRI$670&ZHUHXVHGIRUWKHFXEHVSHFLPHQV$OO
PROGVZHUHSUHSDUHGIRUPL[LQJE\SODFLQJDOLJKWPROGRLODORQJWKHLQWHULRUVXUIDFHVRIWKH
PROG7KLVRLOVHUYHVDVDUHOHDVHDJHQWIRUGHPROGLQJ$EHDGRIJUHDVHZDVUXQEHWZHHQ
WKHEDVHSODWHVRIWKHPROGVDQGWKHIUDPHWRHQVXUHWKHERWWRPRIWKHPROGZDVZDWHUWLJKW
7KH PRUWDU EDUV ZHUH SODFHG IROORZLQJ WKH SURFHGXUHV RI $670 & 5HI    7KH
PRUWDUIRUWKHFXEHVZDVSODFHGIROORZLQJWKHSURFHGXUHVGHVFULEHGLQ$670&
 $670&GHVLJQDWHVWKH$670& 5HI 3URFHGXUH$ :DUP:DWHU
0HWKRG IRULQLWLDOFXULQJRIWKHPRUWDUVSHFLPHQVDIWHUSODFHPHQW7KHSURFHGXUHLQYROYHV
VHDOLQJ WKH WRS RI WKH PROGV ZLWK D ULJLG VWHHO JODVV RU SODVWLF SODWH VXFK WKDW WKH PROG LV
FRPSOHWHO\ZDWHUWLJKW7KHPROGVDUHWKHQLPPHUVHGLQDFXULQJWDQNRIZDWHUWKDWLVNHSWDW
 H  ƒ&  H  ƒ)   7KH PROGV DUH NHSW LQ WKH WDQN IRU  H  KRXUV  )RU WKLV WHVW
SURJUDPLWZDVGHFLGHGWRPRGLI\WKLVSURFHGXUHVRWKDWWKHVSHFLPHQVZHUHVWRUHGLQD
SHUFHQWUHODWLYHKXPLGLW\HQYLURQPHQWLQVWHDGRIEHLQJVXEPHUJHGLQDWDQN$WWHPSWLQJWR
FUHDWHDFRPSOHWHO\ZDWHUWLJKWPROGSURYHGWREHWLPHFRQVXPLQJDQGULVN\EHFDXVHDOHDNLQ
WKHPROGZRXOGUHVXOWLQORVVRIWKHVSHFLPHQV7KHPRGLILHGSURFHGXUHLQYROYHGSODFLQJWKH
PRUWDUVSHFLPHQVLQDQHQYLURQPHQWDOFKDPEHUWKDWZDVNHSWDWH ƒ& H ƒ) 7KH
PROGVZHUHFRYHUHGZLWKPRLVWFORWKVDQGWKHQVHDOHGLQSODVWLFEDJV:DWHUWUD\VZHUHDOVR
SODFHGLQVLGHWKHFKDPEHUWRNHHSWKHKXPLGLW\KLJK$OOWKHVHVWHSVZHUHGRQHWRHQVXUHD
 SHUFHQW UHODWLYH KXPLGLW\ HQYLURQPHQW ZDV SURGXFHG VR WKDW WKH IUHVK PRUWDUV GLG QRW
ORVH DQ\ ZDWHU  &UHDWLQJ WKLV HQYLURQPHQW VHUYHV WKH VDPH SXUSRVH DV LPPHUVLQJ WKH
VSHFLPHQVLQDFXULQJWDQN7KHPROGVZHUHNHSWLQWKHFKDPEHUIRUHKRXUV
 $IWHU WKH LQLWLDO DFFHOHUDWHG FXULQJ SHULRG LQ WKH HQYLURQPHQWDO FKDPEHU WKH PROGV
ZHUHUHPRYHGIURPWKHFKDPEHUDQGWKHVSHFLPHQVZHUHGHPROGHG$IWHUGHPROGLQJPRVW
RIWKHVSHFLPHQVZHUHWUDQVIHUUHGWRDFXULQJWDQNFRQWDLQLQJVDWXUDWHGOLPHZDWHUNHSWDW

 
H  ƒ&  H  ƒ)   7ZR RI WKH FXEHV ZHUH WDNHQ DQG WHVWHG IRU GHWHUPLQLQJ WKH
FRPSUHVVLYHVWUHQJWKDWGD\&RPSUHVVLYHVWUHQJWKZDVPHDVXUHGIROORZLQJWKHSURFHGXUHV
RI$670&7KHFXEHVZHUHFRROHGWRDPELHQWWHPSHUDWXUHLQDPRLVWFORWKDQGWKHQ
WHVWHG  $670 & UHTXLUHV WKDW WKH PRUWDU VSHFLPHQV DUH FXUHG XQWLO WKH PRUWDU
GLVSOD\V D VWUHQJWK RI  03D  SVL  RU KLJKHU&XEHVZHUHWHVWHGXQWLOWKHDYHUDJH
VWUHQJWKRIWKHFXEHVZDVJUHDWHUWKDQ03D SVL 8QWLOWKLVVWUHQJWKZDVUHDFKHG
DOOWKHVSHFLPHQVZHUHNHSWLQWKHVDWXUDWHGOLPHZDWHU

 7HVWLQJ3URFHGXUHV
 8SRQUHDFKLQJWKHVWUHQJWKRI03D SVL WKHPRUWDUEDUVSHFLPHQVZHUH
PHDVXUHGIRUWKHLULQLWLDOOHQJWK/HQJWKPHDVXUHPHQWVZHUHPDGHXVLQJDOHQJWKFRPSDUDWRU
IROORZLQJ WKH SURFHGXUHV RI $670 &  $ PP LQ  UHIHUHQFH EDU
PDGHRIDORZFRHIILFLHQWRIWKHUPDOH[SDQVLRQVWHHODOOR\ZDVXVHGWR]HURWKHJDXJHRQWKH
FRPSDUDWRU  7KH PRUWDU EDUV ZHUH NHSW LQ D VDWXUDWHG VWDWH GXULQJ PHDVXULQJ EHFDXVH DQ\
GU\LQJFRXOGUHVXOWLQVKULQNDJH%HIRUHWDNLQJPHDVXUHPHQWVWKHVWXGVDWWKHEDUHQGVZHUH
EORWWHGGU\7KHEDUVZHUHWKHQSODFHGLQWKHFRPSDUDWRU7KHEDUVZHUHVSXQDIHZWLPHV
DQG WKH PD[LPXP UHDGLQJ IURP WKH GLDO JDXJH ZDV WDNHQ  /HQJWK PHDVXUHPHQWV ZHUH
UHFRUGHGWRWKHQHDUHVWPP LQ %HWZHHQHDFKPHDVXUHPHQWWKHUHIHUHQFHEDU
ZDVSODFHGEDFNLQWKHFRPSDUDWRUWRHQVXUHWKHJDXJHUHPDLQHG]HURHG
 $IWHU LQLWLDO OHQJWK PHDVXUHPHQWV WKH PRUWDU EDUV ZHUH LPPHGLDWHO\ LPPHUVHG LQ D
VRGLXP VXOIDWH VROXWLRQ  7KH EDUV ZHUH VWRUHG LQ FRQWDLQHUV ZLWK OLGV VR WKDW WKH VROXWLRQ
ZRXOG QRW HYDSRUDWH  7KH EDUV ZHUH VXSSRUWHG E\ VHYHUDO PP  LQ  GLDPHWHU 39&
SLSHV VR WKDW QR VXUIDFH RI WKH EDUV WRXFKHG DQ\ VLGH RI WKH FRQWDLQHU  )ROORZLQJ WHVW
UHTXLUHPHQWV WKH VRGLXP VXOIDWH VROXWLRQ ZDV SUHSDUHG DW OHDVW  GD\ EHIRUH LWV XVH  7KH
VROXWLRQ GHVLJQDWHG E\ $670 & ZDV D  PRODU  SHUFHQW VRGLXP VXOIDWH
1D62 VROXWLRQ2QHOLWHURIVROXWLRQZDVSUHSDUHGE\ILUVWGLVVROYLQJJRIDQK\GURXV
WHFKQLFDOJUDGH1D62VDOWLQPPRIGHLRQL]HGZDWHU$IWHUWKHVDOWZDVGLVVROYHGWKH
VROXWLRQZDVGLOXWHGWROLWHUE\DGGLQJGHLRQL]HGZDWHU7KHVROXWLRQZDVUHTXLUHGWRKDYH
DS+EHWZHHQDQG7KURXJKRXWDOOWKHWHVWLQJWKHVRGLXPVXOIDWHVROXWLRQVZHUHNHSWDW

 
HR& HR) $670&UHTXLUHVWKDWWKHPRUWDUEDUVEHVWRUHGVXFKWKDWD
VXOIDWH VROXWLRQ WR EDU YROXPH UDWLR RI  H  H[LVWV  6ROXWLRQV ZHUH PDGH IRU WKLV WHVW
SURJUDPVRWKDWDUDWLRRIZDVPDLQWDLQHG
 /HQJWK PHDVXUHPHQWV ZHUH WDNHQ IRU HDFK EDWFK DW       DQG  ZHHNV
DIWHUWKHEDUVZHUHLQLWLDOO\SODFHGLQWKHVRGLXPVXOIDWHVROXWLRQ/RQJWHUPPHDVXUHPHQWV
ZHUH WDNHQ DIWHU  DQG  PRQWKV RI VRDNLQJ  0RQWKV ZHUH FRQVLGHUHG WR EH  GD\V  7KH
OHQJWKPHDVXUHPHQWSURFHGXUHVGHVFULEHGHDUOLHUZHUHIROORZHGIRUDOOPHDVXUHPHQWV$IWHU
HDFKPHDVXUHPHQWWKHVXOIDWHVROXWLRQIRUWKHEDUVZDVUHSODFHGZLWKIUHVKVROXWLRQDQGWKH
FRQWDLQHUVDQGSLSHVXSSRUWVZHUHFOHDQHG
7KHGDWDREWDLQHGIURPWKLVWHVWLQJZHUHWKHFKDQJHLQOHQJWKRIWKHPRUWDUEDUVRYHU
WLPH LQ WKH VRGLXP VXOIDWH VROXWLRQ  /HQJWK PHDVXUHPHQWV ZHUH XVHG WR FDOFXODWH SHUFHQW
H[SDQVLRQVIRUWKHEDUV7KHYLVXDODSSHDUDQFHRIWKHVSHFLPHQVZDVDOVRREVHUYHGDQGDQ\
FUDFNLQJRUZDUSLQJLQWKHEDUVZDVGRFXPHQWHG

 3KDVH7HVWLQJ3URJUDP
7KH VHFRQG SKDVH RI WKH WHVWLQJ SURJUDP LQYROYHG WKH LQYHVWLJDWLRQ RI WKHLQIOXHQFH
SHUPHDELOLW\KDVRQWKHVXOIDWHUHVLVWDQFHRIFRQFUHWH3ODLQSRUWODQGFHPHQWFRQFUHWHPL[HV
PDGHXVLQJWKUHHGLIIHUHQWW\SHVRIFHPHQWZHUHHYDOXDWHG&RQFUHWHVZLWKFRPELQDWLRQVRI
SRUWODQGFHPHQWDQGWZRW\SHVRIIO\DVKZHUHDOVRWHVWHG)RUHDFKFHPHQWDQGFRPELQDWLRQ
RI FHPHQW ZLWK IO\ DVK PL[HV ZLWK DW OHDVW WKUHH GLIIHUHQW ZDWHUWRFHPHQWLWLRXV PDWHULDO
UDWLRVZHUHWHVWHG7KHFHPHQWLWLRXVFRQWHQWRIDOOWKHPL[HVZDVNHSWWKHVDPHVRWKDWWKH
FKHPLVWU\ LQ WKH FRQFUHWH UHPDLQHG FRQVWDQW ZKLOH WKH SHUPHDELOLW\ YDULHG  9DULDWLRQ LQ
SHUPHDELOLW\ ZDV IXUWKHU DFKLHYHG E\ FXULQJ VSHFLPHQV IURP HDFK EDWFK ZLWK GLIIHUHQW
PHWKRGV  6RPH VSHFLPHQV ZHUH FXUHG DW URRP WHPSHUDWXUH ZKLOH RWKHUV ZHUH FXUHG XVLQJ
DFFHOHUDWHGFXULQJSURFHGXUHV7KHSHUPHDELOLW\IRUDOOWKHFRQFUHWHVZDVGHWHUPLQHGXVLQJ
$670&6XOIDWHUHVLVWDQFHZDVHYDOXDWHGE\PDNLQJDQGWHVWLQJFRQFUHWHF\OLQGHUV
IROORZLQJWKHSURFHGXUHVRI86%50HWKRG%'HWDLOVRQWKHPDWHULDOVXVHGLQWHVWLQJ
WKH PL[ GHVLJQV WKDW ZHUH WHVWHG DQG WKH WHVWLQJ SURFHGXUHV DUH GLVFXVVHG LQ WKH IROORZLQJ
VHFWLRQV

 
 0DWHULDOV
7KLVVHFWLRQGHVFULEHVWKHPDWHULDOVXVHGIRUWKHFRQFUHWHEDWFKHVSUHSDUHGIRU3KDVH
 WHVWLQJ$OOWKHSRUWODQGFHPHQWDQGPLQHUDODGPL[WXUHVXVHGLQWKH3KDVHPL[HVZHUH
WKH VDPH PDWHULDOV WKDW ZHUH WHVWHG LQ 3KDVH   7KH 7\SH , FHPHQW IURP %XGD 7H[DV WKH
7\SH ,,, %  FHPHQW IURP 1HZ %UDXQIHOV 7H[DV DQG WKH 7\SH 9 FHPHQW IURP 2GHVVD
7H[DVZHUHXVHGLQWKH3KDVHPL[HV)RUPLQHUDODGPL[WXUHVWKH$670&ODVV)IO\DVK
IURP 5RFNGDOH 7H[DV DQG WKH $670 &ODVV & IO\ DVK IURP 3DUULVK 7H[DV ZHUH XVHG
3RWDEOHZDWHUZDVXVHGLQDOOWKHPL[HV7KHUHPDLQLQJVHFWLRQVGHVFULEHWKHDJJUHJDWHVDQG
WKHFKHPLFDODGPL[WXUHXVHGLQWHVWLQJ

)LQH$JJUHJDWH
 7KH ILQH DJJUHJDWH XVHG LQ 3KDVH  WHVWLQJ ZDV D FRPPHUFLDOO\ DYDLODEOH QDWXUDO
VLOLFHRXVFRQFUHWHULYHUVDQGIURP$XVWLQ7H[DV6LHYHDQDO\VHVRIWKHVDQGLQGLFDWHGLWPHW
WKH UHTXLUHPHQWV RI $670 & 5HI   IRU ILQH DJJUHJDWH  $Q H[DPSOH RI D VLHYH
DQDO\VLV LV VKRZQ LQ 7DEOH   7KH VDQG KDG DQ DYHUDJH ILQHQHVV PRGXOXV RI  D GU\
EXONVSHFLILFJUDYLW\RIDQGDQDEVRUSWLRQFDSDFLW\RISHUFHQW

7DEOH±6LHYH$QDO\VLVRI3KDVH)LQH$JJUHJDWH

6LHYH6L]H 3DVVLQJ $670&6SHF 5HI 


PP LQ   
  
  
  
  
  
  
  




 
&RDUVH$JJUHJDWH
 7KH FRDUVH DJJUHJDWH XVHG LQ 3KDVH  WHVWLQJ ZDV D FRPPHUFLDOO\ DYDLODEOH QDWXUDO
FRQFUHWHULYHUJUDYHOIURP$XVWLQ7H[DV$FFRUGLQJWRVLHYHDQDO\VLVWKHFRDUVHDJJUHJDWH
PHW WKH UHTXLUHPHQWV IRU D 1RFRDUVHDJJUHJDWHGHVLJQDWHGE\$670&3DUWLFOH
VL]HV JHQHUDOO\ UDQJHG IURP  PP  LQ  WR D 1R  VLHYH  $ VLHYH DQDO\VLV IURP WKH
VXSSOLHU DQG DQ DQDO\VLV SHUIRUPHG DW WKH &05* ODERUDWRU\ DUH VKRZQ LQ 7DEOH  DQG
UHVXOWV DUH FRPSDUHG ZLWK WKH $670 & VSHFLILFDWLRQV  :KLOH WKHUH ZHUH VOLJKW
GLIIHUHQFHV LQ SDUWLFOH JUDGDWLRQ EHWZHHQ WKH UHSRUWHG DQG ODERUDWRU\ DQDO\VHV ERWK PHW
$6706L]HUHTXLUHPHQWV$QDO\VLVDOVRVKRZHGWKHFRDUVHDJJUHJDWHKDGDQDYHUDJHGU\
URGGHG XQLW ZHLJKW RI  NJP  OEVIW  DQG D GU\ EXON VSHFLILF JUDYLW\ RI   7KH
DEVRUSWLRQFDSDFLW\RIWKHDJJUHJDWHZDVGHWHUPLQHGWREHDERXWSHUFHQW

7DEOH±6LHYH$QDO\VLVRI3KDVH&RDUVH$JJUHJDWH

3DVVLQJ $670&6SHF 5HI


6LHYH6L]H 3DVVLQJ /DERUDWRU\ 
6XSSOLHU   IRU6L]H
PP LQ    
PP LQ    
PP LQ    
PP LQ    
PP LQ    
   
   

&KHPLFDO$GPL[WXUH
 $KLJKUDQJHZDWHUUHGXFLQJ +5:5 DGPL[WXUHZDVXVHGIRUVRPHRIWKHPL[HVLQ
WKLV WHVW SURJUDP LQ RUGHU WR DFKLHYH ZRUNDELOLW\ LQ D PL[ ZLWKRXW LQFUHDVLQJ WKH ZDWHU
FRQWHQW7KH+5:5DGPL[WXUHDOVRUHIHUUHGWRDVDVXSHUSODVWLFL]HUZDVHVSHFLDOO\XVHIXO
IRU WKH ORZZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLRPL[HVEHFDXVHWKHVHEDWFKHVKDGH[WUHPHO\
ORZ ZDWHU FRQWHQWV DQG WKXV OLWWOH ZRUNDELOLW\ XSRQ LQLWLDO PL[LQJ  7KH +5:5 DGPL[WXUH
XVHG IRU WKLV SURMHFW ZDV D FRPPHUFLDOO\ DYDLODEOH SURGXFW IURP &OHYHODQG 2KLR  7KH

 
DGPL[WXUH PHHWV WKH UHTXLUHPHQWV RI $670 & 5HI   IRU 7\SH $ DQG ) ZDWHU
UHGXFLQJDGPL[WXUHV

 0L['HVLJQV
$ WRWDO RI WZHQW\WZR FRQFUHWH PL[ GHVLJQV ZHUH HYDOXDWHG LQ 3KDVH   7HQ SODLQ
SRUWODQGFHPHQWFRQFUHWHVDQGWZHOYHFRQFUHWHVFRQWDLQLQJDFRPELQDWLRQRIFHPHQWZLWKIO\
DVKZHUHHYDOXDWHG
)RUWKHSODLQSRUWODQGFHPHQWPL[HVWKUHHW\SHVRIFHPHQWZHUHWHVWHGZLWKDWOHDVW
WKUHHGLIIHUHQWZDWHUWRFHPHQWUDWLRV7KHEDWFKHVDUHRXWOLQHGEHORZ

 &RQFUHWHZLWK7\SH,FHPHQWDQGZDWHUWRFHPHQWUDWLRVRIDQG

 &RQFUHWH ZLWK 7\SH ,,, %  FHPHQW DQG ZDWHUWRFHPHQW UDWLRV RI   
DQG

 &RQFUHWHZLWK7\SH9FHPHQWDQGZDWHUWRFHPHQWUDWLRVRIDQG


 )RUWKHFRQFUHWHPL[HVFRQWDLQLQJIO\DVKRQO\WKH7\SH,,, % FHPHQWZDVXVHGIRU
WHVWLQJ7KHIROORZLQJEDWFKHVZHUHFRQVLGHUHG

 &RQFUHWH ZLWK $670 &ODVV ) IO\ DVK DW  SHUFHQW DQG  SHUFHQW YROXPHWULF
UHSODFHPHQWZLWKZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLRVRIDQG

 &RQFUHWH ZLWK $670 &ODVV & IO\ DVK DW  SHUFHQW DQG  SHUFHQW YROXPHWULF
UHSODFHPHQWZLWKZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLRVRIDQG


7KHJHQHUDOPL[GHVLJQVXVHGIRUWKHSODLQSRUWODQGFHPHQWFRQFUHWHPL[HVDUHVKRZQ
LQ 7DEOH   $SSHQGL[ % RXWOLQHV WKH PL[ SURSRUWLRQV IRU DOO WKH PL[HV GRQH LQ 3KDVH 
WHVWLQJ


 
7DEOH±0L[3URSRUWLRQVIRU3ODLQ3RUWODQG&HPHQW&RQFUHWHV

:DWHUWR&HPHQW5DWLR    



:DWHU OE\G     

&HPHQW OE\G     

&RDUVH$JJUHJDWH±GU\ OE\G     
)LQH$JJUHJDWH±GU\ OE\G     
6XSHUSODVWLFL]HU IOR]OEFHPHQW     
'HVLUHG6OXPS LQ     
&RQYHUVLRQVOE\G NJPDQGLQ PP


7KH ZDWHU FRQWHQW DQG DJJUHJDWH ZHLJKWV VKRZQ LQ 7DEOH  GR QRW LQFOXGH
DGMXVWPHQWV PDGH IRU DJJUHJDWH PRLVWXUH FRQWHQW  5DQJHV RI +5:5 DGPL[WXUH TXDQWLWLHV
DUH JLYHQ IRU HDFK PL[  7KH DPRXQW XVHG YDULHG GHSHQGLQJ RQ WKH ZDWHUWRFHPHQW UDWLR
FHPHQW W\SH DQG WKH PL[LQJ FRQGLWLRQV  7KH DPRXQW RI WKH FKHPLFDO DGPL[WXUH WKDW ZDV
H[SHFWHG WR EH XVHG ZDV WDNHQ RXW RI WKH ZDWHU FRQWHQW EHIRUH PL[LQJ EHFDXVH WKH
VXSHUSODVWLFL]HU LV PRVWO\ ZDWHU  7KH VXSHUSODVWLFL]HU ZDV JHQHUDOO\ XVHG IRU WKH  DQG
ZDWHUWRFHPHQWUDWLRPL[HVWRSURGXFHZRUNDEOHFRQFUHWH
7KHRULJLQDOJRDOZDVWRXVHWKHVXSHUSODVWLFL]HUWRPDNHDOOWKHPL[HVKDYHDVOXPS
YDOXHLQWKHUDQJHRIWRPP WRLQ 7KLVSURYHGWREHDGLIILFXOWWDVNIRUWKH
 ZDWHUWRFHPHQW UDWLR PL[HV EHFDXVH RI WKH PHGLXP OHYHO FHPHQW FRQWHQW DQG ORZ
ZDWHUWRFHPHQW UDWLR ZKLFK OHG WR D ORZ ZDWHU FRQWHQW DQG DQ H[WUHPHO\ GU\ PL[  ,W ZDV
IRXQGHDUO\LQWHVWLQJWKDWSXVKLQJWKHVHPL[HVWRDPP LQ RUKLJKHUVOXPSFUHDWHGD
SRRUTXDOLW\FRQFUHWH7KHIUHVKFRQFUHWHVKRZHGKLJKOHYHOVRIEOHHGLQJDQGWKHKDUGHQHG
FRQFUHWH KDG D EODFN DSSHDUDQFH  /RQJWHUP WHVWLQJ VKRZHG WKH PL[HV¶ GD\ VWUHQJWKV
ZHUH DV ORZ DV WKH HTXLYDOHQW  ZDWHUWRFHPHQW UDWLR PL[HV DQG WKHLU SHUPHDELOLW\ ZDV
QRWDVORZDVH[SHFWHG$GHFLVLRQZDVPDGHWRUHGXFHWKHVOXPSUHTXLUHPHQWIRUWKH
ZDWHUWRFHPHQW UDWLR PL[HV WR  WR  PP  WR  LQ   7KHVH ORZHU VOXPS FRQFUHWHV
SHUIRUPHG ZHOO DV ORQJ DV FDUH ZDV WDNHQ WR SURSHUO\ FRQVROLGDWH WKH PDWHULDO GXULQJ
SODFHPHQW

 
)RUWKHFRQFUHWHPL[HVZLWKFRPELQDWLRQVRIFHPHQWZLWKIO\DVKDFHUWDLQYROXPHWULF
SHUFHQWDJH RI WKH FHPHQW FRQWHQW ZDV UHSODFHG E\ WKH IO\ DVK  %HFDXVH WKH IO\ DVKHV KDYH
ORZHUVSHFLILFJUDYLW\YDOXHVWKDQWKHFHPHQWVWKLVUHSODFHPHQWJHQHUDOO\UHVXOWHGLQDGURS
LQ WKH WRWDO ZHLJKW RI FHPHQWLWLRXV PDWHULDO   7R NHHS WKH ZDWHUWRFHPHQWLWLRXV PDWHULDO
UDWLRVDWDQGZDWHUFRQWHQWVKDGWREHGURSSHGVOLJKWO\7KHTXDQWLW\RIILQH
DJJUHJDWHLQWKHPL[KDGWREHLQFUHDVHGWRNHHSWKH\LHOGRIWKHPL[WKHVDPH0L[GHVLJQV
IRUEOHQGVRIFHPHQWDQGIO\DVKZHUHGRQHIRUYROXPHWULFUHSODFHPHQWOHYHOVRI
DQGSHUFHQW7DEOHVKRZVWKHPL[SURSRUWLRQDGMXVWPHQWVXVHGZKHQWKH$670&ODVV
)IO\DVKZDVXVHGDWDUHSODFHPHQWOHYHORISHUFHQW$SSHQGL[%GHWDLOVHDFKPL[ZLWK
DOOWKHGLIIHUHQWIO\DVKUHSODFHPHQWOHYHOV

7DEOH±0L[3URSRUWLRQVIRU&RQFUHWH&RQWDLQLQJ%OHQGRI3RUWODQG
&HPHQWDQG)O\$VK SHUFHQWYROXPHWULFUHSODFHPHQW 

:&5DWLR   


:DWHU OE\G    

3RUWODQG&HPHQW OE\G    
)O\$VK OE\G    

&RDUVH$JJUHJDWH±GU\ OE\G    

)LQH$JJUHJDWH±GU\ OE\G    
6XSHUSODVWLFL]HU IOR]OEFHPHQW    
'HVLUHG6OXPS LQ    
&RQYHUVLRQVOE\G NJPDQGLQ PP


 0L[LQJ3ODFHPHQWDQG&XULQJ3URFHGXUHV
7KHFRQFUHWHEDWFKHVZHUHPL[HGXVLQJDFXELFPHWHU FXELFIRRW URWDU\GUXP
PL[HUPHHWLQJWKHUHTXLUHPHQWVRI$670& 5HI %DWFKVL]HVZHUHW\SLFDOO\
FXELFPHWHUV FXIW %DVLFPL[LQJSURFHGXUHVIROORZHGWKHJXLGHOLQHVRI$670&
%HIRUHEDWFKLQJRXWPDWHULDOVWKHPRLVWXUHFRQWHQWVRIWKHFRDUVHDQGILQHDJJUHJDWHVZHUH
PHDVXUHG DQG PRLVWXUH DGMXVWPHQWV ZHUH PDGH IRU WKH EDWFK ZHLJKWV  %HIRUH SODFLQJ DQ\

 
PDWHULDOVLQWKHPL[HUWKHVLGHVRIWKHGUXPZHUHEXWWHUHGZLWKDPRUWDUDSSUR[LPDWHO\HTXDO
WR  SHUFHQW RI WKH EDWFK PRUWDU WR FRPSHQVDWH IRU PRUWDU ORVV EHFDXVH RI VWLFNLQJ WR WKH
VLGHVRIWKHPL[HU,QLWLDOPL[LQJZDVGRQHIROORZLQJWKHVHVWHSV

 $GGFRDUVHDJJUHJDWHDQGVRPHRIWKHPL[LQJZDWHUEHIRUHVWDUWLQJWKHPL[HU

 6WDUWWKHPL[HUDQGWKHQDGGWKHILQHDJJUHJDWHFHPHQWDQGDQ\PLQHUDODGPL[WXUHV
XVHG)LQLVKE\DGGLQJWKHUHPDLQGHURIWKHPL[LQJZDWHU

 0L[ WKH LQJUHGLHQWV IRU  PLQXWHV  7KHQ VWRS WKH PL[HU IRU D PLQXWH UHVW SHULRG
6FUDSHDQ\PRUWDUIURPWKHGUXPVLGHVDQGEODGHVDWWKHEHJLQQLQJRIWKHUHVWWLPH
&RYHU WKH PL[HU IRU WKH UHPDLQGHU RI WKH WLPH  )LQLVK E\ PL[LQJ IRU DQRWKHU 
PLQXWHV


$IWHU WKLV LQLWLDO PL[LQJ WKH FRQFUHWH ZDV JHQHUDOO\ WHVWHG IRU LWV IUHVK SURSHUWLHV
7KHVOXPSRIWKHFRQFUHWHZDVGHWHUPLQHGIROORZLQJWKHSURFHGXUHVRI$670& 5HI
 $LUFRQWHQWZDVRQO\GHWHUPLQHGIRUWULDOEDWFKHVWRHQVXUHWKHDVVXPHGDLUFRQWHQWZDV
IDLUO\ DFFXUDWH  7KH SUHVVXUH PHWKRG GHVFULEHG LQ $670 & 5HI   ZDV XVHG WR
GHWHUPLQHWKHDLUFRQWHQW)RUEDWFKHVZKHUHWKHVOXPSZDVIRXQGWREHDFFHSWDEOHDIWHUWKLV
LQLWLDOPL[LQJWKHFRQFUHWHWHVWHGIRUVOXPSZDVUHLQFRUSRUDWHGLQWRWKHPL[E\PL[LQJIRU
WRVHFRQGVDQGWKHFRQFUHWHZDVUHDG\IRUSODFHPHQW)RUWKHORZDQGPRGHUDWHZDWHUWR
FHPHQWLWLRXV PDWHULDO UDWLR PL[HV WKH VOXPS RI WKH FRQFUHWH ZDV JHQHUDOO\ YHU\ ORZ DIWHU
LQLWLDOPL[LQJ)RUWKHVHORZVOXPSPL[HVDGGLWLRQDOPL[LQJZDVQHHGHGWRLQFRUSRUDWHWKH
VXSHUSODVWLFL]HULQWRWKHPL[WRDFKLHYHPRUHZRUNDELOLW\7KH+5:5DGPL[WXUHZDVDGGHG
WRWKHLQJUHGLHQWVXVLQJDV\ULQJHZKLOHWKHPL[HUZDVUXQQLQJ:KHQVPDOOGRVDJHVRIWKH
DGPL[WXUH ZHUH XVHG WKH PL[HU ZDV UXQ IRU DSSUR[LPDWHO\  PLQXWHV  /DUJHU GRVDJHV
UHTXLUHG PRUH WLPH IRU LQFRUSRUDWLRQ DQG WKH PL[HU ZDV UXQ IRU  WR  PLQXWHV  $IWHU
LQFRUSRUDWLQJWKHVXSHUSODVWLFL]HUWKHIUHVKFRQFUHWHZDVWHVWHGIRUVOXPS7KHSURFHVVZDV
UHSHDWHGXQWLOWKHGHVLUHGVOXPSZDVUHDFKHGDQGWKHFRQFUHWHZDVUHDG\IRUSODFHPHQW
7KHVSHFLPHQVQHHGHGIRUWKLVWHVWLQJSURJUDPZHUHPP LQ GLDPHWHUE\
PP LQ ORQJF\OLQGHUVIRUHDUO\FRPSUHVVLYHVWUHQJWKWHVWLQJPP LQ GLDPHWHUE\

 
PP LQ  ORQJ F\OLQGHUV ZLWK JDXJH VWXGVHPEHGGHGDWHDFKHQGIRUVXOIDWHH[SRVXUH
WHVWLQJ DQG PP LQ  GLDPHWHU E\ PP LQ  ORQJ F\OLQGHUV IRU FRPSUHVVLYH
VWUHQJWKDQGSHUPHDELOLW\WHVWLQJ7KHVHWVRIVSHFLPHQVPDGHIRUHDFKEDWFKDUHRXWOLQHGLQ
7DEOH7KHFXULQJSURFHGXUHVVKRZQLQWKHILQDOFROXPQDQGWKHVHWQXPEHULQJV\VWHP
DUH H[SODLQHG ODWHU LQ WKLV VHFWLRQ  6LQJOHXVH SODVWLF PROGV ZHUH XVHG IRU FDVWLQJ DOO WKH
VSHFLPHQV)RUWKHPP[PP LQ[LQ F\OLQGHUVZLWKHPEHGGHGJDXJHVWXGV
PP LQ VTXDUHDFU\OLFSODVWLFSODWHVZHUHXVHGWRVHWWKHVWXGVLQSODFH7KHSODWHV
ZHUHWKUHDGHGVXFKWKDWWKHJDXJHVWXGVFRXOGEHKHOGLQSODFHGXULQJSODFHPHQWDQGWKHQWKH
SODWHFRXOGEHUHPRYHGGXULQJGHPROGLQJ*DXJHVWXGVZHUHVHWVXFKWKDWDJDXJHOHQJWKRI
DSSUR[LPDWHO\PP LQ H[LVWHGIURPHPEHGGHGVWXGHQGWRHQG7KHUHJXODUPP[
PP LQ [ LQ  F\OLQGHUV DQG WKH F\OLQGHUV ZLWK JDXJH VWXGV ZHUH SODFHG DQG
FRQVROLGDWHG XVLQJ WKH H[WHUQDO YLEUDWLRQ SURFHGXUHV RI $670 &  7KH PP [
PP LQ[LQ F\OLQGHUVZHUHSODFHGDQGFRQVROLGDWHGXVLQJWKHURGGLQJSURFHGXUHV
RI$670&
$OOWKHVSHFLPHQVZHUHLQLWLDOO\FXUHGLQWKHVDPHPDQQHU7KHVSHFLPHQVZHUHNHSW
DWHƒ& H ƒ) DQGFRYHUHGZLWKZHWEXUODSDQGSODVWLFEDJV)RUWKHZDWHUWR
FHPHQWLWLRXV PDWHULDO UDWLR EDWFKHV VSHFLPHQVZHUHNHSWLQWKLVFRQGLWLRQIRUHKRXUV
DQGWKHQGHPROGHG7KHVHEDWFKHVKDGTXLFNVWUHQJWKGHYHORSPHQWDQGFRXOGEHGHPROGHG
HDUO\  $OO RWKHU EDWFKHV ZHUH GHPROGHG DIWHU  H  KRXUV WR HQVXUH HQRXJK ERQG KDG
GHYHORSHGEHWZHHQWKHFRQFUHWHDQGWKHJDXJHVWXGVIRUGHPROGLQJ$IWHUGHPROGLQJPRVW
RIWKHVSHFLPHQVZHUHWUDQVIHUUHGWRDFXULQJWDQNFRQWDLQLQJVDWXUDWHGOLPHZDWHUNHSWDW
H  R&  H  R)   7ZR PP [ PP LQ [ LQ  F\OLQGHUV ZHUH NHSW RXW IRU
FRPSUHVVLYHVWUHQJWKHYDOXDWLRQV7KHDPRXQWRIWLPHWKHUHVWRIWKHVSHFLPHQVZHUHNHSWLQ
WKHURRPWHPSHUDWXUHFXULQJWDQNGHSHQGHGRQWKHFXULQJSURFHGXUHEHLQJXVHG
)RXUGLIIHUHQWFXULQJSURFHGXUHVZHUHXVHGLQ3KDVHWHVWLQJ6RPHVSHFLPHQVZHUH
FXUHG IROORZLQJ WKH JXLGHOLQHV HVWDEOLVKHG LQ WKH 86%5  0HWKRG % SURFHGXUHV  7KLV
LQYROYHG PRLVW FXULQJ WKH VSHFLPHQV DW URRP WHPSHUDWXUH XQWLO D FRQFUHWH FRPSUHVVLYH
VWUHQJWKRI03D SVL RUPRUHZDVUHDFKHG3DLUVRIWKHPP[PP LQ
[ LQ  F\OLQGHUV ZHUH WHVWHG IROORZLQJ WKH SURFHGXUHV RI $670 & 5HI   XQWLO DQ

