lmmunotoxicology and Risk Assessment
lmmunotoxicology and Risk Assessment DENNIS K. FLAHERTY 6W/RXLV0LVVRXUL
Kl...
131 downloads
1193 Views
8MB Size
Report
This content was uploaded by our users and we assume good faith they have the permission to share this book. If you own the copyright to this book and it is wrongfully on our website, we offer a simple DMCA procedure to remove your content from our site. Start by pressing the button below!
Report copyright / DMCA form
lmmunotoxicology and Risk Assessment
lmmunotoxicology and Risk Assessment DENNIS K. FLAHERTY 6W/RXLV0LVVRXUL
Kluwer Academic Publishers New York, Boston, Dordrecht, London, Moscow
eBook ISBN: Print ISBN:
0-306-46810-7 0-306-45971-X
©2002 Kluwer Academic Publishers New York, Boston, Dordrecht, London, Moscow Print © 1999 Kluwer Academic / Plenum Publishers New York All rights reserved
No part of this eBook may be reproduced or transmitted in any form or by any means, electronic, mechanical, recording, or otherwise, without written consent from the Publisher
Created in the United States of America
Visit Kluwer Online at: and Kluwer's eBookstore at:
http://kluweronline.com http://ebooks.kluweronline.com
7R&DURO ZLIHDQGEHVWIULHQG
3UHIDFH
7R DGHTXDWHO\ GHILQHWKHULVNRIDGYHUVHKHDOWKHIIHFWVFDXVHG E\ LPPXQHG\V IXQFWLRQ LWLV LPSRUWDQWWKDWWKHUHDGHUXQGHUVWDQG WKHFRQFHSWXDO DQG SUDFWLFDO DVSHFWV RIFODVVLFDO LPPXQRORJ\ LPPXQRWR[LFRORJ\ DQGWR[LFRORJ\ &ODVVLFDO LPPXQRORJ\H[SORUHV LPPXQH PHFKDQLVPV LQYROYHGLQ GHIHQVH DJDLQVWPLFUR ELDO DJHQWVDQGWXPRUV $OVR LWGHILQHVGHIHFWVRUG\VIXQFWLRQDWWKHPROHFXODU OHYHO KLJKOLJKWVWKHUHODWLRQVKLS EHWZHHQGHIHFWVDQGFOLQLFDOGLVHDVH DQGSUR YLGHV PRVW RI WKH ³VWDWH RI WKH DUW´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
YLLL
3UHIDFH
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¶VKRSHWKDWZLWKWKHXQGHUVWDQGLQJRIWKH HIIHFWRI[HQRELRWLFV RQWKHLPPXQHV\VWHPDQGSURSHUULVNDVVHVVPHQWSDUDGLJPV ZHZLOOEHEHWWHU DEOHWRLQWHUSUHWWKHGDWDIURPKXPDQDQGDQLPDOVWXGLHV,QWXUQZHZLOOEHDEOH WR PDNH EHWWHU DQG PRUH LQIRUPHG GHFLVLRQV FRQFHUQLQJ WKH ULVN RI DGYHUVH KHDOWK HIIHFWV SURGXFHG E\ H[SRVXUH WR FKHPLFDOV SKDUPDFHXWLFDOV DQG RWKHU [HQRELRWLFV
&RQWHQWV
1,QWURGXFWLRQWROPPXQRWR[LFRORJ\
,QQDWH,PPXQLW\
&HOOVRIWKH,PPXQH6\VWHP ,PPXQRJHQLFLW\DQG$QWLJHQLFLW\ $QWLJHQ3UHVHQWLQJ&HOOV 1 $QWLJHQ3UHVHQWDWLRQ 6XUIDFH,QWHUDFWLRQVDQG,QWUDFHOOXODU6LJQDOLQJ %&HOO$FWLYDWLRQ $QWLERGLHV ,PPXQRORJLFDO0HPRU\ &RPSOHPHQW 3KDJRF\WRVLVDQG,QWUDFHOOXODU.LOOLQJ ,PPHGLDWH+\SHUVHQVLWLYLW\5HDFWLRQV L[
;
&RQWHQWV
$XWRLPPXQLW\ 'HOD\HG+\SHUVHQVLWLYLW\5HDFWLRQV .LOOHU&HOOV .LOOHU&HOOVDQG9LUDOOQIHFWLRQV 7UDQVSODQWDWLRQ 7KH.LQHV $VVHVVPHQWRI%LRORJLFDO6LJQLILFDQFH +RVW'HIHQVHDQG7XPRU0RGHOV 5LVN&KDUDFWHUL]DWLRQ 5HIHUHQFHV ,QGH[
,QWURGXFWLRQWROPPXQRWR[LFRORJ\
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
7+(3$5$//(/2*5$0 ,PPXQRWR[LFRORJLVWVQRUPDOO\DUHFDVWLQWRWZRUROHV7KH\PXVWDVVHVVWKH SRWHQWLDOKXPDQULVNEDVHGRQLQYLYRRU LQYLWURGDWDVHWV,QDQRWKHUUROHWKH\
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
)LJXUH 7KH SDUDOOHORJUDP XVHG WR DVVHVV LPPXQRWR[LFLW\
OQWURGXFWLRQ WR OPPXQRWR[LFRORJ\
7DEOH
2SSRUWXQLVWLFOQIHFWLRQV$VVRFLDWHGZLWK7%DQG1HXWURSKLO'HIHFWV
1HXWURSKLOGHIHFWV
2SVRQL]DWLRQGHIHFWV
6WDSK\ORFRFFL (FROL .OHEVLHOOD 3VHXGRPRQDV %DFWHURLGHV $VSHUJLOOXV
3QHXPRFRFFL 6WUHSWRFRFFL +DHPRSKLOXV
&HOOPHGLDWHGGHIHFWV &\WRPHJDORYLUXV +HUSHVVLPSOH[ +HUSHV]RVWHU /LVWHULD /HJLRQHOOD 0\FREDFWHULD 3QHXPRF\VWLV 7R[RSODVPD &DQGLGDDOELFDQV &U\SWRFRFFXV &RFFLGLRLGHV
0RGLILHGIURP &OLQLFVLQ ,PPXQRORJ\DQG$OOHUJ\ 3LQFKLQJ
7XPRUV DULVLQJ IURP LPPXQRVXSSUHVVLRQ DUH DOVR XQXVXDO .DSRVL¶V VDU FRPD DQ H[WUHPHO\ UDUH VNLQ WXPRU LQ QRUPDO VXEMHFWV LV IRXQG ZLWK JUHDW IUHTXHQF\LQLPPXQRVXSSUHVVHGVXEMHFWVZLWK$,'6,QFUHDVHGPDOLJQDQFLHVDUH DOVR IRXQG DIWHU SXUSRVHIXO LPPXQRVXSSUHVVLRQ 7ZHQW\VL[ SHUFHQW RI UHQDO WUDQVSODQW SDWLHQWV VXUYLYLQJ IRU \HDU GHYHORS FDQFHU $W \HDUV RI SDWLHQWVGHYHORSHGFDQFHUV3HQQ &HUWDLQWXPRUVDUHREVHUYHGZLWKJUHDW IUHTXHQF\ 7KH LQFLGHQFH RI FDQFHUV RI WKH VNLQ DQG OLS ZHUH WLPHV WKH H[SHFWHG UDWH LQ DUHDV ZLWK KLJK OHYHOV RI VXQVKLQH 7KH LQFLGHQFH RI QRQ +RGJNLQ¶V O\PSKRPDLQFUHDVHG WRIROGRYHUDQ DJHPDWFKHGSRSXODWLRQ 3HQQ
(9$/8$7,1*,0081(6<67(067$786 OPPXQRWR[LFLW\ %HFDXVH [HQRELRWLFV KDYH PXOWLSOH HIIHFWV RQ WKH LPPXQH V\VWHP LW LV GLIILFXOWWRDUULYHDWDFRQFLVHGHILQLWLRQIRULPPXQRWR[LFLW\+RZHYHUWKH86 )'$ FRQVLGHUV DQ LPPXQRWR[LF HIIHFW WR EH ³DQ\ FKDQJH LQ WKH VWUXFWXUH RU IXQFWLRQRIWKHLPPXQHV\VWHPWKDWLVSHUPDQHQWRUUHYHUVLEOH´7KLVGHILQLWLRQ KDV EHHQ HPEUDFHGE\ PRVWLPPXQRWR[LFRORJLVWV EHFDXVH LWFRQVLGHUV DOO SRV VLEOHRXWFRPHV RILQWHUDFWLRQV EHWZHHQ WKH LPPXQHV\VWHPDQG [HQRELRWLFV 7KH LQWHUDFWLRQ EHWZHHQ [HQRELRWLFV HJ FKHPLFDOV RU SKDUPDFHXWLFDOV DQG WKH LPPXQH V\VWHP KDV IRXU SRVVLEOH RXWFRPHV WKH [HQRELRWLF PD\ GLUHFWO\LQWHUDFWZLWKWKHLPPXQHV\VWHPWRVXSSUHVVRUHQKDQFHWKHUHVSRQVHWR H[RJHQRXV DJHQWV WKH[HQRELRWLF PD\ LQWHUDFW ZLWK KRVWWLVVXH DQG LQLWLDWH K\SHUVHQVLWLYLW\ RU DXWRLPPXQHUHDFWLRQV WKH [HQRELRWLF PD\QRWUHDFWGL
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
UHFWO\ZLWKWKHLPPXQHV\VWHPEXWLQLWLDWHHIIHFWVLQRWKHURUJDQVWKDWLQIOXHQFH WKHLPPXQH V\VWHP DQG WKH[HQRELRWLFPD\KDYH QRHIIHFWRQWKHLPPXQH V\VWHP 0XQVRQ HWDO
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¶V SXUSRVHLV VFUHHQLQJ RUPHFKDQLVWLF ,Q VFUHHQLQJ VWXGLHV LWLVLPSRUWDQWWRXVH
OQWURGXFWLRQWROPPXQRWR[LFRORJ\
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
GRVH OHYHOV VKRXOG EH VXIILFLHQW WR GHPRQVWUDWH SURSRUWLRQDOLW\ QDPHO\ /' /' DQG /' 6DPSOHV VKRXOG EH FROOHFWHG IURP HDUO\ LQ WKHH[SRVXUH WR WKH WLPHSRLQW ZKHQ WKH OLPLWRIGHWHFWLRQ LQ VHUXP LV UHDFKHG 7LPH SRLQWV VKRXOG DOORZ VXIILFLHQW WLPH WR ERWK WLVVXH DQG SODVPD OHYHOVYHUVXVWLPHSURILOHV
,QQDWH,PPXQLW\
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HVSLUDWRU\7UDFW%DUULHUV 6HYHUDOPHFKDQLVPVSUHYHQWUHVSLUDWRU\LQIHFWLRQVE\EDFWHULDDQGYLUXVHV &HOOV LQ PXFRXV PHPEUDQHV H[SUHVV DGKHVLRQ PROHFXOHV WKDW ELQG LQIOXHQ]D %RUGHWHOODSHUWXVVLV DQG 1HLVVHULDJRQRUUKRHDH 5HVSLUDWRU\FHOOVDOVRSURGXFH PXFXV ZKLFKWUDSV DQG ORFDOL]HV WKH LQYDGLQJ EDFWHULD 8VLQJ WKH PXFRFLOLDU\ HVFDODWRUFLOLDWHGFHOOVPRYHWKHPXFXVWUDSSHGEDFWHULDXSZDUGDQGRXWRIWKH UHVSLUDWRU\WUDFW
6WRPDFK%DUULHUV 7KHS+RIVWRPDFKIOXLGVIRUPVDSDVVLYHEDUULHUWRLQIHFWLRQRIWKHLQWHVWL QDO WUDFW ,QDGXOWV WKHS+RIWKHVWRPDFKLV EHWZHHQ DQG %DFWHULDFDQQRW VXUYLYH LQ WKH DFLG HQYLURQPHQW DQG LQWHVWLQDO LQIHFWLRQV DUH XQFRPPRQ LQ DGXOWV 1HZERUQV KRZHYHU KDYH DOHVV DFLG S+ DQG EDFWHULDFDQ VXUYLYH DQG SDVVLQWRWKHLQWHVWLQH,QWHVWLQDOLQIHFWLRQVDUHFRPPRQ LQQHRQDWHV
&2//(&7,216 &ROOHFWLQV DUH D IDPLO\ RIPDPPDOLDQ OHFWLQ FRQWDLQLQJ SURWHLQV WKDW LQ FOXGH PDQQRVHELQGLQJ OHFWLQ 0%/ ERYLQH FRQJOXWLQLQ OXQJ VXUIDFWDQWV $ DQG'DQGERYLQHFROOHFWLQ +RSSHDQG5HLG 6WUXFWXUDOO\FROOHFWLQV DUH PXOWLPHULF SURWHLQV HJ ± SRO\SHSWLGHV KDYLQJ ³IORZHU ERXTXHW´ RU ³;OLNH´VWUXFWXUHV (DFKSRO\SHSWLGHFRQVLVWVRIDQ1WHUPLQDOVHJPHQWDFRO
OQQDWHOPPXQLW\
ODJHQ VHTXHQFH DQGD&WHUPLQDO OHFWLQ 7KH\DUHVWUXFWXUDOO\ DQGIXQFWLRQDOO\ UHODWHGWRWKH&OTFRPSRQHQWRIWKHFODVVLFDOFRPSOHPHQWSDWKZD\0DOKRWUDHW DO &ROOHFWLQVELQGWRVXJDUUHVLGXHVRQEDFWHULDYLDWKHOHFWLQGRPDLQV DQGWRSKDJRF\WLFFHOOVXVLQJWKHFROODJHQVHTXHQFH/X
0DQQRVH%LQGLQJ/HFWLQ %HFDXVH 0%/ DOVR WHUPHG PDQQRVHELQGLQJ SURWHLQ KDV PXOWLSOH IXQF WLRQV LW LV WKH PRVW VWXGLHG RI WKH FROOHFWLQV 0%/ KDV D ³IORZHU ERXTXHW´ VWUXFWXUH DQG WKH FLUFXODWLQJ VHUXP IRUP LV KH[DPHULF 1RUPDO VHUXP OHYHO LQ LQIDQWVLV QJPO7XUQHU ,QWKHSUHVHQFH RIFDOFLXP 0%/QDWXUDOO\ DQGVHOHFWLYHO\ELQGVWR VXJDUV VXFK DV1DFHW\OJOXFRVDPLQH PDQQRVH DQG1DFHW\OPDQQRVDPLQH %LQGLQJ WR VXJDUV LV XVXDOO\ ZHDN ZLWK D FRQVWDQW RI .G a 0 EXW WKH PROHFXOH¶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
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
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α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
352/,1( $1'$5*,1,1(5,&+$17,0,&52%O$/ 3(37,'(6 1HXWURSKLOV SURGXFH 3UR DQG $UJULFK DQWLEDFWHULDO SURWHLQV LQFOXGLQJ %DF DQG%DF )UDQNHWDO 7KHSUROLQHDQGDUJLQLQHFRQWHQWRIWKHVH SURWHLQV LV DQG UHVSHFWLYHO\ 7KHVHSHSWLGHV DUH DFWLYH DJDLQVW JUDP QHJDWLYHEDFWHULDDQGDFWE\GHFUHDVLQJWKH$73FRQWHQWDQGWUDQVSRUWRIDPLQR DFLGVDQGQXFOHRWLGHV1LFRODVDQG0RU
,QQDWHOPPXQLW\
7KH PRVWVWXGLHG RIWKHVH QHXWURSKLO SHSWLGHV LV35 RULJLQDOO\ LVRODWHG IURP SLJ LQWHVWLQH 35 LQFUHDVHV QHXWURSKLO SKDJRF\WRVLV RI JUDP QHJDWLYH RUJDQLVPVVXFKDV6DOPRQHOODFKROHUDHVXV 7KHVHSHSWLGHVGRQRWO\VHWKHFHOOV YLDSRUH IRUPDWLRQ 5DWKHU WKH\ SRWHQWLDWH WKH DFWLYLW\ RIPDJDLQLQ $ DSRUH IRUPLQJSHSWLGH6KLHWDO
1,75,&2;,'( 1LWULF R[LGH LV D VKRUWOLYHG IUHH UDGLFDO SURGXFHG IURP /DUJLQLQH DQG UHOHDVHG E\ D QXPEHU RI FHOOV GXULQJ UHVSRQVH WR LQIHFWLRQV ,W PD\ EH UDSLGO\ FRQYHUWHG WR QLWULWH D VWDEOH PHWDEROLWH 12 KDV QRQVSHFLILF WR[LF HI IHFWV RQ D ZLGH UDQJH RIEDFWHULD EXW PD\ DOVR GDPDJH KRVW WLVVXH 'UDSLHU
1$785$/.,//(51. &(//6 1.FHOOVUHSUHVHQWDWKLUGO\PSKRF\WHOLQHDJHEHLQJQHLWKHU7FHOOVQRU% FHOOV )ROORZLQJFHOOFRQWDFWWKH\UHOHDVHSHUIRULQDQGJUDQ]\PHV3HUIRULQVDFW PXFKOLNHGHIHQVLQVDQGFUHDWHWUDQVPHPEUDQHSRUHVLQWKHWDUJHWFHOOOLSLGOD\HU /LX HWDO *UDQ]\PHVWULJJHUDQHQGRQXFOHDVHWKDWGHJUDGHV'1$DQG LQGXFHVDSRSWRVLV6\PWKDQG7UDSLDQL
,00812'()O&O(1&<$1',11$7(,0081,7< ,QQDWH LPPXQLW\ SOD\V DUROH LQ GHIHQVH RIWKH QHRQDWH ZKLOH WKH LPPXQH V\VWHPLV GHYHORSLQJ &KLOGUHQ ZLWK DJHUHODWHGRSVRQLFGHIHFWVRIWHQKDYHUH GXFHGOHYHOVRILQQDWHGHIHQVHSURWHLQV VXFKDV0%/6XSHUHWDO *HQHWLF GHIHFWV DOVR FDXVH 0%/ LPPXQRGHILFLHQFLHV 0XWDWLRQV LQ FR GRQV RU RIH[RQ DOWHUWKH WHUWLDU\ VWUXFWXUH RIWKH 0%/ FROODJHQ VHTXHQFH 7KHVH PXWDWLRQV DUH VLQJOH DPLQR DFLG VXEVWLWXWLRQV LQ ZKLFK JOX WDPLF DFLG FRGRQ RU DVSDUWLF DFLG FRGRQ LV VXEVWLWXWHG IRU JO\FLQH +RPR]\JRXV PXWDWLRQV UHVXOW LQ ORZ VHUXP 0%/ OHYHOV FRQVLVWLQJ RI ORZ PROHFXODUPDVV N'D WKUHHFKDLQ VXEXQLWV /LSVFRPEH HWDO %H FDXVHRIWKHODFNRIVWUXFWXUDO VWDELOLW\WKHVHFKDLQVGRQRWIRUPROLJRPHUVDQG FDQQRW DFWLYDWHFRPSOHPHQW :KHQFRRFFXUULQJ ZLWKRWKHULPPXQRORJLFDO DE QRUPDOLWLHV HJ & GHILFLHQF\ ORZ 0%/ OHYHOV LQFUHDVH WKH ULVN RI LQIHF WLRQV
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
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γ ,/αDQG ,/ XS UHJXODWLQJD7K UHVSRQVH7KHSHULWRQHDOUHVSRQVHUHVXOWVLQHDUOLHUFOHDUDQFHRI WKHRUJDQLVPDQGGHFUHDVHGWLVVXHGDPDJHWKDWLVFKDUDFWHULVWLFRI/LVWHULDLQIHF WLRQV$OEULJKWHWDO ,QQDWHLPPXQLW\LVDOVRUHVSRQVLEOHIRUUHVLVWDQFHZKHQDFTXLUHGLPPXQLW\ LV GRZQUHJXODWHG ,QIHFWLRQ ZLWK 7U\SDQRVRPD PXVFXOL GRZQUHJXODWHV WKH DF TXLUHGLPPXQHV\VWHP\HWWKHLQIHFWLRQGRHVQRWVSUHDGZLWKLQWKHKRVW1.FHOOV DQGDFWLYDWHGSHULWRQHDOPDFURSKDJHVFRQWUROWKHLQIHFWLRQ7KH1.FHOOVNLOOWKH SDUDVLWHRUFHOOVLQIHFWHGZLWKWKHSDUDVLWH0DFURSKDJHVVHFUHWHDGGLWLRQDOF\WR WR[LFPROHFXOHV$OEULJKWHWDO
+$=$5','(17,),&$7O21 7KHIXQFWLRQRIFROOHFWLQVLVXVXDOO\PHDVXUHGLQRSVRQL]DWLRQDVVD\V7UDGL WLRQDOO\ 0%/ DFWLYLW\ LV GHWHUPLQHG LQ D \HDVW DVVD\ 7XUQHU HW DO $QWLPLFURELDOIDFWRUVLQWKHDOYHRODUOLQLQJIOXLGVHJVXUIDFWDQWV$DQG' DUH DOVRGHWHUPLQHGE\RSVRQL]DWLRQ,QWKHDVVD\VWKHRSVRQL]HGEDFWHULDDUHXVXDOO\ 6WDSK\ORFRFFXVDXUHXV&RRQURGDQG
,QQDWH ,PPXQLW\
,QWKHUDWRQO\VXUIDFWDQW$DFWVDVDQ RSVRQLQIRUSKDJRF\WRVLV3LNDDUHW DO )ORZ F\WRPHWU\ KDV EHHQ XVHG WR GHWHFW WKH RSVRQL]DWLRQ RI (V FKHULFKLD FROL E\UDWDOYHRODUPDFURSKDJHV 7KHGDWDDUH H[SUHVVHGDV SHUFHQW PLFURRUJDQLVPNLOOHG 1.FHOOVFDQ NLOO VHYHUDOGLIIHUHQWWXPRUFHOOV 7KHO\VLVRI.RU<$. WDUJHW FHOOV E\ KXPDQ PRXVH RU UDW 1. FHOOV FDQ EH PHDVXUHG LQ FKURPLXP UHOHDVHDVVD\V
5(*8/$725<326,7,2121,11$7(,0081,7< 5HJXODWRU\DJHQFLHVKDYHH[SUHVVHGDQLQWHUHVWLQWKHHIIHFWVRI[HQRELRWLFV RQ LQQDWH LPPXQLW\ 7KH KDUPRQL]HG ),)5$76&$ JXLGHOLQHV OLVWDQ 1.FHOO IXQFWLRQ DVVD\DVDPHDVXUHRILQQDWHLPPXQLW\ +RZHYHUPHDVXUHPHQWRI1. FHOODFWLYLW\LVDRSWLRQDODQGLVQRWPDQGDWHGE\WKH(3$7HVWLQJSDUDGLJPVIRU ELRFKHPLFDOSHVWLFLGHVXQGHU),)5$VXESDUW0UHTXLUHWKDWWKHHIIHFWRIFKHPL FDOV RQ1.FHOOIXQFWLRQEHGHWHUPLQHG LQ DGD\ VWXG\
&HOOVRIWKH,PPXQH6\VWHP
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
,0081(())(&725&(//6 /\PSKRF\WHV 7ZRSRROVRIO\PSKRF\WHVDUHIRXQGLQWKHERG\7KHODUJHVWSRROUHVLGHVLQ WKH VHFRQGDU\ O\PSKRLG RUJDQV VXFK DV WKHVSOHHQ DQGO\PSKQRGHV /\PSKR F\WHV LQ WKHVH RUJDQV DUH XVXDOO\ XQGHUJRLQJ VWLPXODWLRQ DQG GLIIHUHQWLDWLRQ 5HVWLQJO\PSKRF\WHVLQWKHSHULSKHUDOEORRGUHSUHVHQWWKHVPDOOHVWSRRO$WDQ\ SRLQWLQWLPH RQO\ RIWKHWRWDOO\PSKRF\WHSRROFLUFXODWHV LQWKHSHULSKHUDO
OPPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
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
&HOOV RIWKH OPPXQH 6\VWHP
7DEOH
$VVRFLDWLRQRI7K&HOOVZLWK6SHFLILF'LVHDVH6WDWHV
Helminths 7ULFKXULVPXULV 1LSSRVWURQJ\OXV EUDVLOLHQVLV +HOLJLPRVRPRLGHVSRO\J\UXV %UXJLDPDOD\L 6FKLVWRVRPDPDQVRQL Bacterium %RUUHOLDEXUJGRUMHUL Allergy ,PPHGLDWHDOOHUJ\
7KUHVSRQVHLQUHVLVWDQWPLFHFXUHV 7KUHVSRQVHDVVRFLDWHGZLWKUHMHFWLRQ 7KUHVSRQVHDVVRFLDWHGZLWKH[SXOVLRQ 7KUHVSRQVHFRUUHODWHVZLWKSURWHFWLRQ 7KDVVRFLDWHGZLWKJUDQXORPDV 7KFHOOVFRQIHUUHVLVWDQFH 7KGHWHFWHGLQODWHDVWKPDDQG DOOHUJHQVSHFLILF7FHOOFORQHV
0RGLILHGIURP,PPXQRORJ\7RGD\0RVVPDQDQG6DGYROZLWKSHUPLVVLRQ RI(OVHYLHU6FLHQFH
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
7DEOH
$VVRFLDWLRQ RI 7K &HOOV ZLWK 6SHFLILF 'LVHDVH 6WDWHV
Protozoans /HLVKPDQLDPDMRU / GRQRYDQL / EUDVLOLHQVLV Fungus &DQGLGD DOELFDQV Bacteria 0\FREDFWHULXPWXEHUFXORVLV 0 OHSUDH
7KFXUHVDQGFRQIHUVUHVLVWDQFH 7KFXUHVORFDOOHLVKPDQLDVLV 7KORFDOL]HGGLVHDVH 7KUHVSRQVHFRUUHODWHVZLWKUHVLVWDQFH 7KFRUUHODWHVZLWKUHVLVWDQFH 7KIRXQGDWVLWHRIGHOD\HGK\SHUVHQVLWLYLW\UHDFWLRQV
0RGLILHGIURPOPPXQRORJ\ 7RGD\0RVVPDQ DQG6DG ZLWKSHUPLVVLRQ RI(OVHYLHU6FLHQFH
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
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αGH[WUDQV7KHVHPROHFXOHV DUHPDMRUFRPSRQHQWVRIWKH JUDPQHJDWLYH EDFWHULDOFHOOZDOO %HFDXVH RI WKH ORFDOL]DWLRQ LQ WKH JXW DQG WKH SURGXFWLRQ RIDQWLEDFWHULDO DQWLERGLHV% FHOOVDUHLPSRUWDQWLQPXFRVDOLPPXQLW\,QDGGLWLRQWKH\SUR GXFHDQWLERGLHVUHDFWLYHZLWKWK\URJOREXOLQDQGVLQJOHVWUDQGHG'1$&OHDUDQFH RIGHQDWXUHGVHOIDQWLJHQVLQDXWRLPPXQHGLVHDVHVVXFKDV6M|JUHQ¶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
&HOOV RIWKH ,PPXQH 6\VWHP
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
)LJXUH 7KH PDWXUDWLRQDO SDWKZD\ RI 7 FHOOV LQ WKH WK\PXV IROORZHG E\ PRVW 7 FHOOV H[SUHVVLQJ WKH αβ 7FHOO UHFHSWRU 7&5 7UDQVLWLRQ IURP WKH &' GRXEOHQHJDWLYH FHOOV WR VLQJOHODEHOHG FHOOV UHTXLUHV WKH V\QWKHVLV RI β FKDLQ SURWHLQ DQG DFWLYDWLRQ RI WKH SURWHLQ W\URVLQH NLQDVH SOFN 0RGLILHG IURP ,PPXQRORJ\ 7RGD\ $QGHUVRQ DQG 3HUOPXW WHU ZLWK SHUPLVVLRQ RI (OVHYLHU 6FLHQFH
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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¶S OFN VHUYHV WR FRQWURO WKH UHFRPELQDWLRQRIWKHYDULDEOHSRUWLRQVRIWKH0+&9αDQG9 UHJLRQVRI WKH7&5 8QGHUWKH LQIOXHQFH RIWK\PLF KRUPRQHV SURGXFHG E\ HSLWKHOLDO FHOOV WKH GRXEOHQHJDWLYH FHOOV EHJLQ WR PDWXUH RYHUDSHULRG RI RU ZHHNV ,QLWLDOO\ SUROLIHUDWLQJFHOOVH[SUHVVORZOHYHOVRI&' 0RVWFHOOVWUDQVLWLRQ LQWRGRXEOH SRVLWLYH&'&' FHOOV6XFKFHOOVFRQVWLWXWHRYHURIWKHWRWDOFHOOVLQ WKHDGXOWWK\PXV$VWKHGRXEOHSRVLWLYHFHOOVPRYHIURPWKHFRUWH[WRWKHWK\PLF PHGXOOD 7&5 α LV DOVR H[SUHVVHG RQ WKH FHOO VXUIDFH $W WKLV SRLQW WKH &' PDUNHULVXSUHJXODWHGDQGH[SUHVVHGRQWKHO\PSKRF\WHV)LJ $ERXWRI WKHFHOOVDUH&'7&5α/βDQGKDOIDUH&'7&5 α/β 7RGHYHORSWKHFRPSOHWHUHSHUWRLUHRIDQWLJHQLFVSHFLILFLWLHV7&5α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α/β UHSUHVHQW RIWKHWRWDOWK\PRF\WHV7KHVHFHOOVXOWLPDWHO\HYROYHLQWRKHOSHUFHOOVZLWK FODVV,,0+&UHVWULFWHGDFWLYLW\%HFDXVHWKHVHFHOOVKDYHEHHQSURFHVVHGE\WKH WK\PXVWKH\DUHFRPPRQO\FDOOHG 7KHOSHUFHOOV%\GD\ &'&'7&5 α/β FHOOV DSSHDU LQ WKH WK\PXV $OWKRXJK WKHVH FHOOV FRPSULVH RQO\ RI WKH WRWDOWK\PRF\WHVWKH\DUHUHOHDVHGLQWRWKHSHULSKHUDOEORRGLQKLJKQXPEHUVWR EHFRPHFODVV,0+&UHVWULFWHG7&'F\WRWR[LFFHOOV 7KHUH LV D GLVWLQFW VHFRQG OLQHDJH RI α/β FHOOV ,Q WKH WK\PXV D VPDOO SRSXODWLRQ FDUULHV D &' &' 7&5 α/β SKHQRW\SH $OWKRXJK WKHVH FHOOVDUHRIWHQDXWRUHDFWLYHWKH\FDQH[LWWKHWK\PXVZLWKRXWXQGHUJRLQJSRVLWLYH RU QHJDWLYH VHOHFWLRQ %HFDXVH WKHVH FHOOV DUH SURFHVVHG GLIIHUHQWO\ WKDQ WKH FRQYHQWLRQDOWK\PRF\WHVLWKDVEHHQVSHFXODWHGWKDWWKHVH7FHOOVKDYHDQDOWHU
&HOOV RIWKH ,PPXQH 6\VWHP
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¶VSDWFKHV 33V DQGRWKHUJXWDVVRFLDWHGO\PSKRLGWLVVXHDUHDQDORJRXVLQIXQFWLRQWRWKH EXUVDRI)DEULFLXV ,QPDPPDOVWKHUROHRIWKHJXWDVVRFLDWHGO\PSKRLGWLVVXHLQ%FHOOGHYHO RSPHQWLVXQFOHDUDQGPD\EHVSHFLHVGHSHQGHQW,QUDEELWVWKHUHLVQRHYLGHQFH WKDW 33V DSSHQGL[ RU VDFFXOXV URWXQGXV SOD\ D UROH LQ % FHOO GLIIHUHQWLDWLRQ &RRSHUDQG/DZWRQ 5DEELWJXWO\PSKRLGWLVVXHFRQWDLQVRQO\WKHSUHFXU VRUV RI,J$SURGXFLQJ % FHOOV WKDW PLJUDWH WR RWKHU DUHDV RIWKH JXW IROORZLQJ DQWLJHQVWLPXODWLRQ&UDLJDQG&HEUD ,QWKLVVSHFLHVWKHUHLVDFRQVHQVXV WKDWWKHERQHPDUURZLVWKHVROHVRXUFHRI%FHOOV&RRSHUDQG/DZWRQ ,Q RWKHUVSHFLHV33VDUHWKHSULPDU\VRXUFHRI% FHOOGLIIHUHQWLDWLRQ,QWKHVKHHS SK\VLRORJLFDO DQGDQDWRPLFGDWDVKRZWKDW33VIXQFWLRQ DVDSULPDU\O\PSKRLG RUJDQ5H\QROGVHWDO DQGSURYLGHWKHQHFHVVDU\PLFURHQYLURQPHQWIRU% FHOO SUROLIHUDWLRQ DQG DQWLJHQGULYHQ PXWDWLRQ RILPPXQRJOREXOLQ JHQHV 5H\ QDXG HWDO .
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
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
)LJXUH /\PSKRF\WH HPLJUDWLRQ WKURXJK WKH KLJK HQGRWKHOLDO YHQXOH FHOOV LQWR WKH WLVVXH 7KH LQLWLDO LQWHUDFWLRQ ZLWK +(9V LQ WKH O\PSK QRGH LV PHGLDWHG E\ O\PSKRF\WH /VHOHFWLQ ZKLFK LQWHUDFWV ZLWK PXFLQ FRXQWHUUHFHSWRUV &' DQG JO\FRV\ODWLRQGHSHQ GHQW DGKHVLRQ PROHFXOH *O\&$0 ,QFUHDVHG DGKHVLYHQHVV LV PHGLDWHG E\ DFWLYDWLRQ RI *SURWHLQFRXSOHG UHFHSWRUV /\PSKRF\WH DUUHVW LV PHGLDWHG E\ WKH LQWHJULQ OHXNRF\WH IXQFWLRQDVVRFLDWHG PROHFXOH /)$ DOVR NQRZQ DV α/β RU &'D&' 7KH PHFK DQLVPV LQYROYHG LQ WUDQVPLJUDWLRQ RI O\PSKRF\WHV DUH XQFOHDU EXW D FRDWLQJ RI JO\FRFDO\[ RQWKH+(9 VXUIDFH PD\ SOD\ DFULWLFDO UROH 0RGLILHGIURP ,PPXQRORJ\ 7RGD\ *LUDUGDQG 6SULQJHU E a0ZLWK SHUPLVVLRQ RI (OVHYLHU 6FLHQFH
WLQVRQWKHO\PSKRF\WH&'DQGDJO\FRV\ODWLRQGHSHQGHQWDGKHVLRQPROHFXOH *O\&$0 RQ WKH+(9 $ VHFRQG VLJQDO PHGLDWHG YLD*SURWHLQFRXSOHGWR UHFHSWRUV DFWLYDWHV WKH O\PSKRF\WH ,W LV XQFOHDU ZKHWKHU WKHVH UHFHSWRUV DUH OLJDQGV IRUF\WRNLQHVRURWKHUORFDO DFWLYDWLRQ IDFWRUV $UUHVWRIO\PSKRF\WHPRYHPHQWUHTXLUHVWZRVHSDUDWHLQWHUDFWLRQVEHWZHHQ WKH O\PSKRF\WH DQG +(9 3DQ O\PSKRF\WH LQWHJULQ PROHFXOH /)$ α/β RU &'D&' LQWHUDFWVZLWKWKH+(9LQWHUFHOOXODUDGKHVLRQPROHFXOHV DQG ,&$0 DQG $ VHFRQGO\PSKRF\WHLQWHJULQFDOOHGD UHDFWV ZLWK0DG &$0 RQ+(9V+DPD 7KHODWWHULQWHUDFWLRQVDUUHVWPRYHPHQWRIDOO PHPRU\ FHOOV WKDWH[SUHVV KLJK OHYHOV RID
&HOOV RIWKH ,PPXQH 6\VWHP
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
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
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
6758&785(2)6(&21'$5</<03+2,'25*$16 7KH/\PSK1RGH /\PSKRF\WHV ZLWKLQ O\PSK QRGHV DUH WKH PDMRU GHIHQVH DJDLQVWEDFWHULDO SDWKRJHQVLQWKHVNLQDQGWLVVXH /\PSKQRGHVDUHWKHILUVWRUJDQL]HG VWUXFWXUH HQFRXQWHUHGE\ERWKPLFUREHVDQGO\PSKRF\WHV$IWHUHPSW\LQJLQWRWKHVXEFDS VXODUVLQXV WKHEORRGSHUFRODWHVWKURXJKWKHQRGH7KLVDOORZVLQWHUDFWLRQVEH WZHHQ PLFUREHV DQG GLIIHUHQW O\PSKRF\WH VXEVHWV DW GLIIHUHQW VLWHV ZLWKLQ WKH QRGH)LJ
&HOOV RIWKH ,PPXQH 6\VWHP
)LJXUH 7KH WK\PLF GHSHQGHQW DQG LQGHSHQGHQW DUHDV RI D O\PSK QRGH 5HSULQWHG IURP ,PPXQRORJ\ %HOODQWL ZLWK SHUPLVVLRQ RI : % 6DXQGHUV &R
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
7KH 6SOHHQ 7KHVSOHHQKDVWKHSULPDU\UHVSRQVLELOLW\IRUPRXQWLQJDQLPPXQHUHVSRQVH WREORRGERUQHSDWKRJHQV4XDQWLWDWLYHO\LWLVWKHPRVWLPSRUWDQWRUJDQLQWHUPV RI O\PSKRF\WHPLJUDWLRQDQGILOWUDWLRQ/RFDWHGLQWKHXSSHUOHIWTXDGUDQWRIWKH DEGRPHQ WKH VSOHHQ ZHLJKV DSSUR[LPDWHO\ J LQ KXPDQV $OPRVW RI WKHWRWDOO\PSKRF\WHSRSXODWLRQLVIRXQGLQWKHVSOHHQ,QDGGLWLRQDERXWRI WKH O\PSKRF\WHV LQ WKH EORRG ; O\PSKRF\WHV PLJUDWH WKURXJK WKH VSOHHQHDFKGD\3DEVW
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
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
)LJXUH 6FKHPDWLF VWUXFWXUH RI WKH VSOHHQ 5HSULQWHG IURP ,PPXQRORJ\ %HOODQWL ZLWK SHUPLVVLRQ RI : % 6DXQGHUV &R
&HOOV RIWKH ,PPXQH6\VWHP
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
:LVNRWW±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
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
7KH:$63:LVNRWW$OGULFKV\QGURPHSURWHLQ JHQHKDVQRVLJQLILFDQWKRPROR J\ WR DQ\ NQRZQ JHQH EXW KDV FKDUDFWHULVWLFV RIDWUDQVFULSWLRQ IDFWRU )LVFKHU DQG:RRG
3+(127<3,&*(1(7,&$%1250$/,7,(6 $GHQRVLQH'HDPLQDVH'HILFLHQF\ 6HYHUHFRPELQHGLPPXQRGHILFLHQF\6&,' LVDQDXWRVRPDOUHFHVVLYHGLV RUGHUPDQLIHVWHGDVWKHDEVHQFHRULQKLELWLRQRIO\PSKRF\WHHQ]\PHV7DEOH $ERXWRQHWKLUGRI6&,'SDWLHQWVKDYHDGHIHFWLQWKHHQ]\PHDGHQRVLQHGHDP LQDVH7KLVHQ]\PHQRUPDOO\FRQYHUWVDGHQRVLQHDQGGHR[\DGHQRVLQHWRLQRVLQH DQG ¶GHR[\LQRVLQH /DFNRID IXQFWLRQDO HQ]\PH FDXVHV WKH DFFXPXODWLRQ RI GHR[\DGHQRVLQHDGHQRVLQHWULSKRVSKDWH$73 DQG6DGHQRV\OKRPRF\VWHLQH,Q WXUQ WKHVHSURGXFWVLQKLELWULERQXFOHRWLGHUHGXFWDVHQHFHVVDU\IRU'1$V\QWKH VLVLQ7DQG% FHOOV
3XULQH1XFOHRVLGH3KRVSKRU\ODVH'HILFLHQF\ ,QFKLOGUHQWKHUHLVDGHIHFWLQSURGXFWLRQRIWKHHQ]\PHSXULQHQXFOHRVLGH SKRVSKRU\ODVH313 OHDGLQJWRDFFXPXODWLRQRIGHR[\JXDQRVLQHDQGJXDQRVLQH WULSKRVSKDWHLQ WKH VHUXP 'HR[\JXDQRVLQH KDV DWR[LFHIIHFWRQSUHFXUVRUDQG PDWXUH7FHOOV 7KLVLVUHIOHFWHGLQDODFNRIIXQFWLRQDO7FHOOV LQWKHSHULSKHUDO EORRG ,Q FRQWUDVW % FHOOV DUH QRWDIIHFWHG E\ WKH SUHVHQFH RIGHR[\JXDQRVLQH 6WLHKP DQG%FHOO LPPXQHIXQFWLRQLVXVXDOO\ZLWKLQQRUPDOOLPLWV
$WD[LD7HODQJLHFWDVLD$7 (DUO\V\PSWRPVRIWKHGLVHDVHDUHDWD[LDZKHQWKHFKLOGEHJLQVWRZDONDQG WHODQJLHFWDVLDRQWKHFRQMXQFWLYDDW\HDUVRIDJH$7LVDQDXWRVRPDOUHFHVVLYH 7DEOH 3KHQRW\SLF*HQHWLF6\QGURPHV ZLWK,PPXQH$EQRUPDOLWLHV $GHQRVLQHGHDPLQDVHGHILFLHQF\ $WD[LDWHODQJLHFWDVLD %ORRP¶VV\QGURPH 'RZQ¶VV\QGURPH 6FKLPNH¶VLPPXQRRVVHRXVG\VSODVLD 6KZDFKPDQV\QGURPH 6KRUWOLPEHG GZDUILVP DQG FDUWLODJH KDLU K\SRSODVLD 5HSULQWHG IURP 3HGLDWULF 5HVHDUFK 6WLHKP 6 ZLWK SHUPLVVLRQ RI3HGLDWULF5HVHDUFK
&HOOV RIWKH ,PPXQH 6\VWHP
GLVRUGHU RI'1$ UHSDLU ,Q PRVW SDWLHQWV WKHUH DUH GHILFLHQFLHV LQ WKH %FHOO SURGXFWLRQRIVSHFLILFDQWLERG\LVRW\SHVHJ,J$ GHFUHDVHGGHOD\HGK\SHUVHQ VLWLYLW\UHDFWLRQV DQGPDUNHGGHIHFWVLQ &' 7F\WRWR[LFFHOO IXQFWLRQ
%ORRP¶V6\QGURPH 7KHVHSDWLHQWVXVXDOO\\RXQJFKLOGUHQKDYHIDFLDOHU\WKHPDDQGWHODQJLHF WDVLDUHODWHGWRVXQVHQVLWLYLW\$GHIHFWLYH'1$UHSDLUPHFKDQLVPLVWKHXQGHU O\LQJFDXVHRIWKHGLVHDVH 7KHQDWXUHDQGVHYHULW\RIWKHLPPXQHGHIHFWYDULHV IURPSDWLHQWWRSDWLHQW 6RPHSDWLHQWVKDYHRQO\ORZDQWLERG\OHYHOVUHIOHFWLQJ UHGXFHG&'FHOOV 2WKHUVKDYHGHFUHDVHG QXPEHUV RI&' O\PSKRF\WHVDQGD FRQVHTXHQWGHIHFWLQFHOOXODULPPXQLW\,QFUHDVHGULVNRIO\PSKRLGPDOLJQDQF\LV DVVRFLDWHGZLWKWKHGHIHFWLYHUHSDLUPHFKDQLVP)LVFKHUDQG:RRG
'RZQ¶V6\QGURPH ,QGLYLGXDOV ZLWK 'RZQ¶V V\QGURPH KDYH PXOWLSOH LPPXQRORJLFDO DEQRU PDOLWLHVLQFOXGLQJDEQRUPDOGLVWULEXWLRQRIO\PSKRF\WHVXEVHWVFHOOXODULPPXQH IXQFWLRQGHILFLWVDQGDXWRLPPXQHSKHQRPHQD+RZHYHUWKHLPPXQHGHIHFWVLQ WKHVHSDWLHQWVDUHQRWVHYHUHHQRXJKWRLQFUHDVHWKHLQFLGHQFHRILQIHFWLRQV,WZDV K\SRWKHVL]HG WKDWWKHVHFKDQJHV DUHSDUWRIWKH HDUO\ DJHUHODWHG VHQHVFHQFH RI WKHLPPXQHV\VWHPLQ'RZQ¶VSDWLHQWV)LVFKHUDQG$UQDL]9LOOQD
6FKPLNHµV,PPXQRRVVHRXV'\VSODVLD 7KLV GLVHDVH UHVXOWV IURP DQ DXWRVRPDO UHFHVVLYH JHQH GHIHFW SURGXFLQJ VNHOHWDOG\VSODVLDGZDUILVPSURJUHVVLYHQHSKURSDWK\DQGFKDQJHVLQVNLQSLJ PHQWDWLRQ$VVRFLDWHGZLWKWKHV\QGURPHLVDORZQXPEHURI&'7O\PSKRF\WHV ZLWK α/β7&5UHFHSWRUV6WLHKP
*(1(7,&6<1'520(6:,7+,0081('()(&76 ,QDGGLWLRQWRWKHSKHQRW\SLFDEQRUPDOLWLHVWKHUHDUHRWKHUJHQHWLFGHIHFWV WKDW KDYH LQKHUHQW LPPXQH GHIHFWV 7DEOH 3URJHULD DQG IDPLOLDO PLFURHQ FHSKDO\KDYHDVVRFLDWHG7FHOOGHIHFWV)ROLFDFLGGHILFLHQF\UHVXOWVLQGHSUHVVHG FHOOPHGLDWHGLPPXQLW\DQGRWKHU%FHOOGHIHFWV6WLHKP
&+(0,&$/6$))(&7,1*/<03+2,'7,668( 6SOHQLF DQGO\PSKQRGHO\PSKRF\WHVDUHWDUJHWVIRUIXQJDOWR[LQV 2FKUD WR[LQV IURP$VSHUJLOOXV DQG 3HQLFLOOLXP DUH F\WRWR[LF +RZHYHU WKHF\WRWR[LF
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
7DEOH
$VVRUWHG*HQHWLF6\QGURPHVZLWK$VVRFLDWHG ,PPXQH'HIHFWV
&RQJHQLWDOIROLFDFLGPDODEVRUSWLRQ 7 DQG %FHOO GHIHFW (FWRGHUPDOG\VSODVLDZLWKDSODVWLFDQHPLD 7FHOO GHIHFW )DPLOLDOPLFURHQFHSKDO\ZLWKQRUPDO,4 7 DQG %FHOO GHIHFW 3URJHULD7FHOO GHIHFW 5HSULQWHGIURP 3HGLDWULF5HVHDUFK 6WLHKP 6ZLWKSHUPLVVLRQ RI 3HGLDWULF 5HVHDUFK
UHVSRQVHLVGHSHQGHQWRQGRVHURXWHRIDGPLQLVWUDWLRQDQGWKHWHVWVSHFLHV7KH WULFKORURWKHFHQHIDPLO\DUHSRWHQWLQKLELWRUVRISURWHLQV\QWKHVLVLQO\PSKRF\WHV )XVDULXP SURGXFHVWZRSRWHQWWULFKORURWKHFHQHV7WR[LQDQGGHR[\QLYDOHQRO 6\QWKHWLFDFHW\O WHWUDK\GUR[\EXW\OLPLGD]ROH 7+, GHSOHWHVERWK7 DQG%FHOOVLQEORRGVSOHHQO\PSKQRGHVDQGWK\PXV$OWKRXJKWKHPHFKDQLVP RIDFWLRQLVQRWIXOO\ GHOLQHDWHG 7+,PD\ IXQFWLRQ DV DYLWDPLQ% DQWDJRQLVW 7+,FRPSHWHVZLWKS\ULGR[DO¶SKRVSKDWHDWWKHFRIDFWRUELQGLQJVLWHVRQ3/3 GHSHQGHQWHQ]\PHV
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± IURPEDVHOLQHYDOXHVDUHFRQVLGHUHGUHOHYDQW %HFDXVH WKH EDVHOLQH YDOXHV YDU\ ZLGHO\ LW LV RIWHQ GLIILFXOW WR DVFHUWDLQ WUHDWPHQWUHODWHG HIIHFWV +HQFH :%& FRXQWV DUH UHJDUGHG DV DQ LQVHQVLWLYH FRUUHODWH RI LPPXQRWR[LFLW\ ,Q DQLPDO VWXGLHV WKH FRQFRUGDQFH EHWZHHQ OHXNRF\WHFRXQWVDQGELRORJLFDOO\UHOHYDQWLQYLYRLPPXQHGHIHFWVZDVRQO\ /XVWHU HWDO
&HOOV RIWKH ,PPXQH 6\VWHP
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¶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
&'62; &' &' : &'6 &' [ & ' &' . FKDLQV2;
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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¶V GLVHDVH VKRZ QR DOWHUDWLRQ LQ SHULSKHUDO O\PSKRF\WH VXEVHWV ZKHUHDV VXEVHWV LQ WKH VSOHHQDUHDEQRUPDOO\VNHZHG*XSWDDQG7DQ 'DWDDOVRVKRZWKDW+,9
&HOOV RIWKH ,PPXQH 6\VWHP
GHVWUR\VFHOOVZLWKLQWKHO\PSKQRGHVORQJEHIRUHFKDQJHVRFFXULQWKHSHULSKHUDO EORRG
2UJDQ:HLJKWV /\PSKRLG RUJDQ ZHLJKWV HJ WK\PXV VSOHHQ O\PSK QRGHV KDYH RIWHQ EHHQ XVHG DV DQ LQGH[ RILPPXQRWR[LFLW\ ,Q SUDFWLFH WKH ZHLJKWV YDU\ HQRU PRXVO\DQGODUJHVWDQGDUGGHYLDWLRQVIURPWKHPHDQYDOXHVDUHFRPPRQ'LIIHU HQFHVEHWZHHQRUJDQ ZHLJKWVIURPWUHDWHGDQGFRQWURODQLPDOVDUHUDUHO\VWDWLV WLFDOO\ VLJQLILFDQW 7KH YDULDWLRQV LQ WK\PLF DQG O\PSK QRGH ZHLJKWV UHIOHFW GLIILFXOWLHV LQ H[FLVLRQ %HFDXVH RI WKHLU DQDWRPLF SRVLWLRQ O\PSK QRGHV DUH GLIILFXOWWRGLVVHFW,QFRQWUDVWWKHWK\PXVLVHDVLO\DFFHVVLEOHEXWHPEHGGHGLQD IDWW\ WLVVXH PDWUL[ :LWK WKH WK\PLF DQG IDWW\ WLVVXH FORVHO\ UHVHPEOLQJ HDFK RWKHULWLVGLIILFXOWWRVHSDUDWHWKHRUJDQDQGWKHIDW7K\PLFZHLJKWVLQQRUPDO \RXQJDQLPDOV ZLWKQRKLVWRORJLFDODEQRUPDOLWLHVPD\YDU\E\ ,QVWDQGDUGWR[LFRORJ\VWXGLHVWKHVSOHHQLVFRQVLGHUHGWKHPDLQWDUJHWRUJDQ IRU LPPXQRWR[LFDQWV 6SOHQLF ZHLJKW RU VSOHQLFERG\ ZHLJKW UDWLRV DUH RIWHQ XVHGDVDQLQGH[RILPPXQRWR[LFLW\7KHVSOHQLFERG\ZHLJKWUDWLRFRQFRUGDQFH ZLWK LQ YLYR ELRORJLFDO HIIHFWV LV RQO\ /XVWHU HWDO D 7KHUHIRUH VSOHQLF ZHLJKWV DUHDUHODWLYHO\LQVHQVLWLYHFRUUHODWHRILPPXQRWR[LFLW\ . 7KH ORZ FRQFRUGDQFHPD\UHIOHFWWKH IDFWWKDWIDFWRUV XQUHODWHGWR LPPX QRWR[LFLW\ FDQ LQFUHDVH RU GHFUHDVH VSOHQLF ZHLJKWV ,QFUHDVHG SURGXFWLRQ RU GHJUDGDWLRQRIHU\WKURF\WHVZLOOLQFUHDVHVSOHQLFZHLJKWV&RQYHUVHO\HXWKDQDVLD ZLWKEDUELWXUDWHVFDXVHVFRQWUDFWLRQRIWKHVSOHHQUHGXFLQJWKHWRWDOZHLJKW7KH UHODWLRQVKLSEHWZHHQVSOHQLFZHLJKWFKDQJHVDQGLQYLYRHIIHFWVLVRIWHQXQFOHDU
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
&HOOV RIWKH ,PPXQH 6\VWHP
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5(*8/$725<326,7,21 5HJXODWRU\DJHQFLHVLQWKH8QLWHG6WDWHVDQG(XURSHUHTXLUHWKHLQFOXVLRQRI DQXPEHURIHQGSRLQWVLQVWDQGDUGWR[LFRORJ\VWXGLHV:HLJKWVRILPPXQRFRPSH
Cells of the Immune System
37
WHQW RUJDQV DQG KLVWRSDWKRORJ\ DUH UHTXLUHG ([WHQVLYH H[DPLQDWLRQV RI WKH VSOHHQWK\PXVO\PSKQRGHVRQHQRGHFRYHULQJWKHURXWHRIDGPLQLVWUDWLRQDQG DQRWKHU GLVWDO QRGH FRYHULQJ V\VWHPLF HIIHFWV 3H\HU¶V SDWFKHV DQG WKH ERQH PDUURZDUHUHTXLUHGE\WKH(3$)'$DQG2(&'/\PSKRF\WHSKHQRW\SLQJLV OLVWHG DVDQ RSWLRQDODVVD\ LQ WKHKDUPRQL]HG),)5$76&$ JXLGHOLQHV
,PPXQRJHQLFLW\DQG$QWLJHQLFLW\
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
(OLFLWDWLRQRIDQ LPPXQHUHVSRQVHLVGHSHQGHQW LQSDUWRQ WKHVL]HRIWKH LPPXQRJHQ0LQLPDOLPPXQHUHVSRQVHVFDQEHHOLFLWHGE\LPPXQRJHQVKDYLQJ D VL]H RI N'D ZKLOH WKH EHVW LPPXQRJHQV KDYH D VL]H RI N'D /DUJH PDFURPROHFXOHV DUH EHWWHU LPPXQRJHQV EHFDXVH WKH\ DUH LQVROXEOH ,QVROXEOH SDUWLFOHVDUHPRUHHDVLO\LQJHVWHGDQGSURFHVVHGE\PDFURSKDJHV
$17,*(16$1'+$37(16 $QWLJHQLFLW\GHQRWHVWKHDELOLW\RIDSURFHVVHGLPPXQRJHQWRLQWHUDFWZLWK HIIHFWRU FHOOV RU SURGXFWV RIWKH LPPXQH V\VWHP IROORZLQJ D VHFRQG H[SRVXUH $QWLJHQVLQWHUDFWZLWKDQWLERGLHVLQGXFHDF\WRWR[LFUHVSRQVHE\NLOOHUFHOOVDQG HOLFLWK\SHUVHQVLWLYLW\UHDFWLRQV0RVWLPPXQRJHQVDUHDQWLJHQVEXWDQWLJHQVDUH QRWQHFHVVDULO\LPPXQRJHQV 6PDOOFKHPLFDOVKDSWHQV RIOHVVWKDQN'DFDQQRWVWLPXODWHWKHLPPXQH V\VWHP 7KHUHIRUH E\ GHILQLWLRQ KDSWHQV DUH QRW LPPXQRJHQV ,I WKH KDSWHQ ELQGVWRDSURWHLQFDUULHU WKHKDSWHQ±FDUULHUFRPSOH[EHFRPHVDQLPPXQRJHQ WKDWVWLPXODWHV DUHVSRQVHWRWKHERXQGKDSWHQ
(3,723(6 7KHPROHFXODUIUDJPHQWUHFRJQL]HGE\DQWLERGLHVRUHIIHFWRUFHOOVLVFDOOHG DQ HSLWRSH RU DQWLJHQLFGHWHUPLQDQW *HQHUDOO\WKHVHDUHORZPROHFXODUZHLJKW K\GURSKLOLFIUDJPHQWV)LJ SURFHVVHGE\SKDJRF\WLFFHOOV,QDQ\PROHFXOH WKHUHPD\EHVHYHUDOGLIIHUHQWHSLWRSHVFUHDWLQJPXOWLYDOHQWDQWLJHQV+RZHYHU RQHHSLWRSH ZLOO EH GRPLQDQWRYHUWKH RWKHUHSLWRSHV 7KHLPPXQHUHVSRQVHLV XVXDOO\ JHQHUDWHGWRZDUGWKHGRPLQDQWHSLWRSH7DEOH +RZHYHU DV WKHLP PXQHUHVSRQVH HYROYHV WKH SUHGRPLQDQWHSLWRSH ZLOO FKDQJH E\ D PHFKDQLVP NQRZQDVHSLWRSHVSUHDGLQJ 7KHUHDUHVHYHUDOW\SHVRIHSLWRSHV6SHUPZKDOHP\RJORELQKDVILYHOLQHDU VHTXHQWLDOHSLWRSHVFRQWDLQLQJVL[WRHLJKWK\GURSKLOLFDPLQRDFLGVLQWKHEHQGV RIWKH QRUPDODKHOL[ FRQIRUPDWLRQ )LJ 0RVWRIWKHVHHSLWRSHV DUHUHFRJ QL]HG LQ WKH QDWLYH IUDJPHQWHG DQG H[WHQGHG FRQIRUPDWLRQV RIWKH PROHFXOH 0RUH IUHTXHQWO\ OLQHDU HSLWRSHV DUH QRW DFFHVVLEOH WR DQWLERG\ LQ WKH QDWLYH FRQILJXUDWLRQ DQGUHDFWRQO\ ZLWKGHQDWXUHGIRUPV RIWKHPROHFXOH *OREXODUSURWHLQVKDYHGLIIHUHQWFRQIRUPDWLRQDOHSLWRSHV FUHDWHGZKHQ VH TXHQWLDO RU QRQVHTXHQWLDO HSLWRSHV DUH EURXJKW WRJHWKHU LQ FORVH SUR[LPLW\ E\ IROGLQJ 6PHUGRX HWDO 7KH QRQVHTXHQWLDO FRQIRUPDWLRQDO HSLWRSHV RI KHQ HJJZKLWH O\VR]\PH DUH ZHOO FKDUDFWHUL]HG )LJ 7KH FRQIRUPDWLRQDO GHWHUPLQDQWVKRZQFRQVLVWVRIDFORVHGORRSVWUXFWXUHIRUPHGE\GLVXOILGHERQGV DW DPLQR DFLGV DQG 7KH LPPXQH V\VWHP UHFRJQL]HV WKH WHUWLDU\ ORRS
OPPXQRJHQLFLW\ DQG $QWLJHQLFLW\
)LJXUH 7KH UHODWLRQVKLS EHWZHHQ HSLWRSHV DQG LQWHUQDO SHSWLGHV &' 7K FHOOV UHFRJ QL]H LQWHUQDO SHSWLGHV H[SRVHG GXULQJ DQWLJHQ SURFHVVLQJ E\ PDFURSKDJHV 7KH DPLQR DFLGV RI KHQ HJJZKLWH O\VR]\PH DUH SORWWHG DJDLQVW WKH SURWUXVLRQ LQ WKH WHUWLDU\ SURWHLQ VWUXFWXUH 7KH 7FHOO HSLWRSHV DUH FRPSRVHG RI DPLQR DFLGV ZLWK D PLQLPXP RISURWUXVLRQ 0RGLILHG IURP 0RGHUQ 7UHQGV LQ +XPDQ /HXNHPLD 5RWKEDUG
