- ! 0 - %" ! 1 . 1 #1 2 ! 1 ! 3 4 5 #6

    





         

     

         

                 

             

               

  

      !"#   $       !%          

        &         ! '                         

 ! (       

            

  



#  

                 

!  )

         *         

   




   


        
    

+,-  .+ /-  
 !0  -%"! 1 . 1 #12  ! 1!3 4    5#6 7  6

!. 7 6

4           #  



 

 


        

 


   

     

 

  !"  # $ 


 
 
  
  

 
   

     
 

 


     
 
  
 





 ! 
  
"



 
# 

 
 $  !%
 !

   
& 
$
 '  

 
'  

($
 
 ' 

# %
 %
)   %
*  % '  
  $


'
 

 
 + 
 


" %
 
 
 

&
 '  !

#  



 
$, 
 

( 

$
    
  
 
-
 
 
   
.   
   

 
 

 
     
 
  
 

  

 
 
 ! 
"-
 
 

 
 


 


( 
   %
 

 
 


  

   

 
 

. 


 
 %
   %

 %
 
 %
 
 


$ 
   
 

 
$



$ -




 
  
 
 -

 

 

 

  
  
 
 


 


-
- /

/
 
$$$    0 

  1"
1"#23.
" 
  






  


4& 
)*
5
/
+)     6
78%
99:::
&  %
  

) 2 
 ;   *
 

&
 


 
 

7=:@
4& 
)*
5
/
+) "
3 
 

"
 

&  
7=:@

%XON+HWHURMXQFWLRQ2UJDQLF6RODU &HOOV%DVHGRQ2UJDQLF'\HV

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ž& DQG WKH SURGXFW LV DERXW  SXUH VLOLFRQ )XUWKHU SXULILFDWLRQ LV WKHQ W\SLFDOO\DFKLHYHGE\UHDFWLRQZLWKK\GURJHQFKORULGHWRIRUPWULFKORURVLODQH6L+&O ZKLFK 

&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

LVSXULILHGE\IUDFWLRQDOGLVWLOODWLRQDQGILQDOO\UHGXFHGWRVLOLFRQE\K\GURJHQ0RUHWKDQILIW\ \HDUV RI UHVHDUFK VLQFH WKH GHYHORSPHQW RI WKH ILUVW VLOLFRQ VRODU FHOO KDV OHDG WR D ZRUOG SKRWRYROWDLFPRGXOHSURGXFWLRQRI0:LQZLWKDSRZHUFRVWRIa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a  JUHDWHUWKDQWRGD\¶VPRVWHIILFLHQWRUJDQLFVRODUFHOOVEDVHGRQVPDOOPROHFXODUZHLJKWWKLQ ILOPSKRWRGHWHFWRUV WREHFRPHPRUHHFRQRPLFDOO\HIILFLHQWWKDQVLOLFRQVRODUFHOOV



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

 2UJDQLF FRPSDUHG WR LQRUJDQLF VHPLFRQGXFWRUV IRU VRODU FHOO DSSOLFDWLRQV 2UJDQLF PROHFXODU DQG SRO\PHULF VHPLFRQGXFWRUV FDQ IRUP ILOPV ZLWK FRPSOH[ PRUSKRORJLHV DQG YDU\LQJ GHJUHHV RI RUGHU DQG SDFNLQJ PRGHV WKURXJK WKH LQWHUSOD\ RI D YDULHW\ RI QRQFRYDOHQW LQWHUDFWLRQV 7KHLU PROHFXODU VWUXFWXUH FRQVLVWHQWO\ SUHVHQWV D EDFNERQHDORQJZKLFKWKHFDUERQRUQLWURJHQR[\JHQVXOIXU DWRPVDUHVSK\EULGL]HGDQG WKXV SRVVHVV D ŒDWRPLF RUELWDO 7KH FRQMXJDWLRQ RYHUODS  RI WKHVH Œ RUELWDOV DORQJ WKH EDFNERQH UHVXOWV LQ WKH IRUPDWLRQ RI GHORFDOL]HG Œ PROHFXODU RUELWDOV ZKLFK GHILQH WKH IURQWLHUPROHFXODUHOHFWURQLFOHYHOVKLJKHVWRFFXSLHGPROHFXODURUELWDO+202 DQGORZHVW XQRFFXSLHG PROHFXODU RUELWDO /802  DQG WKHUHIRUH GHWHUPLQH WKH RSWLFDO DQG HOHFWULFDO SURSHUWLHVRIWKHPDFUR PROHFXOHV7KHRYHUODSRIWKHIURQWLHUŒ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



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

GHORFDOL]HG ,Q WKHVH FDVHV WKH H[FLWRQV DUH UHIHUUHG WR DV SRODURQV DQG WKH WUDQVSRUW WKHQ UHOLHV RQ WKHVH SRODURQV KRSSLQJ IURP PROHFXOH WR PROHFXOH 2UJDQLF VHPLFRQGXFWRUV KDYH ODUJH H[WLQFWLRQ FRHIILFLHQWV FRPSDUHG WR FU\VWDOOLQH VLOLFRQ OHDGLQJ WR HIILFLHQW OLJKW KDUYHVWLQJLQOD\HUVWKDWDUHUHODWLYHO\WKLQZLWKWKLFNQHVVHVLQWKHUDQJHRIQP

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a IV  SKRWRLQGXFHG FKDUJH WUDQVIHU RFFXUV EHWZHHQ GRQRU SRO\PHUV DQG IXOOHUHQHV LL  IXOOHUHQHVH[KLELWKLJKHOHFWURQPRELOLW\IRUH[DPSOH3&%0VKRZVHOHFWURQPRELOLW\XSWR  FP9V >@ PHDVXUHG E\ ILHOG HIIHFW WUDQVLVWRUV DQG LLL  IXOOHUHQHV VKRZ D EHWWHU SKDVH VHJUHJDWLRQLQWKHEOHQGILOPV>@

2UJDQLFVRODUFHOOVWUXFWXUHV 7KHJHQHUDOVWUXFWXUHRIDQRUJDQLFSKRWRYROWDLFGHYLFHVLPLODUWRWKDWUHSRUWHGE\7DQJ >@ LQ  LV VKRZQ LQ )LJ D  ,W FRQVLVWV RI D WUDQVSDUHQW HOHFWURGH W\SLFDOO\ D



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

FRQGXFWLQJ R[LGH VXFK DV LQGLXPWLQ R[LGH ,72  ZKLFK LV XVHG DV DQ DQRGH IRU KROH FROOHFWLRQWZRRUJDQLFOLJKWDEVRUELQJOD\HUVDQGDVHFRQGHOHFWURGHW\SLFDOO\DFRQGXFWLQJ

 )LJXUH  5HSUHVHQWDWLYH GRQRUV DQG DFFHSWRUV RUJDQLF VHPLFRQGXFWRUV XVHG EHQHILFLDOO\ LQ SKRWRYROWDLFDSSOLFDWLRQV 0(+339 SRO\>PHWKR[\¶HWK\OKH[\OR[\ SKHQ\OHQHYLQ\OHQH@ 3+7 SRO\KH[\OWKLRSKHQH  3)2'%7 SRO\>GLRFW\OIOXRUHQH DOW¶GLWKLHQ\O¶¶¶EHQ]RWKLDGLD]ROH  3&'7%7  SRO\>1¶KHSWDGHFDQ\OFDUED]ROHDOW¶¶GLWKLHQ\O¶¶¶ EQ]RWKLDGL]DROH  &10(+339 SRO\>PHWKR[\¶HWK\OKH[\OR[\@F\DQRYLQ\OHQH SKHQ\OHQH )7% SRO\¶GLRFW\OIOXRUHQHFRELV11¶EXW\OSKHQ\O ELV11¶SKHQ\OSKHQ\OHQHGLDPLQH 3&%0 >@SKHQ\O&EXW\ULFDFLGPHWK\OHVWHUDQG 3&%0 >@SKHQ\O&EXW\ULFDFLGPHWK\OHVWHU



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

PHWDOVXFKDV$ORU$JZKLFKLVXVHGDVDFDWKRGHIRUHOHFWURQ FROOHFWLRQ7KHWZRRUJDQLF OD\HUVDUHPDGHRIGLIIHUHQWRUJDQLFVHPLFRQGXFWRUVRQHZLWKDQHOHFWURQGRQRUFKDUDFWHUDQG WKH RWKHU ZLWK DQ HOHFWURQDFFHSWRU FKDUDFWHU (OHFWURQGRQRU PROHFXOHV H[KLELW D ORZ LRQL]DWLRQSRWHQWLDODQGWKXVDKLJKO\LQJ+202HQHUJ\ ZKLOHHOHFWURQDFFHSWRUPROHFXOHV SRVVHVV D KLJK HOHFWURQ DIILQLW\ DQG WKXV D ORZO\LQJ /802 HQHUJ\  >@ 7KLV NLQG RI RUJDQLFVRODUFHOOVLVGHILQHGDVDELOD\HUVRODUFHOOLQZKLFKWKHGRQRUDQGDFFHSWRUOD\HUVDUH GHSRVLWHGVHSDUDWHO\

/LJKW

*ODVV ,72

'RQRU $FFHSWRU $O

D 



)LJXUH  &URVVVHFWLRQDO UHSUHVHQWDWLRQV RI RUJDQLF SKRWRYROWDLF FHOO VWUXFWXUHV D  ELOD\HU VWUXFWXUHDQGE EXONKHWHURMXQFWLRQVWUXFWXUH

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



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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

%DVLFZRUNLQJSULQFLSOHVRIRUJDQLFVRODUFHOOV $OWKRXJKVRODUFHOOWHFKQRORJ\KDVEHHQVWXGLHGIRUGHFDGHVLWLVRQO\LQWKHSDVWVHYHUDO \HDUVWKDWRUJDQLFSKRWRYROWDLFFHOOVKDYHHPHUJHGDVDSRVVLEOHFRQWHQGHULQWKHVRODUSRZHU LQGXVWU\ &RQYHQWLRQDO VLOLFRQ SKRWRYROWDLFV ZLWK HIILFLHQFLHV DSSURDFKLQJ  FRQVLVW RI WZR RU PRUH OD\HUV RI SRVLWLYHO\ RU QHJDWLYHO\ GRSHG VHPLFRQGXFWLQJ PDWHULDOV 8SRQ DEVRUSWLRQRIDSKRWRQHOHFWURQVDUHSURPRWHGIURPWKHYDOHQFHEDQGWRWKHFRQGXFWLRQEDQG RIWKHPDWHULDOPDNLQJXSWKHDEVRUELQJOD\HU2QFHH[FLWHGWKHVHHOHFWURQVDUHIUHHWRIRUPD FXUUHQW2UJDQLFSKRWRYROWDLFFHOOVZRUNE\DVOLJKWO\GLIIHUHQWPHFKDQLVP$VGLVFXVVHGLQD QXPEHURIUHYLHZVRQRUJDQLFVRODUFHOOV>@WKHDEVRUELQJOD\HUVDUHFRPPRQO\GHVLJQHG XVLQJPDWHULDOVFRQVLVWLQJODUJHO\RIFDUERQDWRPVDUUDQJHGLQDFRQMXJDWHGV\VWHP2QFHWKH RUJDQLF VHPLFRQGXFWLQJ PDWHULDOV DUH EURXJKW LQWR FRQWDFW ZLWK RQH DQRWKHU LQ D KHWHURMXQFWLRQ EOHQGV RU LQ WKLQILOP ELOD\HUV  DQ LQWHUIDFH LV IRUPHG 7KLV LQWHUIDFH DOORZV IRUDRQHZD\WUDQVSRUWRIHLWKHUHOHFWURQVRUKROHV:KHQWKHVHWKLQILOPPDWHULDOVDEVRUED SKRWRQDQH[FLWRQLVIRUPHG>@7KHVHH[FLWRQVDUHQRWIUHHWRWUDYHOWKURXJKRXWWKHOD\HU DV WKH\ FDQ LQ PDQ\ LQRUJDQLF PDWHULDOV 5DWKHU WKH\ PXVW PDNH WKHLU ZD\ YLD H[FLWRQ GLIIXVLRQWRWKHLQWHUIDFHRIDVHFRQGPDWHULDOZKHUHWKH\XQGHUJRDQH[FLWRQGLVVRFLDWLRQLQWR HOHFWURQVDQGKROHVWKDWWUDYHOWRWKHFDWKRGHDQGWKHDQRGHUHVSHFWLYHO\



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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

9DFXXP /HYHO

K

,3

($



H -,72

/802 -$O



/802



K



,72 $QRGH

+202   

'RQRU



(J 

+202 

$FFHSWRU



$O &DWKRGH



)LJXUH6FKHPDWLFVKRZVHQHUJ\OHYHOGLDJUDPRIWKHRUJDQLFVRODUFHOOFRPSRQHQWVDQGGHSLFWV WKHDEVRUSWLRQRIOLJKWE\GRQRUFKDUJHFDUULHUVHSDUDWLRQDQGFKDUJHFROOHFWLRQDWHOHFWURGHV-  HOHFWURGHZRUNIXQFWLRQ(J RSWLFDOHQHUJ\JDS,3 LRQL]DWLRQSRWHQWLDO($ HOHFWURQDIILQLW\

2SWLFDODEVRUSWLRQ &RQMXJDWHG ROLJRPHUV DQG SRO\PHUV GLVSOD\ DEVRUSWLRQ EDQGV WKDW DUH XVXDOO\ L  YHU\ LQWHQVHDVDUHVXOWRIWKHODUJHZDYHIXQFWLRQRYHUODSEHWZHHQWKHJURXQGVWDWHDQGWKHORZHVW H[FLWHGVWDWHVDQGLL EURDGGXHWRWKHVLJQLILFDQWJHRPHWU\UHOD[DWLRQVWKDWWDNHSODFHLQWKH H[FLWHG VWDWHV WKH ZLGWK RI WKH DEVRUSWLRQ EDQGV FDQ UHDFK RYHU  H9  ,Q ŒFRQMXJDWHG V\VWHPVWKHERQGOHQJWKVDUHSULPDULO\PRGXODWHGE\WKHŒHOHFWURQGHQVLWLHVRQWKHERQGV DQ\ FKDQJH LQ HOHFWURQLF VWDWH GXH WR H[FLWDWLRQ RU LRQL]DWLRQ PRGLILHV WKH ŒHOHFWURQ ERQG GHQVLWLHVDQGWKXVWKHERQGOHQJWKV>@7KLVVWURQJFRQQHFWLRQEHWZHHQHOHFWURQLFVWUXFWXUH DQGJHRPHWULFVWUXFWXUHLVUHIHUUHGWRDVVWURQJHOHFWURQYLEUDWLRQSKRQRQ FRXSOLQJ



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

7KHZLGWKVRIWKH DEVRUSWLRQEDQGVDOORZIRU JRRGPDWFKLQJ ZLWKDVL]HDEOHSRUWLRQRI WKHVRODUVSHFWUXP2QFHSURPRWHGWRDQH[FLWHGVWDWHWKHŒFRQMXJDWHGV\VWHPUHOD[HVGRZQ WR WKH ERWWRP RI WKH SRWHQWLDO HQHUJ\ VXUIDFH RI WKH ORZHVW H[FLWHG VWDWH WKH H[FLWHG VWDWH UHDFKHV LWV HTXLOLEULXP JHRPHWU\ DQG DQ H[FLWRQ IRUPV ZH QRWH WKDW WKLV UHOD[DWLRQWKHUPDOL]DWLRQSURFHVVFRQVWLWXWHVDILUVWVRXUFHRISRZHUORVV :HUHFDOOWKDWWKH H[FLWRQ LV D ERXQG HOHFWURQKROH SDLU ZLWK D W\SLFDO ELQGLQJ HQHUJ\ RQ WKH RUGHU RI D IHZ WHQWKVRIDQH97KLVKLJKYDOXHLVDUHIOHFWLRQQRWRQO\RIWKHUDWKHUORZGLHOHFWULFFRQVWDQWRI ŒFRQMXJDWHG RUJDQLF PDWHULDOV EXW DOVR RI WKH VLJQLILFDQW HOHFWURQ FRUUHODWLRQ DQG JHRPHWU\ UHOD[DWLRQHIIHFWVSUHVHQWLQWKHVHPDWHULDOV7KXVLQFRQWUDVWWRLQRUJDQLFVHPLFRQGXFWRUVWKH DEVRUSWLRQRIDSKRWRQDWURRPWHPSHUDWXUHLQFRQMXJDWHGRUJDQLFPDWHULDOVGRHVQRWOHDGWR IUHH FKDUJH FDUULHUV EXW WR QHXWUDO ERXQG HOHFWURQKROH SDLUV 7KLV LV WKH UHDVRQ ZK\ WZR FRPSRQHQWV DQ HOHFWURQ GRQRU DQG DQ HOHFWURQ DFFHSWRU DUH UHTXLUHG WR SURPRWH WKH JHQHUDWLRQRIFKDUJHFDUULHUVLQRUJDQLFVRODUFHOOV

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

([FLWRQGLVVRFLDWLRQDWGRQRUDFFHSWRULQWHUIDFH 7KHFKDUJHVHSDUDWLRQRIWKHH[FLWRQVDWWKHLQWHUIDFHFDQEHLQIOXHQFHGE\FRQFHQWUDWLRQ DQGPRUSKRORJ\JUDGLHQWVQHDUWKHKHWHURMXQFWLRQWKDWWDNHSODFHGXULQJWKHIRUPDWLRQRIWKH RUJDQLFILOPVRUFDQEHDVVLVWHGE\ORFDOHOHFWULFILHOGV>@&KDUJHVHSDUDWLRQLVNQRZQWR RFFXU DW RUJDQLF VHPLFRQGXFWRUPHWDO LQWHUIDFHV DW LPSXULWLHV VXFK DV R[\JHQ RU EHWZHHQ



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

PDWHULDOV ZLWK VXIILFLHQWO\ GLIIHUHQW HOHFWURQ DIILQLWLHV DQG LRQL]DWLRQ SRWHQWLDOV >@ DV D UHVXOW RI VXIILFLHQW ORFDO HOHFWULF ILHOG ZKLFK GULYHV FKDUJH VHSDUDWLRQ 7KH RUJDQLF PDWHULDO ZLWK ORZ HOHFWURQ DIILQLW\ DQG LRQL]DWLRQ SRWHQWLDO LV WKH HOHFWURQ GRQRU ZKLOH WKH RWKHU PDWHULDO ZLWK KLJK HOHFWURQ DIILQLW\ DQG LRQL]DWLRQ SRWHQWLDO LV WKH HOHFWURQ DFFHSWRU ,I WKH GLIIHUHQFHLQ HOHFWURQ DIILQLW\ DQGLRQL]DWLRQSRWHQWLDOLVQRWVXIILFLHQWWKHH[FLWRQPD\MXVW KRSRQWRWKHPDWHULDOZLWKWKHORZHUEDQGJDSZLWKRXWVSOLWWLQJXSLWVFKDUJHV(YHQWXDOO\LW ZLOOUHFRPELQHZLWKRXWFRQWULEXWLQJFKDUJHVWRWKHSKRWRFXUUHQW