 
DYHUDJH VWUHQJWK RI  03D  SVL  RU KLJKHU ZDV UHDFKHG  :KHQ WKLV VWUHQJWK ZDV
HVWDEOLVKHGVXOIDWHH[SRVXUHF\OLQGHUVZHUHUHPRYHGIURPWKHFXULQJWDQNDQGLPPHUVHGLQD
VXOIDWHVROXWLRQ7KHVSHFLPHQVFXUHGLQWKLVPDQQHUZHUHGHVLJQDWHGDV6HWVSHFLPHQV

7DEOH±6SHFLPHQ6HWVIRU3KDVH%DWFKHV
6SHFLPHQ 6HW
7HVWLQJ3URFHGXUH RI&\O &XULQJ3URFHGXUH 
7\SH 

(DUO\&RPSUHVVLYH LQ[LQ R)XQWLO03D


 
6WUHQJWK F\OLQGHU SVL 
  R)IRU'
GD\ PRQWK
LQ[LQ
&RPSUHVVLYH   R)IRU'R)IRU'
F\OLQGHU
6WUHQJWK
  R)IRUPRQWKV
R)XQWLO03D
 
SVL 
LQ[LQ
6XOIDWH([SRVXUH
F\OLQGHUZ   R)IRU'
7HVW
JDXJHVWXGV
  R)IRU'R)IRU'
  R)IRUPRQWKV
  R)IRU'
LQ[LQ
3HUPHDELOLW\7HVWLQJ
F\OLQGHUV   R)IRU'R)IRU'
  R)IRUPRQWKV
$OOVSHFLPHQVFDSSHGZLWKDLUWLJKWOLGVDQGFXUHGXQGHUSODVWLFEDJVDQGZHWEXUODSDW
DSSUR[LPDWHO\ƒ)IRUWKHILUVWWRKRXUV6SHFLPHQVDUHWKHQGHPROGHGDQGPRLVWFXUHGLQ
OLPHZDWHUFXULQJWDQNVDWWKHGHVLJQDWHGWHPSHUDWXUHVDQGIRUWKHGHVLJQDWHGWLPHVVKRZQLQWKH
FROXPQ
&RQYHUVLRQVLQ PPƒ) ƒ&DQGƒ) ƒ&

 
6HW  VSHFLPHQV ZHUH FXUHG LQ WKH  H  ƒ&  H  ƒ)  URRP WHPSHUDWXUH FXULQJ
WDQNXSWRDQDJHRIGD\V7KLVLVDW\SLFDOFXULQJSURFHGXUHWKDWLVXVHGWRHVWDEOLVK
GD\ FRPSUHVVLYH VWUHQJWK DQG SHUPHDELOLW\ YDOXHV IRU D FRQFUHWH  $W  GD\V DIWHU PL[LQJ
VXOIDWHH[SRVXUHF\OLQGHUVZHUHLPPHUVHGLQDVXOIDWHVROXWLRQPP[PP LQ[
LQ  F\OLQGHUV ZHUH WHVWHG IRU FRPSUHVVLYH VWUHQJWK DQG SHUPHDELOLW\ F\OLQGHUV ZHUH VOLFHG
DQGWHVWHGIRUSHUPHDELOLW\

 
6HWVSHFLPHQVZHUHFXUHGLQWKHVDPHGD\SHULRGDVWKH6HWF\OLQGHUV7KH
GLIIHUHQFH ZDV 6HW  F\OLQGHUV ZHUH FXUHG XQGHU D PXFK KLJKHU WHPSHUDWXUH IRU WKH ODVW 
ZHHNVRIWKLVSHULRG$IWHUGD\VRIPRLVWFXULQJDWH ƒ& H ƒ) VSHFLPHQVZHUH
WUDQVIHUUHG WR D FXULQJ WDQN FRQWDLQLQJ VDWXUDWHG OLPHZDWHU NHSW DW  H  ƒ&  H  ƒ) 
7KHWDQNZDVNHSWLQDQHQYLURQPHQWDOFKDPEHUWKDWZDVPDLQWDLQHGDWHƒ& Hƒ) 
DQGKHDWLQJFRLOVZHUHXVHGWRHQVXUHWKHZDWHUWHPSHUDWXUHLQWKHWDQNUHPDLQHGDWWKHKLJK
WHPSHUDWXUHOHYHO7KHVSHFLPHQVZHUHFXUHGDWWKLVH ƒ& H ƒ) WHPSHUDWXUHIRU
 GD\V  $W  GD\V DIWHU PL[LQJ VXOIDWH H[SRVXUH F\OLQGHUV ZHUH LPPHUVHG LQ D VXOIDWH
VROXWLRQ PP [ PP LQ [ LQ  F\OLQGHUV ZHUH WHVWHG IRU FRPSUHVVLYH VWUHQJWK
DQG SHUPHDELOLW\ F\OLQGHUV ZHUH VOLFHG DQG WHVWHG IRU SHUPHDELOLW\  7KH JRDO RI WKLV
DFFHOHUDWHGFXULQJSURFHGXUHZDVWRGHYHORSVSHFLPHQVWKDWGHPRQVWUDWHWKHSHUPHDELOLW\RI
FRQFUHWH FXUHG DW URRP WHPSHUDWXUH IRU  PRQWKV LQ WKH VKRUWHU WLPH VSDQ RI  GD\V
2]\LOGLULP SHUIRUPHG UHVHDUFK DW WKH 9LUJLQLD 7UDQVSRUWDWLRQ 5HVHDUFK &RXQFLO
GHPRQVWUDWLQJWKDWWKHKLJKWHPSHUDWXUHFXULQJDFFXUDWHO\VLPXODWHGWKHORQJWHUPFXULQJRI
 PRQWKV DW URRP WHPSHUDWXUH 5HI    ,Q WKHLU ORZSHUPHDELOLW\ VSHFLILFDWLRQV IRU
WUDQVSRUWDWLRQIDFLOLWLHVWKH9LUJLQLD'HSDUWPHQWRI7UDQVSRUWDWLRQVSHFLILHGWKHDFFHOHUDWHG
FXULQJSURFHGXUHIRUSUHSDULQJFRQFUHWHIRUUDSLGSHUPHDELOLW\WHVWLQJ 5HI 7KHSXUSRVH
RIWKH6HWVSHFLPHQVLVWRHYDOXDWHWKHDFFXUDF\RIWKLVFXULQJPHWKRG
6HWVSHFLPHQVSURYLGHWKHORQJWHUPFXULQJGDWDZLWKZKLFKWKH6HWVSHFLPHQV¶
UHVXOWV FDQ EH FRPSDUHG  1R 6HW  VSHFLPHQV ZLOO KDYH EHHQ WHVWHG E\ WKH WLPH RI WKLV
UHSRUW EHFDXVH RI WKH ORQJ FXULQJ SHULRG  6HW  VSHFLPHQV ZLOO EH NHSW LQ WKH URRP
WHPSHUDWXUHFXULQJWDQNIRUPRQWKV6XOIDWHH[SRVXUHF\OLQGHUVZLOOWKHQEHWUDQVIHUUHGWR
D VXOIDWH VROXWLRQ DQG FRPSUHVVLYH DQG SHUPHDELOLW\ VSHFLPHQV ZLOO EH WHVWHG  7KH UHVXOWV
FDQEHFRPSDUHGZLWK6HWUHVXOWVWRHYDOXDWH2]\LOGLULP¶VUHVHDUFK

 6XOIDWH([SRVXUH7HVWLQJ3URFHGXUHV
3URFHGXUHV IRU VXOIDWH H[SRVXUH WHVWLQJ IROORZ WKH EDVLF JXLGHOLQHV RI 86%5 
0HWKRG % XVLQJ PRGLILFDWLRQV VXJJHVWHG LQ WHVW SURJUDPV SHUIRUPHG E\ )UHHPDQ 5HI  
DQG 7LNDOVN\ 5HI IRU7KH8QLYHUVLW\RI7H[DVDW$XVWLQ0HWKRG%RIWKH86%5

 
WHVW SURFHGXUHV UHTXLUHV D  SHUFHQW VRGLXP VXOIDWH 1D62  VROXWLRQ EH XVHG IRU VXOIDWH
H[SRVXUH2QHOLWHURIWKHVROXWLRQZDVSUHSDUHGE\ILUVWGLVVROYLQJJUDPVRIDQK\GURXV
WHFKQLFDO JUDGH 1D62 VDOW LQ  PLOOLOLWHUV RI GHLRQL]HG ZDWHU  7KH VROXWLRQ ZDV WKHQ
GLOXWHG WR  OLWHU XVLQJ GHLRQL]HG ZDWHU  7KH VRGLXP VXOIDWH VROXWLRQ ZDV DOZD\V PDGH DW
OHDVWGD\EHIRUHXVHDQGNHSWDWH ƒ& H ƒ) 6ROXWLRQVZHUHSUHSDUHGVXFKWKDWD
VROXWLRQWRVSHFLPHQYROXPHUDWLRRIZDVPDLQWDLQHG7KLVUDWLRPHHWVWKHHUDWLR
UHTXLUHPHQWRIWKH86%5SURFHGXUHV
:KHQFXULQJSURFHGXUHVZHUHFRPSOHWHGVXOIDWHH[SRVXUHF\OLQGHUVZHUHWUDQVIHUUHG
WRWKHVRGLXPVXOIDWHH[SRVXUHVROXWLRQFRQWDLQHUV6HYHUDOPP LQ GLDPHWHU39&
SLSHV ZHUH XVHG WR VXSSRUW WKH F\OLQGHUV DQG SUHYHQW VSHFLPHQ FRQWDFW ZLWK WKH FRQWDLQHU
VLGHV%RWKWKHOHQJWKDQGWKHPDVVRIWKHF\OLQGHUVZHUHHYDOXDWHGRYHUWLPHLQWKHVXOIDWH
VROXWLRQ  ,QLWLDO PHDVXUHPHQWV ZHUH QRW WDNHQ XQWLO WKH VSHFLPHQV KDG VRDNHG IRU  GD\V
7KLVHOLPLQDWHGWKHHIIHFWVRILQLWLDODEVRUSWLRQDQGWKHUHVXOWLQJLQLWLDOH[SDQVLRQWKDWRFFXUV
ZKHQWKHF\OLQGHUVDUHILUVWH[SRVHGWRWKHVROXWLRQ 5HI 
7KH OHQJWKV RI WKH F\OLQGHUV ZHUH PHDVXUHG XVLQJ D OHQJWK FRPSDUDWRU ZLWK D GLDO
JDXJHWKDWUHDGWRWKHQHDUHVWPP LQ $PP LQ UHIHUHQFH
EDUPDGHRIDORZFRHIILFLHQWRIWKHUPDOH[SDQVLRQVWHHODOOR\ZDVXVHGIRU]HURLQJWKHGLDO
JDXJH7KHPDVVRIWKHF\OLQGHUVZDVPHDVXUHGXVLQJDGLJLWDOVFDOHZLWKDQDFFXUDF\RI
JUDPV  %HIRUH DQ\ PHDVXUHPHQWV ZHUH WDNHQ VSHFLPHQV ZHUH UHPRYHG IURP WKH VXOIDWH
VROXWLRQ DQG EORWWHG WR D VDWXUDWHGVXUIDFH GU\ 66'  FRQGLWLRQ  7KH 66' FRQGLWLRQ ZDV
FRQVLGHUHG WR EH UHDFKHG ZKHQ WKH JORVV\ PRLVW DSSHDUDQFH RI WKH F\OLQGHU VXUIDFH IDGHG
$V PHQWLRQHG EHIRUH LQLWLDO PHDVXUHPHQWV ZHUH WDNHQ DIWHU  ZHHN RI VRDNLQJ
0HDVXUHPHQWV DUH UHTXLUHG HYHU\ PRQWK IRU  PRQWKV DIWHU WKHVH LQLWLDO PHDVXUHPHQWV DQG
WKHQ HYHU\  PRQWKV WKHUHDIWHU  7KH ILQDO PHDVXUHPHQWV VKRXOG EH  \HDUV DIWHU WKH LQLWLDO
PHDVXUHPHQWV ZHUH WDNHQ 6ROXWLRQV ZHUH UHSODFHG DQG FRQWDLQHUV FOHDQHG GXULQJ HDFK
PHDVXUHPHQWWRHQVXUHDS+EHORZZDVPDLQWDLQHGIRUWKHVXOIDWHHQYLURQPHQW
7KLV VXOIDWH H[SRVXUH WHVWLQJ SURYLGHV GDWD IRU WKH SHUFHQW H[SDQVLRQ RYHU WLPH RI
FRQFUHWHF\OLQGHUVLPPHUVHGLQDVRGLXPVXOIDWHVROXWLRQ'DWDDUHDOVRSURGXFHGLQGLFDWLQJ
WKH SHUFHQW PDVV FKDQJH WKDW RFFXUUHG LQ WKH F\OLQGHU RYHU WLPH  )LQDOO\ SK\VLFDO

 
REVHUYDWLRQVFDQEHPDGHDQGUHFRUGHGFRQFHUQLQJFUDFNGHYHORSPHQWVSDOOLQJDQGVXUIDFH
VFDOLQJLQWKHVSHFLPHQV

 3HUPHDELOLW\7HVWLQJ3URFHGXUHV
7KH SHUPHDELOLW\ RI FRQFUHWH WHVWHG LQ 3KDVH  ZDV PHDVXUHG IROORZLQJ WKH
SURFHGXUHV RI WKH UDSLG SHUPHDELOLW\ WHVW $670 &  8SRQ FRPSOHWLRQ RI FXULQJ
PP [ PP LQ [ LQ  F\OLQGHUV ZHUH UHPRYHG IURP WKH FXULQJ WDQNV DQG FXW
XVLQJDQDEUDVLYHVDZLQWRPP LQ WKLFNPP LQ GLDPHWHUFRQFUHWHVOLFHV)RU
HDFKURRPWHPSHUDWXUHFXUHGDFFHOHUDWHGFXUHGDQGORQJWHUPFXUHGVHWRIVSHFLPHQVIRXU
VOLFHVZHUHRUZLOOEHWHVWHG
$W WKH HQG RI WKH UDSLG SHUPHDELOLW\ WHVW FRXORPE YDOXHV UHSUHVHQWLQJ WKH WRWDO
FXUUHQW SDVVHG WKURXJK WKH FRQFUHWH VOLFHV RYHU WKH KRXU WHVWLQJ SHULRG ZHUH REWDLQHG
7KHVHFRXORPEYDOXHVKDYHEHHQVKRZQWREHUHSUHVHQWDWLYHRIWKHFKORULGHLRQSHQHWUDELOLW\
DQG WKXV DQ LQGLUHFW LQGLFDWLRQ RI WKH SHUPHDELOLW\ RI WKH FRQFUHWH  )RU 3KDVH  WHVWLQJ
SHUPHDELOLW\WHVWVZHUHUXQIRUFRQFUHWHFXUHGIRUGD\VDQGZLOOEHUXQIRUFRQFUHWHFXUHG
IRU  PRQWKV  )RU HDFK VSHFLPHQ VHW WKH DYHUDJH FRXORPE YDOXH IRU WKH IRXU WHVWHG VOLFHV
ZDVUHFRUGHG

 
&KDSWHU)RXU7HVW5HVXOWV

 ,QWURGXFWLRQ
7KHIROORZLQJFKDSWHUSUHVHQWVDOOWHVWUHVXOWVRI3KDVHWHVWLQJDQGWHVWUHVXOWVWRGDWH
RI3KDVHWHVWLQJ)RU3KDVHWHVWLQJWKHIUHVKSURSHUWLHVFRPSUHVVLYHVWUHQJWKZLWKWLPH
DQG EDU H[SDQVLRQV IRU HDFK PRUWDU DUH SUHVHQWHG  )RU 3KDVH  WHVWLQJ WKH IUHVK EDWFK
SURSHUWLHV FRPSUHVVLYH VWUHQJWK GHYHORSPHQW GD\ SHUPHDELOLW\ UHVXOWV DQG LQLWLDO
H[SDQVLRQDQGPDVVFKDQJHUHVXOWVDUHSUHVHQWHG5HVXOWVIRU3KDVHWHVWLQJZLOOEHXSGDWHG
LQIXWXUHUHSRUWVIRUWKLV7['27SURMHFW

 3KDVH7HVW5HVXOWV
 7KH IROORZLQJ VHFWLRQV SURYLGH WKH UHVXOWV RI 3KDVH  WHVWLQJ  )LUVW WKH IUHVK
SURSHUWLHVRIWKHPRUWDUPL[HVDUHSUHVHQWHG7KHZDWHUFRQWHQWDGMXVWPHQWVQHHGHGIRUWKH
PRUWDUVFRQWDLQLQJSR]]RODQVRUVODJDUHGLVFXVVHGDQGWKHIORZQXPEHUVREWDLQHGIRUHDFK
PL[ DUH JLYHQ  7KH FRPSUHVVLYH VWUHQJWK GHYHORSPHQWV RI HDFK PRUWDU DUH WKHQ SUHVHQWHG
)LQDOO\WKHPRUWDUEDUH[SDQVLRQVDUHVKRZQ

 0L[5HVXOWVDQG)UHVK0RUWDU3URSHUWLHV
$ WRWDO RI WZHQW\IRXU PRUWDU PL[HV ZHUH PDGH IRU 3KDVH  WHVWLQJ  7DEOH 
SURYLGHV DQ RXWOLQH RI WKH EDWFKHV PDGH LW LQFOXGHV WKH EDWFK QDPHV WKH PDWHULDOV WKH\
FRQWDLQPL[FRQGLWLRQVDQGWKHIORZQXPEHUIRUHDFKPL[0RVWRIWKHIORZQXPEHUVZHUH
NHSW ZLWKLQ WKH UDQJH RI  WR  DQGRU ZLWKLQ SOXV RU PLQXV  RIWKHHTXLYDOHQWSODLQ
SRUWODQGFHPHQWPRUWDUIORZ7KHFKDQJHLQZDWHUFRQWHQWQHHGHGWRDFKLHYHWKHVHIORZVLQ
WKHPRUWDUVZLWKDFRPELQDWLRQRIFHPHQWDQGDPLQHUDODGPL[WXUHGHSHQGHGRQWKHW\SHDQG
DPRXQW RI DGPL[WXUH XVHG  )RU PL[HV FRQWDLQLQJ WKH &ODVV & IO\ DVK WKH ZDWHU FRQWHQW
JHQHUDOO\QHHGHGWREHUHGXFHGWRSHUFHQWIURPWKHRULJLQDOFRQWHQWXVHGIRUWKHSRUWODQG
FHPHQW PRUWDUV  0L[HV FRQWDLQLQJ WKH &ODVV ) IO\ DVK QHHGHG D  WR  SHUFHQW UHGXFWLRQ
0L[HVFRQWDLQLQJWKHVODJUHTXLUHGDQLQFUHDVHLQZDWHUDVWKHFRQWHQWZDVLQFUHDVHGWR
SHUFHQW  $V IDU DV HDFK FHPHQW W\SH WKH7\SH,FHPHQWSURGXFHGWKHKLJKHVWIORZQXPEHU

 
PRUWDU7KH7\SH,,,FHPHQWVSURGXFHGPRGHUDWHIORZVDQGWKH7\SH9FHPHQWSURGXFHG
WKHORZHVWIORZ

7DEOH±'HVFULSWLRQ0L[&RQGLWLRQVDQG)UHVK3URSHUWLHVRI3KDVH0RUWDUV
%DWFK &HPHQW )O\$VK6ODJ 0L[7HPS 5HODWLYH
)ORZ1XPEHU
1DPH 7\SH 5HS   ƒ)   +XPLGLW\  
3& ,,, $  1RQH   
)& ,,, $  &     
)& ,,, $  &     
)$ ,,, $  )     
)$ ,,, $  )     
6 ,,, $  6ODJ     
3& ,,, %  1RQH   
)& ,,, %  &     
)& ,,, %  &     
)$ ,,, %  )     
)$ ,,, %  )     
6 ,,, %  6ODJ     
3& 9 1RQH   
)& 9 &     
)& 9 &     
)$ 9 )     
)$ 9 )     
6 9 6ODJ     
3 , 1RQH   
& , &     
& , &     
) , )     
) , )     
6ODJ , 6ODJ     
,QWKLVFROXPQ&VWDQGVIRU$670&ODVV&IO\DVKDQG)VWDQGVIRU$670&ODVV)IO\DVK
&RQYHUVLRQƒ&  ƒ)± 

 &RPSUHVVLYH6WUHQJWK5HVXOWV
)LJXUHV    DQG  VKRZ WKH FRPSUHVVLYH VWUHQJWK GHYHORSPHQW RI WKH
3KDVHPRUWDUVIRUWKHIRXUGLIIHUHQWFHPHQWV7DEOHVKRZVWKHFRPSUHVVLYHVWUHQJWKVRI

 
WKH PRUWDUV DW WKH WLPH RI LPPHUVLRQ LQ WKH VXOIDWH VROXWLRQ DQG WKH DJH RI WKH PRUWDUV DW
LPPHUVLRQ$SSHQGL[&SURYLGHVFRPSOHWHUHVXOWVLQWDEXODUIRUP




&RPSUHVVLYH6WUHQJWK SVL

 

3&
 )&
)&

)$
 )$
6



        
$JH KU

R
&XUHGDWH )IRUILUVWKRXUVDQGDWURRPWHPSHUDWXUHIRUUHPDLQGHURIWLPH
&RQYHUVLRQSVL 03D 
)LJXUH±&RPSUHVVLYH6WUHQJWKVRI0RUWDUVZLWK7\SH,,, $ &HPHQW




&RPSUHVVLYH6WUHQJWK SVL

 

 3&
)&

)&
 )$
 )$
6



        
$JH KU

R
&XUHGDWH )IRUILUVWKRXUVDQGDWURRPWHPSHUDWXUHIRUUHPDLQGHURIWLPH
&RQYHUVLRQSVL 03D 


)LJXUH±&RPSUHVVLYH6WUHQJWKVRI0RUWDUVZLWK7\SH,,, % &HPHQW

 


&RPSUHVVLYH6WUHQJWK SVL

 

 3&
)&

)&
 )$
 )$
6

        
$JH KU



&XUHGDWHR)IRUILUVWKRXUVDQGDWURRPWHPSHUDWXUHIRUUHPDLQGHURIWLPH

)$UHDFKHGSVLDIWHUWRWDOGD\VRIFXULQJ

&RQYHUVLRQSVL 03D 


)LJXUH±&RPSUHVVLYH6WUHQJWKVRI0RUWDUVZLWK7\SH9&HPHQW




&RPSUHVVLYH6WUHQJWK SVL

 


3
 &
 &
)

)
 6ODJ

        
$JH KU

&XUHGDWHR)IRUILUVWKRXUVDQGDWURRPWHPSHUDWXUHIRUUHPDLQGHURIWLPH

&RQYHUVLRQSVL 03D 


)LJXUH±&RPSUHVVLYH6WUHQJWKVRI0RUWDUVZLWK7\SH,&HPHQW

 

7DEOH±&RPSUHVVLYH6WUHQJWKVDQG$JHRI3KDVH0RUWDUVDW
,PPHUVLRQLQ6RGLXP6XOIDWH6ROXWLRQ
$W,PPHUVLRQLQWR6XOIDWH6ROXWLRQ
%DWFK &HPHQW )O\$VK6ODJ
1DPH 7\SH 5HS  &RPSUHVVLYH6WUHQJWK
$JH GD\V 
SVL 
3& ,,, $  1RQH  
)& ,,, $  &    
)& ,,, $  &    
)$ ,,, $  )    
)$ ,,, $  )    
6 ,,, $  6ODJ    
3& ,,, %  1RQH  
)& ,,, %  &    
)& ,,, %  &    
)$ ,,, %  )    
)$ ,,, %  )    
6 ,,, %  6ODJ    
3& 9 1RQH  
)& 9 &    
)& 9 &    
)$ 9 )    
)$ 9 )    
6 9 6ODJ    
3 , 1RQH  
& , &    
& , &    
) , )    
) , )    
6ODJ , 6ODJ    
,QWKLVFROXPQ&VWDQGVIRU$670&ODVV&IO\DVKDQG)VWDQGVIRU$670&ODVV)IO\DVK
&RQYHUVLRQSVL 03D


,QLWLDO FRPSUHVVLYH VWUHQJWKV ZHUH PHDVXUHG ZKHQ PRUWDU VSHFLPHQV ZHUH UHPRYHG
IURPWKH R&  R) FKDPEHUDSSUR[LPDWHO\KRXUVDIWHUWKHVSHFLPHQVZHUHFDVW1R
PRUWDU KDG UHDFKHG WKH 03D SVL  FRPSUHVVLYH VWUHQJWK SODWHDX DIWHU WKLV LQLWLDO

 
 KRXUV RI FXULQJ DQG WKXV DOO WKH EDWFKHV UHTXLUHG DGGLWLRQDO FXULQJ WLPH LQ WKH URRP
WHPSHUDWXUHVDWXUDWHGOLPHZDWHUFXULQJWDQNV
)RU HDFK FHPHQW W\SH WKH SODLQ SRUWODQG FHPHQW PRUWDUV UHDFKHG VWUHQJWKV RI 
03D SVL RUKLJKHUPXFKTXLFNHUWKDQWKHPRUWDUVZLWKPLQHUDODGPL[WXUHV7KHSODLQ
7\SH,,,FHPHQWPRUWDUVJDLQHGVWUHQJWKWKHTXLFNHVWDVHDFKUHDFKHGVWUHQJWKVDERYH
03D SVL DIWHUDSSUR[LPDWHO\GD\LQWKHURRPWHPSHUDWXUHOLPHZDWHU7KHPRUWDU
ZLWK WKH 7\SH ,,, $  SRUWODQG FHPHQW KDG D VWUHQJWK RI  03D  SVL  DIWHU
DSSUR[LPDWHO\KRXUVRIWRWDOFXULQJZKLOHWKHPRUWDUZLWKWKH7\SH,,, % FHPHQWKDGD
VWUHQJWK RI  03D  SVL DIWHUWKHVDPHDPRXQWRIFXULQJ7KH7\SH,FHPHQWKDG
FRPSDUDEOHHDUO\VWUHQJWKJDLQWRWKH7\SH,,,FHPHQWVLWUHDFKHGDFRPSUHVVLYHVWUHQJWKRI
03D SVL LQOHVVWKDQKRXUV7KH7\SH9FHPHQWPRUWDU3&KDGWKHVORZHVW
VWUHQJWKGHYHORSPHQW,WWRRNQHDUO\WRWDOKRXUVRIFXULQJEHIRUHDVWUHQJWKRI03D
SVL ZDVUHDFKHG
7KH PRUWDUV ZLWK PLQHUDO DGPL[WXUHV UHTXLUHG PXFK PRUH FXULQJ WLPH DV QR PRUWDU
UHDFKHG D 03D SVL  FRPSUHVVLYH VWUHQJWK EHIRUH  KRXUV RI WRWDO FXULQJ  7KH
PRUWDUV ZLWK FRPELQDWLRQV RI WKH 7\SH ,,, RU 7\SH , FHPHQWV ZLWK D PLQHUDO DGPL[WXUH
XVXDOO\UHDFKHG03D SVL FRPSUHVVLYHVWUHQJWKVEHWZHHQDQGGD\VRIFXULQJ
7KH7\SH9FHPHQWPRUWDUVZLWKPLQHUDODGPL[WXUHVXVXDOO\UHTXLUHGPRUHFXULQJWLPHDQG
RQH PRUWDU UHTXLUHG  GD\V RI FXULQJ EHIRUH UHDFKLQJ WKH 03D SVL  VWUHQJWK
SODWHDX

 6XOIDWH([SDQVLRQ5HVXOWVIRU3ODLQ3RUWODQG&HPHQW0RUWDUV
'HWDLOHG VXOIDWH H[SDQVLRQ UHVXOWV IRU DOO WKH 3KDVH  PRUWDUV DUH SURYLGHG LQ
$SSHQGL[ '  )LJXUH  DQG 7DEOH  RXWOLQH WKH H[SDQVLRQ UHVXOWV IRU WKH PRUWDUV
FRQWDLQLQJSODLQSRUWODQGFHPHQW)LJXUHVKRZVPHDVXUHGEDUH[SDQVLRQVDIWHU
DQGZHHNVDQGPRQWKV GD\V DQGPRQWKV GD\V RIFRQWLQXRXVVRDNLQJ
LQ WKH VRGLXP VXOIDWH VROXWLRQ  )RU HDFK PRUWDU 7DEOH  SURYLGHV WKH DYHUDJH GD\
H[SDQVLRQVDORQJZLWKWKH&$FRQWHQWRIWKHFHPHQWWHVWHGWKHQXPEHURIEDUVWHVWHGDQG
WKH VWDQGDUG GHYLDWLRQ RI WKH GDWD 7KH H[SDQVLRQ OLPLWV GHILQHG IRU $670 & DUH

 
GHSLFWHG JUDSKLFDOO\ LQ )LJXUH  E\ KRUL]RQWDO JULGOLQHV$FFRUGLQJWRWKHOLPLWVPRUWDUV
KDYLQJ GD\ H[SDQVLRQV RI OHVV WKDQ  SHUFHQW PHHW WKH UHTXLUHPHQWV IRU D VHYHUH
VXOIDWHHQYLURQPHQWPRUWDUVZLWKDGD\H[SDQVLRQRIRUOHVVPHHWWKHUHTXLUHPHQWV
IRU D PRGHUDWH VXOIDWH HQYLURQPHQW DQG PRUWDUV ZLWK GD\ H[SDQVLRQV H[FHHGLQJ 
SHUFHQWDUHRQO\DSSOLFDEOHLQPLOGHQYLURQPHQWV


 

0LOG 

 3&
([SDQVLRQ 


3&
0RGHUDWH  3&

 3


6HYHUH


 
          

7LPHLQ6XOIDWH6ROXWLRQ 'D\V


)LJXUH±6XOIDWH([SDQVLRQVRI3ODLQ3RUWODQG&HPHQW0RUWDUV


7DEOH±'D\6XOIDWH([SDQVLRQVRI3ODLQ3RUWODQG&HPHQW0RUWDUV

&$
%DWFK &HPHQW 1RRI 6WDQGDUG $YHUDJH'D\
&RQWHQW
1DPH 7\SH %DUV 'HYLDWLRQ ([SDQVLRQ

3& ,,, $     
3& ,,, %     
3& 9    
3 ,    

 
7KHPRUWDUEDUVFRQWDLQLQJWKH7\SH,,, $ FHPHQWKDGDYHUDJHGD\H[SDQVLRQV
VOLJKWO\DERYHSHUFHQWDQDYHUDJHGD\H[SDQVLRQRISHUFHQWZDVREWDLQHGIRU
WKHPRUWDU 'DWDUDQJHGIURPWRSHUFHQWIRUWKHVL[EDUVWHVWHG7KH7\SH,,,
%  FHPHQW PRUWDU KDG KLJKHU H[SDQVLRQV H[FHHGLQJ  SHUFHQW DW  GD\V WKH DYHUDJH
GD\ H[SDQVLRQ IRU WKH PRUWDU ZDV  SHUFHQW  'DWD UDQJHG IURP  WR 
SHUFHQWIRUWKHVL[EDUVWHVWHG7KHPRUWDUPL[3&IRUWKH7\SH9FHPHQWKDGWKHORZHVW
DYHUDJH GD\ H[SDQVLRQ WKH  SHUFHQW DYHUDJH H[SDQVLRQ ZDV ZHOO EHORZ 
SHUFHQW  7KH YDULDQFH EHWZHHQ WKH VL[ 3& EDU VSHFLPHQ H[SDQVLRQV ZDV PLQLPDO DV
H[SDQVLRQVUDQJHGIURPWRSHUFHQW7KHPRUWDUPL[3FRQWDLQLQJWKH7\SH,
FHPHQWKDGWKHKLJKHVWH[SDQVLRQVRIWKHSODLQSRUWODQGFHPHQWPRUWDUVDVDQDYHUDJH
GD\H[SDQVLRQRISHUFHQWZDVREWDLQHG7KHGD\H[SDQVLRQVIRUDOOVL[EDUVZHUH
ZHOODERYHSHUFHQWDVGDWDUDQJHGIURPWRSHUFHQW