VWUXFWXUH%HQMDPLQHWDO . 5HGXFWLRQRIWKHGLVXOILGHERQGVZLWKPHUFDS WRHWKDQROGLVUXSWV WKHWHUWLDU\VWUXFWXUHDQGWKHDQWLJHQLFLW\ LVORVW 1HZHSLWRSHVFDQEHFUHDWHGE\SURWHRO\VLVSKRVSKRU\ODWLRQRURWKHUPRG LILFDWLRQVRISURWHLQV7KHDOWHUDWLRQVLQWKHVHFRQGDU\RUWHUWLDU\VWUXFWXUHFUHDWH DQHRDQWLJHQ)RUH[DPSOHDPLQRDFLGVDUHRIWHQDGGHGWRUHFRPELQDQWSURWHLQV WKDW DUH VXEVHTXHQWO\ UHIROGHG LQ WKH ODERUDWRU\ %RWK PDQLSXODWLRQV RIQDWLYH SURWHLQV FDQFUHDWHLPPXQRJHQLFQHRDQWLJHQV
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
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
)LJXUH 7KH FRQIRUPDWLRQDO GHWHUPLQDQWV RI KHQ HJJZKLWH O\VR]\PH %LQGLQJ RI DQWL ERG\ GHSHQGV RQ WKH PDLQWHQDQFH RI WKH WHUWLDU\ HSLWRSH VWUXFWXUH E\ LQWUDFKDLQ GLVXOILGH ERQGV 7KH HSLWRSH EODFN FLUFOHV LV FUHDWHG E\ WKH IRUPDWLRQ RI D ORRS EHWZHHQ DPLQR DFLGV DQG 6\QWKHWLF DQG RSHQ DQG FORVHG ORRS VWUXFWXUHV ZHUH UHDFWHG ZLWK DQWLORRS DQWLVHUXP 6HURORJLFDO UHDFWLYLW\ ZDV RQO\ REVHUYHG ZKHQ WKH ORRS VWUXFWXUH ZDV PDLQ WDLQHG 0RGLILHG IURP $QQXDO 5HYLHZ RI,PPXQRORJ\ %HQMDPLQ HW DO
WLRQRIWKH7FHOOHSLWRSHUHDFWVZLWKWKH7FHOOUHFHSWRUZKHUHDVWKHK\GURSKRELF SRUWLRQFDOOHGDQDJUHWRSH LQWHUDFWVZLWKFODVV,RU,,PDUNHUVRQWKHFHOOVXUIDFH %FHOO HSLWRSHV IURP JOREXODU SURWHLQV DUH ORFDWHG LQ WKH IOH[LEOH K\GUR SKLOLFUHJLRQVRIDQ LPPXQRJHQ )OH[LELOLW\RIWKHHSLWRSHHQVXUHVKLJKDIILQLW\ ELQGLQJWRDQWLERG\DQG%FHOOV7KHVHHSLWRSHVPD\EHOLQHDURUFRQIRUPDWLRQDO (SLWRSHVL]HLVDUHIOHFWLRQRIWKHFRPELQLQJVLWHVLQDQDQWLERG\PROHFXOH,QWKH
OPPXQRJHQLFLW\ DQG $QWLJHQLFLW\
)LJXUH 'LDJUDP RI VSHUP ZKDOH P\RJORELQ VKRZLQJ %FHOO HSLWRSHV 0RGLILHG IURP $GYDQFHV LQ ([SHUL PHQWDO 0HGLFLQH DQG %LRORJ\ $WDVVL HW DO
FDVH RIORZPROHFXOHZHLJKW FDUERK\GUDWHV RUSURWHLQV WKH HSLWRSH PD\ EH DV VPDOO DV ± DPLQR DFLGV *OREXODU SURWHLQ HSLWRSHV PD\ UDQJH IURP WR DPLQRDFLGV
(;2*(1286$1'(1'2*(1286$17,*(16 0RVWH[RJHQRXVO\ V\QWKHVL]HGLPPXQRJHQV DUHGHULYHGIURPEDFWHULD YL UXVHVDQGIXQJLLQIHFWLQJWKHKRVW9LUXVHVVXFKDVLQIOXHQ]DKDYHVHYHUDOGLIIHU HQW LPPXQRJHQLF PROHFXOHV %HFDXVH WKH YLUXV OHDYHV WKH FHOO E\ DSURFHVV RI EXGGLQJ WKH HQYHORSH VXUURXQGLQJ WKH YLUXV RIWHQ FRQWDLQV JO\FRSURWHLQV DQG OLSRSURWHLQVIURPWKHKRVW¶VFHOOPHPEUDQH7KHVHLPPXQRJHQLFPROHFXOHVFRQ 7DEOH 3RVLWLRQ RI ,PPXQRGRPLQDQW 7FHOO (SLWRSHV DQG $PSKLSDWKLF6HJPHQWVLQ6HOHFWHG3URWHLQV $QWLJHQ 6SHUP ZKDOH P\RJORELQ
&KLFNHQ O\VR]\PH
&KLFNHQRYDOEXPLQ +HSDWLWLV%YLUXV6 +HSDWLWLV% VXUIDFHDQWLJHQ
7FHOO HSLWRSHV
$PSKLSDWKLF VHJPHQWV
$PSKLSDWKLF VFRUH
²
²
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
WDLQUHSHWLWLYHDPLQRDFLGVHTXHQFHVWKDWDUHDFFHVVLEOHWRWKHLPPXQHV\VWHP,Q DGGLWLRQWKHYLUXVFDQSURGXFHUDGLDWLQJJO\FRSURWHLQVDQGSURWHLQVKHPDJJOXWL QLQVDQGQHXUDPLQLGDVH ,QIOXHQ]D$YLUXVVWUDLQVDUHRIWHQW\SHGRQWKHEDVLVRI VHURORJLFDO UHDFWLYLW\ GLUHFWHG WRZDUG WKH KHPDJJOXWLQLQ RU WKH QHXUDPLQLGDVH .XE\ *UDPSRVLWLYH EDFWHULDKDYHWZRW\SHV RIDQWLJHQV 6RPH DQWLJHQV DUH H[ FUHWHGIURPWKHFHOODQGIRUPVROXEOHDQWLJHQV3RO\SHSWLGHH[RWR[LQIURP&RU\ QHEDFWHULXPGLSKWKHULDHEORFNVSURWHLQV\QWKHVLVDQGGHVWUR\VWKHGHHSOD\HUVRI WKHUHVSLUDWRU\PXFRVD7KLVUHVXOWVLQWKHIRUPDWLRQRIDSVHXGRPHPEUDQHLQWKH WUDFKHD REVWUXFWLQJ WKH DLUZD\V 'DYLV HWDO &KROHUD WR[LQ LQFUHDVHV F\FOLF$03LQLQWHVWLQDOFHOOVUHVXOWLQJLQFKORULGHORVV'DYLVHWDO 7KH FKORULGH LPEDODQFH FDXVHV ZDWHU ORVV DQG GLDUUKHD 7KH H[RWR[LQ IURP &ORVWULGLXPWHWDQL UHDFWVZLWKWKHQHUYHHQGLQJVDWWKHQHXURPXVFXODUMXQFWLRQ FDXVLQJVHYHUHDQGSHUVLVWHQWPXVFOHFRQWUDFWLRQ,QWKHFDVHRIWR[LQSURGXFLQJ EDFWHULD WKH LPPXQH V\VWHP DWWHPSWV WR QHXWUDOL]H WKH WR[LQ DQG GHVWUR\ WKH EDFWHULXP 2WKHU DQWLJHQV DUH SDUW RIWKH EDFWHULDO FHOO ZDOO 7KH FHOO ZDOO SRO\VDF FKDULGH RU SHSWLGRJO\FDQ LV FRPSULVHG RI 1DFHW\JOXFRVDPLQH PXUDPLF DFLG UHVLGXHVFURVVOLQNHG E\ VKRUWJO\FLQHFKDLQV,QWHUVSHUVHGLQWKHSHSWLGRJO\FDQ DUHSURWHLQVDQGWHLFKRLFDFLGV7KHUHLVJUHDWYDULDWLRQLQWKHVWUXFWXUHRIWKHFHOO ZDOO SHSWLGRJO\FDQ ZKHQ GLIIHUHQW VSHFLHV RU VWUDLQV RI WKH VDPH VSHFLHV DUH FRPSDUHG 7KHVH FHOO ZDOO FRQVWLWXHQWV DUH LPSRUWDQW IRU GLDJQRVWLF DQG WD[R QRPLFSXUSRVHV 6WUHSWRFRFFDOVWUDLQVDUHJURXSHGRQWKHEDVLVRILPPXQRJHQLF FHOOZDOOFRQVWLWXHQWV ,QDGGLWLRQWRWKHSHSWLGRJO\FDQOD\HUVRPHJUDPSRVLWLYHEDFWHULDVXFKDV 6WUHSWRFRFFXVSQHXPRQLDHKDYHDSRO\VDFFKDULGHFDSVXOH7KHFDSVXOHVFRQWDLQ UHSHDWLQJ XQLWV RIWZR RU WKUHH VXJDUV DQG PD\ UHDFK N'D :LWKLQ WKH 6 SQHXPRQLDH IDPLO\WKHUHDUHRYHUGLIIHUHQWVWUDLQVZLWKGLVWLQFWVWUXFWXUHVDQG LPPXQRJHQLFLW\+RZHYHURQO\ VWUDLQVDUHSDWKRJHQLFLQKXPDQV 7KHJUDPQHJDWLYHEDFWHULDOFHOOZDOOGLIIHUVJUHDWO\IURPWKHJUDPSRVLWLYH ZDOO7KHUHLVOLWWOHSHSWLGRJO\FDQEXWDODUJHRXWHUPHPEUDQHFRQWDLQLQJOLSRSUR WHLQDQGOLSRSRO\VDFFKDULGH/36 /36FRQVLVWVRIUHSHDWLQJOLQHDUWULVDFFKDULGHV OLQNHGWRDFRUHSRO\VDFFKDULGHDQGDFRUHOLSLG$PRLHW\7KHEDVDOFRUHDQGWKH OLSLG$FRQVWLWXWHWKHVHURORJLFDOVSHFLILFLW\RIWKHHQGRWR[LQDQGWKHDVVRFLDWHG WR[LFLW\$WWDFKHGWROLSLG$DUHRGGQXPEHUHGXQVDWXUDWHGIDWW\DFLGV7KHORQJ SRO\VDFFKDULGHRIWKHHQGRWR[LQH[SRVHGWRWKHH[WHUQDOPLOLHXLVDSRWHQWLPPX QRJHQ 7KHVH H[SRVHG SRO\VDFFKDULGHV DQWLJHQV DUH RIWHQ XVHG WR FODVVLI\ VDOPRQHOODDQGVKLJHOODVSHFLHV :KHQ/36LVUHOHDVHGRQGHDWKRIWKHEDFWHULXPLWDFWVDVDSRWHQWHQGRWR[ LQ(QGRWR[LQVDUHSRWHQWSRO\FORQDODFWLYDWRUVRI%FHOOVZLWKFOHDUGRVHGHSHQ GHQW HIIHFWV /RZ GRVHV RI HQGRWR[LQ SURGXFH /36VSHFLILF DQWLERGLHV +LJK FRQFHQWUDWLRQV RI/36 VWLPXODWH PDQ\ %FHOO FORQHV LQFOXGLQJ DXWRUHDFWLYH %
,PPXQRJHQLFLW\ DQG $QWLJHQLFLW\
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
7DEOH 3RSXODWLRQ 7\SH2 7\SH$ 7\SH% 7\SH
%$7KH &RQVWLWXHQWV RI +XPDQ 5HG %ORRG &HOO $QWLJHQV
3HUFHQWDJH
&RUHSRO\PHU
$GGLWLRQDOVXJDU
6SKLQJROLSLG 6SKLQJROLSLG 6SKLQJROLSLG 6SKLQJROLSLG
$FHW\OJOXFRVDPLQH *DODFWRVH *DODFWRVH DQG 1DFHW\OJOXFRVDPLQH
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
OPPXQRJHQLFLW\ DQG $QWLJHQLFLW\
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³EUHDWKLQJ´RIWKHSURWHLQ,QWKHUHOD[HGRU XQVWDEOH IRUP WKH SURWHLQ XQGHUJRHV SURWHRO\WLF FOHDYDJH DQG ELQGLQJ RI WKH SUR[LPDO &WHUPLQXV WR WKH 0+& FODVV ,, PDUNHU $GGLWLRQDO PRGLILFDWLRQ RU WULPPLQJRIWKHSHSWLGHRFFXUVLQWKHELQGLQJFOHIW/DQGU\ 7KHFKDUDFWHULVWLFRIDQWLJHQLFSHSWLGHVXVHGIRUWKHJHQHUDWLRQRIYDFFLQHV KDV EHHQ GLVFHUQHG IURP 0RQWH &DUOR FRPSXWHU H[SHULPHQWV 3HSWLGHV VKRXOG KDYHWKHSURSHQVLW\WRIRUPDKHOLFHVWKDWGRQRWGHYHORSFRLOFRQIRUPDWLRQV,Q DGGLWLRQ WKH\ VKRXOG KDYH D O\VLQH DW WKH &WHUPLQXV 6SRXJH HW DO 0RUHRYHUWKH7FHOOHSLWRSHVVKRXOGQRWEHVHJPHQWDOO\DPSKLSDWKLFHJWZR GLVMRLQWHG VXESHSWLGHV RQH RIZKLFK LV K\GURSKRELF ZKLOH WKH RWKHU LV K\GUR SKLOLF 7KHLPSRUWDQFHRIIODQNLQJUHJLRQVLQWKHJHQHUDWLRQRIDQWLJHQLFHSLWRSHVLV FRQWURYHUVLDO,QWKHJHQHUDWLRQRI&'F\WRWR[LF7FHOOVERWKLQYLYRDQG LQYLWUR UHFRJQLWLRQ LV LQIOXHQFHG E\ WKH & DQG 1WHUPLQDO IODQNLQJ UHVLGXHV $PLQR DFLGVZLWKDURPDWLF W\URVLQH EDVLF O\VLQH RUDOLSKDWLF VLGHFKDLQV DODQLQH HQKDQFH&7/UHFRJQLWLRQ $FLGLF DQG KHOL[EUHDNLQJ DPLQR DFLGV JO\FLQH DQG SUROLQH LQKLELWUHFRJQLWLRQRIWKH1WHUPLQXVHSLWRSH%HUJPDQQHWDO ,Q FRQWUDVW WKH JHQHUDWLRQ RI&' 7 KHOSHU FHOOV WR +,9 JS LQ UHFRPELQDQW SURWHLQVZDVGHSHQGHQWRQWKHLQVHUWLRQSRVLWLRQLQWKHSURWHLQ0RUHRYHUDQWL JHQLFLW\ZDVLQIOXHQFHGE\WKHSURWHLQUHJLRQIODQNLQJWKH+,9SHSWLGH0DQFDHW DO 'LIIHUHQFHVLQDQWLJHQLFSRWHQF\DUHUHODWHGWRWKHVL]HRIWKHHSLWRSH/LQHDU
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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±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±DFWLYLW\ UHODWLRQVKLSV DUHGHWHUPLQHGZLWKFODVVHVRUIDPLOLHVRIFKHPLFDOVNQRZQWREHLPPXQRJHQLF )RUH[DPSOH FKHPLFDOVZLWK DVWUXFWXUH VLPLODUWRWROXHQHGLLVRF\DQDWHV ZRXOG EHIODJJHGDVDSRVVLEOHLPPXQRJHQ6HFRQGWKHFKHPLFDOZRXOGEHUHDFWHGZLWK DOEXPLQ LQ WKH WHVW WXEH WR GHWHUPLQH ZKHWKHU KDSWHQ±SURWHLQ FRQMXJDWHV DUH IRUPHG )LQDOO\ WKH FRPSOH[HV ZRXOG EH LQMHFWHG LQWR DQLPDOV WR GHWHUPLQH ZKHWKHUKDSWHQVSHFLILF DQWLERGLHVDUHIRUPHG
,PPXQRJHQLFLW\ DQG $QWLJHQLFLW\
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±UHVSRQVH UHODWLRQVKLS DQG WKH DQWLERGLHV DUH QRW QHXWUDOL]LQJWKHUHPD\EHQRVDIHW\UHODWHGLVVXHV ,WLV KRZHYHUQHFHVVDU\WR H[FOXGHWKHSRVVLELOLW\RILPPXQHFRPSOH[YDVFXOLWLVDVDSRWHQWLDOKHDOWKUHODWHG HIIHFW 6SHFLDOL]HGKLVWRSDWKRORJLFDOWHFKQLTXHVFDQEHXVHGWRLGHQWLI\LPPXQH FRPSOH[HV LQWKHNLGQH\RUYDVFXODWXUH
$QWLJHQ3UHVHQWLQJ&HOOV
,1752'8&7,21 $QWLJHQSUHVHQWLQJ FHOOV $3&V FDQ EHGLYLGHG LQWR ³SURIHVVLRQDO´ DQG ³DPD WHXU´ VXEVHWV 3URIHVVLRQDO $3&V VXFK DV PRQRF\WHV PDFURSKDJHV GHQGULWLF FHOOVDQG%FHOOVDUHIXOO\FRPPLWWHGWRDQWLJHQSUHVHQWDWLRQDVDQLQWHJUDOSDUWRI WKHLU IXQFWLRQ LQ WKH DIIHUHQW DUP RIWKH LPPXQHUHVSRQVH 2WKHU FHOOV VXFK DV HQGRWKHOLDOFHOOVILEUREODVWVJOLDOFHOOVSDQFUHDWLFEHWDFHOOVNHUDWLQRF\WHVDQG WK\URLG FHOOV SUHVHQW DQWLJHQ RQO\ XQGHU VHOHFW FRQGLWLRQV GXULQJ DQ LPPXQH UHVSRQVH7KHVHFHOOV DUHFRQVLGHUHG³DPDWHXU´$3&V $3&VDULVHLQWKHERQHPDUURZFLUFXODWHLQWKHEORRGDQGKRPHWRGLIIHUHQW DUHDVLQWKHERG\YLDWKHO\PSKDWLFV\VWHP.DW]HWDO 6WHPFHOOVLQWKH SHULSKHUDOEORRGRFFXUDWDIUHTXHQF\RISHU PRQRQXFOHDUFHOOVDQGSURGXFH ERWK PRQRF\WHV DQG GHQGULWLF FHOOV $GGLWLRQDO VWHP FHOO VWLPXODWLRQ LQGXFHV PDWXUDWLRQ LQWR /DQJHUKDQV FHOOV LQWHUGLJLWDWLQJ FHOOV DQG IROOLFXODU GHQGULWLF FHOOV.QLJKWHWDO E
352)(66O21$/$3&V 3URIHVVLRQDO $3&V VKDUH FRPPRQ DWWULEXWHV $OO KDYH WKH FKDUDFWHULVWLF GHQGULWLFFHOOPRUSKRORJ\+LJKOHYHOVRI0+&PDUNHUVFRPSOHPHQW)FUHFHS WRUV DQG DGKHVLRQ IDFWRUV DUH H[SUHVVHG RQ WKH FHOO VXUIDFH 7KH SURIHVVLRQDO $3&VFDQSUHVHQWSURFHVVHG RUQDWLYHDQWLJHQWR LPPXQRFRPSHWHQWFHOOV ZKLOH SURGXFLQJLQWHUOHXNLQVVXFKDV,/ DQG,/:DFNHUHWDO
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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±DQWLERG\FRP SOH[HVFDOOHGLFFRVRPHV 6]DNDO HWDO D ,QWKHJHUPLQDOFHQWHUWKHLFFR
$QWLJHQ3UHVHQWLQJ &HOOV
VRPHV IRUP D FRPSOH[ ODE\ULQWKLQH VWUXFWXUH PXFK OLNH OD\HUV RI FKHHVHFORWK 7HUDVKLPD HW DO 1DWLYH DQWLJHQ LV VWRUHG LQ LFFRVRPHV IRU H[WHQGHG SHULRGVRIWLPHSURYLGLQJDFRQWLQXLQJVRXUFHRIVWLPXODWLRQIRU%FHOOV*UD\HW DO 2Q VHFRQGDU\ VWLPXODWLRQ %FHOO EODVWV EHFRPH FHQWUREODVWV LQ WKH GDUN ]RQHRIWKHJHUPLQDOFHQWHU7KHUDSLGO\GLYLGLQJFHQWUREODVWVPRYHWKURXJKWKH )'&ODE\ULQWK=LHJOHU+HLWEURFN 8VLQJWKH&'HFWR¶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
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
H[SUHVV&'D&'E&GFDQGFODVV,,0+&RU+/$PROHFXOHVDQGH[SUHVVLRQ FDQ EH XSUHJXODWHG E\ LQWHUIHURQ )XUXH HW DO 7KH\ DUH FDSDEOH RI SKDJRF\WRVLVDQGDQWLJHQSUHVHQWDWLRQWR7FHOOV%LVQRWQRUPDOO\H[SUHVVHG RQ/&V%H[SUHVVLRQFDQEHXS RUGRZQUHJXODWHGE\DQXPEHURIF\WRNLQHV ,/α RU RU ,/ FDQ XSUHJXODWH H[SUHVVLRQ RI % EXW WKH PRVW SRWHQW XSUHJXODWLRQLVPHGLDWHGE\*0&6)&RQYHUVHO\,)1γRU,/ SURIRXQGO\ LQKLELWWKH%H[SUHVVLRQRI/&VLQDGRVH DQGWLPHGHSHQGHQW PDQQHU 7KH GRZQ UHJXODWRU\ DELOLW\ RI ,)1γ RU ,/ QHXWUDOL]HV WKH DFWLYLW\ RI PRVW XS UHJXODWRU\F\WRNLQHV&KDQJHWDO &KHPLFDOVRUDJHQWVWKDWFDXVHGHOD\HGK\SHUVHQVLWLYLW\UHDFWLRQVDUHKDQ GOHGGLIIHUHQWO\WKDQRWKHUDJHQWVDFWLYDWLQJ7KFHOOV,/SURGXFLQJ/&VZLWK VXUIDFHDQWLJHQPLJUDWHIURPWKH VNLQWRGUDLQLQJ O\PSKQRGHV0DUFKDOHWDO &XPEHUEDWFK HW DO 2IWHQ WKHVH FHOOV KDYH D GLVWLQFW YHLOHG PRUSKRORJ\DVWKH\PRYHWRZDUGWKHQRGHV:DFNHUHWDO ,QWKHVXEFDS VXODUVSDFHWKHVHFHOOVDWWDFKWRWKHVLQXVIORRUPLJUDWHWKURXJKWKHLQWHUIROOLFX ODU UHJLRQ WR WKH SDUDFRUWH[ DQG DWWDFK WR WKH UHWLFXODU QHWZRUN $QWLJHQ LV SUHVHQWHG WR &' FHOOV WKDW LQLWLDWH GHOD\HG K\SHUVHQVLWLYLW\ UHVSRQVH .DW] 6LOEHUEHUJHWDO /&VKDYHWKHFDSDFLW\WRLQGXFHDOORJHQHLF7FHOO DFWLYDWLRQ DQGPD\SOD\DUROHLQVNLQJUDIWUHMHFWLRQ 6WLQJO HWDO
%&HOOV % FHOOV DUH DEOH WR SUHVHQW LPPXQRJHQV WR 7 FHOOV ,Q XQLTXH PDQQHU LPPXQRJHQLFSHSWLGHVELQGZLWKKLJKDIILQLW\WRDQWLJHQVSHFLILF DQWLERGLHVRQ WKHFHOOVXUIDFH&URVVOLQNLQJRIDQWLERGLHVLQWHUQDOL]HVWKHSHSWLGH3HSWLGHVDUH GHJUDGHG LQ WKH F\WRSODVP DQG SUHVHQWHG WR 7 FHOOV LQ FRQWH[W ZLWK FODVV ,, PDUNHUV%HFDXVHWKHUHDFWLRQLVDQWLJHQVSHFLILF%FHOOVSUHVHQWDQWLJHQDW WR IROG ORZHU OHYHOV WKDQ UHTXLUHG IRU PDFURSKDJH SUHVHQWDWLRQ $V D UHVXOWRIWKHLQWHUDFWLRQVEHWZHHQ7DQG%FHOOV%FHOOVDUHVWLPXODWHGWRSURGXFH DQWLERGLHV
$0$7(85$3&V :KHQ DFWLYDWHG HSLWKHOLDO FHOOV NHUDWLQRF\WHV DQG RWKHU FHOOV FDQ DFW DV DPDWHXU$3&V7KHVHFHOOVDOOKDYHLQGXFLEOHFODVV,,PDNHUVQHHGHGIRUDQWLJHQ SUHVHQWDWLRQ +RZHYHU PRVWODFNWKH%± DQG%± PROHFXOHVQHFHVVDU\ IRU FRVWLPXODWLRQ RI7 FHOOV
$QWLJHQ3UHVHQWLQJ &HOOV
UHFHSWRUVWKDWDFWDVFRVWLPXODWRU\ PROHFXOHVIRU7FHOOV 8VXDOO\WKHHSLWKHOLDO FHOOVLQGXFH7KUHVSRQVHV 1LFNRORIIDQG7XUND 7KHUH LV DQ DOWHUHGF\WRNLQHSURILOH LQDFWLYDWHG7FHOOV IROORZLQJ LQWHUDF WLRQVZLWKQRQSURIHVVLRQDO$3&V$FWLYDWHG7KFHOOVSURGXFH,/DQG,/EXW IDLO WR SURGXFH ,)1γ VXJJHVWLQJ WKDW ,J( DOOHUJLF DQWLERG\ LV WKH LVRW\SH SUR GXFHGLQWKHLPPXQHUHVSRQVH %HFDXVH,)1γLVQRWSURGXFHGE\LQWHUDFWLRQRIQRQSURIHVVLRQDO$3&VWKH V\QWKHVLVRI,J(FDQQRWEHUHJXODWHG/HXQJ 0RVWDPDWHXU$3&VFDQQRW V\QWKHVL]H ,)1γ EHFDXVH RI D GHIHFW LQ D F\WRNLQH VZLWFKLQJ SDWKZD\ ,/ SURGXFWLRQLVWKHNH\VZLWFKIRULQGXFLQJWKHV\QWKHVLVRI,)1γ,/ FRQVLVWV RIWZR SURWHLQ FKDLQV ZLWK PROHFXODU PDVVHV RI DQG N'D /&V H[SUHVV FRQVWLWXWLYH OHYHOV RIWKHN'D SURWHLQ EXW FDQQRWSURGXFH WKHN'DFKDLQ 7KXV WKH ,/ LV IXQFWLRQDOO\ GHIHFWLYH DQG FDQQRW LQGXFH WKH SURGXFWLRQ RI ,)1γ ,Q DGGLWLRQ WR WKH GLIIHUHQFH LQ ,/ SURGXFWLRQ VRPH DPDWHXU $3&V PD\ DOVR SURGXFH ,/ WKDW EORFNV ,)1γ SURGXFWLRQ E\ 7 FHOOV 'H]XWWHU 'DPEX\DQW 7KHDEVHQFHRUSUHVHQFHRI,)1γGHWHUPLQHVWKH7FHOOVXEVHWWKDWXQGHU JRHVFORQDOH[SDQVLRQ,QWKHSUHVHQFHRI,)1γ7KFHOOVH[SDQGDQGGLIIHUHQWL DWH 7K FHOOV DUH H[SDQGHG LQ WKH DEVHQFH RI,)1γ
8/75$9,2/(7/,*+7$1'/&V ([WHUQDO IDFWRUV FDQ DOVR DOWHU WKH LPPXQRORJLFDO UHVSRQVH LQ WKH VNLQ 8OWUDYLROHWOLJKWLQDFWLYDWHVRUGHVWUR\V/&VLQWKHVNLQ$OFDOD\HW DO ,Q WKHDEVHQFHRI/&VNHUDWLQRF\WHVSURGXFH,/ WKDWSUHYHQWV,)1γSURGXFWLRQ &RQVHTXHQWO\WKHLPPXQHUHVSRQVHVKLIWVWRDFWLYDWLRQRI7KFHOOV7KLV7FHOO VXEVHWSOD\VDUROHLQWKHLQGXFWLRQRI,J(PHGLDWHGDOOHUJLFVNLQUHDFWLRQVHJ DWRSLFGHUPDWLWLV DQGWKHLQGXFWLRQRIDQWLERG\PHGLDWHGDXWRLPPXQHSVRULDVLV 1LFNRORIIDQG7XUND
,0081('<6)81&7,212I'(1'5O7O&&(//6 $ QXPEHU RIGHQGULWLF FHOO GLVRUGHUV DUH VLPSO\ FKDUDFWHUL]HG DV DEQRU PDOLWLHVRISUROLIHUDWLQJ³KLVWLRF\WLFFHOOV´'LVRUGHUVDUHHLWKHUEHQLJQRUPDOLJ QDQW 6RPH SURFHVVHV VXFK DV VHYHUH KLVWLRF\WRVLV KDYH LQFUHDVHG QXPEHUV RI FHOOV WKDWFDQ EHFODVVLILHGDVHLWKHUDPRQRF\WLF RUGHQGULWLFGLVRUGHU -XYHQLOH [DQWKRJUDQXORPD VHHPV WR EH D EHQLJQ SUROLIHUDWLYH GLVRUGHU RI PDFURSKDJHV 6HOIKHDOLQJ UHWLFXORKLVWLRF\WRVLV LV D EHQLJQ GLVRUGHU RI/&V 0RUVFKHOOD DQG &URSOH\
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
$QWLJHQ3UHVHQWDWLRQ
,1752'8&7,21 7KHLPPXQHV\VWHPPXVWGHIHQGWKHKRVWDJDLQVWGLYHUVHDWWDFNVIURPPLFURRU JDQLVPV YLUXVHV DQGWXPRUFHOOV 6RPH EDFWHULD DUH H[RJHQRXV SDWKRJHQV WKDW FLUFXODWHLQWKHEORRGRUFUHDWHIRFLRILQIHFWLRQVLQWLVVXH 2WKHUEDFWHULDDQGDOO YLUXVHV DUH LQWUDFHOOXODU SDUDVLWHV WKDW OLYH ZLWKLQ WKH KRVW FHOOV 7XPRU FHOOV SUHVHQWDVSHFLDOSUREOHPIRUWKHLPPXQHV\VWHP1HRSODVWLFFHOOVDUHFHOOVLQDQ DUUHVWHGVWDWH RIGLIIHUHQWLDWLRQZLWK DORVV RIFHOOGLYLVLRQ FRQWURO ,QWUDFHOOXODU EDFWHULD YLUXVHV DQGWXPRUVFUHDWHHQGRJHQRXVDQWLJHQV 7KHLPPXQHV\VWHPKDVGHYHORSHGGLIIHUHQWVWUDWHJLHVWRGHDOZLWKH[RJHQRXV DQGHQGRJHQRXVSHSWLGHLPPXQRJHQV7KHPHWKRGRISUHVHQWDWLRQLVGHSHQGHQWRQ ERWKWKHPDWUL[DQGWKHQDWXUHRIWKHDQWLJHQ)RUH[DPSOHH[RJHQRXVDQWLJHQVWKDW FLUFXODWHLQWKHEORRGO\PSKRUH[WHUQDOIOXLGVDUHXVXDOO\UHPRYHGE\DQDQWLERG\ UHVSRQVH$QDQWLERG\UHVSRQVHUHTXLUHVDQWLJHQSUHVHQWDWLRQLQDVVRFLDWLRQZLWK 0+&FODVV,,PROHFXOHVDQGDFWLYDWLRQRIERWK7KDQG%FHOOV,QFRQWUDVWYLUDORU WXPRU DQWLJHQV GHYHORS LQVLGH FHOOV DQG HOLFLW DF\WRWR[LF 7FHOO UHVSRQVH WKDW GHVWUR\VWKHLQIHFWHGRUPXWDQWFHOOV(IIHFWRUF\WRWR[LF7FHOOVDUHJHQHUDWHGZKHQ DQWLJHQLVSUHVHQWHGLQFRQFHUWZLWK0+&FODVV,RU&'IDPLO\RISURWHLQV7KH &' LVRIRUPVDUHDQHZO\GHVFULEHGIDPLO\RIDQWLJHQSUHVHQWLQJPROHFXOHVWKDW DUH GLVWDQW FRXVLQV WR WKH 0+& PDUNHUV ,VRIRUPV RI &' SOD\ D XQLTXH UROH LQ SUHVHQWLQJKLJKO\FRQVHUYHGOLSLGV DQGSURWHLQV ,PPXQRJHQVDUHERXQGWRWKH VXUIDFHRI$3&VE\ERWKDFWLYHDQGSDVVLYH SURFHVVHV,QWKHLQLWLDOVWDJHRIWKHLPPXQHUHVSRQVHEDFWHULDIXQJLYLUXVHVRU SURWHLQVDUHLQWHUQDOL]HGE\SKDJRF\WRVLVSLQRF\WRVLV RUPHGLDWHGHQGRF\WRVLV 3KDJRF\WRVLV LV XVHG WR LQJHVW ODUJH SDUWLFOHV FRDWHG ZLWK DQWLERG\ RUFRPSOH
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
&/$66,0+&3527(,16 &ODVV,0+&SURWHLQVDUHIRXQGRQDOOQXFOHDWHGFHOOVZLWKLQWKHERG\7KH VWUXFWXUHRI0+&FODVV,PROHFXOHVLVFKDUDFWHULVWLFRIWUDQVPHPEUDQHSRO\SHS WLGHV$OOFODVV,0+&PROHFXOHVFRQVLVWRID WRN'D αFKDLQ&KDLQVDUH RULHQWHGVRWKDWWKH1WHUPLQXVDQGPRVWRIWKHPROHFXOHH[WHQGLQWRWKHH[WHUQDO PLOLHX)LJ $QRQ0+&FRGHGPLFURJOREXOLQRIDSSUR[LPDWHO\N'DLV DWWDFKHGWRWKHαFKDLQ-RQHV 7KHPDMRUIXQFWLRQRIWKHFODVV,0+& LVWRSUHVHQWLPPXQRJHQLFSHSWLGH IUDJPHQWVWR&'F\WRWR[LF7FHOOV6WHUQDQG:LOH\ 7KHSHSWLGHELQGLQJ UHJLRQ RI WKH FODVV , 0+& PROHFXOH LV ORFDWHG LQ WKH α DQG α UHJLRQV DQG FRQVLVWV RI DSSUR[LPDWHO\ DPLQR DFLGV $ SHSWLGHELQGLQJ FOHIW UHJLRQ LV IRUPHG E\ WZR HTXDO DPLQRDFLG VHJPHQWV LQ WKH α DQG α UHJLRQV 7KH WHUWLDU\ VWUXFWXUH LV DQ HLJKWVWUDQGHG SOHDWHG VKHHW VXSSRUWLQJ WZR KHOL[ VLGH UHJLRQV&OHIWVL]HLVDSSUR[LPDWHO\ ; ; cDQGELQGVSHSWLGHVZLWK DPLQRDFLGV %HWZHHQ WKH α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αDQG αUHJLRQV 6WUXFWXUDOO\LWUHVHPEOHVWKHDLPPXQRJOREXOLQOLNHUHJLRQLQWKDWLWKDVDORRS VWUXFWXUHOLQNHGZLWKGLVXOILGHERQGV 0LFURJOREXOLQVWDELOL]HVWKHLQWHUDFWLRQ EHWZHHQWKHα FKDLQDQGWKHLPPXQRJHQLFSHSWLGH
$QWLJHQ 3UHVHQWDWLRQ
)LJXUH 6FKHPDWLF UHSUHVHQWDWLRQ RIWKH 0+& FODVV , SURWHLQ 1 DQG & UHIHU WR DPLQR DQG FDUER[\ WHUPLQL RI WKH SRO\SHSWLGH FKDLQ 6±6 WR LQWUDFKDLQ SRO\SHSWLGH ERQGV DQG 3 WR SKRVSKRU\ODWLRQ VLWHV 5HSULQWHG IURP &HOOXODU DQG 0ROHFXODU ,PPXQRORJ\ $EEDV HW DO ZLWK SHUPLVVLRQ RI : % 6DXQGHUV &R
&/$66,,0+&3527(,16 0+&FODVV,,SURWHLQVDUHIRXQGFRQVWLWXWLYHO\RQ%FHOOVDQGGHQGULWLFFHOOV DQGFDQEHXSUHJXODWHGRQPDFURSKDJHVDQG/DQJHUKDQVFHOOV(DFKPROHFXOHLV FRPSRVHGRIWZRQRQFRYDOHQWO\ERXQG αDQGFKDLQV)LJ $OWKRXJKERWK FKDLQV KDYH WKH VDPH VWUXFWXUH WKH α FKDLQ LV VOLJKWO\ KHDYLHU N'D EHFDXVH RIH[WHQVLYHJO\FRV\ODWLRQ /LNHWKHFODVV,SURWHLQ WKHFODVV,,SURWHLQ FRQVLVWVRIDSHSWLGHELQGLQJUHJLRQDQLPPXQRJOREXOLQOLNHGRPDLQDQGWUDQV PHPEUDQHDQGF\WRSODVPLFUHJLRQV ,QFRQWUDVWWRWKHFODVV,PDUNHUWKHSHSWLGHELQGLQJSRUWLRQLVFRPSRVHGRI WKH α DQG UHJLRQ RI HDFK FKDLQ 7KHVH UHJLRQV LQWHUDFW WR IRUP DQ HLJKW VWUDQGHGSOHDWHGVKHHWZLWKWZRVXSSRUWLQJαKHOLFHV7KHHQGVRIWKHSHSWLGH UHJLRQ DUH RSHQ DOORZLQJ ERXQG SHSWLGHV WR H[WHQG LQWR WKH H[WHUQDO PLOLHX
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
)LJXUH 6FKHPDWLF UHSUHVHQWDWLRQ RIWKH 0+& FODVV ,, SURWHLQ 1 DQG & UHIHU WR DPLQR DQG FDUER[\ WHUPLQL RI WKH SRO\SHSWLGH FKDLQ 6±6 WR LQWUDFKDLQ SRO\SHSWLGH ERQGV DQG 3 WR SKRVSKRU\ODWLRQ VLWHV 5HSULQWHG IURP &HOOXODU DQG 0ROHFXODU ,PPXQRORJ\ $EEDV HW DO ZLWK SHUPLVVLRQ RI : % 6DXQGHUV &R
$OWKRXJKWKHRSWLPDOELQGLQJOHQJWKLVDPLQRDFLGVSHSWLGHVDVORQJDV DPLQR DFLGVKDYHEHHQUHFRYHUHG IURPSXULILHGFODVV,,PROHFXOHV 'LVWDOWRWKHSHSWLGHELQGLQJUHJLRQVDUHWKH αDQGLPPXQRJOREXOLQ OLNH UHJLRQV %RWK GRPDLQV KDYH D ORRS VWUXFWXUH OLQNHG E\ GLVXOILGH ERQGV %HFDXVHRIKRPRORJLHVLQDPLQRDFLGVHTXHQFHαDQGGRPDLQVEHORQJWRWKH ,JVXSHUIDPLO\7KHVHGRPDLQVDUHLPSRUWDQWLQHVWDEOLVKLQJQRQFRYDOHQWLQWHUDF WLRQV EHWZHHQ FKDLQV /LNH RWKHUWUDQVPHPEUDQH JO\FRSURWHLQV WKHUH DUH VKRUW WUDQVPHPEUDQHUHJLRQVRIK\GURSKRELFDPLQRDFLGVWKDWVSDQWKHF\WRSODVPLF PHPEUDQH $WWDFKHG WR WKH FOXVWHURIEDVLF DPLQR DFLGV DW WKH WHUPLQXV RIWKH WUDQVPHPEUDQHUHJLRQDUHVKRUWK\GURSKLOLF F\WRSODVPLF WDLOVRIYDULDEOHOHQJWK 6FKDIHU HWDO
$QWLJHQ 3UHVHQWDWLRQ
35(6(17$7,212)3(37,'(6%<&/$66, 0+&02/(&8/(6 ,Q WKHFODVVLFDO F\WRVROLF SDWKZD\ IRUHQGRJHQRXV DQWLJHQSUHVHQWDWLRQ E\ FODVV,0+&SURWHLQVWKHLPPXQRJHQLFSDUWLFOHLVXELTXLWLQDWHGDQGGLJHVWHGE\ SURWHDVRPHV LQWKHF\WRSODVP*URHWWUXSHW DO 8ELTXLWLQ DKLJKO\FRQ VHUYHGN'DSURWHLQELQGVWRSURWHLQYLDDUHDFWLRQEHWZHHQWKH¼DPLQRJURXS RQWKHSURWHLQ DQGO\VLQHUHVLGXHVRQWKHXELTXLWLQPROHFXOH 0D\HUDQG 'RKHUW\ 8ELTXLWLQDWLRQRFFXUVZKHQ DGGLWLRQDOPROHFXOHVDUHDGGHGE\ UHDFWLRQVEHWZHHQO\VLQHDQGWKHFDUER[\ORIWKHQH[WXELTXLWLQPROHFXOH)LJ 7KHSUHVHQFH RIIRXUXELTXLWLQVWDUJHWV WKHSURWHLQ IRUIUDJPHQWDWLRQE\ WKH SURWHDVRPHV6FKZDUW]DQG&LHFKDQRYHU +HUVKNR DE
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
3URWHLQVDUHIUDJPHQWHGE\GLIIHUHQWSURWHDVRPHV$6SURWHDVRPHGHXEL TXLWLQDWHV DQGXQIROGV WKHLQWDFWSURWHLQV )LJ 3RO\SHSWLGHV WKHQUHDFWZLWK KHDWVKRFNSURWHLQV HJ+VS IRUWUDQVSRUWWRD6SURWHDVRPHFRPSOH[HG ZLWK3$ 0D\HUDQG'RKHUW\ (WOLQJHUHWDO 7KH 6 SURWHD VRPHFRQVLVWVRIWZRαDQGVXEXQLWVHDFKZLWKVHYHQVXEVHWV :KHQFRQIURQWHGZLWKRYHUZKHOPLQJYLUDODQWLJHQVRUKLJKOHYHOVRILQWHU IHURQWKUHHRIWKHSURWHDVRPHVXEVHWVδ0%DQG0& DUHUHSODFHGZLWK /03 /03 DQG0(&/ )LJ 7KHVH VXEVWLWXWHG PROHFXOHV DUH DFWLYH SURWHDVHVWKDWDFFHOHUDWHWKHFOHDYDJH RISURWHLQVDWWKH&WHUPLQXV RIDUJLQLQH 7RSUHSDUHOLJDQGVIRUUHDFWLYLW\ZLWKWKHFODVV,PROHFXOHVWKH6SURWHDVRPHV FOHDYHSRO\SHSWLGHVRQWKH&WHUPLQDOHQGVRIDURPDWLFEDVLFDQGJOXWDPLFDFLG UHVLGXHV $V D FRQVHTXHQFH RI FOHDYDJH SHSWLGH IUDJPHQWV FRQWDLQLQJ DPLQRDFLGVDUHJHQHUDWHG *URHWWUXSHWDO 7R LQWHUDFW ZLWK 0+& FODVV , SURWHLQV LPPXQRJHQLF IUDJPHQWV PXVW EH WUDQVSRUWHGDFURVVWKHHQGRSODVPLFUHWLFXOXP(5 WRWKHVHFUHWRU\FRPSDUWPHQW 0ROHFXODUFKDSHURQHV VXFK DVKHDWVKRFNSURWHLQV +VS JS RUWUDQVSRUWHU DVVRFLDWHG ZLWKDQWLJHQSURFHVVLQJ 7$3 SURWHLQV DUHXVHG WRWUDQVSRUWLPPX QRJHQVDFURVV WKHPHPEUDQHV )LJ 7KH7$3SURWHLQV EHORQJ WR DIDPLO\ RI $73ELQGLQJ FDVVHWWH SURWHLQV FRPPRQO\ DVVRFLDWHG ZLWK WKH $73GHSHQGHQW WUDQVSRUW RISURWHLQV VXJDUV DQG RWKHUPROHFXOHV DFURVV PHPEUDQHV +LJJLQV 7KH QDWXUH RI WKH &WHUPLQDO DPLQR DFLGV GHWHUPLQHV ZKHWKHU GLJHVWHG SHSWLGHVELQGWR7$3 $OO KXPDQSHSWLGHV ZLOO ELQGWR7$3H[FHSWLQJSURWHLQV ZLWK&WHUPLQDOSUROLQHDQGJO\FLQH0LFHELQGRQO\SURWHLQVZLWKK\GURSKRELF FDUER[\DPLQR DFLGV 5DWV H[SUHVVWZR7$3 DOOHOHVWKDWGLIIHULQWKHLUDELOLW\ WR WUDQVSRUWFKDUJHG&WHUPLQDO DPLQRDFLGV +RZDUG 7KHVHDOOHOHVFRUUH VSRQGWRKXPDQDQGPRXVH ZKLFKDOVRGLIIHULQSHUPLVVLYHQHVV ,Q7$3WUDQVSRUWWRWKHOXPHQRIWKH(5WKHSURWHLQ¶VK\GURSKRELF1WHUPL QXVLVWULPPHGVRWKDWWKHRYHUDOOOHQJWKLVEHWZHHQDQG DPLQRDFLGV7KLV OHQJWKPDWFKHVWKHVL]HSUHIHUUHGE\ WKH0+&,DQWLJHQELQGLQJ VLWH ,Q HIIHFW )LJXUH 0RGHO RI WKH 6 SURWHD VRPH RI 7KHUPRSODVPD DFLGRSKLOXP LQ WKH PRXVH 7KH 7D SURWHDVRPH FRQVLVWV RI FRSLHV RI WZR GLIIHUHQW VXEXQLWV QDPHO\ α DQG S 7KH PRXVH 6 SUR WHDVRPH FRQVLVWV RI VHYHQ GLIIHUHQW α VXEXQLWV DQG VHYHQ GLIIHUHQW VXEXQLWV 7KH WKUHH W\SH VXEXQLWV δ 0% DQG 0& DUH UHSODFHG E\ /03 /03 DQG 0(&/ LQ ,)1γVWLPXODWHG FHOOV 5HSULQWHG IURP ,PPXQRORJ\ 7RGD\ *URHWWUXS HW DO ZLWK SHUPLVVLRQ RI (OVHYLHU 6FLHQFH
$QWLJHQ 3UHVHQWDWLRQ
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
YROYHGLQSHSWLGHORDGLQJ6ROGKHLPHWDO E &DOUHWLFXOLQLQLWLDWHVDVWHDG\ VWDWH DVVRFLDWLRQ ZLWK WKH PFODVV ,7$3 E\ LQWHUDFWLQJ ZLWK WKH 0+& , D GRPDLQ JO\FRV\O PRLHW\ )LQDO IROGLQJ RI WKH α SURWHLQELQGLQJ FOHIW LQGXFHV FKDQJHVLQWKHJO\FRV\OUHJLRQ7KLVFKDQJHLVGHWHFWHGE\FDOUHWLFXOLQUHOHDVLQJ ERWK LWVHOIDQGWKH7$3SURWHLQ +RZDUG 6ROGKHLPHW DO E 0RVW SHSWLGHV DUH TXLFNO\ H[SRUWHG IURP WKH (5 3HSWLGHV FDQ RQO\ EH UHWDLQHGLQWKH(5IROORZLQJJO\FRV\ODWLRQRUUHDFWLRQVZLWKFODVV,0+&PROH FXOHV +RZDUG 7KHWULPROHFXODUFRPSOH[ 0+& SHSWLGH DQG7$3 LV WUDQVSRUWHGIURPWKH(5WR WKH*ROJL DSSDUDWXV )URPWKH*ROJL DSSDUDWXV WKH FRPSOH[ LV WUDQVIHUUHG WR YHVLFOHV WKDW PRYH WR WKH FHOO VXUIDFH )LQDOO\ WKH 0+&SHSWLGHFRPSOH[LVLQVHUWHGLQWRWKHRXWHUFHOOPHPEUDQH6ROGKHLPHWDO E $OWKRXJKWKH0+&,SURWHLQVDUHXVXDOO\JHQHUDWHGLQUHVSRQVHWRHQGRJH QRXV RUF\WRVROLF DQWLJHQV PRQRF\WHV DQG PDFURSKDJHV KDYH VSHFLDOL]HG DQWL JHQSURFHVVLQJ PHWKRGV GHVLJQHG WR SUHVHQW H[RJHQRXV SHSWLGHV WR WKH FODVV , 0+& 3HSWLGHVDUHLQJHVWHGE\SKDJRF\WRVLVRUSLQRF\WRVLV,QWKHSKDJRVRPH FDWKHSVLQ GLJHVWLRQ RIDQWLJHQ UHVXOWV LQ VPDOO IUDJPHQWV RIDPLQR DFLGV ,QWHUDFWLRQV EHWZHHQ WKH GLJHVWHG SHSWLGHV DQG WKH FODVV , PROHFXOHV PD\ RFFXU E\ WKUHH PHFKDQLVPV (PSW\ RU QRQSHSWLGHORDGHG FHOO VXUIDFH FODVV , PROHFXOHV PD\ EH LQWHUQDOL]HG ZLWK WKH LPPXQRJHQ GXULQJ SKDJRF\WRVLV 7KH 0+&SURWHLQVFDQEHORDGHGZLWKLPPXQRJHQLFSHSWLGHVJHQHUDWHGLQWKHSKDJR VRPH DQG UHF\FOHG WR WKH FHOO VXUIDFH ,W LV DOVR SRVVLEOH WKDW 0+& SURWHLQ UHF\FOLQJ IURP WKH FHOO VXUIDFH WR WKH SKDJRVRPH LV D QRUPDO FHOOXODU HYHQW )LQDOO\QHZO\V\QWKHVL]HG0+&,PROHFXOHVPD\UHDFWZLWKWKHSHSWLGHVLQWKH SKDJRVRPH5RFN 7KHVH XQLTXH SUHVHQWDWLRQ PHWKRGV IRU HQGRJHQRXV SHSWLGHV SURYLGH D XQLTXH VXUYHLOODQFH PHFKDQLVP IRU KRVW GHIHQVH DJDLQVW LQWUDFHOOXODU PLFUREHV DQG VRPDWLF FHOO WXPRUV ,Q GHIHQVH DJDLQVWPLFURELDO DJHQWV WKH QRQF\WRVROLF SUHVHQWDWLRQ PHWKRG SURYLGHV D PHDQV WR LGHQWLI\ DQG GHVWUR\ PRQRF\WHV DQG SKDJRF\WHV LQIHFWHG ZLWK P\FREDFWHULD DQG OHLVKPDQLD 7KH FODVV ,EDFWHULDO SHSWLGHFRPSOH[HVJHQHUDWH&'F\WRWR[LFO\PSKRF\WHVWKDWGHVWUR\WKHLQIHFWHG FHOOV DQGSXUJH WKH KRVWRIWKHFHOOXODUUHVHUYRLURILQIHFWLRQ 5RFN 7KHVH SDWKZD\V PD\ DOVR EH LPSRUWDQW LQ GHIHQVH DJDLQVW VRPDWLF FHOO WXPRUV 1RUPDOO\ VRPDWLF WXPRUV H[SUHVV VXERSWLPDO QXPEHUVRISULPDU\DQG VHFRQGDU\PROHFXOHVUHTXLUHGWRJHQHUDWH&'F\WRWR[LFUHVSRQVHV,QJHVWLRQRI WXPRUFHOOV DQGJHQHUDWLRQ RILPPXQRJHQLFSHSWLGHV LQ WKHSKDJRVRPH DOORZV DQWLJHQ SUHVHQWDWLRQ E\ WKH 0+& , SURWHLQV 0RUHRYHU FRVWLPXODWRU\ IDFWRUV QHFHVVDU\IRU&'FHOODFWLYDWLRQDUHSUHVHQWRQWKHPDFURSKDJHVXUIDFH5RFN %HFDXVHRIWKH&'UHVSRQVHERWKGLVHDVHGVRPDWLFFHOOVDQGWKHDQWLJHQ SUHVHQWLQJPRQRF\WHVPDFURSKDJHVDUHGHVWUR\HG7KHKRVWVXUYLYHVEHFDXVHRI PRQRF\WHPDFURSKDJHUHJHQHUDWLRQ IURPWKHERQH PDUURZ 7KHJHQHUDWLRQRIFHOOVXUIDFHSHSWLGHORDGHGFODVV,0+&PROHFXOHVLVYHU\
$QWLJHQ 3UHVHQWDWLRQ
HIILFLHQW DV RQO\ 0+& PROHFXOHV ORDGHG ZLWK LPPXQRJHQLF SHSWLGHV DUH QHFHVVDU\IRUDFWLYDWLRQRI7FHOOV*URHWWUXSHWDO ,PPXQRJHQLFSURWHLQV DUH OHVV WKDQ RIWKH WRWDO SURWHLQFRQWLQXRXVO\ EHLQJ FDWDEROL]HG E\ WKH FHOO7KHUHIRUHLPPXQRJHQLFSURWHLQVPXVWDFWLYHO\FRPSHWHZLWKDZLGHUDQJH RIGLIIHUHQWSHSWLGHV IRU0+& ELQGLQJ
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α/β KRPRGLPHUV 7KH OL ELQGLQJ WR WKH SHSWLGHELQGLQJ VLWH SUHYHQWV LQWHUDFWLRQV EHWZHHQ LQFRPSOHWHO\ IROGHG RU GHQDWXUHG SURWHLQ *HU PDLQ $GGLWLRQDOIXQFWLRQVKDYHDOVREHHQDVFULEHGWRWKHLQYDULDQWFKDLQ 6DQWDQG0LOOHU ,WPD\EHQHFHVVDU\IRUWKHSURSHUIROGLQJRIWKH α/β FKDLQVDQGURXWLQJRIWKH0+&FODVV,,SURWHLQWRWKHHQGRVRPHVDQGO\VRVRPHV 7KH0+&FODVV,,LQYDULDQWFKDLQFRPSOH[LVLQVHUWHGLQWRHQGRVRPHVZKHUH WKHSHSWLGHLVEHLQJGHJUDGHGE\H[SRVXUHWRDVHULHVRIDFLGSURWHLQVLQVSHFLILF K\GURO\WLF HQGRVRPDO S+ DQG O\VRVRPDO S+ FRPSDUWPHQWV 2QFH WKH DQWLJHQ LV WUDQVIHUUHG WR WKH O\VRVRPH GLIIHUHQW DFLGGHSHQGHQW K\GURO\DVHVFDQDFWRQWKHPROHFXOH)LJ 7KHVHDFLGGHSHQGHQWK\GURO\DVHV LQFOXGH SURWHDVHV QXFOHDVHV JO\FRVLGDVHV SKRVSKROLSDVHV DQG SKRVSKDWDVHV *HUPDLQ $FLGSURWHDVHVFDWKHSVLQV$%DQG( WKDWGHJUDGHSHSWLGHV DQG FOHDYH WKH LQYDULDQW FKDLQ DW VHYHUDO VLWHV DUH DOVR LPSRUWDQW LQ DQWLJHQ GHJUDGDWLRQ6HWWHHWDO ,Q WKH ODWH HQGRVRPHV RU FODVV ,, YHVLFOHV &,,9 PXOWLSOH FRSLHV RIWKH 0+& ,, PROHFXOHV DUHUDSLGO\ LQVHUWHG :LWKLQ WKH HQGRVRPHV FDWKHSVLQ FRQ WLQXHV WR WUXQFDWH WKH LQYDULDQW FKDLQV )LQDO FOHDYDJH RFFXUV LQ D VSHFLDOL]HG ODWHSKDVH HQGRVRPH WKH 0+& ,, FRPSDUWPHQW 0,,& 7KH UHVXOWLQJ VPDOO FODVV,,LQYDULDQWSHSWLGH&/,3 LVUHPRYHGIURPWKHFODVV,, PROHFXOH*KRVK HW DO /HHDQG0F&RQQHOO $QRSHQ0+&FRQIRUPDWLRQFDOOHGD IORSS\ VWDWH DOORZV ELQGLQJ RI WKH SHSWLGH DQG VWDELOL]DWLRQ RI WKH α/β FKDLQV
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
)LJXUH 6XPPDU\ RI WKH 0+& FODVV ,, DQWLJHQ SURFHVVLQJ DQG SUHVHQWDWLRQ SDWKZD\
6XEVHTXHQWO\ WKH FODVV ,, FRPSOH[ LV WUDQVSRUWHG WR WKH SODVPD PHPEUDQH :KHQ H[SRVHG WR WKH QHXWUDO S+ RI WKH SODVPD PHPEUDQH WKH FRPSOH[ DV VXPHV D FRPSDFW VWDEOH IRUP ZLWK D KLJK DIILQLW\ FRQVWDQW IRU WKH SHSWLGH 6RPHWLPHV FODVV ,, PROHFXOHV ZLWK WKH DWWDFKHG &/,3 DUH WUDQVSRUWHG WR WKH FHOOVXUIDFH $ VHFRQG PHFKDQLVP IRUSHSWLGH ORDGLQJ E\ FODVV ,, PROHFXOHV KDV EHHQ GHVFULEHG,QWKHPHFKDQLVPVXUIDFH&/,3FRPSOH[HVXQGHUJRHQGRF\WRVLVLQWR UHF\FOLQJFRPSDUWPHQWV/RDGLQJRIQHZSHSWLGHVLVVLPSOLILHGE\WKH+/$'0 DGXDOα/β FKDLQFRPSOH[KDYLQJOLWWOHSRO\PRUSKLVPRUSURWHLQELQGLQJDFWLYLW\ '0VHUYHVDVDPROHFXODUFKDSHURQWKDWLQWHUDFWVZLWKWKHFODVV,,PROHFXOHVDIWHU WKH&/,3LVUHOHDVHGEHFDXVHRILWVLQVWDELOLW\DWWKHORZHQGRVRPDOS+$WDORZ S+WKH+/$'0VWDELOL]HVWKHSHSWLGHELQGLQJ JURRYHRIWKHFODVV,,PROHFXOH )LJ 6WDELOL]DWLRQDOORZVELQGLQJRIORZ DQGKLJKVWDELOLW\SHSWLGHV7KH'0 FDQ H[FKDQJH &/,3 IRUSHSWLGHV LQ DPDQQHU WKDWIROORZV FODVVLFDO 0LFKDHOLV± 0HQWHQNLQHWLFV7XUQRYHUUDWHVRISHSWLGHVSHUPLQXWHKDYHEHHQUHSRUWHG IRUDVLQJOH'05HFHQWO\LWZDVGHWHUPLQHGWKDWWKH³RIIUDWH´DPHDVXUHRIWKH NLQHWLF VWDELOLW\ RI WKH SHSWLGH UDWKHU WKDQ WKH DIILQLW\ FRQVWDQW GHWHUPLQHV
$QWLJHQ 3UHVHQWDWLRQ
)LJXUH '0 DFWV DV DFKDSHURQH DQG UHVFXHV HPSW\ 0+& FODVV ,, GLPHUV &/,3 GLVVRFLDWHV IURP αβ&/,3 FRP SOH[HV E\ LWVHOI DV D UHVXOW RI LWV ORZ VWDELOLW\ DW ORZ HQGRVRPDO S+ ,Q WKH DEVHQFH RI '0 WKH HPSW\ α/β GLPHUV XQGHUJR XQIROGLQJ DQG IRUP DJJUHJDWHV WKDW DUH QR ORQJHU DEOH WR ELQG SHSWLGHV '0 ELQGV DQG VWDELOL]HV HPSW\ FODVV ,, GLPHUVXQWLOKLJKVWDELOLW\SHSWLGHVRFFXS\ WKH JURRYH 5HSULQWHG IURP ,PPXQRORJ\ 7RGD\ .URSVKRIHU HWDO ZLWK SHUPLVVLRQ RI (OVHYLHU 6FLHQFH
ZKHWKHUWKHSHSWLGH LVUHPRYHGE\WKH'0 /RZVWDELOLW\SHSWLGHVKDYHDKLJK RIIUDWHDQGDUHUHOHDVHGIURPWKHFODVV,,PROHFXOHV &RQYHUVHO\KLJKVWDELOLW\ PROHFXOHVZLWKDORZRIIUDWHIRUPVWDEOHLQWHUDFWLRQVZLWKWKHFODVV,,PROHFXOHV )LJ +LJKVWDELOLW\SHSWLGH±FODVV,,FRPSOH[HVGLVVRFLDWHIURPWKH'0DQG DUHUHF\FOHGWRWKHFHOO VXUIDFH.URSVKRIHUHWDO
)LJXUH /RZ DQG KLJKVWDELOLW\ SHSWLGH ELQGLQJ LQ WKH ORDGLQJ FRPSDUWPHQW '0 FDWDO\]HV H[FKDQJH RI &/,3 IRU SHSWLGHV /RZ DIILQLW\ OLJDQGV DUH PRUH DEXQGDQW WKDQ KLJKVWDELOLW\ RQHV DQG WKHUHIRUH KDYH D KLJKHU FKDQFH RIEHLQJ ORDGHG 0RVW RIWKH ORZ DIILQLW\ OLJDQGV DUH UHOHDVHG DQG UHSODFHG ZLWK KLJKDIILQLW\ SHSWLGHV 7KH UHVXOWLQJ α/β SHSWLGH FRPSOH[HV IXUWKHU UHVLVW SHSWLGH HGLWLQJ E\ '0 DQG DFFXPXODWH RQ WKH FHOO VXUIDFH 5HSULQWHG IURP ,PPXQRORJ\ 7RGD\ .URSVKRIHU HW DO ZLWK SHUPLVVLRQ RI (OVHYLHU 6FLHQFH
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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αGRPDLQDQGUHPRWHKRPRORJLHVWRWKHαDQGα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α/β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
$QWLJHQ 3UHVHQWDWLRQ
WKHUHVSRQVHWRZDUGD7KGULYHQ%FHOOPHGLDWHG DQWLERG\UHVSRQVH%HFNPDQ DQG%UHQQHU WKDWLVQHFHVVDU\WRWHUPLQDWHLQWHVWLQDOLQIHFWLRQV
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µHQG RIDOO FODVV ,, PROHFXOHV )LVFKHU DQG:RRG )LVFKHU 0RVW RIWKHVH LQIDQWV IDLO WR WKULYH DQG DUH VXVFHSWLEOH WR YLUDO DQG EDFWHULDO LQIHFWLRQV
&''HILFLHQF\ $Q LPPXQH GHIHFWDVVRFLDWHG ZLWKGHIHFWLYH H[SUHVVLRQ RI&'$ ZDVUH SRUWHG3OHEDQLHWDO LQD\RXWKZLWK³0DUIDQ¶VOLNH¶¶V\QGURPH7KHFKLOG GHYHORSHGFKURQLFXOFHUDWHGVNLQOHVLRQV$OOFHOOVLQWKHLQIODPPDWRU\LQILOWUDWH VKRZHGQRUPDO0+&FODVV,PDUNHUV+RZHYHUGHQGULWLF/DQJHUKDQVFHOOVLQWKH OHVLRQIDLOHGWRH[SUHVV&'3DWLHQWVZLWKVHOIKHDOLQJFXWDQHRXVOHVLRQVH[SUHVV ERWK0+&FODVV,DQG&' 3OHEDQLHW DO
7DEOH
0XWDWLRQV $VVRFLDWHG ZLWK 3ULPDU\ ,PPXQRGHILFLHQFLHV
'LVHDVH 'HIHFWLYH 0+& FODVV ,, 'HIHFWLYH 0+& FODVV ,
&HOO SKHQRW\SH
'HIHFWLYH SURWHLQ
/RZ &' /RZ &' DQG 1.