&KDUJHFDUULHUPRELOLW\DQGFROOHFWLRQDWHOHFWURGHV 7KH NH\ TXDQWLW\ WKDW FKDUDFWHUL]HV FKDUJH WUDQVSRUW LV WKH FDUULHU PRELOLW\ 2QFH WKH FKDUJHV KDYH VHSDUDWHG DW WKH LQWHUIDFHV WKH\ FDQ GULIW DQG GLIIXVH WRZDUGV WKHLU UHVSHFWLYH HOHFWURGHVZLWKHIILFLHQF\GHSHQGLQJRQWKHLUPRELOLWLHV7RUHDFKWKHHOHFWURGHVWKHFKDUJH FDUULHUV QHHG D QHW GULYLQJ IRUFH ZKLFK JHQHUDOO\ UHVXOWV IURP D JUDGLHQW LQ WKH HOHFWURFKHPLFDO SRWHQWLDOV RI HOHFWURQV DQG KROHV 7ZR ³IRUFHV´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Œ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



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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

(YDSRUDWLRQ 7RJURZILOPVE\WKHUPDOHYDSRUDWLRQXVXDOO\DYDFXXPRI3DLVDSSOLHG7KXVWKH PHDQIUHHSDWKRIWKHHYDSRUDWHGPROHFXOHLVORQJHUWKDQWKHGLVWDQFHEHWZHHQWKHHYDSRUDWLRQ VRXUFH DQG WKH VDPSOH KROGHU ,Q DGGLWLRQ FRQWDPLQDQWV OLNH R[\JHQ DQG ZDWHU DUH UHGXFHG DQGFDQEHHOLPLQDWHGIXUWKHUE\XOWUDKLJKYDFXXP3D RUHYDSRUDWLRQLQVLGHRIDJORYH ER[ZLWKLQHUWDWPRVSKHUH7RFUHDWHLQWHUSHQHWUDWLQJGRQRUDFFHSWRUQHWZRUNVEOHQGV RUWR DFKLHYHPROHFXODUGRSLQJFRHYDSRUDWLRQWHFKQLTXHVFDQEHDSSOLHG>@

:HWSURFHVVLQJ &RPPRQ WR DOO ZHW SURFHVVLQJ WHFKQLTXHV LV WKH VROYLQJ RI RUJDQLF PDWHULDOV LQ DQ DSSURSULDWHVROYHQWOLNHZDWHURUDQ\RWKHUSRODURUQRQSRODURUJDQLFVROYHQW,ISRO\PHUVRU 

&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

SRO\PHUSRO\PHU RU SRO\PHUPROHFXOH EOHQGV DUH GLUHFWO\ SURFHVVHG IURP VROXWLRQ VHYHUDO FRPPRQWHFKQLTXHVDUHDSSOLHGL VSLQFRDWLQJLL GRFWRUEODGLQJLLL VFUHHQSULQWLQJLY  LQNMHW SULQWLQJ DQG PDQ\ PRUH )RU H[DPSOH VFUHHQSULQWLQJ ZDV DSSOLHG WR D SRO\> PHWKR[\  GLPHWK\ORFW\OR[\ SSKHQ\OHQH YLQ\OHQH@ 0'02339 3&%0 EOHQG >@

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



-

-R Q -SK

56K

9

«'DUN

&XUUHQW'HQVLW\P$FP 

5V

/LJKW 9PD[  -PD[

92&

-6& 





 9ROWDJH9 





D E   )LJXUH  D  (TXLYDOHQW FLUFXLW XVHG WR PRGHO VRODU FHOOV E  &XUUHQWGHQVLW\YROWDJH FKDUDFWHULVWLFVRIDVRODUFHOOLQWKHGDUNDQGXQGHULOOXPLQDWLRQ7KHQRWDWLRQVDUHGHILQHGLQWKHWH[W



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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«««««««««««««««««««««« 

ZKHUH3LQLVWKHLQFLGHQWSRZHUGHQVLW\DQG ))GHQRWHVWKHILOOIDFWRU 7KHVHSDUDPHWHUVDUH LOOXVWUDWHG LQ )LJ E  7R FKDUDFWHUL]H TXDQWLWDWLYHO\ WKH SHUIRUPDQFH RI VRODU FHOOV IRU WHUUHVWULDODSSOLFDWLRQVVWDQGDUGL]HGLOOXPLQDWLRQFRQGLWLRQVDUHXVHGLQZKLFKWKHVSHFWUXPRI WKHVRXUFHVLPXODWHVWKHVRODUVSHFWUXP$0* DQGKDVDQLQWHQVLW\RQWKHRUGHURI P:FPWKLVFRUUHVSRQGVWRWKHDYHUDJHLQWHQVLW\RIVXQOLJKWZLWKDQDQJOHRILQFLGHQFH  RUHODWLYHWRWKHQRUPDOWRWKHHDUWK¶VVXUIDFH$0GHQRWHVWKHDLUPDVV FRV*VWDQGV IRU JOREDO DQG UHIHUV WR D VPDOO FRQWULEXWLRQ RI GLIIXVH OLJKW WR WKH GLUHFW LQFLGHQW OLJKW  ,PSRUWDQWO\ DFFRUGLQJ WR HTXDWLRQ  WKH 3&( RI D VRODU FHOO LV GHWHUPLQHG E\ WKUHH SDUDPHWHUVWKH))WKH92&DQGWKH-6&7KHUHLVDVXEWOHLQWHUSOD\EHWZHHQWKHSDUDPHWHUV GHWHUPLQLQJWKHHIILFLHQF\DQGWKH\KDYHWREHUHVROYHGWRJHWKHU:HQRZH[DPLQHWKHOLPLWV RIWKHVHWKUHHSDUDPHWHUVLQRUJDQLFVRODUFHOOVDQGGLVFXVVKRZWKH\UHODWHWRPDWHULDOVDQG VRODUFHOOSHUIRUPDQFH

)LOOIDFWRU 7KH))LVGHWHUPLQHGE\WKHIUDFWLRQRIWKHSKRWRJHQHUDWHGFKDUJHFDUULHUVWKDWDFWXDOO\ UHDFK WKH HOHFWURGHV >@ 7KH )) LV XVXDOO\ JLYHQ DV D SHUFHQW DQG LW UHSUHVHQWV WKH ³VTXDUHQHVV´RIWKH-9FXUYHDVVKRZQLQ)LJE 7KHPD[LPXPYDOXHIRUWKH))LVD IXQFWLRQ RI WKH 92& DQG WKH Q RI WKH GLRGH RSWLPDOO\ HTXDO WR   ,Q YLHZ RI WKH KLJKHU GLVRUGHU DQG LPSXULW\ OHYHOV SUHVHQW LQ DPRUSKRXV RUJDQLF VHPLFRQGXFWRUV FRPSDUHG WR WKH SXUHJUDGHVRIVLOLFRQZDIHUVWKDWFDQEHIDEULFDWHGLGHDOLW\IDFWRUVWKDWGHYLDWHIURPXQLW\DUH 

&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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³VKRUWV´WRPD[LPL]HWKHSDUDOOHOVKXQWUHVLVWDQFHDQGWKHUHIRUHWRLQFUHDVH WKH)),QRUGHUWRLQFUHDVHWKHVKXQWUHVLVWDQFHLWLVYHU\FRPPRQWRVSLQFRDWDOD\HURIWKH KROHFRQGXFWRUSRO\HWK\OHQHGLR[\WKLRSKHQH SRO\VW\UHQHVXOSKRQLFDFLG 3('27366  RQWRSRIWKHDQRGHHOHFWURGH7KLVJLYHVDEDUULHUOD\HUZLWK DFRQGXFWLYLW\RI§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

2SHQFLUFXLWYROWDJH 7KH92&LVWKHPD[LPXPYROWDJHWKHGHYLFHFDQSURGXFH$VLQWKHFDVHRIFRQYHQWLRQDO VRODUFHOOVPD[LPL]DWLRQRIWKH-6&E\XVLQJRUJDQLFVHPLFRQGXFWRUVZLWKGHFUHDVLQJRSWLFDO DEVRUSWLRQ JDS LV QRW RYHUDOO DQ HIIHFWLYH VWUDWHJ\ VLQFH WKH PD[LPXP 92& SUHVHQWV DQ RSSRVLWHWUHQGZLWKRSWLFDODEVRUSWLRQJDS,WIROORZVWKDWWKHGHWHUPLQDWLRQRIWKHRSWLPXP OLJKWKDUYHVWLQJFRQGLWLRQVWRPD[LPL]HWKHHIILFLHQF\RIRUJDQLFVRODUFHOOVGHSHQGVODUJHO\ RQ WKH XQGHUVWDQGLQJ RI WKH RULJLQ RI 92& DQG LWV GHSHQGHQFH RQ PDWHULDOV SURSHUWLHV LQ SDUWLFXODUWKHUHODWLYHHQHUJLHVRIWKHUHOHYDQWHQHUJ\OHYHOV DWWKHRUJDQLFKHWHURMXQFWLRQ,Q WKHFDVHZKHUHWKH0HWDO,QVXODWRU0HWDO0,0 PRGHOLVYDOLG WKH92&LVHVWLPDWHGDVWKH GLIIHUHQFHEHWZHHQWKHZRUNIXQFWLRQRIWKHWZRHOHFWURGHV,QFDVHVZKHUHWKHRUJDQLFVRODU FHOOV FRQVLVW RI EOHQGHG SRO\PHU DQG IXOOHUHQH %+- VRODU FHOOV  WKH 0,0PRGHO FDQQRW 

&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

SODFH )XUWKHU LW KDV EHHQ VKRZQ WKDW WKH SRO\PHU PDWUL[ WUDQVSRUWV WKH KROHV DQG WKH IXOOHUHQH PROHFXOHV WUDQVSRUW WKH HOHFWURQV $ORQJ WKH SRO\PHU FKDLQV WKH WUDQVSRUW RI WKH KROHVLVIDVWZKLOHEHWZHHQWKHLQGLYLGXDOFKDLQVWKHWUDQVSRUWLVQHDUO\WLPHVVORZHU7KH IXOOHUHQH PROHFXOHV WUDQVSRUW WKH HOHFWURQV E\ D KRSSLQJ SURFHVV EHWZHHQ WKH LQGLYLGXDO IXOOHUHQH PROHFXOHV DQG WKHUHIRUH DQ RSWLPDO SHUIRUPDQFH UHTXLUHV WKDW WKH IXOOHUHQHV DUH SDFNHGFORVHWRJHWKHU>@

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ƒ& DQG  5+  ZLWK OHVV WKDQ  GHJUDGDWLRQ RI 3&( 7KLV FDQ EH DWWULEXWHG WR WKHLU VHQVLWLYLW\ WR R[\JHQ DQG PRLVWXUH :KLOH LW LV SRVVLEOH WR SURWHFW WKH GHYLFHV WKURXJK FHOO HQFDSVXODWLRQ DQG GHYLFH SDFNDJLQJ LW ZLOO QR GRXEW LQFUHDVH RYHUDOO SURGXFWLRQFRVWV$QLGHDOVROXWLRQLVWRVHDUFKIRUVWDEOHPDWHULDOVWKDWDUHOHVVVHQVLWLYHWR R[\JHQDQGPRLVWXUHVRRQO\PLQLPDOHQFDSVXODWLRQDQGSDFNDJLQJLVUHTXLUHG



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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

&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

ILHOG >@ SURSHU VROYHQW >@ VROYHQWYDSRU WUHDWPHQW >@ DQG DGGLQJ DGGLWLYHV OLNH SRUSK\ULQ>@DQGROHLFDFLG>@

$WKLUGPDWHULDOIRULPSURYLQJ3+73&%0ELQDU\ %+- VRODU FHOO EDVHG RQ 3+7 ZKLFK IRUPV WKH HOHFWURQ GRQRU DQG WKH KROHWUDQVSRUW QHWZRUN DQG3&%0ZKLFKIRUPVWKHHOHFWURQDFFHSWRUDQGWKHHOHFWURQWUDQVSRUWQHWZRUN  LVWKHODUJHVWLQUHVHDUFKHUV¶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



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

/LJKW

*ODVV



,72 3('27366 3+73&%0 '3$ $O





D E   )LJXUH  D  &URVVVHFWLRQDO YLHZ RI ,723('273663+73&%0'3$$O VRODU FHOO DQG E  FKHPLFDOVWUXFWXUHRI'3$

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

&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

DVVLVWDQFHRIVXUIDFWDQW5HFHQWO\6XQHWDO>@V\QWKHVL]HGDVHULHVRIQHZŒ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lW]HOW\SH G\HVHQVLWL]HG VRODU FHOOV >@ DQG DV OXPLQHVFHQWVRODUFRQFHQWUDWRUVDSSOLHGXSRQVRODUFHOOV>@ 

&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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

QP

ZLWK

WKH

GLIIHUHQW

G\HGRSLQJ

UDWLR

:KHQ

ELVWHUWEXW\O

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±&+&+±  FRQQHFWLQJ WKH F\DQR ±&1  DQG FDUER[\O±&22+ JURXSVLQWRWKHFRXPDULQIUDPHZRUNH[SDQGHGWKH ŒFRQMXJDWLRQLQ 

&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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

&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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



1

H9 

6 +&

H9 

2

+&

H9 H9 

2

1

H9

/LJKW

H9 H9

H9  H9 H9  H9 

$O

H9

,72 3+7

H9

&

H9

3&%0

H9



)LJXUH(QHUJ\OHYHOGLDJUDPRIWKH&G\HIURP5HI>@ DQGWKHUHVWFRPSRQHQWVIURP5HI >@ UHODWLYHWRYDFXXP7KHLQVHWVKRZVWKHFKHPLFDOVWUXFWXUHRIWKH&G\H 

6PDOOPROHFXOHRUJDQLFVRODUFHOOV $QWKUDFHQH DV D VPDOOPROHFXOH G\H ZDV WKH ILUVW RUJDQLF FRPSRXQG LQ ZKLFK SKRWRFRQGXFWLYLW\ZDVREVHUYHGE\ 3RFKHWWLQRLQ>@DQG 9ROPHULQ>@ ,Q WKHHDUO\VLWZDVGLVFRYHUHGWKDWPDQ\FRPPRQG\HVVXFKDVPHWK\OHQHEOXHKDGVHPL 

&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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“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

XVLQJ

D

QRYHO

DQWKUDGLWKLRSKHQH

GHULYDWLYH

GLHWK\O

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

&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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

&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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

H  H9 /LJKW

/802 H9

1 6 +&

H9

H9

,72 3('37 366

2

1

H9

2

$O

+&

H9

K

&



H9

+202

3&%0



D  /LJKW

*ODVV ,72 3('27366 &3&%0 $O



E  )LJXUHD (QHUJ\OHYHOGLDJUDPRI&G\HIURP5HI DQGWKHUHVWFRPSRQHQWVRIWKHVRODU FHOO IURP 5HI   UHODWLYH WR YDFXXP DQG E  &URVVVHFWLRQDO YLHZ RI WKH ,723('27366&3&%0$OVRODUFHOO



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

2EMHFWLYHVRIWKHSUHVHQWWKHVLV 7KHZRUNDFFRPSOLVKHGLQWKLVWKHVLVLVGLUHFWHGIRUGHYHORSLQJ%+-RUJDQLFVRODUFHOOV WRZDUGV EHVW SHUIRUPDQFH WKURXJK XWLOL]H VPDOORUJDQLF G\HV LQ WKH RUJDQLF VRODU FHOO DSSOLFDWLRQV2XUREMHFWLYHVRIWKHSUHVHQWWKHVLVFDQEHSRLQWHGLQWKHIROORZLQJSRLQWV  8VHVPDOORUJDQLFOXPLQHVFHQWG\HVDVDWKLUGPDWHULDOIRULPSURYLQJWKHSHUIRUPDQFHRI RUJDQLFVRODUFHOOV  ,QYHVWLJDWLRQEHKDYLRURIWKHPRVWFRPPRQ3+73&%0VRODUFHOOZKHQDWKLUGPDWHULDO LVLQFRUSRUDWHGLQVLGHLW  &RQVWUXFWLRQ D QHZ EXON KHWHURMXQFWLRQ RUJDQLF VRODU FHOO EDVHG RQ VPDOORUJDQLF G\H FRXPDULQDVDVHQVHWL]HUDQGGRQRUPDWHULDODQG3&%0DVDQDFFHSWRU  ,QFUHDVLQJNQRZOHGJHRISURSHUWLHVDQGEHKDYLRURIPDWHULDOVFRPELQHGLQQHZVRODUFHOO V\VWHP  8QGHUVWDQGLQJ WKH GHYLFH SK\VLFV DQG ORFDWLQJ D UHODWLRQVKLS EHWZHHQ SURGXFWLRQ SDUDPHWHUV DQG SHUIRUPDQFH SDUDPHWHUV RI VRODU FHOO EDVHG RQ VPDOORUJDQLF G\H DQG IXOOHUHQH GHULYDWLYH WKURXJK LQYHVWLJDWLRQ WKH GHYLFH SHUIRUPDQFH XQGHU GLIIHUHQW SURGXFWLRQSDUDPHWHUV  ,OOXVWUDWLRQ WKH SURQRXQFHG LPSDFW RI WKH RUJDQLFRUJDQLF LQWHUIDFH RQ DFWLYH OD\HU DEVRUSWLRQDQGSKRWRFXUUHQWRIWKHRUJDQLFVRODUFHOO

5HIHUHQFHV >@ 0 6 $ $EGRX ) 3 2UILQR @- ' 2OVRQ 1RYHO SKRWRYROWDLFV DQ LQWURGXFWLRQ WR EDVLF FKDUDFWHUL]DWLRQ 3K' 7KHVLV 8QLYHUVLW\RI&DOLIRUQLD6DQWD&UX]-XQH >@0*UlW]HOUHYLHZDUWLFOH3KRWRHOHFWURFKHPLFDOFHOOV1DWXUH  >@ - ( .URH]H 3KRWRLQGXFHG FKDUJH VHSDUDWLRQ LQ G\HVHQVLWL]HG ILOPV RI VPRRWK DQG QDQRFU\VWDOOLQH 7L2 3K' 7KHVLV '83 6FLHQFH 'HOIW 8QLYHUVLW\ 3UHVV 7KH 1HWKHUODQGV >@ )RU JHQHUDO LQIRUPDWLRQ DERXW VRODU HQHUJ\ FRQVXOW WKH ,QWHUQDWLRQDO (QHUJ\ $JHQF\ 3KRWRYROWDLF3RZHU6\VWHPV3URJUDPDWZZZLHDSYSVRUJ 