 6XOIDWH([SDQVLRQ5HVXOWVIRU0RUWDUVZLWK0LQHUDO$GPL[WXUHV
)LJXUHVDQGDQG7DEOHVDQGSUHVHQWWKHH[SDQVLRQ
UHVXOWV IRU WKH PRUWDUV FRQWDLQLQJ FRPELQDWLRQV RI FHPHQW ZLWK D PLQHUDO DGPL[WXUH  $
ILJXUH LV SURYLGHG IRU HDFK FHPHQW SUHVHQWLQJ WKH H[SDQVLRQV IRU WKH ILYH PRUWDUV ZLWK
GLIIHUHQW FHPHQWPLQHUDO DGPL[WXUH FRPELQDWLRQV  7KH H[SDQVLRQ RI WKH SODLQ SRUWODQG
FHPHQW PRUWDU LV DOVR SUHVHQWHG LQ HDFK ILJXUH VXFK WKDW DQ REVHUYDWLRQ FDQ EH PDGH DV WR
ZKHWKHUWKHPLQHUDODGPL[WXUHLQFUHDVHGRUGHFUHDVHGVXOIDWHUHVLVWDQFH7KHWDEOHVSURYLGH
LQIRUPDWLRQ DERXW WKH PLQHUDO DGPL[WXUH DQG WKH SHUFHQW YROXPHWULF UHSODFHPHQW WKDW ZDV
XVHG LQ HDFK PL[  7KH WDEOHV WKHQ VXPPDUL]H WKH GDWD IRU WKH EDU H[SDQVLRQV DW  GD\V
)RU VRPH RI WKH PL[HV GD\ H[SDQVLRQ GDWD ZHUH QRW FROOHFWHG IRU DOO VL[ EDUV  7KLV
UHGXFWLRQ LQ WKH QXPEHU RI WHVW VSHFLPHQV ZDV HLWKHU EHFDXVH EDUV EURNH RUFUDFNHGGXULQJ
GHPROGLQJRUGLVSOD\HGHUUDWLFH[SDQVLRQGXULQJWKHWHVWSHULRG)RUVRPHPRUWDUVQR
GD\ H[SDQVLRQ GDWD ZHUH FROOHFWHG EHFDXVH WKH EDUV IRU WKHVH EDWFKHV KDG EHFRPH VR
GHWHULRUDWHGDIWHUGD\VRIVRDNLQJWKDWWKH\ZHUHQRWPHDVXUDEOH


 




0LOG

 3&

([SDQVLRQ 

)&

)&

0RGHUDWH )$
 )$
 6


6HYHUH





          

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH±6XOIDWH([SDQVLRQVRI0RUWDUV&RQWDLQLQJ&RPELQDWLRQVRI
7\SH,,, $ &HPHQWZLWK0LQHUDO$GPL[WXUHV



7DEOH±'D\6XOIDWH([SDQVLRQVRI0RUWDUVZLWK&RPELQDWLRQVRI
7\SH,,, $ &HPHQWZLWK0LQHUDO$GPL[WXUHV

%DWFK )O\$VK 1RRI 6WDQGDUG $YHUDJH'D\
5HS
1DPH 6ODJ  %DUV 'HYLDWLRQ ([SDQVLRQ
3& 1RQH    
)& &    
)& &    
)$ )    
)$ )    
6 6ODJ    
,QWKLVFROXPQ&GHQRWHV$670&ODVV&IO\DVKDQG)GHQRWHV$670&ODVV)IO\DVK





 




0LOG

3&
  )&
([SDQVLRQ 


)&
 )$
0RGHUDWH
 )$
  6

6HYHUH





          


7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH±6XOIDWH([SDQVLRQVRI0RUWDUV&RQWDLQLQJ&RPELQDWLRQVRI
7\SH,,, % &HPHQWZLWK0LQHUDO$GPL[WXUHV



7DEOH±'D\6XOIDWH([SDQVLRQVRI0RUWDUVZLWK&RPELQDWLRQVRI7\SH
,,, % &HPHQWZLWK0LQHUDO$GPL[WXUHV

%DWFK )O\$VK 1RRI 6WDQGDUG $YHUDJH'D\
5HS
1DPH 6ODJ  %DUV 'HYLDWLRQ ([SDQVLRQ
3& 1RQH    
)& &    
)& &    
)$ )    
)$ )    
6 6ODJ    
,QWKLVFROXPQ&GHQRWHV$670&ODVV&IO\DVKDQG)GHQRWHV$670&ODVV)IO\DVK

 




0LOG 
3&

 )&
 )&
([SDQVLRQ 


 )$
0RGHUDWH  )$
 6



6HYHUH 





          


7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH±6XOIDWH([SDQVLRQVRI0RUWDUV&RQWDLQLQJ&RPELQDWLRQVRI7\SH9&HPHQW
ZLWK0LQHUDO$GPL[WXUHV



7DEOH±'D\6XOIDWH([SDQVLRQVRI0RUWDUVZLWK&RPELQDWLRQVRI
7\SH9&HPHQWZLWK0LQHUDO$GPL[WXUHV

%DWFK )O\$VK 1RRI 6WDQGDUG $YHUDJH'D\
5HS
1DPH 6ODJ  %DUV 'HYLDWLRQ ([SDQVLRQ
3& 1RQH    
)& &    
)& &    
)$ )    
)$ )    
6 6ODJ    
,QWKLVFROXPQ&GHQRWHV$670&ODVV&IO\DVKDQG)GHQRWHV$670&ODVV)IO\DVK




 

 


 0LOG
3

&

([SDQVLRQ 


&
 )
 0RGHUDWH
)
6ODJ
 

6HYHUH





          

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH±6XOIDWH([SDQVLRQVRI0RUWDUV&RQWDLQLQJ&RPELQDWLRQVRI7\SH,&HPHQWZLWK
0LQHUDO$GPL[WXUHV



7DEOH±'D\6XOIDWH([SDQVLRQVRI0RUWDUVZLWK&RPELQDWLRQVRI
7\SH,&HPHQWZLWK0LQHUDO$GPL[WXUHV

%DWFK )O\$VK 1RRI 6WDQGDUG $YHUDJH'D\


5HS
1DPH 6ODJ  %DUV 'HYLDWLRQ ([SDQVLRQ
3 1RQH    
& &    
& &    
) )    
) )    
6ODJ 6ODJ    
,QWKLVFROXPQ&GHQRWHV$670&ODVV&IO\DVKDQG)GHQRWHV$670&ODVV)IO\DVK


 
7KH HIIHFW PLQHUDO DGPL[WXUHV KDG RQ WKH VXOIDWH UHVLVWDQFH RI PRUWDUV YDULHG
GHSHQGLQJ RQ WKH FHPHQW ZLWK ZKLFK WKH\ ZHUH EOHQGHG  ,Q JHQHUDO DOO PRUWDU PL[HV
FRQWDLQLQJ WKH $670 &ODVV & IO\ DVK UHDFKHG H[SDQVLRQV H[FHHGLQJ  SHUFHQW RU IDLOHG
EHFDXVHRIFUDFNLQJEHIRUHGD\VRIVRDNLQJ0RUWDUVFRQWDLQLQJWKH$670&ODVV)IO\
DVKDQGWKH**%)VODJDOOKDGDYHUDJHGD\EDUH[SDQVLRQVEHORZSHUFHQW$QRWKHU
FRQVLVWHQW SDWWHUQ ZDV WKDW WKH VWDQGDUG GHYLDWLRQ EHWZHHQ EDU H[SDQVLRQV ZLWKLQ D PRUWDU
VSHFLPHQVHWW\SLFDOO\GHFUHDVHGDVWKHGD\H[SDQVLRQVRIWKHPRUWDUGHFUHDVHG
)RUWKH7\SH,,, $ FHPHQWWKHPRUWDUVFRQWDLQLQJWKH&ODVV)IO\DVKDQGWKHVODJ
VLJQLILFDQWO\ UHGXFHG H[SDQVLRQV DV WKH  SHUFHQW DYHUDJH GD\ H[SDQVLRQ RI SODLQ
SRUWODQGFHPHQWPRUWDUZDVUHGXFHGWRSHUFHQWZLWKWKHDGGLWLRQRIWKHDGPL[WXUHV$
 SHUFHQW YROXPHWULF UHSODFHPHQW RI WKH FHPHQW ZLWK WKH &ODVV ) IO\ DVK UHVXOWHG LQ WKH
KLJKHVW UHGXFWLRQ ZKLOH D  SHUFHQW UHSODFHPHQW ZLWK WKH IO\ DVK SURYLGHG WKH ORZHVW
UHGXFWLRQ  'DWD IRU DOO EDWFKHV ZHUH YHU\ FRQVLVWHQW DV WKH UDQJH EHWZHHQ EDU H[SDQVLRQV
ZLWKLQ D VSHFLPHQ VHW QHYHU H[FHHGHG  SHUFHQW DQG WKH VWDQGDUG GHYLDWLRQ ZDV 
SHUFHQWRUORZHU
7KH GD\ H[SDQVLRQ UHGXFWLRQV E\ WKH &ODVV ) IO\ DVK DQG WKH VODJ ZHUH HYHQ
JUHDWHUIRUPRUWDUVFRQWDLQLQJWKH7\SH,,, % FHPHQWDVWKHSHUFHQWDYHUDJHGD\
H[SDQVLRQRIWKHSODLQSRUWODQGFHPHQWPRUWDUZDVUHGXFHGWRSHUFHQW7KH)$PL[
FRQWDLQLQJ D  SHUFHQW YROXPHWULF UHSODFHPHQW RI WKH &ODVV ) IO\ DVK UHGXFHG WKH SODLQ
FHPHQW PRUWDUV¶ GD\ H[SDQVLRQ  SHUFHQW WR DQ DYHUDJH RI  SHUFHQW  ([SDQVLRQ
UHGXFWLRQVZHUHHYHQPRUHGUDPDWLFZKHQDUHSODFHPHQWRISHUFHQWZDVXVHGIRUWKLVIO\
DVKWKH)$PL[UHGXFHGH[SDQVLRQVSHUFHQWWRDQDYHUDJHGD\H[SDQVLRQRI
SHUFHQW  7KH 6 PL[ FRQWDLQLQJ VODJ UHGXFHG DYHUDJH H[SDQVLRQV  SHUFHQW WKH GD\
DYHUDJH H[SDQVLRQ IRU WKLV PL[ ZDV  SHUFHQW  7KH FRQVLVWHQF\ RI WKH GDWD IRU WKHVH
PL[HVZDVJRRGDVVWDQGDUGGHYLDWLRQVUDQJHGIURPWRSHUFHQW
7KHUHGXFWLRQVLQGD\H[SDQVLRQVSURYLGHGE\WKH&ODVV)IO\DVKDQGVODJZHUH
UHODWLYHO\ VPDOO ZKHQ WKH DGPL[WXUHV ZHUH XVHG LQ FRPELQDWLRQ ZLWK WKH 7\SH 9 FHPHQW
:LWKSHUFHQW&ODVV)IO\DVKUHSODFHPHQWPL[)$KDGDQDYHUDJHGD\H[SDQVLRQ
RISHUFHQWUHGXFLQJWKHH[SDQVLRQRIWKHSODLQSRUWODQGFHPHQWPRUWDUE\SHUFHQW

 
0L[)$ZLWKDSHUFHQWIO\DVKUHSODFHPHQWVKRZHGWKHVDPHLPSURYHPHQWDVWKHVDPH
DYHUDJH GD\ H[SDQVLRQ ZDV REWDLQHG  7KH PL[ FRQWDLQLQJ WKH VODJ 6 SURYLGHG OLWWOH
LPSURYHPHQWDVDQDYHUDJHH[SDQVLRQRISHUFHQWZDVIRXQGDWGD\V7KLVYDOXHLV
RQO\  SHUFHQW OHVV WKDQ WKH SODLQ FHPHQW PRUWDU H[SDQVLRQ  $OO RI WKHVH PL[HV KDG
FRQVLVWHQWGDWDDVVWDQGDUGGHYLDWLRQVZHUHSHUFHQWRUORZHU
 7KHPRVWGUDVWLFOHYHORIUHGXFWLRQVLQVXOIDWHH[SDQVLRQVSURYLGHGE\WKH&ODVV)IO\
DVKDQGVODJFDPHZKHQWKHDGPL[WXUHVZHUHXVHGZLWKWKH7\SH,FHPHQW7KH)ZLWKD
 SHUFHQW &ODVV ) IO\ DVK UHSODFHPHQW SURYLGHG WKH JUHDWHVW LPSURYHPHQW DV D GD\
H[SDQVLRQ RI  SHUFHQW ZDV REWDLQHG  7KLV ZDV D UHGXFWLRQ RI  SHUFHQW IURP WKH
H[SDQVLRQIRXQGIRUWKHSODLQFHPHQWPRUWDU7KH)PL[ZLWKDSHUFHQW&ODVV)IO\DVK
UHGXFHG H[SDQVLRQV  SHUFHQW DV D GD\ DYHUDJH H[SDQVLRQ RI  SHUFHQW ZDV
REWDLQHG  7KH VODJ PL[ 6ODJ UHGXFHG H[SDQVLRQV  SHUFHQW DV D GD\ DYHUDJH
H[SDQVLRQRISHUFHQWZDVPHDVXUHG
0RUWDUVFRQWDLQLQJWKH7\SH,,, $ FHPHQWFRPELQHGZLWKWKH&ODVV&IO\DVKKDG
H[WUHPHO\ KLJK H[SDQVLRQV DV WKH PRUWDU )& WKDW FRQWDLQHG D  SHUFHQW YROXPHWULF
UHSODFHPHQW RI WKH &ODVV & IO\ DVK KDG DQ DYHUDJH GD\ H[SDQVLRQ RI  SHUFHQW
([SDQVLRQVZHUHHUUDWLFDVVRPHEDUVZHUHQRWPHDVXUDEOHDIWHUGD\VRIVRDNLQJDQGWKH
VWDQGDUG GHYLDWLRQ EHWZHHQ H[SDQVLRQV RI WKH PHDVXUDEOH EDUV ZDV  SHUFHQW  $ 
SHUFHQWUHSODFHPHQWZLWKWKHIO\DVKUHVXOWHGLQHYHQKLJKHUH[SDQVLRQVVXFKWKDWWKHEDUVIRU
WKH PRUWDU )& H[SDQGHG DW D IDVWHU UDWH WKDQ WKH )& EDUV EHIRUH EHFRPLQJ VHYHUHO\
GHWHULRUDWHGDQGXQPHDVXUDEOHDIWHUGD\VRIVRDNLQJ)LJXUHVKRZVWKHFRQGLWLRQRI
WKH)&PRUWDUEDUVDIWHUZHHNVRIVRDNLQJ
7KH XVH RI WKH &ODVV & IO\ DVK ZLWK WKH 7\SH ,,, %  FHPHQW UHVXOWHG LQ WKH VDPH
GUDPDWLF LQFUHDVHV LQ H[SDQVLRQV REVHUYHG HDUOLHU  7KH PL[ ZLWK WKH 7\SH ,,, %  FHPHQW
DQGSHUFHQWIO\DVKUHSODFHPHQW)&KDGEDUH[SDQVLRQVDVKLJKDVSHUFHQWDVDQ
DYHUDJHGD\H[SDQVLRQRISHUFHQWZDVREWDLQHG7KLVKLJKYDOXHLVQHDUO\WLPHV
WKH H[SDQVLRQ RI WKH SODLQ FHPHQW PRUWDU  7KH PL[ ZLWK  SHUFHQW IO\ DVK UHSODFHPHQW
H[SDQGHGDWDQH[WUHPHO\KLJKUDWHDVDOOEDUVKDGEHFRPHXQPHDVXUDEOHDIWHUZHHNVRI
VRDNLQJ  )LJXUH  VKRZV WKH PRUWDU EDUV IRU WKH )& PL[ DIWHU  ZHHNV RI VRDNLQJ

 
7KHEDUVZHUHLQHYHQZRUVHFRQGLWLRQWKDQWKRVHVKRZQLQ)LJXUHIRUWKH)&PL[
6RPHEDUVZHUHFRPSOHWHO\GHWHULRUDWHGDQGPRVWZHUHVHYHUHO\ZDUSHGDQGFUDFNHG



)LJXUH±)&0RUWDU%DUVDIWHU:HHNVRI6XOIDWH6ROXWLRQ6RDNLQJ
 


)LJXUH±)&0RUWDU%DUVDIWHU:HHNVRI6XOIDWH6ROXWLRQ6RDNLQJ


 
 7KH XVH RI WKH &ODVV & IO\ DVK ZLWK WKH 7\SH 9 FHPHQW RQFH DJDLQ UHVXOWHG LQ
GUDPDWLFH[SDQVLRQLQFUHDVHVDVWKH)&PL[FRQWDLQLQJDSHUFHQWIO\DVKUHSODFHPHQW
H[SDQGHGWLPHVDVPXFKDVWKHSODLQFHPHQWPRUWDUDIWHUGD\VRIVRDNLQJ7KH)&
PL[ZLWKDSHUFHQWUHSODFHPHQWH[SDQGHGDSSUR[LPDWHO\WLPHVDVPXFKDVDQDYHUDJH
H[SDQVLRQRIZDVREWDLQHG1HLWKHUPL[GLVSOD\HGWKHGHWHULRUDWLRQQRUFUDFNLQJWKDW
ZDVW\SLFDOIRURWKHUPL[HVFRQWDLQLQJWKH&ODVV&IO\DVK
 7KH FRPELQDWLRQ RI &ODVV & IO\ DVK ZLWK D 7\SH , FHPHQW UHVXOWHG LQ PRUWDUV WKDW
GHWHULRUDWHGTXLFNO\DVDOOEDUVIRUWKH&PL[FRQWDLQLQJSHUFHQWRIWKHIO\DVKEHFDPH
XQPHDVXUDEOHDIWHUZHHNVRIVRDNLQJ7KHEDUVIRUWKH&PL[ZLWKSHUFHQWRIWKHIO\
DVK EHFDPH XQPHDVXUDEOH EHWZHHQ  DQG  ZHHNV RI VRDNLQJ  )LJXUH  VKRZV WKH
FRQGLWLRQRIWKH&EDUVDIWHUZHHNVRIVRDNLQJLQVXOIDWHVROXWLRQ



)LJXUH±&0RUWDU%DUVDIWHU:HHNVRI6XOIDWH6ROXWLRQ6RDNLQJ

 3KDVH7HVW5HVXOWV
7KHIROORZLQJVHFWLRQVSURYLGHLQIRUPDWLRQRQWKHPL[UHVXOWVFRPSUHVVLYHVWUHQJWK
GHYHORSPHQW SHUPHDELOLW\ UHVXOWV LQLWLDO H[SDQVLRQV DQG LQLWLDO PDVV FKDQJHV IRU WKH
FRQFUHWH EDWFKHV PDGH IRU 3KDVH  WHVWLQJ  5HVXOWV IRU WKH ORQJWHUP PRQWK FXUHG

 
VSHFLPHQV ZLOO QRW EH SURYLGHG LQ WKLV UHSRUW  7KHVH UHVXOWV DORQJ ZLWK WKH ORQJWHUP
H[SDQVLRQVDQGPDVVFKDQJHVRIWKHDOOWKHWHVWPL[HVZLOOEHSURYLGHGLQIXWXUHUHSRUWV

 0L[5HVXOWVDQG)UHVK&RQFUHWH3URSHUWLHV
$ WRWDO RI WZHQW\WZR FRQFUHWH EDWFKHV ZHUH PDGH IRU 3KDVH  WHVWLQJ  7DEOH 
RXWOLQHVWKHEDWFKQDPHVPL[FRQGLWLRQVDQGIUHVKFRQFUHWHSURSHUWLHV

7DEOH±'HVFULSWLRQ0L[&RQGLWLRQVDQG)UHVK3URSHUWLHVRI3KDVH&RQFUHWHV
+5:5
0L[ &RQF
%DWFK &HPHQW )O\$VK  :&5DWLR $GPL[WXUH 5+ 6OXPS
7HPS 7HPS
1DPH 7\SH 5HS  E\ZHLJKW  IOR]   LQ 
R)  R) 
OEFHPHQW 
3& , 1RQH      
3& , 1RQH      
3& , 1RQH      
3& ,,, %  1RQH      
3& ,,, %  1RQH      
3& ,,, %  1RQH      
3& ,,, %  1RQH      
3& 9 1RQH      
3& 9 1RQH      
3& 9 1RQH      
)&D ,,, %  &        
)&D ,,, %  &        
)&D ,,, %  &        
)&OE ,,, %  &        
)&E ,,, %  &        
)&E ,,, %  &        
)$D ,,, %  )        
)$D ,,, %  )        
)$D ,,, %  )        
)$E ,,, %  )        
)$E ,,, %  )        
)$E ,,, %  )        
,QWKLVFROXPQ&VWDQGVIRU$670&ODVV&IO\DVKDQG)VWDQGVIRU$670&ODVV)IO\DVK
&RQYHUVLRQVƒ&  ƒ)± LQ PP

 
 &RPSUHVVLYH6WUHQJWK5HVXOWV
7DEOH  RXWOLQHV WKH FRPSUHVVLYH VWUHQJWK GHYHORSPHQW RI WKH EDWFKHV PDGH IRU
3KDVH  WHVWLQJ  'HWDLOHG UHVXOWV DUH SURYLGHG LQ $SSHQGL[ (  (DUO\ FRPSUHVVLYH VWUHQJWK
UHVXOWVZHUHIRXQGE\WHVWLQJSDLUVRIPP[PP LQ[LQ F\OLQGHUV7KHWDEOH
SURYLGHVWKHDJHDWZKLFKWKHFRQFUHWHVWUHQJWKZDVIRXQGWREHDWRUDERYH03D 
SVL DQGWKHVWUHQJWKRIWKHFRQFUHWHZKHQLWZDVLPPHUVHGLQWKHVXOIDWHVROXWLRQ7KHWDEOH
DOVR SURYLGHV WKH GD\ FRPSUHVVLYH VWUHQJWKV RI WKH EDWFKHV IRXQG E\ WHVWLQJ PP [
PP LQ [ LQ  F\OLQGHUV  7KH DYHUDJH GD\ FRPSUHVVLYH VWUHQJWKV RI URRP
WHPSHUDWXUHFXUHGDQGDFFHOHUDWHGFXUHGVSHFLPHQVDUHJLYHQ
)RU WKH EDWFKHV ZLWK SODLQ SRUWODQG FHPHQW WKH FRQFUHWHV ZLWK WKH 7\SH ,,, % 
FHPHQWW\SLFDOO\GLVSOD\HGWKHIDVWHVWVWUHQJWKGHYHORSPHQWDQGWKHKLJKHVWXOWLPDWHGD\
VWUHQJWKV7KH7\SH,FHPHQWFRQFUHWHVWUHQJWKVZHUHXVXDOO\VOLJKWO\ORZHUZKLOHWKH7\SH
9FHPHQWFRQFUHWHVDOZD\VKDGWKHVORZHVWVWUHQJWKGHYHORSPHQWDQGXVXDOO\GLVSOD\HGWKH
ORZHVW XOWLPDWH VWUHQJWKV  7KH RQO\ H[FHSWLRQ ZDV WKH  ZDWHUWRFHPHQW UDWLR FRQFUHWH
FRQWDLQLQJ WKH 7\SH 9 FHPHQW  7KLV EDWFK KDG WKH KLJKHVW GD\ URRPWHPSHUDWXUH FXUHG
FRPSUHVVLYH VWUHQJWK RI DOO WKH SODLQ SRUWODQG FHPHQW FRQFUHWHV  &RPSUHVVLYH VWUHQJWK
GHYHORSPHQWDOZD\VVORZHGDQGXOWLPDWHVWUHQJWKVDOZD\VGHFUHDVHGDVWKHZDWHUWRFHPHQW
UDWLRVRIWKHPL[HVLQFUHDVHG7KHDFFHOHUDWHGFXUHGVSHFLPHQVWKDWZHUHPRLVWFXUHGIRU
GD\V DW R& R)  DQG WKHQ PRLVW FXUHG  GD\V DW R& R)  W\SLFDOO\ KDG GD\
FRPSUHVVLYHVWUHQJWKVVOLJKWO\KLJKHUWKDQWKHURRPWHPSHUDWXUHFXUHGVSHFLPHQV6WUHQJWK
LQFUHDVHUDQJHGIURPWRSHUFHQW7KHJUHDWHVWVWUHQJWKGLIIHUHQFHZDVLQWKHZDWHU
WRFHPHQWUDWLRPL[FRQWDLQLQJWKH7\SH,,, % FHPHQWDVWKHDFFHOHUDWHGFXUHGVSHFLPHQV
KDG DQ DYHUDJH VWUHQJWK  03D  SVL  KLJKHU WKDQ WKH URRPWHPSHUDWXUH FXUHG
VSHFLPHQV  7KHUH ZHUH WZR XQXVXDO FDVHV ZLWK WKH  DQG  ZDWHUWRFHPHQW UDWLR
FRQFUHWHVFRQWDLQLQJWKH7\SH9FHPHQWZKHUHWKHDFFHOHUDWHGFXUHGVSHFLPHQVDFWXDOO\KDG
VWUHQJWKVORZHUWKDQWKHURRPWHPSHUDWXUHFXUHGVSHFLPHQV


 
7DEOH±&RPSUHVVLYH6WUHQJWK'HYHORSPHQWIRU3KDVH&RQFUHWHV

:& $W,PPHUVLRQLQ 'D\&RPSUHVVLYH


%DWFK &HPHQW )O\$VK  5DWLR 6XOIDWH6ROXWLRQ 6WUHQJWK SVL 
1DPH 7\SH 5HS  E\
$JH 6WUHQJWK 5RRP7HPS $FFHOHUDWHG
ZHLJKW 
GD\V  SVL  &XUHG &XUHG
3& , 1RQH     
3& , 1RQH     
3& , 1RQH     
3& ,,, %  1RQH     
3& ,,, %  1RQH     
3& ,,, %  1RQH     
3& ,,, %  1RQH     
3& 9 1RQH     
3& 9 1RQH     
3& 9 1RQH     
)&D ,,, %  &       
)&D ,,, %  &       
)&D ,,, %  &       
)&OE ,,, %  &       
)&E ,,, %  &       
)&E ,,, %  &       
)$D ,,, %  )       
)$D ,,, %  )       
)$D ,,, %  )       
)$E ,,, %  )       
)$E ,,, %  )       
)$E ,,, %  )       
,QWKLVFROXPQ&VWDQGVIRU$670&ODVV&IO\DVKDQG)VWDQGVIRU$670&ODVV)IO\DVK
&RQYHUVLRQSVL 03D



&RPSUHVVLYHVWUHQJWKGHYHORSPHQWVIRUWKHFRQFUHWHVFRQWDLQLQJFRPELQDWLRQVRIWKH
7\SH,,, % SRUWODQGFHPHQWZLWKWKH$670&ODVV)DQG&ODVV&IO\DVKHVZHUHJHQHUDOO\
VORZHU WKDQ IRU WKH SODLQ 7\SH ,,, %  SRUWODQG FHPHQW FRQFUHWHV  7KH FRQFUHWH PL[HV
FRQWDLQLQJWKH&ODVV&IO\DVKJHQHUDOO\GHYHORSHGVWUHQJWKIDVWHUWKDQWKHPL[HVFRQWDLQLQJ
WKH &ODVV ) IO\ DVK DV WKH  ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLR PL[HV FRQWDLQLQJ WKH

 
&ODVV ) IO\ DVK WRRN D SDUWLFXODUO\ ORQJ WLPH WR UHDFK WKH 03D SVL  VWUHQJWK
SODWHDX
7KH FHPHQW±PLQHUDO DGPL[WXUH FRPELQDWLRQ FRQFUHWHV ZLWK ZDWHUWRFHPHQWLWLRXV
PDWHULDO UDWLRV RI  DQG  DOZD\V KDG PRLVW URRPWHPSHUDWXUH FXUHG GD\
FRPSUHVVLYH VWUHQJWKV WKDW ZHUH ORZHU WKDQ WKH SODLQ SRUWODQG FHPHQW FRQFUHWHV ZLWK WKH
VDPH ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLRV  7KH PL[HV ZLWK D  ZDWHUWRFHPHQWLWLRXV
PDWHULDO UDWLR JHQHUDOO\ KDG PRLVWFXUHG GD\ VWUHQJWKV KLJKHU WKDQ WKH SODLQ SRUWODQG
FHPHQW FRQFUHWHV  7KH RQO\ H[FHSWLRQ ZDV WKH )$OE EDWFK WKDW FRQWDLQHG D  SHUFHQW
YROXPHWULFUHSODFHPHQWRIWKH&ODVV)IO\DVK7KLVFRQFUHWHKDGDORZVWUHQJWKRI03D
SVL WKDWZDV03D SVL ORZHUWKDQWKHSODLQSRUWODQGFHPHQWFRQFUHWHZLWKD
ZDWHUWRFHPHQWUDWLR,QIDFWDOOWKHFRQFUHWHVFRQWDLQLQJDSHUFHQWUHSODFHPHQWRI
&ODVV)IO\DVKKDGIDLUO\ORZGD\PRLVWFXUHGVWUHQJWKV
7KH OHYHO RI WKH GD\ FRPSUHVVLYH VWUHQJWKV IRU WKH DFFHOHUDWHG FXUHG FHPHQW±
PLQHUDODGPL[WXUHFRPELQDWLRQFRQFUHWHVGHSHQGHGRQWKHW\SHRIIO\DVK$FFHOHUDWHGFXUHG
GD\VWUHQJWKVIRUWKHFRQFUHWHVZLWKWKH$670&ODVV&IO\DVKZHUHORZHUWKDQWKHSODLQ
SRUWODQG FHPHQW FRQFUHWH VWUHQJWKV ZKHQ ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLRV RI  DQG
 ZHUH XVHG DQG ZHUH KLJKHU ZKHQ D ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLR RI  ZDV
XVHG  :KHQ WKH &ODVV ) IO\ DVK ZDV XVHG DOO DFFHOHUDWHG FXUHG GD\ FRPSUHVVLYH
VWUHQJWKV ZHUH KLJKHU WKDQ WKH DFFHOHUDWHG FXUHG VWUHQJWKV RI WKH HTXLYDOHQW SODLQ SRUWODQG
FHPHQWFRQFUHWHVZKHQDSHUFHQWYROXPHWULFUHSODFHPHQWOHYHOZDVXVHGZKLOHVWUHQJWKV
ZHUHORZHUZKHQDSHUFHQWUHSODFHPHQWOHYHOZDVXVHG$OOFRQFUHWHVZLWK&ODVV)IO\DVK
KDGVLJQLILFDQWVWUHQJWKLQFUHDVHVZKHQFRPSDULQJDFFHOHUDWHGFXULQJDQGURRPWHPSHUDWXUH
FXULQJ DV VWUHQJWK LQFUHDVHV DV KLJK DV  03D  SVL  RFFXUUHG  $FFHOHUDWHG FXUHG
VSHFLPHQV ZHUH DV PXFK DV  SHUFHQW VWURQJHU WKDQ URRPWHPSHUDWXUH FXUHG VSHFLPHQV LQ
VRPHFDVHV

 'D\3HUPHDELOLW\5HVXOWV
 7DEOHGLVSOD\VGD\SHUPHDELOLW\UHVXOWVIRUDOOWKHFRQFUHWHEDWFKHVPDGHIRU
3KDVH  WHVWLQJ  $YHUDJH FRXORPEV SDVVHG IRU WKH URRPWHPSHUDWXUH FXUHG VSHFLPHQV DQG
WKHDFFHOHUDWHGFXUHGVSHFLPHQVDUHJLYHQ

 
7DEOH±'D\3HUPHDELOLW\5HVXOWVIRU3KDVH&RQFUHWHV
5RRP7HPSHUDWXUH $FFHOHUDWHG&XUHG
:&
&XUHG '#ƒ)
%DWFK &HPHQW )O\$VK  5DWLR
'#ƒ)  '#ƒ) 
1DPH 7\SH 5HS  E\
ZHLJKW  $YJ&RXORPEV3DVVHG $YJ&RXORPEV3DVVHG
3& , 1RQH   
3& , 1RQH   
3& , 1RQH   
3& ,,, %  1RQH   
3& ,,, %  1RQH   
3& ,,, %  1RQH   
3& ,,, %  1RQH   
3& 9 1RQH   
3& 9 1RQH   
3& 9 1RQH   
)&D ,,, %  &     
)&D ,,, %  &     
)&D ,,, %  &     
)&OE ,,, %  &     
)&E ,,, %  &     
)&E ,,, %  &     
)$D ,,, %  )     
)$D ,,, %  )     
)$D ,,, %  )     
)$E ,,, %  )     
)$E ,,, %  )     
)$E ,,, %  )     
,QWKLVFROXPQ&VWDQGVIRU$670&ODVV&IO\DVKDQG)VWDQGVIRU$670&ODVV)IO\DVK
&RQYHUVLRQƒ&  ƒ)± 

 )RU WKH SODLQ SRUWODQG FHPHQW FRQFUHWHV DYHUDJH GD\ URRPWHPSHUDWXUH FXUHG
VSHFLPHQV¶ FRXORPEV SDVVHG YDOXHV UDQJHG IURP  WR  DV SHUPHDELOLW\ LQFUHDVHG
ZLWKLQFUHDVLQJZDWHUWRFHPHQWUDWLRV7KHSHUPHDELOLW\YDOXHVZHUHIDLUO\LQGHSHQGHQWRI
WKH W\SH RI FHPHQW WKDW ZDV XVHG  $YHUDJH GD\ DFFHOHUDWHG FXUHG VSHFLPHQ FRXORPEV
SDVVHG YDOXHV UDQJHG IURP  WR  DV WKH DFFHOHUDWHG FXULQJ OHG WR UHGXFWLRQV LQ
SHUPHDELOLW\UDQJLQJIURPWRSHUFHQW7KHSHUFHQWUHGXFWLRQVLQSHUPHDELOLW\RZLQJWR

 
DFFHOHUDWHGFXULQJZHUHJHQHUDOO\KLJKHUZKHQWKHZDWHUWRFHPHQWUDWLRRIWKHFRQFUHWHZDV
ORZHU
 )RU WKH 3KDVH  FRQFUHWHV FRQWDLQLQJ &ODVV & IO\ DVK DYHUDJH GD\ URRP
WHPSHUDWXUH FXUHG VSHFLPHQ FRXORPEV SDVVHG YDOXHV ZHUH DOZD\V ORZHU WKDQ WKH FRXORPE
YDOXHVIRUWKHSODLQSRUWODQGFHPHQWFRQFUHWHVZLWKWKHVDPHZDWHUWRFHPHQWLWLRXVPDWHULDO
UDWLRV  7KH UHGXFWLRQV ZHUH W\SLFDOO\ KLJKHVW IRU WKH  ZDWHUWRFHPHQWLWLRXV PDWHULDO
UDWLRFRQFUHWHVDVWKHFRQFUHWHFRQWDLQLQJDSHUFHQWYROXPHWULFUHSODFHPHQWRIWKH&ODVV&
IO\ DVK KDG D FRXORPE YDOXH RI  WKDW ZDV  SHUFHQW ORZHU WKDQ WKH SODLQ SRUWODQG
FHPHQW FRQFUHWH¶V YDOXH  $FFHOHUDWHG FXULQJUHGXFHGWKHVHFRXORPEYDOXHVVLJQLILFDQWO\DV
FRXORPE YDOXHV GURSSHG EHWZHHQ  DQG  SHUFHQW ZKHQ FRPSDUHG WR WKH QRUPDO URRP
WHPSHUDWXUH FXUHG YDOXHV  7KH UHGXFWLRQ LQ SHUPHDELOLW\ RZLQJ WR DFFHOHUDWHG FXULQJ ZDV
DJDLQJHQHUDOO\KLJKHUZKHQWKHZDWHUWRFHPHQWUDWLRRIWKHFRQFUHWHZDVORZHU
 0RVW3KDVHFRQFUHWHVFRQWDLQLQJWKH&ODVV)IO\DVKKDGFRXORPEYDOXHVWKDWZHUH
ORZHUWKDQWKHSODLQSRUWODQGFHPHQWFRQFUHWHVDQGWKH&ODVV&IO\DVK±FHPHQWFRPELQDWLRQ
FRQFUHWHVZLWKWKHVDPHW\SHRIFXULQJDQGZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLR7KHGD\
DYHUDJHFRXORPEVSDVVHGYDOXHVIRUURRPWHPSHUDWXUHFXUHGVSHFLPHQVUDQJHGIURPWR
ZKLOHDFFHOHUDWHGFXUHGVSHFLPHQV¶FRXORPEYDOXHVUDQJHGIURPWRZLWKWKH
ORZHVW SHUPHDELOLWLHV EHLQJ IRXQG IRU WKH FRQFUHWHV FRQWDLQLQJ D  SHUFHQW YROXPHWULF
UHSODFHPHQW RI WKH &ODVV ) IO\ DVK  $FFHOHUDWHG FXULQJ VLJQLILFDQWO\ UHGXFHG FRXORPEV
SDVVHGYDOXHVDVUHGXFWLRQVUDQJHGEHWZHHQWRSHUFHQW