&,,7$ 5); 7$3
0RGLILHGIURP ,PPXQRORJ\7RGD\ )LVFKHU DQG$UQDL]9LOOHQD ± ZLWKSHUPLV VLRQ RI(OVHYLHU6FLHQFH
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
7$3'HILFLHQF\ 6HYHUDOSDWLHQWVZLWK7$3GHILFLHQFLHVKDYHEHHQGHVFULEHG,QDGGLWLRQWR WKHSURWHLQGHILFLHQF\WKHVHSDWLHQWVKDYHORZOHYHOVRI&'DQG1.FHOOVZLWK GHIHFWLYH 0+& FODVV , SURWHLQ H[SUHVVLRQ )LVFKHU DQG $UQDL]9LOOHQD
,17(5)(5(1&(:,7+$17,*(1352&(66,1* $QWLJHQ SUHVHQWDWLRQ FDQ EH LQKLELWHG DW VHYHUDO OHYHOV 6LWHGLUHFWHG SUR WHDVHLQKLELWRUVVXFKDVOHXSHSWLQFDQLQKLELWDQWLJHQGHJUDGDWLRQ6LPLODUHIIHFWV FDQEHLQGXFHGE\FKHPLFDOVGLIIXVLQJDFURVVWKHPHPEUDQHVDQGLQFUHDVLQJWKH S+RIWKHO\VRVRPHV(OHYDWHGS+LQDFWLYDWHVWKHDFLGSURWHDVHLQWKHO\VRVRPH $QWLPDODULDOGUXJVVXFKDVFKORURTXLQHDQGK\GURFKORURTXLQHDUHGLIIXVLEOH GLSURWLFEDVHVWKDWHOHYDWHS+LQDPDWWHURIPLQXWHV,QH[SHULPHQWDOV\VWHPVLW ZDVVKRZQWKDWFKORURTXLQHWUHDWHGPDFURSKDJHVFRXOGLQJHVWP\FREDFWHULDDQG OLVWHULDEXWFRXOGQRWGHJUDGHWKHLQJHVWHGEDFWHULD([SUHVVLRQRIFODVVPDUN HUVFDQEHUHGXFHGE\FRUWLFRVWHURQHWUHDWPHQW$WFRQFHQWUDWLRQVDVORZDV; 0 FRUWLFRVWHURLGVFDQUHGXFHWKHH[SUHVVLRQ RIFODVV PDUNHUVE\ ERWK LQYLYRDQG LQYLWUR
6XUIDFH,QWHUDFWLRQVDQG,QWUDFHOOXODU6LJQDOLQJ
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
7&(//5(&(3725 (VVHQWLDO WR WKH JHQHUDWLRQ RI DQ LPPXQH UHVSRQVH LV WKH 7FHOO UHFHSWRU 7&5 7KH UHFHSWRU KDV D WZRFKDLQ α DQG WUDQVPHPEUDQH VWUXFWXUH )LJ %RWK JO\FRSURWHLQ FKDLQV DUH WR N'D LQ VL]H EXW GLIIHU LQ HOHFWUR VWDWLF FKDUJH 7KH α FKDLQ LV DFLGLF DQG WKH FKDLQ LV QHXWUDO RU XQFKDUJHG (DFK FKDLQ KDV D YDULDEOH GRPDLQ 9 DV DQ LQWUDFKDLQ ORRS ± DPLQR DFLGV KHOGWRJHWKHUE\WZR F\VWHLQHUHVLGXHV 7KXV WKHUHLV DVWUXFWXUDO WHUWLD U\ KRPRORJ\ ZLWK WKH YDULDEOH SRUWLRQ RIDQ DQWLERG\ PROHFXOH 7KHMXQFWLRQ EHWZHHQ WKH YDULDEOH DQG FRQVWDQW GRPDLQV RIWKH 7&5 LV OLQNHG E\ DMRLQLQJ
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
)LJXUH 6FKHPDWLF GLDJUDP RI WKH αβ 7FHOO UHFHSWRU (DFK YDULDEOH UHJLRQ FRQWDLQV WKUHH K\SHUYDULDEOH UHJLRQV 7KH VWUXFWXUH RI WKH γδ 7FHOO UHFHSWRU LV DOPRVW LGHQWLFDO WRWKHαβUHFHSWRU0RGLILHGIURP,PPXQRORJ\ .XE\:+)UHHPDQ &R
- UHJLRQ 6RPH FKDLQV DOVR KDYH D GLYHUVLW\ ' GRPDLQ EHVLGHV WKH - GR PDLQ $ FRQVWDQW GRPDLQ DPLQR DFLGV LV FRPSRVHG RI VHYHUDO VXE UHJLRQVRUVXEGRPDLQV7KHUHDUHLQWUDFKDLQORRSVVLPLODUWRWKRVHIRXQGLQWKH YDULDEOHUHJLRQDKLQJHUHJLRQZLWKGLVXOILGHOLQNVEHWZHHQWKHα DQGFKDLQVD WUDQVPHPEUDQHUHJLRQFRQVLVWLQJRI±K\GURSKRELFDPLQRDFLGVLQYROYHGLQ DFWLYDWLRQRI&' DQGDVPDOO&WHUPLQXV ZLWKQRLQWUDFHOOXODUVLJQDOLQJFDSD ELOLWLHV 7ZRGLIIHUHQWIRUPVRIWKH7&5KDYHEHHQGHVFULEHG7KHαβ7&5 IRUP LVIRXQGRQ ± RISHULSKHUDO EORRG7FHOOV (QJHO HWDO $VHFRQG IRUP RI WKH UHFHSWRU 7&5 FRQVLVWV RI γδ FKDLQV 2QO\ VPDOO QXPEHUV RI
6XUIDFH ,QWHUDFWLRQV DQG LQWUDFHOOXODU 6LJQDOLQJ
SHULSKHUDOEORRGO\PSKRF\WHVH[SUHVVWKHγδ UHFHSWRU,QFRQWUDVWKLJKQXPEHUV RI γδ UHFHSWRUVDUHIRXQGRQPXFRVDOLQWUDHSLWKHOLDOO\PSKRF\WHVDQGGHQGULWLF FHOOV 7KH VWUXFWXUHV RI7&5DQG7&5O GLIIHURQO\LQWKHQDWXUH RIWKH VXJDUV DWWDFKHGWRWKHKLQJHRUFRQVWDQWUHJLRQVDQGWKHSUHVHQFHRI'GRPDLQVLQWKHγ FKDLQ'H/LEHUR 7KH αβ DQG γδ KDYHGLIIHUHQWIXQFWLRQVLQGHIHQVH/\PSKRF\WHVEHDULQJ WKH αβ UHFHSWRU DUH GHSHQGHQW RQ LQWHUDFWLRQV ZLWK WKH 0+& FODVV , DQG ,, SURWHLQVDQGUHVSRQGWRIRUHLJQPDWHULDOHQWHULQJWKHERG\YLDWKHLQKDODWLRQ RU EORRG URXWHV 7KHVH O\PSKRF\WHV XVXDOO\ UHFRJQL]H LPPXQRJHQLF OLQHDU DPLQR DFLGVHTXHQFHV,QFRQWUDVWWKHγδH[SUHVVLQJO\PSKRF\WHVDUHQRWXVXDOO\VWLPX ODWHGE\SHSWLGHVSUHVHQWHGE\WKH0+&7KH\DUHUHVSRQVLEOHIRUVXUYHLOODQFHRI WKHVXUIDFHDQGERZHOHSLWKHOLDDJDLQVWLQIHFWLRXVDJHQWV)XUWKHUWKHγδ 7FHOOV PD\SOD\DSURWHFWLYHUROHE\H[HUWLQJGLUHFWO\WLFHIIHFWVRQ 6 DXUHXVDQG1. UHVLVWDQWWXPRUVRIWKHJXW'H/LEHUR .DEHOLW] 6RPH γδ 7FHOOVKDYHUHVWULFWHGVHTXHQFHVLQWKH9GRPDLQ,QKXPDQV± RIWKHFLUFXODWLQJ7FHOOVH[SUHVV7&59γ9δ7KHVH7FHOOVUHFRJQL]H EDFWHULXPGHULYHG PROHFXOHV ZLWK SKRVSKDWH UHVLGXHV ,VRSHQW\OS\URSKRVSKDWH DQGGLPHWK\ODOO\OS\URSKRVSKDWHLVRODWHGIURPP\FREDFWHULDDFWLYDWHWKLVSRSXOD WLRQ RI7 FHOOV 6\QWKHWLF FRPSRXQGV VXFK DV DON\O SKRVSKDWHV DUH DOVR SRWHQW DFWLYDWRUVRIWKHγδ SRSXODWLRQ 7KH γδ 7FHOOVKDYHWZRIXQFWLRQV%HFDXVHWKH\UHDFWZLWKDZLGHUDQJHRI FURVVUHDFWLYHSKRVSKRU\ODWHGFRPSRXQGVIURPEDFWHULDWKHVH7FHOOVPD\JLYH WKHLQLWLDOVLJQDOWKDWLQIHFWLRXVDJHQWVKDYHHQWHUHGWKHERG\6HFRQGγδ 7FHOOV PD\ SOD\ DUROH LQ WKH HDUO\ SKDVH UHVSRQVH WR YLUDO LQIHFWLRQV 7KH UHOHDVH RI SKRVSKRU\ODWHG FRPSRXQGV IURP GDPDJHG RU YLUXVLQIHFWHG FHOOV DFWLYDWHV DQG UHFUXLW γδ 7FHOOVLQWRWKHDUHD/RFDOUHOHDVHRI,)1γDQG,)1γDFWLYDWHV RWKHU FHOOV'H/LEHUR .DEHOLW]
2ULJLQ RI7&5'LYHUVLW\ %HFDXVH DVLQJOH7&5LV DQWLJHQ VSHFLILF HYROXWLRQDU\SUHVVXUHV KDYHUH TXLUHG WKH GHYHORSPHQW RI WR GLIIHUHQW DQWLJHQVSHFLILF 7&5V 7KH DQWLJHQLF VSHFLILFLW\ UHVLGHV LQ WKH 9 DQG - UHJLRQV RIWKH 7&5 7KH RULJLQ RI 7&5GLYHUVLW\UHVLGHVLQWKHFRPELQDWLRQDOMRLQLQJRIGLIIHUHQW9DQG-JHQHVLQ αβ DQG γδ FKDLQV)RUH[DPSOHLQWKHα FKDLQRIWKH7&5WKHUHDUHGLIIHUHQW 9 GRPDLQ JHQHV WKDW FDQ EH OLQNHG WR GLIIHUHQW - GRPDLQV 7KHUHIRUH WKH QXPEHURISRVVLEOHFRPELQDWLRQVLV;RU; 7DEOH 6LPLODUO\WKH FKDLQ JHQHV \LHOG ; GLIIHUHQWFRPELQDWLRQV ,W IROORZV WKDW ; GLIIHUHQW7&5DQWLJHQLF VSHFLILFLWLHVFDQEHJHQHUDWHGE\ VLPSOHFRPELQDWLRQDO MRLQLQJRIWKH9DQG-JHQHVLQWKHα DQGFKDLQV.XE\ $GGLWLRQDO 7&5 GLYHUVLW\ LV JHQHUDWHG E\ DOWHUQDWH MRLQLQJ RI ' JHQHV MXQFWLRQDOIOH[LELOLW\RU1UHJLRQQXFOHRWLGHDGGLWLRQ,QWKHILUVWPHFKDQLVP9 FDQ ELQG GLUHFWO\ WR HLWKHU D - RU D ' JHQH FUHDWLQJ D 9- RU D 9-' ZLWK
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
7DEOH
&RPELQDWLRQDO-RLQLQJRI 9DULDEOHDQG-5HJLRQV α/β 7&5 γδ 7&5
'RPDLQ 9 ' -
α
β
,QWUDFKDLQFRPELQDWLRQV [ ; ,QWHUFKDLQFRPELQDWLRQV [
γ
δ
[
0RGLILHGIURP,PPXQRORJ\ .XE\ :+)UHHPDQ &R
GLIIHUHQWDQWLJHQLFVSHFLILFLWLHV-XQFWLRQDOIOH[LELOLW\LVDFKLHYHGE\DGGLQJVHY HUDODOWHUQDWHDPLQRDFLGVDWHDFK-GRPDLQ6L[DPLQRDFLGVFDQEHDGGHGDWHDFK MXQFWLRQ FUHDWLQJ GLIIHUHQW FRPELQDWLRQV 7KH UHDFWLRQ LV FDWDO\]HG E\ D WHUPLQDOGHR[\QXFOHRWLG\OWUDQVIHUDVH-XQFWLRQDOIOH[LELOLW\ DQG1UHJLRQDGGL WLRQFDQJHQHUDWHDVPDQ\DV SRVVLEOHFRPELQDWLRQV.XE\
&'7&53527(,1&203/(; 7KHIXQFWLRQRIWKH7&5LVWRUHFRJQL]HLPPXQRJHQLFSHSWLGHVSUHVHQWHGRQ 0+&SURWHLQV,WKDVQRLQWUDFHOOXODUVLJQDOLQJFDSDELOLWLHV$&'SURWHLQIRUPV DFRPSOH[ ZLWK WKH 7&5 WR DFWLYDWH WKH VLJQDOLQJ SURFHVV &' D SDQ7FHOO PDUNHULVDFRPSOH[RIγδεζη VXEXQLWV)LJ 7KHγδε FKDLQVDUHVPDOO N'D H[WHUQDOSURWHLQVZLWKLPPXQRJOREXOLQOLNHH[WHUQDOGRPDLQVDQGDPL QRDFLGWDLOV,QFRQWUDVWWKHζη SURWHLQVKDYHVPDOOH[WHUQDOGRPDLQVDQGORQJ F\WRSODVPLFGRPDLQVRIDQG DPLQRDFLGVUHVSHFWLYHO\$OWPDQQHWDO 7KH7&5&'FRPSOH[LVDVVHPEOHGLQWKH(5E\PRGLILFDWLRQRIWKH7&5 1WHUPLQXVWKDWELQGVWKHGLPHUVRIWKH&'ζζ FKDLQVLQRIWKHO\PSKR F\WHV 0RVW O\PSKRF\WHV FRQVWLWXWLYHO\ H[SUHVV ζη. :LWKLQ WKH WUDQVPHPEUDQH GRPDLQ SRVLWLYHO\ FKDUJHG DPLQR DFLGV RQ WKH α HJ O\VLQH RU HJ DU JLQLQH 7&5FKDLQVUHDFWZLWKQHJDWLYHO\FKDUJHGDVSDUWLFDFLGUHVLGXHVLQWKHW> FKDLQV7KHζζ FKDLQVLQFRPELQDWLRQZLWKγε RU δε DUHQHFHVVDU\IRUURXWLQJDQG LQVHUWLQJRIWKH7&5&'FRPSOH[LQWRWKHFHOOPHPEUDQH,QWUDFHOOXODUVLJQDO LQJGHSHQGVRQWKHSUHVHQFHRI( VXEXQLW ζη, DQG ζζ KRPRGLPHUVKDYLQJDQWLJHQ UHFRJQLWLRQDFWLYDWLRQPRWLIV$5$0 7KH ε VXEXQLWFRQWDLQVRQHFRS\RIWKH $5$0ZKHUHDVWKHζζ KRPRGLPHUVFRQWDLQWKUHHFRSLHV$OWPDQQHWDO
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
6XUIDFH ,QWHUDFWLRQV DQG OQWUDFHOOXODU 6LJQDOLQJ
)LJXUH 0RGHOLQJ RI &' VLJQDOLQJ LQ % FHOOV 6KDGHG DUHDV RI &' LQGLFDWH WKH IRXU H[WUDFHOOXODU F\VWHLQHULFK GRPDLQV FURVVKDWFKHG DUHDV RI 75$) LQGLFDWH 75$)1 DQG 75$)& KRPRORJ\ =Q LQGLFDWHV WKH ]LQF ULQJ ILQJHU DQG ]LQF ILQJHU GRPDLQV LQ 75$) 75$) DQG 75$) 75$) LV DOVR NQRZQ DV &5$) &'ES RU /$3 5HSULQWHG IURP 7KH -RXUQDO RI,PPXQRORJ\ .HKU\ &RS\ULJKW 7KH $PHULFDQ $VVRFLDWLRQ RI ,PPXQRORJLVWV
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
&'3527(,1 7KH&'LVH[SUHVVHGRQO\PSKRF\WHVKDYLQJ7KHOSHUDPSOLILHUIXQFWLRQV ,W LV D N'D PRQRPHULF WUDQVPHPEUDQH JO\FRSURWHLQ ZLWK WZR YDULDEOH
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
)LJXUH 7KH ,J JHQH VXSHUIDPLO\ )F5,, )F UHFHSWRU ,, S,J5 SRO\,J UHFHSWRU DQWL ERG\ WUDQVSRUW UHFHSWRU 1&$0 QHXUDO FHOO DGKHVLRQ PROHFXOH 3'*)5 SODWHOHWGHULYHG JURZWK IDFWRU UHFHSWRU 5HSULQWHG IURP &HOOXODU DQG 0ROHFXODU ,PPXQRORJ\ $EEDV HW DO ZLWK SHUPLVVLRQ RI : % 6DXQGHUV &R
6XUIDFH OQWHUDFWLRQV DQG LQWUDFHOOXODU 6LJQDOLQJ
'XULQJ&'PHGLDWHGLQWUDFHOOXODUVLJQDOLQJSKRVSKRU\ODWLRQRIVHULQHUHV LGXHVLQWKHWDLODFWLYDWHVWKHOFN RUSNLQDVHV7KHVHNLQDVHVSOD\DFULWLFDOUROH LQWKHDFWLYDWLRQRI0+&UHVWULFWHG7KHOSHUFHOOV6ZHHWHWDO
&'3527(,16 7KH VWUXFWXUH RI&' GHSHQGV RQ WKH VWDJH RI7FHOO PDWXUDWLRQ DQG SHU KDSV DFWLYDWLRQ 7ZR GLVWLQFW WR N'DJO\FRSURWHLQV &'D DQG &' OLQNHGE\GLVXOILGHERQGVDUHLQVHUWHGLQWRWKHFHOOPHPEUDQH)LJ 2FFDVLRQ DOO\&'PD\H[LVWDVDKRPRGLPHURUDVVRFLDWHGZLWKWKHQRQ0+& DQWLJHQ SUHVHQWLQJ&' PROHFXOH 7KHIXQFWLRQRI&' LVVLPLODUWRWKDWRI&'/LNH&'&' VHUYHVDVD FHOO DGKHVLRQPROHFXOHE\ELQGLQJWRWKHD GRPDLQ RIWKH0+&,PROHFXOHRQ WKH $3& $OVR &'PD\EH LQYROYHGLQ VLJQDO WUDQVGXFWLRQEHFDXVH WKHF\WR SODVPLF GRPDLQ LV UDSLGO\ SKRVSKRU\ODWHG IROORZLQJ LQWHUDFWLRQV ZLWK 0+& , PROHFXOHV ([SUHVVLRQ RI WKH &' PROHFXOH LV UHVWULFWHG WR WKH F\WRWR[ LFVXSSUHVVRU7FHOOSRSXODWLRQV/HDK\
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
6,*1$/6,192/9(',17&(//$&7,9$7,21 6HYHUDOVLJQDOVDUHUHTXLUHGIRU7FHOODFWLYDWLRQDQGLQWUDFHOOXODUVLJQDOLQJ WKDWUHVXOWLQ FHOOXODUSUROLIHUDWLRQ DQGSURGXFWLRQ RI,/ 3UROLIHUDWLRQ LV FRQ
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
)LJXUH &'DFWLYDWHG 3,NLQDVH VLJQDOLQJ 3RVVLEOH VLWHV RI DFWLRQ RI &' LQ FOXGH 37.V 3/& FDOFLXP DQG 3, NLQDVH 5HSULQWHG IURP ,PPXQRORJ\ 7RGD\ :DUG HW DO ZLWK SHUPLVVLRQ RI (OVHYLHU 6FLHQFH
WUROOHGE\7&5&'=$3ZKLOHDFWLYDWLRQLVFRQWUROOHGE\WZRVUF SKRVSKDWH W\URVLQHNLQDVHV37.V FDOOHGOFN DQGI\Q OFN LVDVVRFLDWHGZLWK&'DQGI\QLV DVVRFLDWHG ZLWK 7&5&'5XGG HWDO &' OLJDWLRQ LV QHFHVVDU\ WR XSUHJXODWHWKHDFWLYLW\RIOFN E\GHSKRVSKRU\ODWLQJWKHUHJXODWRU\W\URVLQHDWWKH &WHUPLQXV 5XGG HW DO &' DOVR SOD\V D UROH LQ GHWHUPLQLQJ FHOO VXUYLYDODQGFHOOGHDWKE\DFWLYDWLRQRIRWKHUHQ]\PHV :DUGHWDO
,175$&(//8/$56,*1$/6 3UROLIHUDWLRQ LV LQLWLDWHGE\WKHSKRVSKRU\ODWLRQ RIWKHLPPXQRUHFHSWRUW\ URVLQHDFWLYDWLRQPRWLIV,7$0V RQζη DQG ζζ KRPRGLPHUVRI&'3KRVSKR U\ODWLRQRIWKH,7$0VSURYLGHVGRFNLQJVLWHVIRU=$3=ROOHUHWDO ,Q WXUQ =$3LV SKRVSKRU\ODWHG DWPXOWLSOHUHVLGXHV LQFOXGLQJ SRVLWLRQV
6XUIDFH OQWHUDFWLRQV DQG LQWUDFHOOXODU 6LJQDOLQJ
DQG=KDRDQG:HLVV =$3IRUPVDWULPROHFXODUFRPSOH[ZLWKSKRV SKRU\ODWHG6/3DQG9DYDQRQFRJHQHSURGXFW5DDEHWDO $FWLYDWHG RU SKRVSKRU\ODWHG 9DY FDWDO\]HV *'3*73 RQ 5DF DQG DFWLYDWLRQ RIF-XQ NLQDVH)LJ %RWK5DFDQG-XQSURWHLQVDUHLQYROYHGLQFHOOSUROLIHUDWLRQDQG F\WRVNHOHWDOUHDUUDQJHPHQW&UHVSRHWDO
)LJXUH 0XOWLSOH VLJQDOLQJ SDWKZD\V PHGLDWHG E\ &' DQG 7&5&' 3DWKZD\V PH GLDWHG E\ &'SOFN DQG 7&5ζ&'SI\Q7 DQG DVVRFLDWHG SURWHLQV DUH VKRZQ 5H SULQWHG IURP ,PPXQRORJ\ 7RGD\ 5XGG HW DO ZLWK SHUPLVVLRQ RI (OVHYLHU 6FLHQFH
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
/LJDWLRQRIWKH7&5&'DQG&'DFWLYDWHVDVHULHVRISURWHLQVWKDWUHVXOWV LQFHOOXODUDFWLYDWLRQE\VHYHUDOGLIIHUHQWSDWKZD\V)LJ 6LJQDOLQJYLDWKHε VXEXQLW ζη DQG ζζ KRPRGLPHUVLQLWLDWHVPHPEUDQHSURWHLQGHSKRVSKRU\ODWLRQRI VUF DQG=$3W\URVLQHNLQDVHV7KLVDFWLYDWHVW\URVLQHNLQDVHVWKDWSKRVSKRU\ODWH WKH ε DQG ζ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α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γJURZWKIDFWRUUHFHSWRUERXQGSURWHLQDQGLQGXFLEOH,/NLQDVH 7KHVH IDFWRUV DUH FULWLFDO IRU JURZWK DQG WKH SURGXFWLRQ RI,/ 7KH SURWHLQ W\URVLQHNLQDVHVDOVRJHQHUDWH&'5&WKDWPRYHVWRWKHQXFOHXVDQGELQGVWR WKH&'5&JHQHLQWKH,/HQKDQFHUUHJLRQ &'LQWHUDFWVZLWKGLIIHUHQWLVRIRUPVRI%,QWHUDFWLRQEHWZHHQ%DQG &' KRPRGLPHUV RQ DFWLYDWHG 7K FHOOV SKRVSKRU\ODWHV -DN DQG -DN 7KH
6XUIDFH ,QWHUDFWLRQV DQG ,QWUDFHOOXODU 6LJQDOLQJ
DFWLYDWHGHQ]\PHVSKRVSKRU\ODWHDQGLQLWLDWHKRPRGLPHUL]DWLRQRI,/ VWDWDQG VWDW ,QFRQWUDVW%ELQGVWR&'RQUHVWLQJRUDFWLYDWHG7K FHOOVLQLWLDWLQJ UDSLGFORQDOH[SDQVLRQZLWKLQKUDQGH[SUHVVLRQRIWKH,)1γFKDLQ6LJQDOLQJ LV DFFRPSOLVKHG YLD -DN DQG -DN WKDW LV UHTXLUHG IRU SKRVSKRU\ODWLRQ DQG KRPRGLPHUL]DWLRQRI6WDW ,QFRQWUDVWELQGLQJRI&7/$WRWKHVDPHOLJDQGV VHQGV DQHJDWLYH VLJQDOWRWKHFHOO YLDSKRVSKDWLG\OLQRVLWRO NLQDVH
$872&5,1(5($&7,2162)7&(//6 7KHVHFUHWLRQRI,/E\&'RU&'FHOOV LQGXFHVWKHJHQHUDWLRQRI,/ UHFHSWRUV RQ WKH VXUIDFH RI,/SURGXFLQJ FHOOV DXWRFULQH DFWLYLW\ DQG QRQ ,/SURGXFLQJFHOOV SDUDFULQH DFWLYLW\ 7KH,/UHFHSWRULVFRPSRVHGRI&< S S DQGγ S SURWHLQ VXEXQLWV7KH&< VXEXQLWLVDOVRNQRZQDVWKH7DFWLYDWLRQSURWHLQ7DF %LQGLQJ RI,/WRWKHα SURWHLQGRHVQRWHOLFLWDELRORJLFDOUHVSRQVH&RPSOH[HVRIDQG \ SURWHLQV FDQ VXSSRUW KDOIPD[LPDO JURZWK DQG SUROLIHUDWLRQ RI7FHOOV IRU DQ H[WHQGHGSHULRGRIWLPHα, DQG\SURWHLQFRPSOH[HVFUHDWHKLJKDIILQLW\,/ UHFHSWRUV ZLWK DIILQLW\FRQVWDQWV LQ WKHUDQJH RI 0 %HFDXVHRIWKH KLJK DIILQLW\FRQVWDQWV,/FDQ GHOLYHUJURZWKVLJQDOV DWORZFRQFHQWUDWLRQV
683(5$17,*(16 6XSHUDQWLJHQV DUH PROHFXOHV WKDW FDQ DW H[WUHPHO\ ORZ FRQFHQWUDWLRQV VWLPXODWHDQGDFWLYDWH7FHOOV 7KHXQLTXHDQWLJHQVFDQQRWEHSURFHVVHG YLDWKH XVXDO PHFKDQLVPV $FWLQJ RXWVLGH WKH QRUPDO ELQGLQJ FOHIWV WKH\ ELQG WR WKH FRQVWDQWUHJLRQRIWKH0+&FODVV,OPROHFXOHVDQGVHOHFWYDULDEOHHOHPHQWV9 RIWKH7&5FKDLQ7DEOH HIIHFWLYHO\FURVVOLQNLQJWKHWZRPROHFXOHV=XPOD 7KLVUHVXOWVLQHQKDQFHG,/DQG,)1γIURP7FHOOVDQGUHOHDVHRI,/ DQG71)αIURPPRQRF\WHV7KHVHF\WRNLQHVJLYHDQHJDWLYHVLJQDOIRUDQWLERG\ SURGXFWLRQ DQGDSRVLWLYHVLJQDOIRU7FHOO DFWLYDWLRQ 6XSHUDQWLJHQVUHDFWZLWKDVPDOOQXPEHURIFODVV,,PDUNHUVRQWKHVXUIDFH RI$3&V6XSHUDQWLJHQELQGLQJLVVHQVLWLYHWRWKHQDWXUHRIWKHDQWLJHQLFSHSWLGH DVVRFLDWHGZLWKWKHFODVV,,PDUNHUDQGWKHGHQVLW\RIWKHVHOHFWHGSHSWLGH0+& FRPSOH[RQWKHFHOO/RZGHQVLW\7&5±FODVV,,FRPSOH[HVDOORZVHULDOLQWHUDF WLRQVZLWK7FHOOVDQGPLPLFQRUPDODQWLJHQSUHVHQWDWLRQ7KLVVXJJHVWVWKDWWKH PDJQLWXGH RIWKH UHVSRQVH WR VXSHUDQWLJHQV LV UHODWHG WRWKH KLJKIUHTXHQF\ RI UHVSRQGLQJFHOOVUDWKHUWKDQ WKHSRWHQF\ RIWKHDQWLJHQ (QWHURWR[LQV H[RWR[LQV DQG WR[LF EDFWHULDO SURGXFWV DUH NQRZQ VXSHUDQ WLJHQV 6 DXUHXV VWUDLQV WKH PDMRU FDXVHV RIIRRG SRLVRQLQJ DQG WR[LF VKRFN
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
7DEOH
6XSHUDQWLJHQV 5HDFWLYH ZLWK 9 &KDLQV RI 0XULQH DQG +XPDQ 7FHOO 5HFHSWRU 9
6XSHUDQWLJHQ 6WDSK\ORFRFFXV 6($ 6(% 6(& 6(& 6(& 6(' 6(( 7R[LFVKRFNV\QGURPH 7667O
0RXVH
+XPDQ
0RGLILHGIURP,PPXQRORJ\ .XE\ :+)UHHPDQ &R
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
6XUIDFH LQWHUDFWLRQV DQG LQWUDFHOOXODU 6LJQDOLQJ
,Q WKHO\PSK QRGH DQWLJHQ LV SUHVHQWHGRQGHQGULWLFFHOOV DQGWKHUH LV DQ LPPHGLDWHLQFUHDVHLQO\PSKQRGHEORRGIORZZLWKDQLQIOX[RI7KFHOOV7KHVH 7 FHOOV UHDFW ZLWK DQWLJHQ DQG H[LW WKH QRGH :LWKLQ KU XSUHJXODWLRQ RI DGKHVLRQIDFWRUVFDXVHVUHWHQWLRQ RIDQWLJHQVSHFLILF FHOOV 0LWRVLV RI7FHOOVLQ WKH SDUDIROOLFXODU DUHD LQGXFHV F\WRNLQHSURGXFLQJ 7FHOOVWKDWDFWLYDWH RWKHU7 FHOOV7KHDFWLYDWHG7FHOOVOHDYHWKHQRGHDQGFLUFXODWHLQWKHSHULSKHUDOEORRG% FHOOVGLIIHUHQWLDWHLQWR DQWLERG\SURGXFLQJSODVPDFHOOV
O00812'()O&O(1&O(6 7KHUHDUHDQXPEHURISULPDU\LPPXQRGHILFLHQFLHVDVVRFLDWHGZLWKPXWDWHG JHQHV DIIHFWLQJ O\PSKRF\WH VLJQDOLQJ DQG DFWLYDWLRQ 7DEOH $ VDPSOLQJ RI NQRZQGHIHFWVLVGHVFULEHGEHORZ
'HIHFWVLQ7&53URWHLQV 'HIHFWVLQWKH7&5&'FRPSOH[RUVHOHFWSURWHLQFKDLQVKDYHEHHQUHSRUW HG2QHVXEMHFWKDGGHILFLHQWαβ 7FHOOVDQGDQH[FHVVRIγδ &'FHOOVWKDWKDG OLPLWHGDQWLJHQLF VSHFLILFLW\'HFUHDVHGH[SUHVVLRQRI&' ZDVUHSRUWHGLQWZR SDWLHQWV2QHVXEMHFWKDGRQHWHQWKWKHDPRXQWRIQRUPDO&'IOXRUHVFHQFHDQGD PXWDWLRQLQWKHε FKDLQWKDWUHQGHUHGWKHPROHFXOHERWKDEQRUPDODQGXQVWDEOH$ VHFRQGVXEMHFWZLWKORZ&'H[SUHVVLRQKDGLPSDLUHGUHVSRQVHVWRVHOHFWSRO\ VDFFKDULGHV DQGDQ,J*GHILFLHQF\ 6HOHFW GHIHFWV LQ V\QWKHVLV RU DVVHPEO\ RI &' γ RU &' ζ FKDLQV ZHUH UHSRUWHGLQVHYHUDOVXEMHFWV6XFKγFKDLQGHIHFWVLQ&'FHOOVZHUHDVVRFLDWHG ZLWKDXWRLPPXQHKHPRO\WLFDQHPLDDQWLHSLWKHOLDODQWLERGLHVDQGLQFUHDVHGLQFL GHQFHRIYLUDOSQHXPRQLD6WLHKP
7DEOH
7FHOO 0HPEUDQH DQG 6LJQDOLQJ 'HIHFWV
0HPEUDQH GHIHFW ,/5γ,/ UHFHSWRU &' γ &' ζ GHILFLHQF\ ;+,0&'/ .LQDVHGHIHFWV =$3 $70 -DN
%LRORJLFDOHIIHFW ;OLQNHG 6&,' 'HIHFWLYH7FHOODFWLYDWLRQ 'HIHFWLYH,JVZLWFKLQJ &'GHILFLHQF\ 3KRVSKDWLG\OLQRVLWRONLQDVH 6&,'
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
6HYHUH&RPELQHG,PPXQRGHILFLHQF\'LVHDVH 6&,'FDQEHGLYLGHGLQWRWKUHHVXEVHWV,QWKH;OLQNHGIRUPRI6&,'WKHUH DUHSURIRXQGGHFUHDVHVLQWKHQXPEHURIFLUFXODWLQJ7DQG1.FHOOVEXW% FHOOV DUHLQQRUPDOQXPEHUV ,QDQRWKHUIRUPRI6&,' WKHUHLVDPDMRUGHIHFWLQWKH\FKDLQRIWKH,/ UHFHSWRU WKDWSUHYHQWV ELQGLQJ RI,/ 7KH \ FKDLQ LV SDUW RIWKHFHOO UHFHSWRU IRURWKHUF\WRNLQHVVXFKDV,/,/,/,/DQG,/7KHUHIRUHGHIHFWV LQ WKH ,/ UHFHSWRUUHVXOW LQ GLPLQLVKHGUHDFWLYLW\ RIRWKHU F\WRNLQHV 6WXGLHV RQ ,/ UHFHSWRUGHILFLHQW PLFH GHPRQVWUDWHG WKDW WKH GHIHFW LQ WKH,/ SDWK ZD\ LV UHVSRQVLEOH IRU WKH GLPLQLVKHG 7 FHOO GHYHORSPHQW LQ SDWLHQWV ZLWK [6&,'6 7KH,/\FKDLQLVFULWLFDOLQWKHLQLWLDWLRQRIO\PSKRF\WHSUROLIHUDWLRQE\ VLJQDOLQJWKURXJKWKH-DQXVIDPLO\NLQDVH-DN DQG -DN -DNLQWHUDFWVGLUHFWO\ ZLWKWKH\ FKDLQWRLQLWLDWHVLJQDOWUDQVGXFWLRQ,QVRPHSDWLHQWVWKH-DN SURWHLQ LVDOVRGHIHFWLYH $ WKLUG IRUP RI 6&,' LV DVVRFLDWHG ZLWK WKH DEVHQFH RI &' FHOOV DQG GHIHFWLYH =$3 D F\WRSODVPLF W\URVLQH NLQDVH 6WLHKP )LVFKHU DQG $UQDL]9LOOHQD
'HIHFWVLQ6LJQDO7UDQVGXFWLRQ 'HIHFWVLQVLJQDOWUDQVGXFWLRQDUHWKHFRQVHTXHQFHRIPXOWLSOHGHIHFWV7D EOH 'LVHDVHVDQGLPPXQRGHILFLHQF\FDQDOWHUPHPEUDQHSURWHLQVDQGVLJQDO LQJ )RUXQNQRZQUHDVRQV DFWLYHUKHXPDWRLG DUWKULWLV VXSSUHVVHVH[SUHVVLRQ RI &'DQGRU&'6RPHWLPHVWKHH[SUHVVLRQRI&'PD\EHUHGXFHGE\± ,QWHUQDOVHFRQGPHVVHQJHUGHIHFWVZHUHUHSRUWHGLQDVXEVHWRISDWLHQWVZLWK FRPPRQYDULDEOHLPPXQRGHILFLHQF\2QVWLPXODWLRQWKHVHSDWLHQWVIDLOWRJHQHU DWH LQRVLWRO WULVSKRVSKDWH 6LPLODUO\ SDWLHQWV ZLWK W\SH ,GLDEHWHV KDYH D PHVVHQJHUGHIHFWXSVWUHDPRISURWHLQ NLQDVH&
'HIHFWLQ=$36LJQDOLQJ 7KH =$3 SURWHLQ NLQDVH KDV EHHQ UHSRUWHG WR FDXVH D XQLTXH LPPX QRGHILFLHQF\7KLVNLQDVHLVH[SUHVVHGRQ7FHOOVDQGLVDVVRFLDWHGZLWKWKH&' ζ FKDLQ RI WKH 7&5 FRPSOH[ 7&5 DQGOLJDQGELQGLQJ WULJJHU WKH 6UF NLQDVHV WKDW SKRVSKRU\ODWH,7$0VRQWKHζ FKDLQ7\URVLQHSKRVSKRU\ODWLRQRISURWHLQVFDQ QRWRFFXULQWKHSUHVHQFHRIDGHIHFWLYH=$37KLVUHVXOWVLQDODFNRIPDWXUH &'FHOOVLQWKHSHULSKHUDOEORRGDQGGHIHFWLYHDFWLYDWLRQRI&'FHOOV)LVFKHU DQG$UQDL]9LOOHQD
6XUIDFH OQWHUDFWLRQV DQG OQWUDFHOOXODU 6LJQDOLQJ
'HIHFWLQ&'/3URWHLQ 0XWDWLRQ LQ WKH JHQH FRGLQJ IRU&'/FDXVHV K\SHU,J0 V\QGURPH ; +,0 DVHYHUHLPPXQRGHILFLHQF\6XEMHFWVKDYHORZOHYHOVRI,J*,J$DQG,J( LQ VHUXPEXWQRUPDO OHYHOV RI,J0 2WKHU DQDWRPLF GHIHFWV DUH DOVR SUHVHQWLQ KXPDQV DQG NQRFNRXW PLFH 7DEOH 3DWLHQWV VXIIHU IURP LQFUHDVHG XSSHU UHVSLUDWRU\ WUDFW LQIHFWLRQV DQG LQFUHDVHG VXVFHSWLELOLW\ WR 3QHXPRF\VWLV DQG &U\SWRVSRULGLXP 5HFXUUHQWLQIHFWLRQVZLWKWKHVHRUJDQLVPVDUHW\SLFDOO\DVVRFL DWHGZLWK7FHOOGHIHFWV)LVFKHUDQG$UQDL]9LOOHQD
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γ LVR]\PHDQGWKH ζ FKDLQ RIWKH7&5*UDEHUHWDO %DFWHULDO SURGXFWV FDQ DOVR LQKLELWVLJQDOLQJ 3\RF\DQLQH LVRODWHG IURP3 DHUXJLQRVD LQKLELWV7FHOOSUROLIHUDWLRQE\GHFUHDVLQJWKHSURGXFWLRQRIWKHFULWL FDOO\PSKRNLQH,/DQGE\GHFUHDVLQJWKHH[SUHVVLRQRIWKH,/UHFHSWRU/RFDO VXSSUHVVLRQ RI O\PSKRF\WH VWLPXODWLRQ E\ SKHQD]LQH SLJPHQWV VXFK DV S\R F\DQLQHPD\LQWHUIHUHZLWKFHOOXODULPPXQHUHVSRQVHWR3DHUXJLQRVD*UDEHU HW
7DEOH
'HIHFWV 5HSRUWHG LQ &'/'HILFLHQW +XPDQVDQG0LFH
,PSDLUHGPDFURSKDJHDFWLYDWLRQ ,QFUHDVHGVXVFHSWLELOLW\ WRLQWUDFHOOXODUSDUDVLWHV 5HGXFHG,)1γDQG,/SURGXFWLRQ ,PSDLUHG7FHOO SULPLQJDQGUHVSRQVHVWRSHSWLGH IUDJPHQWV 5HGXFHGIROOLFXODUGHQGULWLF FHOO QHWZRUN $EVHQFH RIJHUPLQDO FHQWHUV ,PSDLUHG,JLVRW\SLFVZLWFKLQJ 0RGLILHG IURP 6WRXWDQG 6WXWWOHV
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
DO 7KHWR[LQDIIHFWVWKH7&5&'FRPSOH[LWVHOIE\FDXVLQJDFRYDOHQW PRGLILFDWLRQRIWKH&'ζ VXEXQLWWKDWSUHYHQWVVLJQDOLQJ+DDFNHWDO &KROHUDWR[LQ SUHYHQWVLQRVLWROWULSKRVSKDWHUHOHDVH DQG WKHULVHLQLQWUDFHOOXODU &D
+$=$5','(17,)O&$7O21 ,QLWLDOKD]DUGLGHQWLILFDWLRQVWXGLHVIRFXVRQWKHQXPEHURIWRWDO7FHOOVDQG 7FHOOVXEVHWVSUHVHQWLQWKHWHVWVDPSOH/\PSKRF\WHSKHQRW\SLQJLVDVHQVLWLYH HQGSRLQWIRUGHWHFWLRQRILPPXQRWR[LFLW\$OWHUDWLRQVLQO\PSKRF\WHVXEVHWQXP EHUV FRUUHODWHG ZLWK LQ YLYR LPPXQRWR[LFLW\ RI WKH WLPH /XVWHU HW DO D 7KHVH GDWD VKRXOG EH H[SUHVVHG ERWK DV SHUFHQWDJHV DQG LQ DEVROXWH QXPEHUV:KLOHWKHIRUPHU\LHOGVVRPHLQIRUPDWLRQWKHODWWHULVWKHPRUHELRORJ LFDOO\UHOHYDQWHQGSRLQW
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
%&HOO$FWLYDWLRQ
,1752'8&7,21 'XULQJ DQ LPPXQH UHVSRQVH % FHOOV DUH VWLPXODWHG DQG DFWLYDWHG $FWLYDWLRQ LQLWLDWHVD%FHOOGLIIHUHQWLDWLRQSDWKZD\WKDWUHVXOWVLQDQWLERG\VHFUHWLQJSODVPD FHOOV 'HSHQGLQJ RQ WKH LPPXQRJHQ %FHOO DFWLYDWLRQ PD\ UHTXLUH F\WRNLQHV SURGXFHGE\7KHOSHUFHOOV 7KXVWKHUHDFWLRQ LVD7FHOOGHSHQGHQW 7' DQWL ERG\UHVSRQVH2WKHULPPXQRJHQVFDQGLUHFWO\VWLPXODWH%FHOOVZLWKRUZLWKRXW VLJQDOVSURYLGHGE\QRQ7FHOOV%HFDXVHWKLVUHVSRQVHGRHVQRWUHTXLUH7FHOOVLW LVGHVLJQDWHGD7FHOOLQGHSHQGHQW 7, DQWLERG\UHVSRQVH
%&(//$&7,9$7,21 ,QERWK7'DQG7,DQWLERG\UHVSRQVHVWKHLQLWLDOLQWUDFHOOXODUVLJQDOLQJRFFXUV YLDWKH%FHOOUHFHSWRU%&5 %FHOOVKDYHUHFHSWRUVIRU,JFRQVLVWLQJRIDIRXU PHPEHU%&5FRPSOH[)ODQNLQJWKH)FSRUWLRQRIWKHFHOOERXQGP,J0DUHWKH KHWHURGLPHUDVVRFLDWHGPROHFXOHV,JαDQG,J)LJ ,QWKHPRXVHDQGKXPDQ WKHVHSURWHLQVDUH DQGN'DJO\FRSURWHLQV (DFK,JFRQWDLQVRQHSXWDWLYH LPPXQRUHFHSWRU W\URVLQHEDVHG DFWLYDWLRQ PRWLI,7$0 RIWZRHYHQO\ VSDFHG W\URVLQH UHVLGXHV ZLWKLQ D VL[DPLQRDFLG VHTXHQFH 7KH W\URVLQH UHVLGXHV FDQ VHUYHDVWDUJHWVIRUVUFIDPLO\NLQDVHV37.V ,JDGLUHFWO\DVVRFLDWHVZLWKW\URVLQH NLQDVH O\Q 3URWHLQNLQDVHV\N LVDOVRUHTXLUHGIRUFRPPXQLFDWLRQEHWZHHQWKH%&5 DQGSKRVSKROLSDVH&\5HWK 7KHUHIRUHWKHP,J0DVVRFLDWHGSURWHLQVPD\ KDYH VLJQDOLQJFDSDELOLWLHVVLPLODUWRWKH7&5YDQ1RHVHO HWDO
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
)LJXUH ,QWHUDFWLRQV EHWZHHQ WKH %FHOO UHFHSWRU FRPSOH[ %&5 DQG DVVRFLDWHG PROH FXOHV LQ UHVWLQJ % FHOOV DQG LQ % FHOOV DFWLYDWHG YLDWKH %&5 D ,Q UHVWLQJ FHOOV WKH %&5 FRQVLVWV RI VXUIDFH ,J0 V,J0 PROHFXOHV DQG ,Jα,Jβ KHWHURGLPHUV DVVRFLDWHG VUF IDPLO\ SURWHLQ NLQDVHV DQG WKH WUDQVPHPEUDQH SURWHLQV &' DQG &' E $QWLJHQ LQGXFHG FURVVOLQNLQJ RIWKH %&5 LQLWLDWHV PHWDEROLF HYHQWV WKDW UHVXOW LQ WKH IRUPDWLRQ RI VLJQDOLQJ FRPSOH[HV 7KH VUFIDPLO\ NLQDVHV SSO\Q RU SEON DUH DFWLYDWHG E\ GH SKRVSKRU\ODWLRQ LQGXFHG E\ &' $FWLYDWHG SSO\Q RU SEON SKRVSKRU\ODWH ,Jα,Jβ ZKLFK FDQ LQWHUDFW ZLWK SSO\Q RU SEON DW KLJKHU DIILQLWLHV WR DFWLYDWH WKH HQ]\PDWLF SURFHVV $FWLYDWHG SS,\Q RU SE,N DOVR IRUPV FRPSOH[HV ZLWK SKRVSKRLQRVLWLGH NLQDVH 3, NLQDVH DQG SV\N 7KLV LQWHUDFWLRQ PD\ VHQG D PLWRJHQLF VLJQDO WR % FHOOV RU UHJXODWH %FHOO WUDIILFNLQJ 5HSULQWHG IURP ,PPXQRORJ\ 7RGD\ /DZ HW DO ZLWK SHUPLVVLRQ RI (OVHYLHU 6FLHQFH
9&HOO $FWLYDWLRQ
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
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
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γDQG3,NLQDVH7KHODWWHUNLQDVHPD\DVVRFLDWHZLWKWKH%&5 P,J0E\LQWHUDFWLQJZLWKVUF NLQDVHVVXFKDVO\Q /DZ HWDO $FWLYDWLRQRIWKHSURWHLQW\URVLQHSKRVSKDWDVHDQGSURWHLQW\URVLQHNLQDVHV HJ VUF DQG V\N XSUHJXODWH QXFOHDU WUDQVFULSWLRQ IDFWRUV LQFOXGLQJ 1).% $3DQG1)$75HPRYDORIDQ,Q.αLQKLELWRU\SURWHLQIURP1).%DOORZV WUDQVORFDWLRQ WR WKH QXFOHXV DQG ELQGLQJ WR WKH .%5( JHQH LQ WKH HQKDQFHU UHJLRQ7KLVJHQHUHJLRQFRQWUROVHQWU\LQWRFHOOGLYLVLRQDQGLWLQLWLDWHVWUDQVFULS WLRQRIWKH$3 FRPSOH[FRQWDLQLQJWKHRQFRJHQHVIRVDQGMXQ 7KHVHRQFRJHQHV UHJXODWH WKH SURGXFWLRQ RIFGN F\FOLQ ' DQG WKH P\F JHQH SURGXFW WKDW DUH QHFHVVDU\IRULQLWLDWLRQ RIFHOOGLYLVLRQ
7'$QWLJHQV 6HYHUDOLPPXQRJHQVHOLFLWDFODVVLFDO7'UHVSRQVH7KHSURGXFWLRQRIDQWL ERGLHVWRVKHHSUHGEORRGFHOOVUHTXLUHVLQWHUDFWLRQVEHWZHHQ7FHOOV%FHOOVDQG PDFURSKDJHV SOXVWKHSURGXFWLRQ RIF\WRNLQHV ,QKXPDQV SRNHZHHGPLWRJHQ LQGXFHG VWLPXODWLRQ DQG SUROLIHUDWLRQ RI% FHOOV UHTXLUHV WKHSUHVHQFH RIVPDOO QXPEHURI7FHOOV DQG PDFURSKDJHV
7+<086,1'(3(1'(17%&(//$&7,9$7,21 0DQ\ LPPXQRJHQVFDQ GLUHFWO\FURVVOLQNWKH%&5P,J0FRPSOH[ *HQ HUDOO\WKHVHLPPXQRJHQVKDYHPXOWLSOHLGHQWLFDOHSLWRSHVRUUHSHDWLQJVXEXQLWV DQGDUHQRWQRUPDOO\SURFHVVHGLQWKHDQWLJHQSUHVHQWDWLRQSDWKZD\V
%&HOO $FWLYDWLRQ
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
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
)LJXUH 0RGHO IRU GXDO DQWLJHQ UHFRJQLWLRQ E\ % FHOOV $ FRPSOH[ RI DQWLJHQ $J FRPSOHPHQW &GJ DQG WKH %&5 LQGXFHV PXOWLPHUL]DWLRQ RI WKH FRPSOH[ DQG DJJUHJD WLRQ ZLWK &'7$3$ ±&5 FRPSOH[ 0XOWLPHUL]DWLRQ DOORZV FURVVSKRVSKRU\ODWLRQ DQG DFWLYDWLRQ RI WKH VUFOLNH SURWHLQ W\URVLQH NLQDVH 37.O\Q DQG 37. $FWLYDWHG IRUPV RI WKHVH SKRVSKRURWUDQVIHUDVHV PD\ EH UHVSRQVLEOH IRU FRPSOH[LQJ WR VHFRQG PHVVHQJHU SURWHLQV YLD SKRVSKRU\ODWLRQ RI W\URVLQH UHVLGXHV < LQ WKH F\WRSODVPLF UHJLRQV RI ,Jα ,J DQG &' 5HSULQWHG IURP ,PPXQRORJ\ 7RGD\ YDQ 1RHVHO HWDO ZLWK SHUPLVVLRQ RI (OVHYLHU 6FLHQFH
,/UHFHSWRURQ%FHOOVXSUHJXODWHVWKHH[SUHVVLRQRI%DQG%$GGLWLRQ DOLQWHUDFWLRQVEHWZHHQ&'DQG&7/$UHQGHUVWKH%FHOODIXOO\FRPSHWHQW LPPXQRJHQSUHVHQWLQJFHOO,QDGGLWLRQWKH&'±OLJDQGLQWHUDFWLRQVWLPXODWHV WKH 7 FHOO WR SURGXFH DGGLWLRQDO F\WRNLQHV QHFHVVDU\ IRU DQWLERG\ SURGXFWLRQ JHUPLQDO FHQWHUH[SDQVLRQ LVRW\SLFVZLWFKLQJ DQG LQGXFWLRQ RIPHPRU\ FHOOV &'PD\DOVRSOD\DUROHLQUHJXODWLQJODWHSKDVHVRIWKHLPPXQHUHVSRQVH :KHQFORQDOH[SDQVLRQKDVUHDFKHGDPD[LPXPODWHLQWKHUHVSRQVHWKHLQWHUDF
%&HOO $FWLYDWLRQ
)LJXUH 3URSRVHG VLJQDO WUDQVGXFWLRQ SDWKZD\ DFWLYDWHG E\ &'&' UHFHSWRU FRPSOH[ 'DVKHG DUURZV LQGLFDWH SRWHQWLDO VLJQDO WUDQVGXFWLRQ SDWKZD\V 5HSULQWHG IURP ,PPXQRORJ\ 7RGD\ 7HGGHU HW DO ZLWK SHUPLVVLRQ RI (OVHYLHU 6FLHQFH
WLRQ RI&'DQG&'/FDXVHV DQXSUHJXODWLRQRIWKH)DV RQXQVWLPXODWHGRU QDLYH % FHOOV $WWKH VDPH WLPH 7&5DFWLYDWLRQ RILPPDWXUH7 FHOOV DQG 7K FHOOVLQLWLDWHVWKHH[SUHVVLRQRI)DVDQGWKHSURGXFWLRQRI)DV/7KHODWWHUUHDFWV ZLWK)DVWRLQGXFH%FHOODSRSWRVLV7FHOOVWKDWGRQRWLQWHUDFWZLWK% FHOOVYLD WKH&'OLJDWLRQFRPPLWVXLFLGHYLD)DV/LQGXFHGDSRSWRVLV6LPLODUO\VWLPX ODWHG % FHOOV WKDW GR QRW UHFHLYH WKH &' VLJQDO DUH ³PXUGHUHG´ E\ 7FHOO SURGXFHG )DV/ ,Q WKLV PDQQHU IXUWKHU FORQDO H[SDQVLRQ RI7 FHOOV LV OLPLWHG 6FRWW HWDO
&<72.,1(352'8&7,21%<%&(//6 % FHOOV DUHSRWHQWF\WRNLQHSURGXFHUV 2QDFHOOWRFHOO EDVLV % FHOOV SUR GXFHF\WRNLQHVLQDPRXQWVVLPLODUWRRUKLJKHUWKDQPRQRF\WHVRU7FHOOV3LVWRLD %FHOOSURGXFHGF\WRNLQHVKDYHSDUDFULQHHIIHFWVRQYDULRXVFHOOW\SHVRU DXWRFULQHHIIHFWVRQ%FHOOV([DPSOHVRISDUDFULQHHIIHFWVDUH PDFURSKDJHRU IROOLFXODUGHQGULWLFFHOODFWLYDWLRQE\,)1γ71),/RU*0&6) 1.FHOO DFWLYDWLRQE\,)1γ,)1αRU,/ UHFUXLWPHQWRILQIODPPDWRU\FHOOVE\
,PPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
,/ *&6) RU *0&6) DQG FRVWLPXODWLRQ RI 7FHOO JURZWK E\ ,/α ,/71) DQG,/3LVWRLD %FHOOGHULYHG F\WRNLQHV FDQ DOVR VWLPXODWH RWKHU % FHOOV LQ DQ DXWRFULQH PDQQHU (DUO\ %FHOO JURZWKFDQ EH VWLPXODWHG E\UHFRPELQDQW U ,/ ZKLOH ODWH %FHOO JURZWK DQG GLIIHUHQWLDWLRQ DUH VWLPXODWHG E\ U71) U/7α U,/ U,/U,/DQGU,/ 3LVWRLD
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
%&HOO $FWLYDWLRQ
RIWKH% FHOOVUHVSRQGLQJWR3:0DUH,J'± % FHOOVFRQVLGHUHGUHVWLQJPHPRU\ FHOOV 2QO\ D VPDOO QXPEHU RI XQFRPPLWWHG ,J' FHOOV SURGXFLQJ ,J0 DUH VWLPXODWHG -HOLQHN HW DO %DFWHULD VXFK DV 6 DXUHXV &RZDQV , DOVR VWLPXODWHSUROLIHUDWLRQLQ%FHOOV3UROLIHUDWLRQRI%FHOOVRFFXUVLQD7,PDQQHU EXWF\WRNLQHVDUHUHTXLUHGIRU%FHOOPDWXUDWLRQLQWR$3&V)DONRIIHWDO %RWK,J'±DQG,J'%FHOOVUHVSRQGWR6DXUHXV&RZDQV,ZLWKSUROLIHUDWLRQRI ,J*,J$ DQG,J0DQWLERGLHV 5DW%FHOOVSRVHDWHFKQLFDOSUREOHPLQ%FHOOSUROLIHUDWLRQVWXGLHV7KH\GR QRWUHVSRQGYLJRURXVO\WRPRVW%FHOOPLWRJHQVLQFOXGLQJHQGRWR[LQV9RVHWDO 7KH PRVWSRWHQWUDW%FHOO PLWRJHQ LV DZDWHUVROXEOHH[WUDFWIURP6DO PRQHOOD W\SKLPXULXUQ 0LQFKLQ HW DO +RZHYHU FHOOV UHVSRQG WR WKLV PLWRJHQLQDXQLTXHPDQQHU5HVSRQVHVDUHREVHUYHGDWH[WUHPHO\ORZOHYHOVDQG WKHUH LV DSODWHDXHIIHFW 2QO\ RQHVWXG\ KDVXVHG6 W\SKLPXULXUQWRVWXG\ WKH HIIHFWRIFKHPLFDOVRQWKHLPPXQHV\VWHP6PLDORZLF]HWDO