&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

>@ ( %HFTXHUHO 0pPRLUH VXU OHV HIIHWV pOHFWULTXHV SURGXLWV VRXV O¶LQIOXHQFH GHV UD\RQV VRODLUHV&5$FDG6FL  >@:*$GDPVDQG5('D\3URF56RF/RQGRQ6HU$  >@%/DQJ1HZSKRWRYROWDLFFHOO=3K\V  >@:6FKRWWN\1HZFXSURXVR[LGHSKRWRHOHFWULFFHOOV=3K\V  >@KWWSZZZSEVRUJWUDQVLVWRUVFLHQFHHYHQWVSQMXQFKWPO >@'0&KDSLQ&6)XOOHUDQG*/3HDUVRQ$QHZVLOLFRQSæ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qGH 2UJDQLF SKRWRYROWDLF FHOOV KLVWRU\ SULQFLSOH DQG WHFKQLTXHV - &KLO &KHP6RF  >@9&RURSFHDQX-&RUQLO'$GD6LOYD)LOKR@40=KRX4+RX/=KHQJ;'HQJ'@;*RQJ0+7RQJ@ & @++RSSHDQG166DULFLIWFL2UJDQLFVRODUFHOOV$QRYHUYLHZ-0DWHU5HV   >@%$*UHJJ([FLWRQLFVRODUFHOOV-3K\V&KHP%  >@/6DOHP7KH0ROHFXODU2UELWDO7KHRU\RI&RQMXJDWHG6\VWHPV%HQMDPLQ1HZ@++RSSHDQG166DULFLIWFL3RO\PHUVRODUFHOOV$GY3RO\P6FL  >@-01XQ]L2UJDQLFSKRWRYROWDLFPDWHULDOVDQGGHYLFHV&53K\VLTXH  >@ * +HLPHO / 5RPDQHU ( =RMHU DQG -/ %UpGDV 7RZDUG FRQWURO RI WKH PHWDORUJDQLF LQWHUIDFLDO HOHFWURQLF VWUXFWXUH LQ PROHFXODU HOHFWURQLFV $ ILUVWSULQFLSOHV VWXG\ RQ VHOI DVVHPEOHGPRQROD\HUVRIŒFRQMXJDWHGPROHFXOHVRQQREOHPHWDOV1DQR /HWW  



&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

>@:*HHQV7$HUQRXWV-3RRUWPDQVDQG*+DG]LLRDQQRX2UJDQLFFRHYDSRUDWHGILOPV RI D 339SHQWDPHU DQG & 0RGHO V\VWHPV IRU GRQRUDFFHSWRU SRO\PHU EOHQGV 7KLQ 6ROLG)LOPV  >@6(6KDKHHQ55DGVSLQQHU13H\JKDPEDULDQDQG*(-DEERXU)DEULFDWLRQRIEXON KHWHURMXQFWLRQSODVWLFVRODUFHOOVE\VFUHHQSULQWLQJ$SSO3K\V/HWW  >@0&6FKDUEHU'0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|GQHU5HHOWRUHHO ZHWFRDWLQJDVDQHIILFLHQWXSVFDOLQJWHFKQLTXHIRUWKHSURGXFWLRQRIEXONKHWHURMXQFWLRQ SRO\PHUVRODUFHOOV6RO(QHUJ\0DWHU6RO&HOOV  >@/*RULV0$/RL$&UDYLQR+1HXJHEDXHU166DULFLIWFL,3ROHF//XWVHQ( $QGULHV

-

0DQFD

/

'H

6FKHSSHU

DQG

'

9DQGHU]DQGH

3RO\

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¶KRPPH DQG & 'DJURQ/DUWLJDX +LJK PROHFXODU ZHLJKWV SRO\GLVSHUVLWLHV DQG 

&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

DQQHDOLQJ WHPSHUDWXUHV LQ WKH RSWLPL]DWLRQ RI EXONKHWHURMXQFWLRQ SKRWRYROWDLF FHOOV EDVHG RQ SRO\KH[\OWKLRSKHQH  RU SRO\EXW\OWKLRSKHQH  $GY )XQFW 0DWHU    >@$-0RXOHDQG.0HHUKRO]&RQWUROOLQJPRUSKRORJ\LQSRO\PHUIXOOHUHQHPL[WXUHV $GY0DWHU  >@ 0 $O,EUDKLP 2 $PEDFKHU 6 6HQVIXVV DQG * *REVFK (IIHFWV RI VROYHQW DQG DQQHDOLQJ RQ WKH LPSURYHG SHUIRUPDQFH RI VRODU FHOOV EDVHG RQ SRO\ KH[\OWKLRSKHQH IXOOHUHQH$SSO3K\V/HWW  >@ @.@-&DEDQLOODV*RQ]DOH]79LUJLOL*/DQ]DQL6@$3RFKHWWLQR$FDG/LQFHL5HQG  

&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

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Π&RQMXJDWHGSRO\DQWKUDFHQHDOWIOXRUHQH VZLWK;VKDSHGUHSHDWLQJXQLWV1HZEOXHOLJKW HPLWWLQJSRO\PHUV3RO\PHU  >@ , % %HUOPDQ +DQGERRN RI )OXRUHVFHQFH 6SHFWUD RI $URPDWLF 0ROHFXOHV $FDGHPLF 3UHVV1HZ@50&KULVWLDQG&+/XL6WXGLHVRIIOXRUHVFHQWG\HVSDUW$QLQYHVWLJDWLRQRIWKH HOHFWURQLFVSHFWUDOSURSHUWLHVRIVXEVWLWXWHGFRXPDULQV'\HV3LJPHQWV  >@50&KULVWLHDQG&+/XL6WXGLHVRIIOXRUHVFHQWG\HVSDUW$QLQYHVWLJDWLRQRIWKH V\QWKHVLV

DQG

HOHFWURQLF

VSHFWUDO

SURSHUWLHV

RI

VXEVWLWXWHG

 

EHQ]LPLGD]RO\O FRXPDULQV'\HV3LJPHQWV  >@ % .RYDþ DQG , 1RYDN (OHFWURQLF VWUXFWXUH RI FRXPDULQV 6SHFWURFKLP $FWD $    >@;=KRX-%ORFKZLW]1LPRWK03IHLIIHU%0DHQQLQJ-'UHFKVHO$:HUQHUDQG . /HR ,QYHUWHG WUDQVSDUHQW PXOWLOD\HUHG YDFXXP GHSRVLWHG RUJDQLF OLJKWHPLWWLQJ GLRGHVZLWKHOHFWULFDOO\GRSHGFDUULHUWUDQVSRUWOD\HUVDQGFRXPDULQGRSHGHPLVVLYHOD\HU 6\QWK0HW  

&KDSWHU,QWURGXFWLRQDQGVXUYH\RIOLWHUDWXUH

>@ . +DUD . 6D\DPD @.+DUD@ 5 0 0HL[QHU + *|EHO ) $ @ $ /WDLHI 5 %HQ &KDkEDQH $ %RXD]L]L DQG - 'DYHQDV  3KRWRYROWDLF SURSHUWLHV RI EXON KHWHURMXQFWLRQ VRODU FHOOV ZLWK LPSURYHG VSHFWUDO FRYHUDJH 0DWHU 6FL (QJ &    >@ ; -LDQJ : ) %XUJR\QH -U DQG / 0 5REHVRQ 6HTXHVWUDWLRQ RI HOHFWURDFWLYH PDWHULDOVLQDKLJK7JLQVXODWLQJSRO\PHUPDWUL[IRURSWRHOHFWURQLFDSSOLFDWLRQV3DUW 3KRWRYROWDLFGHYLFHV3RO\PHU  >@ 7 @ *$5H\QROGVDQG.+'UH[KDJH1HZFRXPDULQG\HVZLWKULJLGL]HGVWUXFWXUHIRU IODVKODPSSXPSHGG\HODVHUV2SWLFV&RPPXQ  >@5+%XEH3KRWRFRQGXFWLYLW\RI6ROLGV:LOH\1HZ@ - /DQJH DQG + %l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

&KDSWHU8VLQJGLSKHQ\ODQWKUDFHQHG\HIRULPSURYLQJOLJKWKDUYHVWLQJDQGFKDUJHFDUULHUWUDQVIHURI WKH PRVWFRPPRQ3+73&%0VRODUFHOO

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

)LOPDQGGHYLFHIDEULFDWLRQ



)RU RSWLFDO DEVRUSWLRQ PHDVXUHPHQW WKH 3+73&%0 DQG 3+73&%0'3$ EOHQG VROXWLRQV ZHUH VSLQFRDWHG DW  UHYROXWLRQV SHU PLQXWH USP  RQWR FOHDQ PLFURJODVV VXEVWUDWHVZKLFKKDYHDWKLFNQHVVRIaPP$IWHUVSLQFRDWLQJDOOEOHQGILOPVZHUH WKHUPDOO\DQQHDOHGXVLQJDGLJLWDOO\FRQWUROOHGKRWSODWHDW R&IRUPLQXQGHUQLWURJHQ DWPRVSKHUHLQDJORYHER[)RUVRODUFHOOIDEULFDWLRQWKH,72 VHTXHQWLDOO\FOHDQHGLQDQXOWUDVRQLFEDWKXVLQJDFHWRQHWZLFH DQGPHWKDQRORQFH ULQVHG ZLWK GHLRQL]HG ZDWHU HDFK VWHS WRRN  PLQ  DQG ILQDOO\ GULHG ZLWK IORZLQJ QLWURJHQ $IWHU GU\LQJWKH,72JODVVVXEVWUDWHVZHUHLPPHGLDWHO\XVHGIXUWKHUWRDYRLGUHFRQWDPLQDWLRQ7R LQFUHDVHWKHZRUNIXQFWLRQRI,72HOHFWURGHDQGWRLPSURYHWKHHOHFWULFDOFRQQHFWLRQEHWZHHQ 

&KDSWHU8VLQJGLSKHQ\ODQWKUDFHQHG\HIRULPSURYLQJOLJKWKDUYHVWLQJDQGFKDUJHFDUULHUWUDQVIHURIWKH PRVWFRPPRQ3+73&%0VRODUFHOO

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c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

&KDSWHU8VLQJGLSKHQ\ODQWKUDFHQHG\HIRULPSURYLQJOLJKWKDUYHVWLQJDQGFKDUJHFDUULHUWUDQVIHURIWKH PRVWFRPPRQ3+73&%0VRODUFHOO

5HVXOWVDQGGLVFXVVLRQ 2SWLFDOSURSHUWLHVRIEOHQGILOPV )LJXUH  VKRZV WKH RSWLFDO DEVRUEDQFH RI SULVWLQH '3$ 3+73&%0 DQG 3+73&%0'3$ILOPVVSLQFRDWHGRQWRPLFURJODVVVXEVWUDWHVLQ WKHZDYHOHQJWKUDQJHRI  QP ,Q SULVWLQH 3+73&%0 EOHQG ILOP DEVRUSWLRQ SHDN RI 3+7 RFFXUV DW D ZDYHOHQJWKRIQP$UHGVKLIWLQ3+7DEVRUSWLRQSHDNRFFXUVIURPWRQPDIWHU DGGLQJVPDOODPRXQWVRIWKH'3$G\HLQWR3+73&%0EOHQGDVVKRZQLQ)LJD 7KH UHGVKLIWRI3+7DEVRUSWLRQSHDNPDJQLILHVDQGUHDFKHVQPDIWHUDGGLQJODUJHDPRXQWV RIWKH'3$DVVKRZQLQ)LJE 7KHUHGVKLIWLQRSWLFDO DEVRUSWLRQRIWKH3+73&%0 EOHQG ILOP DIWHU DGGLQJ '3$ LV DQ LQGLFDWLRQ RI LQFUHDVLQJ FRQMXJDWLRQ OHQJWK LQ WKH EOHQG LQGLFDWLQJWKDWWKHFRQMXJDWHGG\HLVLQFRUSRUDWHGLQWKHEDFNERQHRIWKHFRQMXJDWHGV\VWHP .D]LP HW DO >@ VWDWHG WKDW WKH UHGVKLIW RI WKH DEVRUSWLRQ SHDN RI 0(+339 IROORZLQJ WKH DGGLQJRIDFULGLQHRUDQJHG\HZDVDQLQGLFDWLRQRILQFUHDVLQJFRQMXJDWLRQOHQJWKLQWKHVRODU FHOODFWLYHOD\HU7KHLQFUHDVHLQWKHFRQMXJDWLRQOHQJWKRIWKH3+7DIWHUDGGLQJ'3$G\H PHDQV WKDW WKH DOWHUQDWLRQ RI VLQJOHGRXEOH ERQGV EHWZHHQ FDUERQ DWRPV WKURXJK 3+7 PROHFXOHVLQFUHDVHVDQGWKHUHIRUHWKH 55 WUDQVLWLRQE\3+7PROHFXOHVVKLIWVWRDORZHU HQHUJ\ 7KLV WHQGV WR UHVXOW LQ D GHFUHDVH LQ WKH HQHUJ\ JDS RI WKH 3+7 LQ WKH 3+73&%0'3$EOHQGVGXHWRLQFRUSRUDWLRQRI'3$G\HEHWZHHQ3+7FKDLQV7KHUHIRUH IROORZLQJ DGGLQJ '3$ G\H LQWR EOHQG WKH 3+7 DEVRUEV D ODUJHU DPRXQW RI OLJKW SKRWRQV ZKLFKKDYHORZHUHQHUJ\DQGFRQVHTXHQWO\WKHJHQHUDWLRQRIFKDUJHFDUULHUVLQFUHDVHVLQWKH VRODUFHOODFWLYHOD\HU7KHFRQMXJDWLRQOHQJWKKDVVWURQJLPSDFWRQFKDUJHFDUULHUPRELOLW\LQ DFWLYH ODYHU EOHQG DQG WKHUHIRUH LQIOXHQFHV WKH SHUIRUPDQFH RI WKH FRUUHVSRQGLQJ VRODU FHOO >@7KHUHIRUHDGGLQJ'3$G\HLQWR3+73&%0EOHQGLPSURYHVFKDUJHFDUULHUWUDQVIHULQ WKHVRODUFHOO7KHDFKLHYHGHQKDQFHPHQWLQWKHFRQMXJDWLRQOHQJWKE\'3$G\HLVDWWULEXWHG WRWKHRUGHUHGDQGFRQMXJDWHGVWUXFWXUHRIWKHG\H$IXUWKHULQGLFDWLRQRIWKHLPSURYHPHQWRI WKHVWUXFWXUDORUJDQL]DWLRQRIWKH3+73&%0EOHQGE\DGGLQJ'3$G\HLVWKHGHYHORSPHQW LQWKHYLEURQLFVWUXFWXUHRIWKH3+7PROHFXOHV7KHLPSURYHPHQWRIWKHYLEURQLFVWUXFWXUHRI WKH3+7LVLQGLFDWHGWKURXJKWKHLPSURYHPHQWLQWKHVKRXOGHUV ZKLFKDSSHDULQWKH3+7 DEVRUSWLRQSHDNDWDERXWDQGQPDVVKRZQLQ)LJIRUPRUHLOOXVWUDWLRQVVHHWKH DSSHQGLFHV 7KHYLEURQLFVWUXFWXUHLV JHQHUDOO\H[SODLQHGLQVHPLFRQGXFWLQJSRO\PHUVE\D KLJKHUFU\VWDOOL]DWLRQRURUGHULQJRILQWUDFKDLQLQWHUDFWLRQV>@0RUHH[SODQDWLRQVDQGGHWDLOV



&KDSWHU8VLQJGLSKHQ\ODQWKUDFHQHG\HIRULPSURYLQJOLJKWKDUYHVWLQJDQGFKDUJHFDUULHUWUDQVIHURIWKH PRVWFRPPRQ3+73&%0VRODUFHOO

RI WKH YLEURQLF VWUXFWXUH SKHQRPHQD LQ D PROHFXOH DUH IRXQG LQ WKH DSSHQGLFHV )LJXUH  VKRZVWKHFRQWULEXWLRQRI3&%0PROHFXOHVLQWKHDEVRUSWLRQRIWKHDFWLYHOD\HUEOHQGZKLFK RFFXUVDWDZDYHOHQJWKUDQJHRIDSSUR[LPDWHO\QP

 

D

3ULVWLQH'3$G\H 3ULVWLQH3+73&%0ILOP )LOPZLWKPJRI'3$G\H )LOPZLWKPJRI'3$G\H )LOPZLWKPJRI'3$G\H )LOPZLWKPJRI'3$G\H

$EVRUEDQFH

      













:DYHOHQJWKQP  



3ULVWLQH'3$G\H 3ULVWLQH3+73&%0ILOP )LOPZLWKPJRI'3$G\H )LOPZLWKPJRI'3$G\H )LOPZLWKPJRI'3$G\H )LOPZLWKPJRI'3$G\H

E

$EVRUEDQFH

     









:DYHOHQJWKQP



 

)LJXUH  2SWLFDO DEVRUEDQFH RI SULVWLQH '3$ 3+73&%0 DQG 3+73&%0'3$ ILOPV ZLWK GLIIHUHQWG\HDPRXQWVD IURPWRPJE IURPWRPJ



&KDSWHU8VLQJGLSKHQ\ODQWKUDFHQHG\HIRULPSURYLQJOLJKWKDUYHVWLQJDQGFKDUJHFDUULHUWUDQVIHURIWKH PRVWFRPPRQ3+73&%0VRODUFHOO

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

&KDSWHU8VLQJGLSKHQ\ODQWKUDFHQHG\HIRULPSURYLQJOLJKWKDUYHVWLQJDQGFKDUJHFDUULHUWUDQVIHURIWKH PRVWFRPPRQ3+73&%0VRODUFHOO

RIWKH3&%0WRWKHSKRWRFXUUHQW DWDZDYHOHQJWK RIDSSUR[LPDWHO\  QPZKLFKDEVRUEV OLJKWLQWKHZDYHOHQJWKUDQJHRIQPDVVKRZQLQ)LJ



3ULVWLQH3+73&%0VRODUFHOO 6RODUFHOOZLWKPJRI'3$G\H

(4(

    











 :DYHOHQJWKQP

 )LJXUH  (4( VSHFWUD RI VRODU FHOOV EHIRUH DQG DIWHU DGGLQJ  PJ RI WKH '3$ G\H LQWR 3+73&%0DFWLYHOD\HUEOHQG

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



&KDSWHU8VLQJGLSKHQ\ODQWKUDFHQHG\HIRULPSURYLQJOLJKWKDUYHVWLQJDQGFKDUJHFDUULHUWUDQVIHURIWKH PRVWFRPPRQ3+73&%0VRODUFHOO

(4(1RUPDOL]HG



&RQWULEXWLRQRI3&%0

  

&RQWULEXWLRQRI'3$G\H 3ULVWLQH3+73&%0 &HOOZLWKPJRI'3$ &HOOZLWKPJRI'3$ &HOOZLWKPJRI'3$

  