 ,QLWLDO6XOIDWH([SDQVLRQDQG0DVV&KDQJH5HVXOWV
7KH ILUVW WKUHH VHWV RI VXOIDWH H[SRVXUH VSHFLPHQV IURP HDFK 3KDVH  EDWFK DUH
FXUUHQWO\LPPHUVHGLQVXOIDWHVROXWLRQDQGEHLQJPRQLWRUHGIRUH[SDQVLRQDQGPDVVFKDQJH
$SSHQGL[)SURYLGHVWKHLQLWLDOH[SDQVLRQDQGPDVVFKDQJHUHVXOWVIRUDOO3KDVHFRQFUHWHV
LQFOXGLQJ WKH H[SDQVLRQ DQG PDVV FKDQJHV RI WKH 03D SVL  86%5 FXUHG
F\OLQGHUV WKH GD\ URRPWHPSHUDWXUH FXUHG F\OLQGHUV DQG WKH GD\ DFFHOHUDWHG FXUHG
F\OLQGHUV  7KLV $SSHQGL[ SURYLGHV UHVXOWV REWDLQHG WKURXJK $SULO   5HVXOWV DUH
SUHVHQWHGLQERWKWDEXODUDQGJUDSKLFDOIRUP,WLVGLIILFXOWWRLQWHUSUHWPXFKIURPWKHVHHDUO\

 
UHVXOWVEHFDXVHQRVSHFLPHQKDVEHHQH[SRVHGORQJHQRXJKWRWKHVXOIDWHVROXWLRQWRGLVSOD\
DQ\ VLJQLILFDQW H[SDQVLRQ RU PDVV FKDQJH  3DVW UHVHDUFK ZKHUH WKH 86%5  0HWKRG %
SURFHGXUHV ZHUH XVHG VKRZHG WKDW LW UHTXLUHV EHWZHHQ  WR  GD\V RI H[SRVXUH EHIRUH
DQ\GHOLQHDWLRQFDQEHPDGHEHWZHHQWKHSHUIRUPDQFHRIRQHVHWRIVSHFLPHQVYHUVXVDQRWKHU
5HI 0HDVXUHPHQWVRIH[SDQVLRQVDQGPDVVFKDQJHVZLOOFRQWLQXHWKURXJKDQH[SRVXUH
SHULRGRIDSSUR[LPDWHO\PRQWKV

 


 
&KDSWHU)LYH'LVFXVVLRQDQG$QDO\VLV

 ,QWURGXFWLRQ
7KHWHVWSURJUDPIRUWKLVUHSRUWFRQVLVWHGRIDWZRSKDVHLQYHVWLJDWLRQ,Q3KDVHD
SHUIRUPDQFHWHVWIRUVXOIDWHUHVLVWDQFHZDVHYDOXDWHG,Q3KDVHWKHHIIHFWVRIFRQFUHWHPL[
SURSHUWLHVDQGFXULQJFRQGLWLRQVRQSHUPHDELOLW\DQGWKHHIIHFWVRISHUPHDELOLW\RQFRQFUHWH
VXOIDWH UHVLVWDQFH ZHUH LQYHVWLJDWHG  7KH RYHUDOO SXUSRVH RI WKH WHVW SURJUDP ZDV WKH
HVWDEOLVKPHQW RI SHUIRUPDQFHEDVHG VSHFLILFDWLRQV IRU WKH GXUDELOLW\ RI FRQFUHWH DJDLQVW
VXOIDWHH[SRVXUH7KHSUHFHGLQJFKDSWHUSUHVHQWHGWKHUHVXOWVREWDLQHGWKXVIDUIURPWKLVWHVW
SURJUDP  ,Q WKLV FKDSWHU WKHVH UHVXOWV ZLOO EH DQDO\]HG DQG WKHLU LPSOLFDWLRQV FRQFHUQLQJ
VSHFLILFDWLRQGHYHORSPHQWZLOOEHGLVFXVVHG

 'LVFXVVLRQRI3KDVH7HVW5HVXOWV
,Q3KDVHWKHPRUWDUEDUH[SDQVLRQWHVW$670&³6WDQGDUG7HVW0HWKRG
IRU/HQJWK&KDQJHRI+\GUDXOLF&HPHQW0RUWDUV([SRVHGWRD6XOIDWH6ROXWLRQ´ZDVXVHGWR
HYDOXDWH WKH HIIHFWV RI SRUWODQG FHPHQW FKHPLVWU\ DQG PLQHUDO DGPL[WXUHV RQ VXOIDWH
UHVLVWDQFH 5HI    7KH SXUSRVH RI WKH WHVWLQJ ZDV WR HYDOXDWH WKH VXLWDELOLW\ RI $670
& DV D SHUIRUPDQFH WHVW  7KH IROORZLQJ VHFWLRQV GLVFXVV WKH H[SHULPHQWDOO\
GHWHUPLQHGHIIHFWVRIWKHGLIIHUHQWPDWHULDOSURSHUWLHVDQGWKHFRUUHODWLRQRIWKHVHUHVXOWVZLWK
SDVW H[SHULHQFH ZLWKLQ WKH FRQFUHWH LQGXVWU\  7KH FRQVLVWHQF\ RI WKH WHVW GDWD DQG WKH
HIIHFWLYHQHVV RI WKH H[SDQVLRQ FULWHULD HVWDEOLVKHG E\ $670 6XEFRPPLWWHH & IRU
DVVHVVLQJ OHYHOV RI VXOIDWH UHVLVWDQFH DUH DOVR HYDOXDWHG  $QDO\VLV LV XVHG WR DVVHVV WKH
DGHTXDF\ RI $670 & DV D SHUIRUPDQFH WHVW IRU VXOIDWH UHVLVWDQFH DQG WR GHYHORS
UHFRPPHQGDWLRQVFRQFHUQLQJLQFRUSRUDWLQJWKHWHVWLQWRSHUIRUPDQFHEDVHGVSHFLILFDWLRQV

 (IIHFWVRI&HPHQW&KHPLVWU\RQ6XOIDWH5HVLVWDQFH
$V GLVFXVVHG LQ &KDSWHU  SDVW UHVHDUFK KDV HVWDEOLVKHG WKDW WKH PRVW LPSRUWDQW
SRUWODQGFHPHQWFKHPLFDOFRPSRQHQWDIIHFWLQJVXOIDWHUHVLVWDQFHLVWKHWULFDOFLXPDOXPLQDWH
&$  FRQWHQW RI WKH FHPHQW  ,Q 3KDVH  WHVWLQJ IRXU FHPHQWV ZLWK &$ FRQWHQWV UDQJLQJ

 
IURP  WR  SHUFHQW ZHUH WHVWHG  )LJXUH  SURYLGHV D SORW RI WKH DYHUDJH GD\
H[SDQVLRQV WKDW ZHUH REWDLQHG IRU WKH IRXU SODLQ SRUWODQG FHPHQW PRUWDUV YHUVXV WKH &$
FRQWHQWVRIWKHFHPHQWVXVHGLQHDFKPRUWDU



3KDVH0RUWDU'DWD
 3RLQWV ,


0LOG 
,,, % \ [ [

0RGHUDWH
,,, $
 9
6HYHUH
9 ,,, ,

       

&$&RQWHQW 

)LJXUH±$YHUDJH'D\([SDQVLRQVYHUVXV&HPHQW&$&RQWHQWVIRU3ODLQ3RUWODQG
&HPHQW0RUWDUV

7KHKRUL]RQWDOJULGOLQHVLQ)LJXUHUHSUHVHQWWKH$670&H[SDQVLRQOLPLWV
HVWDEOLVKHG E\ $670 6XEFRPPLWWHH & DQG SURSRVHG LQ WKLV SURMHFW¶V SHUIRUPDQFH
EDVHGVSHFLILFDWLRQV7KHOLQHDWDGD\H[SDQVLRQRISHUFHQWGHOLQHDWHVEHWZHHQPLOG
DQG PRGHUDWH VXOIDWH HQYLURQPHQW UHVLVWDQFH ZKLOH WKH OLQH DW DQ H[SDQVLRQ RI SHUFHQW
GHOLQHDWHV EHWZHHQ PRGHUDWH DQG VHYHUH VXOIDWH UHVLVWDQFH  7KH YHUWLFDO JULGOLQHV UHSUHVHQW
WKH SRUWODQG FHPHQW &$ FRQWHQW OLPLWV HVWDEOLVKHG LQ WKH $670 & VSHFLILFDWLRQV IRU
FDWHJRUL]LQJVXOIDWHUHVLVWDQWFHPHQWV$OLQHLVSURYLGHGDWSHUFHQW&$WRUHSUHVHQWWKH
PD[LPXP DOORZDEOH &$ FRQWHQW RI VHYHUH VXOIDWHUHVLVWDQW 7\SH 9 FHPHQWV DQG DQRWKHU
OLQH LV SURYLGHG DW  SHUFHQW WR UHSUHVHQW WKH PD[LPXP DOORZDEOH FRQWHQW IRU WKH PRGHUDWH
VXOIDWHUHVLVWDQW7\SH,,,RU7\SH,,FHPHQWV

 
3KDVH  WHVWLQJ RI SODLQ SRUWODQG FHPHQW PRUWDUV FRQILUPHG WKH ZHOOVXSSRUWHG IDFW
WKDW WKH &$ FRQWHQW RI D FHPHQW JUHDWO\ LPSDFWV LWV VXOIDWH UHVLVWDQFH  7KH VHFRQGGHJUHH
SRO\QRPLDOWUHQGOLQHVKRZQLQ)LJXUHWKDWZDVGHYHORSHGXVLQJWKHIRXU3KDVHWHVWGDWD
SRLQWV GLVSOD\V D FOHDU LQFUHDVH LQ H[SDQVLRQ DQG WKXV GHFUHDVH LQ VXOIDWH UHVLVWDQFH DV WKH
FHPHQW &$ FRQWHQW LQFUHDVHG  7KH UDWH RI H[SDQVLRQ LQFUHDVHG DV WKH &$ FRQWHQWV
LQFUHDVHG
,QFRPSDULQJWKHOHYHOVRIVXOIDWHUHVLVWDQFHGHWHUPLQHGIRUWKHIRXU3KDVHSRUWODQG
FHPHQWVXVLQJWKH$670&H[SDQVLRQFULWHULDYHUVXVWKH$670&&$FRQWHQW
OLPLWVWKUHHRXWRIWKHIRXUFHPHQWHYDOXDWLRQVFDPHXSZLWKWKHVDPHUHVXOWV7KH7\SH,
FHPHQW ZDV IRXQG WR EH RQO\ DGHTXDWH LQ PLOG VXOIDWH HQYLURQPHQWV DFFRUGLQJ WR $670
&EHFDXVHRILWVKLJKDYHUDJHGD\H[SDQVLRQRISHUFHQWDQGDFFRUGLQJWR
$670&EHFDXVHRILWVKLJK&$FRQWHQWRISHUFHQW7KH7\SH9FHPHQWSURYHGWR
EH DGHTXDWH IRU VHYHUH VXOIDWH HQYLURQPHQWV DFFRUGLQJ WR $670 & EHFDXVH LWV
DYHUDJHGD\H[SDQVLRQZDVDORZSHUFHQWDQGDFFRUGLQJWR$670&EHFDXVH
RILWV&$FRQWHQWRISHUFHQW7KH7\SH,,, $ FHPHQWPHWWKHUHTXLUHPHQWVIRUPRGHUDWH
VXOIDWHHQYLURQPHQWVDFFRUGLQJWR$670&EHFDXVHRILWVDYHUDJHGD\H[SDQVLRQRI
SHUFHQWDQGDFFRUGLQJWR$670&EHFDXVHRILWV&$FRQWHQWRISHUFHQW
7KH RQH FDVH ZKHUH $670 & VXOIDWH UHVLVWDQFH HYDOXDWLRQV GLG QRW PDWFK
$670&HYDOXDWLRQVZDVIRUWKH7\SH,,, % FHPHQW7KHFHPHQWKDGD&$FRQWHQWRI
SHUFHQWWKDWSODFHGLWZLWKLQWKHFDWHJRU\RIDPRGHUDWHVXOIDWHUHVLVWDQWFHPHQWDFFRUGLQJ
WR $670 & VSHFLILFDWLRQV  +RZHYHU WHVWV RQ WKH SODLQ SRUWODQG FHPHQW PRUWDU
FRQWDLQLQJ WKH 7\SH ,,, %  FHPHQW SURGXFHG DQ DYHUDJH GD\ H[SDQVLRQ RI 
SHUFHQW  7KLV H[SDQVLRQ LV DERYH  SHUFHQW DQG WKXV PDNHV WKH FHPHQW LQDGHTXDWH IRU
PRGHUDWHVXOIDWHHQYLURQPHQWVDFFRUGLQJWR$670&H[SDQVLRQFULWHULD
7KH KLJK H[SDQVLRQ RI WKH 7\SH ,,, %  FHPHQW PRUWDU LV QRW DOWRJHWKHU VXUSULVLQJ
ZKHQSDVWUHVHDUFKLVFRQVLGHUHG)LUVWRIDOOZKHQ&$FRQWHQWOLPLWVIRUFHPHQWZHUHILUVW
EHLQJ UHVHDUFKHG LQ  E\ WKH 3RUWODQG &HPHQW $VVRFLDWLRQ WKH YDOXH RI  SHUFHQW &$
ZDVHVWDEOLVKHGDVWKHERUGHUOLQHEHWZHHQJRRGDQGSRRUFHPHQWSHUIRUPDQFHDJDLQVWVXOIDWH
DWWDFN$FFRUGLQJWRWKLVUHVHDUFKWKH7\SH,,, % FHPHQWHYDOXDWHGLQ3KDVHWHVWLQJPD\

 
EHULJKWRQWKHERUGHUEHWZHHQEHLQJDPLOGRUPRGHUDWHVXOIDWHUHVLVWDQWFHPHQW6HFRQGO\
DPRQJ WKH VHYHUDO GLIIHUHQW FHPHQW W\SHV WHVWHG LQ GHYHORSLQJ WKH H[SDQVLRQ OLPLWV IRU
$670 & QR 7\SH ,,, RU 7\SH ,, FHPHQW ZLWK D &$ FRQWHQW KLJKHU WKDQ  SHUFHQW
ZDV HYDOXDWHG 5HIV     7KH RQO\ WHVWHG FHPHQWV ZLWK &$ FRQWHQWV EHWZHHQ  DQG 
SHUFHQWZHUHEOHQGHGFHPHQWVZKHUHWKH&$FRQWHQWZDVHVWLPDWHGXVLQJWKH%RJXHPHWKRG
5HI    7KHUH LV QR HYLGHQFH VKRZLQJ SODLQ SRUWODQG FHPHQW PRUWDUV ZLWK FHPHQW &$
FRQWHQWVEHWZHHQDQGSHUFHQWKDGGD\H[SDQVLRQVRIOHVVWKDQSHUFHQW)LQDOO\
RWKHU FRPSRQHQWV RI D FHPHQW¶V FKHPLVWU\ EH\RQG WKH &$ FRQWHQW DIIHFW LWV VXOIDWH
UHVLVWDQFH)RUERUGHUOLQHFHPHQWVOLNHWKH7\SH,,, % FHPHQWWHVWHGLQWKLVSURJUDPWKHVH
FRPSRQHQWV VXFK DV J\SVXP FRXOG SXVK WKH FHPHQW LQWR D ORZHU FDWHJRU\ RI VXOIDWH
UHVLVWDQFH
$FFRUGLQJ WR 3KDVH  WHVW UHVXOWV HVSHFLDOO\ WKRVH FRQFHUQLQJ WKH 7\SH ,,, % 
FHPHQW WKH H[SDQVLRQ FULWHULD HVWDEOLVKHG IRU $670 & FDQ EH FRQVHUYDWLYH LQ
FRPSDULVRQ WR WKH $670 & VSHFLILFDWLRQV ZKHQ XVHG WR GHWHUPLQH SRUWODQG FHPHQW
VXOIDWHUHVLVWDQFHOHYHOV7KHVHFRQGGHJUHHHTXDWLRQFRUUHVSRQGLQJWRWKHWUHQGOLQHVKRZQ
LQ )LJXUH  FDQ EH XVHG WR FDOFXODWH GD\ H[SDQVLRQ FULWHULD WKDW GLUHFWO\ FRUUHVSRQG
ZLWK $670 & OLPLWV DFFRUGLQJ WR 3KDVH  WHVW UHVXOWV  $FFRUGLQJ WR WKH WUHQGOLQH
HTXDWLRQDQDYHUDJHGD\H[SDQVLRQRISHUFHQWFRUUHVSRQGVWRD&$FRQWHQWRI
SHUFHQW DQG LV WKXV WKH ERUGHUOLQH EHWZHHQ VHYHUH DQG PRGHUDWH VXOIDWH UHVLVWDQFH  $Q
DYHUDJHGD\H[SDQVLRQRISHUFHQWFRUUHVSRQGVWRD&$FRQWHQWRISHUFHQWDQG
LVWKXVWKHERUGHUOLQHEHWZHHQPRGHUDWHDQGPLOGVXOIDWHUHVLVWDQFH7KHH[SDQVLRQYDOXHV
DUHDQGSHUFHQWKLJKHUWKDQWKH$6706XEFRPPLWWHH&H[SDQVLRQOLPLWV
5HVXOWVLQGLFDWHWKDWERUGHUOLQHFHPHQWVZLWK&$FRQWHQWVEHWZHHQDQGSHUFHQWWKDWDUH
FRQVLGHUHGPRGHUDWHVXOIDWHUHVLVWDQWFHPHQWVDFFRUGLQJWR$670&VSHFLILFDWLRQVPD\
EH FDWHJRUL]HG DV PLOG VXOIDWH UHVLVWDQW FHPHQWV DFFRUGLQJ WR FXUUHQW $670 &
H[SDQVLRQ OLPLWV $OVR $670 & 7\SH 9 VHYHUH VXOIDWH UHVLVWDQW FHPHQWV ZLWK &$
FRQWHQWV EHWZHHQ  DQG  SHUFHQW PD\ EH IRXQG WR RQO\ PHHW PRGHUDWH VXOIDWH UHVLVWDQFH
UHTXLUHPHQWVZKHQ$670&LVXVHG

 
2ZLQJWRWKHOLPLWHGDPRXQWRIGDWDFROOHFWHGLQ3KDVHLWZRXOGEHXQUHDVRQDEOHWR
UHFRPPHQG DQ LQFUHDVH LQ $670 & GD\ VXOIDWH H[SDQVLRQ OLPLW YDOXHV EDVHG RQ
WKHVHUHVXOWV$PRUHUHDOLVWLFLQWHUSUHWDWLRQRIWKHUHVXOWVLVWKDWWKH\SURYLGHDZDUQLQJWR
HQJLQHHUV WKDW FDXWLRQ VKRXOG EH WDNHQ ZKHQ XVLQJ ERUGHUOLQH FHPHQWV ZLWK &$ FRQWHQWV
EHWZHHQDQGSHUFHQWDQGDQGSHUFHQW7KHFHPHQWPD\KDYHDKLJKJ\SVXPFRQWHQW
RU RWKHU FKDUDFWHULVWLF WKDW PD\ SXVK WKH FHPHQW WR D ORZHU FDWHJRU\ RI VXOIDWH UHVLVWDQW
EHKDYLRU7KHEHVWDSSURDFKDQHQJLQHHUFDQWDNHLVWRDYRLGWKHXVHRIWKHERUGHUOLQHWR
SHUFHQW &$ FRQWHQW FHPHQWV LQ VHYHUH VXOIDWH HQYLURQPHQWV DQG ERUGHUOLQH  WR  SHUFHQW
&$ FRQWHQW FHPHQWV LQ PRGHUDWH VXOIDWH HQYLURQPHQWV  ,I WKLV FDQQRW EH DYRLGHG WKH
HQJLQHHU VKRXOG WHVW WKH ERUGHUOLQH FHPHQW XVLQJ WKH $670 & SURFHGXUHV DQG
FXUUHQWH[SDQVLRQFULWHULDWRHQVXUHWKHFHPHQWLVDGHTXDWH

 (IIHFWVRI0LQHUDO$GPL[WXUHVRQ6XOIDWH5HVLVWDQFH
,Q3KDVHWKHHIIHFWVRIDQ$670&ODVV)IO\DVKDQ$670&ODVV&IO\DVKDQGD
JURXQG JUDQXODWHG EODVW IXUQDFH VODJ **%)6  RQ WKH VXOIDWH UHVLVWDQFH RI PRUWDUV ZHUH
HYDOXDWHG XVLQJ WKH SURFHGXUHV RI $670 &  7KH IROORZLQJ VHFWLRQ GLVFXVVHV WKH
HIIHFWV RI HDFK PLQHUDO DGPL[WXUH WKDW ZHUH UHYHDOHG IURP WKH WHVW UHVXOWV  5HVXOWV DUH
FRPSDUHG ZLWK SDVW H[SHULHQFH DV WKH XOWLPDWH JRDO LV WR HYDOXDWH WKH DFFXUDF\ RI $670
& DV D SHUIRUPDQFH WHVW IRU GHWHUPLQLQJ WKH VXOIDWH UHVLVWDQFH RI FHPHQWPLQHUDO
DGPL[WXUHFRPELQDWLRQV

$670&ODVV))O\$VK
 3DVWH[SHULHQFHKDVUHYHDOHGWKDWIO\DVKHVPHHWLQJWKHUHTXLUHPHQWVIRU$670&ODVV
)IO\DVKJHQHUDOO\LPSURYHVXOIDWHUHVLVWDQFH'HVSLWHWKHUHODWLYHO\KLJKFDOFLXPFRQWHQWRI
WKH$670&ODVV)IO\DVKXVHGLQ3KDVHWHVWLQJPRVWVRXUFHVVKRZWKLVIO\DVKFDQDOVREH
H[SHFWHGWRLPSURYHVXOIDWHUHVLVWDQFH8VLQJWKH'XQVWDQ¶V5IDFWRUDSSURDFKWRSUHGLFWLQJ
IO\DVKSHUIRUPDQFHDJDLQVWVXOIDWHDWWDFNQRVLJQLILFDQWLPSURYHPHQWLQVXOIDWHUHVLVWDQFHLV
H[SHFWHGIURPWKH3KDVHIO\DVK7KH$670&ODVV)IO\DVK&D2FRQWHQWRISHUFHQW
DQG )H2 FRQWHQW RI  SHUFHQW \LHOG D 'XQVWDQ 5 IDFWRU RI   7KLV 5 IDFWRU SXWV WKH

 
3KDVH&ODVV)IO\DVKLQWKHUDQJHRIIO\DVKHVWKDWDUHH[SHFWHGWRSURYLGHQRVLJQLILFDQW
FKDQJHWRVXOIDWHUHVLVWDQFH+RZHYHUWKH'XQVWDQ5IDFWRULVFRQVHUYDWLYHEHFDXVHLWGRHV
QRWFRQVLGHUWKHLPSDFWVRIVLOLFDDOXPLQDDQGVXOIXUFRQWHQWLQWKHIO\DVK
7KH 7LNDOVN\&DUUDVTXLOOR SURFHGXUHV IRU SUHGLFWLQJ WKH IO\ DVK HIIHFW RQ VXOIDWH
UHVLVWDQFH SURYLGH D PRUH FRPSUHKHQVLYH HYDOXDWLRQ RI WKH IO\ DVK EHFDXVH PRVW RI WKH IO\
DVKFKHPLFDOFRPSRQHQWVWKDWLQIOXHQFHVXOIDWHUHVLVWDQFHDUHFRQVLGHUHG7KH&D2FRQWHQW
RI  SHUFHQW IRU WKH 3KDVH  &ODVV ) IO\ DVKSXWVLWZLWKLQWKHUDQJHRIWRSHUFHQW
&D2 FRQWHQW IO\ DVKHV WKDW PXVW EH H[DPLQHG XVLQJ D &D26L2$O2 WHUQDU\ GLDJUDP
)LJXUH  VKRZV KRZ WKH JODVV\ SRUWLRQV RI WKH &ODVV ) IO\ DVK OLH LQ WKH WHUQDU\ GLDJUDP
7KH VWDU SRLQW LV GHWHUPLQHG EDVHG RQ WKH IO\ DVK¶V  SHUFHQW 6L2FRQWHQWSHUFHQW
$O2 FRQWHQW DQG  &D2 FRQWHQW DQG WKXV D  SHUFHQW 6L2 JODVV\ SKDVH 
SHUFHQW $O2 JODVV\ SKDVH DQG  SHUFHQW &D2 JODVV\ SKDVH  7KH JODVV\ SRUWLRQ RI WKH
DVK LV LQ WKH XSSHU KDOI RI WKH DQRUWKLWH ILHOG VXFK WKDW WKH DVK LV OLNHO\ WR LPSURYH VXOIDWH
UHVLVWDQFH DFFRUGLQJ WR WKH 7LNDOVN\&DUUDVTXLOOR UHFRPPHQGHG IO\ DVK HYDOXDWLRQ
SURFHGXUHV
,QIRUPDWLRQ VXSSRUWLQJ WKH 3KDVH  &ODVV ) IO\ DVKHV¶ DELOLW\ WR LPSURYH VXOIDWH
UHVLVWDQFHLVDOVRSURYLGHGE\7LNDOVN\DQG&DUUDVTXLOORLQWKHLUHYDOXDWLRQVRIWKHHIIHFWVRI
WZHQW\ GLIIHUHQW IO\ DVKHV RQ WKH VXOIDWH UHVLVWDQFH RI FRQFUHWH 5HI    7LNDOVN\ DQG
&DUUDVTXLOOR UHYHDOHG WUHQGV VKRZLQJ IO\ DVKHV ZLWK D WRWDO 6L2 $O2 DQG )H2 FRQWHQW
H[FHHGLQJSHUFHQWJHQHUDOO\LPSURYHGVXOIDWHUHVLVWDQFH7KHLUUHVHDUFKDOVRUHYHDOHGIO\
DVKHV ZLWK D VLOLFD 6L2  FRQWHQW JUHDWHU WKDQ  SHUFHQW DQG ORZ VXOIXU WULR[LGH FRQWHQWV
W\SLFDOO\ LPSURYHG VXOIDWH UHVLVWDQFH  7KH 3KDVH  &ODVV )IO\DVKKDVDWRWDO6L2$O2
DQG)H2FRQWHQWRISHUFHQWD6L2FRQWHQWRISHUFHQWDQGDORZVXOIXUWULR[LGH
FRQWHQW RI  SHUFHQW  $OO WKHVH FKHPLFDO SURSHUWLHV LQGLFDWH WKLV FODVV RI IO\ DVK ZLOO
LPSURYHVXOIDWHUHVLVWDQFHDFFRUGLQJWR7LNDOVN\DQG&DUUDVTXLOOR¶VUHVHDUFK

 
6L2 


&ODVV))O\$VK

*HKOLQLWH

  $QRUWKLWH

0XOOLWH

  


&D2 $O 2

)LJXUH±(YDOXDWLRQRI5HDFWLYLW\RI3KDVH&ODVV))O\$VK*ODVV\3KDVHV8VLQJ
7HUQDU\'LDJUDP


5HVXOWV RI 3KDVH  $670 & WHVWLQJ RQ PRUWDUV FRQWDLQLQJ WKH &ODVV ) IO\ DVK
FRQILUPHG WKDW WKH IO\ DVK GLG LQGHHG LPSURYH VXOIDWH UHVLVWDQFH  )LJXUH  VKRZV WKH
DYHUDJHGD\VXOIDWHH[SDQVLRQVRIDOOWKH3KDVHPRUWDUVFRQWDLQLQJWKH&ODVV)IO\DVK
DQGWKHFRUUHVSRQGLQJSODLQSRUWODQGFHPHQWPRUWDUV$OOPRUWDUVFRQWDLQLQJWKH&ODVV)IO\
DVK KDG LPSURYHG VXOIDWH UHVLVWDQFH FRPSDUHG WR WKHLU UHVSHFWLYH SODLQ SRUWODQG FHPHQW
PRUWDU$OO&ODVV)IO\DVKPRUWDUVKDGDYHUDJHGD\H[SDQVLRQVEHORZSHUFHQWVXFK
WKDW HDFK PRUWDU PHW WKH UHTXLUHPHQWV IRU VHYHUH VXOIDWH UHVLVWDQFH DFFRUGLQJ WR $670
&H[SDQVLRQFULWHULD

 




&ODVV))O\$VK
'D\([SDQVLRQ 

 &ODVV))O\$VK
&ODVV))O\$VK


0LOG

0RGHUDWH


6HYHUH


, ,,, $ ,,, % 9

&HPHQW7\SH
)LJXUH±'D\6XOIDWH([SDQVLRQVRI0RUWDUVZLWK&ODVV))O\$VK

7KH OHYHO RI UHGXFWLRQV LQ VXOIDWH H[SDQVLRQ GHSHQGHG RQ WKH W\SH RI FHPHQW ZLWK
ZKLFK WKH IO\ DVK ZDV EHLQJ XVHG UHGXFWLRQV LQFUHDVHG DV WKH &$ FRQWHQW RI WKH FHPHQW
LQFUHDVHG5HGXFWLRQVLQH[SDQVLRQZHUHDVVPDOODVSHUFHQWZKHQWKH&ODVV)IO\DVK
ZDV XVHG ZLWK WKH 7\SH 9 FHPHQW DQG DV KLJK DV  SHUFHQW ZKHQ WKH IO\ DVKZDVXVHG
ZLWKWKH7\SH,FHPHQW1RWUHQGVZHUHREVHUYHGFRQFHUQLQJWKHLPSDFWRIIO\DVKFRQWHQW
RQVXOIDWHUHVLVWDQFHEHFDXVHVRPHWLPHVWKHSHUFHQWUHSODFHPHQWPRUWDUZRXOGKDYHORZHU
H[SDQVLRQVZKLOHRWKHUWLPHVWKHSHUFHQWUHSODFHPHQWPRUWDUKDGWKHORZHUYDOXH7KLV
ODFN RI FRUUHODWLRQ EHWZHHQ VXOIDWH UHVLVWDQFH DQG IO\ DVK FRQWHQW IRU &ODVV ) IO\ DVKHV ZDV
DOVRGLVFRYHUHGE\7LNDOVN\DQG&DUUDVTXLOORLQWKHLUUHVHDUFK 5HI 

$670&ODVV&)O\$VK
 2ZLQJ WR WKH KLJK FDOFLXP FRQWHQW RI $670 &ODVV & IO\ DVKHV PRVW RI WKHVH IO\
DVKHVKDYHEHHQVKRZQWRSURYLGHOLWWOHLPSURYHPHQWLIQRWUHGXFWLRQVLQVXOIDWHUHVLVWDQFH
)RUWKH&ODVV&IO\DVKHYDOXDWHGIRU3KDVHWHVWLQJWKH'XQVWDQDQG7LNDOVN\&DUUDVTXLOOR
SURFHGXUHVIRUSUHGLFWLQJWKHHIIHFWRIIO\DVKRQVXOIDWHUHVLVWDQFHVKRZWKLVIO\DVKVKRXOG

 
KDYH D VLJQLILFDQWO\ QHJDWLYH LPSDFW RQ WKH UHVLVWDQFH RI PRUWDUV WR VXOIDWH DWWDFN  :LWK D
&D2FRQWHQWRISHUFHQWDQGD)H2FRQWHQWRISHUFHQWWKH3KDVH&ODVV&IO\DVK
KDV D 'XQVWDQ¶V 5IDFWRURI7KLV5IDFWRUSXWVWKHIO\DVKLQWKHFDWHJRU\RIIO\DVKHV
WKDW FDQ EH H[SHFWHG WR UHGXFH VXOIDWH UHVLVWDQFH 7LNDOVN\ DQG &DUUDVTXLOOR UHFRPPHQGHG
WKDW DQ\ IO\ DVK ZLWK D &D2 FRQWHQW H[FHHGLQJ  SHUFHQW VKRXOG QRW EH XVHG LQ FRQFUHWH
H[SRVHG WR VXOIDWH  %DVHG RQ WKHVH UHFRPPHQGDWLRQV WKH 3KDVH  &ODVV & IO\ DVK ZLWK LWV
&D2 FRQWHQW RI  SHUFHQW LV QRW DSSOLFDEOH LQ VXOIDWH HQYLURQPHQWV DV WKH IO\ DVK LV
H[SHFWHGWRVHYHUHO\UHGXFHVXOIDWHUHVLVWDQFH
 3KDVHWHVWUHVXOWVVXSSRUWHGWKHSUHGLFWLRQVRI'XQVWDQ7LNDOVN\DQG&DUUDVTXLOOR
LQ WKDW DOO PRUWDUV FRQWDLQLQJ WKH &ODVV & IO\ DVK KDG H[SDQVLRQV ZHOO DERYH  SHUFHQW
EHIRUH  GD\V RI VRDNLQJ  7KH XVH RI WKH &ODVV & IO\ DVK ZLWK DQ\ RI WKH FHPHQW W\SHV
\LHOGHG PRUWDUV WKDW ZHUH XQVXLWDEOH IRU DSSOLFDWLRQ LQ HQYLURQPHQWV ZKHUH VXOIDWHV DUH D
FRQFHUQ  $OO PRUWDUV HLWKHU FUDFNHG DQG GHWHULRUDWHG WR WKH SRLQW ZKHUH WKH\ ZHUH
XQPHDVXUDEOHEHIRUHGD\VRIVRDNLQJZDVUHDFKHGRUKDGH[WUHPHO\KLJKH[SDQVLRQVDW
GD\V
)LJXUHVKRZVWKHGD\H[SDQVLRQVRIWKHPRUWDUVZLWK&ODVV&IO\DVKDQGWKH
FRUUHVSRQGLQJ SODLQ SRUWODQG FHPHQW PRUWDUV  7KH GD\PHDVXUHPHQWSHULRGZDVFKRVHQ
EHFDXVH WKLV ZDV WKH ORQJHVW SHULRG DW ZKLFK DW OHDVW RQH EDU IURP DOO WKH EDWFKHV ZDV
PHDVXUDEOH$IWHUGD\VVHWVRIPRUWDUEDUVZLWK&ODVV&IO\DVKVWDUWHGWREHFRPHWRWDOO\
GHWHULRUDWHG  7KH UHVXOWV LQ )LJXUH  VKRZ WKDW &ODVV & IO\ DVK TXLFNO\ UHGXFHG VXOIDWH
UHVLVWDQFH DQG WKH UHGXFWLRQ LQFUHDVHG ZLWK LQFUHDVLQJ IO\ DVK FRQWHQW  7KLV UHODWLRQVKLS
EHWZHHQ IO\ DVK FRQWHQW DQG VXOIDWH UHVLVWDQFH ZKHUH LQFUHDVHG FRQWHQW \LHOGV LQFUHDVHG
H[SDQVLRQVZDVDOVRREVHUYHGLQ7LNDOVN\DQG&DUUDVTXLOOR¶VZRUN 5HI )LJXUHDOVR
VKRZV WKDW WKH UDWH RI H[SDQVLRQ RI WKH PRUWDUV ZLWK &ODVV & IO\ DVK LQFUHDVHG DV WKH &$
FRQWHQWRIWKHSRUWODQGFHPHQWLQWKHPRUWDULQFUHDVHG,QWKHHQGDOOWKHPRUWDUVFRQWDLQLQJ
&ODVV&IO\DVKVKRZHGHLWKHUVLJQLILFDQWGHWHULRUDWLRQRUKLJKH[SDQVLRQVWKDWLQGLFDWHGWKH
PRUWDUVZHUHQRWVXLWDEOHIRUDSSOLFDWLRQLQDVXOIDWHHQYLURQPHQW