5(*8/$725<326,7,2121%&(//$&7,9$7,21 3UROLIHUDWLRQLQGXFHGE\/36HQGRWR[LQLVDFRPPRQHQGSRLQWLQWR[LFRORJ\ VWXGLHV +RZHYHU WKH DVVD\ LV QRW YHU\ VHQVLWLYH EHFDXVH FHOOV FDQ UHFRYHU IXQFWLRQLQWKH±GD\VQHFHVVDU\WRLQGXFHSUROLIHUDWLRQ0RUHRYHUWKHDVVD\LV QRWUHSURGXFLEOHLQWKHODERUDWRU\PDNLQJWKHGDWDGLIILFXOWWRLQWHUSUHW%HFDXVH RIWKHWHFKQLFDOGLIILFXOWLHVWKHUHLVRQO\DFRQFRUGDQFHEHWZHHQGHFUHPHQWV LQ /36LQGXFHGSUROLIHUDWLRQ DQGWKRVH LQ ELRORJLFDOO\ UHOHYDQW LQ YLYR HIIHFWV /XVWHU HWDO D 'HVSLWH WKH ODFN RIVHQVLWLYLW\ LQ WKH O\PSKRF\WH SUROLIHUDWLRQ DVVD\V WKH )'$¶V &HQWHU IRU )RRG 6DIHW\ DQG $SSOLHG 1XWULWLRQ &)6$1 KDV LQFOXGHG D%FHOO SUROLIHUDWLRQ DVVD\ LQ D VFUHHQLQJSURWRFRO IRU SURGXFWVDIHW\DVVHVVPHQW,QHYDOXDWLRQRILPPXQRWR[LFSRWHQWLDOERWKUHGXFHG DQGHOHYDWHGSUROLIHUDWLRQ DUHRILQWHUHVWWRWKH&HQWHU+LQWRQ
$QWLERGLHV
,1752'8&7,21 $QWLERGLHV RU LPPXQRJOREXOLQV DUH SURWHLQ JOREXOLQV IRXQG LQ WKH VHUXP DQG YDULRXVRWKHUH[WHUQDOVHFUHWLRQVWKHLUSURGXFWLRQLVWKHUHVXOWRIVWLPXODWLRQE\ DQLPPXQRJHQ7KH\FDQUHDFWVSHFLILFDOO\ZLWKWKHDQWLJHQVWLPXODWLQJV\QWKH VLV ,Q WKH ROGHU OLWHUDWXUH SURGXFWLRQ RI DQWLERGLHV LV WHUPHG D KXPRUDO UH VSRQVH 7KHUHDUH VHYHUDO GLIIHUHQWDQWLERG\ IDPLOLHV RULVRW\SHV (DFK LVRW\SH DSSHDUV DWDGLIIHUHQWSRLQWLQ WLPHGXULQJ DQ LPPXQHUHVSRQVH DQGKDVGLIIHU HQWIXQFWLRQV
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
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
)LJXUH 7KH EDVLF GLPHU +±/ VWUXFWXUH RI DQ LPPXQRJOREXOLQ
(Q]\PDWLF&OHDYDJHRI$QWLERGLHV 7KHIXQFWLRQDOFRPSRQHQWVRIDQWLERGLHVKDYHEHHQGHOLQHDWHGE\HQ]\PDWLF GLJHVWLRQ 3DSDLQ FOHDYHVWKH+FKDLQVDWDSRLQWDERYHWKHLQWHUFKDLQGLVXOILGH OLQNDJH 7ZR IXQFWLRQDO VXEXQLWV FDOOHG )DE IUDJPHQWV DUH OLEHUDWHG 7KH)DEV FRQVLVW RIWKH HQWLUH /FKDLQ DQG WKH 1WHUPLQDO HQG RIWKH +FKDLQ $QWLERG\ FRPELQLQJVLWHVIRUDQWLJHQDUHFRQWDLQHGZLWKLQWKH)DEIUDJPHQW %HFDXVHWKH WZR )DE IUDJPHQWV DUH QRW OLQNHG WRJHWKHU E\ D GLVXOILGH ERQG WKH )DEV DUH XQLYDOHQWDQGFDQELQGDQWLJHQ VHSDUDWHO\7KHUHPDLQLQJSRUWLRQVRIWKHWZR+ FKDLQVDUHOLQNHGWRJHWKHUWRIRUPDXQLWFDOOHGWKH)FIUDJPHQW 7KH)FSRUWLRQ RIDQWLERGLHV ELQGV WR UHFHSWRUV RQ WKH VXUIDFHRILPPXQRFRPSHWHQWFHOOV
$QWLERGLHV
3HSVLQFOHDYHVWKHDQWLERG\DWDGLIIHUHQWSRLQWRQWKHSURWHLQ7KH&WHUPL QXVRU)FSRUWLRQLVGLJHVWHGEHORZWKHGLVXOILGHEULGJHFUHDWLQJDPROHFXOHZLWK QR)FSRUWLRQ DQG IXQFWLRQDOO\ ELYDOHQWDQWLERG\FRPELQLQJVLWHV
$17,%2'<,627<3(6 6HYHUDOGLIIHUHQWDQWLERG\LVRW\SHVGLIIHULQJERWKLQVWUXFWXUHDQGLQELRORJ LFDOIXQFWLRQKDYHEHHQGHVFULEHG,QWKHROGHUOLWHUDWXUHDQWLERGLHVZHUHFDOOHG JDPPDJOREXOLQVRU 6JOREXOLQVEDVHG RQ WKHUDWH RIPLJUDWLRQ LQ DQ HOHFWUR SKRUHWLF ILHOGRUVHGLPHQWDWLRQUDWHV LQDQ XOWUDFHQWULIXJHUHVSHFWLYHO\ 7KHUHDUHIRXUPDMRUDQWLERG\LVRW\SHVGLIIHUHQWLDWHGE\WKHFKHPLFDOVWUXF WXUHRIWKH+FKDLQ)LJ 7KHUHIRUHγ +FKDLQDQWLERGLHVDUHWHUPHG,J* FKDLQVDUHIRXQGLQ,J0DQWLERGLHVα FKDLQVDUHDFRPSRQHQWRI,J$DQWLERGLHV DQG,J(DQWLERGLHVKDYHε FKDLQV ,Q DGGLWLRQ WRWKH + FKDLQV WKHUH DUHWZRW\SHV RI/FKDLQV NDSSD . RU ODPEGD $ $ VLQJOH DQWLERG\PROHFXOH LV FRPSRVHGRILVRW\SLF + FKDLQV DQG
)LJXUH 6FKHPDWLF RI DQWLERG\ LVRW\SHV LQ EORRG DQG VDOLYD %ORFNV GHQRWH JO\FRV\OD WLRQ SRLQWV
OPPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
HLWKHU . RU λ/FKDLQVEXWQRWERWK,QDQRUPDODQWLERG\SRSXODWLRQDQWLERGLHVRIWKH VDPHLVRW\SHZLOOKDYH. RU λFKDLQV %DVHGRQDPLQRDFLGVHTXHQFLQJVWXGLHVDQWLERG\VWUXFWXUHFDQEHEURNHQGRZQLQWR YDULDEOHDQGFRQVWDQWSRUWLRQV7KH1WHUPLQLRIWKH+DQG/FKDLQVDUHYDULDEOHDQGDUH GHVLJQDWHGWKH9/ DQG9+ SRUWLRQVRIWKHDQWLERGLHV&RQYHUVHO\WKH&WHUPLQLRIWKH+ DQG/FKDLQVKDYHDFRQVWDQWDPLQRDFLGVWUXFWXUH7KH/FKDLQKDVRQO\RQHFRQVWDQW GRPDLQEXWWKHγ DQGFKDLQVKDYHWKUHHGLIIHUHQWFRQVWDQWGRPDLQVFDOOHG&+&+DQG &+ 7KH α DQG ε FKDLQVKDYHDQDGGLWLRQDOFRQVWDQW&+GRPDLQDWWKH&WHUPLQXV
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±PJPO +HWHURORJRXV DQWLJHQV DQG QDWXUDO DQWLJHQV HOLFLW DQ ,J0 UHVSRQVH 7KHVH DQWLJHQVLQFOXGHUKHXPDWRLGIDFWRUVFROGDJJOXWLQLQVKHWHURSKLOHDQWLJHQV VLQ JOH DQG GRXEOHVWUDQGHG '1$ QRUPDO LVRDJJOXWLQLQV RIKXPDQ EORRGJURXSV OHXNRDJJOXWLQLQV WK\URLG DQWLJHQV 6DOPRQHOOD W\SKRVD 2 DQWLJHQV DQG WKH :DVVHUPDQQDQWLJHQIRXQGLQ WKH VSLURFKHWHFDXVLQJV\SKLOLV
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
$QWLERGLHV
7DEOH )XQFWLRQDO &KDUDFWHULVWLFV RI,J*6XEFODVVHV 5HFHSWRU ELQGLQJ ,J* ,J* ,J* ,J*
± ±
&RPSOHPHQW DFWLYDWLRQ
±
±
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
,PPXQRJOREXOLQ$ ,J$FRQVLVWLQJRIα KHDY\FKDLQVPDNHVXSDERXW±RIWKHQRUPDO SRRORILPPXQRJOREXOLQV,WLVIRXQGLQGLIIHUHQWIRUPVLQWKHVHUXPRUH[WHUQDO VHFUHWLRQV,J$IRXQGLQEORRGLVHLWKHUWKHEDVLF+±/XQLWVRUGLPHUVRIEDVLF+± /XQLWVERXQGWRJHWKHUE\-FKDLQV ,QKXPDQVWKHUHDUHWZRVXEFODVVHVRI,J$,J$ DQG,J$ ,QWKHVHUXP RIWKH,J$LV,J$ZKHUHDVRIWKH,J$LQVHFUHWLRQVLV,J$7HDUVDQG FRORVWUXPFRQWDLQ WKHKLJKHVWFRQFHQWUDWLRQRI,J$ 7KH VHFUHWRU\ V IRUP RI,J$ LV IRXQG LQ ERG\ VHFUHWLRQV VXFK DV VDOLYD WHDUV DQGFRORVWUXP V,J$ LQ H[WHUQDO IXOLGVFRQVLVWV RIWKH EDVLF +±/ GLPHUV ZLWK DQ DWWDFKHG VHFUHWRU\SLHFH N'D 7KH VHFUHWRU\SLHFH DJO\FRSURWHLQ PHPEHURIWKH,JVXSHUIDPLO\LVFRLOHGDURXQGWKH)FSRUWLRQVRIWKHGLPHUV ,W IXQFWLRQVWRLQKLELWHQ]\PDWLFGHJUDGDWLRQRIWKHV,J$LQWKHH[WHUQDORULQWHUQDO DFLGHQYLURQPHQWV
OPPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
V,J$ DQWLERGLHV VHUYHDV WKH ILUVWOLQH RIVSHFLILFGHIHQVH DJDLQVWPLFURRU JDQLVPV WKDW LQYDGH WKH UHVSLUDWRU\ DQG JDVWURLQWHVWLQDO WUDFWV 7KLV DQWLERG\ LVRW\SHLVSDUWLFXODUO\LPSRUWDQWLQGHIHQVHDJDLQVW6DOPRQHOOD 9LEULRFKROHUDH DQG 1HLVVHULD VSHFLHV,J$GRHVQRWIL[FRPSOHPHQWE\WKHFODVVLFDOSDWKZD\,W GRHVQRWSDVVWKHSODFHQWDDQGVRLVQRWGHWHFWDEOHDWELUWKDOWKRXJKIUHHWUDQVSRUW SLHFH PD\ EH SUHVHQW +XPDQ LQIDQWV DUH FDSDEOH RIV\QWKHVL]LQJ ,J$ DW ± ZHHNVRIDJH
,PPXQRJOREXOLQ ' ,J'DFFRXQWVIRUOHVVWKDQ RIWKHWRWDOFLUFXODWLQJLPPXQRJOREXOLQSRRO PJPOVHUXP $OWKRXJKLWVUROHLQVHUXPLVXQFHUWDLQ,J'LVDQLPSRUWDQW SDUWRI%FHOO GLIIHUHQWLDWLRQSULRUWRVWHSVOHDGLQJWRFODVVVSHFLILF FORQHGHYHO RSPHQW
,PPXQRJOREXOLQ( 7KH,J(FODVVKDVDFKHPLFDOVWUXFWXUHVLPLODUWR,J*LQWKDWLWFRQVLVWVRIWKH EDVLF +/VWUXFWXUH ,WV PROHFXODU PDVV LV KLJKHU WKDQ ,J* EHFDXVH WKH KHDY\ FKDLQV KDYH DQ H[WUD FRQVWDQW GRPDLQ &+ ,J( LV DOVR XQLTXH LQ KDYLQJ D KLJKFDUERK\GUDWHFRQWHQW²YHUVXVIRUWKH,J*VXEW\SHV ,J(LVDVVRFLDWHGZLWKLPPHGLDWHDOOHUJLFUHDFWLRQVVXFKDVDVWKPDUKLQLWLV DQGXUWLFDULD8VLQJ)F UHFHSWRUV,J(DWWDFKHVWRIL[HGPDVWFHOOVDQGEDVRSKLOV LQWKHEORRG
,00812'()O&O(1&O(6 7KHUH DUH D QXPEHU RI IDPLOLDO V\QGURPHV DVVRFLDWHG ZLWK K\SRJDP PDJOREXOLQHPLD7DEOH 0DQ\RIWKHVH V\QGURPHVUHIOHFWGHIHFWVLQ LVRW\SLF VZLWFKLQJRUSURGXFWLRQRIVSHFLILFDQWLERG\ LVRW\SHV
6HOHFWLYH,J$'HILFLHQF\ ,J$GHILFLHQF\LVWKHPRVWFRPPRQ RIDOOLPPXQRGHILFLHQFLHV'HSHQGLQJ RQWKHFRXQWU\WKHLQFLGHQFHLVEHWZHHQ DQG 7KHUHLVDQLQFUHDVHG LQFLGHQFHRI,J$GHILFLHQF\LQVXEMHFWVZLWKGHIHFWVLQFKURPRVRPH FRQQDWDO UXEHOODV\QGURPHDQGDWD[LDWHODQJLHFWDVLD0LHWHQV $VVRFLDWHGZLWKWKH GHILFLHQF\ DUH UHFXUUHQW EDFWHULDO LQIHFWLRQV EURQFKLWLV VLQXVLWLV SQHXPRQLD DOOHUJLHVDQGDXWRLPPXQHGLVHDVHV6FKDIIHUHWDO %FHOOGLIIHUHQWLDWLRQ DUUHVWSUHYHQWLQJLVRW\SLFVZLWFKLQJIURP,J*WR,J$LVWKHFHQWUDOGHIHFWLQWKH LPPXQRGHILFLHQF\
$QWLERGLHV
7DEOH )DPLOLDO6\QGURPHV$VVRFLDWHG ZLWK+\SRJDPPDJOREXOLQHPLD ;OLQNHGDJDPPDJOREXOLQHPLD &RPPRQYDULDEOHLPPXQRGHILFLHQF\ ,PPXQRGHILFLHQF\ZLWKK\SHUOJ0 &\FOLFQHXWURSHQLD 6KZDFKPDQV\QGURPH $WD[LDWHODQJLHFWDVLD 5HWLFXODUG\VJHQHVLV 6KRUWOLPEHGGZDUILVP 3DUWLDODOELQLVPDQGLPPXQRGHILFLHQF\ :+,0V\QGURPH 0RGLILHGIURP3HGLDWULF5HVHDUFK 6WLHKP 6 ZLWK SHUPLVVLRQ RI3HGLDWULF 5HVHDUFK
&RPPRQ 9DULDEOH ,PPXQRGHILFLHQF\ &9,' LV D PDMRU DQWLERG\ LPPXQRGHILFLHQF\ FKDUDFWHUL]HG E\ UHFXUUHQW XSSHU ORZHUUHVSLUDWRU\ WUDFW LQIHFWLRQV DQG LQ DIHZ SDWLHQWV JUDQXORPDWRXV GLVHDVH&XQQLQJKDP5XQGOHV 2YHURIWKHSDWLHQWSRSXODWLRQVDOVR GHYHORSDXWRLPPXQHGLVHDVHV9HWULHHWDO %DVHG RQ WKH QXPEHU DQG IXQFWLRQ RI % FHOOV LQ WKH SHULSKHUDO EORRG SDWLHQWVFDQ EHVHJUHJDWHGLQWRWKUHHJURXSV $VPDOOJURXSRISDWLHQWVODFNV% FHOOVLQWKHEORRGDQGKDVRQO\VFDWWHUHGERQHPDUURZ%FHOOV7KHVHVXEMHFWVDUH FODVVLILHG DV %UXWRQ¶V W\SH ;OLQNHG DJDPPDJOREXOLQHPLD ;/$ 7KH PDMRU SKHQRW\SLFGHIHFWLVDPXWDWLRQLQWKH%UXWRQ¶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
OPPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
% FHOOV IURP WKHVHSDWLHQWVGRQRWSURGXFHHLWKHU,J* RU,J$ ,J0FDQEH SURGXFHG LQYLWUREXWQRWLQYLYR %HFDXVHRQO\,J0FDQEHSURGXFHGWKHUHDUH UHFXUUHQW XSSHU UHVSLUDWRU\ LQIHFWLRQV DQG LQIHFWLRQV ZLWK RSSRUWXQLVWLF SDWKR JHQV VXFK DV &U\SWRVSRULGLXP RU 3QHXPRF\VWLVFDULQLL 0RUHRYHU VRPH,J0V DUH DXWRDQWLERGLHV UHDFWLQJ ZLWK KRVW UHG FHOOV OHXNRF\WHV DQG SODWHOHWV 7KH GHVWUXFWLRQ RIWKHVHEORRGFHOOVOHDGV WR VHFRQGDU\ LPPXQRGHILFLHQFLHVDQGUH GXFHGUHVLVWDQFHWRLQIHFWLRQV)LVFKHUDQG$UQDL]9LOOHQD
',6($6(6$1'$17,%2'<6<17+(6,6 'LIIHUHQWFOLQLFDOFRQGLWLRQVDQGGLVHDVHVDIIHFWWKHV\QWKHVLVRIDQWLERGLHV $FXWHDQGFKURQLFYLUDOLQIHFWLRQVHVSHFLDOO\WKRVHZLWK(SVWHLQ±%DUUYLUXVDQG F\WRPHJDORYLUXVFDQGHFUHDVHV\QWKHVLV6LPLODUGHFUHDVHVKDYHEHHQUHSRUWHGLQ VXEMHFWV ZLWK FROODJHQ YDVFXODU GLVRUGHUV VXFK DV 6/( 0DOLJQDQFLHV RI WKH LPPXQH V\VWHP HJ OHXNHPLD O\PSKRPD P\HORPD DQG WK\PRPD DOVR GH FUHDVHWKHQXPEHUV RUIXQFWLRQRIDQWLERG\VHFUHWLQJ FHOOV
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
(19,5210(17$/&+(0,&$/6$1'$17,%2'< 352'8&7,21 7KHHIIHFWVRIPHWDOVDQGHQYLURQPHQWDOFKHPLFDOVRQDQWLERG\SURGXFWLRQ KDYHEHHQUHSRUWHGXVLQJPLFHUDWV JXLQHDSLJV DQGUDEELWV 7DEOHV DQG :LWKIHZH[FHSWLRQV WKHPRXVHLVWKHPRVWVHQVLWLYH VSHFLHV *XLQHDSLJVDQG UDEELWVZHUHWKHOHDVWUHVSRQVLYHWRWKHLPPXQRVXSSUHVVLYHHIIHFWVRIFKHPLFDOV
$QWLERGLHV
7DEOH
/HDG &DGPLXP 0HUFXU\ 6HOHQLXP 1LFNHO =LQF
6HOHFW 0HWDOV WKDW $OWHU $QWLERG\ 3URGXFWLRQ 0RXVH
5DW
±
±
±
*XLQHD SLJ
5DEELW
± ± ± ± ± ±
±
±
0RGLILHGIURP,PPXQRORJ\DQG$OOHUJ\3UDFWLFH .ROOHU
0212&/21$/$17,%2',(6 0XULQH0RQRFORQDO$QWLERGLHV (DUO\ H[SHULPHQWVE\.RKOHUDQG0LOVWHLQ VKRZHGWKDWLW ZDVSRV VLEOHWRSURGXFHDQWLERGLHVLQWKHWHVWWXEHE\IXVLQJLPPXQL]HGPXULQHVSOHQLF O\PSKRF\WHVZLWKDQDQWLERG\SURGXFLQJFHOOOLQH.RKOHUDQG0LOVWHLQ 7HFKQRORJ\ KDV EHHQ PRGLILHG DQG H[WHQGHG VR LW LV DOVR SRVVLEOH WR SURGXFH DQWLERGLHV IROORZLQJ UDEELWPRXVHRUKDPVWHU±PRXVH IXVLRQV .RKOHUDQG0LO VWHLQ 5D\ERXOGDQG7DNDKDVKL 0RQRFORQDO DQWLERGLHVUHSUHVHQWDKRPRJHQHRXV UHDJHQW XVHIXO LQERWK LQ YLWUR DQG LQ YLYR VWXGLHV (DFK DQWLERG\ KDV WKH VDPH VWUXFWXUH DIILQLW\ DQG DYLGLW\ IRU WKH DQWLJHQ WKDW HOLFLWHG LWV SURGXFWLRQ %HFDXVH WKH DQWLERGLHV DUH
7DEOH
6HOHFW &KHPLFD,V WKDW $OWHU $QWLERG\ 3URGXFWLRQ
7&&' 7HWUDFKORURGLEHQ]RIXUDQ 3HQWDFKORURSKHQRO 3RO\FKORULQDWHGELSKHQ\O 3RO\EURPLQDWHG ELSKHQ\O %HQ]R>D@S\UHQH 'LPHWK\OEHQ]>D@DQWKUDFHQH 0HWK\OFKRODQWKUHQH 8UHWKDQH 3KRUERODFHWDWH /LQGDQH 7R[DSKHQH
0RXVH
5DW
*XLQHDSLJ
± ±
± ± ± ± ± ± ±
± ±
± ± ± ± ± ± ± ±
0RGLILHG IURP ,PPXQRORJ\ DQG$OOHUJ\ 3UDFWLFH .ROOHU
5DEELW ±
± ±
± ± ± ± ± ± ± ±
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
+XPDQL]HG0RQRFORQD,$QWLERGLHV 0XULQH PRQRFORQDO DQWLERGLV KDYH EHHQ XVHG LQ WKH WUHDWPHQW RI VHYHUDO PDOLJQDQFLHV +RZYHU HIILFDF\ ZDV RIWHQ UHGXFHG EHFDXVH WKH PXULQH SURWHLQ ZDV LPPXQRJHQLF LQ KXPDQV 7R UHGXFH WKH LPPXQRJHQLFLW\ RI PRQRFORQDO DQWLERGLHVKXPDQL]HGPRQRFORQDODQWLERGLHVKDYHEHHQFRQVWUXFWHG6KHDUPDQ HW DO $GDLU HW DO 8VLQJ WKH JHQRPLF IUDJPHQWV IURP D VLQJOH URXQG RI 3&5 KXPDQL]HG DQWLERGLHV FDQ EH SURGXFHG E\ LQVHUWLQJ WKH PXULQH + DQG / FKDLQ K\SHUYDULDEOH 9 UHJLRQV LQWR D PDPPDOLDQ H[SUHVVLRQ YHFWRU FRQWDLQLQJWKHKXPDQ. DQG γ ,&H[RQV6KHDUPDQHWDO *HQHUDOO\,J* LVXVHGLQWKHIRUPDWLRQRIKXPDQL]HGDQWLERG\EHFDXVHLWGRHVQRWIL[FRPSOH PHQWRUELQGWRFHOOVYLDWKH)FUHFHSWRU
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± RIWKH WRWDO DQWLERG\ SRSXODWLRQ LV ELVSHFLILFUHIOHFWLQJWKHIDFWWKDWFRXSOLQJRIKRPRORJRXV +FKDLQV 'H/DXHW DO RFFXUV DWDPXFKKLJKHUIUHTXHQF\WKDQWZRGLIIHUHQW+FKDLQV7KLV
$QWLERGLHV
VPDOO DPRXQWRIELVSHFLILF DQWLERG\ PXVW EH VHSDUDWHG IURP PRVW RIWKH DQWL JHQLFDOO\ LQDFWLYHEXWVWUXFWXUDOO\ VLPLODUDQWLERGLHV &KHPLFDO 6\QWKHVLV RI%LVSHFLILF $QWLERGLHV 0RQRFORQDO DQWLERGLHV )DE¶RU)DE¶ IUDJPHQWVFDQEHFRXSOHGWRIRUPELVSHFLILFDQWLERGLHV7KHPRVW FRPPRQ OLQNDJHPHWKRGLQYROYHVFRYDOHQWELQGLQJ YLD6+ JURXSV LQWKHKLQJH UHJLRQRU DPLQRJURXSV&URVVOLQNDJHRIDQWLERGLHVRU)DE¶ IUDJPHQWVFDQEH IDFLOLWDWHG E\ VXFFLQLPLG\OS\ULG\OGLWKLRO SURSLRQDWH 63'3 $OWKRXJK WKHUHDFWLRQUHDGLO\ DFWLYDWHV6+JURXSV DSRSXODWLRQRIUDQGRPO\FURVVOLQNHG DQWLERGLHV ZLWK GLIIHUHQW VSHFLILFLWLHV LV FUHDWHG 7KLV OLPLWV WKH XWLOLW\ RI WKH 63'3OLQNHG DQWLERGLHV )DQJHU HW DO ,QFUHDVHG VSHFLILFLW\ FDQ EH DFKLHYHG E\ OLQNDJH RIGLIIHUHQWSXULILHG )DE¶ IUDJPHQWV ZLWK ¶GLWKLRELV QLWUREHQ]RLFDFLG RURSKHQ\OHQHGLPDOHLPLGH*OHQQLVHWDO %UHQQDQHW DO 8VLQJRSKHQ\OHQHGLPDOHLPLGHLWLVSRVVLEOHWRDGGDWKLUGIUDJPHQW WR IRUPWULVSHFLILF DQWLERGLHV 7XWWHWDO %L DQG WULVSHFLILF DQWLERGLHV KDYH OLPLWHG FOLQLFDO XVH EHFDXVH WKH\ KDYH LQFUHDVHG LPPXQRJHQLFLW\ DQG UH GXFHG LQYLYRKDOIOLIH
$'9(56(())(&762)$17,%2'<$'0,1,675$7,21 3RO\FORQDO PRQRFORQDODQGFKLPHULFDQWLERGLHVKDYHEHHQXVHG IRUWUHDW PHQW RIFDQFHUV DXWRLPPXQH GLVHDVHV FORWWLQJ GLVRUGHUV LQIHFWLRXV GLVHDVHV DQGJUDIWUHMHFWLRQ)DQJHUHWDO $GPLQLVWUDWLRQRIDOOIRUPVRIDQWLERGLHV HYRNHVDQDQWLERG\UHVSRQVHDIWHU ± ZHHNVRIWUHDWPHQW %HFDXVHWKHPXULQH DQWLERGLHV DUH PRUHIRUHLJQ WR WKH KXPDQ KRVW UHVSRQVHV RFFXU ZLWK DJUHDWHU IUHTXHQF\ DQG D KLJKHU LQWHQVLW\ FRPSDUHG ZLWK WKH UHVSRQVHV WR KXPDQL]HG DQWLERG\ 7KHLPPXQHUHVSRQVHVGLUHFWHGWRZDUGPXULQHDQGKXPDQL]HGPRQRFORQDO DQWLERGLHV DUH GLUHFWHG WRZDUG GLIIHUHQW DQWLJHQLF VLWHV 0XULQH DQWLERGLHV DUH GLUHFWHG WRZDUG ERWK LGLRW\SLF DQG LVRW\SLF PDUNHUV 7KH LQWHUDFWLRQV EHWZHHQ WKHLQGXFHGDQWLERG\DQGLGLRW\SLFPDUNHUVLQWKHPRQRFORQDODQWLJHQFRPELQLQJ VLWHEORFNELQGLQJWRWKHWDUJHWPROHFXOH LGLRW\SLFUHDFWLYLW\ ZKLOHRWKHUDQWL ERGLHV UHDFWLQJ ZLWK LVRW\SLF PDUNHUV HQKDQFH FOHDUDQFH IURP WKH ERG\ 5H VSRQVHVWRWKHKXPDQL]HGDQWLERG\DUHQRUPDOO\GLUHFWHGWRZDUGLGLRW\SLFPDUN HUVLQWKH+DQG/FKDLQYDULDEOHUHJLRQ%HFDXVHWKHLVRW\SLFPDUNHUVLQKXPDQL]HG DQWLERGLHV DUH QRWUHFRJQL]HG DVIRUHLJQ WKHUH LV XVXDOO\ QR LVRW\SLF UHVSRQVH
7KH$FWLYDWLRQ6\QGURPH $JURXSRIVLGHHIIHFWVJHQHUDOO\DVVRFLDWHGZLWKWKHILUVWDGPLQLVWUDWLRQRI DQWLERGLHVLVWHUPHGWKHDFWLYDWLRQV\QGURPH :LWKLQ±KUIROORZLQJDQWLERG\ DGPLQLVWUDWLRQSDWLHQWVH[KLELWKLJKIHYHUFKLOOVQDXVHDYRPLWLQJDQGGLDUUKHD
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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± GD\V /LNH PRVW DQWLERG\ SUHSDUDWLRQV DGPLQLVWUDWLRQ WR KXPDQV FDXVHG WKH DFWLYDWLRQ V\QGURPH VLGH HIIHFWV )ROORZLQJ WKH ILUVW GRVH SDWLHQWV GHYHORSHG IHYHU FKLOOV WUHPRUV G\VSQHD DQGFKHVWSDLQ 2WKHUV\PSWRPVVXFKDVQDXVHDDQGYRPLWLQJRFFXUUHGLQDSSUR[LPDWHO\ RI WKH SDWLHQWV 3RSXODWLRQ VWXGLHV KDYH HVWDEOLVKHG WKH IUHTXHQF\ RIVHULRXV VLGH HIIHFWV IROORZLQJ DSSOLFDWLRQ RIPRQRFORQDO DQWLERGLHV WRWUHDWPHQW RIFDQFHUV 7KHRYHUDOOIUHTXHQF\RIVLGHHIIHFWVLQDODUJHWHVWSRSXODWLRQLVXVXDOO\DERXW± 7DEOH 7KHPHFKDQLVPE\ZKLFKWKHDQWL&'LQGXFHGWKHDFWLYDWLRQV\QGURPHKDV EHHQSDUWLDOO\GHILQHG&URVVOLQNDJHRIWKH&'DFWLYDWHVWKH7FHOOWKDWEHJLQV WRSURGXFH,)1γ,QWHUIHURQDFWLYDWHGPRQRF\WHVSURGXFH71)α:KHQFRP
7DEOH )UHTXHQF\ RI ,PPXQRORJLFDO 6LGH (IIHFWV 3URGXFHG E\ $GPLQLVWUDWLRQ RI 0RQRFORQDO $QWLERGLHV IRU 7UHDWPHQW RI &DQFHUV 6LGHHIIHFW Serum sickness $QDSK\ODFWRLGUHDFWLRQV ,QWHVWLQDOFDUFLQRPD &KURQLFO\PSKRF\WLFOHXNHPLD 1HXUREODVWRPD %URQFKRVSDVP ,QWHVWLQDOFDUFLQRPD &XWDQHRXV7FHOO O\PSKRPD
1R RIFDVHV
7RWDOQR RI SDWLHQWV
,
,
0RGLILHGIURP,QWHUQDWLRQDO-RXUQDORI%LRORJLFDO0DUNHUV YDQGHU/LQGHQ HWDO
$QWLERGLHV
11
ELQHGZLWK,/SURGXFWLRQ71)αDFWLYDWHVPRQRF\WHVQHXWURSKLOVSODWHOHWV DQGHQGRWKHOLDOFHOOV $GKHUHQFHRILPPXQRFRPSHWHQWFHOOVWRWKHHQGRWKHOLXP LQFUHDVHVFRDJXODWLRQWKURPERVLVDQGYDVFXODUSHUPHDELOLW\0HGLDWRUVUHOHDVHG IURPPRQRF\WHVFDXVHIHYHUDQGFKLOOV'UHHV
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
6HUXP6LFNQHVV 'HOD\HG WR[LFLW\ LV DOVR D IHDWXUH RIFRQWLQXRXV DQWLERG\ DGPLQLVWUDWLRQ 6HUXPVLFNQHVVPD\GHYHORSIROORZLQJ±ZHHNVRIDGPLQLVWUDWLRQ7KHSDWLHQW PD\ SUHVHQW ZLWK DFRQVWHOODWLRQ RIV\PSWRPV LQFOXGLQJ XUWLFDULD PDODLVH DU WKUDOJLDVDQGJHQHUDOL]HGO\PSKDGHQRSDWK\6\PSWRPVDUHFDXVHGE\WKHGHSR VLWLRQRILPPXQHFRPSOH[HVLQRUJDQVDQGFDSLOODULHV 'LOOPDQ
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±DQWLERG\ FRPSOH[HV 7KH VHQVLWLYLW\ RI PHWKRGXVHGWRPHDVXUHVHUXPLPPXQRJOREXOLQOHYHOVLV VKRZQLQ7DEOH ,Q WKHFDVH RI,J* DQG ,J$GHWHUPLQDWLRQV QRUPDO OHYHOV LQ WKH VHUXP RU H[WHUQDOIOXLGVGRQRWH[FOXGHWKHSRVVLELOLW\RIDQLPPXQHGHIHFW7KHUHPD\EH
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
7DEOH 6HQVLWLYLW\RI0HWKRGV XVHGWR,GHQWLI\DQG4XDQWLWDWH ,PPXQRJOREXOLQVLQ6HUXPRI3ODVPD $VVD\ 2XFKWHUORQ\GRXEOHGLIIXVLRQ *HOGLIIXVLRQ 5DGLRLPPXQRDVVD\ (/,6$
JDQWLERG\ 1PO
0RGLILHGIURP0DQXDORI&OLQLFDO,PPXQRORJ\5RVHDQG)ULHGPDQ $PHULFDQ6RFLHW\IRU0LFURELRORJ\
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±GD\V 7KH,J0DQG ,J$ LVRW\SHVKDYHDUHODWLYHO\VKRUWKDOIOLIH RI±GD\V %XUUHOOHWDO &DXWLRQPXVWEHH[HUFLVHGLQWKHLQWHUSUHWDWLRQRIGDWD/RVVRILPPXQRJOREXOLQ RFFXUVLQ LQWHVWLQDOGLVRUGHUV DIIHFWLQJWKHLQWHJULW\RIWKHPXFRVDO OD\HU
,QGXFWLRQRI$QWLERG\3URGXFWLRQ +XPDQ ([SHULHQFH 6HUXPDQWLERGLHVLQGXFHGE\LPPXQL]DWLRQWRFRP PRQLQIHFWLRXVDJHQWVFDQDOVRKHOSLQWKHGLDJQRVLVRIVHFRQGDU\LPPXQRGHIL FLHQF\+XPDQVHUXPVKRXOGFRQWDLQDQWLERGLHVGLUHFWHGWRZDUGFRPPRQFKLOG KRRG YDFFLQH DQWLJHQV VXFK DV GLSKWKHULD WHWDQXV WR[RLG PHDVOHV DQG SROLR
$QWLERGLHV
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
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
VHOHFW SURGXFWLRQ ORWV RI IHWDO FDOI VHUXP ZLOO VXSSRUW WKH H[ YLYR DQWLERG\ SURGXFWLRQ ,Q DGGLWLRQ 65%&V IURP GLIIHUHQW DQLPDOV YDU\ ZLWK UHVSHFW WR LPPXQRJHQLFLW\7KHUHIRUHWKHVDPHORWRI65%&VVKRXOGEHXVHGIRUWKHLQYLYR DQG H[YLYRSRUWLRQVRIWKHDVVD\)LQDOO\JXLQHDSLJFRPSOHPHQWFDQRIWHQO\VH UHG FHOOV LQ WKH DEVHQFH RIDQWLERG\ &RPSOHPHQW PXVW EH FDUHIXOO\ VFUHHQHG EHIRUHXVHLQWKHDVVD\0LVKHOODQG'XWWRQ 7R DYRLG SUREOHPVDVVRFLDWHG ZLWKGHYHORSPHQWDQGHQXPHUDWLRQ RI3)& DQ(/,6$ WRPHDVXUHDQWLERGLHVWR65%&VKDVEHHQGHYHORSHG 7HPSOHHWDO ,QWKHDVVD\65%&PHPEUDQHVDUHSUHSDUHGE\.&OH[WUDFWLRQ$VVHUXP FDQEHVWRUHGIUR]HQIRUH[WHQGHGSHULRGVEHIRUHDQDO\VHVWKH(/,6$KDVJUHDW DGYDQWDJHV RYHUWKH3)& DVVD\ ZKLFK PXVWEH SHUIRUPHG RQ WKH VDPH GD\ DV VDFULILFH 7KHUH DUH GLVWLQFWGLIIHUHQFHV LQ GDWD LQWHUSUHWDWLRQ IURP(/,6$ DQG 3)& DVVD\V 7KH 3)& DVVD\ PHDVXUHV WKH WRWDO QXPEHU RI % FHOOV LQ WKH VSOHHQ SURGXFLQJDQWLERG\RQDSHUFHOOEDVLV $QHJDWLYHUHVXOWLQWKH3)&DVVD\GRHV QRWH[FOXGHDQLPPXQRWR[LFHYHQWLQRWKHULPPXQRFRPSHWHQWRUJDQVVXFKDVWKH WK\PXVRUO\PSKQRGHV,QFRQWUDVWWKH(/,6$PHDVXUHVWKHWRWDOSURGXFWLRQRI DQWLERGLHVIURPDOOLPPXQRFRPSHWHQWFHOOVDQGGHFUHPHQWVLQDQWLERG\OHYHOVRU ³WLWHU´PD\EHUHIOHFWLYHRIDQLPPXQRWR[LFHIIHFW7KH(/,6$LVDYDOLGVFUHHQ LQJWRROWRWHVWWKHHIIHFWVRIFKHPLFDOVDQGSKDUPDFHXWLFDOVDQGWKH3)& DVVD\ PD\EHPRUHXVHIXO LQPHFKDQLVWLFVWXGLHV$QRQ\PRXV D
5(*8/$725<326,7,2121,00812*/2%8/,1 $1$/<6(6 6WDWLF0HDVXUHPHQWV 2QO\WKH&HQWHUIRU)RRG6DIHW\DQG$SSOLHG1XWULWLRQUHTXLUHVWKHHOHFWUR SKRUHWLFDQDO\VHVRIVHUXPSURWHLQV7KLVLQFOXGHVWKHTXDQWLILFDWLRQDQGUHODWLYH SHUFHQWDJHV RI,J* ,J$DQG,J0 LQFRQWURODQGWUHDWHGDQLPDOV
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
$QWLERGLHV
FKDULGH HQGRWR[LQ DQG KXPDQ SQHXPRFRFFDO YDFFLQH KDYH EHHQ XVHG LQ PLFH DQGUDWV+LQWRQ %HQVRQDQG5REHUWV 8VLQJVWDQGDUGKXPDQVHUD SURYLGHGE\WKH)'$&HQWHUIRU%LRORJLFVUHVSRQVHVRIWKHWHVWVSHFLHV FDQEH FRPSDUHGZLWKKXPDQUHVSRQVHV6FKLIIPDQ 7UDGLWLRQDOO\WKH65%&3)&DVVD\KDVEHHQ XVHGWRDVVHVVDQWLERG\SUR GXFWLRQ LQ UDWV DQG PLFH $OO DJHQFLHV QRZ FRQVLGHU WKH (/,6$ IRU DQWLJHQ VSHFLILFDQWLERG\DVDUHOLDEOHVHQVLWLYHDQGUHSURGXFLEOHWHFKQLTXHIRUGHWHFWLRQ RIDQWLJHQVSHFLILF UHVSRQVHVWR65%&V
0RQRFORQDO $QWLERGLHV )RUPRQRFORQDODQWLERGLHVXVHGLQKXPDQFOLQLFDOWULDOVWKH)'$UHTXLUHVD GHWDLOHG GHVFULSWLRQ RIWKH LPPXQRORJLFDO SURSHUWLHV 7KH GHVFULSWLRQ LQFOXGHV DQWLJHQLFVSHFLILFLW\FRPSOHPHQWELQGLQJFDSDELOLW\DQGXQLQWHQWLRQDOUHDFWLYLW\ WRZDUGKXPDQWLVVXHVRURUJDQVGLIIHUHQWIURPWKHWDUJHWRUJDQ&URVVUHDFWLYLW\ FDQ EH DVVHVVHG LQ D YDULHW\ RI KXPDQ WLVVXHV XVLQJ DSSURSULDWH LPPX QRKLVWRFKHPLFDOWHFKQLTXHV
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
OPPXQRORJLFDO0HPRU\
,1752'8&7,21 ,PPXQLW\WRYLUXVHVVXFKDVPHDVOHV\HOORZIHYHUDQGSROLRKDVVKRZQWKDWWKH LPPXQHV\VWHPFDQUHPHPEHUDQDPQHVWLFUHVSRQVH DSUHYLRXVLQVXOWDQGWKDW WKHLPPXQLW\LVORQJOLYHG2QFHDSHUVRQUHFRYHUHGIURPWKHLQLWLDOLQIHFWLRQKH RU VKHFRXOG QRW EHUHLQIHFWHG ODWHULQOLIH $KPHGDQG *UD\ $OVR WKH GDWD VKRZHG WKDW YLUDO LPPXQLW\ SHUVLVWHG ZLWKRXW UHH[SRVXUH WR WKH YLUXV 6SUHQW $OWKRXJKLPPXQRORJLFDO PHPRU\ RI7 DQG % FHOOV LV DFFHSWHG DV GRJPD &HURWWLQLDQG0DF'RQDOG WKHUHLVFRQVLGHUDEOHGHEDWHRYHUWKHPHFKD QLVPV LQYROYHG LQ WKH JHQHUDWLRQ DQG PDLQWHQDQFH RIPHPRU\ FHOOV 7KHUH DUH WZR RSSRVLQJ YLHZSRLQWV 2QH YLHZSRLQW SRVWXODWHV WKDW PHPRU\ LV UHODWHG WR ORQJOLYHG UHVWLQJ PHPRU\ FHOOV WKDW GR QRW UHTXLUH DQWLJHQ IRU VXUYLYDO 7KH RSSRVLQJ YLHZ LV WKDW PHPRU\ LV WKHSURGXFW RIFRQWLQXHG VWLPXODWLRQ E\ ORZ GRVHVRIDQWLJHQ6SUHQW
$)),1,7<0$785$7,212)0(025<&(//6 7&HOOV 7KHJHQHUDWLRQRILPPXQRORJLFDOPHPRU\GHSHQGVRQWKHSRVLWLYHVHOHFWLRQ RI7 FHOOV ZLWK KLJKDIILQLW\ DQWLJHQ UHFHSWRUV 'XULQJ WKH LQLWLDO VWDJHV RIDQ LPPXQHUHVSRQVH LQWHQVHSUROLIHUDWLRQJHQHUDWHV7FHOOVKDYLQJKLJKDQGORZ
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
%&HOOV *HQHUDWLRQRI%FHOOPHPRU\LQYROYHVORQJWHUPH[SRVXUHWRDQWLJHQDQWL JHQ±DQWLERG\FRPSOH[HVDQGWKHSUHVHQFHRIFRPSOHPHQWIUDJPHQWV)ROOLFXODU GHQGULWLFFHOOVIRUPORQJ EHDGHGH[WHQVLRQVFDOOHG LFFRVRPHV ,FFRVRPHV ELQG RQO\ DQWLJHQ±DQWLERG\ FRPSOH[HV SURGXFHGHDUO\ LQWKHLPPXQHUHVSRQVH 5H WDLQHG DQWLJHQV PDLQWDLQ LPPXQRORJLFDO VSHFLILFLW\DQGQDWLYH PROHFXODUPDVV ,QLWLDOELQGLQJRI% FHOOVWRWKH DQWLJHQ±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
OPPXQRORJLFDO 0HPRU\
)LJXUH 0HPRU\ %FHOO JHQHUDWLRQ DQG FLUFXODWLRQ LQ WKH JHUPLQDO FHQWHUV $QWLJHQ DQWLERG\ FRPSOH[HV ELQG WR )F UHFHSWRUV DQG FRPSOHPHQW FRPSRQHQWV & RQ WKH IROOLFXODU GHQGULWLF FHOOV 0DWXUH DQWLJHQVSHFLILF % FHOOV DUH WUDSSHG LQ WKH JHUPLQDO FHQWHU 7KH % FHOOV XQGHUJR D UDSLG SUROLIHUDWLYH F\FOH IROORZHG E\ DSRSWRVLV 6HOHFWHG PHPRU\ FHOOV PLJUDWH WR WKH PDUJLQDO ]RQH $QWLJHQ VWLPXODWLRQ PRELOL]HV WKH PHPRU\ FHOOV WR UHHQWHU WKH JHUPLQDO FHQWHU DQG SUROLIHUDWH
FKDLQV7KH³NH\PXWDWLRQV´LQWURGXFHGLQWRWKH9UHJLRQVRIWKH+DQG/FKDLQV RFFXUDWDUDSLGUDWH0XWDWLRQVDUHLQWURGXFHGDWDUDWHRIESSHUJHQHUD WLRQLQERWKWKH+DQG/FKDLQV%DVHGRQDVWDQGDUG9UHJLRQOHQJWKRIES WKLV OHDGV WR FDOFXODWLRQV RIWZR PXWDWLRQV SHUJHQHUDWLRQ %HUHN DQG0LOVWHLQ %HUHN DQG =LHJQHU 7ZR ZHHNV DIWHU LQLWLDWLRQ RI WKH LPPXQH UHVSRQVH RIWKHJHQHUDWHGDQWLERGLHVKDYH³NH\PXWDWLRQV´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
OPPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
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
,PPXQRORJLFDO 0HPRU\
0$,17(1$1&(2)0(025< 7KHSHUVLVWHQFHRIDQWLJHQDQGWKHQDWXUHRIWKHDQWLJHQSUHVHQWLQJFHOOVDUH LPSRUWDQWIRUPHPRU\ JHQHUDWLRQ $QWLJHQ PD\SHUVLVW RQ VRPHGHQGULWLF FHOOV IRU H[WHQGHG SHULRGV RIWLPH )RU H[DPSOH KXPDQ VHUXP DOEXPLQ FDQ SHUVLVW LQWDFWLQO\PSKRLGIROOLFOHVIRUPRQWKV7HZDQG0DQGHO 6RPHGHQGULWLF FHOOV SURYLGH DPDWUL[ IRULQWHUDFWLRQV ZLWK KLJKDIILQLW\ 7FHOOV DQG SURFHVVHG DQWLJHQ)ROOLFXODUGHQGULWLFFHOOVLQWKHJHUPLQDOFHQWHUGRQRWELQGIUHHDQWLJHQ UHGXFLQJ WKHLUDELOLW\WRVWLPXODWH7'UHVSRQVHV
+$=$5','(17,),&$7,21 ,PPXQL]DWLRQ ZLWK DQWLJHQV NQRZQ WR HOLFLW PHPRU\ DQG DQ DQDPQHVWLF UHVSRQVHFDQEHXVHGLQKD]DUGLGHQWLILFDWLRQ%\GHILQLWLRQPRVWRIWKHVHDQWL JHQV DUH 7' DQWLJHQV VXFK DV 65%&V RU WHWDQXV WR[RLG ,PPXQL]DWLRQV DUH
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
ZLGHO\VSDFHGVRWKDWWKH,J0DQG,J*UHVSRQVHVFDQEHPHDVXUHGLQ(/,6$VRU LQWKHFDVHRI65%&V WKH3)& DVVD\
5(*8/$725<326,7,2121,00812/2*,&$/0(025< 7KHUHJXODWRU\DJHQFLHVKDYHQRWVKRZQDQLQWHUHVWLQWKHHIIHFWVRIFKHPL FDOV RUSKDUPDFHXWLFDOVRQLPPXQRORJLFDO PHPRU\ ,WLVDVVXPHGWKDWHIIHFWVRQWKHPHPRU\FHOOSRSXODWLRQFRXOGEHGHILQHGE\ FRQYHQWLRQDOKLVWRSDWKRORJ\*XLGHOLQHVIRULPPXQRWR[LFLW\WHVWLQJRIELRFKHPL FDO SHVWLFLGHV ),)5$ VXEVHFWLRQ 0 GR KRZHYHU UHTXLUH WKH SHWLWLRQHU WR GHWHUPLQHWHVWFRPSRXQGHIIHFWVRQERWK,J0DQG,J*UHVSRQVHVWRD7'DQWLJHQ
&RPSOHPHQW
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±DQWLERG\FRPSOH[HVFODVVLFDOSDWKZD\ RUDXQLTXHDOWHUQDWLYHPHFKD QLVPWKDWGRHVQRWUHTXLUHWKHSUHVHQFH RIDQWLERG\ 7DEOH
&/$66,&$/&203/(0(173$7+:$< 5HFRJQLWLRQ&RPSOH[ $IWHU WKH LQWHUDFWLRQ ZLWK WKH DQWLERG\ HLWKHU ,J* RU ,*0 PXOWLPHULF FRPSOHPHQW FRPSRQHQW& ELQGV WR WKH )F SRUWLRQ RIWKH DQWLERG\ 2QO\ RQH PROHFXOH RI ,J0 RU WZR PROHFXOHV RI ,J* DUH UHTXLUHG WR DFWLYDWH WKH WKUHH VXEXQLWVRI& )LJ
OPPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
7DEOH &KDUDFWHULVWLFVRI3URWHLQV ,QYROYHGLQWKH&RPSOHPHQW3DWKZD\V 3URWHLQ
0ROHFXODU ZHLJKW
6HUXPFRQFQ JPO
&T &U &V F F & & & & & &
&RPSOHPHQW FRPSRQHQW & FRQVLVWV RI WKUHH GLIIHUHQW SURWHLQV &T LV FRPSRVHGRIWKUHHSRO\SHSWLGHFKDLQVZLWKDWULSOHKHOLFDO³FROODJHQOLNH´1WHU PLQXVDQGDJOREXODUVWUXFWXUHDWWKH&WHUPLQXV&TLQWHUDFWVZLWKWKHDQWLERG\ DWWKHKLQJHUHJLRQ &KDQJHV LQ &TFRQIRUPDWLRQ DFWLYDWHWKHFDOFLXPGHSHQ GHQWHQ]\PDWLFDFWLYLW\RIGLPHULF&U&ULVFOHDYHGDXWRFDWDO\WLFDOO\WRD N'D PROHFXOH ZLWK VHULQH HVWHUDVH DFWLYLW\ )LJ 8VLQJ WKH VHULQH HVWHUDVH DFWLYLW\ &U FOHDYHV &V LQWR DQRWKHU N'D SURWHLQ ZLWK HVWHUDVH DFWLYLW\ 0XOOHU(EHUKDUG
$FWLYDWLRQ &RPSOH[ $FWLYDWHG&VDFWVRQPXOWLSOH&DQG&PROHFXOHVLQWKHVHUXPWROLEHUDWH ELRORJLFDOO\DFWLYHIUDJPHQWV)LJ &LVDODUJHN'D WULPHULFSRO\SHS 7DEOH 3URWHLQV RI WKH $OWHUQDWLYH &RPSOHPHQW3DWKZD\ 1DPH & )DFWRU% )DFWRU' + 3URSHUGLQ &ELQDFWLYDWRU
0ROHFXODU ZHLJKW
6HUXPFRQFQ JPO
&RPSOHPHQW
)LJXUH $FWLYDWLRQ RI WKH & FRPSOH[
WLGHFRQWDLQLQJα DQGFKDLQV7KHVROXEOH&DN'D ELQGVWRDPLQRJURXSV RQSURWHLQV$OWKRXJKWKHELRORJLFDOVLJQLILFDQFHRI&DLVXQFOHDULWGRHVDFWDV DQ DQDSK\ODWR[LQ WKDW QRQLPPXQRORJLFDOO\ OLEHUDWHV KLVWDPLQH IURP PDVW FHOOV DQG EDVRSKLOV 7KH UHOHDVHG KLVWDPLQH LQFUHDVHV YDVFXODU SHUPHDELOLW\ DQG VPRRWKPXVFOHFRQWUDFWLRQ &EKDVDGLIIHUHQWIXQFWLRQ,WKDVDQXQXVXDOWKLRHVWHUJURXSLQWKHα FKDLQ :KHQDWWDFNHGE\DPLQRDQGK\GUR[\OJURXSVDQXQVWDEOH&ELVFUHDWHG6RPH PHWDVWDEOH &E XQGHUJRHV HVWHULILFDWLRQ IRUPLQJ ERQGVZLWKFDUERK\GUDWHV RQ WKH FHOO VXUIDFH RU DPLGH ERQGV ZLWK SURWHLQV )LJ 7KH IXQFWLRQ RIWKH & FOHDYDJHLVWRORFDOL]HWKH&ELQFOXVWHUVRQWKHFHOOVXUIDFHQHDUWKHVLWHRIWKH DQWLJHQ±DQWLERG\LQWHUDFWLRQ5XGG\ HWDO D 1DWLYH&LV D N'DSRO\SHSWLGHWKDWELQGV WRWKHFHOOERXQG&ELQD UHDFWLRQUHTXLULQJPDJQHVLXP&LVFOHDYHGE\&VLQWR&DDQG&E&E N'D GLIIXVHVLQWRWKHH[WHUQDOPLOLHXDQGDFWLYDWHV&NLQLQV$ODUJHUN'D
,PPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
)LJXUH &OHDYDJH RI FRPSOHPHQW FRPSRQHQWV & DQG &
IUDJPHQW &D UHPDLQV LQ FRQWDFW ZLWK WKH &E WR FUHDWH D & FRQYHUWDVH HQ]\PDWLFFRPSOH[0XOOHU(EHUKDUG 7KH & FRQYHUWDVH LV XVHG WR DPSOLI\ WKH FODVVLFDO FRPSOHPHQW FDVFDGH )LJ 7KLVN'DGLPHULFSURWHLQKDVα DQGFKDLQV&LQGXFHGFOHDYDJH RI & α FKDLQ OLEHUDWHV &D D N'D IUDJPHQ 7KLV VPDOO IUDJPHQW LV DQ DQ DSK\ODWR[LQ &RPSDUHGZLWK&DDQDSK\ODWR[LQ &DLV ±WLPHV PRUHELR ORJLFDOO\DFWLYH/LNHWKH&PROHFXOHWKHODUJHN'D &E α FKDLQKDVD XQLTXHWKLRHVWHUWKDWLV DWWDFNHGE\ DPLQRDQGK\GUR[\O JURXSV 7KHPHWDVWDEOH&EVHH)LJ ELQGVWRWKHFHOOVXUIDFHIRUPLQJDFRPSOH[ ZLWK&D&E%LQGLQJRI&ELVKLJKO\HIILFLHQWLQELRORJLFDOWHUPV%HWZHHQ DQG RIWKHWRWDO&EELQGVWRWKHFHOOVXUIDFH :DUG