:DYHOHQJWKQP  )LJXUH(4(VSHFWUDRIVRODUFHOOVEHIRUHDGGLQJ'3$G\HDQGDIWHUDGGLQJGLIIHUHQWDPRXQWVRI WKHG\HLQWR3+73&%0DFWLYHOD\HUEOHQG7KLVILJXUHVKRZVWKHFRQWULEXWLRQRIWKH'3$DWQP ZKLFKLQFUHDVHVZLWKLQFUHDVHLQWKHG\HFRQWHQWLQWKHEOHQG

7KXVWKH'3$G\HFRQWULEXWHVWRWKHSKRWRFXUUHQWWKURXJKGLUHFWDEVRUSWLRQRISKRWRQV IURPWKHOLJKWVRXUFH,QDGGLWLRQWRWKLVFRQWULEXWLRQWKHUHLVDSUREDELOLW\WKDWWKH'3$G\H FRQWULEXWHVWRWKHSKRWRFXUUHQWWKURXJKDQRWKHUZD\,QWKLVZD\WKHG\HPD\FRQWULEXWHWR WKHSKRWRFXUUHQWE\WUDQVIHUWKHDEVRUEHGHQHUJ\E\WKHG\H LQWKHZDYHOHQJWKUDQJHRI QPWR3+7PROHFXOHVZKLFKKDYHRSWLFDODEVRUSWLRQLQWKH ZDYHOHQJWK UDQJHRI QPDVVKRZQLQ)LJ7KLVSKHQRPHQRQLVFDOOHG)|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



&KDSWHU8VLQJGLSKHQ\ODQWKUDFHQHG\HIRULPSURYLQJOLJKWKDUYHVWLQJDQGFKDUJHFDUULHUWUDQVIHURIWKH PRVWFRPPRQ3+73&%0VRODUFHOO



















 









$EVRUSWLRQ



)OXRUHVFHQFH[



 













:DYHOHQJWKQP  )LJXUH  $EVRUSWLRQ DQG IOXRUHVFHQFH VSHFWUD RI '3$ G\H GLVVROYHG LQ F\FORKH[DQH IURP 5HI >@ 

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

&KDSWHU8VLQJGLSKHQ\ODQWKUDFHQHG\HIRULPSURYLQJOLJKWKDUYHVWLQJDQGFKDUJHFDUULHUWUDQVIHURIWKH PRVWFRPPRQ3+73&%0VRODUFHOO

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

2SHQ&LUFXLW9ROWDJH9

   

































6KRUW&LUFXLW&XUUHQW'HQVLW\P$FP



$PRXQWRI'3$G\HPJ  )LJXUH9DULDWLRQRI92&” DQG-6&û ZLWKLQFUHDVHLQWKHDPRXQWRI'3$G\HLQFRUSRUDWHGLQ WKHDFWLYHOD\HUEOHQGVRIWKH,723('273663+73&%0'3$$OVRODUFHOOV

7KH )) DQG 3&( VLPLODUO\ EHKDYH LQ WKH YDULDWLRQ ZLWK WKH '3$ FRQFHQWUDWLRQ LQ WKH 3+73&%0EOHQGVDVVKRZQLQ)LJ7KH))DQG3&(LQFUHDVHIURPDQG 

&KDSWHU8VLQJGLSKHQ\ODQWKUDFHQHG\HIRULPSURYLQJOLJKWKDUYHVWLQJDQGFKDUJHFDUULHUWUDQVIHURIWKH PRVWFRPPRQ3+73&%0VRODUFHOO

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



)LOO)DFWRU

 







 







 

 















$PRXQWRI'3$G\HPJ



3RZHU&RQYHUVLRQ(IILFLHQF\



 

)LJXUH9DULDWLRQRI))û DQG3&(” ZLWKLQFUHDVHLQWKHDPRXQWRI'3$G\HLQFRUSRUDWHG LQWKHDFWLYHOD\HUEOHQGVRIWKH,723('273663+73&%0'3$$OVRODUFHOOV



&KDSWHU8VLQJGLSKHQ\ODQWKUDFHQHG\HIRULPSURYLQJOLJKWKDUYHVWLQJDQGFKDUJHFDUULHUWUDQVIHURIWKH PRVWFRPPRQ3+73&%0VRODUFHOO

FRQMXJDWHG'3$G\HLQWR3+73&%0DFWLYHOD\HUWHQGVWRLPSURYHPHQWLQWKH3&(IURP WR

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



&KDSWHU8VLQJGLSKHQ\ODQWKUDFHQHG\HIRULPSURYLQJOLJKWKDUYHVWLQJDQGFKDUJHFDUULHUWUDQVIHURIWKH PRVWFRPPRQ3+73&%0VRODUFHOO

5HIHUHQFHV >@/*RULV0$/RL$&UDYLQR+1HXJHEDXHU166DULFLIWFL,3ROHF//XWVHQ( $QGULHV - 0DQFD / 'H 6FKHSSHU DQG ' 9DQGHU]DQGH

3RO\

GLWKLRRFW\OLVRWKLDQDSKWHQH  D QHZ ORZ EDQG JDS SRO\PHU VSHFWURVFRS\ DQG VRODU FHOO FRQVWUXFWLRQ6\QWK0HW  >@'&KLUYDVH-3DULVL-&+XPPHOHQDQG9'\DNRQRY,QIOXHQFHRIQDQRPRUSKRORJ\ RQ WKH SKRWRYROWDLF DFWLRQ RI SRO\PHUIXOOHUHQH FRPSRVLWHV 1DQRWHFKQRORJ\     >@ * /L 9 6KURWUL\D - +XDQJ @ 7 @&-%UDEHF6(6KDKHHQ&:LQGHU3'HQNDQG166DULFLIWFL(IIHFWRI/L)PHWDO HOHFWURGHVRQWKHSHUIRUPDQFHRISODVWLFVRODUFHOOV$SSO3K\V/HWW  >@ & - %UDEHF 2UJDQLF SKRWRYROWDLFV WHFKQRORJ\ DQG PDUNHW 6RO (QHUJ\ 0DWHU 6RO &HOOV             





&KDSWHU &RQWULEXWLRQ RI FRXPDULQ  G\H WR OLJKW KDUYHVWLQJ DQG SKRWRFXUUHQWRI3+73&%0EXONKHWHURMXQFWLRQVRODUFHOO ,QWURGXFWLRQ %+- VRODU FHOO EDVHG RQ 3+7 ZKLFK IRUPV WKH HOHFWURQ GRQRU DQG WKH KROHWUDQVSRUW QHWZRUN DQG3&%0ZKLFKIRUPVWKHHOHFWURQDFFHSWRUDQGWKHHOHFWURQWUDQVSRUWQHWZRUN  LVWKHODUJHVWLQUHVHDUFKHUV¶LQYHVWLJDWLRQVIRULPSURYLQJLWVSRZHUFRQYHUVLRQHIILFLHQF\> @2QHRIWKHUHDVRQVRIGHFUHDVLQJRUJDQLFVRODUFHOOVHIILFLHQF\LQFRPSDULVRQZLWKWKHLU LQRUJDQLF FRXQWHUSDUWV LV WKDW WKH VSHFWUDO UDQJH RI WKH RSWLFDO DEVRUSWLRQ RI WKH FRQGXFWLQJ SRO\PHUV LV UHODWLYHO\ QDUURZ FRPSDUHG WR VRODU VSHFWUXP ZKHUH WKH OLPLWDWLRQ LQ OLJKW DEVRUSWLRQ DFURVV WKH VRODU VSHFWUXP OLPLWV WKH SKRWRFXUUHQW RI WKH VRODU FHOOV )RU HIILFLHQW DQGSURQRXQFHGOLJKWKDUYHVWLQJDQGFRQVHTXHQWO\SKRWRFXUUHQWRI3+73&%0VRODUFHOO FRXPDULQG\HVFDQEHLQFRUSRUDWHGLQWKH%+-EOHQGVDVDQRUJDQLFWKLUGPDWHULDO%HFDXVHRI LWV OLJKW KDUYHVWLQJ SURSHUW\ DFFRPSDQLHG ZLWK LWV HQHUJHWLFDOO\ IDYRUDEOH LQFRUSRUDWLRQ LQWR 3+73&%0ELQDU\ZHXVHLQWKLVFKDSWHUWKHFRQMXJDWHGFRXPDULQG\H& WRVWXG\LWV LPSDFW RQ OLJKW KDUYHVWLQJ DQG SKRWRFXUUHQW RI WKH 3+73&%0 %+- VRODU FHOO 7KH FRQMXJDWHG&G\HLQWKHFRPELQDWLRQZLWK3+73&%0ELQDU\VKRZVDWKHUPRG\QDPLFDOO\ VXLWDEOHFKDUJHVHSDUDWLRQDWWKH&3&%0LQWHUIDFHDVVKRZQLQ)LJ 7KHLQFOXVLRQRI&G\HDVDVHQVLWL]HULQ3+73&%0VRODUFHOOLVRXUVHFRQGDWWHPSW IRULPSURYLQJOLJKWKDUYHVWLQJRIWKHVRODUFHOO7KHILUVWDWWHPSWZDVLQWKHSUHYLRXVFKDSWHU >@LQZKLFKWKH'3$FRQMXJDWHGG\HZDVLQFOXGHGLQ3+73&%0VRODUFHOOIRULPSURYLQJ WKH

VRODU

FHOO

SHUIRUPDQFH

,Q

WKH

SUHVHQW

ZRUN

ZH

FRQVWUXFW

,723('273663+73&%0&$OVRODUFHOOVZLWKGLIIHUHQWFRQFHQWUDWLRQVRIWKH&G\H LQ WKH VRODU FHOO DFWLYH OD\HU WR VWXG\ WKH LQIOXHQFH RI WKH & G\H RQ OLJKW DEVRUSWLRQ DQG SKRWRFXUUHQW RI WKH PRVW FRPPRQ VRODU FHOO 7KLV VWXG\ PD\ LQFUHDVH RXU NQRZOHGJH DERXW WKHEHKDYLRURIWKH3+73&%0ELQDU\ZKHQDWKLUGPDWHULDOLVEOHQGHGZLWKLQLW7KHRSWLFDO DEVRUSWLRQ VSHFWURVFRS\ DQG SKRWRFXUUHQW VSHFWURVFRS\ XQGHU $0 * ZKLWH OLJKW LOOXPLQDWLRQ ZLWK DQ LQWHQVLW\ RI  P:FP DUH LQYHVWLJDWHG IRU WKH VRODU FHOOV



&KDSWHU  &RQWULEXWLRQ RI FRXPDULQ  G\H WR OLJKW KDUYHVWLQJ DQG SKRWRFXUUHQW RI 3+73&%0 EXON KHWHURMXQFWLRQVRODUFHOO



([SHULPHQWDOGHWDLOV 0DWHULDOVDQGVROXWLRQV 7KH & RU EHQ]RWKLD]RO\O GLHWK\ODPLQR FRXPDULQ  FRQMXJDWHG G\H ZDV SXUFKDVHGIURP6LJPD$OGULFKDQGXVHGZLWKRXWIXUWKHUSXULILFDWLRQ7KH&G\HZDVDGGHG ZLWKYDULRXVTXDQWLWLHVDVDQGPJLQWRPJP/RI3+73&%0ZHLJKWUDWLR  EOHQG LQ GLFKORUREHQ]HQH DV D VROYHQW 7KH EOHQG VROXWLRQV ZHUH YLJRURXVO\ VWLUUHG IRU PRUHWKDQKDWURRPWHPSHUDWXUHXQGHUQLWURJHQDWPRVSKHUHLQDJORYHER[WRPD[LPL]H PL[LQJZKLOHDYRLGLQJWRXFKLQJWKHYLDOFDS

)LOPDQGGHYLFHIDEULFDWLRQ )RURSWLFDODEVRUSWLRQPHDVXUHPHQWWKH3+73&%0DQG3+73&%0&EOHQGILOPV ZLWKGLIIHUHQWFRQFHQWUDWLRQVRIWKH&G\HLQWKHEOHQGV ZHUHSUHSDUHGE\VSLQFRDWLQJWKH VROXWLRQV RQWR FOHDQ PLFURJODVV VXEVWUDWHV 7KH SULVWLQH 3+73&%0 VRODU FHOO DQG 3+73&%0& VRODU FHOOV ZLWK GLIIHUHQW FRQFHQWUDWLRQV RI WKH & G\H LQ WKH EOHQGV ZHUH SUHSDUHGE\WKHVDPHSURFHGXUHVGLVFXVVHGLQWKHSUHYLRXVFKDSWHUH[FHSWWKDWZHXVHGLQWKH SUHVHQWZRUNDQRWKHUYDFXXPGHSRVLWLRQV\VWHP IRUWKHUPDOGHSRVLWLRQRIDQDSSUR[LPDWHO\ QPWKLFN$OHOHFWURGHRQWRDFWLYHOD\HU)RUWXQDWHO\WKLV V\VWHPZDVORFDWHGYHU\FORVH WRWKHJORYHER[LQZKLFKWKHDFWLYHOD\HUVZHUHSUHSDUHGXQGHU\HOORZOLJKW%\WKLVZD\WKH H[SRVXUHWLPHWRDLUDQGZKLWHOLJKWZDVVKRUWLQFRPSDULVRQZLWKWKHHYDSRUDWLRQV\VWHPXVHG LQWKHSUHYLRXVFKDSWHUDQGWKHUHIRUHWKHGHJUDGDWLRQRIWKHSUHVHQWLQYHVWLJDWHGRUJDQLFVRODU FHOOV ZDV VPDOO :H FDQ UHFRJQL]H WKLV DGYDQWDJH LQ WKH SKRWRFXUUHQW DQG 3&( YDOXHV RI SULVWLQH3+73&%0VRODUFHOODWWKHFRPSDULVRQZLWKWKRVHRIWKHVDPHVRODUFHOOSUHSDUHG DQGGLVFXVVHGLQWKHSUHYLRXVFKDSWHU7KHILOPSUHSDUDWLRQDQGWKHUPDODQQHDOLQJFRQGLWLRQV ZHUH NHSW WKH VDPH DV WKRVH RI WKH FRUUHVSRQGLQJ GHYLFHV IRU DFFXUDWH FRPSDULVRQ 7KH WKHUPDODQQHDOLQJRIWKHVRODUFHOOVDVZHOODVEOHQGILOPVZDVFDUULHGRXWWZLFHEHIRUH$O GHSRVLWLRQDW R&IRUPLQDQGDIWHU$OGHSRVLWLRQDW R&IRU PLQ7KHFRPSOHWH RUJDQLFVRODUFHOOVZHUHVWRUHGLQGDUNXQGHUVXLWDEOHSUHVVXUHXQWLOPHDVXUHPHQWV

0HDVXUHPHQWV 7KH RSWLFDO DEVRUSWLRQ VSHFWURVFRS\ RI 3+73&%0 DQG 3+73&%0& EOHQG ILOPV RQPLFURJODVVVXEVWUDWHVZDVFDUULHGRXWEHIRUHDQGDIWHUWKHUPDODQQHDOLQJXVLQJD-$6&2 

&KDSWHU  &RQWULEXWLRQ RI FRXPDULQ  G\H WR OLJKW KDUYHVWLQJ DQG SKRWRFXUUHQW RI 3+73&%0 EXON KHWHURMXQFWLRQVRODUFHOO



989YLV1,5VSHFWURSKRWRPHWHU7KH(4(DQG-9FKDUDFWHULVWLFVPHDVXUHPHQWVDIWHU WKHUPDODQQHDOLQJZHUHSHUIRUPHGIRUWKHVRODUFHOOVDVGLVFXVVHGLQWKHSUHYLRXVFKDSWHU7KH PHDVXUHPHQWV ZHUHSHUIRUPHGVRRQDIWHUSUHSDUDWLRQRIGHYLFHVWR DYRLGDQ\FKDQJHLQWKH SKRWRHOHFWULFSURSHUWLHVFDXVHGE\DJLQJ

5HVXOWVDQGGLVFXVVLRQ 2SWLFDOSURSHUWLHVRIEOHQGILOPV ,WLVLPSRUWDQWWRNQRZWKDWWKHVSHFWUDOUDQJHRIWKHRSWLFDODEVRUSWLRQFRPSDUHGWRWKH VRODU VSHFWUXP DEVRUSWLRQ YDOXH DQG DEVRUSWLRQ ZDYHOHQJWK DUH WKH IDFWRUV WKDW DIIHFW WKH WRWDO QXPEHU RI DEVRUEHG SKRWRQV E\ D VRODU FHOO DFWLYH OD\HU 7KH QXPEHU RI DEVRUEHG SKRWRQV DQG WKHUHIRUH WKH JHQHUDWHG SKRWRFXUUHQW IURP D VRODU FHOO LQFUHDVH ZKHQ WKH DEVRUSWLRQ UDQJH DQG WKH DEVRUSWLRQ SHDN YDOXH LQFUHDVH IRU WKH VRODU FHOO DFWLYH OD\HU 7KH QXPEHU RI DEVRUEHG SKRWRQV LQ D VRODU FHOO DFWLYH OD\HU DOVR ULVHV ZKHQ WKH DFWLYH OD\HU DEVRUEV LQ WKH UHG RU QHDU LQIUDUHG UHJLRQ RI WKH VRODU VSHFWUXP ZKHUH WKHUH LV WKH ODUJHVW QXPEHURIWKHYLVLEOHOLJKWSKRWRQV 2SWLFDODEVRUSWLRQEHIRUHWKHUPDODQQHDOLQJ %HIRUHWKHUPDODQQHDOLQJWKHFRQWULEXWLRQRIWKH&G\HWRWKHRSWLFDODEVRUSWLRQRIWKH 3+73&%0DFWLYHOD\HULVVKRZQLQ)LJD ZLWKYDU\LQJWKHFRQWHQWVRIWKHG\HLQWKH EOHQGVDVDQGPJ$VVKRZQLQWKLVILJXUHWKHDEVRUSWLRQSHDNRI3+7PROHFXOHVLQ SULVWLQH3+73&%0EOHQGILOPLVSUHVHQWHGDWDZDYHOHQJWKRIQP$IWHUDGGLQJ&G\H LQWR 3+73&%0 EOHQG WKH FRQWULEXWLRQ RI WKH G\H DSSHDUV DV DQ DEVRUSWLRQ SHDN LQFRUSRUDWHG LQ WKH 3+7 SHDN IURP WKH OHIW VLGH 7KH IRUPHG SHDNV IURP WKLV RYHUODSSLQJ JUDGXDOO\LQFUHDVHLQWKHLUYDOXHVWDNHOLWWOHGLIIHUHQWVKDSHIURPWKHRULJLQDO3+7SHDNDQG RFFXUDWORZHUZDYHOHQJWKDURXQGQPE\DGGLQJRUPJRIWKHG\H DFFRPSDQLHGZLWK DOLWWOHEURDGHQLQJLQDEVRUSWLRQZDYHOHQJWKUDQJHE\LQFUHDVLQJ&G\HFRQFHQWUDWLRQLQWKH 3+73&%0& EOHQGV 7KH QHZ VKDSH RI WKHVH SHDNV UHIHUV WR WKH VKDSH RI SULVWLQH & SHDNZKLFKFDQEHREVHUYHGIURP)LJE :KLOHWKHREVHUYHGEOXHVKLIWRIWKHDEVRUSWLRQ SHDNVIURPWRQPE\DGGLQJRUPJRIWKHG\HLQWR3+73&%0EOHQGPD\EH GXHWRDEVRUSWLRQRIWKHG\HLWVHOILQWKHEOHQGVQHDUIURPWKHZDYHOHQJWKRIQP$QRWKHU SUREDELOLW\RIWKHRULJLQRIWKHEOXHVKLIWRIWKH3+7DEVRUSWLRQSHDNLVWKDWWKLVEOXHVKLIWPD\ EHRULJLQDWHIURPDGHFUHDVHLQSRO\PHUFRQMXJDWLRQOHQJWK>@DIWHUDGGLQJ&G\HZKHUH 