 


 &ODVV&)O\$VK
%DU#
'D\([SDQVLRQ 

&ODVV&)O\$VK

&ODVV&)O\$VK











, ,,, $ ,,, % 9

&HPHQW7\SH

)LJXUH±'D\6XOIDWH([SDQVLRQVRI0RUWDUVZLWK&ODVV&)O\$VK

*URXQG*UDQXODWHG%ODVW)XUQDFH6ODJ
 7KH ILQDO PLQHUDO DGPL[WXUH WKDW ZDV HYDOXDWHG LQ 3KDVH  WHVWLQJ ZDV WKH JURXQG
JUDQXODWHG EODVW IXUQDFH VODJ  3DVW UHVHDUFK FRQFHUQLQJ WKH HIIHFWV RI VODJ RQ VXOIDWH
UHVLVWDQFHLQGLFDWHGVODJKHOSVWRLPSURYHVXOIDWHUHVLVWDQFHEHFDXVHLWUHGXFHVWKHDPRXQWRI
DYDLODEOHFDOFLXPK\GUR[LGH/LWWOHUHVHDUFKKDVEHHQGRQHWRSURYLGHPHWKRGVIRUSUHGLFWLQJ
WKH HIIHFWLYHQHVV RI RQH VODJ YHUVXV DQRWKHU H[FHSW WKDW VRPH UHVHDUFKHUV KDYH IRXQG WKDW
XVLQJ VODJ DW KLJK UHSODFHPHQW OHYHOV LQFUHDVHV LWV HIIHFWLYHQHVV LQ LPSURYLQJ VXOIDWH
UHVLVWDQFH)RU3KDVHWHVWLQJDVODJYROXPHWULFUHSODFHPHQWOHYHORISHUFHQWZDVXVHG
WKLVLVDW\SLFDOUHSODFHPHQWYDOXHXVHGIRUVODJLQODERUDWRULHVDQGLQWKHILHOG

 


6ODJ
'D\([SDQVLRQ 


6ODJ


0LOG



0RGHUDWH

6HYHUH

, ,,, $ ,,, % 9
&HPHQW7\SH  

)LJXUH±'D\6XOIDWH([SDQVLRQVRI0RUWDUVZLWK**%)6ODJ

3KDVH  WHVW UHVXOWV IRU PRUWDUV FRQWDLQLQJ VODJ FRUUHODWHG ZHOO ZLWK ZKDW ZRXOG EH
H[SHFWHG IURP SDVW H[SHULHQFH  $OO WKH PRUWDUV KDG UHGXFHG VXOIDWH H[SDQVLRQV LQ
FRPSDULVRQ WRWKHLUUHVSHFWLYHSODLQSRUWODQGFHPHQWPRUWDU)LJXUHVKRZVWKHDYHUDJH
GD\H[SDQVLRQVRIWKHPRUWDUVZLWKVODJDQGWKHSODLQSRUWODQGFHPHQWPRUWDUV6LPLODU
WRWKHPRUWDUVZLWK&ODVV)IO\DVKDOOWKHPRUWDUVFRQWDLQLQJVODJKDGGD\H[SDQVLRQV
OHVVWKDQSHUFHQWWKHOHYHORIUHGXFWLRQVLQH[SDQVLRQVLQFUHDVHGDVWKH&$FRQWHQWRI
WKHSRUWODQGFHPHQWLQFUHDVHG$FFRUGLQJWRWKH$670&H[SDQVLRQFULWHULDDOOWKH
PRUWDUVZLWKVODJPHWWKHUHTXLUHPHQWVIRUVHYHUHVXOIDWHUHVLVWDQFH7KHPRUWDUVSHUIRUPHG
DV ZHOO DV WKH PRUWDUV FRQWDLQLQJ &ODVV ) IO\ DVK  7KHVH UHVXOWV VKRZ WKH  SHUFHQW VODJ
YROXPHWULF UHSODFHPHQW OHYHO ZDV HQRXJK WR SURYLGH VXIILFLHQW FDOFLXP K\GUR[LGH
FRQVXPSWLRQDQGWKXVLPSURYHGVXOIDWHUHVLVWDQFH





 
 )LQDO(YDOXDWLRQRI$670&
 7KH XOWLPDWH JRDO RI 3KDVH  WHVWLQJ ZDV WR GHWHUPLQH WKH VXLWDELOLW\ RI $670
&DVDSHUIRUPDQFHWHVWIRUHYDOXDWLQJWKHVXOIDWHUHVLVWDQFHRISRUWODQGFHPHQWDQG
SRUWODQGFHPHQWPLQHUDODGPL[WXUHFRPELQDWLRQV7KHWHVWFDQEHHYDOXDWHGE\LQYHVWLJDWLQJ
WKHIROORZLQJWKUHHLVVXHV

 7KHFRQVLVWHQF\DQGWKXVWKHUHOLDELOLW\RIUHVXOWVREWDLQHGIURPWKHWHVW

 &RUUHODWLRQRIWHVWUHVXOWVZLWKSDVWH[SHULHQFHLQWKHFRQFUHWHLQGXVWU\

 $FFXUDF\ DQG HIIHFWLYHQHVV RI WKH WHVW¶V H[SDQVLRQ FULWHULD XVHG IRU GHWHUPLQLQJ
WKHOHYHORIVXOIDWHUHVLVWDQFHRIDPRUWDU


,QRUGHUWREHDQDGHTXDWHSHUIRUPDQFHWHVW$670&PXVWEHFRQVLVWHQWFRUUHODWH
ZLWKSDVWH[SHULHQFHDQGKDYHHIIHFWLYHFRUUHVSRQGLQJSHUIRUPDQFHFULWHULD
 7KH FRQVLVWHQF\ DQG UHOLDELOLW\ RI UHVXOWV SURGXFHG IURP 3KDVH  WHVWLQJ FDQ EH
DVVHVVHGE\H[DPLQLQJWKHVWDQGDUGGHYLDWLRQVWKDWZHUHFDOFXODWHGIRUHDFKVHWRIPRUWDUEDU
GDWD  )LJXUH  VKRZVDSORWRIWKHVWDQGDUGGHYLDWLRQYDOXHVFDOFXODWHGIRUVHYHUDORIWKH
3KDVH  PRUWDU GDWD VHWV YHUVXV WKH DYHUDJH GD\ VXOIDWH H[SDQVLRQ YDOXHV WKDW ZHUH
REWDLQHG IRU WKH PRUWDUV  7KH RQO\ PRUWDUV QRW LQFOXGHG LQ WKLV ILJXUH DUH WKH PRUWDUV
FRQWDLQLQJ &ODVV & IO\ DVK EHFDXVH WKHVH PRUWDUV HLWKHU GHWHULRUDWHG EHIRUH GD\
PHDVXUHPHQWVZHUHREWDLQHGRUKDGXQXVXDOO\KLJKH[SDQVLRQV
)LJXUHVKRZVWKDWWKHVWDQGDUGGHYLDWLRQEHWZHHQPRUWDUEDUH[SDQVLRQVZLWKLQD
VHWJHQHUDOO\LQFUHDVHGDVWKHGD\H[SDQVLRQVRIWKHPRUWDUVLQFUHDVHG7KH&ODVV&IO\
DVK PRUWDUV VXSSRUWHG WKLV SDWWHUQ  7KH\ KDG WKH KLJKHVW H[SDQVLRQV DQG DOVR WKH KLJKHVW
VWDQGDUG GHYLDWLRQV RI DOO WKH PRUWDUV ZLWK GDWD VWDQGDUG GHYLDWLRQV UDQJLQJ IURP  WR
SHUFHQW7KLVSDWWHUQLVDSRVLWLYHWUHQGEHFDXVHLWLQGLFDWHVWKDWPRUWDUVZLWKGD\
H[SDQVLRQV LQ WKH ORZHU UDQJH ZLOO KDYH ORZHU GDWD VWDQGDUG GHYLDWLRQV DQG WKXV PRUH
FRQVLVWHQWGDWD(QJLQHHUVXVLQJ$670&ZLOOJHQHUDOO\RQO\EHFRQFHUQHGZLWKWKH
UHOLDELOLW\RIGDWDIRUPRUWDUVZLWKGD\H[SDQVLRQVDWRUEHORZSHUFHQWEHFDXVHWKHVH

 
DUH WKH PRUWDUV WKDW ZLOO EH ODEHOHG DFFHSWDEOH DFFRUGLQJ WR WHVW FULWHULDIRUDSSOLFDWLRQLQ D
PRGHUDWH RU VHYHUH VXOIDWH HQYLURQPHQW  $V VKRZQ LQ )LJXUH  3KDVH  PRUWDUV ZLWK
H[SDQVLRQV OHVV WKDQ  SHUFHQW JHQHUDOO\ KDG GDWD VWDQGDUG GHYLDWLRQV RI OHVV WKDQ 
SHUFHQW DQG PDQ\ KDG GHYLDWLRQV DW RU EHORZ  SHUFHQW  'DWD GLG QRW JHW HUUDWLF XQWLO
GD\H[SDQVLRQVVWDUWHGWRH[FHHGSHUFHQW3KDVHUHVXOWVLQGLFDWHHQJLQHHUVFDQEH
FRQILGHQW WKDW GDWD REWDLQHG IURP $670 & WHVWLQJ ZLOO EH UHOLDEOH IRU DQ\ PRUWDU
WKDWLVFDWHJRUL]HGDVDPRGHUDWHRUVHYHUHVXOIDWHUHVLVWDQWPRUWDU



6WDQGDUG'HYLDWLRQRI'DWD 




6HYHUH 0RGHUDWH 0LOG


 'DWD3RLQWVIRU$OO0RUWDUV
([FHSW7KRVHZ&ODVV&
)O\$VK

     

$YJ'D\([SDQVLRQV 

)LJXUH±0RUWDU'DWD¶V6WDQGDUG'HYLDWLRQYHUVXV$YHUDJH'D\([SDQVLRQV

 7KH$670&WHVW¶VDFFXUDF\LQSUHGLFWLQJPRUWDUVXOIDWHUHVLVWDQFHVFDQRQO\EH
GHWHUPLQHG E\ WHVWLQJ PDWHULDOV ZKHUH NQRZOHGJH RI WKHLU VXOIDWH UHVLVWDQFH EHKDYLRUV
DOUHDG\ H[LVWV DQG VKRZLQJ WHVW UHVXOWV FRUUHODWH ZLWK SDVW H[SHULHQFH  7KURXJK \HDUV RI
LQYHVWLJDWLRQ UHVHDUFKHUV DQG HQJLQHHUV KDYH HVWDEOLVKHG SDWWHUQV LQ FRQFUHWH PDWHULDO
EHKDYLRU LQ VXOIDWH HQYLURQPHQWV 7KHVHSDWWHUQVLQFOXGHGHFUHDVLQJVXOIDWHUHVLVWDQFHZLWK
LQFUHDVLQJ &$ FRQWHQWV LQ SRUWODQG FHPHQWV LPSURYHG VXOIDWH UHVLVWDQFH ZLWK WKH XVH RI
&ODVV)IO\DVKDQGVODJDQGUHGXFHGVXOIDWHUHVLVWDQFHVZLWKWKHXVHRI&ODVV&IO\DVK2QH

 
PDMRU JRDO RI 3KDVH  WHVWLQJ ZDV WR WHVWWKH$670&WHVW¶VDELOLW\WRUHYHDOWKHVH
SDWWHUQV$670&SDVVHGWKLVH[DPLQDWLRQDQGDOOUHVXOWVFRUUHODWHGZHOOZLWKZKDW
ZDV H[SHFWHG EDVHG RQ SDVW H[SHULHQFH  3KDVH  WHVWLQJ VKRZHG $670 & KDV WKH
DELOLW\ WR UHYHDO ERWK QHJDWLYH DQG SRVLWLYH FKDUDFWHULVWLFV LQ WKH VXOIDWH UHVLVWDQFHV RI ERWK
SODLQSRUWODQGFHPHQWVDQGFHPHQWPLQHUDODGPL[WXUHFRPELQDWLRQV
 7KH ILQDO VWHS LQ HYDOXDWLQJ $670 & LQYROYHV H[DPLQLQJ WKH H[SDQVLRQ
FULWHULD HVWDEOLVKHG E\ $670 6XEFRPPLWWHH &  7KH FULWHULD FDQ EH HYDOXDWHG E\
FRPSDULQJWKHPZLWKVSHFLILFDWLRQVWKDWDUHFXUUHQWO\EHLQJXVHGWRGHOLQHDWHEHWZHHQPLOG
PRGHUDWH DQG VHYHUH VXOIDWH UHVLVWDQW PDWHULDOV DQG HQVXULQJ WKH FXUUHQW VSHFLILFDWLRQV DQG
WKH$670&FULWHULDSURGXFHVLPLODUUHVXOWV7KHPDLQVSHFLILFDWLRQFXUUHQWO\LQXVHIRU
WKH SXUSRVH RI VXOIDWH UHVLVWDQFH FDWHJRUL]DWLRQ LV WKH $670 & SRUWODQG FHPHQW &$
FRQWHQWOLPLWWKDWFDWHJRUL]HVFHPHQWVLQWR7\SH9VHYHUHVXOIDWHUHVLVWDQWFHPHQWV7\SH,,
RU,,,PRGHUDWHVXOIDWHUHVLVWDQWFHPHQWVDQGQRQVXOIDWHUHVLVWDQW7\SH,FHPHQWV
,Q VHFWLRQ  D FRPSDULVRQ EHWZHHQ $670 & VSHFLILFDWLRQV DQG $670
& FULWHULD ZDV PDGH EDVHG RQ H[SDQVLRQ UHVXOWVIRUWKHIRXU3KDVHSODLQSRUWODQG
FHPHQW PRUWDUV  7KH FRPSDULVRQ LQGLFDWHG WKH VSHFLILFDWLRQV DQG WKH H[SDQVLRQ FULWHULD
FRUUHODWHGIDLUO\ZHOODVWKUHHRXWWKHIRXUFHPHQWVZHUHGHWHUPLQHGWRKDYHWKHVDPHOHYHORI
VXOIDWHUHVLVWDQFHXVLQJWKHWZRLQGLFDWRUV)RUWKHRQHFHPHQWZKHUHUHVXOWVGLGQRWPDWFK
$670&UHVXOWVLQGLFDWHGWKHFHPHQWZDVRQO\DGHTXDWHIRUPLOGVXOIDWHHQYLURQPHQWV
ZKLOH $670 & VSHFLILFDWLRQV FDWHJRUL]HG WKH FHPHQW DV D PRGHUDWH VXOIDWH UHVLVWDQW
FHPHQW  7KLV UHVXOW LQGLFDWHV WKH $670 & H[SDQVLRQ FULWHULD FDQ VRPHWLPHV EH
FRQVHUYDWLYHLQFRPSDULVRQWR$670&VSHFLILFDWLRQV7KLVSRVVLELOLW\LVQRWDOWRJHWKHU
QHJDWLYHDVDFRQVHUYDWLYHFULWHULDPHDQVDVDIHUFULWHULDDVIDUDVDVVXULQJFRQFUHWHGXUDELOLW\
DJDLQVWVXOIDWHDWWDFN%DVHGRQ3KDVHWHVWUHVXOWVDQGSDVWODERUDWRU\DQGDQDO\WLFDOWHVWV
H[DPLQLQJ$670&DQGLWVH[SDQVLRQFULWHULDWKHH[SDQVLRQOLPLWVRISHUFHQW
GD\H[SDQVLRQVRUOHVVIRUVHYHUHVXOIDWHUHVLVWDQFHDQGSHUFHQWGD\H[SDQVLRQVRU
OHVVIRUPRGHUDWHVXOIDWHUHVLVWDQFHFDQEHFRQVLGHUHGDFFHSWDEOH7KHOLPLWVDUHDFFXUDWHDQG
VDIH LQ DVVHVVLQJ WKH OHYHOV RI VXOIDWH UHVLVWDQFH RI FHPHQWV RU FHPHQWPLQHUDO DGPL[WXUH
FRPELQDWLRQV

 
 ,PSOLFDWLRQVRI5HVXOWV&RQFHUQLQJ6SHFLILFDWLRQV
3KDVHUHVXOWVKDYHLQGLFDWHG$670&³6WDQGDUG7HVW0HWKRGIRU/HQJWK
&KDQJH RI +\GUDXOLF&HPHQW 0RUWDUV ([SRVHG WR D 6XOIDWH 6ROXWLRQ´ LV DQ DGHTXDWH
SHUIRUPDQFHWHVWIRUGHWHUPLQLQJWKHOHYHORIUHVLVWDQFHRIDQ\FHPHQWLWLRXVPDWHULDODJDLQVW
VXOIDWH DWWDFN  7KH WHVW KDV EHHQ VKRZQ WR SURGXFH FRQVLVWHQW DQG UHOLDEOHUHVXOWV5HVXOWV
FRUUHODWHZHOOZLWKSDVWODERUDWRU\H[SHULHQFH)LQDOO\WKHSHUIRUPDQFHFULWHULDKDYHVKRZQ
WREHHIIHFWLYHDWGHWHUPLQLQJDOHYHORIVXOIDWHUHVLVWDQFHIRUDPDWHULDO:LWKWKHVHUHVXOWV
$670 & KDV SURYHQ WR EH DQ DFFHSWDEOH SHUIRUPDQFH WHVW IRU DSSOLFDWLRQ LQ WKH
7['27SHUIRUPDQFHEDVHGVSHFLILFDWLRQVEHLQJSUHSDUHGLQWKLVSURMHFW
7KH SURSRVHG SHUIRUPDQFHEDVHG VSHFLILFDWLRQV IRU VXOIDWH UHVLVWDQFH GHYHORSHG
HDUOLHU LQ WKLV SURMHFW ZHUH SUHVHQWHG LQ &KDSWHU   7KURXJK H[DPLQLQJ $670 &
SURFHGXUHV SHUIRUPLQJ 3KDVH  WHVWLQJ DQG DQDO\]LQJ WHVW UHVXOWV D FRXSOH RI LVVXHV DURVH
ZKHUH LW VHHPHG FKDQJHV LQ WKH SURSRVHG VSHFLILFDWLRQV ZRXOG PDNH WKHP PRUH HIIHFWLYH
7KH ILUVW LVVXH LQYROYHV HOLPLQDWLQJ WKH PDVV FKDQJH OLPLWV WKDW ZHUH LQFRUSRUDWHG LQWR WKH
SHUIRUPDQFH FULWHULD FRUUHVSRQGLQJ WR $670 &  $V GLVFXVVHG LQ &KDSWHU  LW ZDV
GHWHUPLQHG HDUO\ LQ WKH WHVW SURJUDP SUHSDUDWLRQ WKDW LQFRUSRUDWLQJ D PDVV FKDQJH
PHDVXUHPHQW LQWR $670 & SURFHGXUHV ZRXOG EH GLIILFXOW DQG PD\ LQWHUIHUH ZLWK
H[SDQVLRQUHVXOWV$OVRWKHPDVVFKDQJHFULWHULRQVHUYHVDVDQLQGLFDWRURIVXUIDFHVFDOLQJ
EXWWKLVW\SHRIGDPDJHZLOOPRVWOLNHO\QRWRFFXULQWKHPRUWDUEDUVWKDWDUHWHVWHGLQ$670
&
$VHFRQGVSHFLILFDWLRQUHODWHGLVVXHDURVHIURP3KDVHSODLQSRUWODQGFHPHQWPRUWDU
WHVWUHVXOWVZKHUHLWZDVIRXQGWKDWERUGHUOLQHSRUWODQGFHPHQWVZLWK&$FRQWHQWVEHWZHHQ
DQGSHUFHQWDQGDQGSHUFHQWKDGWKHSRWHQWLDORIGURSSLQJDVXOIDWHUHVLVWDQFHOHYHO
DFFRUGLQJ WR $670 & FULWHULD  7KHVH UHVXOWV VKRXOG UDLVH FDXWLRQ WR HQJLQHHUV WKDW
FHPHQWV ZLWK &$ FRQWHQWV EHWZHHQ  DQG  SHUFHQW PD\ QRW EH DGHTXDWH IRU PRGHUDWH
VXOIDWH HQYLURQPHQWV DQG FHPHQWV ZLWK &$ FRQWHQWV EHWZHHQ  DQG  SHUFHQW PD\ QRW EH
DGHTXDWH IRU VHYHUH VXOIDWH HQYLURQPHQWV  $ VDIH DSSURDFK IRU DGGUHVVLQJ WKLV LVVXH LQ WKH
VSHFLILFDWLRQVZRXOGEHWRUHTXLUHHQJLQHHUVWRWHVWERUGHUOLQHFHPHQWV$Q\7\SH,,RU,,,
FHPHQW ZLWK D &$ FRQWHQW EHWZHHQ  DQG  SHUFHQW RU DQ\ 7\SH 9 FHPHQW ZLWK D &$

 
FRQWHQW EHWZHHQ  DQG  SHUFHQW VKRXOG EH H[DPLQHG XVLQJ $670 & WR DVVXUH WKH
FHPHQWVPHHWSHUIRUPDQFHFULWHULD
7DEOHV  DQG  VKRZ WKH PRGLILHG SHUIRUPDQFHEDVHG VSHFLILFDWLRQV IRU VXOIDWH
UHVLVWDQFH FRQWDLQLQJ WKH FKDQJHV GLVFXVVHG DERYH  ,W VKRXOG EH QRWHG WKHVH WDEOHV PD\ EH
PRGLILHG DJDLQ DIWHU 3KDVH  UHVXOWV DUH ILQDOL]HG EHFDXVH FKDQJHV PD\ EH PDGH ZLWK WKH
ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLR OLPLWV DQG UHFRPPHQGDWLRQV PD\ EH PDGH FRQFHUQLQJ
WKHXVHRIWKH86%50HWKRG%SURFHGXUHVIRUDGGLWLRQDOSHUIRUPDQFHHYDOXDWLRQV

7DEOH±0L['HVLJQ3DUDPHWHUVIRU&RQFUHWH5HVLVWDQWWR6XOIDWH$WWDFN
6HYHULW\RI(QYLURQPHQW &HPHQW7\SH 0D[LPXPZF
0LOG  
 
0RGHUDWH  7\SH,,  

6HYHUH 7\SH9  

9HU\6HYHUH 7\SH9SR]]RODQRUVODJ  
 :KHQ FKORULGH RU RWKHU GHSDVVLYDWLQJ DJHQWV DUH SUHVHQW LQ DGGLWLRQ WR VXOIDWH D ORZHU
ZDWHUFHPHQWUDWLRPD\EHQHFHVVDU\WRUHGXFHFRUURVLRQRIHPEHGGHGLWHPV
 2U XVH D FRPELQDWLRQ RI FHPHQW DQG PLQHUDO DGPL[WXUH WKDW PHHWV RU H[FHHGV WKH
SHUIRUPDQFH RI 7\SH ,, FHPHQW DV WHVWHG E\ $670 &  DQG WKH SHUIRUPDQFH
UHTXLUHPHQWV RI 7DEOH   $OVR 7\SH ,, FHPHQWV ZLWK &$ FRQWHQWV EHWZHHQ  DQG 
SHUFHQW VKRXOG EH H[DPLQHG XVLQJ $670 & DQG VKRZQ WR PHHW WKH SHUIRUPDQFH
UHTXLUHPHQWVRI7DEOH
 2U XVH D FRPELQDWLRQ RI FHPHQW DQG PLQHUDO DGPL[WXUH WKDW PHHWV RU H[FHHGV WKH
SHUIRUPDQFH RI 7\SH 9 FHPHQW DV WHVWHG E\ $670 &  DQG WKH SHUIRUPDQFH
UHTXLUHPHQWV RI 7DEOH   $OVR 7\SH 9 FHPHQWV ZLWK &$ FRQWHQWV EHWZHHQ  DQG 
SHUFHQW VKRXOG EH H[DPLQHG XVLQJ $670 & DQG VKRZQ WR PHHW WKH SHUIRUPDQFH
UHTXLUHPHQWVRI7DEOH
 8VH D SR]]RODQ RU VODJ WKDW KDV EHHQ GHWHUPLQHG YLD $670 & WR LPSURYH VXOIDWH
UHVLVWDQFHZKHQXVHGLQFRQFUHWHFRQWDLQLQJ7\SH9FHPHQW


7DEOH±3HUIRUPDQFH&ULWHULDIRU6XOIDWH5HVLVWDQFHE\$670&
 5HVLVWDQFH/HYHO
3HUIRUPDQFH&ULWHULD 0RGHUDWH 6HYHUH
([SDQVLRQ  


 
 'LVFXVVLRQRI3KDVH7HVW5HVXOWV
 )RU 3KDVH  WHVWLQJ RQO\ LQWHUPHGLDWH UHVXOWV DUH DYDLODEOH EHFDXVH ORQJWHUP
PHDVXUHPHQWVDQGWHVWLQJUHPDLQ7KHIROORZLQJVHFWLRQVGLVFXVVWKHUHVXOWVWKDWKDYHEHHQ
REWDLQHG DQG WKDW ZHUH SUHVHQWHG LQ &KDSWHU   7KH HIIHFWV RI FHPHQW W\SH PLQHUDO
DGPL[WXUHV ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLRV DQG FXULQJ FRQGLWLRQV RQ FRPSUHVVLYH
VWUHQJWK DQG SHUPHDELOLW\ DUH GLVFXVVHG  5HVXOWV DUH FRPSDUHG ZLWK SDVW H[SHULHQFH DQG
LQLWLDO LPSOLFDWLRQV FRQFHUQLQJ WKH SHUIRUPDQFHEDVHG VSHFLILFDWLRQV DUH FRQVLGHUHG  1R
GLVFXVVLRQ LV SURYLGHG FRQFHUQLQJ LQLWLDO H[SDQVLRQV DQG PDVV FKDQJHV RI WKH VXOIDWH
H[SRVXUHVSHFLPHQVEHFDXVHLWLVWRRHDUO\IRUDQ\FRQFOXVLRQVWREHGUDZQ

 (IIHFWVRI0L[3URSHUWLHVDQG&XULQJ&RQGLWLRQVRQ&RPSUHVVLYH6WUHQJWK
 7KH GD\ FRPSUHVVLYH VWUHQJWKV IRU 3KDVH  FRQFUHWHV UDQJHG EHWZHHQ  DQG
03D DQGSVL GHSHQGLQJRQWKHFHPHQWVPLQHUDODGPL[WXUHVDQGZDWHUWR
FHPHQWLWLRXV PDWHULDO UDWLRV WKDW ZHUH XVHG LQ WKH PL[  6WUHQJWKV DOVR GHSHQGHG RQ WKH
FRQGLWLRQV XQGHU ZKLFK VSHFLPHQV ZHUH FXUHG  7KH IROORZLQJ SDUDJUDSKV UHYLHZ WKH
VWUHQJWKVRIWKHSODLQSRUWODQGFHPHQWFRQFUHWHVWKHFRQFUHWHVZLWK&ODVV&IO\DVKDQGWKH
FRQFUHWHV ZLWK &ODVV ) IO\ DVK DV WUHQGV DUH H[DPLQHG FRQFHUQLQJ WKH HIIHFWV RI PL[
SURSHUWLHVDQGFXULQJFRQGLWLRQVRQFRPSUHVVLYHVWUHQJWK
)LJXUHVKRZVWKHGD\PRLVWURRPWHPSHUDWXUHFXUHGFRPSUHVVLYHVWUHQJWKVRI
WKHWHQSODLQSRUWODQGFHPHQWFRQFUHWHVWKDWZHUHWHVWHG)LJXUHVKRZVKRZDFFHOHUDWHG
FXULQJ DIIHFWHG FRPSUHVVLYH VWUHQJWK DV ERWK WKH URRPWHPSHUDWXUH FXUHG DQG DFFHOHUDWHG
FXUHGGD\VWUHQJWKV EDUVZLWKGRWWHGOLQHV DUHSUHVHQWHG)RUWKHSODLQSRUWODQGFHPHQW
FRQFUHWHV FRPSUHVVLYH VWUHQJWKV DOO LQFUHDVHG DV ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLRV
GHFUHDVHG7KHW\SHRIFHPHQWXVHGLQWKHFRQFUHWHVVHHPHGQRWWRKDYHDODUJHLPSDFWRQ
XOWLPDWHVWUHQJWKV7KH7\SH9FHPHQWFRQFUHWHVW\SLFDOO\KDGWKHORZHVWVWUHQJWKVZLWKWKH
H[FHSWLRQRIWKHZDWHUWRFHPHQWUDWLRFRQFUHWHPL[

 


&RPSUHVVLYH6WUHQJWK SVL
7\SH,
 7\SH,,, %
7\SH9








   
:DWHUWR&HPHQW5DWLR

)LJXUH±'D\5RRP7HPSHUDWXUH&XUHG&RPSUHVVLYH6WUHQJWKVIRU3ODLQ3RUWODQG
&HPHQW&RQFUHWHV
&RQYHUVLRQSVL 03D 


7\SH, 5 7\SH, $
7\SH,,, %  5 7\SH,,, %  $
&RPSUHVVLYH6WUHQJWK SVL

 7\SH9 5 7\SH9 $


5  5RRP7HPS '#R)
 $  $FFHOHUDWHG '#R)'#R)








   

:DWHUWR&HPHQW5DWLR


)LJXUH±&RPSDULVRQRI'D\5RRP7HPSHUDWXUHDQG$FFHOHUDWHG&XUHG&RPSUHVVLYH
6WUHQJWKVIRU3ODLQ3RUWODQG&HPHQW&RQFUHWHV
&RQYHUVLRQSVL 03D 


 
7KH DFFHOHUDWHG FXULQJ RI WKH SODLQ SRUWODQG FHPHQW FRQFUHWHV JHQHUDOO\ LQFUHDVHG
VWUHQJWKV VOLJKWO\ EHWZHHQ  DQG  SHUFHQW ZKHQ FRPSDUHG WR WKH URRP WHPSHUDWXUH FXUHG
VSHFLPHQ VWUHQJWKV  :LWK WZR RI WKH 7\SH 9 FHPHQW FRQFUHWHV DFFHOHUDWHG FXUHG GD\
FRPSUHVVLYH VWUHQJWKV ZHUH DFWXDOO\ VOLJKWO\ ORZHU WKDQ URRPWHPSHUDWXUH FXUHG GD\
VWUHQJWKV)RUWKHPRVWSDUWLWFDQEHFRQFOXGHGWKDWDFFHOHUDWHGFXULQJGLGOLWWOHWRLPSURYH
WKHGD\FRPSUHVVLYHVWUHQJWKVRIWKHSODLQSRUWODQGFHPHQWFRQFUHWHV7KLVUHVXOWLVQRW
WRRVXUSULVLQJEHFDXVHSDVWUHVHDUFKKDVVKRZQWKDWSODLQSRUWODQGFHPHQWFRQFUHWHVGHYHORS
PRVWRIWKHLUVWUHQJWKFDSDFLW\ZLWKLQWKHILUVWGD\VRIFXULQJ6WUHQJWKGHYHORSPHQWIRU
SODLQSRUWODQGFHPHQWFRQFUHWHVDIWHUGD\VJHQHUDOO\IODWWHQVRXW7KXVWKHLQFUHDVHGKHDW
DQGWKHSRWHQWLDOLQFUHDVHLQWKHUDWHRIVWUHQJWKGHYHORSPHQWSURYLGHGE\DFFHOHUDWHGFXULQJ
ZLOOQRWQHFHVVDULO\OHDGWRPXFKKLJKHUVWUHQJWKVLQSODLQSRUWODQGFHPHQWFRQFUHWHV
 )LJXUHVKRZVWKHGD\PRLVWURRPWHPSHUDWXUHFXUHGFRPSUHVVLYHVWUHQJWKVRI
WKH VL[ FRQFUHWHV FRQWDLQLQJ &ODVV & IO\ DVK DQG WKH FRUUHVSRQGLQJ SODLQ 7\SH ,,, % 
SRUWODQG FHPHQW FRQWURO FRQFUHWHV  )LJXUH  SURYLGHV D FRPSDULVRQ RI WKHVH VWUHQJWKV
ZLWK WKH VWUHQJWKV REWDLQHG ZKHQ DFFHOHUDWHG FXULQJ SURFHGXUHV ZHUH XVHG  )RU URRP
WHPSHUDWXUH FXULQJ WKH  DQG  ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLR FRQFUHWHV ZLWK
&ODVV & IO\ DVK JHQHUDOO\ KDG FRPSUHVVLYH VWUHQJWKV WKDW ZHUH HLWKHU VOLJKWO\ KLJKHU RU
VOLJKWHU ORZHU WKDQ WKH SODLQ 7\SH ,,, %  FHPHQW FRQFUHWH VWUHQJWKV  :KHQ WKH ORZ 
ZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLRZDVXVHGWKH&ODVV&IO\DVKFRQFUHWHVKDGVLJQLILFDQWO\
KLJKHU FRPSUHVVLYH VWUHQJWKV WKDQ WKH SODLQ FRQFUHWH  :KLOH GLIIHUHQFHV ZHUH W\SLFDOO\
PLQLPDO WKH KLJKHU IO\ DVK FRQWHQW RI  SHUFHQW W\SLFDOO\ UHVXOWHG LQ ODUJHU VWUHQJWKV WKDQ
WKH  SHUFHQW FRQWHQW  ,W FDQ EH FRQFOXGHG WKDW XVLQJ &ODVV & IO\ DVK FHUWDLQO\ GLG QRW
UHGXFH GD\ FRQFUHWH VWUHQJWKV VLJQLILFDQWO\ EHFDXVH LQ VRPH FDVHV WKH IO\ DVK DFWXDOO\
VLJQLILFDQWO\ LPSURYHG FRPSUHVVLYH VWUHQJWKV  7KLV UHVXOW LV VRPHZKDW H[SHFWHG ZLWK KLJK
FDOFLXPIO\DVKHVOLNHWKH&ODVV&IO\DVKXVHGLQ3KDVHWHVWLQJ7KHVHIO\DVKHVKDYHEHHQ
VKRZQ WR \LHOG GD\ FRPSUHVVLYH VWUHQJWKV HTXDO WR RU DERYH SODLQ SRUWODQG FHPHQW
FRQFUHWHVWUHQJWKV 5HI 