0HPEUDQH$WWDFN 8QLW 7KH&E&D&EFRPSOH[VHUYHVDV D&FRQYHUWDVHWKDWFOHDYHVWKH N'DKHWHURGLPHU&)LJ &OHDYDJHRI&OLEHUDWHVDQ ON'D&DIUDJPHQW DQGDWZRFKDLQ N'D&E)ROORZLQJLQWHUDFWLRQVEHWZHHQVROXEOH&DDQG PHGLDWRUFRQWDLQLQJFHOOVEDVRSKLOVPDVWFHOOVDQGSODWHOHWV KLVWDPLQHFDQEH UHOHDVHG 7KXV &D DFWV DV DQ DQDSK\ODWR[LQ LQGXFLQJ FRQWUDFWLRQ RI VPRRWK PXVFOHDQGLQFUHDVLQJYDVFXODUSHUPHDELOLW\&DLVWKHPRVWSRWHQWDQDSK\ODWR[ LQ ±WLPHVPRUHSRWHQWWKDW&D LQ WKHFRPSOHPHQWFDVFDGH ,QDGGL WLRQ&DLQFUHDVHV WKHPRYHPHQWRIQHXWURSKLOVFKHPRNLQHVLV DQG VWLPXODWHV
&RPSOHPHQW
)LJXUH )RUPDWLRQ RI & FRQYHUWDVH
PLJUDWLRQFKHPRWD[LV RISRO\PRUSKRQXFOHDUOHXNRF\WHVDQGPRQRF\WHVLQWRWKH DUHD&EELQGVWRWKHFHOOVXUIDFH0XOOHU(EHUKDUG ,QWHUDFWLRQVEHWZHHQ&DQG&FUHDWHDVWDEOHFRPSOH[RQWKHFHOOVXUIDFH )LJ %LQGLQJ RIWKH & FRPSRQHQW FUHDWHV D WLJKWO\ ELQGLQJ WULPROHFXODU OLSRSKLOLFFRPSOH[&&&YLDLQVHUWLRQRI&LQWRWKHK\GURSKRELFFHOOPHP EUDQH&LVDN'DWULPHULFSRO\SHSWLGHZLWKα, DQGγ FKDLQV7KHN'D γ FKDLQ LV LQVHUWHG LQWR WKH OLSLG ELOD\HU IXUWKHU LQFUHDVLQJ WKH VWDELOLW\ RI WKH &&&& FRPSOH[ )ROORZLQJ SRO\PHUL]DWLRQ RI IRXU & PROHFXOHV LQWR D F\OLQGULFDO IRUP & LV LQVHUWHG LQWR WKH PHPEUDQH QHDU & IRUPLQJ WKH &&&&&FRPSOH[)LJ 2FFDVLRQDOO\ WR &PROHFXOHVSRO\PHU L]H IRUPLQJ³SRO\&´ ,QVHUWLRQ RI& FUHDWHV O\WLF SRUHV LQ WKH PHPEUDQH 7KH SRUHV DOORZ WKH H[FKDQJHRIZDWHUDQGLRQVUHVXOWLQJLQRVPRWLFO\VLVRIWKHFHOO $OWHUQDWLYHO\
)LJXUH &OHDYDJH RI & DQG LQWHUDFWLRQV ZLWK &
OPPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
)LJXUH 3RUH IRUPDWLRQ DQG O\VLV RI VHQ VLWL]HG VKHHS UHG FHOOV
SRUH IRUPDWLRQ PD\ DOORZ KLJK FRQFHQWUDWLRQV RI FDOFLXP WR HQWHU WKH FHOO FDXVLQJFHOOGHDWK0XOOHU(EHUKDUG
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
&21752/0(&+$1,606,17+(&/$66,&$/3$7+:$< &RQWURORIWKH5HFRJQLWLRQ&RPSOH[ & VHULQHSURWHDVH LQKLELWRU,1+ DEURJDWHV WKHDFWLYLW\ RI&V DQG&U ,1+PLPLFV WKH QRUPDO & VXEVWUDWH )LJ $IWHUFOHDYDJH & ,1+ XVHV D WKLRHVWHU OLQNDJH WR FRYDOHQWO\ ELQG WR &,V DQG &U DQG LQKLELWV HQ]\PDWLF DFWLYLW\RIWKH& UHFRJQLWLRQXQLW=LFFDUGLDQG&RRSHU %DXHU
&RPSOHPHQW
)LJXUH &RQWURO SURWHLQV IRU WKH FODVVLFDO SDWKZD\
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
&RQWURORIWKH0HPEUDQH&RPSOH[ 7ZRUHJXODWRU\SURWHLQVFRQWUROWKHDFWLYDWLRQRIWKHPHPEUDQHDWWDFNFRP SOH[ 0$& %RWK UHVWULFW WKH O\VLV RIE\VWDQGHU FHOOV GXULQJ WKH FRPSOHPHQW FDVFDGH+RPRORJRXVUHVWULFWLRQIDFWRU+5) KDVEHHQJLYHQD&'GHVLJQD WLRQ 7KLV SURWHLQ ELQGV WR WKH& FRPSRQHQWDQG LQVHUWV LWVHOILQWR WKHSODVPD PHPEUDQHYLDSKRVSKDWLG\OLQRVLWROOLQNDJHV&LQVHUWLRQLVSUHYHQWHGDQGFHOOV FDQQRWEHO\VHG7KHVHFRQGSURWHLQ²YLEURQHFWLQRU6SURWHLQ²FRPSOH[HVZLWK VROXEOH &E& 7KXV PHPEUDQH LQVHUWLRQ RIWKH 0$& LV SUHYHQWHG 0XOOHU (EHUKDUG
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
)LJXUH 6FKHPDWLF RI PHWDVWDEOH &E
&RPSOHPHQW
)LJXUH 7KH & FRQYHUWDVH LQ WKH DOWHUQDWLYH SDWKZD\
DE 6XUIDFHERXQG&E%EFOHDYHVWKH α $UJ±6HU FKDLQRI&WR JHQHUDWH &E WKDW ELQGV WR WKH FHOO DQG IRUPV DGGLWLRQDO & FRQYHUWDVH FRP SOH[HV 6RPH&EOLEHUDWHGE\WKHQRYHOFRQYHUWDVHELQGVWRWKHFRPSOH[LWVHOI FUHDWLQJD&%E&E7KHQHZFRPSOH[DFWVDVD&FRQYHWWDVHWKDWK\GURO\]HV WKH α FKDLQ $UJ±$UJ OLEHUDWLQJ &D DQG &E 2VOHU DQG 6DQGEHUJ
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
)LJXUH &RQWURO SURWHLQV LQ DOWHU QDWLYH SDWKZD\
OPPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
VWURQJO\ WR KLJKO\ VXOIDWHG JO\FRFRQMXJDWHV VXFK DV GH[WUDQ VXOIDWH KHSDULQ FKRQGURLWLQVXOIDWH$DQGFDUUDJHHQDQ%LQGLQJGHSHQGVRQWKHQXPEHURULHQWD WLRQ DQGSRO\PHULFDUUDQJHPHQWRIVXOIDWHJURXSV0HUL DQG3DQJEXUQ
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±DPLQRDFLGV%LQGLQJ RI&EDQG&ELVDVVRFLDWHGZLWKWKHVHFRQG6&57KLVHQVXUHVWKDWELQGLQJRI WKH FRPSOHPHQW IUDJPHQWV WR &5 RFFXUV DW D GLVWDQFH IURP WKH FHOO VXUIDFH %HUJHU HWDO
&5&RPSOHPHQW5HFHSWRU&' &5 LV DVLQJOHFKDLQ LQWHJUDO PHPEUDQH JO\FRSURWHLQ ,WELQGV L&E DQG &GJWKDWDUHOLEHUDWHGZKHQ)DFWRU,FOHDYHV&E&5LVSUHVHQWRQIROOLFXODU GHQGULWLFFHOOVLQWKHJHUPLQDOFHQWHUVDQGVHUYHVWRWUDSDQWLJHQ±DQWLERG\FRP SOH[HV DQG DFWLYDWH PHPRU\ % FHOOV 2Q QDLYH% FHOOV &5UHFHSWRULV IRXQG DVVRFLDWHGZLWK&'DQG7$3$ SURWHLQ7KLVFRPSOH[LVQHFHVVDU\WRGHOLYHU DFWLYDWLRQVLJQDOVDWORZOHYHOVRIDQWLJHQ6LPHWDO
&5&RPSOHPHQW5HFHSWRU0DF&'E&' &5 LV IRXQG RQ PRQRF\WHV QHXWURSKLOV 1. FHOOV DQG GHQGULWLF FHOOV 6WUXFWXUDOO\ &5 KDV KRPRORJLHV ZLWK WKH LQWHJULQ IDPLO\ RIFHOO VXUIDFHSUR WHLQV &5 FRQVLVWV RI WZR QRQFRYDOHQWO\ OLQNHG α N'D DQG N'D FKDLQVGHVLJQDWHG&' 7KH&5 FKDLQKDVKRPRORJ\ZLWKWKH FKDLQVRI O\PSKRF\WH IXQFWLRQDVVRFLDWHG DQWLJHQ /)$ DQGS %HFDXVHRIWKH VLPLODULW\WR/)$ PRQRF\WHVDQGQHXWURSKLOVFDQDWWDFKWRWKHYDVFXODUHSLWKH OLXPYLD,&$0 ZLWKRXWFRPSOHPHQWDFWLYDWLRQ 3KDJRF\WRVLVDQGNLOOLQJRI[HQRELRWLFVDUHLQLWLDWHGE\WZRGLVWLQFWPHFKD QLVPV /LNHRWKHUFRPSOHPHQWUHFHSWRUV&5 ELQGVL&E OLEHUDWHG E\)DFWRU,
&RPSOHPHQW
FOHDYDJH DQG LQLWLDWHV SKDJRF\WRVLV DQG LQWUDFHOOXODU NLOOLQJ RI EDFWHULD &5 ELQGV OHFWLQV SUHVHQW RQ WKH VXUIDFH RI6DFFKDURP\FHV 6WDSK\ORFRFFXV HSLGHU PLGLWLV DQG +LVWRSODVPDFDSVXODWXPZLWKRXWWKHQHFHVVLW\IRUFRPSOHPHQWDFWL YDWLRQ%HUJHUHWDO
0,&52%,$/$%86(2)7+(&203/(0(176<67(0 %DFWHULD DQG YLUXVHV FDQ XVH FRPSOHPHQWUHFHSWRUV WR LQLWLDWH SHQHWUDWLRQ LQWRFHOOV&5VHUYHVDVDUHFHSWRUIRUDQXPEHURISDWKRJHQLFEDFWHULDLQFOXGLQJ 0\FREDFWHULXP /HLVKPDQLD /HJLRQHOOD DQG %DEHVLD &5 LV QHFHVVDU\ IRU ELQGLQJ DQG LQIHFWLRQ RI% O\PSKRF\WHV E\ (SVWHLQ%DUUYLUXV +,9VSUHDGVE\DWWDFKPHQWWR&5&5RU&5$VLWUHDFWVZLWKWKHKRVW FHOOWKHYLUXVLVSURWHFWHGIURPFRPSOHPHQWO\VLVE\DFRDWLQJRIKRVWPHPEUDQH LQKLELWRURIUHDFWLYHO\VLV&' DQGGHFD\DFFHOHUDWLQJSURWHLQ'$)&' ,Q DGGLWLRQ +,9 JS QHFHVVDU\ IRU GLUHFW IXVLRQ RIWKH YLUXV DQG KRVW FHOO PHPEUDQH LVFRDWHGZLWKIDFWRU+DQLQKLELWRURIDOWHUQDWHFRPSOHPHQWSDWKZD\ DFWLYDWLRQ 0LFURELDODWWDFKPHQWWRFRIDFWRUSURWHLQV LV DOVRXVHGDVDPHDQVWRSHQH WUDWHFHOOV0HDVOHVYLUXVDQG6WUHSWRFRFFXVS\RJHQHV*URXS$DWWDFKDQGLQIHFW FHOOV YLD WKH FRPSOHPHQW PHPEUDQH FRIDFWRUSURWHLQ ,Q WKH FDVH RIWKH VWUHS WRFRFFXVDFHOOZDOOSURWHLQFDOOHG0SURWHLQDWWDFKHVWR0&3RQWKHVXUIDFHRI NHUDWLQRF\WHV&RPSOHPHQWO\VLVRIWKHERXQGEDFWHULXPLVSUHYHQWHGE\DFRDW LQJRIIDFWRU+
0,&52%,$/&203/(0(17,1$&7,9$7,21 0LFUREHV KDYH GHYHORSHG XQLTXH PHFKDQLVPV WR FLUFXPYHQW RU LQDFWLYDWH WKHFRPSOHPHQWFDVFDGH,WLVZHOOGRFXPHQWHGWKDWKLJKFRQFHQWUDWLRQVRIVLDOLF DFLGRQWKHFHOOVXUIDFHLQFUHDVHWKHELQGLQJRIIDFWRU+DQGLQKLELWWKHFRPSOH PHQWFDVFDGH7\SH,,,*URXS%VWUHSWRFRFFXV. ( FROL DQG*URXS%DQG& 1HLVVHULDPHQLQJLWGLVSRWHQWSDWKRJHQVLQKXPDQV KDYHKLJKO\GHYHORSHGFDS VXOHV ULFK LQ VLDOLF DFLGUHVLGXHV 2WKHU EDFWHULD VXFK DV 3VHXGRPRQDV VHFUHWH HODVWDVHWKDWLQDFWLYDWHV&DDQG&DUHGXFLQJWKHORFDOLQIODPPDWRU\UHVSRQVHLQ WLVVXH3DUDVLWHV7U\SDQRVRPDFUX]L FDQLQDFWLYDWHWKHFRPSOHPHQWFDVFDGHE\ DN'DSURWHLQFDOOHG7'$)7KLVSURWHLQKDVKRPRORJ\ZLWKWKHFODVVL FDO '$) 2WKHUSDUDVLWHV /HLVKPDQLD PDMRUSURPDVWLJRWHV VLPSO\ UHOHDVH WKH PHPEUDQHFRPSOH[IURPWKHFHOOVXUIDFH9LUXVHVFDQDOVRLQDFWLYDWHWKHFRPSOH PHQWSDWKZD\7KHYDFFLQLDYLUXVSURGXFHVDYDFFLQLDFRQWUROSURWHLQ9&3 WKDW LVKRPRORJRXVWRWKHDPLQRDFLGVHTXHQFHVDWWKH1WHUPLQXVRI&EELQGLQJ
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
SURWHLQ,QWHUDFWLRQEHWZHHQ9&3DQGFRPSOHPHQWFRPSRQHQWVEORFNVWKHDFWL YDWLRQ RI& DQG&
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
'HIHFWVLQ$FFHVVRU\3URWHLQV 6RPHVXEMHFWVODFN'$)+5)DQG&'WKDWQRUPDOO\LQKLELW&FRQYHU WDVHIRUPDWLRQ,QWKLVV\QGURPH²FDOOHG3DUR[\VPDOQRFWXUQDOKHPRJORELQXULD 31+ ²WKHVHUHJXODWRU\SURWHLQVKDYHDGHIHFWLYHJO\FRV\OSKRVSKDWLG\OLQRVLWRO DQFKRUSURWHLQSUHYHQWLQJELQGLQJWRWKHFHOOPHPEUDQH%HFDXVHUHGEORRGFHOOV DUH XVXDOO\ WKH WDUJHW RIFRPSOHPHQW DFWLYDWLRQ VXEMHFWV KDYH UHFXUUHQW LQWUD YDVFXODUUHGFHOOKHPRO\VLV %DUWKRORPHZDQG6KDQDKDQ
0,&52%,$/,1)(&7,216$1'&203/(0(17 '()O&O(1&,(6 'HIHFWVLQWKHHDUO\FRPSRQHQWV &&&RU& RIWKHFODVVLFDOSDWK ZD\UHQGHUVXEMHFWVVXVFHSWLEOHWRS\RJHQLFLQIHFWLRQVZLWKJUDPSRVLWLYHEDFWH ULDVXFKDV VWUHSWRFRFFL DQG VWDSK\ORFRFFL 'HIHFWV LQ)DFWRU' RUSURSHUGLQ LQ WKH DOWHUQDWH SDWKZD\ DUH DVVRFLDWHG ZLWK UHFXUUHQW LQIHFWLRQV ZLWK S\RJHQLF EDFWHULD RU QHLVVHULD VSHFLHV ,QIHFWLRQV ZLWKQHLVVHULD DUH DOVR DVVRFLDWHG ZLWK GHIHFWV LQ &± FRPSRQHQWV RIWKH0$&
&RPSOHPHQW
7DEOH
&KHPLFDOVDQG3KDUPDFHXWLFDOVWKDW,QKLELW WKH &RPSOHPHQW 6\VWHP
&RPSRXQG *OXWDUDOGHK\GH 'DSVRQH &KORURTXLQH '3HQLFLOODPLQH *O\FRVDPLQRJO\FDQSRO\VXOIDWH &\FORVSRULQ $ 'LR[LQ 3HQWDFKORURSKHQRO 6RGLXP D]LGH
7UHDWPHQW
,QKLELWLRQ
$QWLLQIODPPDWRU\ /HSURV\ /HSURV\ $UWKULWLV 0XOWLSOHGLVHDVHV 2UJDQ UHMHFWLRQ
&D&D & & F &DQGIDFWRU% &+ &+ DQG & &+ DQG & &+
5HSULQWHG IURP 0HWKRGV LQ ,PPXQRWR[LFRORJ\ %XUOHVRQ 'HDQ DQG 0XQVRQ HGV 9RO S&RS\ULJKWZLWKSHUPLVVLRQRI:LOH\±/LVV,QFDVXEVLGLDU\RI-RKQ:LOH\DQG6RQV ,QF
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
&KHPLFDOV,QFUHDVLQJ&RPSOHPHQW /HYHOV LQ 6HUXP
&KHPLFDO
&+
&
W%XW\OK\GURTXLQRQH
±
&KORURRSKHQ\OHQHGLDPLQH 'LHWK\OVWLOEHVWURO (VWUDGLRO P1LWURWROXHQH 3\UDQ FRSRO\PHU ¶7KLRELVWEXW\OPFUHVRO
±
± ±
± ±
5HSULQWHG IURP 0HWKRGV LQ ,PPXQRWR[LFRORJ\ %XUOHVRQ 'HDQ DQG 0XQVRQ HGV 9RO , S &RS\ULJKW ZLWK SHUPLVVLRQ RI:LOH\ /LVV,QF DVXEVLGLDU\ RI-RKQ:LOH\ DQG6RQV ,QF
OPPXQRWR[LFRORJ\DQG 5LVN $VVHVVPHQW
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
+$=$5','(17O)O&$7O21 7ZR PHWKRGV DUH XVHG IRU DVVHVVLQJ FRPSOHPHQW IXQFWLRQ 2QH PHWKRG PHDVXUHVWKHIXQFWLRQDODFWLYLW\ZKLOHWKHVHFRQGTXDQWLWDWHVWKHDPRXQWRI& SURWHLQLQWKHVHUXP/LQDQG:KLWH 7KHIXQFWLRQDOKHPRO\WLFDFWLYLW\RI FRPSOHPHQWFDQ EH GHWHUPLQHGE\UHODWLQJWKH DPRXQW RIKHPRJORELQ UHOHDVHG IURPDQWLERG\FRDWHGHU\WKURF\WHVIROORZLQJUHDFWLRQZLWKVHUXP8VLQJWKH9DQ .URJK HTXDWLRQ WKH YROXPH RIVHUXP QHFHVVDU\ WRO\VH RIWKHFRDWHGUHG FHOOV &+ XQGHUVWDQGDUGFRQGLWLRQV LVGHWHUPLQHG /LQDQG:KLWH 7KHFKRLFHRIDQWLERG\FRDWHG WDUJHWFHOOVGLIIHUV ZLWKGLIIHUHQWVRXUFHVRI FRPSOHPHQW +XPDQ JXLQHDSLJDQGGRJFRPSOHPHQWZLOOO\VH65%&V 0RXVH FRPSOHPHQW FDQQRW O\VH VHQVLWL]HG 65%&V EHFDXVH IRU XQNQRZQ UHDVRQV VXUIDFH SURWHLQV LQDFWLYDWH WKH HDUO\ FRPSOHPHQWFRPSRQHQWV 0RXVH FRPSOHPHQWUHDGLO\O\VHVUDEELWUHGFHOOVFRDWHGZLWKDQWLERG\9DQ'LMNHWDO
&RPSOHPHQW
0LFURWLWHU FRPSOHPHQW DVVD\V IRU KHPRO\WLF FRPSOHPHQW &+ ZHUH GHYHORSHGLQWKHHDUO\ V:KLWHDQG$QGHUVRQ ,QWKH VHFRQGLPPXQRFKHPLFDODVVD\ V\VWHP DQWLERG\WR WKH& FRPSOH PHQWLVUHDFWHG ZLWKVHUXPSURGXFLQJDQWLJHQDQWLERG\FRPSOH[HV &RPSOH[HV LQFUHDVHWKHWXUELGLW\RIVHUXPLQDPDQQHUSURSRUWLRQDOWRWKHDPRXQWRI&LQ WKHVDPSOH/LQDQG:KLWH 5DGLDOLPPXQRGLIIXVLRQFDQDOVREHXVHGWR PHDVXUH&OHYHOV
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
3KDJRF\WRVLVDQG,QWUDFHOOXODU.LOOLQJ
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
,0081(&203/(;(6$1'&203/(0(17$&7,9$7,21 ,Q WKH HDUO\ SKDVH RIWKH DQWLERG\ UHVSRQVH WKHUH LV DQ H[FHVV RIDQWLJHQ FRPSDUHG ZLWK WKH DQWLERG\ FRQFHQWUDWLRQ 6PDOO DQG LQWHUPHGLDWH VL]H FRP SOH[HV DUH IRUPHG ZKHQ WKHUH LV H[FHVV DQWLJHQ &RPSOHPHQW LV XVXDOO\ QRW DFWLYDWHGEHFDXVHWKHUHDUHIHZDQWLERGLHVDVVRFLDWHGZLWKWKHFRPSOH[HV$VWKH DQWLERG\FRQFHQWUDWLRQVLQFUHDVHWKHFRPSOH[HVEHFRPHODUJHU :KHQWKHUDWLR
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
RIDQWLJHQ WR DQWLERG\ LV RSWLPDO D ODUJH ODWWLFHZRUNFRPSOH[ LV IRUPHG 7KH LQVROXEOHFRPSOH[HVDFWLYDWHWKHFODVVLFDOFRPSOHPHQWSDWKZD\ZLWKWKHOLEHUD WLRQ RIFKHPRWDFWLF IDFWRUV %HFDXVHRIDKLJKK\GURVWDWLFSUHVVXUHODUJHFRPSOH[HVXVXDOO\VHWWOHRXWLQ WKH NLGQH\V RU WKH V\QRYLD ,IWKH DQWLJHQ LV FDWLRQLF ELQGLQJ WR WKH EDVHPHQW PHPEUDQH RI WKH FDSLOODU\ YHVVHO FUHDWHV WKH SRWHQWLDO IRU D PRUH GHVWUXFWLYH HIIHFW
75$160(0%5$1(0,*5$7,21 3KDJRF\WHV RIWHQPXVWOHDYHWKHYHVVHOVE\WUDQVHQGRWKHOLDOPLJUDWLRQ DQG HQWHUWKHWLVVXHFRPSDUWPHQW7KHSDVVDJHWKURXJKWKHHQGRWKHOLXPUHTXLUHVWKH GLVDVVHPEO\DQGUHPRGHOLQJ RIERWKWKHHQGRWKHOLXPDQGEDVHPHQWPHPEUDQH 7KLVSURFHVVLVVLPSOLILHGE\WKHVHFUHWLRQRIPDWUL[PHWDOORSURWHLQDVHV003V DIDPLO\ RI SURWHDVHV 7KHVH HQ]\PHV KDYHD ZLGH VSHFWUXP RIDFWLYLW\ RQ FROODJHQODPLQLQDQGJHODWLQ 6\QWKHVLV RI WKH 003V LV XSUHJXODWHG E\ FHOO±PDWUL[ LQWHUDFWLRQV HJ FRQWDFW ZLWK FROODJHQ RUFHOO±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α $W WKH VDPH WLPH 7*) DQG LQVXOLQ JURZWK IDFWRU DUH UHOHDVHG IURP WKHGHJUDGHGFRQQHFWLYHWLVVXH
3+$*2&<7,&&(//)F5(&(37256 )ROORZLQJLQWHUDFWLRQVZLWKWKHHQGRWKHOLXPWKHQHXWURSKLOVH[SUHVVDQXP EHURIVSHFLILFUHFHSWRUVLQFOXGLQJ)FUHFHSWRUVIRULPPXQRJOREXOLQV7DEOH 7KUHH FODVVHV RI UHFHSWRUV DUH H[SUHVVHG E\ SKDJRF\WLF FHOOV )Fγ5, &' )Fγ5,&' DQG)Fγ5,,,&' 0RVWUHFHSWRUVDUHKHWHURROLJRPHULFFRP SOH[HVFRQVLVWLQJRIQLQHPHPEUDQHDVVRFLDWHG)F5VDQGWKUHHVROXEOH)FUγ5V FRGHGE\HLJKWJHQHV7KHUHFHSWRUVDUHWUDQVPHPEUDQHSURWHLQVZLWKVLPLODULWLHV WR WKH %&5 DQG 7&5 UHFRJQLWLRQ SURWHLQV 6RPH UHFHSWRUV KDYH ³LPPX QRJOREXOLQOLNH´ GRPDLQV +LJKDIILQLW\ )Fγ5, &' FRQWDLQV WKUHH LPPX
3KDJRF\WRVLV DQG ,QWUDFHOOXODU .LOOLQJ
7DEOH &HOOXODU5HFHSWRUVRQWKH6XUIDFHRI3KDJRF\WLF&HOOV 5HFHSWRU &5 &' &5&' &5 0DF &'E&'
&'
&' &'
/RFDWLRQ $FWLYDWHG301V )ROOLFXODUGHQGULWLFFHOOV )ROOLFXODUGHQGULWLFFHOOV 0RQRF\WHV $FWLYDWHG301V 'HQGULWLFFHOOV 0RQRF\WHVPDFURSKDJHV $FWLYDWHG301V 0RQRF\WHVPDFURSKDJHV $FWLYDWHG301V 0DFURSKDJHV
/LJDQG &EL&EDQG& L&EDQG&GJ L&E
+XPDQ ,J* DQG ,J* 0RXVH,J*D 2[LGDWLYHEXUVW 3RO\PHULF ,J* 5HVSLUDWRU\EXUVW ,J*DDQG ,J*
QRJOREXOLQOLNH GRPDLQV LQ WKH H[WUDFHOOXODU UHJLRQ )Fγ5,, DQG )Fγ5,,, KDYH RQO\WZRLPPXQRJOREXOLQGRPDLQVDQGDORZHUELQGLQJDIILQLW\IRU,J*'HRHW DO *HQHWLFSRO\PRUSKLVPDPRQJWKH)FUHFHSWRUVLVFRPPRQ$OWHUQDWHIRUPV RI)Fγ5,,&' GLIIHUE\DVLQJOHDPLQRDFLGDUJLQLQHRUKLVWLGLQH DWSRVLWLRQ LQ WKH VHFRQG ,J GRPDLQ FUHDWLQJ )Fγ5,,D5 RU )Fγ5,D+)LJ 7KH ORZDIILQLW\ UHFHSWRU )Fγ5,,,DOVR KDV WZR DOWHUQDWH IRUPV )FUγ5,,,D DQG )Fγ5,,,E6XEW\SHVRIERWKWKH)Fγ5,,,DDQGEUHFHSWRUVKDYHEHHQLGHQWLILHG 7KHWZRDOORW\SHVRI)Fγ5,,,DFRQWDLQHLWKHUYDOLQHRUSKHQ\ODODQLQHDWSRVLWLRQ $OORW\SHVRI)Fγ5,,,E1$RU1$GLIIHULQILYHQXFOHRWLGHVWKDWUHVXOW LQ GLIIHUHQWJO\FRV\ODWLRQSDWWHUQV'HRHWDO 1997)
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γ, RU ζ FKDLQV WKDW FRQWDLQDDPLQRDLGLPPXQRUHFHSWRUW\URVLQHDFWLYDWLRQPRWLI,7$0 6HY HUDO ,7$0V DUH SKRVSKRU\ODWHG E\ VUF SURWHLQ W\URVLQH NLQDVHV 37.V ZKLFK DOORZLQWHUDFWLRQVZLWKV\N NLQDVHV6WU]HOHFNDHWDO
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
)LJXUH 7KH KXPDQ )Fγ5 UHFHSWRU IDPLO\ 7KH OLJDQGELQGLQJ D FKDLQ FRQWDLQV H[ WUDFHOOXODU UHJLRQV FRPSULVLQJ GLVXOILGHERQGHG LPPXQRJOREXOLQ ,J OLNH GRPDLQV )Fγ5, KDV WKUHH ,J GRPDLQV WKH RWKHUV KDYH WZR ,J GRPDLQV )Fγ5,D )Fγ5,,D DQG H[LVW DV ROLJRPHULF FRPSOH[HV ZLWK DVVRFLDWHG )F5γβ FKDLQV WKDW FRQWDLQ LPPXQRUHFHSWRU W\URVLQHEDVHG DFWLYDWLRQ PRWLIV ,7$0V )Fγ5,,E FRQWDLQV DQ LQKLEL WRU\ PROHFXOH ,7,0 7KHUH DUH WZR DOORW\SLF IRUPV RI KXPDQ )Fγ5,,D WKDW DUH GLVWLQ JXLVKHG E\ WKH SUHVHQFH RI DUJLQLQH )Fγ5,,D5 RU KLVWLGLQH )Fγ5,,D+ 7KH WZR DOORW\SHV RI )Fγ5,,,D FRQWDLQ HLWKHU YDOLQH RU SKHQ\ODODQLQH DW SRVLWLRQ 5H SULQWHG IURP ,PPXQRORJ\ 7RGD\ 'HR HW DO ZLWK SHUPLVVLRQ RI (OVHYLHU 6FLHQFH
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
3KDJRF\WRVLV DQG ,QWUDFHOOXODU .LOOLQJ
5(63,5$725<%8567 'LJHVWLRQ DQG LQWUDFHOOXODUNLOOLQJ UHTXLUHV HQHUJ\ GHULYHG IURP DUHVSLUD WRU\EXUVW%DJJLROLQLDQG:\PDQQ (QHUJ\LVJHQHUDWHGIURPWKHFODVVL FDO (PEGHQ±0H\HUKRISDWKZD\ DQG WKH KH[RVH PRQRSKRVSKDWH VKXQW +06 )LJ ,QDFWLYHO\UHVSLULQJFHOOVRIWKHHQHUJ\LVSURYLGHGE\WKH+06,Q WKH LQLWLDO VWDJHV RI WKH UHVSLUDWRU\ EXUVW 2 UHDFWV ZLWK R[LGDVHV WKDW XVH
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
OPPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
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±:HLVVUHDFWLRQJHQHUDWHVERWKK\GURJHQSHUR[LGHDQGK\GUR[\OUDGLFDOV 7KHSURSRVHGUHDFWLRQVHTXHQFH&KULVWHQHWDO LVDVIROORZV
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
7KHUHDFWLYHSHUR[\QLWULWHPROHFXOHRUWKHFRQMXJDWHDFLGUHDFWZLWKPDQ\ GLIIHUHQWVXEVWUDWHV3HUR[\QLWULWHR[LGL]HVVXOIK\GU\OJURXSVZKLOHSHUR[\QLWURXV DFLGK\GUR[\ODWHV SKHQROLFFRPSRXQGV SHUR[LGDWHV OLSLGV DQG R[LGL]HV VXJDUV
3KDJRF\WRVLV DQG ,QWUDFHOOXODU .LOOLQJ
DQG '1$ 3HUR[LGDWLRQ RI SURWHLQV FRQWDLQLQJ VXOI\GU\O JURXSV F\VWHLQH RU EDVLFDPLQRDFLGVKLVWLGLQHO\VLQH LVDOVRFRPPRQ 0RQRF\WHV DQG 301V DOVR FRQWDLQ D P\HORSHUR[LGDVH 032 ZKLFK LV VHFUHWHGLQWRWKHSKDJRVRPHIURPSULPDU\JUDQXOHV7DEOH ,QWKHSUHVHQFHRI 032 K\GURJHQ SHUR[LGHV DQG KDOLGHV DFW DV VXEVWUDWHV IRU WKH IRUPDWLRQ RI K\SRKDORXV DFLGV %HFDXVH &O LV WKH PDMRU KDOLGH SUHVHQW LQ WKH ERG\ K\SR FKORURXVDFLGLVXVXDOO\IRUPHG&KULVWHQHWDO +2 &O +
+2&O +2
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
51+
7DEOH
+ +2&O
51+&O
+
+2
&RQVWLWXHQWVRI3ULPDU\DQG6HFRQGDU\*UDQXOHV 3ULPDU\JUDQXOHV
0LFURELFLGDO 1HXWUDOVHULQHSURWHDVHV
$FLGK\GURODVHV
0LVFHOODQHRXV
0\HORSHUR[LGDVH /\VR]\PH (ODVWDVH &DWKHSVLQ* 3URWHLQDVH 1$FHW\OJOXFRVDPLQH &DWKHSVLQ' &DWKHSVLQ% *OXFXURQLGDVH /DFWRIHUULQ 9LWDPLQ%ELQGLQJSURWHLQ &\WRFKURPH%
6HFRQGDU\JUDQXOHV /\VR]\PH &ROODJHQDVH
0RGLILHG IURP $QQXDO 5HYLHZ RI0HGLFLQH *DOOLQ ZLWK SHUPLVVLRQ RI WKH $QQXDO 5HYLHZ RI0HGLFLQH
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
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
02'8/$7,212)7+(5(63,5$725<%8567 7KH UHVSLUDWRU\ EXUVW FDQ EH PRGXODWHG E\ H[WUDFHOOXODU RU LQWUDFHOOXODU PHFKDQLVPV2QHH[WUDFHOOXODUPRGXODWLRQPHFKDQLVPLQYROYHVWKHLQDFWLYDWLRQ RUFKHODWLRQ RIFRSSHUDQG LURQ WKDWPHGLDWHWKH+DEHU±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
1,75,&2;,'(352'8&7,21 ,Q D V\VWHP LQGHSHQGHQW RI WKH UHVSLUDWRU\ EXUVW SKDJRF\WHV FDQ LQGXFH 12PHGLDWHG F\WRWR[LFLW\ E\ DFWLYDWLRQ RI LQGXFLEOH L126 DQG FRQVWLWXWLYH F126 LVRIRUPVRIQLWULFR[LGHV\QWKDVH126 8VLQJWKLVR[LGDWLYHSDWKZD\ /DUJLQLQHFDQEHFRQYHUWHGWRFLWUXOOLQHZLWKWKHOLEHUDWLRQRIQLWULFR[LGH12
3KDJRF\WRVLV DQG ,QWUDFHOOXODU .LOOLQJ
,QWXUQ 12UHDFWVZLWK2 WRIRUPDQXPEHURIDGGLWLRQDOUHDFWLYHLQWHUPHGLDWHV VXFKDV GLQLWURJHQWULR[LGH12 RUGLQLWURJHQWHWUR[LGH12 'LHWHUWHWDO 7KHUHDFWLRQ VHTXHQFHIRUWKH JHQHUDWLRQ RI12 LVDV IROORZV
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
$'9(56(+($/7+())(&76 &KURQLFLQIHFWLRQRULQIODPPDWLRQLVDVVRFLDWHGZLWKDGYHUVHKHDOWKHIIHFWV 003V SOD\ D UROH LQ WKH SDWKRSK\VLRORJ\ RIH[SHULPHQWDO GLVHDVH PRGHOV ,Q DQLPDO PRGHOV RIUKHXPDWRLG DUWKULWLV 003V PD\ FRQWULEXWH WR FDUWLODJH DQG ERQHGHVWUXFWLRQV\QRYLDOSUROLIHUDWLRQDQGSHULRVWHDOERQHIRUPDWLRQ)LUHVWHLQ ,QH[SHULPHQWDODOOHUJLFHQFHSKDORP\HOLWLV($( LQPLFH003VDSSHDU LQ WKH VSLQDO IOXLG DQG DOWHU WKH QRUPDO SHUPHDELOLW\ RIWKH EORRGEUDLQEDUULHU *RHW]O HWDO 5HDFWLRQSURGXFWVIURPWKHR[LGDWLYHEXUVWDQGWKHQLWULFR[LGHSDWKZD\DUH KDUPIXOWRWKHKRVW'XULQJWKHR[LGDWLYHEXUVWUHDFWLRQSURGXFWVVXFKDV DQG +2 OHDN IURP SKDJRF\WLF FHOOV DQG NLOO FHOOV LQ WKH VXUURXQGLQJ WLVVXH 7KLV OHDGVWRFRPSHQVDWRU\FHOOGLYLVLRQWRUHSODFHORVWFHOOV $VWKHFHOOVDUHSUROLI HUDWLQJ WKH\ VXIIHU JHQHWLF GDPDJH IROORZLQJ H[SRVXUH WR PXWDJHQLF FKORUR DPLQHV &RPSRXQGVSURGXFHGE\ WKHQLWULF R[LGHSDWKZD\DUH DOVR PXWDJHQLF 7KH 1QLWURVR FRPSRXQGV DUH ERWK FDUFLQRJHQLF DQG LPPXQRVXSSUHVVLYH %DUWVFKDQG0RQWHVDQR +DJJHUW\DQG+ROVDSSOH ,QFUHDVHGFHOO GLYLVLRQFRPELQHG ZLWK'1$OHVLRQVUHVXOWLQKLJKHUPXWDWLRQUDWHV 3URORQJHG SUROLIHUDWLRQ H[SDQGV WKH PXWDWHG FHOOV DQG LQFUHDVHV WKH SUREDELOLW\ RIFDQFHU :HLW]PDQDQG*RUGRQ
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
)5((5$',&$/6&$9(1*,1* 7LVVXH GHVWUXFWLRQ LV QRUPDOO\ SUHYHQWHG E\ DQWLR[LGDQW GHIHQVH PHFKD QLVPV6HYHUDOSURWHLQVDQGYLWDPLQVDFWDVIUHHUDGLFDOVFDYHQJHUV$VH[DPSOHV YLWDPLQ(LQKLELWVSHUR[\UDGLFDOVJOXFRVHVFDYHQJHVWKHK\GUR[\OUDGLFDOVDQG DVFRUELF DFLGUHGXFHVFDUERQFHQWHUHGUDGLFDOV/DUJHLURQELQGLQJSURWHLQVFDQ DOVRDFWDVVFDYHQJHUV&HUXORSODVPLQLQDFWLYDWHVOLSLGDONR[\UDGLFDOVDQGWUDQV IHUULQELQGVK\SRFKORURXVDFLGV
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
,0081('()O&O(1&O(6$662&,$7(' :,7+3+$*2&<726,6 7KHUH LV DQ DVVRFLDWLRQ EHWZHHQ DOORW\SLF IRUPV RI WKH )Fγ5 DQG GLVHDVH ,QGLYLGXDOVH[SUHVVLQJWKH)Fγ5,,D5UHFHSWRUDUHPRUHVXVFHSWLEOHWRLQIHF WLRQVZLWKHQFDSVXODWHGEDFWHULD(QFDSVXODWHGEDFWHULDHYRNHDUHVSRQVHFRQVLVW LQJ RI ,J* DQWLERGLHV 7KH )Fγ5,,D5 UHFHSWRUV FDQQRW ELQG ,J*FRDWHG EDFWHULD 7KH )Fγ5,,D+ DOORW\SH LV WKH RQO\ IXQFWLRQDO )Fγ5 FDSDEOH RI ELQGLQJ,J*DQWLERGLHV'HRHWDO $QRUPDOIXQFWLRQRIWLVVXHPDFURSKDJHVLVWKHUHPRYDODQGGHVWUXFWLRQRI DJHGUHGFHOOVIURPFLUFXODWLQJEORRG,Q*DXFKHU¶VRU1HZPDQQ±3LFN¶VGLVHDVH WKHUHLVDGHIHFWLQWKHIXQFWLRQRIHQ]\PHVGHJUDGLQJVSKLQJROLSLGV%HFDXVHRI WKHGHIHFWUHGEORRGFHOOGHEULVDFFXPXODWHVZLWKLQWKHPDFURSKDJH7KHDFFX PXODWHGOLSLGLQKLELWV WKHIXQFWLRQ RISURWHLQ NLQDVH& WKDWLV QHFHVVDU\IRUWKH PHPEUDQHWUDQVGXFWLRQ RIH[WHUQDO VWLPXOL WKDWDFWLYDWH RUUHJXODWH WKH PDFUR
3KDJRF\WRVLV DQG LQWUDFHOOXODU .LOOLQJ
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
&+(0O&$/6$1'3+$*2&<726,6 (QYLURQPHQWDOFKHPLFDOVDQGSKDUPDFHXWLFDOVFDQDOWHUSKDJRF\WLFIXQFWLRQ 7DEOH 1RQVWHURLGDO DQWLLQIODPPDWRU\GUXJV16$,'V DUHFRPPRQO\XVHG
OPPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
7DEOH
&KHPLFDOV WKDW $OWHU 0DFURSKDJH $FWLYLW\ LQ $QLPDOV
&KHPLFDO /HDG &DGPLXP 0HUFXU\ 1LFNHO 3HQWDFKORURSKHQRO 7R[DSKHQH
6SHFLHV 0RXVH UDW 0RXVH 0RXVH 0RXVHUDWUDEELW 0RXVHUDW 0RXVH
(IIHFW
1
1RHIIHFW 0RGLILHG IURP ,PPXQRORJ\ DQG $OOHUJ\ 3URFULFH .ROOHU
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
+$=$5','(17,),&$7,21 1HXWURSKLOVSOD\DFULWLFDOUROHLQGHIHQVHDJDLQVWEDFWHULDODQGIXQJDOLQIHF WLRQV 7KH IXQFWLRQDO FDSDFLW\ RI LVRODWHG RU SXULILHG SKDJRF\WLF FHOOV FDQ EH GHWHUPLQHGE\PDQ\GLIIHUHQWDVVD\V
3KDJRF\WRVLV DQG OQWUDFHOOXODU .LOOLQJ
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¶ DELOLW\WRNLOOLQJHVWHG EDFWHULD ,Q PRVW DVVD\ V\VWHPV SKDJRF\WHV DUH LQFXEDWHG ZLWK RSVRQL]HG 6 DXUHXV IRU PLQ $IWHU O\VLV RI H[WUDFHOOXODU EDFWHULD ZLWK O\VRVWDSKLQ WKH QXPEHU RI VXUYLYLQJ LQWUDFHOOXODU EDFWHULD LV GHWHUPLQHG ,Q QRUPDO SHUL SKHUDO EORRG SKDJRF\WLF FHOOV WKH EDFWHULDO VXUYLYDO UDWH DWPLQ LV OHVV WKDQ 7KLV DVVD\ PHDVXUHV ERWK WKH LQKLELWLRQ DQG WKH VWLPXODWLRQ RI 5(6 DFWLYLW\ 7KHPRVWSUHGLFWLYHIRUDOWHUHGPDFURSKDJHIXQFWLRQ$QRQ\PRXV D LVDKROLVWLFDVVD\+ROLVWLFDVVD\VWHVWWKHIXQFWLRQRIWKHHQWLUH5(6HQFRPSDVV LQJ ERWK IL[HGPDFURSKDJHV DQGFLUFXODWLQJ PRQRF\WHV DQG QHXWURSKLOV ,Q WKH DVVD\ LQWUDYHQRXV LQMHFWLRQ RI &UODEHOHG 65%&V LV XVHG DV WKH VWLPXOXV $W GHILQHGWLPHSRLQWVXSWRPLQ DEORRGVDPSOHLVREWDLQHGIURPWKHWDLOYHLQ DQGWKHUDGLRDFWLYLW\GHWHUPLQHG:KLWHHWDO 7KUHHHQGSRLQWVDUHPHD VXUHGGXULQJWKHDVVD\&OHDUDQFHRIODEHOHGFHOOVIURPWKHEORRGLVGHWHUPLQHG DQG WKH GDWD DUH H[SUHVVHG DV WKH YDVFXODU KDOIOLIH 7KH SKDJRF\WLF LQGH[ LV GHULYHG IURP WKH VORSH RI WKH FOHDUDQFH FXUYH $OVR GHWHUPLQHG LV WKH RUJDQ GLVWULEXWLRQ RIUDGLRDFWLYLW\ 7KHVH GDWDDUH H[SUHVVHG DV SHUFHQWRUJDQ XSWDNH DQGFRXQWV SHUPLQXWH SHUPLOOLJUDP RIWLVVXH $GGLWLRQDO VWXGLHV FDQ EH XQGHUWDNHQ WR GHILQH WKH GHIHFW ZLWKLQ WKHUHV SLUDWRU\ EXUVW 7KH KLJKHUHQHUJ\OHYHOHOHFWURQV IURPWKH VXSHUR[LGHPROHFXOH
OPPXQRWR[LFRORJ\DQG 5LVN $VVHVVPHQW
FDQEHXVHGDVDEDVLVIRUTXDQWLWDWLRQ:KHQWKHHOHFWURQUHWXUQVWRWKHJURXQG VWDWH OLJKW LV HPLWWHG /XPLQRO D F\FOLF K\GUD]LGH HQKDQFHV WKH FKHPL OXPLQHVFHQFHGHWHUPLQHGLQ D OLTXLGVFLQWLOODWLRQ FRXQWHUFRQILJXUHG VR WKDWLWV SKRWRPXOWLSOLHU WXEHV KDYH EHHQ WDNHQ RXW RIFRLQFLGHQWVHWWLQJ %XUUHOO HWDO (OHFWURQVSLQUHVRQDQFHXVLQJGLPHWK\OS\UROLQH1R[LGH DVWKHWUDS FDQEHXVHGWRTXDQWLWDWHK\GUR[\OUDGLFDOVSURGXFHGGXULQJSKDJRF\WRVLV'HWHF WLRQRI+2 LVXVXDOO\GHWHUPLQHGIROORZLQJWKHLQGLUHFWR[LGDWLRQRIK\GURJHQ GRQRUV VXFK DV VFRSROHWLQ K\GURFRXPDULQ ,Q WKH ILUVW VWDJH RI WKH DVVD\ +2 UHDFWVZLWKKRUVHUDGLVKSHUR[LGDVH7KHUHDFWLRQSURGXFWVR[LGL]HVFRSROHWLQ FDXVLQJ DUHGXFWLRQLQWKHQRUPDOIOXRUHVFHQFH5RVHQDQG.OHEDQRII 7KHUHDUH VHYHUDO H[YLYR RU LQ YLWUR V\VWHPVWKDWDUH XVHIXO LQ PHDVXULQJ QLWULWH WKH PDMRU UHDFWLYH QLWURJHQ LQWHUPHGLDWH SURGXFHG LQ WKH QLWULF R[LGH SDWKZD\ $FWLYDWHG SHULWRQHDO PDFURSKDJHV FDQ EH UHFRYHUHG IURP FKLFNHQV LQRFXODWHG ZLWK 6HSKDGH[ RU PLFH LQMHFWHG ZLWK WKLRJO\FROODWH 'LHWHUW HW DO 7KHVHFHOOVFDQEHVWLPXODWHGZLWKEDFWHULDOHQGRWR[LQ/36 WRSURGXFH 12 &HOO OLQHV FDQ DOVR EH XVHG WR WHVW IRU QLWULWH SURGXFWLRQ /36VWLPXODWHG PDFURSKDJH FKLFNHQ +' RU PRXVH 5DZ :(+, DQG - FHOO OLQHV 'LHWHUWHWDO %HXJ HWDO DUHFRPPRQO\XVHGIRUWKLVSXU SRVH 8VLQJVXSHUQDWDQWIOXLGVIURP/36VWLPXODWHGPDFURSKDJHFXOWXUHVQLWULWH FDQ EH PHDVXUHG ZLWK D FKRPRJHQLF UHDJHQW FRQVLVWLQJ RI 1QDSKWK\O HWK\OHQHGLDPLQHGLK\GURFKORULGHDQGVXOIDQLODPLGH*UHHQHWDO )ROORZ LQJLQWHUDFWLRQVZLWKQLWUDWH DUHGFKURPRSKRUHDULVHVZLWKSHDNDEVRUEDQFHRI QP'LHWHUWHWDO ,Q WKH GHVLJQ RIH[SHULPHQWV FDUHIXO DWWHQWLRQ PXVWEH JLYHQ WRWHFKQLFDO IDFWRUVDQGVWUDLQGLIIHUHQFHVLQWKHSURGXFWLRQRIQLWULWH&KLFNHQVFDQQRWV\QWKH VL]H /DUJLQLQH EHFDXVHWKH\ ODFNVHOHFW HQ]\PHV LQ WKH XUHDF\FOH 7DPLU DQG 5DWQHU 7KHUHIRUHWKHGLHWPXVWEHVXSSOHPHQWHGZLWK/DUJLQLQH2WKHU JHQHWLFIDFWRUVLQIOXHQFHWKHDPRXQWRI/DUJLQLQHDYDLODEOHIRUWKHSURGXFWLRQRI 123URGXFWLRQGHSHQGVLQSDUWRQWKHUHQDODUJLQDVHOHYHOV$UJLQDVHOHYHOVDUH JHQHWLFDOO\GHWHUPLQHGDQGPD\GLIIHUEHWZHHQVSHFLHV DQGVWUDLQV1HVKHLPHW DO $Q\ GLVHTXLOLEULXP EHWZHHQ DUJLQDVH DQG 126 LQIOXHQFHV WKH DPRXQW RI DYDLODEOH /DUJLQLQH$UJLQDVHFRQYHUWV/DUJLQLQHWRXUHDWKDWLVTXLFNO\H[FUHWHG E\WKHKRVW ,Q PDPPDOV /DUJLQLQH LV SURGXFHG E\ HQ]\PHV LQ WKH XUHD F\FOH XVLQJ RUQLWKLQHDPPRQLDDQGDVSDUWDWHDVEXLOGLQJEORFNV6XSSOHPHQWDOGLHWDU\/DU JLQLQH PD\ LQIOXHQFH PDFURSKDJH IXQFWLRQ LQ VRPH VSHFLHV EXW QRW LQ RWKHUV 5DWV DQG PLFH PD\ DOVR GLIIHU LQ EDVHOLQH OHYHOV RIQLWULWH WKH DELOLW\ WR SUR GXFHQLWULWHDQGWKHDPRXQWRIQLWUDWHSURGXFHGIROORZLQJVWLPXODWLRQZLWK/36 0LOOV
3KDJRF\WRVLV DQG ,QWUDFHOOXODU .LOOLQJ
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
,PPHGLDWH+\SHUVHQVLWLYLW\5HDFWLRQV
,1752'8&7O21 ,PPHGLDWH DOOHUJLF UHDFWLRQV DUH PHGLDWHG E\ WKH ,J( FODVV RI DQWLERGLHV DQG RFFXU ±PLQDIWHUH[SRVXUHWRDQWLJHQ7KHFOLQLFDOVLJQVDQGV\PSWRPVDUH UHODWHGWRWKHWLPHFRXUVHWKHWDUJHWRUJDQDQGWKHQDWXUHRIWKHSKDUPDFRORJLFDO PHGLDWRUVUHOHDVHGIURP PDVWFHOOV DQGEDVRSKLOV $OOHUJLFUHDFWLRQVPD\EHV\VWHPLF RUORFDOL]HGLQWKHQRVH VNLQ OXQJRU JXW 6\VWHPLFUHDFWLRQVRIWHQUHVXOWLQYDVFXODUFROODSVHDQGGHDWKLQ DUHDFWLRQ FDOOHG DQDSK\OD[LV /HVV VHYHUH UHDFWLRQV RFFXU LQ WKH QRVH DOOHUJLF UKLQLWLV FDXVLQJQDVDOFRQJHVWLRQ VQHH]LQJ DQG ZDWHU\GLVFKDUJH $OOHUJLFUHDFWLRQV LQ WKHOXQJUHVXOWLQDQLQFUHDVHLQDLUZD\FDOLEHUFUHDWLQJDQDVWKPDWLFUHVSRQVH,Q WKHVNLQOHDNDJHRIIOXLGIURPWKHFDSLOODU\EHGLQWRWKHVNLQUHVXOWV LQXUWLFDULD KLYHV LQWKHDUHDRIWKHDOOHUJLFUHDFWLRQ$OOHUJLFUHDFWLRQVFDQDOVRWDNHSODFH LQWKH JXWZLWKDVVRFLDWHGFUDPSLQJGLDUUKHD DQGYRPLWLQJ
$723< &OHDUO\LPPHGLDWHK\SHUVHQVLWLYLW\UXQVLQIDPLOLHVDQGKDVDJHQHWLFEDVLV 7KLVJHQHWLFIDPLOLDOFRQGLWLRQLVFDOOHGDWRS\ .LQGUHGVZLWKLQWKHVDPHIDPLO\ PD\ KDYHDOOHUJLFUHDFWLRQV VXFKDVDVWKPDXUWLFDULD RUUKLQLWLVWRWKHVDPHRU GLIIHUHQW DQWLJHQV ,Q DGGLWLRQ DOO DWRSLF PHPEHUV RID IDPLO\ ZLOO KDYH KLJK OHYHOV RI,J(LQWKH VHUXP 7KH JHQHWLF EDVLV IRU DVWKPDWLF OXQJUHVSRQVHV LV XQFOHDU 6SHFLILF 0+&
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
PDUNHUVPD\EH DVVRFLDWHGZLWKUHVSRQVHWRUDJZHHG $UHFHQWVWXG\ VKRZHGD OLQNDJHEHWZHHQEURQFKLDOK\SHUDFWLYLW\ DQGWKHVXEXQLWVWUXFWXUHRIWKHKLJK DIILQLW\,J(UHFHSWRUFRPSOH[YDQ+HUZHQGHQHWDO 2WKHUVWXGLHVKDYH LPSOLFDWHG PXWDWLRQV LQ WKH FF JHQHFOXVWHUDV DFDXVH IRUDVWKPD 7KH FF JHQHLVDQLQKLELWRURISKRVSKROLSDVHDQGUHJXODWHVSURVWDJODQGLQVOHXNRWULHQHV DQGDLUZD\LQIODPPDWLRQ$Q\G\VIXQFWLRQLQWKHJHQHSURGXFWUHVXOWVLQVNHZHG SURVWDJODQGLQSURGXFWLRQDQGLQFUHDVHGDLUZD\LQIODPPDWLRQ
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±GD\V%FHOOSURGXFHGDQWLJHQVSHFLILF ,J( LV IRXQG LQ WKH VHUXP )LJ 1RUPDOO\ WKH FRQFHQWUDWLRQ LQ VHUXP LV H[WUHPHO\ ORZUDQJLQJIURP WR QJPO
,J()F5(&(37256 &LUFXODWLQJ,J(ELQGVWRUHFHSWRUVRQEDVRSKLOVDQGPDVWFHOOV7ZRW\SHVRI UHFHSWRUV )Fε5, DQG )Fε5,, ZKLFK GLIIHU LQ ELQGLQJ DIILQLW\ KDYH EHHQ GH
,PPHGLDWH +\SHUVHQVLWLYLW\ 5HDFWLRQV
)LJXUH 7KH LQGXFWLRQ DQG HOLFLWDWLRQ RI DQ DOOHUJLF UHDFWLRQ LQ WKH OXQJ 5HSULQWHG IURP 5HVSLUDWRU\ $OOHUJ\ (XURSHDQ &HQWHU IRU (FRWR[LFRORJ\ RI &KHPLFDOV 0RQR JUDSK S