&KDSWHU  &RQWULEXWLRQ RI FRXPDULQ  G\H WR OLJKW KDUYHVWLQJ DQG SKRWRFXUUHQW RI 3+73&%0 EXON KHWHURMXQFWLRQVRODUFHOO



WKH3+73&%0&ILOPVDUHQRWWKHUPDOO\DQQHDOHG$VVKRZQLQ)LJD E\LQFUHDVLQJ &G\HFRQFHQWUDWLRQWKH DEVRUSWLRQRIWKH3+73&%0&EOHQG ILOPVLQFUHDVHVWKURXJK WKHLQFUHDVHLQWKHDEVRUSWLRQSHDNYDOXHZLWKDOLWWOHEURDGHQLQJLQWKHDEVRUSWLRQZDYHOHQJWK UDQJH7KLVPHDQVWKDWWKHWRWDOQXPEHURIDEVRUEHGSKRWRQVE\3+73&%0EOHQGLQFUHDVHV DIWHUDGGLQJ&G\H



D

$EVRUEDQFH

    

3ULVWLQH3+73&%0ILOP )LOPZLWKPJRI&G\H )LOPZLWKPJRI&G\H )LOPZLWKPJRI&G\H

 









:DYHOHQJWKQP 



E

)LOPZLWKPJRI&G\H )LOPZLWKPJRI&G\H )LOPZLWKPJRI&G\H

$EVRUEDQFH







 





:DYHOHQJWKQP

 

)LJXUH2SWLFDODEVRUEDQFHEHIRUHDQQHDOLQJRID SULVWLQH3+73&%0DQG3+73&%0& EOHQGILOPVZLWKYDU\LQJ&FRQFHQWUDWLRQDQGE &G\HIUDJPHQWVZLWKGLIIHUHQWFRQFHQWUDWLRQVLQ 3+73&%0&EOHQGILOPV 



&KDSWHU  &RQWULEXWLRQ RI FRXPDULQ  G\H WR OLJKW KDUYHVWLQJ DQG SKRWRFXUUHQW RI 3+73&%0 EXON KHWHURMXQFWLRQVRODUFHOO



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

&KDSWHU  &RQWULEXWLRQ RI FRXPDULQ  G\H WR OLJKW KDUYHVWLQJ DQG SKRWRFXUUHQW RI 3+73&%0 EXON KHWHURMXQFWLRQVRODUFHOO



7KHQPUHGVKLIWRIWKH&DEVRUSWLRQSHDNGXHWRWKHUPDODQQHDOLQJFDQEHREVHUYHG PRUH SUHFLVHO\ E\ FRPSDULQJ )LJV E  DQG E  ZKLFK SUHVHQW WKH SXUH DEVRUSWLRQ VHSDUDWH DEVRUSWLRQ  RI WKH & G\H LQ DFWLYH OD\HU EOHQGV $V VKRZQ LQ WKHVH ILJXUHV WKH DEVRUSWLRQSHDNVRIRUPJRIWKH&G\HHPEHGGHGLQWKHEOHQGVUHGVKLIWIURPWR QPE\DQQHDOLQJ



D

3ULVWLQH3+73&%0ILOP )LOPZLWKPJRI&G\H )LOPZLWKPJRI&G\H )LOPZLWKPJRI&G\H )LOPZLWKPJRI&G\H

$EVRUEDQFH

  

3+7SHDNSRVLWLRQ

   







:DYHOHQJWKQP



 



E

),OPZLWKPJRI&G\H ),OPZLWKPJRI&G\H ),OPZLWKPJRI&G\H ),OPZLWKPJRI&G\H

$EVRUEDQFH







 





:DYHOHQJWKQP

 

)LJXUH  2SWLFDO DEVRUEDQFH DIWHU DQQHDOLQJ RI D  SULVWLQH 3+73&%0 DQG 3+73&%0& EOHQGILOPVZLWKYDU\LQJ&FRQFHQWUDWLRQDQGE &G\HIUDJPHQWVZLWKGLIIHUHQWFRQFHQWUDWLRQVLQ 3+73&%0&EOHQGILOPV 



&KDSWHU  &RQWULEXWLRQ RI FRXPDULQ  G\H WR OLJKW KDUYHVWLQJ DQG SKRWRFXUUHQW RI 3+73&%0 EXON KHWHURMXQFWLRQVRODUFHOO



7KHUHGVKLIWRI3+7DEVRUSWLRQSHDNGXHWRWKHUPDODQQHDOLQJ XSRQ3+73&%0& EOHQGILOPVFDQEHH[SODLQHGRQWKHEDVHVRIVWUXFWXUDORUJDQL]DWLRQRI3+7FKDLQVZKLFK DUHNQRZQWRFU\VWDOOL]HXSRQWKHUPDODQQHDOLQJ>@$IWHUWKHUPDODQQHDOLQJWKHSDUWRIWKH DEVRUSWLRQVSHFWUDRULJLQDWLQJIURPWKHRUGHUHGSKDVHLVUHGVKLIWHG7KLVLVLQDJUHHPHQWZLWK WKH FU\VWDO JURZWK WKHRU\ LQ WKH SRO\PHUV ZKLFK VWDWHV WKDW ZLWK LQFUHDVH LQ DQQHDOLQJ WHPSHUDWXUHWKHVL]HRIWKHFU\VWDOOLWHVLQFUHDVHV$VWKHSRO\PHUFKDLQVDUHH[WHQGHGWKURXJK WKHFU\VWDOOLWHVWKLFNHUFU\VWDOOLWHVZRXOGJLYHDORQJHUFRQMXJDWLRQOHQJWK>@2QWKHRWKHU KDQGWKH&DEVRUSWLRQSHDNLQWKHEOHQGVGRHVQRWHIIHFWLYHO\UHGVKLIWE\WKHUPDODQQHDOLQJ 7KLVPD\EHDWWULEXWHGWRPROHFXODUGLIIXVLRQRIWKHVPDOO&PROHFXOHVLQWKHSRO\PHUPDWUL[ >@7KHUHGVKLIWRIWKHDEVRUSWLRQRI3+73&%0&EOHQGILOPVE\WKHUPDODQQHDOLQJLV DQ LQGLFDWLRQ RI LQFUHDVLQJ FRQMXJDWLRQ OHQJWK LQ WKH EOHQGV HYHQ LI WKLV LQFUHDVLQJ LV DV D ILQHVFDOH LQFUHDVLQJ HVSHFLDOO\ LQ FDVH RI & G\H DV D VPDOO PROHFXODU ZHLJKW FRPSRXQG 7KLV PHDQV WKDW WKH DOWHUQDWLRQ RI VLQJOHGRXEOH ERQGV EHWZHHQ FDUERQ DWRPV LQ WKH EOHQGV LQFUHDVHVDQGWKHUHIRUHWKH55 WUDQVLWLRQVVKLIWWRORZHUHQHUJ\7KLVWHQGVWRDGHFUHDVHLQ HQHUJ\JDSRIWKHEOHQGVE\WKHUPDODQQHDOLQJ7KHUHIRUHWKH3+7DQG&G\HDEVRUEODUJHU DPRXQWVRIOLJKWSKRWRQVZKLFKKDYHORZHUHQHUJ\E\WKHUPDODQQHDOLQJDQGFRQVHTXHQWO\ WKH JHQHUDWLRQ RI FKDUJH FDUULHUV PD\ LQFUHDVH LQ WKH VRODU FHOOV 7KH LPSURYHPHQW LQ OLJKW KDUYHVWLQJ RI 3+73&%0 ELQDU\ E\ LQFRUSRUDWLRQ RI & G\H ZLWK WKHUPDO DQQHDOLQJ PD\ UHVXOWLQDSRVLWLYHLPSDFWRQVKRUWFLUFXLWFXUUHQWRIWKHFRUUHVSRQGLQJVRODUFHOOVSURYLGHG WKDWWKHRWKHUIDFWRUVVXFKDVH[FLWRQGLVVRFLDWLRQDQGFKDUJHFDUULHUPRELOLW\DUHVXIILFLHQWO\ VDWLVIDFWRU\ IRU VRODU FHOO DFWLYH OD\HU ,Q WKLV ZRUN WKHUPDO DQQHDOLQJ LPSURYHV WKH FRQMXJDWLRQ OHQJWK RU VWUXFWXUDO RUJDQL]DWLRQ  RI WKH 3+7 LQGLFDWHG IURP UHGVKLIW RI WKH SRO\PHUDEVRUSWLRQSHDN ZKLOHLQWKHSUHYLRXVFKDSWHUWKHFRQMXJDWLRQOHQJWKRIWKH3+7 ZDVLPSURYHGE\DGGLQJ'3$FRQMXJDWHGG\HLQWR3+73&%0EOHQG

([WHUQDOTXDQWXPHIILFLHQF\VSHFWUD 7KH

(4(

VSHFWUD

RI

WKH

,723('273663+73&%0$O

DQG

,723('273663+73&%0&$O VRODU FHOOV ZLWK LQFUHDVLQJ & FRQFHQWUDWLRQ LQ WKH DFWLYHOD\HUEOHQGVDIWHUDQQHDOLQJDWR&IRUPLQDQGDIWHUWKDWDWR&IRUPLQ DUH VKRZQLQ)LJLQWKHZDYHOHQJWKUDQJHIURPWRQP7KHFRQWULEXWLRQRI3+7WR WKHSKRWRFXUUHQWRISULVWLQH3+73&%0DQG3+73&%0&VRODUFHOOVLVREVHUYHGLQ)LJ  DW D ZDYHOHQJWK RI  QP IRU DOO LQYHVWLJDWHG VRODU FHOOV ZKHUH WKH 3+7 KDV DQ DEVRUSWLRQSHDNDWQPDVVKRZQLQ)LJD 7KHHPLQHQWFRQWULEXWLRQLQ(4(VSHFWUD 

&KDSWHU  &RQWULEXWLRQ RI FRXPDULQ  G\H WR OLJKW KDUYHVWLQJ DQG SKRWRFXUUHQW RI 3+73&%0 EXON KHWHURMXQFWLRQVRODUFHOO



RI WKH 3+73&%0&VRODU FHOOV LV REVHUYHG IRU & G\H DURXQG D ZDYHOHQJWK RI  QP ZKHUH WKH & G\H DEVRUEV OLJKW DW DERXW  QP DV VKRZQ LQ )LJ D  7KH SRVVLEOH PHFKDQLVPIRUFKDUJHFDUULHUJHQHUDWLRQIURPWKH3+73&%0&VRODUFHOOVZDVGLVFXVVHG LQ WKH LQWURGXFWLRQ FKDSWHU XVLQJ )LJ  IRU H[SODQDWLRQ ,W LV NQRZQ WKDW WKH 3&%0 FRQWULEXWHVWRDODUJHH[WHQWWRWKHSKRWRFXUUHQWRISRO\PHU3&%0VRODUFHOOVDVGLVFXVVHGE\ +RSSHHWDO>@,QGHHGWKH(4(VSHFWUDRIWKHLQYHVWLJDWHGVRODUFHOOVLQ)LJVKRZWKH

(4(1RUPDOL]HG



D

&FRQWULEXWLRQ

 

3+7FRQWULEXWLRQ

 3ULVWLQH3+73&%0GHYLFH 'HYLFHZLWKPJRI&G\H 'HYLFHZLWKPJRI&G\H 'HYLFHZLWKPJRI&G\H

 









:DYHOHQJWKQP

 

 

(4(



3ULVWLQH3+73&%0GHYLFH 'HYLFHZLWKPJRI&G\H 'HYLFHZLWKPJRI&G\H 'HYLFHZLWKPJRI&G\H

E

      









:DYHOHQJWKQP

 

)LJXUH  (4( VSHFWUD DV D  QRUPDOL]HG WR SHDN YDOXH DQG DV E  UHDO YDOXH IRU SULVWLQH 3+73&%0DQG3+73&%0&VRODUFHOOVZLWKYDU\LQJ&FRQFHQWUDWLRQ



&KDSWHU  &RQWULEXWLRQ RI FRXPDULQ  G\H WR OLJKW KDUYHVWLQJ DQG SKRWRFXUUHQW RI 3+73&%0 EXON KHWHURMXQFWLRQVRODUFHOO



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|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

&KDSWHU  &RQWULEXWLRQ RI FRXPDULQ  G\H WR OLJKW KDUYHVWLQJ DQG SKRWRFXUUHQW RI 3+73&%0 EXON KHWHURMXQFWLRQVRODUFHOO



3+7 DQG 3&%0 PROHFXOHV DQGRU EHWZHHQ WKH DGMDFHQW SRO\PHU FKDLQV ,Q WKHVH FLUFXPVWDQFHV WKH & G\H PD\ UHGXFH WKH GLIIXVLRQ RI WKH H[FLWRQV WUDYHOLQJ WR LQWHUIDFLDO UHJDLQV WR GLVVRFLDWH DQGRU PD\ UHGXFH WKH FKDUJH FDUULHU PRELOLW\ WRZDUGV HOHFWURGHV 7KHUHIRUHWKHSKRWRFXUUHQWGLPLQLVKHVLQWKHVRODUFHOODFWLYHOD\HU7KHREVHUYHGUHGXFWLRQ LQWKHSKRWRFXUUHQWUHGXFHVSRZHUFRQYHUVLRQHIILFLHQF\RIWKH3+73&%0VRODUFHOOIURP WRDIWHUDGGLQJPJRIWKH&G\HLQWRDFWLYHOD\HUEOHQG

$EVRUSWLRQRI3+73&%0EOHQGILOP $EVRUSWLRQRISXUH&G\HILOP (PLVVLRQRISXUH&G\HILOP

      

[



[



[



[



[



[



[



[



)OXRUHVFHQFH

1RUPDOL]HG$EVRUEDQFH



 









:DYHOHQJWKQP  )LJXUH$EVRUSWLRQVSHFWUXPRIPJP/RISXUH&G\HGLVVROYHGLQGLFKORUREHQ]HQHDQG VSLQFRDWHGRQWRPLFURJODVVVXEVWUDWH7KHILJXUHDOVRVKRZVIOXRUHVFHQFHVSHFWUXPRISXUH&G\H GLVVROYHGLQHWKDQROIURP5HI>@LQDGGLWLRQWRRSWLFDODEVRUSWLRQRI3+73&%0EOHQGILOPIURP )LJD 

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

&KDSWHU  &RQWULEXWLRQ RI FRXPDULQ  G\H WR OLJKW KDUYHVWLQJ DQG SKRWRFXUUHQW RI 3+73&%0 EXON KHWHURMXQFWLRQVRODUFHOO



SUREDEO\ KDYH WKUHH VLWHV IRU H[FLWRQ GLVVRFLDWLRQ ZKLFK DUH 3+73&%0 3+7& DQG &3&%0LQWHUIDFHV+HQFHWKHHIIHFWLYHYROXPHVRIH[FLWRQGLVVRFLDWLRQFHQWHUVDUHPXFK KLJKHULQWKHG\HEOHQGHG3+73&%0VRODUFHOOV

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

5HIHUHQFHV >@ * /L 9 6KURWUL\D - +XDQJ @ ; -LDQJ : ) %XUJR\QH -U DQG / 0 5REHVRQ 6HTXHVWUDWLRQ RI HOHFWURDFWLYH PDWHULDOVLQDKLJK7JLQVXODWLQJSRO\PHUPDWUL[IRURSWRHOHFWURQLFDSSOLFDWLRQV3DUW 3KRWRYROWDLFGHYLFHV3RO\PHU  >@&&:X+@:-%HOFKHU.,:DJQHUDQG3&'DVWRRU7KHHIIHFWRISRUSK\ULQLQFOXVLRQRQWKH VSHFWUDOUHVSRQVHRIWHUQDU\3+7SRUSK\ULQ3&%0EXONKHWHURMXQFWLRQVRODUFHOOV6RO (QHUJ\0DWHU6RO&HOOV 





                              





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



&KDSWHU&RXPDULQG\HEOHQGHGZLWK3&%0DVDEXONKHWHURMXQFWLRQDQGFKDUJHWUDQVIHUFRPSOH[EOHQGIRU RUJDQLFVRODUFHOODSSOLFDWLRQV



([SHULPHQWDO3URFHGXUH 0DWHULDOVDQGVROXWLRQV 7KH & G\H DQG 3&%0 ZHUH SXUFKDVHG DQG XVHG ZLWKRXW IXUWKHU SXULILFDWLRQ 7KH &3&%0EOHQGVROXWLRQZLWKWKHFRPSRVLWLRQRIZWZDVSUHSDUHGE\GLVVROYLQJWKH WZR FRPSRQHQWV & G\H DQG 3&%0  LQ GLFKORUREHQ]HQH ZLWK D FRQFHQWUDWLRQ RI  PJP/ 7KH VROXWLRQ ZDV YLJRURXVO\ VWLUUHG IRU PRUH WKDQ  K DW URRP WHPSHUDWXUH XQGHU QLWURJHQDWPRVSKHUHLQDJORYHER[WRPD[LPL]HPL[LQJZKLOHDYRLGLQJWRXFKLQJWKHYLDOFDS

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

&KDSWHU&RXPDULQG\HEOHQGHGZLWK3&%0DVDEXONKHWHURMXQFWLRQDQGFKDUJHWUDQVIHUFRPSOH[EOHQGIRU RUJDQLFVRODUFHOODSSOLFDWLRQV



SKRWRHOHFWULFSURSHUWLHVFDXVHGE\DJLQJ7KH(4(DQGSHUIRUPDQFHSDUDPHWHUYDOXHVLQWKLV ZRUN GLG QRW FRQVLGHU WKH GHYLFH GHJUDGDWLRQ FDXVHG E\ OLJKW DQG DLU GXULQJ WUDQVIHU WKH SUHSDUHGVRODUFHOOIURPWKHFKDPEHURI$OHYDSRUDWLRQV\VWHPWR-9FKDUDFWHULVWLFVVHWXSIRU PHDVXUHPHQW