 


&RPSUHVVLYH6WUHQJWK SVL
&ODVV&)O\$VK
&ODVV&)O\$VK

&ODVV&)O\$VK








  
:DWHUWR&HPHQWLWLRXV0DWHULDO5DWLR
)LJXUH±'D\5RRP7HPSHUDWXUH&XUHG&RPSUHVVLYH6WUHQJWKVIRU&RQFUHWHV
&RQWDLQLQJ&ODVV&)O\$VK
&RQYHUVLRQSVL 03D 


&ODVV& 5 &ODVV& $
&RPSUHVVLYH6WUHQJWK SVL

&ODVV& 5 &ODVV& $
 &ODVV& 5 &ODVV& $
5  5RRP7HPS '# R)
 $  $FFHOHUDWHG '# R)'# R)








  
:DWHUWR&HPHQWLWLRXV0DWHULDO5DWLR


)LJXUH±&RPSDULVRQRI'D\5RRP7HPSHUDWXUHDQG$FFHOHUDWHG&XUHG
&RPSUHVVLYH6WUHQJWKVIRU&RQFUHWHV&RQWDLQLQJ&ODVV&)O\$VK
&RQYHUVLRQSVL 03D 


 
7KH OHYHO RI VWUHQJWK LQFUHDVHVREWDLQHGIURPDFFHOHUDWHGFXULQJWKH&ODVV&IO\DVK
FRQFUHWHV ZHUH MXVW VOLJKWO\ JUHDWHU WKDQ WKRVH REWDLQHG IRU WKH SODLQ SRUWODQG FHPHQW
FRQFUHWHV  6WUHQJWK LQFUHDVHV UDQJHG IURP EHWZHHQ  DQG  SHUFHQW ZLWK WKH KLJKHVW
SHUFHQW VWUHQJWK LQFUHDVHV RFFXUULQJ LQ WKH FRQFUHWHV FRQWDLQLQJ D  SHUFHQW YROXPHWULF
UHSODFHPHQW RI WKH IO\ DVK  7KH UHVXOWV LQGLFDWH WKDW WKH &ODVV & IO\ DVK OLNH WKH SODLQ
SRUWODQGFHPHQWVREWDLQVPRVWRILWVVWUHQJWKFDSDFLW\ZLWKLQWKHILUVWGD\FXULQJSHULRG
)LJXUHGLVSOD\VWKHGD\URRPWHPSHUDWXUHFXUHGFRPSUHVVLYHVWUHQJWKVRIWKH
FRQFUHWHV FRQWDLQLQJ WKH &ODVV ) IO\ DVK DQG WKH FRUUHVSRQGLQJ SODLQ 7\SH ,,, %  FHPHQW
FRQFUHWHV  7KHVH VWUHQJWKV DUH FRPSDUHG ZLWK WKH GD\ DFFHOHUDWHG FXUHG VWUHQJWKV LQ
)LJXUH   )RU PRLVW URRPWHPSHUDWXUH FXULQJ WKH OHYHO RI VWUHQJWK REWDLQHG LQ WKH
FRQFUHWHV FRQWDLQLQJ WKH &ODVV ) IO\ DVK GHSHQGHG RQ WKH IO\ DVK FRQWHQW  &RPSUHVVLYH
VWUHQJWKVGHFUHDVHGDVWKHIO\DVKFRQWHQWLQFUHDVHG7KHFRQFUHWHVFRQWDLQLQJDSHUFHQW
YROXPHWULF UHSODFHPHQW RI &ODVV ) IO\ DVK KDG ORZHU VWUHQJWKV WKDQ WKH SODLQ FHPHQW
FRQFUHWHV ZLWK WKH VDPH ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLRV  &RQFUHWHV FRQWDLQLQJ D 
SHUFHQW &ODVV ) IO\ DVK UHSODFHPHQW KDG VWUHQJWKV WKDW ZHUH DSSUR[LPDWHO\ HTXDO WR WKH
VWUHQJWKVRIWKHFRQFUHWHVZLWKSHUFHQW&ODVV&IO\DVK7KHVHSHUFHQW&ODVV)IO\DVK
UHSODFHPHQW FRQFUHWH VWUHQJWKV ZHUH VOLJKWO\ EHORZ WKH SODLQ SRUWODQG FHPHQW FRQFUHWHV¶
VWUHQJWKV ZKHQ ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLRV RI  DQG  ZHUH XVHG ZKLOH WKH
VWUHQJWKZDV03D SVL VWURQJHUZKHQDUDWLRZDVXVHG:KLOHSDVWH[SHULHQFH
KDV VKRZQ WKDW WKH XVH RI &ODVV ) IO\ DVKHV W\SLFDOO\ \LHOGV GURSV LQ GD\ FRPSUHVVLYH
VWUHQJWKVLWLVQRWVXUSULVLQJWKDWWKLV3KDVH&ODVV)IO\DVKSURGXFHGVRPHVWUHQJWKVWKDW
ZHUH FRPSDUDEOH LI QRW KLJKHU WKDQ SODLQ FHPHQW FRQFUHWH VWUHQJWKV  7KH IO\ DVK KDV D
FDOFLXP R[LGH &D2  FRQWHQW RI  WKDW LV IDLUO\ KLJK IRU D &ODVV ) IO\ DVK  7KH KLJK
FDOFLXPOHYHOLPSURYHVWKHDELOLW\RIWKHIO\DVKWRGHYHORSVWUHQJWKLQFRQFUHWH+RZHYHU
UHVXOWVGRVKRZWKDWWKHVWUHQJWKGHYHORSPHQWGRHVGHFUHDVHDVPRUHFHPHQWLVUHSODFHGZLWK
WKH&ODVV)IO\DVK


 


&RPSUHVVLYH6WUHQJWK SVL
&ODVV))O\$VK
&ODVV))O\$VK

&ODVV))O\$VK








  
:DWHUWR&HPHQWLWLRXV0DWHULDO5DWLR

)LJXUH±'D\5RRP7HPSHUDWXUH&XUHG&RPSUHVVLYH6WUHQJWKVIRU&RQFUHWHV
&RQWDLQLQJ&ODVV))O\$VK
&RQYHUVLRQSVL 03D 


&ODVV) 5 &ODVV) $
&RPSUHVVLYH6WUHQJWK SVL

&ODVV) 5 &ODVV) $
 &ODVV) 5 &ODVV) $
5  5RRP7HPS '# R)
 $  $FFHOHUDWHG '# R)'# R)








  
:DWHUWR&HPHQWLWLRXV0DWHULDO5DWLR


)LJXUH±&RPSDULVRQRI'D\5RRP7HPSHUDWXUHDQG$FFHOHUDWHG&XUHG
&RPSUHVVLYH6WUHQJWKVIRU&RQFUHWHV&RQWDLQLQJ&ODVV))O\$VK
&RQYHUVLRQSVL 03D 

 
7KHOHYHOVRIVWUHQJWKLQFUHDVHZHUHWKHKLJKHVWRIDOOLQWKH3KDVHFRQFUHWHVZKHQ
DFFHOHUDWHG FXULQJ ZDV XVHG ZLWK FRQFUHWHV FRQWDLQLQJ &ODVV ) IO\ DVK  6WUHQJWK LQFUHDVHV
UDQJHG IURP  WR  SHUFHQW DV DFFHOHUDWHG FXULQJ \LHOGHG VWUHQJWKV DV KLJK DV  03D
 SVL  JUHDWHU WKDQ URRPWHPSHUDWXUH FXUHG VWUHQJWKV  7KHVH UHVXOWV LQGLFDWH WKDW WKH
3KDVH&ODVV)IO\DVKWDNHVPRUHWLPHWKDQWKH3KDVH&ODVV&IO\DVKDQGWKHFHPHQWVWR
GHYHORS LWV IXOO VWUHQJWK FDSDFLW\  6RPH UHVXOWV VKRZHG WKDW ZKHQ HQRXJK KHDW RU WLPH LV
SURYLGHGWKH&ODVV)IO\DVKFDQKHOSWRSURYLGHVRPHVLJQLILFDQWFRQFUHWHVWUHQJWKLQFUHDVHV

 (IIHFWVRI0L[3URSHUWLHVDQG&XULQJ&RQGLWLRQVRQ3HUPHDELOLW\
 2QH PDMRU JRDO RI 3KDVH  WHVWLQJ ZDV WR GHPRQVWUDWH WKH VHYHUDO IDFWRUV WKDW
LQIOXHQFHWKHSHUPHDELOLW\RIFRQFUHWH7KHIROORZLQJSDUDJUDSKVGLVFXVVWKHHIIHFWRIZDWHU
WRFHPHQWLWLRXV PDWHULDO UDWLR FHPHQW W\SH PLQHUDO DGPL[WXUHV DQG FXULQJ FRQGLWLRQV RQ
FRQFUHWHSHUPHDELOLW\DV3KDVHGD\SHUPHDELOLW\UHVXOWVDUHGLVFXVVHG$JRRGZD\WR
TXDOLWDWLYHO\ DQDO\]H WKH FRXORPE YDOXHV REWDLQHG LQ 3KDVH  WHVWLQJ LV WR XVH WKH WHUPV
HVWDEOLVKHG E\ :KLWLQJ IRU LQWHUSUHWLQJ UHVXOWV REWDLQHG IURP WKH $670 & WHVW
$FFRUGLQJ WR :KLWLQJ¶V UHVHDUFK FRXORPE YDOXHV RI  RUKLJKHULQGLFDWHKLJKFRQFUHWH
FKORULGH SHQHWUDELOLW\ YDOXHV EHWZHHQ  DQG  LQGLFDWH PRGHUDWH SHQHWUDELOLW\
YDOXHV EHWZHHQ  DQG  LQGLFDWH ORZ SHQHWUDELOLW\ DQG YDOXHV EHWZHHQ  DQG
LQGLFDWHYHU\ORZSHQHWUDELOLW\
 )RU WKH PRLVW URRPWHPSHUDWXUH FXUHG SODLQ SRUWODQG FHPHQW FRQFUHWHV GD\
FRXORPEYDOXHVUDQJHGEHWZHHQDQGDVSHUPHDELOLW\GHFUHDVHGZLWKGHFUHDVLQJ
ZDWHUWRFHPHQW UDWLRV  7KH UHVXOWV IRU WKHVH FRQFUHWHV DUH GLVSOD\HG LQ )LJXUH   $V
H[SHFWHG WKH  ZDWHUWRFHPHQW UDWLR PL[HV KDG ORZ WR PRGHUDWH SHQHWUDELOLW\ WKH 
ZDWHUWRFHPHQW UDWLR PL[HV KDG PRGHUDWH WR KLJK SHQHWUDELOLW\ DQG WKH  ZDWHUWR
FHPHQW UDWLR PL[HV KDG KLJK SHQHWUDELOLW\  :KLOH WKH SHUPHDELOLW\ UHVXOWV GLVSOD\ WKH FOHDU
LPSDFW RI WKH ZDWHUWRFHPHQW UDWLR RQ SHUPHDELOLW\ QR WUHQGV FDQ EH REVHUYHG FRQFHUQLQJ
WKHHIIHFWVRIFHPHQWW\SHRQSHUPHDELOLW\,QIDFWLWVDSSHDUVEDVHGRQ3KDVHUHVXOWVWKDW
FHPHQWW\SHKDVOLWWOHWRQRLPSDFWRQFRQFUHWHSHUPHDELOLW\


 

7\SH,
7\SH,,, %
3HUPHDELOLW\ &RXORPEV


7\SH9






   
:DWHUWR&HPHQW5DWLR

)LJXUH±'D\5RRP7HPSHUDWXUH&XUHG&KORULGH,RQ3HUPHDELOLWLHVIRU3ODLQ
3RUWODQG&HPHQW&RQFUHWHV

 )LJXUH  FRPSDUHV WKH GD\ SHUPHDELOLWLHV RI WKH DFFHOHUDWHG FXUHG SODLQ
SRUWODQG FHPHQW FRQFUHWHV ZLWK WKH URRPWHPSHUDWXUH FXUHG UHVXOWV  5HGXFWLRQV LQ
SHUPHDELOLW\RZLQJWRDFFHOHUDWHGFXULQJUDQJHGIURPWRSHUFHQW+DYLQJWKHSHUFHQW
UHGXFWLRQVLQSHUPHDELOLW\RZLQJWRDFFHOHUDWHGFXULQJEHKLJKHUWKDQWKHSHUFHQWLQFUHDVHVLQ
FRPSUHVVLYHVWUHQJWKLQGLFDWHVLWPD\WDNHPRUHKHDWRUVLPXODWHGWLPHIRUDSODLQSRUWODQG
FHPHQWFRQFUHWHWRGHYHORSLWVORZHVWSHUPHDELOLW\WKDQLWGRHVIRULWWRGHYHORSLWVXOWLPDWH
FRPSUHVVLYHVWUHQJWK7KLVWUHQGKDVEHHQREVHUYHGLQWKHFRQFUHWHLQGXVWU\IRUDORQJWLPH
5HVHDUFK KDV VKRZQ LW WDNHV IURP  GD\V WR  \HDU RI URRPWHPSHUDWXUH FXULQJ IRU D
FRQFUHWHWRUHDFKLWVXOWLPDWHOHYHORISHUPHDELOLW\2QO\DSSUR[LPDWHO\GD\VDUHQHHGHG
IRUIXOOFRPSUHVVLYHVWUHQJWKGHYHORSPHQW

 

7\SH, 5 7\SH, $
7\SH,,, %  5 7\SH,,, %  $
3HUPHDELOLW\ &RXORPEV
7\SH9 5 7\SH9 $

5  5RRP7HPS '#R)
$  $FFHOHUDWHG '#R)'#R)






   

:DWHUWR&HPHQW5DWLR

)LJXUH±&RPSDULVRQRI'D\5RRP7HPSHUDWXUHDQG$FFHOHUDWHG&XUHG&KORULGH
,RQ3HUPHDELOLWLHVIRU3ODLQ3RUWODQG&HPHQW&RQFUHWHV

)RUWKHFRQFUHWHVFRQWDLQLQJ&ODVV&IO\DVKGD\URRPWHPSHUDWXUHFXUHGFKORULGH
LRQ SHUPHDELOLWLHV ZHUH DOZD\V ORZHU WKDQ WKH SHUPHDELOLW\ YDOXHV IRU WKH FRUUHVSRQGLQJ
SODLQ 7\SH ,,, %  FHPHQW FRQFUHWHV  )LJXUH  VKRZV WKH URRPWHPSHUDWXUH FXUHG
SHUPHDELOLWLHVRIWKH&ODVV&IO\DVKFRQFUHWHVDQGWKHSODLQ7\SH,,, % FHPHQWFRQFUHWHV
7KH  DQG  ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLR FRQFUHWHV ZLWK &ODVV & IO\ DVK KDG
VLJQLILFDQWO\ ORZHU SHUPHDELOLWLHV WKDQ WKH SODLQ 7\SH ,,, %  FHPHQW FRQFUHWHV ZLWK WKH
VDPH UDWLRV ZKLOH WKH FRQFUHWHV ZLWK WKH  ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLR KDG RQO\
VOLJKWO\ ORZHU URRPWHPSHUDWXUH FXUHG SHUPHDELOLWLHV  ,QFUHDVHV LQ IO\ DVK FRQWHQW VKRZHG
QR VLJQLILFDQW DIIHFW RQ SHUPHDELOLW\ ZKHQ WKH 3KDVH  &ODVV & IO\ DVK ZDV XVHG  7KHVH
3KDVH  UHVXOWV FRUUHODWH ZHOO ZLWK SDVW UHVHDUFK EHFDXVH SDVW H[SHULHQFH KDV VXSSRUWHG WKH
IDFWWKDWIO\DVKUHGXFHVSHUPHDELOLW\5HVHDUFKHUVKDYHLQGLFDWHGWKDWSR]]RODQLFUHDFWLRQV
LQGXFHG E\ WKH PLQHUDO DGPL[WXUHV WUDQVIRUP ODUJH SRUHV ZLWKLQ FHPHQWLWLRXV V\VWHPV LQWR
ILQHSRUHV 5HI 


 


&ODVV&)O\$VK
3HUPHDELOLW\ &RXORPEV

&ODVV&)O\$VK

&ODVV&)O\$VK






  
:DWHUWR&HPHQWLWLRXV0DWHULDO5DWLR

)LJXUH±'D\5RRP7HPSHUDWXUH&XUHG&KORULGH,RQ3HUPHDELOLWLHVIRU&RQFUHWHV
&RQWDLQLQJ&ODVV&)O\$VK

 3DVW UHVHDUFK KDV DOVR VKRZQ WKDW FRQFUHWHV FRQWDLQLQJ FHPHQWPLQHUDO DGPL[WXUH
FRPELQDWLRQV UHTXLUH ORQJHU FXULQJ WLPHV WKDQ GR SODLQ FHPHQW FRQFUHWHV WR IXOO\ GHYHORS
WKHLU FHPHQWLWLRXV V\VWHPV DQG WKXV WKHLU ORZHVW SHUPHDELOLW\  5HVHDUFK E\ 7LNDOVN\ DQG
&DUUDVTXLOOR 5HI   VKRZHG WKDW DIWHU  GD\V RI PRLVW FXULQJ FRQFUHWHV ZLWK IO\ DVK KDG
FRPSDUDEOH RU KLJKHU SHUPHDELOLWLHV WKDQ HTXLYDOHQW SODLQ SRUWODQG FHPHQW FRQFUHWHV
+RZHYHUDIWHUDQGGD\VRIPRLVWFXULQJWKHSHUPHDELOLWLHVRIWKHFRQFUHWHVZLWKIO\
DVK GURSSHG VLJQLILFDQWO\ DQG GURSSHG ZHOO EHORZ WKH SHUPHDELOLW\ RI WKH FRQWURO SODLQ
SRUWODQGFHPHQWFRQFUHWH 5HI 3KDVHUHVXOWVVKRZHGWKLVVDPHW\SHRISDWWHUQDVDOOWKH
DFFHOHUDWHGFXUHG&ODVV&IO\DVKFRQFUHWHVSHFLPHQVKDGSHUPHDELOLWLHVWKDWZHUHDWOHDVW
SHUFHQW ORZHU WKDQ WKHLU URRPWHPSHUDWXUH FXUHG SHUPHDELOLWLHV DQG ZHUH PXFK ORZHU WKDQ
WKHSODLQSRUWODQGFHPHQWFRQFUHWHDFFHOHUDWHGFXUHGSHUPHDELOLWLHV$FFHOHUDWHGDQGURRP
WHPSHUDWXUH FXUHG SHUPHDELOLWLHV IRU WKH &ODVV & IO\ DVK DQG SODLQ 7\SH ,,, %  FHPHQW
FRQFUHWHV DUH FRPSDUHG LQ )LJXUH   $VVXPLQJ DFFHOHUDWHG FXULQJ VLPXODWHV ORQJWHUP
FXULQJ WKHVH UHVXOWV GHPRQVWUDWH WKDW LW WDNHV WLPH IRU WKH EHQHILWV RI IO\ DVK WR WUXO\ VKRZ
EHFDXVHIO\DVKHVKDYHEHHQVKRZQWRVLJQLILFDQWO\UHGXFHFRQFUHWHSHUPHDELOLWLHVZLWKWLPH
.QRZLQJ WKLV SURSHUW\ WKH 9LUJLQLD 'HSDUWPHQW RI 7UDQVSRUWDWLRQ 9'27  SURSRVHG

 
VSHFLI\LQJ DFFHOHUDWHG FXULQJ IRU WKH SUHSDUDWLRQ RI FRQFUHWH VSHFLPHQV IRU UDSLG
SHUPHDELOLW\WHVWLQJIRUORZSHUPHDELOLW\VSHFLILFDWLRQVIRUWUDQVSRUWDWLRQIDFLOLWLHV 5HI 
9'27 XQGHUVWRRG WKDW WKH VLPXODWHG ORQJWHUP FXULQJ SURYLGHG E\ DFFHOHUDWHG FXULQJ LV
QHHGHGWRGLVSOD\WKHIXOOEHQHILWVRIPLQHUDODGPL[WXUHVVXFKDVIO\DVKWKDWPD\EHXVHIXO
IRUDSSOLFDWLRQLQDIDFLOLW\H[SRVHGWRFKHPLFDODWWDFN


&ODVV& 5 &ODVV& $

3HUPHDELOLW\ &RXORPEV

&ODVV& 5 &ODVV& $
 &ODVV& 5 &ODVV& $
5  5RRP7HPS '#R)
 $  $FFHOHUDWHG '#R)'#R)










  

:DWHUWR&HPHQWLWLRXV0DWHULDO5DWLR

)LJXUH±&RPSDULVRQRI'D\5RRP7HPSHUDWXUHDQG$FFHOHUDWHG&XUHG&KORULGH
,RQ3HUPHDELOLWLHVIRU&RQFUHWHV&RQWDLQLQJ&ODVV&)O\$VK

 7KHEHQHILWVRIIO\DVKFRQFHUQLQJSHUPHDELOLW\ZKHUHVKRZQHYHQPRUHVRLQ3KDVH
WHVWLQJZKHQWKH&ODVV)IO\DVKZDVXVHG)LJXUHVKRZVWKHGD\URRPWHPSHUDWXUH
FXUHGSHUPHDELOLWLHVRIWKHFRQFUHWHVFRQWDLQLQJ&ODVV)IO\DVKDQGWKHFRUUHVSRQGLQJSODLQ
7\SH,,, % FHPHQWFRQFUHWHV3HUPHDELOLWLHVRIWKHFRQFUHWHVZLWKWKH&ODVV)IO\DVKZHUH
DV PXFK DV  FRXORPEV ORZHU WKDQ WKH FRQFUHWH ZLWKRXW IO\ DVK DV WKH UHGXFWLRQV
LQFUHDVHG ZLWK LQFUHDVLQJ IO\ DVK FRQWHQW  7LNDOVN\ DQG &DUUDVTXLOOR DOVR IRXQG WKDW WKH
&ODVV)IO\DVKWKH\WHVWHGSURGXFHGORZHUSHUPHDELOLWLHVWKDQWKH&ODVV&IO\DVK,WDSSHDUV
ORZ FDOFLXP IO\ DVKHV PD\ \LHOG WKHJUHDWHVWEHQHILWVDVIDUDVSHUPHDELOLW\UHGXFWLRQ 5HI
 

 

&ODVV))O\$VK
&ODVV))O\$VK
3HUPHDELOLW\ &RXORPEV

&ODVV))O\$VK






  
:DWHUWR&HPHQWLWLRXV0DWHULDO5DWLR


)LJXUH±'D\5RRP7HPSHUDWXUH&XUHG&KORULGH,RQ3HUPHDELOLWLHVIRU&RQFUHWH
&RQWDLQLQJ&ODVV))O\$VK

$FFHOHUDWHGFXULQJRIWKHFRQFUHWHVZLWK&ODVV)IO\DVK\LHOGHGH[WUHPHO\KLJKDQG
FRQVLVWHQW UHGXFWLRQV LQ GD\ SHUPHDELOLWLHV DV FRPSDUHG WR WKH URRPWHPSHUDWXUH FXUHG
UHVXOWV3HUPHDELOLWLHVZHUHUHGXFHGEHWZHHQDQGSHUFHQWDVPRVWGD\DFFHOHUDWHG
FXUHG SHUPHDELOLWLHV ZHUH OHVV WKDQ  FRXORPEV ZLWK WKH KLJKHVW YDOXH EHLQJ 
FRXORPEV  )LJXUH  FRPSDUHV GD\ URRP WHPSHUDWXUH DQG DFFHOHUDWHG FXUHG
SHUPHDELOLWLHVIRUWKH&ODVV)IO\DVKFRQFUHWHVDQGWKHSODLQ7\SH,,, % FHPHQWFRQFUHWHV
7KHVHUHVXOWVDJDLQVKRZWKDWFRQFUHWHVZLWKWKH3KDVH&ODVV)IO\DVKWRRNWKHORQJHVWWR
GHYHORS WKHLU SRUH VWUXFWXUHV DQG FHPHQWLWLRXV V\VWHPV DQG VLPXODWHG ORQJWHUP FXULQJ
UHVXOWHGLQWKHODUJHVWSHUFHQWVWUHQJWKLQFUHDVHVDQGSHUFHQWSHUPHDELOLW\UHGXFWLRQV


 

&ODVV) 5 &ODVV) $
&ODVV) 5 &ODVV) $
3HUPHDELOLW\ &RXORPEV

&ODVV) 5 &ODVV) $

5  5RRP7HPS '#R)
$  $FFHOHUDWHG '#R)'#R)






  
:DWHUWR&HPHQWLWLRXV0DWHULDO5DWLR

)LJXUH±&RPSDULVRQRI'D\5RRP7HPSHUDWXUHDQG$FFHOHUDWHG&XUHG&KORULGH
,RQ3HUPHDELOLWLHVIRU&RQFUHWHV&RQWDLQLQJ&ODVV))O\$VK

 ,PSOLFDWLRQVRI5HVXOWV&RQFHUQLQJ6SHFLILFDWLRQV
 :KLOHQRILQDOFRQFOXVLRQVFDQEHGUDZQFRQFHUQLQJWKHLPSDFWRI3KDVHWHVWLQJRQ
WKHVSHFLILFDWLRQVIRUVXOIDWHUHVLVWDQWFRQFUHWHVXQWLOORQJWHUP3KDVHVXOIDWHH[SRVXUHWHVW
UHVXOWV DUH REWDLQHG VRPH WUHQGV LPSDFWLQJ WKH SHUIRUPDQFHEDVHG VSHFLILFDWLRQV FDQ EH
REVHUYHGIURPUHVXOWVREWDLQHGWRGDWH6SHFLILFDOO\3KDVHUHVXOWVUHYHDOSUREOHPVZLWKWKH
ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLR OLPLWV WKDW DUH FXUUHQWO\ VSHFLILHG IRU VXOIDWH UHVLVWDQW
FRQFUHWHPL[GHVLJQVLQFXUUHQW$&,DQG8%&JXLGHOLQHVDQGLQWKHSURSRVHGVSHFLILFDWLRQV
GHYHORSHGHDUOLHULQWKLVSURMHFW
:KLOHWKHUHLVOLWWOHUHVHDUFKVKRZLQJKRZWKHFXUUHQWVXOIDWHUHVLVWDQFHVSHFLILFDWLRQ
ZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLROLPLWVZHUHGHULYHGLWFDQJHQHUDOO\EHVDLGWKHUDWLRVDUH
VSHFLILHGWRHQVXUHWKDWJRRGTXDOLW\FRQFUHWHLVXVHGLQVXOIDWHHQYLURQPHQWV*RRGTXDOLW\
FRQFUHWH FDQ EH GHILQHG DV FRQFUHWH KDYLQJ DFFHSWDEOH FRPSUHVVLYH VWUHQJWK DQG PRUH
LPSRUWDQWO\ ORZ WR PRGHUDWH SHUPHDELOLW\  7KH SUREOHP ZLWK WKH ZDWHUWRFHPHQWLWLRXV
PDWHULDOUDWLRVSHFLILFDWLRQLVWKDWLWDVVXPHVWKDWWKHZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLRLV
WKHRQO\FRQFUHWHSURSHUW\WKDWDIIHFWVSHUPHDELOLW\3KDVHUHVXOWVKDYHGHPRQVWUDWHGWKDW

 
WKLV LV QRW WKH FDVH  :KLOH WKH ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLRV RI 3KDVH  FRQFUHWHV
VLJQLILFDQWO\ LPSDFWHG WKH FRQFUHWH SHUPHDELOLW\ UHVXOWV VKRZHG WKDW PLQHUDO DGPL[WXUHV
VXFKDVIO\DVKDQGWKHFXULQJFRQGLWLRQVKDYHHTXDOO\LPSRUWDQWHIIHFWV7KHVHHIIHFWVFDQ
EHREVHUYHGE\ORRNLQJDWWKHFRQFUHWHVKDYLQJDZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLRRI
LQ )LJXUH  :KLOHHDFKFRQFUHWHKDGWKHVDPHZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLRWKH
FRQFUHWHV FRQWDLQHG GLIIHUHQW OHYHOV RI &ODVV ) IO\ DVK DQG ZHUH FXUHG XQGHU GLIIHUHQW
FRQGLWLRQV  7KH UHVXOWV VKRZ VL[ GLIIHUHQW SHUPHDELOLWLHV WKDW UDQJHG IURP D KLJK YDOXH RI
FRXORPEVWRDYHU\ORZYDOXHRIFRXORPEV7KHDGGLWLRQRIIO\DVKVLJQLILFDQWO\
ORZHUHGSHUPHDELOLWLHVDVGLGFXULQJWKHVSHFLPHQVXQGHUKLJKHUKHDWFRQGLWLRQV
3KDVH  UHVXOWV LQGLFDWH WKDW VSHFLI\LQJ D PD[LPXP ZDWHUWRFHPHQWLWLRXV PDWHULDO
UDWLR LQ VXOIDWH UHVLVWDQFH VSHFLILFDWLRQV RU LQ DQ\ VSHFLILFDWLRQV IRU WKDW PDWWHU KLQGHUV
HQJLQHHUV DQG OLPLWV WKHLU RSWLRQV IRU DFKLHYLQJ JRRG TXDOLW\ FRQFUHWH  7KH VSHFLILFDWLRQ
GRHV QRW DOORZ HQJLQHHUV WR WDNH DGYDQWDJH RI VXFKQHZWHFKQRORJLHVDVPDWFKWHPSHUDWXUH
FXULQJ DQG IO\ DVK VODJ DQG VLOLFD IXPH PLQHUDO DGPL[WXUHV  3KDVH  UHVXOWV SURYHG WKDW
JRRGTXDOLW\FDQEHDFKLHYHGLQDKLJKZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLRFRQFUHWHZLWKWKH
XVH RI WKH SURSHU DPRXQW RI PLQHUDO DGPL[WXUHV DQGRU LPSURYHG FXULQJ SURFHGXUHV  $V
H[SODLQHG LQ WKH LQWURGXFWLRQ RI WKLV UHSRUW RQH PDMRU JRDO LQ WKH GHYHORSPHQW RI
SHUIRUPDQFHEDVHG VSHFLILFDWLRQV LV WR SURYLGH HQJLQHHUV ZLWK WKH IUHHGRP WR XWLOL]H DQ\
DYDLODEOH WHFKQRORJ\ WR SURGXFH D FRQFUHWH WKDW PHHWV GXUDELOLW\ QHHGV IRU D JLYHQ MRE
FRQGLWLRQ  7KH HQJLQHHU KDV RQO\ WR VKRZ WKURXJK WHVWLQJ WKDW KLV RU KHU FRQFUHWH KDV WKH
SURSHUWLHVQHFHVVDU\IRUDGHTXDWHSHUIRUPDQFH&XUUHQWZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLR
OLPLWVGRQRWSURYLGHHQJLQHHUVWKLVIUHHGRP
2QH DSSURDFK WR FKDQJLQJ WKH ZD\ WKH SURSRVHG SHUIRUPDQFHEDVHG VSHFLILFDWLRQV
GHILQHJRRGTXDOLW\FRQFUHWHDQGWKXVDFFHSWDEOHFRPSUHVVLYHVWUHQJWKVDQGSHUPHDELOLW\LQ
VXOIDWHHQYLURQPHQWVLVWRPDNHWKHIROORZLQJPRGLILFDWLRQV

 &KDQJH ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLR OLPLWV WR VRPH IRUP RI PD[LPXP
DOORZDEOHGD\FRXORPEYDOXHVDVWHVWHGE\$670&