VFULEHG 7DEOH 7KH KLJKDIILQLW\ ,J( UHFHSWRUV )Fε5, DUH SUHVHQW RQ WKH VXUIDFH RI WLVVXH IL[HG PDVW FHOOV LQ WKH WUDFKHD DQG LQWHVWLQH FLUFXODWLQJ EDVRSKLOV/DQJHUKDQVFHOOVPRQRF\WHVIURPDWRSLFLQGLYLGXDOVDQGHRVLQRSKLOV IURP SHUVRQV LQIHFWHG ZLWK SDUDVLWHV ,J( ELQGV VWURQJO\ WR WKHVH UHFHSWRUV DV HYLGHQFHG E\ WKH X 0 GLVVRFLDWLRQ FRQVWDQW /RZDIILQLW\ UHFHSWRUV DUH SUHVHQW RQ 7 DQG % FHOOV PRQRF\WHV DQG HR VLQRSKLOV7DEOH 7KHELQGLQJDIILQLW\IRU,J(LVGLVWLQFWO\ORZHU ; 0 WKDQWKHFODVVLFDOPDVWFHOORUEDVRSKLOUHFHSWRU&DSURQHWDO
+LJK$IILQLW\)Fε 5,5HFHSWRU 7KH )Fε5,FRQVLVWV RI α, DQG WZR \ FKDLQV )LJ ,J( ELQGV WR WKH D FKDLQ D N'D WUDQVPHPEUDQH SURWHLQ 6WUXFWXUDO VLPLODULWLHV WR WKH)Fγ5,, DQG )Fγ5,,, UHFHSWRUV DUH IRXQG LQ WKH ,J(ELQGLQJ SRUWLRQ RI WKH α FKDLQ ,Q DGGLWLRQ WKH α FKDLQ KDV WKH WZR ORRSV FKDUDFWHULVWLF RI WKH ,J VXSHUIDPLO\ PHPEHUVDQGDVKRUWDPLQRDFLG F\WRSODVPLFGRPDLQ ,QFRQWUDVWWRWKHα FKDLQWKH FKDLQLVDORQJDPLQRDFLG SRO\SHSWLGH WKDWFURVVHVWKHPHPEUDQHIRXUWLPHV/LNHWKHα FKDLQWKHFKDLQKDVDVKRUW F\WRSODVPLFGRPDLQ/LX
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
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
7DEOH
'LVWULEXWLRQDQG$IILQLW\RI)Fε5,DQG )Fε5,,&' 5HFHSWRUV UHFHSWRUV
'LVWULEXWLRQ
0DVWFHOOV %DVRSKLOV
1XPEHUSHUFHOO
EDVRSKLOV PDVWFHOOV 0 7HWUDPHU
$IILQLW\ 6WUXFWXUH
UHFHSWRUV 7DQG% O\PSKRF\WHV 0DFURSKDJHPRQRF\WHV (RVLQRSKLOV 3ODWHOHWV SODWHOHWV PDFURSKDJHV ± 0 'LPHU
5HSULQWHGIURP,PPXQRORJ\7RGD\ &DSURQ HWDO ZLWKSHUPLVVLRQRI (OVHYLHU6FLHQFH
,PPHGLDWH +\SHUVHQVLWLYLW\ 5HDFWLRQV
)LJXUH $ VFKHPDWLF RI WKH DPLQR DFLG VHTXHQFH RI WKH UHFHSWRU 0RGLILHG IURP ,PPXQRORJLFDO 5HYLHZV 0HW]JHU ZLWK SHUPLVVLRQ IURP 0XQNVJDDUG ,QWHUQDWLRQDO 3XEOLVKHUV
7KHUHFHSWRUDOVRKDVWZRLGHQWLFDO FKDLQVFRPSRVHGRIDPLQRDFLGV 0RVW RI WKH DPLQR DFLGV LQ WKH FKDLQ DUH IRXQG LQ WKH F\WRSODVPLF GRPDLQ 6WUXFWXUDO VWXGLHVGHPRQVWUDWHGWKDWWKH\FKDLQVDUHKRPRORJRXVWRWKH FKDLQ RIWKH&'PROHFXOH%HFDXVHDQWLJHQUHFRJQLWLRQPRWLIVDUHIRXQGLQWKHF\WR SODVPLFGRPDLQV RI FKDLQV DQGWKH FKDLQ WKHVHFKDLQVPD\ EH LQYROYHG LQ VLJQDOWUDQVGXFWLRQ0HW]JHU /LX
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
/RZ$IILQLW\)Fε5,, &' 5HFHSWRU /RZDIILQLW\UHFHSWRUV&' IRU,J(DUHN'DSURWHLQVIRXQGRQ%FHOOV PRQRF\WHVDQGHRVLQRSKLOV$OWHUQDWHVSOLFLQJRIPHVVHQJHU51$FDQFUHDWHWZR GLIIHUHQWDOORW\SLFSURWHLQV)Fε5,,DDQG)Fε5,,E )Fε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± +2 DQGF\WRNLQHV.ROE HWDO :KHQWKHV&'LVGHULYHGIURPWKH )Fε5,,E DOORW\SH LQWHUDFWLRQV ZLWK WKH FRPSOHPHQW UHFHSWRUV JHQHUDWH ,/ OD ,/,)1γDQG71)α'XJDVHWDO
685)$&(,17(5$&7,216'85,1*6(&21'(;32685( 0DVWFHOOV DQGEDVRSKLOVIURPDOOHUJLFVXEMHFWV KDYHLQFUHDVHG QXPEHUVRI KLJKDIILQLW\UHFHSWRUVIRU,J(7KHUHFDQEHIURPWR)Fε5,UHFHSWRU VLWHV IRU,J( KHDY\FKDLQV SHUEDVRSKLO DQG XS WR LQ DWRSLF LQGLYLGXDOV %XUUHOO HWDO $W DQ\ WLPH SRLQW ± RI WKH WRWDO UHFHSWRUV DUH RFFXSLHGE\DQWLERGLHV &URVVOLQNDJHRIWZRFHOOERXQG,J(LQLWLDWHVDQHQHUJ\GHSHQGHQW)Fε5, VLJQDOLQJ SURFHVV WKDWUHVXOWV LQ PHGLDWRUUHOHDVH )ROORZLQJ UHFHSWRU DJJUHJD WLRQWKHUHFHSWRU\FKDLQLVSKRVSKRU\ODWHGE\UHFHSWRUDVVLVWHGSURWHLQNLQDVH& $JJUHJDWLRQDOVRDFWLYDWHVO\Q DPHPEHURIWKHVUF IDPLO\ 3KRVSKRU\ODWLRQRI WKHLPPXQRUHFHSWRUW\URVLQHEDVHGDFWLYDWLRQ PRWLI,7$0V UHVXOWV LQUHFUXLW PHQWRIV\N 7KHODWWHUELQGV WRWKHSKRVSKRU\ODWHG,7$0V DQG LV DFWLYDWHGE\ DXWRSKRVSKRU\ODWLRQ$IWHUDFWLYDWLRQV\N PRYHVWRWKHFHOOPHPEUDQHELQGVWR
,PPHGLDWH +\SHUVHQVLWLYLW\ 5HDFWLRQV
WKHUHFHSWRU FKDLQ DQGUHJXODWHV FP\F JHQHH[SUHVVLRQ 7KHUHPDLQLQJSRU WLRQVRIWKHDFWLYDWLRQSDWKZD\VDUHVLPLODUWRWKRVHGHVFULEHGIRU7DQG%FHOOV 5D]LQ HWDO
$//(5*,&5($&7,216,17+(/81* (DUO\$VWKPDWLF5HDFWLRQVLQWKH/XQJ $VWKPDLV DGLVHDVHFKDUDFWHUL]HGE\ SDUWLDODLUZD\REVWUXFWLRQWKDWLVUH YHUVLEOH HLWKHU VSRQWDQHRXVO\ RU ZLWK WUHDWPHQW 8S WR RI SDWLHQWV ZLWK DVWKPD KDYH SRVLWLYH VNLQ WHVWV WR FRPPRQ DHURDOOHUJHQV VXFK DV SROOHQV RU JUDVVHV2YHURIDVWKPDWLFSDWLHQWVKDYHDVVRFLDWHGUKLQLWLV1HOVRQ :KHQH[SRVHGWRWKHDOOHUJHQIRUWKHVHFRQGWLPHKLVWDPLQHKHSDULQ DQG WU\SDVH DUH H[WUXGHG IURP WKH PDVW FHOOV RU EDVRSKLOV ZLWKLQ ± PLQ 7KH SUHIRUPHG PHGLDWRUV KDYH GLYHUVH ELRORJLFDO IXQFWLRQV +LVWDPLQH LV D PDMRU SKDUPDFRORJLFDO PHGLDWRU UHOHDVHG IURP PDVW FHOOV DQG EDVRSKLOV ,QWHUDFWLRQV EHWZHHQ KLVWDPLQH + UHFHSWRUV RQ VPRRWK PXVFOH LQGXFH FRQWUDFWLRQ RI VPRRWKPXVFOH7KLVFDXVHVDUHGXFWLRQLQDLUZD\FDOLEHUDQGWKHFKDUDFWHULVWLF ³ZKHH]LQJ´ DVVRFLDWHG ZLWK DVWKPD +LVWDPLQH+ UHFHSWRU LQWHUDFWLRQV LQ FUHDVHPXFXVVHFUHWLRQ DQGEORRGIORZ +HSDULQLVUHOHDVHGDVSDUWRIWKHKLVWD PLQHJUDQXOHDQGIXQFWLRQVDVDQDQWLFRDJXODQW7KHPRVWDEXQGDQWSURWHDVHLQ PDVWFHOOV LVWU\SDVH 7KLVORQJOLYHGSURWHDVHVHUYHVWRDFWLYDWHRWKHUHQ]\PHV DQGIXQFWLRQDOPROHFXOHV )RUH[DPSOH WU\SDVHDFWLYDWHVPDQ\003VWKDWDUH QHFHVVDU\IRUFROODJHQGHJUDGDWLRQ,QDGGLWLRQWU\SDVHDLGVLQWKHJHQHUDWLRQRI WKH&DDQDSK\ODWR[LQ 7KH$UDFKLGRQLF$FLG3DWKZD\ $IWHUVHFUHWLRQ RIWKH SUHIRUPHG JUDQ XOHV PDVW FHOOV RU EDVRSKLOV EHJLQ WR V\QWKHVL]H PHGLDWRUV WKDW DXJPHQW WKH DOOHUJLFUHVSRQVH$FWLYDWLRQRIWKHDUDFKLGRQLFDFLGSDWKZD\LQLWLDWHVDUHVSRQVH UHVXOWLQJ LQ DFWLYDWLRQ RI HLWKHU WKH OLSR[\JHQDVH RU F\FORR[\JHQDVH SDWK ZD\V 0HWDEROLVP RIDUDFKLGRQLF DFLG E\ WKH OLSR[\JHQDVH SDWKZD\ SURGXFHV OHXNRWULHQHV656$ VXFKDV/7&/7'RU/7(/HXNRWULHQHVELQGVSHFLIL FDOO\WRUHFHSWRUVRQVPRRWKPXVFOHDQGLQGXFHEURQFKRFRQVWULFWLRQ0DVWFHOOV DOVR V\QWKHVL]H DQG UHOHDVH SURVWDJODQGLQ ' 3*' YLD DFWLYDWLRQ RI F\FOR R[\JHQDVH 3*' LQWHUDFWV ZLWK VPRRWK PXVFOH UHFHSWRUV DQG DFWV DV ERWK D EURQFKRFRQVWULFWRUDQGDYDVRGLODWRU3ODWHOHWDFWLYDWLQJIDFWRU3$) LVSURGXFHG LQ LQWHUDFWLRQV EHWZHHQ PHPEUDQH OLSLGV RU FKHPLFDO UHDFWLRQV EHWZHHQ DU DFKLGRQLF DFLG DQG SKRVSKROLSDVH $ %URQFKRFRQVWULFWLRQ UHWUDFWLRQ RIHQGR WKHOLDOFHOOVDQGUHOD[DWLRQRIVPRRWKPXVFOHDUHPHGLDWHGE\ 3$)
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
1LWULF2[LGH3URGXFWLRQ 3URGXFWLRQRIQLWULFR[LGHIURPDLUZD\HSLWKHOLDO FHOOVPD\SOD\DFULWLFDOUROHLQDPSOLILFDWLRQDQGSHUSHWXDWLRQRIWKHDVWKPDWLF UHVSRQVH 1LWULF R[LGH LQKLELWV 7K FHOO PDWXUDWLRQ DQG WKH SURGXFWLRQ RI,)1γ 3URGXFWLRQRI,)1γLVFULWLFDOWRWKHGRZQUHJXODWLRQRI,J(DQWLERG\SURGXFWLRQ 7KHODFNRI,)1γDOORZVWKHSUROLIHUDWLRQRI7KFHOOVDQGWKHSURGXFWLRQRI,/ DQG ,/ ,/ SOD\V DFULWLFDOUROH LQ HRVLQRSKLOUHFUXLWPHQWLQWR WKH DLUZD\V (RVLQRSKLOVPD\SOD\DPDMRUUROHLQDLUZD\LQIODPPDWLRQ7KHGLUHFWHGLQIOX[RI HRVLQRSKLOVPD\EHSDUWRIDQLQQDWHGHIHQVHPHFKDQLVPDJDLQVWSDUDVLWHVWKDWLV DFFLGHQWDOO\ DFWLYDWHG GXULQJWKHDVWKPDWLFUHVSRQVH %DUQHV DQG/LHZ
/DWH$VWKPDWLF5HDFWLRQVLQWKH/XQJ 2YHURIDVWKPDWLFVKDYHVHFRQGDU\UHDFWLRQVRFFXUULQJWR KUDIWHU WKHLQLWLDODVWKPDWLFHSLVRGH/DWHSKDVHUHDFWLRQVDUHFKDUDFWHUL]HGE\SURORQJHG FRQWUDFWLRQRIVPRRWKPXVFOHLQFUHDVHGPXFXV VHFUHWLRQDQGDQ LQIODPPDWRU\ UHVSRQVH 6HYHUDOGLIIHUHQWPHFKDQLVPVDUHSURSRVHGWRH[SODLQWKHFOLQLFDOVLJQVDQG V\PSWRPVRIODWHSKDVHUHDFWLRQV 2QH VFHQDULRLPSOLFDWHVFKHPRNLQHVVXFKDV 0&3 0&3 5DQWHV DQG ,/ DV WKH FDXVH RI KLVWDPLQH UHOHDVH IURP EDVRSKLOV 7KLVUHDFWLRQ GRHV QRWUHTXLUHWKHSUHVHQFH RI,J(RUDQWLJHQ $QRWKHUSURSRVHGPHFKDQLVPUHTXLUHVKLVWDPLQHUHOHDVLQJIDFWRU+5) DQG WKHSUHVHQFHRI,J(RQWKHPDVWFHOOVXUIDFH,WLVSURSRVHGWKDW+5)UHDFWVZLWK FHOOERXQG ,J( LQD ZD\WKDWFURVVOLQNV RUEULGJHV WZR,J(PROHFXOHV &URVV OLQNDJH LQLWLDWHV WKH VLJQDOLQJ SURFHVV WKDWUHOHDVHV PHGLDWRUV +RZHYHU +5) UHOHDVHVKLVWDPLQHIURPRQO\RIDVWKPDWLFFHOOV,WLVSRVVLEOHWKDWWKHUHDUH WZR,J(VXEW\SHVUHIOHFWLQJGLIIHUHQFHVLQJO\FRV\ODWLRQRUDOWHUQDWLYHJHQHVSOLF LQJ 2QO\RQHVXEW\SHZLOOUHDFWZLWKWKH+5) $WKLUGPHFKDQLVPLPSOLFDWHVK\SRGHQVHHRVLQRSKLOVDVWKHHIIHFWRUFHOOVLQ WKHODWHSKDVHUHDFWLRQV3$)DQG/7%DUHFKHPRDWWUDFWDQWVIRUWKHHRVLQRSKLOV $FFXPXODWLRQ RIWKH K\SRGHQVH HRVLQRSKLOV HQULFKHV PRVW LQIODPPDWRU\ ODWH SKDVHDVWKPDWLFUHDFWLRQV(RVLQRSKLOVH[SUHVV9/$&'G&' VHOHFWLQV WKDWDOORZDGKHUHQFHWRHQGRWKHOLDOFHOOVH[SUHVVLQJ9&$0 5HOHDVHRIPDMRU EDVLF SURWHLQ DXJPHQWV LQFUHDVHG EURQFKLDO FRQVWULFWLRQ LQGXFHG E\ DFHW\OFKR OLQH 3HUR[LGDVHDQGQHXURWR[LQDUHDOVRUHOHDVHGIURPWKH K\SRGHQVHFHOOV DQG GDPDJHERWKHQGRWKHOLXPDQGHSLWKHOLXP
2FFXSDWLRQDO$VWKPD 2FFXSDWLRQDO DVWKPD GLIIHUV IURP FODVVLFDO DHURDOOHUJHQ DWRSLF DVWKPD LQ VHYHUDOUHVSHFWV7KHGLVHDVHRIWHQGHYHORSVLQSHRSOHZKRDUHQRWDWRSLF8QOLNH FODVVLFDO DVWKPD WKH RQVHW RI DVWKPD PD\ UHTXLUH D ODWHQW SHULRG RI VHYHUDO PRQWKVWRVHYHUDO\HDUV:KHQVXEMHFWVDUHIXOO\VHQVLWL]HGWKH\KDYHGHPRQVWUD
,PPHGLDWH +\SHUVHQVLWLYLW\ 5HDFWLRQV
EOHSXOPRQDU\UHVSRQVHV DWDWPRVSKHULF FKHPLFDO FRQFHQWUDWLRQV IDUEHORZ WKH LUULWDQW FRQFHQWUDWLRQV FDXVLQJ V\PSWRPV LQ QRQVHQVLWL]HG VXEMHFWV 1HZPDQ 7D\ORU :RUNSODFHDVWKPDFDQEHDVVRFLDWHGZLWKVXEVWDQFHVVXFKDVKLJKPROHFX ODUPDVVSURWHLQVXVXDOO\±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
$//(5*,& 5($&7,216 ,1 7+( *87 :LWKLQPLQXWHVDIWHULQJHVWLQJDOOHUJHQLFIRRGVWXIIV,J(PHGLDWHGUHDFWLRQV RFFXULQWKHLQWHVWLQHDQGSDWLHQWVH[KLELWYRPLWLQJGLDUUKHDPDODEVRUSWLRQDQG
OPPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
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¶VPLON7KLVPROHFXOHEHFRPHVPRUHDQWLJHQLFIROORZLQJ SURWHRO\WLFGLJHVWLRQ+DGGDGHWDO
25$/$//(5*<6<1'520( ,QGLYLGXDOVZLWKDOOHUJLHVWRWUHHJUDVVHVZHHGVDQGUDJZHHGSROOHQVPD\ GHYHORSLWFKLQJRIWKHOLSVWRQJXHDQGEXFFDOPXFRVDDIWHUHDWLQJIUXLWV(QEHUJ 7DEOH
3HUFHQW $OOHUJHQLFLW\ RI &RPPRQ )RRG$OOHUJHQV
3URWHLQ (JJDOOHUJHQV 2YDOEXPLQ 0LONDOOHUJHQV /DFWRJORELQ &DVHLQ D/DFWRJORELQ 6R\EHDQDOOHUJHQV &RQJO\FLQLQ VXEXQLW .XQWL]WU\SVLQ LQKLELWRU &RQJOXWLQLQ VXEXQLW 6R\OHFWLQ
7RWDOSHUFHQW SURWHLQ
3HUFHQW DOOHUJHQLFLW\
± ±
0RGLILHGIURP &ULWLFDO5HYLHZVLQ)RRG6FLHQFHDQG1XWULWLRQ 0HWFDOIH HWDO 6
,PPHGLDWH +\SHUVHQVLWLYLW\ 5HDFWLRQV
6\VWHPLFHIIHFWVDUHQRWHQJHQGHUHGEHFDXVHWKHIUXLWDOOHUJHQVDUHHDVLO\ GHJUDGHGLQWKHVWRPDFK 2UDODOOHUJ\RFFXUVEHFDXVHDHURSROOHQVUXEEHUSURG XFWV DQG IRRG DOOHUJHQV VKDUH VLPLODU DQWLJHQV %LUFK SROOHQ DSSOHV FDUURWV SRWDWRHV FHOHU\ KD]HOQXW DQG NLZL IUXLW KDYH VLPLODU RU LGHQWLFDO DOOHUJHQLF HSLWRSHV 5DJZHHGSROOHQ VKDUHVFRPPRQHSLWRSHVZLWKPHORQVEDQDQDV ]XF FKLQLVTXDVKDQGFXFXPEHUV/DWH[DQWLJHQVFURVVUHDFWZLWKEDQDQDVFKHVWQXWV DQGDYRFDGRV$QGHUVRQ
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
6XOILWHV $VWKPDFDQDOVREHLQGXFHGE\VXOILWHJDVHVUHOHDVHGZKHQIRRGLVFKHZHG RUZKHQJDVHVDUHOLEHUDWHGE\RWKHUPHDQV$OWKRXJKWKHPHFKDQLVPRIDFWLRQLV XQFOHDUWKHUHVSRQVHPD\EHDVVRFLDWHGZLWKDVXOILWHR[LGDVHGHILFLHQF\LQVRPH DVWKPDWLFV
5DGLRFRQWUDVW0HGLD 'XULQJWKHUDGLRORJLFHYDOXDWLRQRISDWLHQWV YDULRXVW\SHV RIORZPROHFX ODUPDVVZDWHUVROXEOHUDGLRFRQWUDVWPHGLDDUHDGPLQLVWHUHGWRSDWLHQWVYLDWKH LQWUDYHQRXV URXWH 5DVKHV XUWLFDULD DQJLRQHXURWLF HGHPD DQG VPRRWK PXVFOH VSDVPVRFFXUZLWKVRPHIUHTXHQF\2FFDVLRQDOO\SDWLHQWVGHYHORSK\SRWHQVLRQ SXOPRQDU\HGHPDDQGFDUGLDFDUUHVWDVDUHVXOWRIDQDQDSK\OD[LVW\SHUHDFWLRQ 0RUWDOLW\ IURP UDGLRFRQWUDVW PHGLD DGPLQLVWUDWLRQ LV ± 0RUHDX HW DO 5DGLRFRQWUDVWPHGLDPD\DFWGLUHFWO\RQPDVWFHOOVDQGEDVRSKLOVWRUHOHDVH PHGLDWRUV 6DOWV RILR[DJOLF DFLG LR[LWKDODPLF DFLG DQG LRYHUVRO UHOHDVH SUH IRUPHGPHGLDWRUV VXFKDVKLVWDPLQHDQGWU\SDVH%XWWKH\GRQRWLQLWLDWHWKHGH QRYR V\QWKHVLV RISURVWDJODQGLQV DQG OHXNRWULHQHV $ *HQRYHVH HWDO 7KHHIIHFWGLIIHUVZLWKWKHQDWXUHRIWKHWDUJHWFHOOPDVWFHOOVRUEDVRSKLOV DQG
OPPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
WKHDQDWRPLFVLWH+\SHURVPRODOLW\PD\SOD\DQLPSRUWDQWUROHLQWKHDFWLYDWLRQ RIEDVRSKLOVEXWQRWPDVWFHOOV6WHOODWRHWDO
7ROXHQH'LLVRF\DQDWH7', 7', LV ZLGHO\XVHG LQ SRO\XUHWKDQHSURGXFWLRQ DQG LQ WKHPDQXIDFWXUH RI SODVWLFVIRDPLQVXODWLRQDQGV\QWKHWLFFRDWLQJV7KHQXPEHURIZRUNHUVSRWHQ WLDOO\H[SRVHGWR7',LVODUJH$OWKRXJKWKHFOLQLFDOVLJQVDQGV\PSWRPVUHVHP EOH FODVVLFDO DVWKPD 7', DVWKPDPD\ QRWEH LPPXQRORJLFDOO\ PHGLDWHG /HVV WKDQ RI7',DVWKPDWLFVKDYH,J(GLUHFWHGWRZDUGWKHKDSWHQ%XWFKHUet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
,J($1'3$5$6,7,&,1)(&7,216 7KUHVSRQVHV DUH WKH PDMRUGHIHQVHPHFKDQLVP DJDLQVWKHOPLQWKV ,QIHF WLRQVZLWK7ULFKXULV1LSSRVWURQJ\OXVRU +HOLJPRVRPRLGHV FDQEHWHUPLQDWHGE\ D 7K UHVSRQVH WKDW DFFHOHUDWHV GHDWK DQG H[SXOVLRQ RI WKH ZRUPV ,Q RWKHU LQIHVWDWLRQV D7K UHVSRQVH DJDLQVW %UXJLD DQG 6FKLVWRVRPD SURWHFWV WKH KRVW DJDLQVW LQIHFWLRQ )RU 6FKLVWRVRPD WKH 7K UHVSRQVH LV GLUHFWHG WRZDUG WKH VFKLVWRVRPHHJJV DQGLVDVVRFLDWHGZLWKJUDQXORPDIRUPDWLRQ
,PPHGLDWH +\SHUVHQVLWLYLW\ 5HDFWLRQV
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
3+$50$&(87,&$/6&+(0O&$/6 $1'$//(5*L&5($&7,216 &RPPRQ ,J(0HGLDWHG $OOHUJLF 5HDFWLRQV 5HDFWLRQVWRSHQLFLOOLQDUHFRPPRQLQ WR RISDWLHQWVWDNLQJWKHGUXJ 7KH 7KUHVSRQVH LV GLUHFWHGWRZDUGPHWDEROLF SURGXFWV RIWKHGUXJ 7KHPRVW FRPPRQ DQWLJHQ LV WKH SHQLFLOOR\O GHULYDWLYH UHDFWHG ZLWK ε DPLQR JURXSV LQ O\VLQHUHVLGXHVRISURWHLQV$VHFRQGDQWLJHQLVFUHDWHGZKHQWKHWKLD]LOLGLQHULQJ RISHQLFLOOLFDFLGLVRSHQHGWRFUHDWHSHQDPDOGLFDFLG7KHDFLGFDQIRUPGLVXO ILGHOLQNDJHV ZLWKSURWHLQV 6\PSWRPV RFFXUULQJ ± GD\V IROORZLQJ WUHDWPHQW FDQ EH GLVWLQFWO\ GLIIHUHQW 8UWLFDULD DQG DQJLRHGHPD FKDUDFWHULVWLF RIDQ ,J(PHGLDWHG UHDFWLRQ KDYHEHHQUHSRUWHG 6HUXPVLFNQHVVDQGLPPXQHFRPSOH[YDVFXOLWLVDUHDFRP PRQRFFXUUHQFH,QUDUHLQVWDQFHVSHQLFLOOLQLQGXFHVSXOPRQDU\ILEURVLVDVVRFL DWHGZLWKDQ DXWRLPPXQHUHVSRQVH
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
OPPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
VHULRXVSUREOHPDQGFDQRQO\EHUHVROYHGE\UHGXFLQJWKHDOOHUJHQLFPDWHULDOWR OHYHOVWKDWGRQRWHYRNHV\PSWRPV+LJKO\VHQVLWL]HGVXEMHFWVPD\EHIRUFHGWR FKDQJHOLIHVW\OHVRURFFXSDWLRQV 6WDQGDUGWR[LFLW\WHVWLQJLVQRWGHVLJQHGWRGHWHFWLPPHGLDWHK\SHUVHQVLWLYLW\ UHDFWLRQV2WKHUWHVWVDQGHQGSRLQWVPD\JLYHVRPHLQVLJKWVLQWRWKHWHVWPDWHULDO¶V DELOLW\WRLQGXFHDOOHUJLFUHDFWLRQV$QLQLWLDODVVHVVPHQWRIDOOHUJHQLFLW\FDQEH PDGHE\VHDUFKLQJWKHOLWHUDWXUHWRGHWHUPLQHZKHWKHUWKHWHVWFRPSRXQGEHORQJVWR DIDPLO\ RIFKHPLFDOVNQRZQWRLQGXFHDOOHUJLFUHDFWLRQVLQ KXPDQV ([DPLQDWLRQRIVWUXFWXUH±DFWLYLW\UHODWLRQVKLSLVDQRWKHULPSRUWDQWILUVWVWHS LQWKHDVVHVVPHQWSURFHVV )URPWKHVWUXFWXUHDQGQDWXUHRIFKHPLFDOO\UHDFWLYH JURXSVLWLVSRVVLEOHWRGHWHUPLQHZKHWKHUWKHVPDOOPROHFXODUZHLJKWFKHPLFDO 60:& FDQELQGWRSURWHLQV 7R HOLFLW DQ LPPXQH RU DOOHUJHQLF DQWLERG\ UHVSRQVH WKH 60:& PXVW FRYDOHQWO\ELQGWRSURWHLQFUHDWLQJD60:&±SURWHLQFRPSOH[&KDUDFWHULVWLFDO O\ 60:&V IRUPPXOWLSOHFRYDOHQWRUK\GURJHQERQGV ZLWKSURWHLQV 60:&±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±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
,PPHGLDWH +\SHUVHQVLWLYLW\ 5HDFWLRQV
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
/DERUDWRU\7HVWLQJ 5DGLRDOOHUJRVRUEHQW7HVW5$67 /DERUDWRU\WHVWVFDQEHXVHGWRVXSSRUW DWHQWDWLYHPHGLFDOGLDJQRVLVRILPPHGLDWHK\SHUVHQVLWLYLW\7KH5$67LVDQLQ YLWUR UDGLRLVRWRSLF PHWKRGXVHG WRGRFXPHQWWKHSUHVHQFH RIDOOHUJHQVSHFLILF ,J($GNLQVRQ ,QWKHDVVD\DQWLJHQLVFRXSOHGWRDVROLGSKDVHVXSSRUW HJFHOOXORVHDFHWDWHGLVNV DQGLQFXEDWHGZLWKWHVWVHUXP)ROORZLQJZDVKLQJ UDGLRODEHOHGDQWLKXPDQ,J(LVDGGHG$IWHUIXUWKHUZDVKLQJWKHGLVNLVSODFHGLQ DVXLWDEOHLVRWRSHFRXQWHUDQGWKHUDGLRDFWLYLW\FRXQWHG7KHSUHVHQFHRIDQWLJHQ VSHFLILF,J(FRUUHODWHVZLWKV\PSWRPVLQRQO\DERXW RISDWLHQWV%HUJDQG -RKDQVVRQ +LVWDPLQH 5HOHDVH$VVD\ 7KLV DVVD\ PHDVXUHV KLVWDPLQHUHOHDVH IURP VHQVLWL]HGEDVRSKLOVIROORZLQJLQFXEDWLRQZLWKSXWDWLYHDOOHUJHQV7KHFRUUHODWLRQ EHWZHHQ LQYLWURKLVWDPLQHUHOHDVHLVDERYH 6LUDJDQLDQ
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
OPPXQRWR[LFRORJ\DQG 5LVN $VVHVVPHQW
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
,PPHGLDWH +\SHUVHQVLWLYLW\ 5HDFWLRQV
3URWHLQVIURP3ODQWVZLWK1R.QRZQ$OOHUJLF3RWHQWLDO ,IWKHSURWHLQLV IURPDQRQDOOHUJHQLF VRXUFHSODQW DGLIIHUHQWDSSURDFK LV XQGHUWDNHQ7KHEDVLFSUHPLVHLVWKDWWKHUHLVQRVLQJOHSUHGLFWLYHWHVWIRUGHWHU PLQLQJ WKH DOOHUJHQLF SRWHQWLDO RIIRRG SURWHLQV $OVR LW LV DVVXPHG WKDW IRRG DOOHUJHQVFURVVWKHLQWHVWLQDOPHPEUDQHVDQGDUHUHVLVWDQWWRKHDWDQGDFLGGLJHV WLRQ7KHUHIRUHVWUXFWXUH±DFWLYLW\UHODWLRQVKLSV7FHOOHSLWRSHPDSSLQJKHDWDQG DFLG VWDELOLW\ \LHOG FULWLFDO LQIRUPDWLRQ RQ WKH DOOHUJHQLF SRWHQWLDO RISURWHLQV $FLGVWDELOLW\FDQEHWHVWHGLQJDVWULFDQGLQWHVWLQDOPRGHOVRIPDPPDOLDQGLJHV WLRQGHVFULEHGLQWKH 8QLWHG6WDWHV3KDUPDFRSHLD 7\SLFDOO\IRRGDOOHUJHQVDUH VWDEOHIRUPRUHWKDQ KULQWKHDFLGHQYLURQPHQW
$XWRLPPXQLW\
,1752'8&7,21 $XWRLPPXQHGLVHDVHV RFFXULQ ±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
$17,%2'<0('O$7('$872,0081,7< *RRGSDVWXUH¶V6\QGURPH *RRGSDVWXUH¶V V\QGURPH LVDQ DXWRLPPXQHGLVHDVHFDXVLQJUDSLGSURJUHV VLYHSXOPRQDU\ KHPRUUKDJHDQGRUJORPHUXORQHSKULWLV 7KHDXWRDQWLJHQ LV SDUW
OPPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
7DEOH $XWRDQWLJHQV$VVRFLDWHGZLWK$XWRLPPXQH'LVHDVH 'LVHDVH
2UJDQFHOO
,''0
,VOHWFHOOV
$GGLVRQ¶VGLVHDVH 3HUQLFLRXVDQHPLD
$GUHQDOFRUWH[ 3DULHWDOFHOOV
7K\URLGGLVHDVH
7K\URLG
7DUJHWDQWLJHQV *$'*$' 7\URVLQHSKRVSKDWDVHV +\GUR[\ODVH +.$73DVH ,QWULQVLFIDFWRU 7K\URLGSHUR[LGDVHWK\URJOREXOLQ 77 76+ 76+ UHFHSWRU
0RGLILHG IURP ,PPXQRORJ\ 7RGD\ 6RQJ HW DO ZLWK SHUPLVVLRQ RI (OVHYLHU 6FLHQFH
RIWKH W\SH ,9 FROODJHQ PDWUL[ ZLWKLQ WKH EDVHPHQW PHPEUDQH .DOOXUL HWDO :KHQERWKWKHOXQJDQGNLGQH\DUHGLVHDVHWDUJHWVWKHDXWRDQWLJHQLVSDUW RIWKH FROODJHQ FKDLQ 7KH HSLWRSH UHVLGHV LQ WKH &WHUPLQXV DQG FRQVLVWV RIDGLVFRQWLQXRXVDVVRFLDWLRQ RIWKHODVWDPLQRDFLGUHVLGXHV2YHU RISDWLHQWVZLWKOXQJDQGNLGQH\GLVHDVHIRUPDQWLERGLHVGLUHFWHGWRZDUGWKH FROODJHQFKDLQ7KHNLGQH\LVWKHVROHWDUJHWRUJDQLQWKHUHPDLQLQJ RISDWLHQWVZLWK*RRGSDVWXUH¶V7KHVHVXEMHFWVSURGXFHDQWLERGLHVGLUHFWHG WRZDUG WKH RU FROODJHQ FKDLQV +XGVRQ HWDO .DOOXULHWDO 7KLVFROODJHQIRUPLVDQWLJHQLFDOO\DQGVWUXFWXUDOO\GLVWLQFW IURPWKH FKDLQ
6\VWHPLF/XSXV(U\WKHPDWRVXV6/( ,Q 6/( VXEMHFWV IRUP DXWRDQWLERGLHV WR DPXOWLWXGH RIWLVVXH DQWLJHQV LQ FOXGLQJ'1$ PLWRFKRQGULD UHG EORRGFHOOV DQG FORWWLQJ IDFWRUV $V DFRQVH TXHQFH RI UHDFWLRQV EHWZHHQ DQWLERGLHV DQG WDUJHW WLVVXH KHPRO\WLF DQHPLD OHXNRSHQLD DQG WKURPERF\WRSHQLF SXUSXUD DUH FRPPRQ REVHUYDWLRQV ,Q DGGL WLRQ GHSRVLWLRQ RIDQWLERG\±'1$ FRPSOH[HV LQ WKH FDSLOODU\ EHG LQGXFHV DQ H[WHQVLYHYDVFXOLWLV
*UDYHV¶'LVHDVH *UDYHV¶GLVHDVHZKLFKLVDQDXWRLPPXQHUHVSRQVHLQWKHWK\URLGUHVXOWVLQ K\SHUWK\URLGLVP$QWLERGLHVUHDFWZLWKWKHWK\URLGVWLPXODWLQJKRUPRQHUHFHSWRU 76+5 VWLPXODWLQJ WKH SURGXFWLRQ RI WK\URLG KRUPRQHV 7KH DQWLERGLHV DUH XQLTXHLQWKDWWKH\DYLGO\ELQGWRVSHFLILFUHJLRQVRIWKH76+5LQFOXGLQJDPLQR DFLGVHTXHQFHV±DQG ± 0L\DVKLWDDQG0RUL ,W LV XQFOHDU ZKHWKHUDQWLERGLHV RU7K FHOOV DUH WKHSULPDU\ FDXVH RIWKH GLVHDVH7KHUHLVDSRRUFRUUHODWLRQEHWZHHQUHFHSWRUVSHFLILFDQWLERG\OHYHOVDQG
$XWRLPPXQLW\
WKHGLVHDVHFRXUVH ,QFRQWUDVW VHQVLWL]HG7K FHOOVWKDWUHFRJQL]HWK\URLGDQWL JHQVDQGRWKHUWLVVXHHSLWRSHVDUHRIWHQDVVRFLDWHGZLWK*UDYHV¶ GLVHDVH 7K FHOOV DUH DOVR DVVRFLDWHG ZLWK DQ RSKWKDOPLF DXWRLPPXQH UHVSRQVH DVVRFLDWHG ZLWK *UDYHV¶ GLVHDVH 7KHVH FHOOV FDQ LQILOWUDWH WKH H\H RUELW YLD DGKHVLRQ IDFWRU LQWHUDFWLRQV DQG DWWDFN ILEUREODVWV LQ WKH H\H ,Q WXUQ WKH IL EUREODVWV EHFRPHHIIHFWRUFHOOV LQ WKH RSKWKDOPRSDWK\ +HXIHOGHU 7KH PHFKDQLVP E\ ZKLFK WKH 7 FHOOV HVFDSH WKH QRUPDO WROHUDQFH EDUULHUV LV XQ NQRZQ
0\DVWKHQLD*UDYLV ,QWKLVGLVHDVHSDWLHQWVIRUPDQWLERGLHVWRWKHDFHW\OFKROLQHUHFHSWRUWKDWLV UHVSRQVLEOHIRUWUDQVGXFWLRQRIQHUYHLPSXOVHV
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¶VWK\URLGLWLV*UDYHV¶ GLVHDVHDQGPXOWLSOHVFOHURVLV 7UHPEOHDX HWDO
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
(7,2/2*<2)$872,0081(5($&7,216 ,/'HSHQGHQW$FWLYDWLRQRI$XWRUHDFWLYH7&HOOV 7KH QRUPDO 7FHOO SRSXODWLRQ LQ KXPDQV DQG DQLPDOV FRQWDLQV TXLHVFHQW DXWRUHDFWLYH7FHOOV0LFURELDOSURGXFWVVXFKDVHQGRWR[LQVEDFWHULDO'1$DQG ROLJRQXFOHRWLGHVFRQWDLQLQJXQPHWK\ODWHGF\WRVLQHJXDQLQHQXFOHRWLGHVFDQDFWL YDWHDXWRUHDFWLYH7FHOOVZKHQDQWLJHQSUHVHQWLQJFHOOV DUHSURGXFLQJ,/ $FWLYDWLRQRIDXWRUHDFWLYH7FHOOV LVQRQVSHFLILFLQQDWXUH ,/ HQKDQFHV WKHGLIIHUHQWLDWLRQDQGSUROLIHUDWLRQRI7K FHOOVERWKLQYLYRDQG LQYLWUR0RUH RYHU,/LQGXFHV,)1γ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γ E\ FROODJHQVSHFLILF 7K FHOOV 7KH ,)1γ XSUHJXODWHVSURGXFWLRQ RI,J*DDQG,J*EDQWLERG\ LVRW\SHV 7KHVHFROODJHQ VSHFLILF FRPSOHPHQWIL[LQJ DQWLERGLHV FDXVH PRUH VHYHUH GHVWUXFWLYH DUWKULWLV ZKHQFRPSDUHGZLWKFRQWURODQLPDOV6HJDOHWDO
/RVVRI6XSSUHVVLRQDQGDQ,QFUHDVHLQ$XWRLPPXQH%&HOOV 7KHUHLVHYLGHQFHLQKXPDQVDQGDQLPDOVWKDWDXWRLPPXQHWK\URLGGLVRUGHUV DUHUHODWHGWRG\VUHJXODWLRQRIDQWLJHQVSHFLILFVXSSUHVVRU7FHOOV7KHG\VUHJXOD WLRQLVWKHUHVXOWRIDGHSOHWLRQRI7VFHOOVRUDQLQDGHTXDWHDFWLYDWLRQRIVXSSUHV VLRQ 9ROSH 7KH G\VUHJXODWLRQ PD\ DOORZ WKH SURGXFWLRQ RI&' % FHOOV7KHVH³DXWRLPPXQH%FHOOV´ELQGPDQ\VHOIDQWLJHQVDQGFDQEHDXWRVWLPX ODWHGWR SURGXFH DQWLERGLHV GLUHFWHGWRZDUGVHOIDQWLJHQV 7KHUHLVDVLJQLILFDQW LQFUHDVHLQ&'%FHOOVLQSDWLHQWVZLWK*UDYHV¶ GLVHDVH$IHOWUDHWDO
0XWDWLRQVLQ+/$&ODVV,,$QWLJHQV ,''0DOVRNQRZQDVMXYHQLOHRUW\SH,GLDEHWHVRFFXUVLQRQO\RIDOO GLDEHWHV8VXDOO\WKHGLVHDVHEHJLQVHDUO\LQOLIHZLWKDSHDNDJHRIRQVHWRIWR \HDUV'HVWUXFWLRQRILQVXOLQSURGXFLQJFHOOVLVUHODWHGWRERWKF\WRWR[LF7 FHOOVDQGDQDQWLERG\UHVSRQVH
$XWRLPPXQLW\
7KHUHLV DVWURQJ DVVRFLDWLRQEHWZHHQ WKHSUHVHQFH RIFLVGLPHUV RI+/$ '4DQG,''0LQDOOHWKQLFJURXSVVWXGLHG7RGG (YLGHQFHVXJJHVWVWKDW DVLQJOHDPLQRDFLGVXEVWLWXWLRQDWSRVLWLRQLQWKHFKDLQLVUHVSRQVLEOHIRUWKH DXWRLPPXQHGLVHDVH,QQRUPDOVXEMHFWVDVSDUWLFDFLGLVQRUPDOO\IRXQGDWSRVL WLRQDQGWKHFKDLQLVPLQLPDOO\H[SUHVVHGRQFHOOV,''0SDWLHQWVFRPPRQ O\ H[SUHVV KLJK QXPEHUV RIWKH FKDLQ DQG KDYH DODQLQH YDOLQH RU VHULQH DW SRVLWLRQ6KH 7KHUH DUH WZR K\SRWKHVHV WR H[SODLQ WKH GLYHUVLW\ RIWKH DXWRLPPXQH UH VSRQVHV LQ ,''0 %RWK K\SRWKHVHV DVVXPH WKDW QRQVSHFLILF LQIODPPDWLRQ RU YLUDO LQIHFWLRQV LQFUHDVH DSRSWRVLV ZLWKWKH UHOHDVH RIDXWRDQWLJHQV $NHUEORP (SVWHLQ%DUUYLUXV (%9 PD\ EH LQYROYHG LQ WKH LQLWLDWLRQ RIWKH,''0 LPPXQHUHVSRQVH$ILYHDPLQRDFLGVHTXHQFH*33$$ LQWKHWKDPLQRDFLG UHJLRQRI+/$'4LVIRXQGLQWKH%(5)HQFRGHG$%1$&SURWHLQRI(%9 3DWHQWV ZLWKDFXWH(%9 LQIHFWLRQV DQGYDOLQH VHULQH RUDODQLQHDWSRVLWLRQ GHYHORS DFXWH GLDEHWHV $QWLERGLHV DJDLQVW WKH (%9 SHSWLGH PD\ SHUVLVW IRU VHYHUDO\HDUV3DUNNRQHQHWDO &RPSOHPHQWLQGXFHGO\VLVRIFURVVUHDF WLYHDQWLERGLHVERXQGWR FHOOVPD\LQLWLDWHWKHGLVHDVH ,QWKHILUVWVFHQDULRJOXWDPLFDFLGGHFDUER[\ODVH*$' LVUHOHDVHGIURP G\LQJ FHOOV DQG UHDFWV WLJKWO\ ZLWK WKH PXWDWHG +/$'4 7KH ODWWHU KDV D SHUPLVVLYH VLWH IRU DPLQR DFLGV DQG IRXU DQFKRU SURWHLQV VXLWDEOH IRU ELQGLQJ *$' 3UHVHQWDWLRQRIWKH*$' ZLWKWKHDOWHUHG 0+& JHQHUDWHV F\WRWR[LF7 FHOOV VSHFLILF IRU LQVXOLQSURGXFLQJ FHOOV )LJXUH &\WRWR[LF 7 FHOOV DQG DFWLYDWHG7KFHOOVVHFUHWH,)1γWKDWLVWR[LFWRWKHLVOHWFHOOV6HFUHWLRQRI,/ DQG,/ E\RWKHULPPXQRFRPSHWHQWO\PSKRF\WHVDFWLYDWHVPDFURSKDJHVDQG LQFUHDVHV WKH DFWLYLW\RIWKHF\WRWR[LF 7FHOOV .LOOHU 7FHOO O\VLV RI YLUXVLQIHFWHG RU DSRSWRWLF FHOOV UHOHDVHV DQWLJHQLF SHSWLGHV VXFKDV LQVXOLQ KHDWVKRFNSURWHLQ7LVKOHUDQG6KRHQIHOG , FDUER[\SHSWLGDVH+ LVOHWFHOOVXUIDFHDQWLJHQ ,&$ 'REHUVHQ DQG LVOHWFHOOPLWRFKRQGULDODQWLJHQ
$XWRLPPXQLW\
DQWLJHQLFHSLWRSHVZLWKSURWHLQVDQGPLFURRUJDQLVPV,QIHFWLRQVZLWKWKHVH[HQR ELRWLFV PD\ WULJJHU DQ DXWRLPPXQH UHVSRQVH WR WKH SDQFUHDWLF FHOOV 7KH WZR *$' SHSWLGHVS DQGS VKDUHDVHTXHQFHKRPRORJ\ZLWKFR[VDFNLHYLUXV 3& VHTXHQFH LGHQWLW\ 3(9.(. FDSVLG SURWHLQ DQG DUH WKH PDMRU HSLWRSHV UHFRJQL]HGE\7FHOOV6FKORRWHWDO +HDWVKRFNSURWHLQVVKDUHHSLWRSHV ZLWKPDQ\( FROLDQG /DFWREDFLOOXV VSHFLHV&DUER[\SHSWLGDVH+LVVWUXFWXUDOO\ VLPLODUWRERWKWKHFR[VDFNLHFRDWSURWHLQ DQG QXFOHRSURWHLQRILQIOXHQ]D$
0RGLILHG ³6HOI ´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³VHOISURWHLQV´ZRXOGUHVXOW,QDQDXWRLPPXQHUHVSRQVHWKHDQWLERG\ZRXOGEH GLUHFWHG WRZDUG WKH GUXJDOWHUHG VHOI SURWHLQ EXW QRW WKH QDWLYH VHOI SURWHLQ 7KHRILORSRXORV
0ROHFXODU 0LPLFU\ %DFWHULD DUH FRQVWDQWO\ HYROYLQJ DQG GHYLVLQJ PHFKDQLVPV WR HYDGH WKH LPPXQH V\VWHP 2IWHQ EDFWHULD H[SUHVV OLQHDU DPLQR DFLG VHTXHQFHV WKDW DUH KRPRORJRXVWR³VHOISURWHLQV´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
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
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
$XWRLPPXQLW\
6RPHKXPDQSDWKRJHQVH[SUHVVWKH4.5 5$$VHTXHQFHLQLPPXQRJHQLF SURWHLQV 7KH ILYHDPLQRDFLG VHTXHQFH KDV EHHQ UHSRUWHG LQ 'QD- KHDW VKRFN SURWHLQV IURP ( FROL /DFWREDFLOOXV ODFWXV %UXFHOOD RYLV DQG (SVWHLQ%DUU JSSURWHLQ$OEDQLDQG5RXGLHU 7KHVHKHDWVKRFNSURWHLQVELQGDYLGO\ WRWKH'5PROHFXOHDQGWKHFRPSOH[LVUHFRJQL]HGE\7FHOOV $PXOWLVWHSSURFHVVLVUHVSRQVLEOHIRUWKHHOLFLWDWLRQRI5$1HLWKHUWKH'5 QRUWKH'QD-E\WKHPVHOYHVFDQLQLWLDWHDQDXWRLPPXQHUHVSRQVH,QWKHILUVWVWHS LPPXQRJHQLFIRUHLJQPDWHULDOFRQWDLQLQJWKH³VKDUHGHSLWRSH´LVORFDOL]HGLQWKH LQIODPPDWRU\ VLWH E\ V\QRYLDO W\SH $ PDFURSKDJHV 7 FHOOV WKDW ELQG WKH 4.5 5$$ DUHVHOHFWHG YLDKLJKDIILQLW\7&5 LQWHUDFWLRQV DQG H[SDQGHG IRO ORZLQJ7FHOOVWLPXODWLRQ7KHUHDFWLRQLVSHUSHWXDWHGE\WKHLQWHUDFWLRQRI7FHOOV ZLWK 0+&'5 0+&'5FRPSOH[HG IRUHLJQ SURWHLQV FRQWDLQLQJ WKH 4.5 5$$ VHTXHQFH RU WKH 4.5 5$$ VHTXHQFH LQ VROXEOH SURWHLQV 'H VWUXFWLRQRIFHOOVFDUU\LQJWKH0+&'5PDUNHUPD\UHOHDVHRWKHULPPXQRJHQLF VHOISURWHLQV RU H[SRVH FU\SWLF PDUNHUV WKDW FRQWULEXWH WR ³HSLWRSH VSUHDGLQJ´ (OVRQ HWDO 7FUX]LWKHHWLRORJLFDODJHQWRI&KDJDV¶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
&U\SWLF ´6HOI´$FWLYDWLRQ ,QWKLVK\SRWKHWLFDOVFHQDULRLWLVDVVXPHGWKDWHDFKVHOISURWHLQKDVVHYHUDO GRPLQDQWHSLWRSHV WKDWVHUYHDV VHOIPDUNHUV 'XULQJ7FHOOPDWXUDWLRQ7FHOOV UHDFWLQJ ZLWK WKHVH PDUNHUV DUH QHJDWLYHO\ VHOHFWHG DQG GHVWUR\HG RU EHFRPH WROHUDQW RI ³VHOI´ PDUNHUV &RQYHUVHO\ WKHUH DUH PDQ\ PLQRU VXEGRPLQDQW HSLWRSHVFRQVWLWXWLQJ³FU\SWLFVHOI´WKDWFDQLQGXFHDQLPPXQHUHVSRQVH7KLVLV SRVVLEOH EHFDXVH WROHUDQFH GLUHFWHG WRZDUG WKH ³FU\SWLF VHOI´ PDUNHUV ZDV QRW
OPPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
HVWDEOLVKHGGXULQJGHYHORSPHQWRIWKHLPPXQHV\VWHP$QLPPXQHUHVSRQVHWR WKHVHPDUNHUVLVXVXDOO\QRWXQGHUWDNHQEHFDXVHRILQHIIHFWLYHDQWLJHQSURFHVVLQJ RU KLQGHUHG DFFHVV WR WKH 0+& WKDW SUHYHQWV WKH LQLWLDWLRQ RIDQ LPPXQH UH VSRQVH &KHPLFDOH[SRVXUH RUYLUDO LQIHFWLRQV PD\SURYLGHWKH LQLWLDWLQJHYHQWIRU SUHVHQWDWLRQRI³FU\SWLF´VHOIDQWLJHQV9LUDOLQIHFWLRQVLQFUHDVHWKHSUHVHQWDWLRQ RIWKHVXEGRPLQDQWPDNHUE\PROHFXODUPLPLFU\7KHRILORSRXORV &KHPL FDOH[SRVXUHPD\DOVRUHVXOWLQSUHVHQWDWLRQWR7FHOOVE\FUHDWLQJDOWHUHG³FU\S WLF´ DQWLJHQV ZLWK KLJK DIILQLW\ IRU 0+& PROHFXOHV $QWLQXFOHRODU DQWLERGLHV LQGXFHG E\ H[SRVXUH WR +J&O DUH WKH UHVXOW RISUHVHQWDWLRQ RI ³FU\SWLF´ VHOI SHSWLGHVWR7KDQG% FHOOV
6HTXHVWHUHG$QWLJHQV 7LVVXHDQWLJHQVVHTXHVWHUHGEHKLQGDQDWRPLFEDUULHUVGRQRWFRQWDFW7FHOOV ZKHQWKHUHSHUWRLUHRI³VHOI´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γ (QGRJHQRXV DQWLJHQV DUH SUH VHQWHGWR&'FHOOVYLDWKH0+&,,PROHFXOHV:LWKRXW%FRVWLPXODWLRQWKH)DV LV XSUHJXODWHG DQG H[SUHVVHG RQ 7 FHOOV /LQNDJH RI )DV DQG )DV/ LQGXFHV DSRSWRVLVLQWKHDXWRUHDFWLYH7FHOOV'D\DQHWDO SUHYHQWLQJVWLPXODWLRQ RI7FHOOV
,PPXQH'HYLDWLRQ 7KH LQWUDRFXODU SRUWLRQ RI WKH H\H LV QRW VHTXHVWHUHG IURP WKH LPPXQH V\VWHP,WLVHTXLSSHGZLWKDQWLJHQSUHVHQWLQJFHOOVHIIHUHQWDQGDIIHUHQWLPPX QRORJLFDOFRPPXQLFDWLRQURXWHVDQGGUDLQLQJO\PSKQRGHV
$XWRLPPXQLW\
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³QRQVHOI´ H\H PROHFXOHV VXFK DV UHWLQDO 6 SURWHLQV IURP GHOD\HG K\SHUVHQVLWLYLW\ RU F\WRWR[LF LPPX QRORJLFDOUHDFWLRQV 6WUHLOHLQ %HFDXVHWKHH\HFDQQRWUHVSRQG ZLWKGH OD\HG K\SHUVHQVLWLYLW\ UHDFWLRQV LW LV H[WUHPHO\ VXVFHSWLEOH WR LQIHFWLRQ ZLWK LQWUDFHOOXODUPLFURRUJDQLVPV*HU\DQG6WUHLOHLQ
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
,PPXQH'\VUHJXODWLRQ 'LVWXUEDQFHVLQWKH7K7KUDWLRKDYHEHHQFRQVLGHUHGDSULPDU\FDXVHRI DXWRLPPXQH GLVHDVH ,QFUHDVHG QXPEHUV RI7K FHOOV &' &'52 ZHUH UHSRUWHG LQ +DVKLPRWR¶V WK\URLGLWLV *UDYHV¶ GLVHDVH DQGFHUWDLQ IRUPV RI5$ DQGGLDEHWHV,QPLFH7KFHOOVSURGXFH,)1γDQG7)1αWKDWDFWLYDWHF\WRWR[ LF7FHOOV,QQRUPDOVXEMHFWV7KFHOOVSURYLGHF\WRNLQHVVXFKDV,/DQG,/ WKDWGRZQUHJXODWHLQWHUIHURQ SURGXFWLRQ DQGLQKLELWDXWRLPPXQHUHVSRQVHV
,
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