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



&KDSWHU&RXPDULQG\HEOHQGHGZLWK3&%0DVDEXONKHWHURMXQFWLRQDQGFKDUJHWUDQVIHUFRPSOH[EOHQGIRU RUJDQLFVRODUFHOODSSOLFDWLRQV



FRQVHTXHQWO\WKHJHQHUDWLRQRIFKDUJHFDUULHUVLQFUHDVHVLQWKHVRODUFHOODFWLYHOD\HU )URP )LJ  D EURDG DEVRUSWLRQ SHDN FDQ EH REVHUYHG DW DSSUR[LPDWHO\  QP ,W VHHPV WKDW ,72 LV UHVSRQVLEOH IRU WKLV SHDN ZKLFK GLVDSSHDUV ZKHQ WKH ,72 VXEVWUDWH LV UHSODFHG E\ D TXDUW]VXEVWUDWHLQWKHFDVHVRIERWKSULVWLQH&DQG&3&%0EOHQGILOPVDVVKRZQLQ)LJ 7KHRULJLQRIWKLVVPDOOSHDNDQGLWVHIIHFW RQVRODUFHOOSHUIRUPDQFHDQGSKRWRFXUUHQW ZLOOEHGLVFXVVHGLQFKDSWHUVL[ 

&3&%0ILOPEHIRUHDQQHDOLQJ &3&%0ILOPDIWHUDQQHDOLQJ



$EVRUEDQFH

      













:DYHOHQJWKQP  )LJXUH  2SWLFDO DEVRUEDQFH RI &3&%0  ZW  EOHQG ILOP VSLQFRDWHG RQWR ,72JODVV VXEVWUDWHEHIRUHDQGDIWHUWKHUPDODQQHDOLQJDW R&IRUPLQ7KHILJXUHVKRZVWKHUHGVKLIWRIWKH &DEVRUSWLRQSHDNDIWHUWKHUPDODQQHDOLQJDVDQLQGLFDWLRQRILQFUHDVLQJFRQMXJDWLRQOHQJWKLQWKH &3&%0EOHQGE\DQQHDOLQJ

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

&KDSWHU&RXPDULQG\HEOHQGHGZLWK3&%0DVDEXONKHWHURMXQFWLRQDQGFKDUJHWUDQVIHUFRPSOH[EOHQGIRU RUJDQLFVRODUFHOODSSOLFDWLRQV



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

3ULVWLQH&ILOP &3&%0EOHQGILOP



$EVRUEDQFH

     











:DYHOHQJWKQP



 

)LJXUH  2SWLFDO DEVRUEDQFH RI SULVWLQH & DQG &3&%0  ZW  EOHQG ILOPV VSLQFRDWHG RQWRTXDUW]VXEVWUDWHVDIWHUDQQHDOLQJDW R&IRUPLQ7KHILJXUHVKRZVWKHUHGVKLIWRIWKH& DEVRUSWLRQSHDNDIWHUEOHQGLQJZLWK3&%0DVDQLQGLFDWLRQRIWKH&7&IRUPDWLRQLQWKHEOHQG

7R YHULI\ WKH IRUPDWLRQ RI D &7& LQ D &3&%0 EOHQG ILOP RSWLFDO DEVRUEDQFH PHDVXUHPHQWV KDYH EHHQ FDUULHG RXW RQ &3&%0 EOHQG ILOPV DV D IXQFWLRQ RI EOHQGLQJ FRPSRVLWLRQ DW    DQG  ZW 7KH QRUPDOL]HG DEVRUEDQFH VSHFWUD RI WKHVH ILOPV LQ FRPSDULVRQ ZLWK WKRVH RI SULVWLQH& ILOP DUH VKRZQ LQ )LJ  )URP WKHVH PHDVXUHPHQWV LW FDQ EH REVHUYHG WKDW E\ LQFUHDVLQJ 3&%0 FRQFHQWUDWLRQ LQ WKH &3&%0



&KDSWHU&RXPDULQG\HEOHQGHGZLWK3&%0DVDEXONKHWHURMXQFWLRQDQGFKDUJHWUDQVIHUFRPSOH[EOHQGIRU RUJDQLFVRODUFHOODSSOLFDWLRQV

1RUPDOL]HG$EVRUEDQFH



RI3&%0 RI3&%0 RI3&%0 RI3&%0 RI3&%0

      









:DYHOHQJWKQP



 

)LJXUH  1RUPDOL]HG RSWLFDO DEVRUEDQFH RI SULVWLQH & G\H DQG &3&%0 EOHQG ILOPV DV D IXQFWLRQRI3&%0FRQFHQWUDWLRQLQWKHEOHQG7KHLQFUHDVHLQUHGVKLIWRIWKH&DEVRUSWLRQSHDNZLWK LQFUHDVLQJ3&%0FRQFHQWUDWLRQYHULILHVWKHIRUPDWLRQRIWKH&7&LQWKHEOHQG

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



&KDSWHU&RXPDULQG\HEOHQGHGZLWK3&%0DVDEXONKHWHURMXQFWLRQDQGFKDUJHWUDQVIHUFRPSOH[EOHQGIRU RUJDQLFVRODUFHOODSSOLFDWLRQV



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± 3&%0 VSHFWUD  & VSHFWUD  LQ DFFRUGDQFHZLWKDPHWKRGUHSRUWHGSUHYLRXVO\E\$EUDPRYLü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

&3&%0DVDEXONKHWHURMXQFWLRQEOHQG )LJXUHVKRZVDFRPSDULVRQEHWZHHQWKH(4(RIWKH&3&%0ZW VRODUFHOO DQGWKHDEVRUSWLRQSHDNRI&LQERWKSULVWLQHG\HDQGLQ&3&%0ZW EOHQGILOPV H[WUDFWHG IURP )LJ   DIWHU WKHUPDO WUHDWPHQW DW  R& IRU  PLQ LQ WKH ZDYHOHQJWK 

&KDSWHU&RXPDULQG\HEOHQGHGZLWK3&%0DVDEXONKHWHURMXQFWLRQDQGFKDUJHWUDQVIHUFRPSOH[EOHQGIRU RUJDQLFVRODUFHOODSSOLFDWLRQV





6SHFWUD



 

 6SHFWUD





$EVRUEDQFH

$EVRUEDQFH





  





 

 

:DYH1XPEHUFP  )LJXUH  )7,5 VSHFWUD RI SULVWLQH & G\H ILOP OLJKW JUD\ VSHFWUD   DQG WKH GLIIHUHQFH EHWZHHQ &3&%0DQG3&%0ILOPVEODFNVSHFWUD $UURZVLQGLFDWHWKH,5DEVRUSWLRQSHDNVUHODWHGWRWKH &7&EDQGLQWKH&3&%0EOHQG

UDQJH IURPWRQP %HIRUHWKHUPDO DQQHDOLQJQR ZRUNLQJ GHYLFH LVREWDLQHG)URP WKH

FRPSDULVRQ

VKRZQ

LQ

)LJ



WKH

(4(

PD[LPXP

SHDN

RI

WKH

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

&KDSWHU&RXPDULQG\HEOHQGHGZLWK3&%0DVDEXONKHWHURMXQFWLRQDQGFKDUJHWUDQVIHUFRPSOH[EOHQGIRU RUJDQLFVRODUFHOODSSOLFDWLRQV



SRRUFKDUJHWUDQVSRUW>@,QJHQHUDODQGDVDUHVXOWRISKDVHVHSDUDWLRQRQQDQRPHWHUVFDOH RFFXUULQJ LQ WKH DFWLYH OD\HU EOHQG WKH GRQRUDFFHSWRU LQWHUIDFHV SKRWRDFWLYH SQ KHWHURMXQFWLRQVLWHV VSUHDGZLWKLQWKHHQWLUHYROXPHRIWKH%+-FRPSRVLWHOD\HU7KHUHIRUH WKH OLPLWDWLRQV RI H[FLWRQ PLJUDWLRQ DQG FKDUJH VHSDUDWLRQ DUH RYHUFRPH 0RUHRYHU LQ WKH %+-ERWKPDWHULDOVGRQRUDQGDFFHSWRU KDYHSHUFRODWLQJSDWKVWRWKHLUUHVSHFWLYHHOHFWURGH WR HQVXUH HIILFLHQW FKDUJH WUDQVSRUW DQG FROOHFWLRQ 7KHUHIRUH WKH IRUPDWLRQ RI D %+- DV D VRODUFHOODFWLYHOD\HULPSURYHVWKHJHQHUDWHGSKRWRFXUUHQWIURPWKHVRODUFHOO

(4(RI&3&%0 $EVRUSWLRQRI&3&%0 $EVRUSWLRQRISULVWLQH&



 





 



 







(4(

$EVRUEDQFH



 



:DYHOHQJWKQP



  

)LJXUH  (4( VSHFWUXP RI WKH ,723('27366&3&%0 ZW $O GHYLFH WKLFN EODFN VROLG DEVRUSWLRQVSHFWUXPRIWKH&3&%0ZW WKLQEODFNVROLG DQGDEVRUSWLRQVSHFWUXP RIWKHSULVWLQH&G\HEODFNGDVKHG 7KHILJXUHVKRZVWKHV\PEDWLFEHKDYLRURIWKHGHYLFHDVDUHVXOW RIPDWFKLQJLQWKHZDYHOHQJWKRIWKHDEVRUSWLRQDQG(4(RIWKH&3&%07KHILJXUHDOVRLQGLFDWHV &7& IRUPDWLRQ LQ WKH &3&%0 EOHQG WKURXJK WKH SKRWRFXUUHQW ZKLFK RFFXUV LQ WKH DEVRUSWLRQ UDQJHRIWKHEOHQGQRWRISULVWLQH&

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

&KDSWHU&RXPDULQG\HEOHQGHGZLWK3&%0DVDEXONKHWHURMXQFWLRQDQGFKDUJHWUDQVIHUFRPSOH[EOHQGIRU RUJDQLFVRODUFHOODSSOLFDWLRQV



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



&KDSWHU&RXPDULQG\HEOHQGHGZLWK3&%0DVDEXONKHWHURMXQFWLRQDQGFKDUJHWUDQVIHUFRPSOH[EOHQGIRU RUJDQLFVRODUFHOODSSOLFDWLRQV



/802



/LJKW

([FLWRQ

)URQW $QRGH ,72

 

&7&

  /80 2 (J RI&7&

+20 2

&

%DFN &DWKRGH $O

+20 2

3&%0

 )LJXUH0HFKDQLVPVRIFKDUJHFDUULHUJHQHUDWLRQDVDUHVXOWRIQRUPDOH[FLWRQGLVVRFLDWLRQDQG &7&LQWKH&3&%0VRODUFHOO

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ŒŒDJJUHJDWHV DUH IRUPHG LQ WKH VROLGVWDWH7KXVLWLVDVVXPHGWKDWWKHUHGR[SRWHQWLDOVRILQGLYLGXDOPROHFXOHVLQVROXWLRQGR QRWSURSHUO\UHIOHFWWKHHQHUJHWLFVLWXDWLRQLQWKHVROLGPDWHULDODQGKHQFHLQWKHDFWXDOGHYLFH >@7KLVOHDGVWRDQDOWHUDWLRQRIWKHIURQWLHURUELWDOHQHUJLHVRIPROHFXOHVLQWKH&3&%0 FRPSRVLWHFRPSDUHGZLWKWKRVHRILVRODWHGPROHFXODUVSHFLHV ,Q%+-VRODUFHOOVWKH))UHODWHVWRWKHVHULHVUHVLVWDQFHRIWKHDFWLYHOD\HUZKLFKUHGXFHV DVWKHFKDUJHPRELOLW\LQFUHDVHV>@$VWKHFKDUJHPRELOLW\LVKLJKHULQRUGHUHGPDWHULDOV 

&KDSWHU&RXPDULQG\HEOHQGHGZLWK3&%0DVDEXONKHWHURMXQFWLRQDQGFKDUJHWUDQVIHUFRPSOH[EOHQGIRU RUJDQLFVRODUFHOODSSOLFDWLRQV



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qUH 3 0RUHWWL 0 *UDQVWU|P . 3HWULWVFK ( $ 0DUVHJOLD5+)ULHQG-/%UpGDV+5RVWDQG$%+ROPHV6RO(QHUJ\0DWHU6RO &HOOV  >@6 .D]LP 0 =XOIHTXDU 0 0D]KDUXO +DT 3 . %KDWQDJDU DQG 0 +XVDLQ (OHFWULFDO DQGRSWLFDOSURSHUWLHVRIWKLQILOPVEDVHGRQSRO\>PHWKR[\HWK\OKH[\OR[\  SKHQ\OHQH YLQ\OHQH@ GRSHG ZLWK DFULGLQH RUDQJH G\H ZLWK SRVVLEOH SKRWRYROWDLF DSSOLFDWLRQV6RO(QHUJ\0DWHU6RO&HOOV  >@ 5 0 0HL[QHU + *|EHO ) $ @&&:X+@$$%DNXOLQ6*(OL]DURY$1.KRGDUHY'60DUW\DQRY,9*RORYQLQ'@ / *RULV . +DHQHQ 0 1HVOiGHN 3 :DJQHU ' 9DQGHU]DQGH DQG / ' 6FKHSSHU $EVRUSWLRQ SKHQRPHQD LQ RUJDQLF WKLQ ILOPV IRU VRODU FHOO DSSOLFDWLRQV LQYHVWLJDWHG E\ SKRWRWKHUPDOGHIOHFWLRQVSHFWURVFRS\-0DWHU6FL  >@$$%DNXOLQ'60DUW\DQRY'@ 5 6 0XOOLNHQ 0ROHFXODU FRPSRXQGV DQG WKHLU VSHFWUD - $P&KHP 6RF    



&KDSWHU&RXPDULQG\HEOHQGHGZLWK3&%0DVDEXONKHWHURMXQFWLRQDQGFKDUJHWUDQVIHUFRPSOH[EOHQGIRU RUJDQLFVRODUFHOODSSOLFDWLRQV



>@&-%UDEHF6(6KDKHHQ&:LQGHUDQG166DULFLIWL(IIHFWRI/L)PHWDOHOHFWURGHV RQWKHSHUIRUPDQFHRISODVWLFVRODUFHOOV$SSO3K\V/HWW  >@)3DGLQJHU565LWWEHUJHUDQG166DULFLIWL(IIHFWVRISRVWSURGXFWLRQWUHDWPHQWRQ SODVWLFVRODUFHOOV$GY)XQFW0DWHU  >@ % $EUDPRYLü ' âRMLü DQG 9 $QGHUOXK 9LVLEOHOLJKWLQGXFHG SKRWRFDWDO\WLF GHJUDGDWLRQRIKHUELFLGHPHFRSURSLQDTXHRXVVXVSHQVLRQRI7L2$FWD&KLP6ORY   >@ * 5XDQL & )RQWDQLQL 0 0XUJLD DQG & 7DOLDQL :HDN LQWULQVLF FKDUJH WUDQVIHU FRPSOH[HV $ QHZ URXWH IRU GHYHORSLQJ ZLGH VSHFWUXP RUJDQLF SKRWRYROWDLF FHOOV - &KHP3K\V  >@+@ + +RSSH DQG 1 6 6DULFLIWFL 0RUSKRORJ\ RI SRO\PHUIXOOHUHQH EXON KHWHURMXQFWLRQ VRODUFHOOV-0DWHU&KHP 



&KDSWHU&RXPDULQG\HEOHQGHGZLWK3&%0DVDEXONKHWHURMXQFWLRQDQGFKDUJHWUDQVIHUFRPSOH[EOHQGIRU RUJDQLFVRODUFHOODSSOLFDWLRQV



>@ 7 @10.URQHQEHUJ 0'HSSLVFK):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

'HYLFHZLWKRI3&%0 'HYLFHZLWKRI3&%0 'HYLFHZLWKRI3&%0



(4(

     











:DYHOHQJWKQP  )LJXUH  (4( VSHFWUD RI WKH ,723('27366&3&%0$O GHYLFHV ZLWK LQFUHDVLQJ 3&%0 FRQFHQWUDWLRQLQWKHVRODUFHOODFWLYHOD\HU



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

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

 









)LOO)DFWRU

2SHQ&LUFXLW9ROWDJH9







 









3&%0&RQWHQWZW

 

)LJXUH  9DULDWLRQ RI 92&  û  DQG )) ^  ZLWK LQFUHDVLQJ 3&%0 FRQFHQWUDWLRQ LQ WKH ,723('27366&3&%0$OGHYLFHV

$V VKRZQ LQ )LJ  WKHUH LV QR VSHFLILF YDULDWLRQ IRU WKH 92& ZLWK WKH YDULDWLRQ RI 3&%0 FRQFHQWUDWLRQ LQ WKH PL[WXUH RI WKH %+- OD\HU 6WXGLHV RQ 0'023393&%0 GHYLFHVVKRZHGWKDWWKH92&ZDVFRPSRVLWLRQLQGHSHQGHQWIRU3&%0FRQWHQWVDERYHDERXW  E\ ZHLJKW >@ )RU RUJDQLF %+- PDWHULDOV DV GLVFXVVHG LQ WKH SUHYLRXV FKDSWHUV WKH JHQHUDOSHUFHSWLRQLVWKDWWKH92&LVGHWHUPLQHGE\WKHHQHUJ\GLIIHUHQFHEHWZHHQWKH+202 

&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

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



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

WKHSKRWRYROWDLFSHUIRUPDQFHUHGXFHV7KHVDPHUHVXOWVDUHDUJXHGE\*HHQVHWDO>@LQWKH FDVH RI XVLQJ EXON GRQRUDFFHSWRU KHWHURMXQFWLRQ EDVHG RQ D EOHQG RI SRO\PHWKR[\



6KRUW&LUFXLW&XUUHQW'HQVLW\P$FP

GLPHWK\ORFW\OR[\ SKHQ\OHQHYLQ\OHQH 2&&339 DQG3&%0





















 













3RZHU&RQYHUVLRQ(IILFLHQF\





3&%0&RQWHQWZW  )LJXUH  9DULDWLRQ RI -6&  û  DQG 3&( ^  ZLWK LQFUHDVLQJ 3&%0 FRQFHQWUDWLRQ LQ WKH ,723('27366&3&%0$OGHYLFHV