 
 $GG PLQLPXP FRPSUHVVLYH VWUHQJWK UHTXLUHPHQWV VLPLODU WR WKRVH VSHFLILHG LQ
$&,DQGWKH8%&


)RU SHUPHDELOLW\ VSHFLILFDWLRQV LW ZRXOG EH HIIHFWLYH WR UHTXLUH WHVW VSHFLPHQV EH
SUHSDUHGIROORZLQJWKHDFFHOHUDWHGFXULQJSURFHGXUHVRIPRLVWFXULQJGD\VDW R&  R) 
DQGWKHQPRLVWFXULQJGD\VDW R&  R) 3KDVHUHVXOWVVKRZWKLVFXULQJSURFHGXUH
DOORZV HQJLQHHUV WR GHPRQVWUDWH WKH ORQJWHUP EHQHILWV RI PLQHUDO DGPL[WXUHV LQ D VKRUW
SHULRG RI WLPH  $V IDU DV WKH FRXORPE YDOXH TXDQWLWLHV WKDW VKRXOG EH VSHFLILHG LW LV QRW
SRVVLEOH WR FRPH XS ZLWK YDOXHV EDVHG RQ WKH OLPLWHG DPRXQW RI GDWD FROOHFWHG LQ 3KDVH 
WHVWLQJ,GHDVIRUYDOXHVFDQEHREWDLQHGIURPWKHUHVXOWVIRUWKHSODLQ7\SH,,, % FHPHQW
FRQFUHWH ZLWK D ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLR RI  DQG WKH SODLQ 7\SH 9 FHPHQW
FRQFUHWH ZLWK D ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLR RI  WHVWHG LQ 3KDVH   7KHVH
FRQFUHWHV FRUUHVSRQG GLUHFWO\ ZLWK WKH XSSHU OLPLW FRQFUHWH W\SHV VSHFLILHG LQ FXUUHQW
JXLGHOLQHV IRU PRGHUDWH DQG VHYHUH VXOIDWH HQYLURQPHQWV UHVSHFWLYHO\  7KH 7\SH ,,, % 
FHPHQW FRQFUHWH KDG D GD\ DFFHOHUDWHG FXUHG SHUPHDELOLW\ RI  FRXORPEV ZKLOH WKH
7\SH 9 FHPHQW FRQFUHWH KDG D GD\ DFFHOHUDWHG FXUHG SHUPHDELOLW\ RI  FRXORPEV
6LPSO\EDVHGRQWKHVHUHVXOWVLWFRXOGEHVDLGWKDWFRQFUHWHVPXVWKDYHDGD\DFFHOHUDWHG
FXUHG SHUPHDELOLW\ RIFRXORPEVRUOHVVWREHXVHGLQDPRGHUDWHVXOIDWHHQYLURQPHQW
DQG D SHUPHDELOLW\ RI  FRXORPEV RU OHVV WR EH XVHG LQ D VHYHUH VXOIDWH HQYLURQPHQW
$QRWKHURSWLRQLVWRDOORZHQJLQHHUVWRWHVWWKHLUKLJKHUZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLR
PL[GHVLJQDJDLQVWWKHHTXLYDOHQWSODLQSRUWODQGFHPHQWZDWHUWRFHPHQWLWLRXVPDWHULDO
UDWLRFRQFUHWHIRUPRGHUDWHVXOIDWHHQYLURQPHQWVRUWKHSODLQSRUWODQGFHPHQWZDWHUWR
FHPHQWLWLRXV PDWHULDO UDWLR FRQFUHWH IRU VHYHUH VXOIDWH HQYLURQPHQWV  ,I WKH HQJLQHHU¶V
SURSRVHG FRQFUHWH SHUPHDELOLW\ YDOXH LV ORZHU WKDQ WKH FRQWURO FRQFUHWH YDOXH ZKHQ WKH
DFFHOHUDWHGFXULQJSURFHGXUHVDQG$670&DUHXVHGWKHHQJLQHHU¶VPL[GHVLJQKDVPHW
VSHFLILFDWLRQV
7ZR PRUH VWHSV DUH QHHGHG WR SURYH WKHVH PD[LPXP DOORZDEOH FRXORPE YDOXH
VSHFLILFDWLRQV DUH HIIHFWLYH DQG QHFHVVDU\  )LUVW UHVXOWV PXVW GHPRQVWUDWH WKDW FRQFUHWH
SHUPHDELOLWLHVDIIHFWFRQFUHWHVXOIDWHUHVLVWDQFHPRUHWKDQGRZDWHUWRFHPHQWLWLRXVPDWHULDO

 
UDWLRV  2QFH ORQJWHUP 3KDVH  VXOIDWH H[SRVXUH WHVW UHVXOWV DUH REWDLQHG GD\ VXOIDWH
H[SDQVLRQV DQG PDVV FKDQJHV FDQ EH FRPSDUHG WR WKH SHUPHDELOLW\ DQG WKH ZDWHUWR
FHPHQWLWLRXV PDWHULDO UDWLRV RI WKH FRQFUHWHV  7KH UHVXOWV FDQ EH XVHG WR GHWHUPLQH ZKLFK
SURSHUW\PRVWGLUHFWO\LPSDFWVVXOIDWHUHVLVWDQFH,IUHVXOWVDUHDVH[SHFWHGDQGLWLVLQGHHG
WUXH WKDW WKH PD[LPXP ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLRV DUH VLPSO\ VSHFLILHG WR HQVXUH
GHVLUDEOHFRQFUHWHSHUPHDELOLW\WKHVSHFLILFDWLRQFKDQJHVSURSRVHGLQWKLVVHFWLRQVKRXOGEH
LPSOHPHQWHG,QFOXGLQJWKHVHFKDQJHVZLOOWKHQHQVXUHWKDWWKHPDWHULDOSURSHUWLHVWKDWPRVW
GLUHFWO\LPSDFWWKHUHVLVWDQFHRIFRQFUHWHWRVXOIDWHDWWDFNDUHWKHRQHVDGGUHVVHGLQWKHQHZ
SHUIRUPDQFHEDVHGVSHFLILFDWLRQV
7KHILQDOVWHSLQHYDOXDWLQJSHUPHDELOLW\VSHFLILFDWLRQVLQYROYHVHVWDEOLVKLQJWKHOHYHO
RI LPSDFW RI SHUPHDELOLW\ RQ VXOIDWH UHVLVWDQFH DQG FRPSDULQJ WKLV LPSDFW WR WKH LPSDFW RI
FHPHQWLWLRXV PDWHULDO FKHPLVWU\  6RPH SDVW UHVHDUFK KDV GHPRQVWUDWHG WKDW RYHU D ORQJ
SHULRG RI WLPH ORZ SHUPHDELOLW\ FDQQRW SUHYHQW VXOIDWH DWWDFN LI WKH FHPHQWLWLRXV PDWHULDO
FKHPLVWU\ RI WKH FRQFUHWH LV YXOQHUDEOH 5HIV     7KLV SUREOHP GRHV QRW LPSDFW
VSHFLILFDWLRQVWRRPXFKEHFDXVHQRSRUWLRQRIWKHFXUUHQWVSHFLILFDWLRQVDOORZVHQJLQHHUVWR
RYHUFRPHSRRUFHPHQWLWLRXVFKHPLVWU\ZLWKH[WUHPHO\ORZSHUPHDELOLW\$PRUHLQWHUHVWLQJ
TXHVWLRQ WKDW 3KDVH  UHVXOWV PD\ DQVZHU LV ZKHWKHU KLJK SHUPHDELOLW\ QHFHVVDULO\ KXUWV
FRQFUHWHV ZLWK VHYHUH VXOIDWH UHVLVWDQW FHPHQWLWLRXV PDWHULDO FKHPLVWU\  3HUKDSV D FRQFUHWH
ZLWK 7\SH 9 FHPHQW ZLOO EH UHVLVWDQW WR VXOIDWH DWWDFN QR PDWWHU ZKDW LWV OHYHO RI
SHUPHDELOLW\  ,I WKLV LV WUXH PD[LPXP FRXORPE YDOXH OLPLWV IRU VHYHUH VXOIDWH UHVLVWDQW
HQYLURQPHQWVPD\QRWQHHGWREHWRRVWULQJHQWRUPD\QRWEHQHFHVVDU\DWDOO7KHVHLVVXHV
ZLOOEHDGGUHVVHGLQIXWXUHUHSRUWVZKHQDOO3KDVHUHVXOWVKDYHEHHQREWDLQHG



 
&KDSWHU6L[&RQFOXVLRQVDQG5HFRPPHQGDWLRQV

 ,QWURGXFWLRQ
7KLV UHVHDUFK SURMHFW LQYROYHG DQ H[SHULPHQWDO LQYHVWLJDWLRQ RI WKH UHVLVWDQFHV RI
YDULRXVPRUWDUVDQGFRQFUHWHVWRVXOIDWHDWWDFNIRUWKHSXUSRVHRIHVWDEOLVKLQJSHUIRUPDQFH
EDVHGVSHFLILFDWLRQVIRUGXUDEOHFRQFUHWHLQVXOIDWHHQYLURQPHQWV7KHWHVWSURJUDPIRUWKLV
UHVHDUFKZDVGLYLGHGLQWRWZRSKDVHV3KDVHLQYROYHGHYDOXDWLQJDSRWHQWLDOSHUIRUPDQFH
WHVW $670 & WKDW FRXOG EH XVHG IRU H[DPLQLQJ WKH VXOIDWH UHVLVWDQFH RI
FHPHQWLWLRXVPDWHULDOV3KDVHLQYROYHGHYDOXDWLQJKRZFRQFUHWHPL[SURSHUWLHVDQGFXULQJ
FRQGLWLRQV LQIOXHQFHG SHUPHDELOLW\ DQG KRZ SHUPHDELOLW\ LPSDFWHG FRQFUHWH VXOIDWH
UHVLVWDQFH  7KLV FKDSWHU KLJKOLJKWV WKH FRQFOXVLRQV WKDW ZHUH GUDZQ IURP WKH WHVW UHVXOWV
REWDLQHG WR GDWH DQG WKH UHFRPPHQGDWLRQV WKDW ZHUH GHYHORSHG FRQFHUQLQJ SHUIRUPDQFH
EDVHGVSHFLILFDWLRQV

 &RQFOXVLRQV

 &RQFOXVLRQVIURP3KDVH7HVW5HVXOWV 
 
 6XOIDWHH[SDQVLRQVRI$670&WHVWHGSODLQSRUWODQGFHPHQWPRUWDUVFRQILUPHGWKH
LPSDFW FHPHQW WULFDOFLXP DOXPLQDWH &$  FRQWHQWV KDYH RQ VXOIDWH UHVLVWDQFH DV
LQFUHDVLQJ&$FRQWHQWV\LHOGHGLQFUHDVHGH[SDQVLRQV

 ,Q FRPSDULQJ WKH $670 & H[SDQVLRQ OLPLWV DQG WKH $670 & &$ FRQWHQW
OLPLWV XVHG IRU GHWHUPLQLQJ OHYHOV RI VXOIDWH UHVLVWDQFH IRU SRUWODQG FHPHQWV WKH
H[SDQVLRQ OLPLWV VRPHWLPHV SURYHG WR EH FRQVHUYDWLYH LQ FRPSDULVRQ WR $670 &
OLPLWV  ,Q RQH FDVH DQ $670 & 7\SH ,,, PRGHUDWH VXOIDWH UHVLVWDQW FHPHQW ZDV
IRXQG WR EH LQDGHTXDWH IRU PRGHUDWH VXOIDWH HQYLURQPHQWV DFFRUGLQJ WR FXUUHQW $670
&H[SDQVLRQFULWHULD

 3KDVH  WHVW UHVXOWV GHPRQVWUDWHG WKDW HQJLQHHUV VKRXOG WDNH FDXWLRQ ZKHQ XVLQJ
ERUGHUOLQH FHPHQWV ZLWK &$ FRQWHQWV EHWZHHQ  DQG  SHUFHQW RU  DQG  SHUFHQW LQ

 
PRGHUDWH RU VHYHUH VXOIDWH HQYLURQPHQWV UHVSHFWLYHO\ EHFDXVH WKH FHPHQW PD\ EH
LQDGHTXDWHIRUWKHHQYLURQPHQW

 7HVW UHVXOWV IRU PRUWDUV FRQWDLQLQJ &ODVV ) IO\ DVK VKRZHG WKH IO\ DVK VLJQLILFDQWO\
UHGXFHG VXOIDWH H[SDQVLRQV DV HDFK PRUWDU PHW $670 & H[SDQVLRQ FULWHULD IRU
VHYHUHVXOIDWHUHVLVWDQFH7KHVHUHVXOWVFRUUHODWHZHOOZLWKZKDWZDVH[SHFWHGEDVHGRQ
SDVWH[SHULHQFH

 7HVW UHVXOWV IRU PRUWDUV FRQWDLQLQJ &ODVV & IO\ DVK VKRZHG WKH IO\ DVK VLJQLILFDQWO\
LQFUHDVHG H[SDQVLRQV DV HDFK PRUWDU SURYHG WR EH LQDGHTXDWH IRU DSSOLFDWLRQ LQ DQ\
VXOIDWHHQYLURQPHQW5HVXOWVDJDLQFRUUHODWHGZHOOZLWKSDVWH[SHULHQFH

 (YDOXDWLRQVRIPRUWDUVFRQWDLQLQJVODJFRQILUPHGWKHH[SHFWHGUHVXOWWKDWVODJLPSURYHV
VXOIDWHUHVLVWDQFH6XOIDWHH[SDQVLRQVZHUHUHGXFHGHQRXJKWKDWHDFKPRUWDUPHW$670
&H[SDQVLRQFULWHULDIRUVHYHUHVXOIDWHUHVLVWDQFH

 $Q RYHUDOO HYDOXDWLRQ RI $670 & VKRZHG WKH WHVW SURGXFHG FRQVLVWHQW DQG
UHOLDEOHGDWDIRUDQ\PRUWDUZLWKH[SDQVLRQVLQWKHVHYHUHDQGPRGHUDWHVXOIDWHUHVLVWDQFH
UDQJH7HVWUHVXOWVFRUUHODWHGZHOOZLWKSDVWH[SHULHQFHDVWKHWHVWDFFXUDWHO\UHYHDOHGWKH
HIIHFWV RI YDULRXV SRUWODQG FHPHQWV DQG FHPHQWPLQHUDO DGPL[WXUH FRPELQDWLRQV RQ
VXOIDWH UHVLVWDQFH  ([SDQVLRQ SHUIRUPDQFH FULWHULD FRUUHVSRQGLQJ WR $670 &
SURYHGWREHDFFHSWDEOHDVWKHOLPLWVZHUHVKRZQWRDWOHDVWEHFRQVHUYDWLYHDQGWKXVVDIH


 &RQFOXVLRQVIURP3KDVH7HVW5HVXOWV
 
 7KH GD\ URRPWHPSHUDWXUH FXUHG VSHFLPHQ FRPSUHVVLYH VWUHQJWKV IRU SODLQ SRUWODQG
FHPHQW FRQFUHWHV UHYHDOHG WKDW WKH VWUHQJWKV GHFUHDVHG ZKHQ WKH ZDWHUWRFHPHQW UDWLR
LQFUHDVHG&HPHQWW\SHKDGOLWWOHLPSDFWRQWKHOHYHORIVWUHQJWK

 7KH GD\ DFFHOHUDWHG FXUHG VWUHQJWKV ZHUH RQO\ VOLJKWO\ KLJKHU WKDQ WKH URRP
WHPSHUDWXUHFXUHGVWUHQJWKVIRUWKHSODLQFHPHQWFRQFUHWHV7KHLQFUHDVHGKHDWGLGOLWWOH
WR LPSURYH VWUHQJWK EHFDXVH WKH FRQFUHWHV GHYHORSHG PRVW RI WKHLU VWUHQJWK FDSDFLW\
ZLWKLQWKHILUVWGD\VRIURRPWHPSHUDWXUHFXULQJ

 
 7KH GD\ URRPWHPSHUDWXUH FXUHG VSHFLPHQ FRPSUHVVLYH VWUHQJWKV IRU WKH FRQFUHWHV
ZLWK&ODVV&IO\DVKZHUHVLPLODUWRSODLQFHPHQWFRQFUHWHVWUHQJWKVLQWKDWWKHIO\DVKGLG
OLWWOH WR UHGXFH FRPSUHVVLYH VWUHQJWK DQG DFWXDOO\ LQFUHDVHG VWUHQJWKV ZKHQ WKH 
ZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLRZDVXVHG

 $FFHOHUDWHGFXULQJRIWKHFRQFUHWHVZLWK&ODVV&IO\DVKLQFUHDVHGVWUHQJWKVVOLJKWO\PRUH
WKDQ LQ SODLQ SRUWODQG FHPHQW FRQFUHWHV  +RZHYHU LW DSSHDUHG WKH &ODVV & IO\ DVK
FRQFUHWHV KDG DOVR JDLQHG D PDMRULW\ RI WKHLU VWUHQJWK ZLWKLQ WKH ILUVW  GD\V RI URRP
WHPSHUDWXUHFXULQJ

 7KHGD\URRPWHPSHUDWXUHFXUHGFRPSUHVVLYHVWUHQJWKVIRUWKHFRQFUHWHVZLWK&ODVV)
IO\ DVK GHSHQGHG RQ WKH IO\ DVK FRQWHQW  7KH ORZHU IO\ DVK FRQWHQW RI  SHUFHQW
YROXPHWULFUHSODFHPHQWSURGXFHGVWUHQJWKVVLPLODUWRWKHSODLQSRUWODQGFHPHQWFRQFUHWH
VWUHQJWKV ZKLOH WKH KLJKHU  SHUFHQW FRQWHQW \LHOGHG FRQFUHWHV ZLWK ORZHUFRPSUHVVLYH
VWUHQJWKV

 7KH KLJKHVW VWUHQJWK LPSURYHPHQWV RZLQJ WR DFFHOHUDWHG FXULQJ RFFXUUHGLQWKH&ODVV)
IO\ DVK FRQFUHWHV DV VWUHQJWKV IRU ERWK WKH ORZ DQG KLJK IO\ DVK FRQWHQW FRQFUHWHV ZHUH
QHDUO\ HTXLYDOHQW WR RU KLJKHU WKDQ SODLQ SRUWODQG FHPHQW FRQFUHWH VWUHQJWKV DIWHU
DFFHOHUDWHGFXULQJ

 7KH GD\ URRPWHPSHUDWXUH FXUHG VSHFLPHQ FKORULGH LRQ SHUPHDELOLWLHV IRU WKH SODLQ
SRUWODQGFHPHQWFRQFUHWHVLQFUHDVHGDVWKHZDWHUWRFHPHQWUDWLRLQFUHDVHG7KHFHPHQW
W\SHKDGOLWWOHLPSDFWRQFRXORPEYDOXHV

 7KHGD\DFFHOHUDWHGFXUHGSODLQSRUWODQGFHPHQWFRQFUHWHSHUPHDELOLWLHVZHUHVOLJKWO\
ORZHUWKDQWKHURRPWHPSHUDWXUHFXUHGYDOXHV:KHQDFFHOHUDWHGFXULQJSURFHGXUHVZHUH
XVHG SHUFHQW UHGXFWLRQV LQ SHUPHDELOLW\ ZHUH KLJKHU WKDQ UHGXFWLRQV LQ FRPSUHVVLYH
VWUHQJWKIRUWKHSODLQSRUWODQGFHPHQWFRQFUHWHVSHFLPHQV

 7KHGD\URRPWHPSHUDWXUHFXUHGVSHFLPHQSHUPHDELOLWLHVIRUWKHFRQFUHWHVZLWK&ODVV
&IO\DVKZHUHDOZD\VORZHUWKDQSODLQSRUWODQGFHPHQWFRQFUHWHYDOXHV

 
5HGXFWLRQVLQSHUPHDELOLW\RZLQJWRDFFHOHUDWHGFXULQJIRUWKHFRQFUHWHVZLWK&ODVV&IO\
DVK ZHUH PXFK KLJKHU WKDQ UHGXFWLRQV LQ WKH SODLQ SRUWODQG FHPHQW FRQFUHWHV  5HVXOWV
LQGLFDWH WKH IO\ DVK UHTXLUHV PRUH WLPH WR GHYHORS WKH IXOO FHPHQW PDWUL[ DQG WKXV WKH
RSWLPXPFRQFUHWHSHUPHDELOLW\

7KHGD\URRPWHPSHUDWXUHFXUHGVSHFLPHQSHUPHDELOLWLHVIRUWKHFRQFUHWHVZLWK&ODVV
)IO\DVKZHUHWKHORZHVWRIDOOWKHFRQFUHWHV7KHSHUPHDELOLW\GURSSHGZLWKLQFUHDVLQJ
IO\DVKFRQWHQW

$FFHOHUDWHGFXULQJRIWKHFRQFUHWHVZLWK&ODVV)IO\DVKUHVXOWHGLQWKHODUJHVWUHGXFWLRQV
LQ SHUPHDELOLW\  3HUPHDELOLWLHV ZHUH DV PXFK DV  FRXORPEV ORZHU WKDQ WKH SODLQ
SRUWODQGFHPHQWFRQFUHWHYDOXHV


 5HFRPPHQGDWLRQV

 5HFRPPHQGDWLRQV%DVHGRQ3KDVH5HVXOWV
 
 3KDVH  UHVXOWV LQGLFDWH $670 & SURGXFHV UHOLDEOH UHVXOWV WKDW FRUUHODWH ZHOO
ZLWK SDVW ODERUDWRU\ H[SHULHQFH  $670 & KDV SURYHQ WR EH DQ DGHTXDWH
SHUIRUPDQFH WHVW WKDW FDQ EH XVHG LQ SHUIRUPDQFHEDVHG VSHFLILFDWLRQV WR HYDOXDWH WKH
VXOIDWHUHVLVWDQFHRISRUWODQGFHPHQWVDQGFHPHQW±PLQHUDODGPL[WXUHFRPELQDWLRQV

 7KH PRUWDU EDU H[SDQVLRQ SHUIRUPDQFH FULWHULD FRUUHVSRQGLQJ WR $670 & KDYH
SURYHQ WR EH D IDLUO\ DFFXUDWH SUHGLFWRU RI SRUWODQG FHPHQW DQG FHPHQW±PLQHUDO
DGPL[WXUH FRPELQDWLRQ VXOIDWH UHVLVWDQFH OHYHOV  1R FKDQJHV DUH UHFRPPHQGHG
FRQFHUQLQJ WKH H[SDQVLRQ FULWHULD EHFDXVH WKH\ ZHUH VKRZQ WR EH FRQVHUYDWLYH DQG WKXV
VDIH

 7KHHOLPLQDWLRQRIWKHPDVVFKDQJHFULWHULDSURSRVHGLQDQHDUOLHUUHSRUWIRUWKLV7['27
SURMHFW KDV EHHQ UHFRPPHQGHG  7KH PDVV FKDQJH FULWHULD FRUUHVSRQGLQJ WR $670
&SURYHGWREHLQHIIHFWLYHEHFDXVHWKHPHDVXUHPHQWLVGLIILFXOWWRSHUIRUPZLWKRXW

 
LQWHUIHULQJ ZLWK H[SDQVLRQ UHVXOWV DQG WKH FULWHULD DUH HYDOXDWLQJ D GDPDJH PHFKDQLVP
VXUIDFHVFDOLQJWKDWZLOOPRVWOLNHO\QRWRFFXULQ$670&PRUWDUEDUVSHFLPHQV

 $Q DGGLWLRQ WR WKH SHUIRUPDQFHEDVHG VSHFLILFDWLRQV KDV EHHQ SURSRVHG FRQFHUQLQJ
ERUGHUOLQHFHPHQWVZLWK&$FRQWHQWVEHWZHHQDQGSHUFHQWDQGDQGSHUFHQW7KH
UHFRPPHQGDWLRQ LQYROYHV UHTXLULQJ HQJLQHHUV WR WHVW WKHVH ERUGHUOLQH FHPHQWV XVLQJ
$670&LIWKHFHPHQWVDUHWREHXVHGLQPRGHUDWHRUVHYHUHVXOIDWHHQYLURQPHQWV
UHVSHFWLYHO\  (QJLQHHUV PXVW SURYH WKHVH FHPHQWV PHHW $670 & SHUIRUPDQFH
FULWHULD UHTXLUHPHQWV IRU WKHLU VHUYLFH HQYLURQPHQW XQOHVV IXUWKHU UHVHDUFK SURYHV WKDW
WKHVHFHPHQWVDUHDGHTXDWHIRUXVHLQPRGHUDWHDQGVHYHUHVXOIDWHHQYLURQPHQWV


 5HFRPPHQGDWLRQV%DVHGRQ3KDVH5HVXOWV
 
 %DVHGRQ3KDVHUHVXOWVWKDWFOHDUO\VKRZHGWKDWWKHZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLR
RIDFRQFUHWHPL[ZDVQRWWKHRQO\IDFWRULQIOXHQFLQJFRQFUHWHSHUPHDELOLW\LWKDVEHHQ
UHFRPPHQGHGWKDWWKHZDWHUWRFHPHQWLWLRXVPDWHULDOUDWLROLPLWVEHUHSODFHGE\DSURYHQ
DQG UHOLDEOH SHUIRUPDQFHEDVHG WHVW LQGLFDWRU RI WKH SHUPHDELOLW\ FKDUDFWHULVWLFV RI WKH
FRQFUHWH 6XFK DOWHUQDWLYHV DV XVLQJ FRXORPE YDOXH OLPLWV IRU GLIIHUHQW VXOIDWH
HQYLURQPHQWV VHHP SURPLVLQJ EXW IXUWKHU UHVHDUFK LV QHHGHG SULRU WR LWV IXOO
LPSOHPHQWDWLRQ

 )LQDO FRXORPE YDOXH OLPLWV FDQQRW EH HVWDEOLVKHG XQWLO ORQJWHUP 3KDVH  VXOIDWH
H[SRVXUHWHVWUHVXOWVDUHREWDLQHG/RQJWHUPUHVXOWVZLOOGHWHUPLQHLILWLVSHUPHDELOLW\
DQG QRW ZDWHUWRFHPHQWLWLRXV PDWHULDO UDWLR YDOXHV WKDW PRVW GLUHFWO\ LPSDFWV VXOIDWH
UHVLVWDQFH  $OVR WKH UHVXOWV ZLOO UHYHDOWKHLPSDFWRISHUPHDELOLW\RQVXOIDWHUHVLVWDQFH
FRPSDUHGWRWKHLPSDFWRIFHPHQWLWLRXVPDWHULDOFKHPLVWU\7KLVLQIRUPDWLRQFDQEHXVHG
WRGHWHUPLQHWKHQHFHVVLW\RIKDYLQJFRQFUHWHSHUPHDELOLW\UHTXLUHPHQWVIRUHDFKVXOIDWH
HQYLURQPHQW

 


 
##$

 $PHULFDQ 6RFLHW\ IRU 7HVWLQJ DQG 0DWHULDOV ³6WDQGDUG 7HVW 0HWKRG IRU /HQJWK
&KDQJH RI +\GUDXOLF&HPHQW 0RUWDUV ([SRVHG WR D 6XOIDWH 6ROXWLRQ´ &
3KLODGHOSKLD3$
 $PHULFDQ 6RFLHW\ IRU 7HVWLQJ DQG 0DWHULDOV ³6WDQGDUG 6SHFLILFDWLRQ IRU 3RUWODQG
&HPHQW´&3KLODGHOSKLD3$
 $PHULFDQ 6RFLHW\ IRU 7HVWLQJ DQG 0DWHULDOV ³6WDQGDUG 6SHFLILFDWLRQ IRU &RDO )O\
$VK DQG 5DZ RU &DOFLQHG 1DWXUDO 3R]]RODQ IRU 8VH DV D 0LQHUDO $GPL[WXUH LQ
3RUWODQG&HPHQW&RQFUHWH´&D3KLODGHOSKLD3$
 8QLWHG 6WDWHV %XUHDX RI 5HFODPDWLRQ 86 'HSW RI WKH ,QWHULRU ³3URFHGXUH IRU
/HQJWK &KDQJH RI +DUGHQHG &RQFUHWH ([SRVHG WR $ONDOL 6XOIDWHV´ 86 %XUHDX RI
5HFODPDWLRQ 6WDQGDUGV RI 7HVWLQJ 3URFHGXUHV  86 *RYHUQPHQW 3ULQWLQJ
2IILFH:DVKLQJWRQ'&
 $PHULFDQ 6RFLHW\ IRU 7HVWLQJ DQG 0DWHULDOV ³6WDQGDUG 7HVW 0HWKRG IRU (OHFWULFDO
,QGLFDWLRQ RI &RQFUHWH¶V $ELOLW\ WR 5HVLVW &KORULGH ,RQ 3HQHWUDWLRQ´ &
3KLODGHOSKLD3$
 &RRSHU 0LFKDHO & 'XUDELOLW\ 0RGHOV IRU 3RUWODQG &HPHQW &RQFUHWH 6XOIDWH
$WWDFN$ONDOL6LOLFD5HDFWLRQ$EUDVLRQDQG&RUURVLRQRI5HLQIRUFLQJ6WHHOPDVWHU¶V
WKHVLV7KH8QLYHUVLW\RI7H[DVDW$XVWLQ0D\
 7LNDOVN\ 3 - DQG &DUUDVTXLOOR 5 /  7KH (IIHFW RI )O\ $VK RQ WKH 6XOIDWH
5HVLVWDQFHRI&RQFUHWH5HVHDUFK5HSRUW&HQWHUIRU7UDQVSRUWDWLRQ5HVHDUFK
7KH8QLYHUVLW\RI7H[DVDW$XVWLQ
 $PHULFDQ &RQFUHWH ,QVWLWXWH ³*XLGH WR 'XUDEOH &RQFUHWH´ $&, 5 $&,
&RPPLWWHH'HWURLW0,
 0F0LOODQ)56WDQWRQ7(7\OHU,/DQG+DQVHQ:&/RQJ7LPH6WXG\RI
&HPHQW 3HUIRUPDQFH LQ &RQFUHWH &KDSWHU   ³&RQFUHWH([SRVHGWR6XOIDWH6RLOV´
3RUWODQG&HPHQW$VVRFLDWLRQ$&,'HWURLW0,
 3RUWODQG&HPHQW$VVRFLDWLRQ7ZHQW\<HDU5HSRUWRQWKH/RQJ7LPH6WXG\RI&HPHQW
3HUIRUPDQFHLQ&RQFUHWH$GYLVRU\&RPPLWWHH3&$6NRNLH,/
 %HOOSRUW % 3 ³&RPEDWLQJ 6XOIDWH $WWDFN RQ &RQFUHWH RQ %XUHDX RI 5HFODPDWLRQ
3URMHFWV´ 3HUIRUPDQFH RI &RQFUHWH  5HVLVWDQFHRI&RQFUHWHWR6XOSKDWHDQG2WKHU
(QYLURQPHQWDO &RQGLWLRQV ( * 6ZHQVRQ HG  8QLYHUVLW\ RI 7RURQWR 3UHVV
&DQDGDSS±
 )UHHPDQ 5 % DQG &DUUDVTXLOOR 5 / 2SWLPL]DWLRQ RI WKH 3K\VLFDO DQG
&RPSRVLWLRQDO &KDUDFWHULVWLFV RI )O\ $VK &HPHQW IRU WKH 3URGXFWLRQ RI 6XOIDWH
5HVLVWDQW &RQFUHWH 5HVHDUFK 5HSRUW ) &HQWHU IRU 7UDQVSRUWDWLRQ 5HVHDUFK
7KH8QLYHUVLW\RI7H[DVDW$XVWLQ$XJXVW

 
 7LNDOVN\ 3 - DQG &DUUDVTXLOOR 5 / ³3HUPHDELOLW\ (IIHFWV RQ WKH 6XOIDWH
5HVLVWDQFH RI &RQFUHWH´ 6HUYLFHDELOLW\ DQG 'XUDELOLW\ RI &RQVWUXFWLRQ 0DWHULDOV
9RO%$6XSUHQDQW HG SS±
 .DORXVHN * / 3RUWHU / & DQG +DUERH ( 0 ³3DVW 3UHVHQW DQG 3RWHQWLDO
'HYHORSPHQWV RI 6XOIDWH5HVLVWLQJ &RQFUHWHV´ -RXUQDO RI 7HVWLQJ DQG (YDOXDWLRQ
9RO1RSS±
 $PHULFDQ &RQFUHWH ,QVWLWXWH ³8VH RI )O\ $VK LQ &RQFUHWH´ $&, 5 $&,
&RPPLWWHH'HWURLW0,
 'XQVWDQ(5-U³$3RVVLEOH0HWKRGIRU,GHQWLI\LQJ)O\$VKHV7KDW:LOO,PSURYH
WKH 6XOIDWH 5HVLVWDQFH RI &RQFUHWHV´ &HPHQW &RQFUHWH DQG $JJUHJDWHV $670
9RO1RSS±
 0DWKHU . ³)DFWRUV $IIHFWLQJ 6XOIDWH 5HVLVWDQFH RI 0RUWDUV´ 3URFHHGLQJV WK
,QWHUQDWLRQDO &RQJUHVV RQ WKH &KHPLVWU\ RI &HPHQW 3DULV 9RO ,9 SS ±

 0HKWD3.³(IIHFWRI)O\$VK&RPSRVLWLRQRQ6XOIDWH5HVLVWDQFHRI&HPHQW´$&,
-RXUQDO3URFHHGLQJV9RO1RSS±
 7LNDOVN\3-DQG&DUUDVTXLOOR5/³)O\$VKIRU6XOIDWH5HVLVWDQW&RQFUHWH´$&,
0DWHULDOV-RXUQDO$&,'HWURLW0,9RO1RSS±
 0F&DUWK\*--RKQDVHQ'06WHLQZDQG6-DQG7KHGFKDQDPRRUWK\$³;
5D\'LIIUDFWLRQ$QDO\VLVRI)O\$VK´$GYDQFHVLQ;5D\$QDO\VLV9RO
 $PHULFDQ6RFLHW\IRU7HVWLQJDQG0DWHULDOV³7HVW0HWKRGIRU6DPSOLQJDQG7HVWLQJ
)O\ $VK RU 1DWXUDO 3R]]RODQV IRU 8VH DV D 0LQHUDO $GPL[WXUH LQ 3RUWODQG&HPHQW
&RQFUHWH´&3KLODGHOSKLD3$
 :DQJ * 6 DQG 3RROH 7 ³6XOIDWH 5HVLVWDQFH RI 0RUWDUV 8VLQJ 3RUWODQG &HPHQW
DQG %OHQGV RI 3RUWODQG &HPHQW DQG 3R]]RODQ RU 6ODJ´ 7HFKQLFDO 5HSRUW 6/
86$UP\
 3RUWODQG&HPHQW$VVRFLDWLRQ'HVLJQDQG&RQWURORI&RQFUHWH0L[WXUHV(QJLQHHULQJ
%XOOHWLQ7KLUWHHQWK(GLWLRQ6+.RVPDWNDDQG:&3DQDUHVH6NRNLH,/
 $PHULFDQ &RQFUHWH ,QVWLWXWH ³6WDQGDUG 3UDFWLFH IRU 6HOHFWLQJ 3URSRUWLRQV IRU
1RUPDO +HDY\ZHLJKW DQG 0DVV &RQFUHWH´ $&,  $&, &RPPLWWHH 
'HWURLW0,
 $PHULFDQ &RQFUHWH ,QVWLWXWH ³%XLOGLQJ &RGH 5HTXLUHPHQWV IRU 6WUXFWXUDO &RQFUHWH
DQG&RPPHQWDU\´$&,DQG$&,5$&,&RPPLWWHH'HWURLW0,

 ,QWHUQDWLRQDO&RQIHUHQFHRI%XLOGLQJ2IILFLDOV³8QLIRUP%XLOGLQJ&RGH±9ROXPH
6WUXFWXUDO(QJLQHHULQJ'HVLJQ3URYLVLRQV´:KLWWLHU&$
 7H[DV'HSDUWPHQWRI7UDQVSRUWDWLRQ%ULGJH'HVLJQ*XLGH)LUVW(GLWLRQ