'58*6&+(0,&$/6$1'$872,0081(5(63216(6 &KHPLFDOVDQGGUXJVFDXVHDXWRLPPXQHUHVSRQVHVLQKXPDQV7KHDXWRLP PXQHUHVSRQVHDEDWHVZKHQWKHGUXJLVUHPRYHG+RZHYHUVRPHUHVSRQVHVFDQ SHUVLVWIRUVHYHUDO\HDUV
+HPRO\WLF $QHPLDV $QHPLDV DUH LQGXFHG E\ D QXPEHU RI GLIIHUHQW VSHFLILF DQG QRQVSHFLILF PHFKDQLVPV α0HWK\OGRSDFDXVHVDWUXHDXWRLPPXQHKHPRO\WLFDQHPLDLQ± RISDWLHQWV$QWLERGLHVGLUHFWHGWRZDUG5KDQWLJHQVRQUHGEORRGFHOOVKDYH EHHQUHSRUWHGLQSDWLHQWVUHFHLYLQJα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
$XWRLPPXQLW\
FRPSHQVDWRU\ PHFKDQLVP WKHVH SDWLHQWV PD\ DOVR XVH DQ DOWHUQDWH PHWDEROLF SDWKZD\ WKDW R[LGL]HV WKH GUXJ FUHDWLQJKLJKO\UHDFWLYH PHWDEROLWHVFDSDEOH RI LQWHUDFWLQJ ZLWK'1$
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
'UXJVDQGWKH&UHDWLRQRI³1HRDQWLJHQV´ 'UXJV RIWHQ FUHDWH ³QHRDQWLJHQV´ WKDW LQGXFH WKH IRUPDWLRQ RI DXWRDQ WLERGLHV7KHVHDQWLERGLHVPD\EHGLUHFWHGWRZDUGFHOOVWLVVXHFRPSRQHQWVDQG UHGRUZKLWHEORRGFHOOV %HFDXVHRIFKHPLFDOLQWHUDFWLRQZLWKWLVVXHVRPHGUXJVFDQFUHDWH³QHRDQ WLJHQV´ E\ GLUHFW PRGLILFDWLRQ RI VHOI SURWHLQV '3HQLFLOODPLQH KDV IUHH VXOIK\GU\O DQG DPLQR JURXSV 7KHVH UHDFWLYH JURXSV FDQ LQWHUDFW ZLWK IUHH DO GHK\GH JURXSV RQ FROODJHQ XVLQJ DPL[HG VXOILGHUHDFWLRQ RUUHGXFWLRQ RIF\V WHLQH &KHPLFDO PRGLILFDWLRQ RI VHOI PROHFXOHV FUHDWHV ³QHRDQWLJHQV´ -DIIH %HFDXVHRIWKHKLJKLQFLGHQFHRIDXWRLPPXQHUHVSRQVHV'SHQLFLOODPLQH KDVOLPLWHGXVHLQWKHWUHDWPHQWRIDUWKULWLV LQKXPDQV+LOO
+$=$5'O'(17O)O&$7O21 7KHSUHVHQFHRIDXWRDQWLERGLHVGLUHFWHGWRZDUGKRVWWLVVXHLVDKDOOPDUNRI DQDXWRLPPXQHUHVSRQVH ,PPXQRIOXRUHVFHQFHDVVD\VFDQEHXVHGWRGHWHFWWKH SUHVHQFH RI DXWRDQWLERGLHV 'DWD IURP WKHVH DVVD\V PXVW EH LQWHUSUHWHG ZLWK FDXWLRQ DV DQWLERG\ WLWHUV PD\ GHFUHDVH ZLWK WLPH 5RVH DQG %KDWLD 7LVVXHVSHFLILF DXWRUHDFWLYH7FHOOV VKRXOGDOVREHGHPRQVWUDEOHLQDQDXWRLP PXQHUHVSRQVH3UROLIHUDWLRQRI7FHOOVIROORZLQJH[SRVXUHWRWLVVXHDQWLJHQVFDQ EHXVHGDVDQLQYLWURFRUUHODWHRI7K DXWRLPPXQLW\
OPPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
$QLPDOVPRGHOFDQDOVREHXVHGWRDVVHVVWKHELRORJLFDOVLJQLILFDQFHRIWKH SUHOLPLQDU\VWXGLHV 7KHVHPRGHOVZLOOEHGLVFXVVHGLQ DODWHUFKDSWHU
5(*8/$725<326,7,2121$872,0081,7< (QGSRLQWVIRUDXWRLPPXQLW\DUHQRWQRUPDOO\SDUWRIVWDQGDUGLPPXQRWR[ LFLW\WHVWLQJ7HVWVVXFKDVWKHSRSOLWHDOO\PSKQRGHDVVD\FDQEHXVHGWRVFUHHQ IRU DXWRLPPQLW\ 7KLV DVVD\ DQG RWKHU XVHIXO WHVWV ZLOO EH H[SORUHG LQ ODWHU FKDSWHUV
'HOD\HG+\SHUVHQVLWLYLW\5HDFWLRQV
,1752'8&7,21 'HOD\HGW\SH K\SHUVHQVLWLYLW\ '7+ UHDFWLRQV GLIIHU IURP LPPHGLDWH DOOHUJLF UHDFWLRQV LQ FOLQLFDO VLJQV FKURQRORJ\ KLVWRORJLFDO IHDWXUHV DQG WKH QDWXUH RI LPPXQH HIIHFWRUFHOOV 8QOLNH LPPHGLDWH K\SHUVHQVLWLYLW\ '7+ LQYROYHV O\P SKRF\WHV DQGPDFURSKDJHV DVHIIHFWRUFHOOV $QWLERGLHV DUH QRWLQYROYHGLQWKH UHDFWLRQ 0RUHRYHU UHDFWLRQV RFFXU± KUUDWKHUWKDQ ±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
'(/$<('+<3(56(16O7O9O7<6.,15($&7,216 &RQWDFW'HUPDWLWLV 5HDFWLYLW\ LVXVXDOO\GLUHFWHGWRZDUG ORZPROHFXODUZHLJKWFKHPLFDOVWKDW SHQHWUDWHWKHGHUPLV6RPHFKHPLFDOVELQGGLUHFWO\WRVNLQSURWHLQVZKLOHRWKHUV
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
UHTXLUHPHWDEROLF RUSKRWRFRQYHUVLRQSULRUWRSURWHLQELQGLQJ $QGHUVRQHWDO 'XULQJWKHLQLWLDOH[SRVXUH DQWLJHQLVFDSWXUHGE\/DQJHUKDQVFHOOV/&V RUYHLOHGFHOOVWKDWH[SUHVVKLJKQXPEHUVRI+/$'5'4DQG'30RVWRIWKH FKHPLFDO±SURWHLQDGGXFWVDUHSURFHVVHGE\WKH/&VDQGLPPXQRJHQLFIUDJPHQWV DUH SUHVHQWHG RQ WKH FHOO VXUIDFH LQ FRQWH[WZLWK0+& PDUNHUV 0HWDO VDOWVRI QLFNHO VWLPXODWHWKHLPPXQH V\VWHPE\GLIIHUHQWPHFKDQLVPV 1LFNHOFDQUHDFW ZLWK WKH 0+& PDUNHUV GLUHFWO\ RU LQGLUHFWO\ DV QLFNHO±SURWHLQ FRPSOH[HV 0RXORQ HWDO 6RRQDIWHUDQWLJHQSURFHVVLQJEHJLQVLPPXQRFRPSHWHQWFHOOVEHJLQWRSUR GXFH DQG VHFUHWH D SDWWHUQ RI F\WRNLQHV WKDW DUH RQO\ SURGXFHG GXULQJ '7+ UHDFWLRQV,/LVSURGXFHGE\WKH/&VDQGNHUDWLQRF\WHVWKDWDOVRVHFUHWH,/α DQGFKHPRNLQHV,3DQG0,3(QNDQG.DW] *0XOOHUHWDO .HUDWLQRF\WHV DOVR VHFUHWH RWKHU F\WRNLQHV VXFK DV *0&6) DQG 71)α WKDW VWLPXODWHWKHPDWXUDWLRQ RI/&V %HFDXVH7FHOOVDUHQRWSUHVHQWLQODUJHQXPEHUVLQWKHVNLQWKHUHLVQRZD\ WRJHQHUDWHDQLPPXQHUHVSRQVH$3&VPXVWOHDYHWKHVNLQDQGWUDYHOWRDO\PSK QRGH7KHF\WRNLQHV,/DQG71)α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³VHQVLWL]HG 7 FHOOV´ IURP WR±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
'HOD\HG +\SHUVHQVLWLYLW\ 5HDFWLRQV
$OWKRXJKWKHVNLQUHVSRQVHXVXDOO\DEDWHVZLWKLQGD\VDQWLJHQVSHFLILF7 FHOOVSHUVLVWLQWKHVNLQIRUVHYHUDOPRQWKV7KHUHIRUHDGGLWLRQDOFRQWDFWZLWKWKH VHQVLWL]LQJ DJHQW UHVXOWV LQ DFFHOHUDWHG ± KU VNLQ UHDFWLRQV DW WKH VLWH RI SUHYLRXVUHDFWLRQV
'(/$<('+<3(56(16,7,9,7<5($&7,216,17+(/81* 7KHPRGHOV\VWHPIRUWKHVWXG\RIGHOD\HGK\SHUVHQVLWLYLW\UHDFWLRQVLQWKH OXQJLV WKHWXEHUFXORVLV PRGHO ,QKDOHG0\FREDFWHULXPWXEHUFXORVLVLV LQJHVWHG E\ DOYHRODU PDFURSKDJHV EXW QRW NLOOHG 5DWKHU WKH RUJDQLVP OLYHV ZLWKLQ WKH SKDJRF\WHEHFDXVH LW LQKLELWV WKH IXVLRQRISULPDU\ RUVHFRQGDU\ JUDQXOHV ZLWK WKH SKDJRVRPH $IWHU ±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γ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± KU RI 7FHOO DFWLYDWLRQ ,&$0 &' LVXSUHJXODWHGRQWKHYDVFXODUHSLWKHOLXP7KLVDGKHVLRQPROH FXOH ORFDOL]HV QHXWURSKLOV YLD0DF±&$0 LQWHUDFWLRQV $QRWKHU DGKHVLRQ IDFWRU 9&$0 LV VORZO\ XSUHJXODWHG RYHUDSHULRG RI KU 0HPRU\7FHOOV DWWDFKWRWKHHQGRWKHOLXPIROORZLQJLQWHUDFWLRQVEHWZHHQ9&$0 RQWKHHQGR
OPPXQRWR[LFRORJ\DQG 5LVN$VVHVVPHQW
WKHOLXPDQG9/$RQ7FHOOV 2WKHU7FHOOVDWWDFKWRHQGRWKHOLXPYLDLQWHUDF WLRQV EHWZHHQ,&$0 DQG/)$ RQ7FHOOV ,QSUHSDUDWLRQIRUH[WUDYDVFXODUL]DWLRQWKHVKDSHRILPPXQRFRPSHWHQWFHOOV PXVWEHDOWHUHG7KHFRPELQHGHIIHFWVRI,/DQG0&3 DUHUHVSRQVLEOHIRUWKH VKDSH FKDQJH 7KHVH F\WRNLQHV ELQG WR KHSDULQ VXOIDWH JO\FRVDPLQRJO\FDQV RQ WKHHQGRWKHOLDOFHOOV¶ VXUIDFHDQGLQFUHDVHWKHDIILQLW\EHWZHHQHQGRWKHOLDOFHOOV DQGWKHOHXNRF\WHV,Q DGGLWLRQ WKHF\WRNLQHVLQGXFHDOHXNRF\WHVKDSHFKDQJH IURP D URXQG LPPRELOH IRUP WR D IODW PLJUDWLQJ IRUP ZKLOH LQFUHDVLQJ WKH ORFRPRWLRQ.XE\ &HOOVFDQQRWH[WUDYDVDWHXQOHVVWKHEDVHPHQWPHPEUDQHLVDOVRUHPRGHOHG 71)DQG,)1γDUHQHFHVVDU\WRLQLWLDWHVKDSHFKDQJHVLQHQGRWKHOLDOFHOOVWKDW DOORZYDVFXODUHJUHVVRIFHOOV ,QDGGLWLRQGHSRVLWLRQRIILEULQRJHQDQGRUDFWL YDWHGILEULQIRUPVDODWWLFHZRUNRUVFDIIROGLQJWKDWDVVLVWVPLJUDWLRQRIO\PSKR F\WHV LQWR WKH WLVVXH /HDNDJH RISURWHLQ LQWR WKH WLVVXH DOVR UHGXFHV WKH VKHDU IRUFHV LQ WKH EORRG DQG LQFUHDVHV WKH DWWDFKPHQW RI OHXNRF\WHV WR WKH HQGR WKHOLXP $FWLYDWHG O\PSKRF\WHV PRQRF\WHV DQG QHXWURSKLOV IURP WKH SHULSKHUDO EORRGKDYHGLIIHUHQWIDWHVLQWKHWLVVXHV1HXWURSKLOVRIWHQGLHZLWKLQ±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γ QLWULF R[LGH DQG 71)α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
'HOD\HG +\SHUVHQVLWLYLW\ 5HDFWLRQV
DFWLYDWH WKH PDFURSKDJHV DQG JLDQW FHOOV $W WKH VDPH WLPH 71) DQG ,/ VWLPXODWH ILEUREODVW SUROLIHUDWLRQ DQG FROODJHQ SURGXFWLRQ 2WKHU PDFURSKDJH GHULYHGIDFWRUVSODWHOHWJURZWKIDFWRU DXJPHQWILEUREODVWSUROLIHUDWLRQRULQGXFH HQGRWKHOLDO FHOO PLJUDWLRQ WUDQVIRUPLQJ JURZWK IDFWRU OHDGLQJ WR QHZ EORRG YHVVHOIRUPDWLRQ$QLQIOX[RIILEUREODVWVSURGXFLQJFROODJHQOHDGVWRIRUPDWLRQ RIWKHGHQVH JUDQXORPDLQWKHOXQJ ,WLVLPSRUWDQWWRUHPHPEHUWKDWWKHP\FREDFWHULDDUHQHYHUDFWXDOO\NLOOHG 5DWKHUWKHEDFWHULDDUHVLPSO\³ZDOOHGRII´IURPWKHERG\DQGWKHJUDQXORPDDUH FRQVWDQWO\ PDLQWDLQHGE\7K FHOOV ,IFHOOXODULPPXQLW\ LV LPSDLUHG E\DJH RU GLVHDVH WKH JUDQXORPD PD\ UXSWXUH VSUHDGLQJ P\FREDFWHULD WKURXJKRXW WKH ERG\
%$&7(5,$/(9$6,212)7+(,0081(6<67(0 6RPH VWUDLQV RIP\FREDFWHULDFDQHYDGHD7KPHGLDWHGLQIODPPDWRU\UH VSRQVH 7KHVH VWUDLQV LQKLELW WKH H[SUHVVLRQ RIWKH % PROHFXOH RQ WKH FHOOV¶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
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
:HHSLQJVNLQUDVKHVOLYHUMDXQGLFHDQGGLDUUKHDDUHDFRQVHTXHQFHRIWKH DFXWH*9+LPPXQRORJLFDOUHDFWLRQ&KURQLF*9+LVPHGLDWHGVROHO\E\7FHOOV DQG PDFURSKDJHV )LEURVLV RIWDUJHW RUJDQV RIWHQ UHVXOWV LQ DORVV RIIXQFWLRQ
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
'HOD\HG +\SHUVHQVLWLYLW\ 5HDFWLRQV
,QFUHDVHGYDVFXODUSHUPHDELOLW\ DQGLQGXUDWLRQDUHFDXVHGE\DFWLYDWLRQRI VHUXPHQ]\PHV)LEULQRJHQDFWLYDWLRQLQFUHDVHVYDVFXODUSHUPHDELOLW\DOORZLQJ FHOOVWRHQWHUWKHWLVVXH &ROODJHQ DFWLYDWLRQ RIWKH+DJHPDQIDFWRULQGXFHVWKH LQGXUDWLRQREVHUYHGLQWKHUHDFWLRQ$VNHQDVH
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
7DEOH
&KHPLFDOV WKDW $OWHU 'HOD\HG7\SH +\SHUVHQVLWLYLW\5HDFWLRQV
&KHPLFDO /HDG 6HOHQLXP 7HWUDFKORURGLEHQ]RIXUDQ 3RO\FKORULQDWHGELSKHQ\O 0HWK\OFKRODQWKUHQH &DUERIXUDQ 'LFKORURSKHQRO 6RGLXPK\SRFKORULGH 'LHWK\OQLWURVDPLQH 7ULSKHQ\OWLQ 'LDON\OWLQ
6SHFLHV 0RXVHUDW 5DW *XLQHDSLJ 5DEELW 0RXVH 5DEELW 5DW 5DW 0RXVH 5DW 0RXVH
(IIHFW
0RGLILHGIURP,PPXQRORJ\DQG$OOHUJ\3UDFWLFH .ROOHU
OPPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
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±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¶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
$ &RPSDULVRQ RI WKH 46$5 0RGHOV IRU &RQWDFW $OOHUJHQV
0RGHO '(5(. '(5(. 0XOWL&$6( $&'0DJHHHWDO
&KHPLFDOV
6RXUFH
6HQVLWLYLW\
6SHFLILFLW\
*307D $QLPDOWHVWV *307KXPDQSDWFK =LHJOHUGDWDEDVH
0RGLILHGIURP4XDQWLWDWLYH6WUXFWXUH$FWLYLW\5HODWLRQVKLS *UDKDP HWDO ZLWKSHUPLVVLRQRI:LOH\ 9&+-RKQ:LOH\DQG6RQV/WG D*XLQHD SLJ PD[LPL]DWLRQ WHVW
'HOD\HG +\SHUVHQVLWLYLW\ 5HDFWLRQV
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± SURWHLQELQGLQJ6WHMVNDOHWDO 7KHO\PSKRF\WHWUDQVIRUPDWLRQWHVWLVDSRSXODUWHVWDPRQJFHOOXODULPPX QRORJLVWVEHFDXVHWKHHQGSRLQWLVREMHFWLYHDQGTXDQWLILDEOH,WLVFRPSDUDWLYHO\ HDV\WRFDUU\ RXWDQGWKHGDWDREWDLQHGFDQ EH VHPLDXWRPDWHG LQUDGLRLVRWRSH FRXQWHUV
5(*8/$725<326,7,2121'(/$<('+<3(56(16,7,9,7< 5HJXODWRU\ DJHQFLHVEDVHWKHKD]DUG LGHQWLILFDWLRQ DQGULVNDVVHVVPHQWRQ JXLQHDSLJPRGHOVIRUGHOD\HGK\SHUVHQVLWLYLW\7KHXVHRIWKHVHPRGHOVZLOOEH GHVFULEHGLQODWHUFKDSWHUV(XURSHDQUHJXODWRU\DJHQFLHVDUHUHOXFWDQWWRDFFHSW GDWDIURPKXPDQVWXGLHV 2EMHFWLRQVWR KXPDQGDWDDUHHWKLFDO LQQDWXUHUDWKHU WKDQVFLHQWLILF7KLVKDVOLPLWHGWKHXVHRIKXPDQGDWDRQ'7+LQWKHUHJXODWRU\ SURFHVV
.LOOHU&HOOV
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
FDOFLXPWKDWLVQHFHVVDU\IRUFHOOXODUDFWLYDWLRQ,QWUDFHOOXODUVLJQDOLQJLVLQLWLDWHG ZKHQ WKH 7&5 LQWHUDFWV ZLWK WKH 0+&±DQWLJHQ FRPSOH[ RQ WKH WDUJHW FHOO &\WRO\WLF7FHOOVFDQRQO\UHFRJQL]HDQWLJHQSUHVHQWHGLQDVVRFLDWLRQZLWK0+&, $ % DQG& PROHFXOHV 6HFRQGDU\ LQWHUDFWLRQVEHWZHHQ% DQG&' LQLWLDWH SUROLIHUDWLRQ DQGSURGXFWLRQ RIF\WRNLQHV %DVHG RQ WKH F\WRNLQH SURGXFWLRQ DQG UHVSRQVH SDWWHUQV WKHUH DUH WZR VXESRSXODWLRQVRI7NLOOHUFHOOV7F FHOOVDUHDFWLYDWHGDQGVWLPXODWHGE\,/ DQGVHFUHWH,/DQG,)1γ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γDQG 71)α*XLGRWWLDQG &KLVDUL 7HUPLQDWLRQ RIYLUDO LQIHFWLRQV ZLWKRXWGHVWUR\LQJ FHOOV PD\EHFULWLFDO WR WKH KRVW¶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³O\PSKRNLQH´WKDWFDQNLOOVHYHUDOGLIIHUHQWVSHFLHVDQGVWUDLQRIEDFWHULD/HYLW] HWDO
.LOOHU&HOOV
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
$FWLYDWLRQ RI1. &HOOV $FWLYDWLRQRI1.FHOOVUHTXLUHVDVHULHVRILQWHUDFWLRQVEHWZHHQWKH1.DQG WDUJHWFHOOV 7KHUDW1.53$DQGPRXVH1.53&DUHUHFHSWRUVRQ1.FHOOV
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
,QKLELWLRQ RI1.&HOO)XQFWLRQ 7KHUH LV DQ LQYHUVH UHODWLRQVKLS EHWZHHQ WKH H[SUHVVLRQ RI0+& FODVV , PROHFXOHVDQG1.FHOONLOOLQJ(QJDJHPHQWRI1.UHFHSWRUVDQGWKH0+&,UHVXOWV LQDQHJDWLYHVLJQDO WRWKH1.FHOOWKDWSUHYHQWVO\VLVRIWDUJHWFHOOV 7DEOH ,QPLFHDQGKXPDQVGLIIHUHQW1.UHFHSWRUVLQWHUDFWZLWKWKH0+&,PROH FXOHV WR VHQG WKH QHJDWLYH VLJQDO 7KH PRXVH LQKLELWRU\ UHFHSWRU /\ LV D PHPEHU RIWKH &OHFWLQ W\SH ,, JO\FRSURWHLQ VXSHUIDPLO\ )LJ %HFDXVH RI DOWHUQDWLYH JHQH VSOLFLQJ DQG DOOHOLF SRO\PRUSKLVP /\$ /\& DQG /\*SURWHLQVKDYHEHHQGHVFULEHG$QLQGLYLGXDO1.FHOOPD\H[SUHVVRQH RUPRUHGLIIHUHQWDOOHOHV/DQLHUDQG3KLOOLSV *HQHSURGXFWVRIWKH/\IDPLO\UHDFWZLWKGLIIHUHQWPXULQH0+&+ PROHFXOHV /\$ UHDFWV RQO\ ZLWK +'G DQG +'N /\& UHFRJQL]HV +.E LQ +E PLFH DQG LQ +G PLFH /\& UHDFWV ZLWK +E DQG +G /RSH]%RWHW HWDO 7KHKXPDQNLOOHUFHOOLQKLELWRU\UHFHSWRUV.,5V DUHPHPEHUVRIDQLPPX QRJOREXOLQUHODWHGVXSHUIDPLO\)LJ 7KH.,5VKDYHHLWKHUWZR,J*RUWKUHH ,J*OLNHORRSVZLWKVXOILGHERQGVFKDUDFWHULVWLFRIWKH,JVXSHUIDPLO\/DQLHUDQG 7DEOH 0ROHFXOH
1. &HOO &RGHG 0ROHFXOHV WKDW 5HJXODWH 1. &HOO $FWLYLW\ 'LVWULEXWLRQ
1.53, /\ $&DQG*
1. 1.
&' &'
+HPDWRSRLHWLF 1.7FHOOV
/LJDQG &DUERK\GUDWH $+'G 'N %+.E *+'G/G &DUERK\GUDWH +/$$%RU&
(IIHFW $FWLYDWHV ,QKLELWV
$FWLYDWHV $FWLYDWHVRULQKLELWV
.LOOHU&HOOV
)LJXUH 6WUXFWXUDO IHDWXUHV RI KX PDQ DQG PRXVH NLOOHU FHOO LQKLELWRU\ IDFWRUV
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
/<03+2.,1($&7,9$7('.,//(5&(//6/$.V 7KH F\WRO\WLF DFWLYLW\ RI 1. FHOOV LV HQKDQFHG IROORZLQJ H[SRVXUH WR,)1α ,)1,)1γDQG,/7KH1.FHOOVEHFRPH/$.FHOOVWKDWFDQO\VHDZLGH UDQJHRIDOORJHQHLF DQGDXWRORJRXV WXPRUFHOOV &OLQLFDO WULDOV GHPRQVWUDWHG WKDWZKHQ 1.FHOOV DQG,/ DUH LQIXVHG LQWR SDWLHQWVZLWKHQGVWDJHPHWDVWDWLFFDQFHUV WKHUHLVDUHGXFWLRQLQWXPRUUHJUHV VLRQ,QVRPHFDVHVWKHWXPRULVHUDGLFDWHG)LQNOHVWHLQDQG0LOOHU
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
1.$1'/$.&(//6,1',6($6( 7KH 1. DQG/$. FHOOV SOD\ DUROH LQ WKH WHUPLQDWLRQ RIYLUDO LQIHFWLRQV 'XULQJWKHHDUO\VWDJHVRIDYLUDOLQIHFWLRQ1.FHOOVDUHWKHSULPDU\HIIHFWRUFHOOV XQWLO D &' 7FHOO UHVSRQVH RFFXUV $OVR 1. FHOOV PD\ VXSSODQW WKH 7FHOO UHVSRQVHGXULQJLQIHFWLRQVZLWKDGHQR DQGKHUSHVYLUXVHVWKDWGRZQUHJXODWHWKH 0+&,PDUNHUH[SUHVVLRQ %DFWHULDOLQIHFWLRQVPD\EHWHUPLQDWHGE\1.DQG/$.FHOOV'LUHFWLQWHU DFWLRQV EHWZHHQ 1.53 DQG EDFWHULDO FHOO VXUIDFH FDUERK\GUDWH GHWHUPLQDQWV UHVXOWLQWKHO\VLVRIWKHEDFWHULXP
1.$1'&7/7$5*(7&(///<6,6 )ROORZLQJPHPEUDQHIXVLRQ EHWZHHQ WKHNLOOHUDQGWDUJHWFHOOV WDUJHWFHOO O\VLV LV PHGLDWHGE\WZRLQGHSHQGHQWPHFKDQLVPV
3HUIRULQVDQG7DUJHW&HOO/\VLV ,QRQHF\WRO\WLFPHFKDQLVPVROXEOHSHUIRULQPROHFXOHVDUHVHFUHWHGE\1. FHOOV DQG &7/V 3HUIRULQV KDYH D VHTXHQFH KRPRORJ\ ZLWK WKH FRPSOHPHQW PHPEUDQHDWWDFNFRPSOH[&E&&&DQG& 7KHVHTXHQFHKRPRO RJ\EHWZHHQ&DQG&UHVLGHVLQDDPLQRDFLGVHTXHQFH/LXHWDO /LNH WKHWHUPLQDO FRPSOHPHQWFRPSRQHQWVSHUIRULQ PRQRPHUVSHUIRUDWHWDUJHW PHPEUDQHV3RO\PHUL]DWLRQRIWKHPRQRPHUVFUHDWHVD WRQPSRUHLQWKH PHPEUDQH /RVV RIPHPEUDQH LQWHJULW\FDXVHV WKH FHOOVWR GLH RIRVPRWLF O\VLV /LX HWDO
*UDQ]\PH /\VLV RI 7DUJHW &HOOV :KHQ NLOOHU FHOOV FRPH LQ GLUHFW FRQWDFW ZLWK WDUJHW FHOO PHPEUDQHV JUDQ]\PHV IURP WKH HIIHFWRU FHOOV DUH LQMHFWHG LQWR WKH WDUJHW FHOO 7KHUH DUH
.LOOHU &HOOV
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α 71) OHXNDOH[LQ DQG IUDJPHQWLQ 6\PWKDQG7UDSLDQL
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
7DEOH
3URSHUWLHV RI.LOOHU &HOO *UDQ]\PHV
*UDQ]\PH
6SHFLHVD
$FWLYLW\
([SUHVVLRQ
$ 7U\SDVH % & ' ( ) * + 0HWDVH
05+ 5+ 05+ 05 0 0 05 0 + 5+
7U\SDVH 7U\SDVH $VSDVH " " " " " " 0HWDVH
&7/1. &7/1. &7/1. &7/ &7/ &7/ &7/ &7/ &7/ 1.
5HSULQWHGIURP,PPXQRORJ\7RGD\IURP6\PWKDQG7UDSLDQL ZLWKSHUPLVVLRQRI(OVHYLHU6FLHQFH D0 0RXVH 5 5DW + +XPDQ
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
)LJXUH 6SHFXODWLYH PRGHO RI O\PSKRF\WHPHGLDWHG F\WRWR[LFLW\ (QGRJHQRXV SUR WHDVHV LQYROYHG LQ FHOO GHDWK VXFK DV ,/ FRQYHUWLQJ HQ]\PH ,&( PD\ EH DFWLYDWHG E\ VLJQDOV SURYLGHG E\ LQIHFWLRXV YLUXVHV JURZWK IDFWRU ZLWKGUDZDO RU '1$ GDPDJH 5H SULQWHG IURP ,PPXQRORJ\ 7RGD\ 6\PWK DQG 7UDSLDQL ZLWK SHUPLVVLRQ RI (OVHYLHU 6FLHQFH
KDYHDQLPPXQRPRGXODWRU\UROHEHFDXVHWKH\SUHIHUHQWLDOO\HOLPLQDWHDFWLYDWHG 0+& SRVLWLYH FHOOV HJ PRQRF\WHVPDFURSKDJHV DQG % FHOOV SUHYHQWLQJ RYHUUHDFWLRQRIWKHLPPXQHV\VWHP+DKQ HWDO
0$&523+$*(.,//(5&(//6 'HSHQGLQJRQWKHVWLPXOLPDFURSKDJHVFDQEHFRPHLQIODPPDWRU\SULPHG RUDFWLYDWHGPDFURSKDJHV,QIODPPDWRU\PDFURSKDJHVH[SRVHGWR,)1γRUEDF WHULDOHQGRWR[LQ/36 EHFRPHDFWLYDWHG/HZLV $FWLYDWHGPDFURSKDJHV FDQ NLOO WXPRUFHOOV LQ YLWUR 7KH UHVSRQVHLV VHOHFWLYHLQ WKDWQRUPDO FHOOV DUH VSDUHGEXWQRQVSHFLILF LQ WKDWGLIIHUHQWW\SHVRIWXPRUFHOOVFDQEHNLOOHG
.LOOHU &HOOV
7KHPDFURSKDJHF\WRO\WLFPHFKDQLVPLVSRRUO\XQGHUVWRRG3RVVLEOHF\WR WR[LF PHGLDWRUV VHFUHWHG E\ PDFURSKDJHV DUH K\GURJHQ SHUR[LGH SURWHDVHV 71)αDQGQLWULF R[LGH ,W LV DOVR SRVVLEOH WKDW GHSOHWLRQ RI PHGLD E\ DUJLQDVHV SOD\VDUROHLQWXPRUFHOONLOOLQJ /HZLV
$17,%2'<'(3(1'(17&(//8/$5 &<7272;,&,7<$'&& 2YHU RI 1. FHOOV KDYH D ORZDIILQLW\ UHFHSWRU &' IRU WKH )F SRUWLRQRI,J*)Fγ5,,,D &'LVXVXDOO\QRQFRYDOHQWO\DVVRFLDWHGZLWK&'ζ DQG)Fε5,γGLPHUV$QGHUVRQHWDO +RZHYHULQWUDFHOOXODUVLJQDOWUDQV GXFWLRQLVPHGLDWHGE\WKH&'UHFHSWRU7KHDVVRFLDWLRQRI&'ζRU)Fε5,γLV GLVSHQVDEOHIRU1.FHOOGHYHORSPHQWDQGIXQFWLRQEXW&'LVUHTXLUHG:KHQ DQWLERG\ LV ERXQG WR WDUJHW FHOOV WKH)F SRUWLRQ ELQGV WR WKH1. FHOO UHFHSWRU 9LYLHU HWDO ,Q+,9DQGRWKHUYLUDOLQIHFWLRQV$'&&FDQEHUHDGLO\GHPRQVWUDWHGXVLQJ DQWLERG\ GLUHFWHG WRZDUG WKHHQYHORSHSURWHLQ DQG HIIHFWRUFHOOV IURP LQIHFWHG SDWLHQWV %UHQQHU HWDO 7KHPHFKDQLVPE\ZKLFK$'&&HIIHFWRUFHOOV O\VH WDUJHW FHOOV LV XQFOHDU +RZHYHU &' VWLPXODWLRQ OHDGV WRWKH UHOHDVHRI LQWUDF\WRSODVPLF 1. FHOO JUDQXOHV 9LYLHU HW DO
,00812'(),&,(1&,(6$662&,$7(':,7+.,//(5&(//6 3ULPDU\1.FHOOLPPXQRGHILFLHQFLHVDUHUDUH3HUKDSVWKHPRVWVWXGLHGRI WKH 1.GHILFLHQFLHV LV WKH &KHGLDN±+LJDVKL V\QGURPH WKDWDIIHFWV WKH QHUYRXV V\VWHPPHODQRF\WHVDQGWKHLPPXQHV\VWHP,QWKHVHSDWLHQWV1.FHOOVELQGWR WDUJHW FHOOV EXW IDLO WR GHOLYHU WKH OHWKDO KLW EHFDXVH RI DEQRUPDO F\WRSODVPLF JUDQXOHV 7KHVH SDWLHQWV KDYH OHVV WKDQ RIWKH QRUPDO 1. FHOO IXQFWLRQ 5RGHU HWDO 7KHUH LV DQ DVVRFLDWLRQ EHWZHHQ 1.GHIHFWV DQG VHYHUH KHUSHVRUYDULFHOODLQIHFWLRQV1.FHOOGHIHFWVDVVRFLDWHGZLWKRWKHULPPXQRGHIL FLHQFLHVDUHVKRZQLQ7DEOH
78025&(//(9$6,212).,//(5&(//6 7XPRUFHOOVPD\HYDGHNLOOHUFHOOGHVWUXFWLRQE\WKHSURGXFWLRQRI)DV/WKDW LQGXFHV DSRSWRVLV LQ DGYHUVDULDO 7,/6 &7/V DQG1.FHOOV H[SUHVVLQJ WKH)DV PDUNHU &RQVWLWXWLYH H[SUHVVLRQ RI )DV/ &'/ KDV EHHQ GHVFULEHG LQ 1. O\PSKRPD ODUJHJUDQXODUO\PSKRF\WLFOHXNHPLDPHODQRPDKHSDWRFHOOXODUKH
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
7DEOH
,PPXQRGHILFLHQFLHV ZLWK 1. &HOO 'HIHFWV 6HYHUHFRPELQHGLPPXQRGHILFLHQF\ 5HWLFXODUG\VJHQHVLV &RPPRQYDULDEOHLPPXQRGHILFLHQF\ &KHGLDN±+LJDVKL V\QGURPH /HXNRF\WHDGKHVLRQGHILFLHQF\ %ORRP¶VV\QGURPH &KURQLFIDWLJXHV\QGURPH
5HSULQWHGIURP3HGLDWULF5HVHDUFK 6WLHKP 6ZLWKSHUPLVVLRQ RI 3HGLDWULF5HVHDUFK
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
&+(0,&$/6$/7(5,1*.,//(5&(//)81&7,21 &KHPLFDOVNQRZQWRDOWHUF\WRWR[LF7FHOOVDQG1.FHOOVDUHVKRZQLQ7DEOH
7DEOH
(IIHFW RI &KHPLFDOV RQ 1DWXUDO .LOOHU &HOO )XQFWLRQ
&KHPLFDO
6SHFLHV
3RO\FKORULQDWHGELSKHQ\O &KORULQHGLR[LGH 6HOHQLXP (WK\OQLWURVRXUHD 'LHWK\OQLWURVDPLQH 0HWK\OFKRODQWKUHQH 0DQJDQHVH
5DW 5DW 5DW 5DW 0RXVH 0RXVH 0RXVH
(IIHFW
0RGLILHG IURP ,PPXQRORJ\ DQG $OOHUJ\ 3UDFWLFH .ROOHU
.LOOHU &HOOV
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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γ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
/\VLV RI 7DUJHW &HOOV E\ $FWLYDWHG 0DFURSKDJHV 3FHOOVDUHWKHWDUJHWRIFKRLFHEHFDXVHWKH\DUHHDVLO\NLOOHGE\PDFUR SKDJHV DQG WKH\ DUH QRW VXVFHSWLEOH WRF\WRO\VLV LQGXFHG E\ 71) RU K\GURJHQ SHUR[LGH ,Q WKH DVVD\ &UODEHOHG WDUJHW FHOOV DUH UHDFWHG ZLWK PDFURSKDJHV WKDWKDYHEHHQ VWLPXODWHGZLWK/36 VWLPXODWHGZLWK/36DQG,)1γRU QRW VWLPXODWHG 0L[WXUHV DUH LQFXEDWHG IRU WR KU DQG WKH DPRXQW RI UHOHDVHGFKURPLXPGHWHUPLQHG*HQHUDOO\WXPRUNLOOLQJLVREVHUYHGLQUHDFWLRQV FRQWDLQLQJPDFURSKDJHV/36DQG,)1γ+RZHYHUUHVXOWVDUHRIWHQGLIILFXOWWR LQWHUSUHWEHFDXVH RIWKH KLJK VSRQWDQHRXV UHOHDVH RIFKURPLXP HJ ± GXULQJWKHORQJLQFXEDWLRQSHULRG/HZLV
/\VLV RI 7DUJHW &HOOV E\$'&& 0RVWFHOOVWKDWH[SUHVV)FUHFHSWRUVIRU,J*FDQPHGLDWH$'&&,QFOXGHGLQ WKLV HIIHFWRU SRSXODWLRQ DUH PRQRF\WHV HRVLQRSKLOV 1. FHOOV DQG DFWLYDWHG PXULQH&'FHOOV/DQLHUHWDO 7KH QDWXUH RI WKH HIIHFWRU FHOO LV GHSHQGHQW RQ ERWK WKH QDWXUH RI WKH FKURPLXPODEHOHGWDUJHWFHOO DQGWKH VRXUFHRIWKHWDUJHWFHOOVSHFLILF,J* +X
.LOOHU &HOOV
PDQ&KDQJOLYHUFHOOVFRDWHGZLWKUDEELW,J*GLUHFWHGWRZDUGWKHOLYHUFHOOVDUH O\VHGE\1.FHOOV0RQRF\WHVDUHWKHVROHHIIHFWRUFHOOVZKHQKXPDQUHGEORRG FHOOVFRDWHGZLWKKXPDQDQWLEORRGJURXSDQWLJHQDUHXVHGLQWKHDVVD\3RSODFN HWDO )LQDOO\ZKHQFKLFNHQUHGEORRGFHOOVFRDWHGZLWKUDEELWDQWLUHG FHOO,J*DUHXVHGLQWKHDVVD\ERWKPRQRF\WHVDQG1.FHOOVFDQO\VHWKHWDUJHW FHOOV%XUUHOOHWDO
5(*8/$725<326,7,2121&<7272;,&&(//6 7KH1DWLRQDO7R[LFRORJ\3URJUDPHYDOXDWHGWKH0/5DQGWKH1.DVVD\IRU LQFOXVLRQLQVFUHHQVWRGHWHFWLPPXQRWR[LFLW\%RWKWKH1.DQG0/5SURYHGWR EH IDLUO\ VHQVLWLYH LQ GHWHFWLQJ LPPXQH HYHQWV 7KH 1. FHOO DVVD\ KDV EHHQ LQFOXGHGLQWKHQHZKDUPRQL]HGJXLGHOLQHVLVVXHGE\WKH86(3$7KHDVVD\LV OLVWHG DVDQ RSWLRQDOHQGSRLQWWREHHYDOXDWHGRQD³FDVHE\FDVH EDVLV´
.LOOHU&HOOVDQG9LUDO,QIHFWLRQV
,1752'8&7,21 $Q\ JHQHUDO WKHRULHV RI LPPXQRORJ\ KDYH WR EH VHHQ LQ WKH FRQWH[W RI YLUDO GLVHDVHV=LQNHUQDJHO ,QPLOOLRQVZHUHNLOOHGE\DXQLTXHLQIOXHQ]D VWUDLQ0XFKODWHULWZDVREVHUYHGWKDWODWHQWYLUXVHVVXFKDV(SVWHLQ±%DUUYLUXV (%9 FRXOGFDXVHGHELOLWDWLQJPRQRQXFOHRVLVLQ&DXFDVLDQVDQG DQRIWHQIDWDO O\PSKRPD LQ EODFN $IULFDQV 2WKHU GDWD IURP WUDQVSODQW SDWLHQWV XQGHUJRLQJ F\FORVSRULQ$WKHUDS\VKRZHGWKDWWKHVHSDWLHQWVKDYHDQLQFUHDVHGLQFLGHQFHRI (%9DVVRFLDWHG O\PSKRSUROLIHUDWLYH GLVRUGHUV 7DQQHU DQG $OILHUL 5H FHQWO\ WKH +,9 SDQGHPLF KDV IXUWKHU VSXUUHG LQWHUHVW LQ LPPXQH UHVSRQVH WR DFXWHDQGFKURQLFYLUDO LQIHFWLRQV
&<7272;,&7&(// 5(63216(729,586(6 ,Q WKH LQLWLDO VWDJHV RIDYLUDO LQIHFWLRQ 1.FHOOV DUH DFWLYDWHG E\ W\SH LQWHUIHURQDQGYLUDOJO\FRSURWHLQV%HVLGHVWKHF\WRO\WLFUROH1.FHOOVDUHQHFHVVDU\ IRUWKHJHQHUDWLRQRIF\WRWR[LF7FHOOV7ZRVLJQDOVDUHQHFHVVDU\IRUGLIIHUHQWLDWLRQ RI7F\WRWR[LFFHOOV,QLWLDOO\WKHUHDUHLQWHUDFWLRQVEHWZHHQ$3&V0+&,7&5 DQG FRVWLPXODWRU\ PROHFXOHV 1. FHOOV RU,/ LQ KLJK FRQFHQWUDWLRQV SURYLGH VHFRQGDU\DFFHVVRU\VLJQDOVQHFHVVDU\IRU7FHOO DFWLYDWLRQ (DUO\LQWKHLPPXQHUHVSRQVH±GD\V VHYHUDOGLIIHUHQWUHVSRQVHV DUH RFFXUULQJ LQ WKH UHJLRQDO O\PSK QRGHV )ROOLFXODU GHQGULWLF FHOOV SUHVHQW ORZ DIILQLW\DQWLJHQVWR&'7KFHOOVWKDWDUHVXSSUHVVLYHDQGDQWLLQIODPPDWRU\
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
/$7(179,586(6 6RPHYLUXVHVFDQLQIHFWFHOOVLQFRUSRUDWHWKHLU'1$LQWRWKHKRVWJHQRPH DQGHVWDEOLVKODWHQWLQIHFWLRQV7ZRH[DPSOHVRIODWHQWYLUXVHVDUH(%9DQG+,9
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¶VO\PSKRPDLQHTXDWRULDO$IULFDDQGYDULDEOH%FHOOO\PSKRPDVLQ&DX FDVLDQVDUH RIWHQWKHUHVXOWRIODWHQW(%9LQIHFWLRQV &' &RQWURORI(%9,QIHFWLRQV 6HYHUDOOLQHV RILQ YLYRHYLGHQFHVKRZ WKDW LPSDLUPHQWRIF\WRWR[LF7FHOO IXQFWLRQ LVUHTXLUHGIRUPDOLJQDQWWUDQVIRU
.LOOHU &HOOV DQG 9LUDO ,QIHFWLRQV
PDWLRQRI%FHOOV,PSDLUPHQWRUGHILFLHQFLHVRI7FHOOVXEVHWVWKDWFRQWURO%FHOO SUROLIHUDWLRQ RUF\WRWR[LF 7 FHOOV DUH IUHTXHQWO\ DVVRFLDWHG ZLWKUHFXUUHQW(%9 LQIHFWLRQV 0DODULD LQIHFWLRQ LV NQRZQ WR LQLWLDWH D VHOHFWLYH 7FHOO GHIHFW WKDW LPSDLUV WKH IXQFWLRQ RIF\WRWR[LF7FHOOV %XUNLWW¶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³UHVWLQJ FHOO´ SKHQRW\SH WKDW LV QHLWKHUUHMHFWHG QRU GHVWUR\HG E\ WKH LPPXQH V\VWHP7KHWUDQVIRUPHG,JORFXVGRZQUHJXODWHV+/$FODVV,PDUNHUVDGKHVLRQ PROHFXOHVDQGWKH(%9FRGHGVXUIDFHSURWHLQV.OHLQ
+,9 +,9LQIHFWLRQVDUHQRWODWHQWLQIHFWLRQV7KHYLUXVLVH[WUHPHO\DFWLYHLQWKH O\PSK QRGHV IURP WKH HDUOLHVW VWDJHV RIWKH GLVHDVH SURFHVV EXW WKH FOLQLFDO PDQLIHVWDWLRQV RU VXVFHSWLELOLW\ WR RSSRUWXQLVWLF SDWKRJHQV RQO\ RFFXUV LQ WKH ODWHUVWDJHV RIWKH GLVHDVH
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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γ7ULQFKLHULD ,Q $,'6SDWLHQWVWKHQRUPDOOHYHOVRI,/DUHUHGXFHGE\± 7KH ODFNRI,/UHVXOWVLQDVNHZHGO\PSKRF\WHVXEVHWSRSXODWLRQLQWKHEORRG7KH GHYHORSPHQWRI7K FHOOVLVGRZQUHJXODWHGDQGWKH7KO\PSKRF\WHSRSXODWLRQ WKHSHUPLVVLYHVLWHRI+,9UHSOLFDWLRQ EHFRPHVWKHSUHGRPLQDQW7KSRSXODWLRQ LQWKHEORRGDQGVSOHHQ'DOJOHLVK
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
.LOOHU &HOOV DQG 9LUDO ,QIHFWLRQV
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
9,5$/ (9$6,212).,//(5&(//6 9LUXVHVKDYHGHYHORSHGVRSKLVWLFDWHGPHFKDQLVPVIRUHYDGLQJWKHLPPXQH V\VWHP 7KHVH PHFKDQLVPV LQFOXGH VKRUW LQFXEDWLRQ WLPHV DQWLJHQLF VKLIW DQG GULIW DQGWKHSURGXFWLRQ RIYLURNLQHV
$QWLJHQLF'ULIWDQG6KLIW ,QIOXHQ]D VWUDLQV DUH FRQVWDQWO\ H[SUHVVLQJ QHZ HSLWRSHV UHVXOWLQJ IURP DQWLJHQLFVKLIWLQJDQGGULIWLQJ'LIIHUHQWPHFKDQLVPVDUHDWSOD\GXULQJDQWLJHQLF GULIWVDQGVKLIWV9LUXVHVFUHDWHQHZHSLWRSHVE\PLQRUFKDQJHVLQWKHDPLQRDFLG RUFDUERK\GUDWHVHTXHQFHVRIVXUIDFHSURWHLQV7KXVWKHDQWLJHQVDUHFRQVWDQWO\ GULIWLQJ )RU H[DPSOH LPPXQH UHVSRQVHV WR LQIOXHQ]D DUH GLUHFWHG WRZDUG WKH KHPDJJOXWLQLQ SURMHFWHG IURP WKH YLULRQ +HPDJJOXWLQLQV DQG QHXUDPLQLGDVH KDYH DKLJKGHJUHHRIJHQHWLF LQVWDELOLW\ DQGXQGHUJR VSRQWDQHRXV SRLQWPXWD WLRQVWKDWFUHDWHQHZHSLWRSHV $QWLJHQLF VKLIWV RFFXUIROORZLQJHSLWRSH H[FKDQJHVEHWZHHQ KXPDQV DQL PDOVDQGWKHYLUXV,QWKHVZLQHIOXLQIOXHQ]DSDQGHPLFFRPPLQJOLQJRIJHQHWLF PDWHULDO IURP WKH +RQJ .RQJ LQIOXHQ]D VWUDLQ +1 DQG VZLQH LQIOXHQ]D +1 UHVXOWHGLQWKHQHZVWUDLQWKDWZDV+1
9LURNLQHV 9LURNLQHV DUH UHFHSWRU PROHFXOHV VHFUHWHG RU SURGXFHG E\ YLUXVHV ,Q HI IHFW WKH\ LQKLELW WKH HOLFLWDWLRQ RI DQ LPPXQH UHVSRQVH FDSDEOH RIGHVWUR\LQJ WKH YLUXV RU YLUXV LQIHFWHG FHOOV 6HOHFW YLUDO VSHFLHV VHFUHWH LQWHUOHXNLQ UHFHS
.LOOHU &HOOV DQG 9LUDO ,QIHFWLRQV
WRUV 'RKHUW\ 0HPEHUV RIWKH SR[YLUXV IDPLO\ SURGXFH DQG VHFUHWH D PROHFXOH KDYLQJ VWUXFWXUDO KRPRORJLHV WR WKH FKDLQ RI WKH ,/ UHFHSWRU %LQGLQJRIIUHH,/ WRWKHSURWHLQSUHYHQWVWKHDFWLYLW\RIWKHPDMRUSURLQIODP PDWRU\F\WRNLQHDQGDOORZVYLUDOUHSOLFDWLRQZLWKLQWKHFHOOV 5DEELWP\[RYLUXV DQG YDFFLQLD D PHPEHU RIWKH SR[YLUXV IDPLO\ VHFUHWH ,)1UHFHSWRUV 0RVV PDQ HW DO %LQGLQJ RI ,)1α DQG LQKLELWV WKH QRUPDO DFWLYDWLRQ RI 1.DQG/$.FHOOV )LQDOO\VRPHKHUSHVYLUXVVWUDLQV VHFUHWHUHFHSWRUVIRU,/ DQG ,/ $KXMD HW DO ,I WKHVH FKHPRNLQHV GR QRW UHDFW ZLWK WKHLU QRUPDO WDUJHWV LPPXQRVXSSUHVVLRQ RFFXUV ZLWKLQ WKH ORFDOL]HG DUHD LQIHFWHG ZLWK WKH YLUXVHV
9LUXVHVDQG0+& 5HJXODWLRQDQG)XQFWLRQ 9LUXVHVFDQDOWHUWKHIXQFWLRQRI0+&PROHFXOHVE\SURGXFLQJSURWHLQVWKDW LQWHUDFWZLWKWKH0+&GXULQJV\QWKHVLVWUDQVORFDWLRQRUUHDFWLRQVZLWKPROHFX ODUFKDSHURQV 7DEOH 7KH,&3 SURWHLQSURGXFHGE\WKHKHUSHVYLUXVLQWHU IHUHVZLWKWKHELQGLQJRIWKH7$3SURWHLQWRFODVV,0+&PROHFXOHV7KXV0+& FDQQRWEHHIIHFWLYHO\WUDQVSRUWHGDFURVVWKHPHPEUDQHRIWKHHQGRSODVPLFUHWLFX OXP$GHQRYLUXVHVLQWHUIHUHZLWK0+&,H[SUHVVLRQDWDODWHUVWHSLQWKHSURFHVV 7KHDGHQRYLUXV(SURWHLQELQGVWRFODVV,0+&DQGSUHYHQWVHJUHVVIURPWKH HQGRSODVPLF UHWLFXOXP (%9 SURGXFHV WKH SURWHLQ %=/) WKDW ELQGV WR WKH FKDLQRIWKH0+&,,PROHFXOHLQWKHHQGRSODVPLFUHWLFXOXP2Q%=/)0+&,, LQWHUDFWLRQDQWLJHQSUHVHQWDWLRQLVLQKLELWHG3ORHJK
7DEOH 9LUXVHV &DSDEOH RI$OWHULQJ WKH ([SUHVVLRQRI0+&0DUNHUV 9LUXV $GHQRYLUXV &\WRPHJDORYLUXV (OHFWURPHOLD +HSDWLWLV +HUSHV +,9 +XPDQSDSLOORPDYLUXV 0HDVOHV 0RORQH\OHXNHPLD 5RXVVDUFRPD 9DFFLQLD 9HVLFXODUVWRPDWLWLV D
' GRZQUHJXODWHG 8 XSUHJXODWHG
0+&,
0+&,,
'D ' ' ' ' ' ' 8 8 ' ' '
± '
± ± ±
8 8 8
±
'
± ±
OPPXQRWR[LFRORJ\ DQG5LVN$VVHVVPHQW
&+(0,&$/6,1&5($6,1*686&(37,%,/,7<729,586(6 0DQ\FKHPLFDOVFDQGHFUHDVH1.FHOOIXQFWLRQDQGLQFUHDVHPRUELGLW\DQG PRUWDOLW\IROORZLQJYLUDO LQIHFWLRQV 7DEOH ,QWUDSHULWRQHDO DGPLQLVWUDWLRQ RI F\FORSKRVSKDPLGH6HOJUDGHHWDO D F\FORVSRULQ RUGLPHWK\OEHQ] >D@DQWKUDFHQH 6HOJUDGH HW DO LQKLELWV 1. FHOO IXQFWLRQ DQG LQFUHDVHV PRUWDOLWLHVIROORZLQJPXULQHF\WRPHJDORYLUXVLQIHFWLRQV,QWKHLQIOXHQ]DPRGHO SKRVJHQH JDV HQKDQFHV LQIOXHQ]D YLUXV LQIHFWLRQV 6HOJUDGH HW DO E\ VXSSUHVVLQJWKHYLUXVVSHFLILF &' F\WRWR[LF DQG1.FHOOUHVSRQVHV %XUOHVRQ DQG .H\HV (UOLFK DQG%XUOHVRQ 7KH LPPXQRWR[LFLW\ RI WHWUDFKORURGLEHQ]RSGLR[LQ LQPLFH+RXVHHWDO KDVDOVREHHQVWXGLHGLQ WKHLQIOXHQ]DPRGHO$VLQJOHGRVHRI JNJ UHVXOWHGLQVLJQLILFDQWPRUWDOLW\ ZKHQDQLPDOVZHUHFKDOOHQJHGZLWKWKHYLUXV
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
5(*8/$725<326,7,21219,5$/,1)(&7,9,7<02'(/6 7KH(3$UHTXLUHVDQLPDOPRGHOVLQ7LHU VWXGLHVWRGHWHUPLQHWKHELRORJ LFDO VLJQLILFDQFHRIGHFUHPHQWV LQIXQFWLRQ RI1.RUF\WRWR[LF7FHOOV