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



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

(IIHFWRIVSLQFRDWLQJVSHHGRI&3&%0EOHQG ,QWKHSUHVHQWVHFWLRQZHLQYHVWLJDWHHIIHFWRIVSLQFRDWLQJVSHHGRQWKHSHUIRUPDQFHRI VRODU FHOO FRPSRVHG RI  PJP/ RI WKH &3&%0  ZW  DFWLYH OD\HU 7KH RSWLFDO DEVRUSWLRQ SKRWRFXUUHQW DQG SHUIRUPDQFH SDUDPHWHUV DUH PHDVXUHG IRU WKH VRODU FHOO XQGHU GLIIHUHQWVSLQFRDWLQJVSHHGVRIWKHDFWLYHOD\HULHGLIIHUHQW&3&%0ILOPWKLFNQHVV ,Q WKLVVWXG\ZHORRNIRUWKHEHVWVSLQFRDWLQJVSHHGDWZKLFKWKH&3&%0ZW VRODU FHOOSURGXFHVWKHEHVWSHUIRUPDQFH

([SHULPHQWDOVHFWLRQ ,Q WKLV SDUW WKH VRODU FHOO DFWLYH OD\HU ZDV SUHSDUHG E\ VSLQFRDWLQJ  PJP/ RI WKH &3&%0ZW VROXWLRQDWGLIIHUHQWVSLQFRDWLQJVSHHGVDV DQG  USP WR REWDLQ GLIIHUHQW WKLFNQHVVHV RI WKH VRODU FHOO DFWLYH OD\HU 7KH RWKHU SUHSDUDWLRQSURFHGXUHVDQGWKHH[SHULPHQWDOSURFHGXUHVIRUILOPVDQGFRPSOHWHVRODUFHOOVDUH WKH VDPH RI WKRVH GHVFULEHG LQ VXEVHFWLRQ  7KH FRPSOHWH RUJDQLF VRODU FHOOV ZLWK WKH FRQILJXUDWLRQVKRZQLQ)LJE ZHUHVWRUHGLQGDUNXQGHUQLWURJHQDWPRVSKHUHLQDJORYH ER[XQWLOWKHPHDVXUHPHQWV

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

&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

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

$EVRUEDQFH



USP USP USP USP USP





 









:DYHOHQJWKQP  )LJXUH2SWLFDODEVRUEDQFHRI&3&%0EOHQGILOPVZLWKYDULDWLRQLQVSLQFRDWLQJVSHHG

7KH (4( VSHFWUD RI WKH ,723('27366&3&%0$O VRODU FHOO DW GLIIHUHQW VSLQ FRDWLQJ VSHHGV RI WKH &3&%0 EOHQG DUH VKRZQ LQ )LJ  LQ WKH ZDYHOHQJWK UDQJH IURP  WR  QP 7KH (4( PD[LPXP SHDN UHODWHG WR WKH FRQWULEXWLRQ RI WKH & G\H WR WKH SKRWRFXUUHQWDSSHDUVDWQPDWGLIIHUHQWVSLQFRDWLQJVSHHGVRIWKHDFWLYHOD\HUZKHUHWKH &G\HDEVRUEVYLVLEOHOLJKWDWQPDVVKRZQLQ)LJ7KH&G\HLQWKHEOHQGVSLQ FRDWHG DW  USP FRQWULEXWHV WR WKH SKRWRFXUUHQW ZLWK  %\ LQFUHDVLQJ VSLQFRDWLQJ



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

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

USP USP USP USP USP

(4(

     











:DYHOHQJWKQP  )LJXUH(4(VSHFWUDRIWKH,723('27366&3&%0$OGHYLFHVZLWKYDULDWLRQLQVSLQFRDWLQJ VSHHGRIWKHDFWLYHOD\HU

7KHUHDUHRWKHUIDFWRUVRWKHUWKDQRSWLFDODEVRUSWLRQ DIIHFWLQJWKHSKRWRFXUUHQWGXHWRD YDULDWLRQ LQ VSLQFRDWLQJ VSHHG RU WKLFNQHVV  RI DQ DFWLYH OD\HU 6RPH RI WKHVH IDFWRUV DUH H[FLWRQGLIIXVLRQDQGFKDUJHFDUULHUWUDQVIHULQWKHDFWLYHOD\HU7KHLQFUHDVHLQDFWLYHOD\HU WKLFNQHVV LQFUHDVHV WKH RSWLFDO DEVRUSWLRQ DQG LQ WKH VDPH WLPH GHFUHDVHV WKH H[FLWRQ GLIIXVLRQ DQG FKDUJH FDUULHU WUDQVIHU LQ WKH DFWLYH OD\HU EOHQG 7KHUHIRUH WKH SKRWRFXUUHQW 

&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

GHFUHDVHVLQWKHFRUUHVSRQGLQJVRODUFHOO,WVHHPVIURPWKHSUHVHQWUHVXOWVWKDWWKHWKLFNQHVV RIWKH&3&%0DFWLYHOD\HUDWUSPLVQRWKLJKWRUHGXFHWKHFKDUJH FDUULHUWUDQVSRUW DQGWRGHFUHDVHWKHSKRWRFXUUHQWRIWKHVRODUFHOO+RZHYHUWKHLQFUHDVHLQWKHFRQFHQWUDWLRQ RIWKH&3&%0EOHQGFDQLQFUHDVHWKHILOPWKLFNQHVVZKLFKDIIHFWVWKHSKRWRFXUUHQWRIWKH &3&%0VRODUFHOODVZLOOEHGLVFXVVHGLQWKHHQGRIWKLVFKDSWHU :H KDYH PHDVXUHG WKH -9 FKDUDFWHULVWLFV RI WKH ,723('27366&3&%0$O VRODU FHOOXQGHU$0*ZKLWHOLJKWLOOXPLQDWLRQZLWKLQWHQVLW\RIP:FPDVDIXQFWLRQRI VSLQFRDWLQJVSHHGRIWKHVRODUFHOODFWLYHOD\HU)URPWKHDQDO\VLVRI-9FKDUDFWHULVWLFVZH KDYHHVWLPDWHGWKHVRODUFHOOSHUIRUPDQFHSDUDPHWHUVRILQYHVWLJDWHGGHYLFHV)LJXUHVDQG GHVFULEHWKHYDULDWLRQRIWKHSDUDPHWHUVZLWKVSLQFRDWLQJVSHHG 2QH FDQ REVHUYH IURP )LJ  WKDW WKH 92& YDULHV ZLWKLQ  9 ZKLOH WKH )) YDULHV ZLWKLQZLWKYDULDWLRQRIVSLQFRDWLQJVSHHGRIWKHVRODUFHOODFWLYHOD\HULQWKHUDQJHRI USP,QJHQHUDOWKHLQFUHDVHLQVSLQFRDWLQJVSHHGRIDQDFWLYHOD\HUGHFUHDVHVWKH ILOPWKLFNQHVVDQGWKHUHIRUHLQFUHDVHVWKH))RIWKHVRODUFHOO7KLVEHKDYLRULVEHFDXVHWKH )) VWURQJO\ GHSHQGV RQ FKDUJH FDUULHU PRELOLW\ ZKLFK LV LQFUHDVHG E\ WKH GHFUHDVH LQ WKH DFWLYH OD\HU WKLFNQHVV $V VKRZQ LQ )LJ  WKH LQFUHDVH LQ VSLQFRDWLQJ VSHHG RI WKH &3&%0EOHQGIURPWRUSPPD\VOLJKWO\LQFUHDVHWKH))RIWKHVRODUFHOODVD UHVXOWRIVPDOOSRVVLEOHGHFUHDVHLQDFWLYHOD\HUWKLFNQHVV7KHLQFUHDVHLQWKH))PHDQVWKDW WKHFKDUJHFDUULHUPRELOLW\LVLPSURYHGLQWKHVRODUFHOO7KH LPSURYHPHQWLQFKDUJHFDUULHU PRELOLW\PD\LPSURYHWKHSKRWRFXUUHQWDQGSHUIRUPDQFHSDUDPHWHUVRIWKHVRODUFHOO)XUWKHU LQFUHDVH LQ VSLQFRDWLQJ VSHHG XS WR  USP VOLJKWO\ GHFUHDVHV WKH )) DOWKRXJK WKH ILOP WKLFNQHVVLVVXIILFLHQWO\ GHFUHDVHGDWKLJKVSLQFRDWLQJVSHHG7KLVPD\ EHEHFDXVHWKLQQHU ILOP WKLFNQHVV GXH WR KLJK VSLQFRDWLQJ VSHHG  FDXVHV D ODUJHU OHDNDJH FXUUHQW ,W LV NQRZQ WKDWWKHODUJHOHDNDJHFXUUHQWEULQJVORZ)) 7KH YDULDWLRQ LQ WKH -6& DQG 3&( DV VKRZQ LQ )LJ  UHVHPEOHV WKH YDULDWLRQ LQ WKH (4( DW GLIIHUHQW VSLQFRDWLQJ VSHHGV RI WKH VRODU FHOO DFWLYH OD\HU 6SLQFRDWLQJ RI WKH &3&%0 EOHQG DW  USP WHQGV WR KLJKHU YDOXH RI WKH - 6& DQG FRQVHTXHQWO\ 3&( RI LQYHVWLJDWHGVRODUFHOOZKLOHWKHLQFUHDVHLQVSLQFRDWLQJVSHHGWRUSPWHQGVWRGHFUHDVH WKHYDOXHVRI-6& DQG3&(6SLQFRDWLQJWKHORZ YLVFRXVVROXWLRQRIWKH&3&%0EOHQGLQ WKH UDQJH RI  USP WHQGV WR VPDOO DQG LQGHILQLWH YDULDWLRQ RI WKH YDOXHV RI -6& DQG 3&(IRULQYHVWLJDWHGVRODUFHOOV$VGLVFXVVHGDERYHIRUWKHYDU\LQJ(4(ZLWKVSLQFRDWLQJ



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

VSHHG RI WKH DFWLYH OD\HU WKH EHVW VSLQFRDWLQJ VSHHG DSSOLHG XSRQ &3&%0 EOHQG LV WKH  USP DW ZKLFK WKH EOHQG ILOP KDV VXLWDEOH WKLFNQHVV WR DEVRUE ODUJHU DPRXQWV RI OLJKW 

 































)LOO)DFWRU

2SHQ&LUFXLW9ROWDJH9

 



6SLQFRDWLQJVSHHGUSP  )LJXUH  9DULDWLRQ RI 92&  û  DQG )) ^  RI WKH ,723('27366&3&%0 ZW $O GHYLFHVZLWKYDULDWLRQLQVSLQFRDWLQJVSHHGRIWKHDFWLYHOD\HU



         













3RZHU&RQYHUVLRQ(IILFLHQF\

6KRUW&LUFXLW&XUUHQW'HQVLW\P$FP



6SLQFRDWLQJVSHHGUSP  )LJXUH  9DULDWLRQ RI -6& û  DQG 3&( ”  RI WKH ,723('27366&3&%0 ZW $O GHYLFHVZLWKYDULDWLRQLQVSLQFRDWLQJVSHHGRIWKHDFWLYHOD\HU



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

SKRWRQV DQG LQ WKH VDPH WLPH WKH WKLFNQHVV RI WKLV ILOP GRHV QRW GLVWXUE FKDUJH FDUULHU WUDQVIHUWRUHVSHFWLYHHOHFWURGHVP$FPRI-6&DQGRI3&(DUHGXHWRVSLQFRDWLQJ WKH&3&%0EOHQGDWUSP7KHREVHUYHGGHFUHDVHLQ- 6&DQG3&(DWUSPLVGXHWR GHFUHDVH LQ RSWLFDO DEVRUSWLRQ RI WKH EOHQG ILOP DV VKRZQ LQ )LJ  ZKLOH WKH VPDOO YDULDWLRQLQWKHVHYDOXHVDWVSLQFRDWLQJLQWKHUDQJHRIUSPPD\EHDWWULEXWHGWR VPDOO YDULDWLRQ LQ WKH RSWLFDO DEVRUSWLRQ RI EOHQG ILOPV GXH WR VPDOO YDULDWLRQ LQ WKH ILOP WKLFNQHVVDWKLJKVSHHGVRIWKHVSLQFRDWLQJ7KHVPDOOYDULDWLRQLQWKHWKLFNQHVVRIWKHDFWLYH OD\HULVDUHVXOWRIORZFRQFHQWUDWLRQDQGORZYLVFRVLW\RIWKH&3&%0EOHQGVROXWLRQ :HPD\FRQFOXGHIURPWKLVLQYHVWLJDWLRQWKDWWKHPJP/VROXWLRQRIWKH&3&%0  ZW  EOHQG KDV ORZ YLVFRVLW\ DQG SURGXFHV VPDOO YDULDWLRQ LQ WKH WKLFNQHVV RI WKH EOHQGILOPE\VSLQFRDWLQJDWVSHHGVLQWKHUDQJHRIUSPZKLOHWKHVSLQFRDWLQJDW VSHHGV ORZHU WKDQ  USP GRHV QRW SURGXFH KRPRJHQHRXV ILOP 7KH RSWLPL]DWLRQ RI WKH &3&%0 EOHQG ILOP WKLFNQHVV ZKLFK RSWLPL]HV WKH VRODU FHOO SHUIRUPDQFH PD\ EH LGHQWLILHGWKURXJKWKHLQFUHDVHLQWKHEOHQGFRQFHQWUDWLRQDV ZLOOEHGLVFXVVHGLQWKHHQGRI WKLVFKDSWHU )URPWKLVLQYHVWLJDWLRQZHFDQLQGLFDWHWKDWWKHEHVWVSLQFRDWLQJVSHHGDSSOLHGXSRQ PJP/RIWKH&3&%0ZW EOHQGLVWKHUSP7KHEHVWVRODUFHOOXQGHUWKHVH FRQGLWLRQV SURGXFHV  9 DV D 92&  DV D ))  P$FP DV D -6& DQG  DV D 3&(

(IIHFWRIWKHUPDODQQHDOLQJXSRQ&3&%0EOHQG )RU XQGHUVWDQGLQJ WKH GHYLFH SK\VLFV DQG IRU HVWDEOLVKLQJ D UHODWLRQVKLS EHWZHHQ SURGXFWLRQSDUDPHWHUVDQGSHUIRUPDQFHSDUDPHWHUVRIQHZVRODUFHOOEDVHGRQVPDOORUJDQLF PROHFXOHVZHLQYHVWLJDWHWKHUPDODQQHDOLQJHIIHFWRQWKHSHUIRUPDQFHRIWKH&3&%0VRODU FHOO >@ ,Q DGGLWLRQ LQ WKLV VWXG\ ZH ORRN IRU WKH EHVW DQQHDOLQJ FRQGLWLRQV DW ZKLFK WKH &3&%0VRODUFHOOSURGXFHVWKHEHVWSHUIRUPDQFH7KHRSWLFDODEVRUSWLRQSKRWRFXUUHQWDQG SHUIRUPDQFHSDUDPHWHUVDUHPHDVXUHGIRUWKHVRODUFHOO

([SHULPHQWDOVHFWLRQ ,Q WKLV SDUW WKH VRODU FHOO DFWLYH OD\HU ZDV SUHSDUHG E\ VSLQFRDWLQJ  PJP/ RI WKH &3&%0ZW VROXWLRQDWUSP7KHUPDODQQHDOLQJRIWKHVRODUFHOOZDVFDUULHG 

&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

RXWEHIRUHDQGDIWHU$OHOHFWURGHGHSRVLWLRQDWGLIIHUHQWFRQGLWLRQVRIDQQHDOLQJWHPSHUDWXUHV DQGDQQHDOLQJWLPHVPHQWLRQHGEHORZ XQGHUQLWURJHQDWPRVSKHUHLQDJORYHER[7KHRWKHU SUHSDUDWLRQ DQG H[SHULPHQWDO SURFHGXUHV IRU ILOPV DQG FRPSOHWH VRODU FHOOV DUH WKH VDPH RI WKRVHGHVFULEHGLQVXEVHFWLRQ

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



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

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



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

$VDQLQGLFDWLRQ.LPHWDO>@VWDWHGWKDWWKHUHZDVQRGLVWLQFWYDULDWLRQLQWKHDEVRUSWLRQ VSHFWUDZKHQDQQHDOLQJWHPSHUDWXUHXSRQDFWLYHOD\HUFRPSRVHGRI3+73&%0EOHQGURVH

1RUPDOL]HG$EVRUEDQFH

DERYHR&DQGWKHVSHFWUXPDWR&ZDVYHU\VLPLODUWRWKDWRIR&

:LWKRXWDQQHDOLQJ R  &IRUPLQ R  &IRUPLQ R  &IRUPLQ R  &IRUPLQ R  &IRUPLQ R  &IRUPLQ R  &IRUPLQ R  &IRUPLQ

      









:DYHOHQJWKQP



 

)LJXUH  2SWLFDO DEVRUEDQFH RI &3&%0 EOHQG ILOP VSLQFRDWHG RQWR PLFURJODVV VXEVWUDWHV  EHIRUHDQGDIWHUWKHUPDODQQHDOLQJDWGLIIHUHQWWHPSHUDWXUHVDQGDQQHDOLQJWLPHV

(IIHFWRIWKHUPDODQQHDOLQJRQWKHFRQWDFW 7KH HIIHFW RI WKHUPDO DQQHDOLQJ RQ WKH FRQWDFW EHWZHHQ &3&%0 DFWLYH OD\HU DQG $O HOHFWURGHLVLQYHVWLJDWHGWKURXJKPHDVXUHPHQWRISKRWRFXUUHQWDQGSHUIRUPDQFHSDUDPHWHUVRI WKH VRODU FHOOV 7KH WKHUPDO WUHDWPHQW LQ WKLV FDVH LV FDUULHG RXW WKURXJK VXEVHTXHQW WZR VWHSVILUVWDQQHDOLQJVWHSZKLFKLVFDUULHGRXWEHIRUH$OGHSRVLWLRQDWR&IRUPLQSUH DQQHDOLQJ  DQG VHFRQG DQQHDOLQJ VWHS ZKLFK LV FDUULHG RXW DIWHU $O GHSRVLWLRQ DW YDULRXV WHPSHUDWXUHV LQ WKH UDQJH RI  R& IRU  PLQ SRVWDQQHDOLQJ  LQ D JORYH ER[ XQGHU QLWURJHQ DWPRVSKHUH ,Q WKLV FDVH WKH SUHDQQHDOLQJ VWHS DW  R& IRU  PLQ EHIRUH $O GHSRVLWLRQLVIRUVWDELOL]LQJFU\VWDOVWUXFWXUHRIWKHDFWLYHOD\HUEOHQGILOP7KXVWKHLPSDFWRI DQQHDOLQJ RQ WKH FRQWDFW EHWZHHQ DFWLYH OD\HU DQG $O HOHFWURGH LV VSHFLILHG E\ WKH SRVW DQQHDOLQJVWHSXQGHUYDULDWLRQRIWKHWHPSHUDWXUHVIURPXSWRR&7KHUHLVQRUHDVRQ IRU VSHFLI\LQJ WKH  R& IRU  PLQ DV FRQGLWLRQV IRU WKH SUHDQQHDOLQJ VWHS ZKHUHDV WKH RUGHUHGVWUXFWXUHRIWKH&3&%0DFWLYHOD\HULVVHFXUHGXQGHU WKHZKROHLQYHVWLJDWHGSUH