 
 7H[DV 'HSDUWPHQW RI 7UDQVSRUWDWLRQ 6WDQGDUG 6SHFLILFDWLRQV IRU &RQVWUXFWLRQ DQG
0DLQWHQDQFHRI+LJKZD\V6WUHHWVDQG%ULGJHV$XVWLQ7;
 $PHULFDQ 6RFLHW\ IRU 7HVWLQJ DQG 0DWHULDOV ³6WDQGDUG 7HVW 0HWKRG IRU 3RWHQWLDO
([SDQVLRQRI3RUWODQG&HPHQW0RUWDUV([SRVHGWR6XOIDWH´&3KLODGHOSKLD
3$
 3DW]LDV 7 ³7KH 'HYHORSPHQW RI $670 0HWKRG & ZLWK 5HFRPPHQGHG
$FFHSWDQFH/LPLWVIRU6XOIDWH5HVLVWDQFHRI+\GUDXOLF&HPHQWV´&HPHQW&RQFUHWH
DQG$JJUHJDWH&&$*'39RO1R6XPPHUSS±
 3DW]LDV 7 ³(YDOXDWLRQ RI 6XOIDWH 5HVLVWDQFH RI +\GUDXOLF&HPHQW 0RUWDUV E\
$670 & 7HVW 0HWKRG´ &RQFUHWH 'XUDELOLW\ ² 7KH .DWKHULQH DQG %U\DQW
0DWKHU ,QWHUQDWLRQDO &RQIHUHQFH 9RO  63 - 0 6FDQORQ HG  $PHULFDQ
&RQFUHWH,QVWLWXWH'HWURLW0,
 2X\DQJ & ³$ 'DPDJH 0RGHO IRU 6XOIDWH $WWDFN RI &HPHQW 0RUWDUV´  &HPHQW
&RQFUHWHDQG$JJUHJDWHV&&$*'39RO1R:LQWHUSS±
 $PHULFDQ 6RFLHW\ IRU 7HVWLQJ DQG 0DWHULDOV ³6WDQGDUG 6SHFLILFDWLRQ IRU 6WDQGDUG
6DQG´&3KLODGHOSKLD3$
 $PHULFDQ6RFLHW\IRU7HVWLQJDQG0DWHULDOV³6WDQGDUG6SHFLILFDWLRQIRU)ORZ7DEOH
IRU8VHLQ7HVWVRI+\GUDXOLF&HPHQW´&3KLODGHOSKLD3$
 $PHULFDQ6RFLHW\IRU7HVWLQJDQG0DWHULDOV³6WDQGDUG7HVW0HWKRGIRU&RPSUHVVLYH
6WUHQJWK RI +\GUDXOLF &HPHQW 0RUWDUV 8VLQJ LQ RU >PP@ &XEH 6SHFLPHQV ´
&3KLODGHOSKLD3$
 $PHULFDQ 6RFLHW\ IRU 7HVWLQJ DQG 0DWHULDOV ³6WDQGDUG 3UDFWLFH IRU 0HFKDQLFDO
0L[LQJ RI +\GUDXOLF &HPHQW 3DVWHV DQG 0RUWDUV RI 3ODVWLF &RQVLVWHQF\´ &
3KLODGHOSKLD3$
 $PHULFDQ6RFLHW\IRU7HVWLQJDQG0DWHULDOV³6WDQGDUG3UDFWLFHIRU8VHRI$SSDUDWXV
IRU WKH 'HWHUPLQDWLRQ RI /HQJWK &KDQJH RI +DUGHQHG &HPHQW 3DVWH 0RUWDU DQG
&RQFUHWH´&3KLODGHOSKLD3$
 $PHULFDQ 6RFLHW\ IRU 7HVWLQJ DQG 0DWHULDOV ³6WDQGDUG 7HVW 0HWKRG IRU /HQJWK
&KDQJH RI +DUGHQHG +\GUDXOLF&HPHQW 0RUWDU DQG &RQFUHWH´ &
3KLODGHOSKLD3$
 $PHULFDQ 6RFLHW\ IRU 7HVWLQJ DQG 0DWHULDOV ³6WDQGDUG 7HVW 0HWKRG IRU 0DNLQJ
$FFHOHUDWHG &XULQJ DQG 7HVWLQJ &RQFUHWH &RPSUHVVLRQ 7HVW 6SHFLPHQV´ &
3KLODGHOSKLD3$
 $PHULFDQ 6RFLHW\ IRU 7HVWLQJ DQG 0DWHULDOV ³6WDQGDUG 6SHFLILFDWLRQ IRU &RQFUHWH
$JJUHJDWHV´&3KLODGHOSKLD3$
 $PHULFDQ 6RFLHW\ IRU 7HVWLQJ DQG 0DWHULDOV ³6WDQGDUG 6SHFLILFDWLRQ IRU &KHPLFDO
$GPL[WXUHVIRU&RQFUHWH´&3KLODGHOSKLD3$

 
 $PHULFDQ 6RFLHW\ IRU 7HVWLQJ DQG 0DWHULDOV ³6WDQGDUG 3UDFWLFH IRU 0DNLQJ DQG
&XULQJ&RQFUHWH7HVW6SHFLPHQVLQWKH/DERUDWRU\´&3KLODGHOSKLD3$
 $PHULFDQ 6RFLHW\ IRU 7HVWLQJ DQG 0DWHULDOV ³6WDQGDUG 7HVW 0HWKRG IRU 6OXPS RI
+\GUDXOLF&HPHQW&RQFUHWH´&3KLODGHOSKLD3$
 $PHULFDQ6RFLHW\IRU7HVWLQJDQG0DWHULDOV³6WDQGDUG7HVW0HWKRGIRU$LU&RQWHQW
RI)UHVKO\0L[HG&RQFUHWHE\WKH3UHVVXUH0HWKRG´&3KLODGHOSKLD3$
 $PHULFDQ6RFLHW\IRU7HVWLQJDQG0DWHULDOV³6WDQGDUG7HVW0HWKRGIRU&RPSUHVVLYH
6WUHQJWKRI&\OLQGULFDO&RQFUHWH6SHFLPHQV´&3KLODGHOSKLD3$
 2]\LOGLULP & ³3HUPHDELOLW\ 6SHFLILFDWLRQ IRU +LJK 3HUIRUPDQFH &RQFUHWH 'HFNV´
9LUJLQLD7UDQVSRUWDWLRQ5HVHDUFK&RXQFLO


 














$SSHQGL[$0L[3URSRUWLRQVIRU3KDVH0RUWDUV

 
 
$SSHQGL[$0L[3URSRUWLRQVIRU3KDVH0RUWDUV


7DEOH$±0L[3URSRUWLRQVIRU3KDVH0RUWDUV
3RUWODQG )O\$VK *UDGHG
%DWFK &HPHQW )O\$VK6ODJ :DWHU
&HPHQW 6ODJ 6DQG±GU\
1DPH 7\SH 5HS  OE\G 
OE\G  OE\G  OE\G 
3& ,,, $  1RQH    
)& ,,, $  &      
)& ,,, $  &      
)$ ,,, $  )      
)$ ,,, $  )      
6 ,,, $  6ODJ      
3& ,,, %  1RQH    
)& ,,, %  &      
)& ,,, %  &      
)$ ,,, %  )      
)$ ,,, %  )      
6 ,,, %  6ODJ      
3& 9 1RQH    
)& 9 &      
)& 9 &      
)$ 9 )      
)$ 9 )      
6 9 6ODJ      
3 , 1RQH    
& , &      
& , &      
) , )      
) , )      
6ODJ , 6ODJ      
,QWKLVFROXPQ&VWDQGVIRU$670&ODVV&IO\DVKDQG)VWDQGVIRU$670&ODVV)IO\DVK
&RQYHUVLRQOE\G NJP



 
 














$SSHQGL[%0L[3URSRUWLRQVIRU3KDVH&RQFUHWHV

 
 
$SSHQGL[%0L[3URSRUWLRQVIRU3KDVH&RQFUHWHV

7DEOH%±0L[3URSRUWLRQVIRU3KDVH&RQFUHWH%DWFKHV

$JJUHJDWH 0L[3URSRUWLRQV
%DWFK'HWDLOV 0RLVWXUH  IOR]\GIRU+5:5DQGOE\GIRU
&RQWHQWV RWKHUV 

:&
)O\$VK 

E\ZHLJKW 
%DWFK1DPH

)O\$VK
5HS 

&HPHQW
+5:5

3RUWODQG
&$  
&HPHQW

)$  

:DWHU
7\SH

&$
)$
3& , 1RQH         
3& , 1RQH         
3& , 1RQH         
3& ,,, %  1RQH         
3& ,,, %  1RQH         
3& ,,, %  1RQH         
3& ,,, %  1RQH         
3& 9 1RQH         
3& 9 1RQH         
3& 9 1RQH         
)&D ,,, %  &           
)&D ,,, %  &           
)&D ,,, %  &           
)&OE ,,, %  &           
)&E ,,, %  &           
)&E ,,, %  &           
)$D ,,, %  )           
)$D ,,, %  )           
)$D ,,, %  )           
)$E ,,, %  )           
)$E ,,, %  )           
)$E ,,, %  )           
,QWKLVFROXPQ&VWDQGVIRU$670&ODVV&IO\DVKDQG)VWDQGVIRU$670&ODVV)IO\DVK
&RQYHUVLRQOE\G NJP


 
 

















$SSHQGL[&&RPSUHVVLYH6WUHQJWK5HVXOWVIRU3KDVH0RUWDUV

 
 
$SSHQGL[&&RPSUHVVLYH6WUHQJWK5HVXOWVIRU3KDVH0RUWDUV


7DEOH&±&RPSUHVVLYH6WUHQJWKVRI0RUWDUVZLWK7\SH,,, $ &HPHQW
%DWFK
3& )& )& )$ )$ 6
1DPH
)O\
&ODVV& &ODVV& &ODVV) &ODVV) 6ODJ
$VK6ODJ 1RQH
         
5HS 
$JH
&RPSUHVVLYH6WUHQJWKV SVL 
GD\V 
      
      
      
      
      
      
7LPHRIPHDVXUHPHQWVURXQGHGWRQHDUHVWGD\6WUHQJWKDIWHUGD\LVDIWHUKRXUVRI
DFFHOHUDWHGFXULQJDWR)0RLVWFXUHGLQOLPHZDWHUDWƒ)IRUUHPDLQGHURIWLPH
&RQYHUVLRQSVL 03D


7DEOH&±&RPSUHVVLYH6WUHQJWKVRI0RUWDUVZLWK7\SH,,, % &HPHQW
%DWFK
3& )& )& )$ )$ 6
1DPH
)O\
&ODVV& &ODVV& &ODVV) &ODVV) 6ODJ
$VK6ODJ 1RQH
         
5HS 
$JH
&RPSUHVVLYH6WUHQJWKV SVL 
GD\V 
      
      
      
      
      
      
      
7LPHRIPHDVXUHPHQWVURXQGHGWRQHDUHVWGD\6WUHQJWKDIWHUGD\LVDIWHUKRXUVRI
DFFHOHUDWHGFXULQJDWR)0RLVWFXUHGLQOLPHZDWHUDWƒ)IRUUHPDLQGHURIWLPH
&RQYHUVLRQSVL 03D

 
7DEOH&±&RPSUHVVLYH6WUHQJWKVRI0RUWDUVZLWK7\SH9&HPHQW
%DWFK1DPH 3& )& )& )$ )$ 6

)O\
&ODVV& &ODVV& &ODVV) &ODVV) 6ODJ
$VK6ODJ 1RQH
         
5HS 

$JH GD\V  &RPSUHVVLYH6WUHQJWKV SVL 

      


      
      
      
      
      
      
      
      
      
7LPHRIPHDVXUHPHQWVURXQGHGWRQHDUHVWGD\6WUHQJWKDIWHUGD\LVDIWHUKRXUVRI
DFFHOHUDWHGFXULQJDWR)0RLVWFXUHGLQOLPHZDWHUDWƒ)IRUUHPDLQGHURIWLPH
&RQYHUVLRQSVL 03D


7DEOH&±&RPSUHVVLYH6WUHQJWKVRI0RUWDUVZLWK7\SH,&HPHQW
%DWFK1DPH 3 & & ) ) 6ODJ

)O\
&ODVV& &ODVV& &ODVV) &ODVV) 6ODJ
$VK6ODJ 1RQH
         
5HS 

$JH GD\V  &RPSUHVVLYH6WUHQJWKV SVL 

      


      
      
      
      
      
      
7LPHRIPHDVXUHPHQWVURXQGHGWRQHDUHVWGD\6WUHQJWKDIWHUGD\LVDIWHUKRXUVRI
DFFHOHUDWHGFXULQJDWR)0RLVWFXUHGLQOLPHZDWHUDWƒ)IRUUHPDLQGHURIWLPH
&RQYHUVLRQSVL 03D

 














$SSHQGL['6XOIDWH([SDQVLRQ5HVXOWVIRU3KDVH0RUWDUV

 
 
$SSHQGL['6XOIDWH([SDQVLRQ5HVXOWVIRU3KDVH0RUWDUV


7DEOH'±6XOIDWH([SDQVLRQVRI0RUWDUVZLWK7\SH,,, $ &HPHQW
%DWFK
3& )& )&
1DPH
)O\
$VK6ODJ 1RQH &ODVV&   &ODVV&  
5HS 
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
'HYLDWLRQ

'HYLDWLRQ

'HYLDWLRQ
RI%DUV

RI%DUV
RI%DUV
6WDQGDUG

6WDQGDUG

6WDQGDUG
6RDNLQJ

'D\V 
7LPH

$YJ

$YJ

$YJ
 

 

 
         
         
         
         
         
         
         
         
         
%DWFK
)$ )$ 6
1DPH
)O\
$VK6ODJ &ODVV)   &ODVV)   6ODJ  
5HS 
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
'HYLDWLRQ

'HYLDWLRQ

'HYLDWLRQ
RI%DUV

RI%DUV

RI%DUV
6WDQGDUG

6WDQGDUG

6WDQGDUG
6RDNLQJ

'D\V 
7LPH

$YJ

$YJ

$YJ
 

 

 

         


         
         
         
         
         
         
         
         


 
7DEOH'±6XOIDWH([SDQVLRQVRI0RUWDUVZLWK7\SH,,, % &HPHQW
%DWFK
3& )& )&
1DPH
)O\
$VK6ODJ 1RQH &ODVV&   &ODVV&  
5HS 
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
'HYLDWLRQ

'HYLDWLRQ

'HYLDWLRQ
RI%DUV

RI%DUV

RI%DUV
6WDQGDUG

6WDQGDUG

6WDQGDUG
6RDNLQJ

'D\V 
7LPH

$YJ

$YJ

$YJ
 

 

 
         
         
         
         
         
         
         
         
         
%DWFK
)$ )$ 6
1DPH
)O\
$VK6ODJ &ODVV)   &ODVV)   6ODJ  
5HS 
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
'HYLDWLRQ

'HYLDWLRQ

'HYLDWLRQ
RI%DUV

RI%DUV

RI%DUV
6WDQGDUG

6WDQGDUG

6WDQGDUG
6RDNLQJ

'D\V 
7LPH

$YJ

$YJ

$YJ
 

 

 

         


         
         
         
         
         
         
         
         


 

7DEOH'±6XOIDWH([SDQVLRQVRI0RUWDUVZLWK7\SH9&HPHQW
%DWFK
3& )& )&
1DPH
)O\
$VK6ODJ 1RQH &ODVV&   &ODVV&  
5HS 
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
'HYLDWLRQ

'HYLDWLRQ

'HYLDWLRQ
RI%DUV

RI%DUV

RI%DUV
6WDQGDUG

6WDQGDUG

6WDQGDUG
6RDNLQJ

'D\V 
7LPH

$YJ

$YJ

$YJ
 

 

 
         
         
         
         
         
         
         
         
         
%DWFK
)$ )$ 6
1DPH
)O\
$VK6ODJ &ODVV)   &ODVV)   6ODJ  
5HS 
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
'HYLDWLRQ

'HYLDWLRQ

'HYLDWLRQ
RI%DUV

RI%DUV

RI%DUV
6WDQGDUG

6WDQGDUG

6WDQGDUG
6RDNLQJ

'D\V 
7LPH

$YJ

$YJ

$YJ
 

 

 

         


         
         
         
         
         
         
         
         


 

7DEOH'±6XOIDWH([SDQVLRQVRI0RUWDUVZLWK7\SH,&HPHQW
%DWFK
3 & &
1DPH
)O\
$VK6ODJ 1RQH &ODVV&   &ODVV&  
5HS  ([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
'HYLDWLRQ

'HYLDWLRQ

'HYLDWLRQ
RI%DUV

RI%DUV

RI%DUV
6WDQGDUG

6WDQGDUG

6WDQGDUG
6RDNLQJ

'D\V 
7LPH

$YJ

$YJ

$YJ
 

 

 
         
         
         
         
         
         
         
         
         
%DWFK
) ) 6ODJ
1DPH
)O\
$VK6ODJ &ODVV)   &ODVV)   6ODJ  
5HS 
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
'HYLDWLRQ

'HYLDWLRQ

'HYLDWLRQ
RI%DUV

RI%DUV

RI%DUV
6WDQGDUG

6WDQGDUG

6WDQGDUG
6RDNLQJ

'D\V 
7LPH

$YJ

$YJ

$YJ
 

 

 

         


         
         
         
         
         
         
         
         


 















$SSHQGL[(&RPSUHVVLYH6WUHQJWK5HVXOWVIRU3KDVH&RQFUHWHV

 
 
$SSHQGL[(&RPSUHVVLYH6WUHQJWK5HVXOWVIRU3KDVH&RQFUHWHV

7DEOH(&RPSUHVVLYH6WUHQJWKVRI3ODLQ3RUWODQG&HPHQW&RQFUHWH
%DWFK1DPH 3& 3& 3& 3& 3&
&HPHQW
, , , ,,, %  ,,, % 
7\SH
:&E\
    
ZHLJKW
$JH GD\V  &RPSUHVVLYH6WUHQJWK SVL 
     
     
     
     
     
 5RRP      
 $FFHO      
%DWFK1DPH 3& 3& 3& 3& 3&
&HPHQW
,,, %  ,,, %  9 9 9
7\SH
:&E\
    
ZHLJKW
$JH GD\V  &RPSUHVVLYH6WUHQJWK SVL 
     
     
     
     
     
     
     
     
     
 5RRP      
 $FFHO      
7LPHRIPHDVXUHPHQWVURXQGHGWRQHDUHVWGD\7ZHQW\HLJKWGD\FRPSUHVVLYHVWUHQJWKVGHWHUPLQHG
XVLQJLQ[LQF\OLQGHUVZLWKDOORWKHUVWUHQJWKVGHWHUPLQHGXVLQJLQ[LQF\OLQGHUV
&RQYHUVLRQSVL 03D

 

7DEOH(±&RPSUHVVLYH6WUHQJWKVRI&RQFUHWHVZLWK)O\$VK
%DWFK1DPH )&D )&D )&D )&E )&E )&E

)O\$VK  &ODVV& &ODVV& &ODVV& &ODVV& &ODVV& &ODVV&


5HS             
:&E\
     
ZHLJKW

$JH GD\V  &RPSUHVVLYH6WUHQJWKV SVL 

      


      
      
      
      
      
      
 5RRP       
 $FFHO       

%DWFK1DPH )$D )$D )$D )$E )$E )$E

)O\$VK  &ODVV) &ODVV) &ODVV) &ODVV) &ODVV) &ODVV)


5HS             
:&E\
     
ZHLJKW

$JH GD\V  &RPSUHVVLYH6WUHQJWKV SVL 

      


      
      
      
      
      
      
      
      
 5RRP       
 $FFHO       
7LPHRIPHDVXUHPHQWVURXQGHGWRQHDUHVWGD\7ZHQW\HLJKWGD\FRPSUHVVLYHVWUHQJWKVGHWHUPLQHG
XVLQJLQ[LQF\OLQGHUVZLWKDOORWKHUVWUHQJWKVGHWHUPLQHGXVLQJLQ[LQF\OLQGHUV
&RQYHUVLRQSVL 03D




 















$SSHQGL[),QLWLDO6XOIDWH([SDQVLRQDQG0DVV&KDQJH5HVXOWV
IRU3KDVH&RQFUHWHV

 
 
7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK3&
%DWFK1DPH 3&
'HVFULSWLRQ 7\SH,&HPHQW1RIO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)

$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ



      
      
      
      
      
      
      
      
      
       



7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK3&
%DWFK1DPH 3&
'HVFULSWLRQ 7\SH,&HPHQW1RIO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)
$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ


      


      
      
      
      
      
      
      
      
       

 
7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK3&
%DWFK1DPH 3&
'HVFULSWLRQ 7\SH,&HPHQW1RIO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)

$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ



      
      
      
      
      
      
      
      
      
       



7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK3&
%DWFK1DPH 3&
'HVFULSWLRQ 7\SH,,, % &HPHQW1RIO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)
$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ


      


      
      
      
      
      
      
      
      
       



 

7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK3&
%DWFK1DPH 3&
'HVFULSWLRQ 7\SH,,, % &HPHQW1RIO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)

$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ



      
      
      
      
      
      
      
      
      
       


7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK3&
%DWFK1DPH 3&
'HVFULSWLRQ 7\SH,,, % &HPHQW1RIO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)
$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ


      


      
      
      
      
      
      
      
      
       

 
7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK3&
%DWFK1DPH 3&
'HVFULSWLRQ 7\SH,,, % &HPHQW1RIO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)

$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ



      
      
      
      
      
      
      
      
      
       



7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK3&
%DWFK1DPH 3&
'HVFULSWLRQ 7\SH9&HPHQW1RIO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)
$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ


      


      
      
      
      
      
      
      
      
      

 
7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK3&
%DWFK1DPH 3&
'HVFULSWLRQ 7\SH9&HPHQW1RIO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)

$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ



      
      
      
      
      
      
      
      
      
       



7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK3&
%DWFK1DPH 3&
'HVFULSWLRQ 7\SH9&HPHQW1RIO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)
$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ


      


      
      
      
      
      
      
      
      
      

 
7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK)&D
%DWFK1DPH )&D
'HVFULSWLRQ 7\SH,,, % &HPHQW&ODVV&IO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)

$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ



      
      
      
      
      
      
      
      
      
       



7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK)&D
%DWFK1DPH )&D
'HVFULSWLRQ 7\SH,,, % &HPHQW&ODVV&IO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)
$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ


      


      
      
      
      
      
      
      
      
       

 
7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK)&D
%DWFK1DPH )&D
'HVFULSWLRQ 7\SH,,, % &HPHQW&ODVV&IO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)

$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ



      
      
      
      
      
      
      
      
      
       


7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK)&E
%DWFK1DPH )&E
'HVFULSWLRQ 7\SH,,, % &HPHQW&ODVV&IO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)
$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ



      
      
      
      
      
      
      
      
      
      

 
7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK)&E
%DWFK1DPH )&E
'HVFULSWLRQ 7\SH,,, % &HPHQW&ODVV&IO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)

$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ



      
      
      
      
      
      
      
      
      
       



7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK)&E
%DWFK1DPH )&E
'HVFULSWLRQ 7\SH,,, % &HPHQW&ODVV&IO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)
$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ


      


      
      
      
      
      
      
      
      
      

 
7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK)$D
%DWFK1DPH )$D
'HVFULSWLRQ 7\SH,,, % &HPHQW&ODVV)IO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)

$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ



      
      
      
      
      
      
      
      
      
       




7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK)$D
%DWFK1DPH )$D
'HVFULSWLRQ 7\SH,,, % &HPHQW&ODVV)IO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)
$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ


      


      
      
      
      
      
      
      
      
      

 
7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK)$D
%DWFK1DPH )$D
'HVFULSWLRQ 7\SH,,, % &HPHQW&ODVV)IO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)

$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ



      
      
      
      
      
      
      
      
      
       




7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK)$E
%DWFK1DPH )$E
'HVFULSWLRQ 7\SH,,, % &HPHQW&ODVV)IO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)
$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ


      


      
      
      
      
      
      
      
      
      

 
7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK)$E
%DWFK1DPH )$E
'HVFULSWLRQ 7\SH,,, % &HPHQW&ODVV)IO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)

$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ



      
      
      
      
      
      
      
      
      
       



7DEOH)6XOIDWH([SDQVLRQVDQG0DVV&KDQJHVIRU%DWFK)$E
%DWFK1DPH )$E
'HVFULSWLRQ 7\SH,,, % &HPHQW&ODVV)IO\DVK ZF 

&XULQJ 5RRP7HPSHUDWXUH $FFHOHUDWHG '#R)


R)XQWLOSVL
3URFHGXUH '#R) '#R)
$YJ0DVV

$YJ0DVV

$YJ0DVV
([SDQVLRQ

([SDQVLRQ

([SDQVLRQ
6RDNLQJ

&KDQJH

&KDQJH

&KDQJH
'D\V
7LPH

$YJ

$YJ

$YJ


      


      
      
      
      
      
      
      
      
      

 


([SDQVLRQ  




3& ZF 
3& ZF 

3& ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI3ODLQ3RUWODQG&HPHQW&RQFUHWHV
ZLWK7\SH,&HPHQW &XUHGDW5RRP7HPSHUDWXUHWRSVL 


0DVV&KDQJH 


3& ZF 
3& ZF 

3& ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI3ODLQ3RUWODQG&HPHQW&RQFUHWHVZLWK
7\SH,&HPHQW &XUHGDW5RRP7HPSHUDWXUHWRSVL 

 




([SDQVLRQ 



3& ZF 
3& ZF 

3& ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI3ODLQ3RUWODQG&HPHQW&RQFUHWHV
ZLWK7\SH,&HPHQW &XUHGDW5RRP7HPSHUDWXUHIRU'D\V 


0DVV&KDQJH 


3& ZF 
3& ZF 

3& ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI3ODLQ3RUWODQG&HPHQW&RQFUHWHVZLWK
7\SH,&HPHQW &XUHGDW5RRP7HPSHUDWXUHIRU'D\V 

 


([SDQVLRQ  




3& ZF 
3& ZF 

3& ZF 


   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI3ODLQ3RUWODQG&HPHQW&RQFUHWHV
ZLWK7\SH,&HPHQW $FFHOHUDWHG&XUHGIRU'D\V 


0DVV&KDQJH 


3& ZF 
3& ZF 

3& ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI3ODLQ3RUWODQG&HPHQW&RQFUHWHVZLWK
7\SH,&HPHQW $FFHOHUDWHG&XUHGIRU'D\V 

 




([SDQVLRQ  
3& ZF 
 3& ZF 
3& ZF 
 3& ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI3ODLQ3RUWODQG&HPHQW&RQFUHWHV
ZLWK7\SH,,, % &HPHQW &XUHGDW5RRP7HPSHUDWXUHWRSVL 




0DVV&KDQJH 




3& ZF 
 3& ZF 
3& ZF 
 3& ZF 


   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI3ODLQ3RUWODQG&HPHQW&RQFUHWHVZLWK
7\SH,,, % &HPHQW &XUHGDW5RRP7HPSHUDWXUHWRSVL 

 


([SDQVLRQ  

 3& ZF 


3& ZF 
3& ZF 

3& ZF 






   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI3ODLQ3RUWODQG&HPHQW&RQFUHWHV
ZLWK7\SH,,, % &HPHQW &XUHGDW5RRP7HPSHUDWXUHIRU'D\V 




0DVV&KDQJH 



 3& ZF 


3& ZF 
 3& ZF 
3& ZF 



   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI3ODLQ3RUWODQG&HPHQW&RQFUHWHVZLWK
7\SH,,, % &HPHQW &XUHGDW5RRP7HPSHUDWXUHIRU'D\V 

 




3& ZF 
([SDQVLRQ 

 3& ZF 


3& ZF 
 3& ZF 






   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI3ODLQ3RUWODQG&HPHQW&RQFUHWHV
ZLWK7\SH,,, % &HPHQW $FFHOHUDWHG&XUHGIRU'D\V 




0DVV&KDQJH 




3& ZF 
3& ZF 
 3& ZF 
3& ZF 



   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI3ODLQ3RUWODQG&HPHQW&RQFUHWHVZLWK
7\SH,,, % &HPHQW $FFHOHUDWHG&XUHGIRU'D\V 


 


([SDQVLRQ  


3& ZF 
3& ZF 
 3& ZF 






   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI3ODLQ3RUWODQG&HPHQW&RQFUHWHV
ZLWK7\SH9&HPHQW &XUHGDW5RRP7HPSHUDWXUHWRSVL 




0DVV&KDQJH 





3& ZF 



3& ZF 
3& ZF 



   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI3ODLQ3RUWODQG&HPHQW&RQFUHWHVZLWK
7\SH9&HPHQW &XUHGDW5RRP7HPSHUDWXUHWRSVL 

 




([SDQVLRQ 

3& ZF 
 3& ZF 
3& ZF 






   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI3ODLQ3RUWODQG&HPHQW&RQFUHWHV
ZLWK7\SH9&HPHQW &XUHGDW5RRP7HPSHUDWXUHIRU'D\V 




0DVV&KDQJH 





3& ZF 


 3& ZF 
3& ZF 



   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI3ODLQ3RUWODQG&HPHQW&RQFUHWHVZLWK
7\SH9&HPHQW &XUHGDW5RRP7HPSHUDWXUHIRU'D\V 

 


([SDQVLRQ  

3& ZF 



3& ZF 
3& ZF 







   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI3ODLQ3RUWODQG&HPHQW&RQFUHWHV
ZLWK7\SH9&HPHQW $FFHOHUDWHG&XUHGIRU'D\V 




0DVV&KDQJH 

 3& ZF 


3& ZF 
 3& ZF 






   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI3ODLQ3RUWODQG&HPHQW&RQFUHWHVZLWK
7\SH9&HPHQW $FFHOHUDWHG&XUHGIRU'D\V 

 




([SDQVLRQ  )&D ZF 



)&D ZF 
)&D ZF 







   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI&RQFUHWHVZLWK3HUFHQW&ODVV&
)O\$VK &XUHGDW5RRP7HPSHUDWXUHWRSVL 


0DVV&KDQJH 

 )&D ZF 


)&D ZF 
 )&D ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI&RQFUHWHVZLWK3HUFHQW&ODVV&)O\
$VK &XUHGDW5RRP7HPSHUDWXUHWRSVL 

 




)&D ZF 


([SDQVLRQ 


)&D ZF 
)&D ZF 







   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI&RQFUHWHVZLWK3HUFHQW&ODVV&
)O\$VK &XUHGDW5RRP7HPSHUDWXUHIRU'D\V 


0DVV&KDQJH 

 )&D ZF 


)&D ZF 
 )&D ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI&RQFUHWHVZLWK3HUFHQW&ODVV&)O\
$VK &XUHGDW5RRP7HPSHUDWXUHIRU'D\V 

 




([SDQVLRQ  )&D ZF 



)&D ZF 
)&D ZF 







   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI&RQFUHWHVZLWK3HUFHQW&ODVV&
)O\$VK $FFHOHUDWHG&XUHGIRU'D\V 


0DVV&KDQJH 

 )&D ZF 


)&D ZF 
 )&D ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI&RQFUHWHVZLWK3HUFHQW&ODVV&)O\
$VK $FFHOHUDWHG&XUHGIRU'D\V 

 


([SDQVLRQ  

 )&OE ZF 


)&E ZF 
)&E ZF 







   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI&RQFUHWHVZLWK3HUFHQW&ODVV&
)O\$VK &XUHGDW5RRP7HPSHUDWXUHWRSVL 


0DVV&KDQJH 

 )&OE ZF 


)&E ZF 
 )&E ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI&RQFUHWHVZLWK3HUFHQW&ODVV&)O\
$VK &XUHGDW5RRP7HPSHUDWXUHWRSVL 

 




([SDQVLRQ  )&OE ZF 



)&E ZF 
)&E ZF 







   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI&RQFUHWHVZLWK3HUFHQW&ODVV&
)O\$VK &XUHGDW5RRP7HPSHUDWXUHIRU'D\V 


0DVV&KDQJH 

 )&OE ZF 


)&E ZF 
 )&E ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI&RQFUHWHVZLWK3HUFHQW&ODVV&)O\
$VK &XUHGDW5RRP7HPSHUDWXUHIRU'D\V 

 


([SDQVLRQ  

)&OE ZF 



)&E ZF 
)&E ZF 







   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI&RQFUHWHVZLWK3HUFHQW&ODVV&
)O\$VK $FFHOHUDWHG&XUHGIRU'D\V 


0DVV&KDQJH 

 )&OE ZF 


)&E ZF 
 )&E ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI&RQFUHWHVZLWK3HUFHQW&ODVV&)O\
$VK $FFHOHUDWHG&XUHGIRU'D\V 

 




([SDQVLRQ  )$D ZF 



)$D ZF 
)$D ZF 







   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI&RQFUHWHVZLWK3HUFHQW&ODVV)
)O\$VK &XUHGDW5RRP7HPSHUDWXUHWRSVL 


0DVV&KDQJH 

 )$D ZF 


)$D ZF 
 )$D ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI&RQFUHWHVZLWK3HUFHQW&ODVV))O\
$VK &XUHGDW5RRP7HPSHUDWXUHWRSVL 

 


([SDQVLRQ  



 )$D ZF 


)$D ZF 
)$D ZF 





   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI&RQFUHWHVZLWK3HUFHQW&ODVV)
)O\$VK &XUHGDW5RRP7HPSHUDWXUHIRU'D\V 


0DVV&KDQJH 


)$D ZF 
)$D ZF 

)$D ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI&RQFUHWHVZLWK3HUFHQW&ODVV))O\
$VK &XUHGDW5RRP7HPSHUDWXUHIRU'D\V 

 




([SDQVLRQ  )$D ZF 



)$D ZF 
)$D ZF 







   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI&RQFUHWHVZLWK3HUFHQW&ODVV)
)O\$VK $FFHOHUDWHG&XUHGIRU'D\V 


0DVV&KDQJH 

 )$D ZF 


)$D ZF 
 )$D ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI&RQFUHWHVZLWK3HUFHQW&ODVV))O\
$VK $FFHOHUDWHG&XUHGIRU'D\V 

 



([SDQVLRQ 
 )$E ZF 
)$E ZF 
 )$E ZF 






   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI&RQFUHWHVZLWK3HUFHQW&ODVV)
)O\$VK &XUHGDW5RRP7HPSHUDWXUHWRSVL 


0DVV&KDQJH 

 )$E ZF 


)$E ZF 
 )$E ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI&RQFUHWHVZLWK3HUFHQW&ODVV))O\
$VK &XUHGDW5RRP7HPSHUDWXUHWRSVL 

 




([SDQVLRQ  )$E ZF 



)$E ZF 
)$E ZF 







   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI&RQFUHWHVZLWK3HUFHQW&ODVV)
)O\$VK &XUHGDW5RRP7HPSHUDWXUHIRU'D\V 


0DVV&KDQJH 

 )$E ZF 


)$E ZF 
 )$E ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI&RQFUHWHVZLWK3HUFHQW&ODVV))O\
$VK &XUHGDW5RRP7HPSHUDWXUHIRU'D\V 

 


([SDQVLRQ  

)$E ZF 



)$E ZF 
)$E ZF 







   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)6XOIDWH([SDQVLRQVRI&RQFUHWHVZLWK3HUFHQW&ODVV)
)O\$VK $FFHOHUDWHG&XUHGIRU'D\V 


0DVV&KDQJH 

 )$E ZF 


)$E ZF 
 )$E ZF 




   

7LPHLQ6XOIDWH6ROXWLRQ 'D\V

)LJXUH)0DVV&KDQJHRI&RQFUHWHVZLWK3HUFHQW&ODVV))O\
$VK $FFHOHUDWHG&XUHGIRU'D\V 


 

Das könnte Ihnen auch gefallen