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

DQQHDOLQJWHPSHUDWXUHUDQJHR& ZLWKRXWFKDQJLQJDVVKRZQLQ)LJ6RE\WKLV PHWKRGWKHYDULDWLRQLQWKHFRQWDFWEHWZHHQ&3&%0EOHQGILOPDQG$OHOHFWURGHLVGXHWR SRVWDQQHDOLQJVWHS )LJXUH  VKRZV WKH (4( VSHFWUD RI WKH ,723('27366&3&%0$O VRODU FHOO XQGHUSUHDQQHDOLQJDORQHDQGXQGHUVXEVHTXHQWWZRWUHDWPHQWVSUHDQQHDOLQJDW R&IRU PLQ DQGSRVWDQQHDOLQJDWGLIIHUHQWWHPSHUDWXUHVLQWKHUDQJHRI R&IRUPLQ LQ WKHZDYHOHQJWKUDQJHIURPWRQP:LWKRXWWKHUPDODQQHDOLQJQRZRUNLQJGHYLFHLV REWDLQHG7KH(4(PD[LPXPSHDNRIWKH&3&%0DFWLYHOD\HUDWDERXWQPUHODWHVWR WKHFRQWULEXWLRQRI&G\HWRWKHSKRWRFXUUHQWZKLOHWKHG\HDEVRUEVOLJKWDWDERXWQPDV VKRZQLQ)LJ$VVKRZQLQ)LJWKHH[FOXVLYHSUHDQQHDOLQJRIWKH&3&%0DFWLYH OD\HUSURGXFHVDDVWKHFRQWULEXWLRQRI&G\HWRWKHSKRWRFXUUHQWDWWKHZDYHOHQJWKRI  QP :KLOH WKH SRVWDQQHDOLQJ DW  R& SUHFHGHG E\ SUHDQQHDOLQJ UHGXFHV WKH FRQWULEXWLRQ RI & G\H WR  %\ JUDGXDO LQFUHDVH LQ WKH SRVWDQQHDOLQJ WHPSHUDWXUH WKH FRQWULEXWLRQ RI WKH & G\H WR WKH SKRWRFXUUHQW JUDGXDOO\ GHFUHDVHV WR UHDFK  XQGHU WKH SRVWDQQHDOLQJDW R&:KLOHWKHRUGHUHGVWUXFWXUHRIWKH&G\HLQWKHEOHQGLVVHFXUHGE\ SUHDQQHDOLQJVWHSWKHGHFUHDVHLQWKHFRQWULEXWLRQRI&G\HLQWKH(4(VSHFWUDE\LQFUHDVH LQ WKH SRVWDQQHDOLQJ WHPSHUDWXUH LV DWWULEXWHG LQ DOO SUREDELOLW\  WR GHWHULRUDWLRQ LQ WKH 

 3UHDQQHDOLQJ 3UHDQQHDOLQJIROORZHGE\ SRVWDQQHDOLQJDW R   & R   & R   & R   & R   &



(4(

      











:DYHOHQJWKQP  )LJXUH  (4( VSHFWUD RIWKH,723('27366&3&%0$O VRODU FHOO XQGHU WKHUPDO WUHDWPHQW EHIRUH$OGHSRVLWLRQDW R&IRUPLQSUHDQQHDOLQJ DQGXQGHUWZRVXEVHTXHQWWUHDWPHQWVSUH DQQHDOLQJ DW  R& IRU  PLQ  IROORZHG E\ DQQHDOLQJ DIWHU $O GHSRVLWLRQ SRVWDQQHDOLQJ  DW GLIIHUHQWWHPSHUDWXUHV



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

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

&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

GDPDJH LQ WKH LQWHUIDFH EHWZHHQ WKH DFWLYH OD\HU DQG WKH HOHFWURGH E\ SRVWDQQHDOLQJ 7KH







 





2QO\SUHDQQHDOHG VRODUFHOO





)LOO)DFWRU

2SHQ&LUFXLW9ROWDJH9

FDXVHRIWKHGDPDJHLQWKHFRQWDFWEHWZHHQ&3&%0DFWLYHOD\HUDQG$OHOHFWURGHGXHWR









 







     R

$QQHDOLQJ7HPSHUDWXUH & 



)LJXUH  9DULDWLRQ RI 92&  û  DQG )) ”  ZLWK DQQHDOLQJ WHPSHUDWXUH RI WKH ,723('27366&3&%0$OVRODUFHOO









 



2QO\SUHDQQHDOHG VRODUFHOO















 

 





3RZHU&RQYHUVLRQ(IILFLHQF\

6KRUW&LUFXLW&XUUHQW'HQVLW\P$FP





     R

$QQHDOLQJ7HPSHUDWXUH &

 )LJXUH  9DULDWLRQ RI -6&  û  DQG 3&( ”  ZLWK DQQHDOLQJ WHPSHUDWXUH RI WKH ,723('27366&3&%0$OVRODUFHOO



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

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

:LWKRXWDQQHDOLQJ 3UHDQQHDOLQJIROORZHG E\SRVWDQQHDOLQJDW 5RRP7  R   & R  &  R   & R   & R   &

$EVRUEDQFH

      







:DYHOHQJWKQP  )LJXUH  2SWLFDO DEVRUEDQFH RI &3&%0 EOHQG ILOP VSLQFRDWHG RQWR ,72JODVV VXEVWUDWHV  ZKLFK LV SUHDQQHDOHG DW  R& IRU  PLQ  IROORZHG E\ SRVWDQQHDOLQJ DW GLIIHUHQW WHPSHUDWXUHV IURPURRPWHPSHUDWXUHXSWRR&



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

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



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

([SHULPHQWDOVHFWLRQ ,QWKLVSDUWWKHVRODUFHOODFWLYHOD\HUZDVSUHSDUHGE\VSLQFRDWLQJWKH&3&%0 ZW  EOHQG DW  USP DW GLIIHUHQW FRQFHQWUDWLRQV DV    DQG  PJP/ 7KHUPDO DQQHDOLQJ RI WKH VRODU FHOO ZDV FDUULHG RXW EHIRUH $O GHSRVLWLRQ DW  R& IRU  PLQ DQG DIWHU$OGHSRVLWLRQDW R&IRUPLQXQGHUQLWURJHQDWPRVSKHUHLQ DJORYHER[7KHRWKHU SUHSDUDWLRQ DQG H[SHULPHQWDO SURFHGXUHV IRU ILOPV DQG FRPSOHWH VRODU FHOOV DUH WKH VDPH RI WKRVHGHVFULEHGLQVXEVHFWLRQ

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

PJP/ PJP/ PJP/ PJP/

$EVRUEDQFH

     







:DYHOHQJWKQP

 

)LJXUH2SWLFDODEVRUEDQFHRI&3&%0EOHQGILOPDWGLIIHUHQWEOHQGFRQFHQWUDWLRQ



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

RIWKH&PROHFXOHVZKLFKPD\EHLQIOXHQFHGE\LQWHUDFWLRQEHWZHHQFKDUJHVRQWKHVXUIDFH RI,72PHWDOHOHFWURGHDQGFKDUJHVRQWKHVXUIDFHRIDFWLYHOD\HU,WLVREVHUYHGIURP)LJ WKDWWKHDEVRUSWLRQSHDNVRIERWK&DQG3&%0JUDGXDOO\UHGVKLIWZLWKJUDGXDOLQFUHDVH LQWKH&3&%0EOHQGFRQFHQWUDWLRQ7KHDEVRUSWLRQSHDNVRIWKH&DQG3&%0LQWKHEOHQG KDYLQJWKHFRQFHQWUDWLRQRIPJP/ORFDWHDWDQGQPUHVSHFWLYHO\:LWKLQFUHDVH LQ&3&%0EOHQGFRQFHQWUDWLRQXSWRPJP/WKHDEVRUSWLRQSHDNVRIWKH&DQG3&%0 UHGVKLIW WR  DQG  QP UHVSHFWLYHO\ 7KH REVHUYHG UHGVKLIW LQ WKH DEVRUSWLRQ RI WKH &3&%0 EOHQG ILOP DW FRQVWDQW DQQHDOLQJ FRQGLWLRQV LV DWWULEXWHG WR LQFUHDVH LQ WKH FRQMXJDWLRQOHQJWKRIERWK&DQG3&%0PROHFXOHVLQWKHDFWLYH OD\HUEOHQGDVDUHVXOWRI LQFUHDVLQJEOHQGFRQFHQWUDWLRQ+RSSHHW DO>@UHYHDOHGWKDWWKHIXOOHUHQHFOXVWHUVL]HDQG WKHDYHUDJHILOPWKLFNQHVVZHUHLQFUHDVHGDWKLJKHUFRQFHQWUDWLRQRIWKH0'023393&%0 VRODU FHOO 7KH 3&%0 FOXVWHUV LQ WKH &3&%0 DFWLYH OD\HU HIILFLHQWO\ WUDQVSRUW WKH SKRWRJHQHUDWHGPRELOHHOHFWURQVE\PHDQVRISHUFRODWHGSDWKZD\VWRWKHUHVSHFWLYHHOHFWURGH )LJXUH  VKRZV (4( VSHFWUD RI WKH ,723('27366&3&%0$O VRODU FHOO XQGHU YDULDWLRQRIWKHDFWLYHOD\HUEOHQGFRQFHQWUDWLRQLQWKHZDYHOHQJWKUDQJHRIQP$V VKRZQ LQ WKLV ILJXUH WKH FRQWULEXWLRQ RI WKH & G\H WR WKH SKRWRFXUUHQW LQFUHDVHV DW D ZDYHOHQJWKRIQPIURPWRDIWHULQFUHDVLQJWKH&3&%0EOHQGFRQFHQWUDWLRQ IURPWRPJP/)XUWKHULQFUHDVHLQWKHEOHQGFRQFHQWUDWLRQXSWRPJP/UHGXFHVWKH FRQWULEXWLRQ RI WKH & G\H WR  DW  QP ,Q RUJDQLF VRODU FHOOV WKH (4( GHSHQGV RQ RSWLFDODEVRUSWLRQH[FLWRQGLIIXVLRQH[FLWRQGLVVRFLDWLRQLQWRIUHHFDUULHUVFKDUJHWUDQVSRUW DQG FKDUJH FROOHFWLRQ DW HOHFWURGHV 6R WKH LQFUHDVH LQ WKH SKRWRFXUUHQW IURP  WR   ZLWK LQFUHDVH LQ WKH &3&%0 EOHQG FRQFHQWUDWLRQ IURP  WR  PJP/  LV DWWULEXWHG WR WKUHH PHDQ UHDVRQV )LUVW WKH LQFUHDVH LQ WKH &3&%0 EOHQG FRQFHQWUDWLRQ LQFUHDVHV WKH RSWLFDO DEVRUSWLRQ RI WKH DFWLYH OD\HU DV VKRZQ IURP )LJ  7KH LQFUHDVH LQ OLJKW KDUYHVWLQJ E\ VRODU FHOO DFWLYH OD\HU WHQGV WR LQFUHDVH LQ WKH JHQHUDWHG FKDUJH FDUULHUV DQG SKRWRFXUUHQW 6HFRQG WKH LQFUHDVH LQ WKH &3&%0 EOHQG FRQFHQWUDWLRQ LPSURYHV WKH FRQMXJDWLRQ OHQJWK LQ WKH EOHQG ILOP LQGLFDWHG IURP UHGVKLIW RI WKH DEVRUSWLRQ RI EOHQG LQ RSWLFDODEVRUSWLRQVSHFWUD,WLVZHOONQRZQWKDWWKHLPSURYHPHQWLQWKHFRQMXJDWLRQOHQJWKLQ EOHQGWHQGVWRLPSURYHFKDUJHFDUULHUWUDQVSRUWZKLFKE\LWVWXUQLPSURYHVWKHSKRWRFXUUHQW DQGSHUIRUPDQFHSDUDPHWHUVRIWKHFRUUHVSRQGLQJVRODUFHOO7KLUGWKHLQFUHDVHLQDFWLYHOD\HU FRQFHQWUDWLRQ LQFUHDVHV WKH QXPEHU RI SKRWRDFWLYH SQ KHWHURMXQFWLRQ VLWHV ZKLFK WHQGV WR HQKDQFHWKHFKDUJHVHSDUDWLRQH[FLWRQGLVVRFLDWLRQ DQGWKHUHIRUHSKRWRFXUUHQWLQWKHVRODU



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

FHOODVPHQWLRQHGLQWKHFDVHRILQFUHDVLQJIXOOHUHQHFOXVWHUVLQWR&G\HLQWKHVHFWLRQRI 7KHUHIRUH WKH H[WHQW RI SKDVH VHSDUDWLRQ GRHV QRW RQO\ VFDOH ZLWK DQ LQFUHDVLQJ IXOOHUHQH IUDFWLRQEXWDOVRZLWKDQLQFUHDVLQJWRWDOFRQFHQWUDWLRQRIWKHSUHFXUVRUVROXWLRQDVVWDWHGE\ +RSSHHWDO>@



PJP/ PJP/ PJP/ PJP/



(4(

       









:DYHOHQJWKQP

 

)LJXUH  (4( VSHFWUD RI WKH ,723('27366&3&%0$O VRODU FHOO DW GLIIHUHQW &3&%0 EOHQGFRQFHQWUDWLRQV

2UJDQLF VHPLFRQGXFWRUV JHQHUDOO\ DUH PDWHULDOV H[KLELWLQJ ORZ PRELOLWLHV UDQJLQJ EHWZHHQ§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

&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

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

 

  



 





)LOO)DFWRU

2SHQ&LUFXLW9ROWDJH9







 













&RQFHQWUDWLRQPJP/  )LJXUH  9DULDWLRQ RI 92&  û  DQG )) ”  ZLWK &3&%0 EOHQG FRQFHQWUDWLRQ RI WKH ,723('27366&3&%0$OVRODUFHOO



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

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

   



  



















3RZHU&RQYHUVLRQ(IILFLHQF\

 6KRUW&LUFXLW&XUUHQW'HQVLW\P$FP

FOXVWHUVVL]HRIWKH3&%0REWDLQHGE\LQFUHDVLQJEOHQGFRQFHQWUDWLRQ



&RQFHQWUDWLRQPJP/  )LJXUH  9DULDWLRQ RI -6&  û  DQG 3&( ”  ZLWK &3&%0 EOHQG FRQFHQWUDWLRQ RI WKH ,723('27366&3&%0$OVRODUFHOO



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

)URP WKLV LQYHVWLJDWLRQ ZH FDQ LQGLFDWH WKDW WKH EHVW FRQFHQWUDWLRQ RI WKH &3&%0 ZW DFWLYHOD\HUVSLQFRDWHGDWUSPDQGDQQHDOHGEHIRUH$OGHSRVLWLRQDW R

&PLQDQGDIWHU$OGHSRVLWLRQDWR&PLQ LVWKHFRQFHQWUDWLRQRIPJP/ 7KH SURJUHVV LQ WKH SHUIRUPDQFH SDUDPHWHUV RI WKH &3&%0 VRODU FHOO XQGHU WKH

GLIIHUHQWSURGXFWLRQSDUDPHWHUVIURPWKHODVWH[SHULPHQWVFDQEHJDWKHUHGDQGVKRZQLQ)LJV  DQG  IRU FRPSDULVRQ $V VKRZQ IURP WKHVH ILJXUHV WKH EHVW VRODU FHOO DIWHU RXU LQYHVWLJDWLRQVLQWKLVFKDSWHULVWKHVRODUFHOOZKLFKKDVZWDVDFRPSRVLWLRQRIWKH &3&%0 EOHQG DQG  PJP/ DV D FRQFHQWUDWLRQ RI WKLV EOHQG $  USP LV WKH VSLQ FRDWLQJVSHHGRIWKHEHVWVRODUFHOODFWLYHOD\HUZKLFKLVDQQHDOHGEHIRUH$OGHSRVLWLRQDW R

&IRUPLQDQGDIWHU$OGHSRVLWLRQDW R&IRUPLQ7KHEHVWVRODUFHOODVVKRZQIURP

)LJVDQGSURGXFHV9DVD92&DVD))P$FPDVD-6&DQG DVD3&(

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

LPSURYHPHQW LQ WKH SKRWRDFWLYH SQ KHWHURMXQFWLRQ VLWHV LQ WKH &3&%0 EOHQG DQG WKHUHIRUHLPSURYHPHQWLQFKDUJHFDUULHUVHSDUDWLRQDQG



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

  

 92& ))

 



)LOO)DFWRU



%HVW&RFHQWUDWLRQ PJP/

%HVW$QQHDOLQJ R  &IRUPLQ %HIRUH$O'HSRVLWLRQ

%HVW6SLQFRDWLQJ6SHHG USP

 %HVW&RPSRVLWLRQ ZW

2SHQ&LUFXLW9ROWDJH9

 



 )LJXUH3URJUHVVRI92&û DQG))” RIWKH,723('27366&3&%0$OVRODUFHOODWWKH EHVWSURGXFWLRQSDUDPHWHUV



-6& 3&(





 





 



%HVW&RFHQWUDWLRQ PJP/



%HVW$QQHDOLQJ R  &IRUPLQ %HIRUH$O'HSRVLWLRQ

%HVW6SLQFRDWLQJ6SHHG USP

%HVW&RPSRVLWLRQ ZW

 







3RZHU&RQYHUVLRQ(IILFLHQF\

6KRUW&LUFXLW&XUUHQW'HQVLW\P$FP





)LJXUH3URJUHVVRI-6&û DQG3&(” RIWKH,723('27366&3&%0$OVRODUFHOODWWKH  EHVWSURGXFWLRQSDUDPHWHUV



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

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

&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

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

5HIHUHQFHV >@ @ @++RSSHDQG166DULFLIWFL0RUSKRORJ\RISRO\PHUIXOOHUHQHEXONKHWHURMXQFWLRQVRODU FHOOV-0DWHU&KHP 



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

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µJLOFK¶ DQG µVXOSKLQ\O¶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HWK\OKH[\OR[\ 



&KDSWHU,QYHVWLJDWLRQRI&3&%0RUJDQLFVRODUFHOOXQGHUGLIIHUHQWSURGXFWLRQSDUDPHWHUV

SKHQ\OHQH YLQ\OHQH@ GRSHG ZLWK DFULGLQH RUDQJH G\H ZLWK SRVVLEOH SKRWRYROWDLF DSSOLFDWLRQV6RO(QHUJ\0DWHU6RO&HOOV  >@+.LP::6RDQG6-0RRQ(IIHFWRIWKHUPDODQQHDOLQJRQWKHSHUIRUPDQFHRI 3+73&%0SRO\PHUSKRWRYROWDLFFHOOV-.RUHDQ&KHP6RF  >@-6DNDL77DLPD7@ * /L 9 6KURWUL\D