7UDQVSlDQWDWLRQ
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
+80$10+&&203/(; 6HYHUDO VHWV RIJHQHV LQYROYHG LQ DQWLJHQ SURFHVVLQJ DQGSUHVHQWDWLRQ DUH FOXVWHUHGWRJHWKHULQWKH0+&7KHVHVHWVRIJHQHVLQFOXGHFODVV,JHQHV+/$$
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
7DEOH
0+& /RFL DQG $OOHOHV ZLWKLQ (DFK /RFXV
&ODVV, $ $ $ $ $ $ $ $Z $ $ $ $ $ $ $ $ $ $Z $Z $Z $Z $Z $Z $Z $Z
% % % % % % % % % % % % %Z % % % % % % %Z %Z % % %Z %Z %Z %Z %Z
% %Z %Z %Z %Z %Z %Z %Z %Z %Z %Z %Z %Z %Z %Z %Z %Z %Z %Z %Z %Z %Z %Z %Z %Z
&ODVV,, &
'Z
'5
'4
'3
&ZO &Z &Z &: &Z &Z &Z &Z &Z &Z &Z
'ZO 'Z 'Z ': ': 'Z 'Z 'Z 'Z 'Z 'Z 'Z 'Z 'Z 'Z 'Z 'Z 'Z 'Z 'Z 'Z 'Z 'Z 'Z 'Z 'Z
'5 '5 '5 '5 '5 '5Z '5 '5Z '5 '5Z '5Z '5Z '5Z '5Z '5Z '5Z '5Z '5Z
'4Z '4Z 'TZ '4 '4Z '4Z '4Z '4Z '4Z
'3Z '3Z '3Z '3Z '3Z '3Z
'5Z '5Z
7UDQVSODQWDWLRQ
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
(92/87,212)7+(0+&&203/(; %HFDXVHWKHLPPXQHV\VWHPLVUHVSRQVLEOHIRUWKHVXUYLYDORIWKHKRVWLWLV QRW XQH[SHFWHG WKDW WKH V\VWHP KDV UHGXQGDQW RU EDFNXS DQWLJHQ SUHVHQWDWLRQ V\VWHPVHJPXOWLSOHFODVV,DQG,,ORFL 7KHSRO\PRUSKLFV\VWHPSUHFOXGHVWKH SRVVLELOLW\WKDWDG\VIXQFWLRQ LQ DVLQJOHFODVV,RU,,PROHFXOH ZRXOGSUHYHQWD UHVSRQVHWRDQ LQIHFWLRXV DJHQW $ SRO\PRUSKLF +/$ GRHV QRW JXDUDQWHH WKH VXUYLYDO RIWKH KRVW 8VLQJ PROHFXODUPLPLFU\ VHOHFWEDFWHULDH[SUHVVPROHFXOHV ZLWKH[WHQVLYH KRPRORJ\ WR 0+& PDUNHUV %HFDXVH WKHVH EDFWHULD DUH UHJDUGHG DV ³VHOI´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
1(:120(1&/$785()257+(&/$66,,$17,*(16 %HFDXVHPRUHDGYDQFHGPROHFXODUELRORJ\WHFKQLTXHVKDYHLGHQWLILHGDGGL WLRQDO YDULDQWVRUVXEJURXSVZLWKLQDVLQJOHDOOHOH DVWDQGDUGL]HGQRPHQFODWXUH ZDV SURSRVHG E\ WKH:RUOG +HDOWK 2UJDQL]DWLRQ 1RPHQFODWXUH&RPPLWWHH IRU
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
WKH+/$V\VWHP $OOJHQHVLQWKHFODVV,,UHJLRQDUHGHVLJQDWHGE\WKHOHWWHU' 7KLVLVIROORZHGE\WKHGHVLJQDWLRQIRUDVXEORFXVHJ34RU 5 7KHOHWWHU$ RU % GHQRWHV DQ α RU FKDLQ ORFDWLRQ )RU H[DPSOH '5% GHQRWHV D JHQH WKDW HQFRGHVDSURGXFWH[SUHVVHGRQWKHFKDLQRIWKH'5 PROHFXOH8VLQJDIRXU GLJLW V\VWHP GLIIHUHQW DOOHOHV DUH QXPEHUHG 7KH ILUVW WZR GLJLWV GHVFULEH WKH FORVHVW DVVRFLDWHG VHURORJLFDO VSHFLILFLW\ HJ '5% 7KH ODVW WZR GLJLWV GHQRWHVXEJURXSV ZLWKLQDNQRZQ VHURORJLFDOVSHFLILFLW\VXFKDV'5% 6KH
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
$VVRFLDWLRQ EHWZHHQ 6SHFLILF 0+& $OOHOHV DQG 'LVHDVHVLQ(XURSHDQ&DXFDVRLGV
'LVHDVH $QN\ORVLQJVSRQG\OLWLV 5HLWHU¶VV\QGURPH 5KHXPDWRLGDUWKULWLV 0\DVWKHQLDJUDYLV $GGLVRQ¶VGLVHDVH *UDYH¶VGLVHDVH &HOLDFGLVHDVH &KURQLFKHSDWLWLV
+/$ DOOHOOH
1R VWXGLHV
$VVRFLDWLRQ
% % '5Z % '5Z 'Z % %Z % '5Z % '5Z
5HODWLYH ULVN
5HSULQWHGIURP&ULWLFDO5HYLHZVLQ,PPXQRORJ\ +DQVHQDQG1HOVRQ ZLWK SHUPLVVLRQRI%HJHOO +RXVH,QF
5HODWLYHULVNLVWKHFKDQFHRILQGLYLGXDOVZLWKDSDUWLFXODU+/$DOOHOHRIGHYHORSLQJDGLVHDVH
7UDQVSODQWDWLRQ
YDWLRQ RIWKH% FHOOVUHVXOWLQJ LQWKHJHQHUDWLRQRIORZDIILQLW\,J0DQWLERGLHV &RPSOHPHQWPHGLDWHGO\VLVRIDQWLERG\FRDWHGKRVWFHOOVOLEHUDWHVDQWLJHQLFHQ ]\PHVWKDWWULJJHUDQ DXWRLPPXQHUHDFWLRQ
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
75$163/$17$7,21 3URSHUPDWFKLQJ RIWLVVXH IURP WKH GRQRU DQG UHFLSLHQW LV HVVHQWLDO WR WKH DFFHSWDQFH RI WKH JUDIW RU LQFUHDVHG IUHTXHQF\ RI JUDIW VXUYLYDO 6XUYLYDO RI Mother A3. Bw35, Cwl, Dwl, DR1, DQw1, DPw1 A2,B8,
Cw3, Dwl, DR2, DQw3, Dpw3
Child 1
Father A3, B7, CW4. DW3, DR2, DQw1, DPw3 A9. B12, Cw2,Dw2, DR3, Dqw2, DPw4
Child 2
A3, Bw35, Cwl, Dwl, DR1, DQw1, Dpw1
A2,B8, Cw3, Dwl, DR2, DQw3, DPw3
A9, B12, Cw2, Dw2, DR3, Dqw2, DPw4
A3, B7, CW4, DW3, DR2, DQw1, DPw3
Child 3
Child 4
A3, Bw35, Cwl, Dwl, DR1, DQw1, Dpw1
A3, B7, CW4, DW3, DR2, DQw1, DPw3
A2,B8, Cw3, Dwl. DR2, DQw3, DPw3
A9, B12, Cw2,Dw2, DR3, Dqw2, DPw4
)LJXUH 7KH LQKHULWDQFH SDWWHUQ RI 0+& PDUNHUV XVHG IRU WKH GHWHUPLQDWLRQ RI SDWHU QLW\ DQG SXWDWLYH WUDQVSODQW GRQRUV
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
NLGQH\ WUDQVSODQWV GHSHQGV RQ SURSHU PDWFKLQJ RIWKH$ % DQG '5 ORFL 'LI IHUHQFHV LQ VXUYLYDO DV DUHIOHFWLRQ RIPLVPDWFKHV LQ HDFK ORFXV DUH VKRZQ LQ 7DEOH ,QSUHSDUDWLRQIRUDWUDQVSODQWDQXPEHURI0+&W\SLQJVDUHSHUIRUPHGRQ WKH GRQRUDQG WKHUHFLSLHQW %HFDXVH DQWLERGLHV GLUHFWHGWRZDUG0+& PDUNHUV FDQ EH LQGXFHG E\ WUDQVIXVLRQV SUHJQDQF\ RUSULRUWUDQVSODQWDWLRQV WKHUHFLS LHQW¶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
*5$)75(-(&7O21 +\SHUDFXWH5HMHFWLRQ 7KLVIRUPRIUHMHFWLRQRFFXUVLQPLQXWHVIROORZLQJWUDQVSODQWDWLRQ3UHH[LVW LQJ DQWLERGLHV ELQG WRWKH HSLWKHOLXP RIWKH WUDQVSODQWHG FHOOV DQG DFWLYDWH WKH FODVVLFDO FRPSOHPHQWFDVFDGH &RPSOHPHQWIUDJPHQWV DFWLYDWH WKHFRDJXODWLRQ SDWKZD\ OLEHUDWLQJ WKHYRQ:LOOHEUDQGIDFWRU ,QWXUQ WKHOLEHUDWHGIDFWRUDFWL YDWHV SODWHOHWV 3ODWHOHWV DUH IXUWKHU DFWLYDWHG E\ DWWDFKPHQW WR WKH EDVHPHQW
7DEOH (IIHFWRI0+&&ODVV,0LVPDWFKHV RQ6XUYLYDORI.LGQH\$OORJUDIWV 0LVPDWFK $ ORFXV
% ORFXV
& ORFXV
3HUFHQW VXUYLYDO
7UDQVSODQWDWLRQ
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
$FXWH9DVFXODU5HMHFWLRQ ,Q VRPHLQVWDQFHVDQWLERGLHVDUHIRUPHGLQUHVSRQVHWRPLVPDWFKHG0+& FODVV,,SURGXFWV,QWHUDFWLRQVEHWZHHQ,J*DQWLERGLHVDQGHQGRWKHOLDOFHOOVDFWL YDWHFRPSOHPHQW 1HFURVLVRIWKHHSLWKHOLDOFHOOVLVREVHUYHG ±GD\VIROORZ LQJWUDQVSODQWDWLRQ
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
7DEOH 0HWKRG 3&5662GRWEORW 3&56625HYHUVHGRW SORW 3&5 2OLJRFDSWXUH 'XDOSKDVH 3&55)/3 3&5663
3&5%DVHG+/$7\SLQJ0HWKRGV
0XOWLSOH SUREHV
3RVW3&5 PDQLSXODWLRQV
+/$PDUNHUDSSOLFDWLRQV
+ 6:$5&' +6:&'
$%'5%'4$'4%'3% '5%'4$'4%'3%
±
+6:&' +6:&' 5($*( $*(
'5%6 '5% '5%'54$'4%'3$ $&'5%'4$'4%
$EEUHYLDWLRQV +K\EULGL]DWLRQ 6:VWULQJHQWZDVKLQJ$5 DXWRUDGLRJUDSK\&' FRORULPHWULFGHWHFWLRQ$*( DJDURVHJHOHOHFWURSKRUHVLV5(UHVWULFWLRQHQGRQXFOHDVHGLJHVWLRQ
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
7DEOH
6FRULQJ RI0+& &ODVV , 0DWFKHV 8VLQJ WKH&RPSOHPHQW/\VLV$VVD\
5DWLQJVFRUH
3HUFHQWFHOOVO\VHG
1RFHOOVNLOOHG ±NLOOHG ±NLOOHG ± NLOOHG ± NLOOHG ±NLOOHG
7UDQVSODQWDWLRQ
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
6HURORJLFDO7\SLQJRI0+&&ODVV,0DUNHUV 0XOWLSDURXV ZRPHQ SURGXFH DQWLERGLHV WR FODVV , PDUNHUV SUHVHQW RQ WKH IHWXV7KHUHDFWLYLW\RIWKHVHDQWLERGLHVKDYHEHHQGHILQHGRYHUWKH\HDUV $QWL ERG\ SDQHOV ZLWKNQRZQFODVV, DOOHOLF VSHFLILFLW\ KDYHEHHQGHYHORSHG ,QWKH DVVD\FHOOVDUHUHDFWHGZLWKDSDQHORIDQWLERGLHVLQWKHSUHVHQFHRIFRPSOHPHQW &HOOV DUH WKHQ VWDLQHG ZLWKHWKLGLXPEURPLGHWR GLIIHUHQWLDWH EHWZHHQ OLYHDQG GHDGFHOOV'HDGFHOOVVWDLQUHGZKHUHDVOLYHFHOOVVWDLQJUHHQ7KHFHOOVDUHVFRUHG RQWKHEDVLV RIWKHSHUFHQWFHOOVNLOOHG7DEOH
7KH.LQHV
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
&<72.,1(6 7KH RU F\WRNLQHVGHVFULEHGLQWKHOLWHUDWXUHKDYHPXOWLSOHIXQFWLRQV +RZHYHUWKH\FDQEHJURXSHGLQWRIXQFWLRQDOIDPLOLHV7KHVHIXQFWLRQDOJURXSV DUHLQYROYHGLQ DFWLYDWLRQDQGPDWXUDWLRQRIO\PSKRF\WHV LQIODPPDWLRQ LQQDWHLPPXQLW\DQG KHPDWRSRLHVLV
OUQPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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αSURWHLQKDVDPROHFXODUPDVVRIN'DUHDFWV ZLWK WKH DQWL7$& PRQRFORQDO DQWLERG\ KDV DORZ DIILQLW\ 0 IRU ,/ DQGFDQQRWLQLWLDWHVLJQDOWUDQVGXFWLRQ:KHQ,/5SURWHLQLVH[SUHVVHGDORQH LWGRHVQRWELQG,/ :DOGPDQQ 7KH DGGLWLRQ RI D WKLUG SURWHLQ ,/5γ WR WKH ,/5α,/5β FRPSOH[ FKDQJHV WKH FRQIRUPDWLRQ RIWKH ,/5 DQG LQFUHDVHVWKH DIILQLW\FRQVWDQW IRU ,/6WDELOL]DWLRQRIWKHKLJKDIILQLW\XQLWPD\EHIDFLOLWDWHGE\DQDGGLWLRQDO WR N'DSURWHLQ:DOGPDQQDQG*ROGPDQ 7KH ,/5γ SURWHLQ LQFUHDVHV DIILQLW\ FRQVWDQWV LQ 7 DQG 1. FHOOV $FWL YDWHG7FHOOVH[SUHVVLQJWKH α, DQG γ SURWHLQV KDYH D KLJK DIILQLW\ 0 IRU ,/ /DUJH JUDQXODU O\PSKRF\WHV 1. FHOOV H[SUHVVLQJ RQO\ ,/5 DQG ,/5γ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ε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
7KH.LQHV
7UDQVIRUPLQJ*URZWK)DFWRU 7*) LV DVPDOO N'D F\WRNLQHSUR GXFHG LQ DODWHQW IRUP E\ 7FHOOV DQG PRQRF\WHV :KHQ DFWLQJ DV DF\WRNLQH 7*) LV D QHJDWLYH UHJXODWRU WKDW FRXQWHUDFWV SURLQIODPPDWRU\ F\WRNLQHV ,W LQKLELWVWKHSUROLIHUDWLRQRIPLWRJHQ RUDQWLJHQVWLPXODWHG7FHOOV$OVR7*) LQKLELWV WKH IXQFWLRQ DQG DFWLYDWLRQ RIPDFURSKDJHV SRO\PRUSKRQXFOHDU FHOOV DQGYDVFXODUHQGRWKHOLDOFHOOV
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α FKDLQ LV XQLTXH WR,/ ZKLOH WKH FKDLQLVFRPPRQ WR WKH,/ UHFHSWRU WKH ,/ UHFHSWRU DQG WKH *0&6)UHFHSWRU .HHJDQ HWDO 7KHUHFHSWRU FRQWDLQV ILYH VKDUHG DPLQR DFLG UHVLGXHV WU\SWRSKDQ±VHULQH±[±WU\SWRSKDQ±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
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
GXFHGE\7%1.FHOOV DQGPRQRF\WHV $FWLYDWHGPRQRF\WHVDUHWKHSULPDU\ VRXUFHRIWKHSFKDLQ7KHSSURWHLQLVKRPRORJRXVWRWKH,/UHFHSWRUDQG FRQWDLQVDQ,JGRPDLQDQGWKH:6;:6 PRWLI ,/ ELQGLQJ WR 7 DQG 1. FHOO UHFHSWRUV LQGXFHV PXOWLSOH HIIHFWV +LJK OHYHOV RI,/ IDYRU WKH GHYHORSPHQW RI&' 7K YHUVXV &' 7K FHOOV ,Q DGGLWLRQ ,/ LQGXFHV GLIIHUHQWLDWLRQRI&' FHOOV WRDFWLYHF\WRWR[LF 7FHOOV +LVFR[ DQG-LDQJ 1.UHFHSWRUELQGLQJ LQFUHDVHV WKHF\WRO\WLF DFWLYLW\ DQGVHUYHVDVDJURZWKIDFWRUIRU1.FHOOV7ULQFKLHUL D 2IWHQ,/DOVR LQGXFHVWKHSURGXFWLRQRI,)1γ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αβ 7&5 &' &' O\PSKRF\WHVDQGPHPRU\7FHOOVDVPDOOEXWLPSRUWDQWVXESRSXODWLRQLQ LPPXQHUHJXODWLRQ.HQQHG\ HWDO 7KHVHFUHWHG N'DSURWHLQ LV KR PRORJRXV WR WKH 25) JHQH RI+HUSHVYLUXV VDLPLUL D NQRZQ O\PSKRWURSLF YLUXV .HQQHG\HWDO ,/ LVDSURLQIODPPDWRU\F\WRNLQHWKDWXSUHJX ODWHV VXUIDFH H[SUHVVLRQ RI,&$0 LQ KXPDQ ILEUREODVWV
7KH.LQHV
WXPRUFHOOV.LOOLQJRIWXPRUFHOOVKRZHYHUUHTXLUHVDVHFRQGVLJQDOSURYLGHGE\ HQGRWR[LQ RU 71) ,)1γ LQIOXHQFHV WKH JURZWK DQG GLIIHUHQWLDWLRQ RI 7 DQG % FHOOV ,W SUR PRWHV WKHPDWXUDWLRQDQGGLIIHUHQWLDWLRQ RI&'7K FHOOV ZKLOH LQKLELWLQJWKH SUROLIHUDWLRQRI7K FHOOV 7KHPDWXUDWLRQRI&' FHOOV DQGVWLPXODWLRQ RI1. FHOOF\WRO\WLFDFWLYLW\UHTXLUH,)1γ,Q%FHOOV,)1γSUHYHQWVLVRW\SLFVZLWFK LQJWR,J* DQG,J( /\PSKRWR[LQ /\PSKRWR[LQ RU 71) LV D VPDOO ± N'D SURWHLQ SURGXFHGH[FOXVLYHO\E\DFWLYDWHG7FHOOV/\PSKRWR[LQKDVKRPRORJ\ZLWK PDFURSKDJH 71) DQG FRPSHWHV ZLWK 71) IRU WKH VDPH UHFHSWRU 3DXO DQG 5XGGOH 8VXDOO\O\PSKRWR[LQDFWVDVDSDUDFULQHIDFWRULQORFDOUHVSRQVHV )XQFWLRQDOO\LWHLWKHUDORQHRULQFRQFHUWZLWK,)1γ LVDSRWHQWDFWLYDWRURI QHXWURSKLOV DQG LQFUHDVHV O\PSKRF\WH DGKHVLRQ WR YDVFXODU HQGRWKHOLDO FHOOV .RUQHUDQG6HGJZLFN ,WFRQWULEXWHVWRGHIHQVHDJDLQVWYLUXVHVDQGEDFWH ULD DQG DJDLQVW WXPRUV 3DXO DQG 5XGGOH +RZHYHU LW PD\ KDYH RWKHU HIIHFWVRQWDUJHWFHOOVLQFOXGLQJNLOOLQJ LQGXFWLRQRIGLIIHUHQWLDWLRQDQGJURZWK VWLPXODWLRQ
&\WRNLQHV LQ OQQDWHOPPXQLW\ ,QWHUIHURQα DQG )DPLOLHV 7\SH,LQWHUIHURQVDUHFRPSRVHGRIWZR VXEJURXSV 7KH LQWHUIHURQD IDPLO\ FRQVLVWV RIDSSUR[LPDWHO\ GLIIHUHQWSUR WHLQV ZLWK DQ DYHUDJH PROHFXODU PDVV RIN'D 6WUXFWXUDOO\ GLVVLPLODU LQWHU IHURQ LV DVLQJOHSURWHLQ 7HUPLQDWLRQRIYLUDOLQIHFWLRQVLVWKHPDMRUIXQFWLRQRI,)1αDQG,QWKH FRQWH[WRIKRVWGHIHQVH,)1αDQGVHUYHIRXUIXQFWLRQV WKH\LQLWLDWHWKH SURGXFWLRQRI¶¶ROLJRDGHQ\ODWHV\QWKDVHWKDWLQWHUIHUHVZLWKWKHUHSOLFDWLRQRI ERWK'1$DQG51$ WKH\SUHYHQWV\QWKHVLVRIHVVHQWLDODPLQRDFLGVVXFKDV WU\SWRSKDQ WKH\ DXJPHQWDQG DFFHOHUDWH WKHDXWRO\WLF DFWLYLW\ RI1.FHOOV DQG WKH\ XSUHJXODWH0+&,H[SUHVVLRQ DQGHQKDQFHWKH&7/UHVSRQVH 7XPRU1HFURVLV)DFWRUα 71)α LVDN'D SURWHLQ SURGXFHG E\ PRQR QXFOHDUSKDJRF\WHVDQG7FHOOVIROORZLQJH[SRVXUHWREDFWHULDO HQGRWR[LQV,WLV XQXVXDO LQ WKDWWKH PROHFXODURULHQWDWLRQ LV UHYHUVHG 7KH DPLQR DFLG WHUPLQXV DQG WKH WUDQVPHPEUDQH IUDFWLRQV DUH ZLWKLQ WKH PHPEUDQH 7KH &WHUPLQXV LV H[WUDFHOOXODU (Q]\PDWLF FOHDYDJH RI VXUIDFHERXQG 71)α FUHDWHV IUDJPHQWV WKDW FLUFXODWH LQ WKH EORRG 7KHVH IUDJPHQWV IRUP D WULPHULF N'D VWUDQG ³MHOO\ UROO´ *UXVV DQG 'RZHU 7KH KRPRWULPHUV ELQG WR WZR GLIIHUHQW UHFHSWRUV S RUS ZKLFKDUHPHPEHUV RIWKH71)W\SH,,,UHFHSWRUIDPLO\
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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αDQG,/DUHWKHSURGXFWVRIWZRJHQHVDQGKDYH OHVVWKDQKRPRORJ\WRHDFKRWKHU&RQWL 0RVWRIWKH,/ LVV\QWKH VL]HGE\PDFURSKDJHVDQGNHUDWLQRF\WHV.XSSHU DFWLYDWHGE\HQGRWR[LQ 71) RU PDFURSKDJH F\WRNLQHV .UDNDXHU 6\QWKHVLV RI ,/ E\ NHU DWLQRF\WHVSURYLGHVDPHFKDQLVPIRULQIODPPDWRU\UHVSRQVHVLQORFDO DUHDVGH YRLGRIPDFURSKDJHV ,/ SUHFXUVRUVDUHN'DSURWHLQVFOHDYHGE\DQHQGRJHQRXVSURWHDVHWR WKHELRORJLFDOO\DFWLYH N'DIRUP,/LVRIWHQIRXQGLQWKHFLUFXODWLRQDIWHU JUDPQHJDWLYHVHSVLV WKXV ,/ DFWV DV DQHQGRFULQHKRUPRQH ,/ ELQGVWR UHFHSWRUV WKDW DUH PHPEHUV RI WKH ,J VXSHUIDPLO\ 7KH W\SH , UHFHSWRU ELQGV ,/ZKHUHDVWKHW\SH,,UHFHSWRUELQGV,/α&RQWL 7KH HIIHFWV RI,/ DUH FRQFHQWUDWLRQ GHSHQGHQW $W ORZ FRQFHQWUDWLRQV ,/ PHGLDWHVLQIODPPDWRU\UHVSRQVHVVLPLODUWR71),WFDXVHVXSUHJXODWLRQRI 0+&, LQLWLDWLRQ RIFRDJXODWLRQ DQG LQFUHDVHGOHXNRF\WHDGKHVLRQ LQ WKHYDV FXODWXUH2¶*DUUD DE $WKLJKFRQFHQWUDWLRQV,/ DFWV DVDQ HQGRFULQH
7KH.LQHV
KRUPRQH WKDW FDXVHV IHYHU V\QWKHVLV RI DFXWHSKDVH SURWHLQV DQG PHWDEROLF ZDVWLQJ ,QWHUOHXNLQ ,/ LV SURGXFHG E\ PRQRQXFOHDUSKDJRF\WHV HQGRWKHOLDO FHOOV ILEUREODVWV DQG,/VWLPXODWHG 7FHOOV 7KH ,/ KRPRGLPHULV DVLQJOH JHQH SURGXFWRI N'D 1RUPDOO\WKLVF\WRNLQHELQGVWRDGLPHULFUHFHSWRUFRQVLVWLQJ RIDN'D ELQGLQJ SURWHLQ ZLWK WKH :6;:6 PRWLI DQG D N'D VLJQDO WUDQVGXFWLRQ SURWHLQ 7KHJSUHFHSWRUELQGLQJSURWHLQ LVVKDUHGE\,/ ,/OHXNHPLD LQKLELWRU\ IDFWRU RQFRVWDWLQ 0 FLOLDU\ QHXURWURSLF IDFWRU DQG FDUGLRWURSLQ 6WLPXODWLRQRIFHOOVZLWK,/FDXVHVGLPHUL]DWLRQRIWKHJSSURWHLQ DFWLYD WLRQRILQWUDFHOOXODUNLQDVHVDQGPRGLILFDWLRQRIWUDQVFULSWLRQIDFWRUV7DJDDQG .LVKLPRWR $QXFOHDUIDFWRUFRQWUROOLQJ,/JHQHH[SUHVVLRQ1),/ LV DOVR LQYROYHG LQ WKH WUDQVFULSWLRQDO UHJXODWLRQ RI DFXWHSKDVH SURWHLQV .LVKLPRWR ,/ KDV VHYHUDO ELRORJLFDO IXQFWLRQV ,WFDXVHV KHSDWRF\WHV WR V\QWKHVL]H ILEULQRJHQ DQLPSRUWDQWDFXWHSKDVHSURWHLQ ,QDGGLWLRQ,/PD\VHUYHDVDQ DXWRFULQHJURZWKIDFWRUIRUQRUPDO DQG PDOLJQDQW%FHOOV HJSODVPDF\WRPDV DQGP\HORPDV DQGDVDFRVWLPXODWRUIRU7FHOOVDQGWK\PRF\WHV6RPHGDWDDOVR VXJJHVWWKDW,/VHUYHVDVDFRIDFWRUIRUWKHJURZWKRIKHPDWRSRLHWLFVWHPFHOOV .LVKLPRWR
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
&R,RQ\6WLPXODWLQJ )DFWRUV &NLW /LJDQG 7KH FNLW OLJDQG RU VWHP FHOO IDFWRU LV D RU N'D SURWHLQPRQRPHUSURGXFHGE\DGLSRF\WHVILEUREODVWVHQGRWKHOLDOFHOOVDQGRWK HUERQHPDUURZVWURPDOFHOOV7KHN'DWUDQVPHPEUDQHSURWHLQIRUPLQWHUDFWV ZLWKDW\URVLQHNLQDVHSURWHLQUHFHSWRUFNLW WKDWLVDQRQFRJHQHSURGXFW,QWHU DFWLRQ EHWZHHQ FNLW DQG WKH OLJDQG VWLPXODWHV WKH SOHXURSRWHQWLDO VWHP FHOO WR SURGXFHPDVWFHOOVDQGHRVLQRSKLOV5\DQHWDO *UDQXORF\WH±0DFURSKDJH&RORQ\6WLPXODWLQJ)DFWRU$FWLYDWHG7FHOOV PDFURSKDJHV HQGRWKHOLDO FHOOV DQG ILEUREODVWV SURGXFH *0&6) 7KLV IDFWRU SURPRWHVWKHJURZWKRISODWHOHWVDQGUHGEORRGFHOOSURJHQLWRUV)DELDQHWDO &RPPLWWHGZKLWHEORRGFHOOSURJHQLWRUVDUHDOVRVWLPXODWHGWRGLIIHUHQWLDWHLQWR JUDQXORF\WHVDQGPRQRQXFOHDUSKDJRF\WHV ,QSHULSKHUDOWLVVXHV*0&6)DFWL YDWHVPDWXUHOHXNRF\WHVORFDOL]HGLQLQIODPPDWRU\ OHVLRQV*0&6)ELQGVWRD UHFHSWRUZLWKWKHFKDUDFWHULVWLF:6;:6 PRWLIDQG D N'DVLJQDOLQJXQLW 0RQRF\WH±0DFURSKDJH&RORQ\6WLPXODWLQJ)DFWRU 0&6)RU&6) LV D GLPHULF N'D SURWHLQ SURGXFHG E\ PDFURSKDJHV HQGRWKHOLDO FHOOV DQG ILEUREODVWV:LWKLQWKHERQHPDUURZSUHFXUVRUVFRPPLWWHGWRPRQRF\WHGHYHO
7KH .LQHV
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
&+(02.,1(6 &KHPRNLQHVDUHIDPLOLHVRIVPDOO±N'D SURWHLQVWKDWVWLPXODWHOHXNR F\WHPRYHPHQWFKHPRNLQHVLV DQG VHUYHDVFKHPRDWWUDFWDQWV FKHPRNLQHV IRU QHXWURSKLOV EDVRSKLOV HRVLQRSKLOV DQG O\PSKRF\WHV .DSODQ HW DO *UDYHVDQG-LDQJ ,QDGGLWLRQFKHPRNLQHVPRGXODWHPDQ\GLIIHUHQWFHOOX ODUIXQFWLRQVLQFOXGLQJUHVSLUDWRU\EXUVWH[SUHVVLRQRIDGKHVLRQPROHFXOHVLQWUD FHOOXODU FDOFLXP OHYHOV DQG DFWLYDWLRQ RI WKH FRQWUDFWLOH HOHPHQWV ZLWKLQ WKH F\WRVNHOHWRQ ,QWKHODVW\HDUVRYHUF\WRNLQHVKDYHEHHQGHVFULEHG7KHVXSHUIDPLO\ LV VWUXFWXUDOO\ GLIIHUHQWLDWHG EDVHG RQ DPLQRWHUPLQDO F\VWHLQH VSDFLQJ DW WKH 1WHUPLQXV7KH &< FKHPRNLQHIDPLO\KDVDQDPLQRDFLGEHWZHHQWKHWZRF\V WHLQHV &;& ZKLOH WKH IDPLO\ KDV VHTXHQWLDO F\VWHLQHV && :HOOV HW DO E
7KHD &KHPRNLQHIDPLO\ 7KH&;&RUα FKHPRNLQHVDUHSURGXFHGE\DFWLYDWHGPRQRF\WHVYDVFXODU HQGRWKHOLXP DQG ILEUREODVWV 7DEOH &KHPRNLQHV KDYH HIIHFWV RQ GLIIHUHQW FHOOV 7KH\ DFWSULPDULO\ RQ QHXWURSKLOV GXULQJ LQIODPPDWRU\ SURFHVVHV EXW GR QRW DWWUDFW PRQRF\WHV *UDYHV DQG -LDQJ 7KH EHVW FKDUDFWHUL]HG &;& FKHPRNLQHLV,/
7KH%&KHPRNLQH)DPLO\ ,QFRQWUDVW&&RUF\WRNLQHVDUHV\QWKHVL]HGE\DFWLYDWHG7FHOOV7DEOH 7KHIDPLO\DFWVRQEDVRSKLOVPRQRF\WHVDQGHRVLQRSKLOV6RPHVHOHFWPHP EHUVRIWKLVIDPLO\DUHDOVRFKHPRDWWUDFWDQWVIRU7FHOOV*UDYHVDQG-LDQJ
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
7DEOH
7KH α&KHPRNLQH)DPLO\
αIDPLO\
7DUJHW FHOOV
1HXWURSKLODFWLYDWLQJSURWHLQ, 1$3 ,/ *52 αβγ 3ODWHOHWIDFWRU3) ,/
1HXWURSKLOV 1HXWURSKLOV 3ODWHOHWVDQGUHVWLQJFHOOV 1. FHOOV
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α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α RUUHFHSWRUVDQG WKH 'XII\HU\WKURF\WHDQWLJHQWKDWELQGVERWKαDQGFKHPRNLQHV
7DEOH
7KH )DPLO\ RI &KHPRNLQHV
IDPLO\ 0DFURSKDJH LQIODPPDWRU\ SURWHLQD 0DFURSKDJH LQIODPPDWRU\ SURWHLQ 0DFURSKDJHFKHPRDWWUDFWDQWSURWHLQV 5DQWHV
7DUJHWFHOOV %DVRSKLOVHRVLQRSKLOV&'&'52 &'5$&'7,/ 7 FHOOV 0&3 PRQRF\WHV 0&3 &'PRQRF\WHVHRVLQRSKLOV
7KH.LQHV
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
&KHPRNLQHV 7KHUHDUHGHILQHGWHPSRUDOUHODWLRQVKLSVEHWZHHQWKHSURGXFWLRQRIFKHPR NLQHVDQGRQVHWRIGLVHDVH)RUH[DPSOHLQPXULQHH[SHULPHQWDOFROODJHQDUWKUL WLV PRGHOV WKHUH LV D VWURQJUHODWLRQVKLS EHWZHHQ WKH SURGXFWLRQ RI0,3 DQG LQWKHMRLQWDQGWKHPDJQLWXGHRIDUWKULWLFLQIODPPDWLRQ$OVRLQKXPDQV WKHUHLVDUHODWLRQVKLSEHWZHHQWKHSURGXFWLRQRI5DQWHV DQG0&3DQG HRVLQRSKLOPHGLDWHGDOOHUJLFDLUZD\LQIODPPDWLRQ6WULHWHUHWDO &KHPRNLQHV SOD\ XQLTXH UROHV LQ WKH SDWKRSK\VLRORJ\ RI+,9 LQIHFWLRQV &'LVNQRZQDVWKH+,9UHFHSWRUEXW+,9DWWDFKPHQWWR&'LVQRWVXIILFLHQW
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
7KH.LQHV
0,&52%,$/$1'9,5$/(9$6,212)7+(.O1(6 &\WRNLQHV 6HYHUDO EDFWHULDO SDWKRJHQV KDYH GHYLVHG PHFKDQLVPV WR FRXQWHUDFW WKH HIIHFWVRIF\WRNLQHV/HLVKPDQLDVSHFLHVSURGXFHJO\FRLQRVLWROSKRVSKROLSLGDQG OLSRSKRVSKRJO\FDQ 7KH IRUPHU GRZQUHJXODWHV 12 SURGXFWLRQ ZKLOH WKH ODWWHU LQKLELWV,/ SURGXFWLRQ 7 FUX]LDQG %UXFHOOD VSHFLHVDOVRSURGXFHDVXUIDFH SURWHLQ VLPLODUWR ³PXFLQ´ 7KLV SURWHLQ LQKLELWVWKHIXQFWLRQ DQG SRVVLEO\WKH SURGXFWLRQRI71)α 6RPHYLUDO VSHFLHVKDYHFRSLHG WKHJHQHIRUDSDUWLFXODUF\WRNLQHDQG XVH WKH JHQHSURGXFWWRLQKLELWWKHLPPXQHUHVSRQVH7KHSR[YLUXVUHFHSWRUKRPR ORJXHVRIKRVWGHIHQVHSURWHLQVDUHWKHPRVWVWXGLHG$OFDPLDQG6PLWK 7KHVH KRPRORJXHV LQFOXGH YDFFLQLD ,/ UHFHSWRU KRPRORJXH 6KRSH ILEURPD YLUXV DQG P\[RPD YLUXV H[SUHVVLQJ D 71) UHFHSWRU DQG WKH P\[RPD YLUXV H[SUHVVLQJ,)1γUHFHSWRUV$KXMDHWDO 2WKHUYLUXVHVVXFKDV(%9SURGXFHSURWHLQVWKDWDUHKRPRORJRXVWR,/ 0RRUH HWDO 3URGXFWLRQ RI WKH ,/ KRPRORJXH DFWLYDWHV WKH 7FHOO ,/5 DQG LQKLELWV WKH SURGXFWLRQ RI F\WRNLQHV $OVR ,/ IXQFWLRQV DV D PDFURSKDJH LQKLELWRUSUHYHQWLQJ WKHH[SUHVVLRQ RI0+& WKHFRVWLPXODWRU\ PDUNHU% DQGWKHSURGXFWLRQRIF\WRNLQHV71),/ DQG,/
&KHPRNLQHV 6RPH YLUXVHV KDYH DFTXLUHG FRSLHV RI JHQHV IRU FKHPRNLQH UHFHSWRUV 6PLWK +XPDQ F\WRPHJDORYLUXV LQIHFWV HSLWKHOLDO FHOOV P\HORLG FHOOV DQGO\PSKRF\WHV7KHYLUDOJHQRPHKDVVHYHUDO8686DQG86 RSHQ UHDGLQJIUDPHVSURGXFLQJSURWHLQV ZLWKPRGHUDWH*SURWHLQUHFHSWRUKRPRORJ\ DQG D KLJK KRPRORJ\ ZLWK WKH DPLQR DFLG VHTXHQFH RI WKH UHFHSWRU :KHQ WKH 86 JHQH SURGXFW ZDV H[SUHVVHG LW ERXQG 0,3 0&3 DQG5DQWHV $KXMDHWDO +HUSHVYLUXV VDLPLUL +96 LV D FORVH UHODWLYH RI(%9 ,W GRHV QRW FDXVH GLVHDVHLQWKHVTXLUUHOPRQNH\WKHQDWXUDOKRVW EXWGRHVFDXVHO\PSKRPDVDQG OHXNHPLD LQ RWKHUPRQNH\ VSHFLHV 2QHRSHQUHDGLQJIUDPH LQWKH'1$ 25) (&5) KDVKRPRORJ\ZLWKWKHUHFHSWRUIRU,/DQGVXJJHVWVWKDWWKH2: (&5) DQG,/5DUHIXQFWLRQDOO\UHODWHG7KH25)(&5)SURGXFWH[SUHVVHG LQIURJRRF\WHVFDQELQGWKH FKHPRNLQHV,/ DQG1$3 $KXMDHW DO %HFDXVHWKHKHUSHVYLUXVHVWDEOLVKHVDORQJWHUPUHODWLRQVKLSZLWKWKH KRVW WKH H[SUHVVLRQ RI D QRQIXQFWLRQDO ,/5 FRQWULEXWHV WR WKH LQIHFWLRQ E\ QHXWUDOL]LQJ,/ ,QFRQWUDVWWRWKHKXPDQF\WRPHJDORYLUXV,/UHFHSWRUWKH25)(&5)LV
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
IXQFWLRQDODQGWUDQVPLWVVLJQDOVWRWKHF\WRVRO7KLVPHFKDQLVPPD\DOORZDFWL YDWLRQRI+96LQIHFWHGFHOOVE\ FKHPRNLQHV7KHELRFKHPLFDOFKDQJHVUHVXOW LQJIURPWKHFKHPRNLQH VLJQDOVPD\SURGXFHYLUDOSUROLIHUDWLRQ RULQGXFWLRQRI YLUDOODWHQF\$KXMDHWDO
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¶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±*XpULQ WXEHU FXORVLVRUJDQLVP
'58*6$1'&<72.,1(6 &\FORVSRULQ$&<$ LVDQHXWURSKLOLFSHSWLGHLVRODWHGIURP7RO\SRFODGLXP LQIODWXP ,WLVXVHGDVDQLPPXQRVXSSUHVVDQWLQRUJDQWUDQVSODQWVDQGLVHVSHFLDOO\ XVHIXO DV DWKHUDS\IRUFRQWUROOLQJ JUDIWYHUVXVKRVWUHDFWLRQ IROORZLQJPDUURZ DQG71) WUDQVSODQWV&<$EORFNVWUDQVFULSWLRQRI,/ ,/,/5
7KH.LQHV
0HFKDQLVWLFDOO\&<$ELQGVWRDQLQWUDFHOOXODUUHFHSWRURQWKHF\FORSKLOLQ±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±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±WLPHVORZHUWKDQ&<$
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
7DEOH &\WRNLQH ,/ ,/ ,/ ,/ ,/ ,/ ,/
&HOO OLQHV 8VHG LQ %LRDVVD\V WR'HWHFW&\WRNLQHV &HOOOLQH
6SHFLHVVSHFLILF
'6 &7// RU+7 )'&3PRXVH 7) KXPDQ &76PRXVH 7) KXPDQ %&/ PRXVH 7) KXPDQ 7' PRXVH ,;1% PRXVH
1R 1R
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αRU,)1γ([DFWO\RSSRVLWHUHVXOWVKDYHEHHQ REVHUYHG LQYLYRLQKXPDQV9DQGHEULHOHWDO ,Q RWKHU FDVHV DOWHUDWLRQV LQ F\WRNLQH SURILOHV GLG QRW FRUUHVSRQG WR WKH NQRZQ FKDUDFWHULVWLFV RI WKH FKHPLFDO 7UHDWPHQW ZLWK +J&O LQGXFHV D 7K UHVSRQVH LQ +6 PLFH $Q LQFUHDVH LQ ,/ ZDV REVHUYHG EXWRWKHUF\WRNLQHV LQYROYHG LQ D 7K UHVSRQVH ,/ ,/ 7*) DQG ,)1γ UHPDLQHG ZLWKLQ QRUPDOOLPLWV9DQGHEULHOHWDO ,QFRQWUDVWF\WRNLQHSURILOHVLQO\PSKQRGHVPD\EHXVHIXOLQGLIIHUHQWLDW LQJEHWZHHQDOOHUJLFVHQVLWL]DWLRQDQGLUULWDWLRQ0LFHH[SRVHGWRWULPHOOLWLFDQ K\GULGH 70$ DNQRZQDOOHUJHQLFFKHPLFDOKDGKLJKOHYHOV RI7K FHOOVDQG ,/ DQG ,/ EXW RQO\ ORZ OHYHOV RI ,)1γ &RQYHUVHO\ PLFH WUHDWHG ZLWK R[D]RORQHDNQRZQFRQWDFWVHQVLWL]HUKDGORZOHYHOVRI,/DQG(DQGKLJK
7KH.LQHV
OHYHOV RI ,)1γ 6LPLODU F\WRNLQH SURILOHV KDYH EHHQ UHSRUWHG DIWHU H[SRVXUH WR RWKHUDOOHUJHQVDQGFRQWDFWVHQVLWL]HUV'HDUPDQHWDO
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
$VVHVVPHQWRI%LRORJLFDO6LJQLILFDQFH +RVW'HIHQVHDQG7XPRU0RGHOV
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±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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
7DEOH
'UXJV DQG&KHPLFDOV 7HVWHG LQ WKH3RSOLWHDO/\PSK 1RGH $VVD\
3RVLWLYHKXPDQ*9+
3/1
1HJDWLYHKXPDQ*9+
&DUEDPD]HSLQH
'HR[\F\FOLQH
&KORUSURPD]LQH +\GUD]DOLQH ,VRQLD]LG 1LWURIXUDQWRLQ 3KHQD]RQH 3KHQ\WRLQ 3URFDLQDPLGH 6WUHSWR]RWRFLQ =LPHOLGLQH
'062 ,QGRPHWKDFLQ /HYDPLVROH 3HQLFLOOLQ 3KHQREDUELWDO 3URPHWKD]LQH
3/1 ± –
± ± ± ± ±
$VVHVVPHQW RI %LRORJLFDO 6LJQLILFDQFH
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±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
$QLPDO 0RGHOVRI$XWRLPPXQLW\ %URZQ 1RUZD\5DW0RGHO 1RUZD\UDWV LPPXQL]HGZLWK QRQWR[LFFRQ FHQWUDWLRQVRIPHUFXULFFKORULGH+J&O GHYHORSDGLVHDVHFKDUDFWHUL]HGE\7K FHOOGHSHQGHQW %FHOO VWLPXODWLRQ 6WLPXODWLRQ FXOPLQDWHV LQ WKH SURGXFWLRQ RI DXWRDQWLERGLHVGLUHFWHGWRZDUG'1$JORPHUXODUEDVHPHQWPHPEUDQHFROODJHQ ,9WK\URJOREXOLQDQGP\HORSHUR[LGDVH
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
,J(0(',$7(' ,00(',$7( $//(5*O& 5($&7,216 'DWDIURPVWDQGDUGWR[LFRORJ\VWXGLHV\LHOGOLWWOHLQIRUPDWLRQRQWKHDELOLW\ RIDWHVWFRPSRXQGWRLQGXFHLPPHGLDWHK\SHUVHQVLWLYLW\LQWKHVNLQRUOXQJ7ZR W\SHVRIPROHFXOHVFDQLQLWLDWHK\SHUVHQVLWLYLW\UHDFWLRQV+LJKPROHFXODUZHLJKW SURWHLQV DUHFRPPRQ DOOHUJHQV /RZPROHFXODUZHLJKWFKHPLFDOV /0:& DUH KDSWHQV DQGPXVWELQGWRSURWHLQWRHOLFLWDQ LPPXQHUHVSRQVH ,WLVSRVVLEOHWRGHILQHWKHDOOHUJLFSRWHQWLDORI/0:&XVLQJDPXOWLOHYHORU WLHU DSSURDFK WR WHVWLQJ ,Q 7LHU VWXGLHV VWUXFWXUH±DFWLYLW\ UHODWLRQVKLSV LQ
$VVHVVPHQW RI %LRORJLFDO 6LJQLILFDQFH
NQRZQ FODVVHVRIDOOHUJHQV DUH DVFHUWDLQHG,Q DGGLWLRQ WKHWKHRUHWLFDOFRYDOHQW SURWHLQELQGLQJ FDSDFLW\ RI WKH FKHPLFDO LV GHWHUPLQHG ,Q 7LHU WKH DFWXDO FKHPLFDO±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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
0RXVH,J(0RGHO ,Q WKH %$/%F PRXVH WRSLFDO DGPLQLVWUDWLRQ RIKXPDQ UHVSLUDWRU\ VHQVL WL]HUVHJSKWKDOLFDQK\GULGHWULPHOOLWLFDQK\GULGH VLJQLILFDQWO\LQFUHDVHVWRWDO DQGKDSWHQVSHFLILF,J(OHYHOV 'HDUPDQDQG.LPEHU 3UHVXPDEO\ WKLV UHVSRQVH LV PHGLDWHG E\ &' 7K FHOOV &RQWDFW VHQVLWL]HUV VXFK DV GLQLWUR
$VVHVVPHQW RI%LRORJLFDO 6LJQLILFDQFH
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
5DW0RGHOIRU+\SHUVHQVLWLYLW\ ,QEUHG 6SUDJXH±'DZOH\UDWV H[KLELWFODVVLFDO DOOHUJLF OXQJUHVSRQVHV ZLWK DQ XQGHUO\LQJ DLUZD\ K\SHUDFWLYLW\ +RZHYHU PHGLDWRUV RI WKH UHVSRQVH DUH GLIIHUHQWLQUDWV DQGKXPDQV +XPDQPHGLDWRUV LQFOXGHKLVWDPLQHKHSDULQ DQG WU\SDVH,QFRQWUDVWUHVSRQVHVLQWKHUDWDUH PHGLDWHGE\VHURWRQLQ7KLVPRGHO QHHGV DGGLWLRQDO YDOLGDWLRQ EHIRUH LWFDQ EH XVHGDV D VWDQGDUGWR[LFRORJ\ WHVW
5DEELW0RGHO 7KHUDEELWKDVEHHQXVHGWRVWXG\K\SHUVHQVLWLYLW\UHDFWLRQVWRSOLFDWLFDFLG WKH DJHQW UHVSRQVLEOH IRU UHG FHGDU DVWKPD LQ H[SRVHG ZRUNHUV &KDQ HW DO 6SHFLILF,J* DQG,J(ZHUHGHPRQVWUDEOH LQ LPPXQL]HG DQLPDOV :KHQ FKDOOHQJHG ZLWK WKH DFLG WKH UDEELWV UHVSRQGHG ZLWK LQFUHDVHV LQ UHVSLUDWRU\ IUHTXHQF\DQGSXOPRQDU\UHVLVWDQFH
'(/$<('+<3(56(16,7,9,7<&217$&7'(50$7,7,6 7KHPRVWFRPPRQO\XVHGDQLPDOWHVWVIRUFRQWDFWVHQVLWLYLW\LQGXFWLRQDUH WKH JXLQHDSLJ PD[LPL]DWLRQ WHVW *307 DQGWKH%XHKOHU7HVW%7 )URPDQ
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
LPPXQRORJLFDOSHUVSHFWLYH WKHVHWHVWVPHDVXUHD7KPHGLDWHGGHOD\HGK\SHU VHQVLWLYLW\UHDFWLRQ
*XLQHD3LJ0D[LPL]DWLRQ7HVW ,QWKH*307WKUHHJURXSVRIDQLPDOVDUHXVHGZLWK±DQLPDOVLQHDFK JURXS2QHJURXSUHFHLYHVLQWUDGHUPDOLQMHFWLRQVRI)UHXQG¶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
$VVHVVPHQW RI %LRORJLFD, 6LJQLILFDQFH
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
/LPLWDWLRQRIWKH*307DQG%7 7KH*307DQG%7KDYHVRPHOLPLWDWLRQV6HYHUHORFDOOHVLRQVRIWHQRFFXU EHFDXVHRIDGMXYDQWWHVWPDWHULDORUWKHRFFOXVLYHSDWFKDWWKHDSSOLFDWLRQVLWH,Q DGGLWLRQ G\HV RU FRORUHG WHVW PDWHULDOV PD\ LPSDLU WKH YLVXDOL]DWLRQ RI WKH HU\WKHPDWRXVOHVLRQ7KHVHIDFWRUVDORQJZLWKVRPHFRH[LVWLQJLUULWDQWUHDFWLRQV PD\\LHOGIDOVHQHJDWLYHUHDFWLRQVLQWKHDVVD\)LQDOO\WKHGDWDPD\EHVNHZHG EHFDXVHWKHRULJLQDOFODVVLILFDWLRQV\VWHPKDVQRVFDOHDQGQHJDWLYHQRQUHDF WLYHFRPSRXQGV FDQQRWEHFODVVLILHGDVQRQVHQVLWL]HUV
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
+80$13$7&+7(67,1* 3DWFK7HVWLQJ 7KHPRVWFRPPRQPHWKRGXVHGIRUGLDJQRVLVRI'7+UHDFWLRQVLVWKHSDWFK WHVW 8VXDOO\ QRQLUULWDWLQJ FRQFHQWUDWLRQV RIWHVW FRPSRXQG DUH SODFHG RQ WKH VNLQIRU±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± GD\V
$VVHVVPHQW RI %LRORJLFDO 6LJQLILFDQFH
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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±QHJDWLYH UHVXOWV ,NDUDVKL HW DO :KHQ PHWDO VDOWV DUH XVHG LQWKH DVVD\ VSHFLDO YHKLFOHV PXVWEH XVHG 6HQVLWL]DWLRQ LV RQO\ REVHUYHG ZKHQ WKH FRPSRXQGV DUH DSSOLHG LQ GLPHWK\O VXOIR[LGHRUDTXHRXVHWKDQROVROXWLRQ
,Q9LWUR6HQVLWL]DWLRQ $ SUDFWLFDO LQ YLWUR PRGHO KDV QRWEHHQ GHYHORSHG %RWKDP HWDO EHFDXVH VHQVLWL]DWLRQ GHSHQGV RQ VHYHUDO GHILQHG DQG LQWHUFRQQHFWHG VWHSV LQ YROYLQJEORRG VNLQFHOOVDQGO\PSKDWLFV /LPLWHG VXFFHVV KDV EHHQ DFKLHYHG ZLWK VWURQJ VHQVLWL]HUV 7KHUH ZDV D FRUUHODWLRQ EHWZHHQ LQYLYR DQG LQYLWUR VHQVLWL]DWLRQ +DXVHUDQG.DW] XVLQJ LQYLWURVHQVLWL]DWLRQRIDQWLJHQVSHFLILFKHOSHU7FHOOV,QWKHDVVD\V\VWHP
$VVHVVPHQW RI %LRORJLFDO 6LJQLILFDQFH
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
,0081(68335(66,21 7KHUH DUHWZRDSSURDFKHVWR DVVHVVLQJWKHELRORJLFDO VLJQLILFDQFHRIVWDQ GDUG VWXG\ HQGSRLQWV 7KH 173 HVWDEOLVKHG VWDWLVWLFDO FRUUHODWLRQV EHWZHHQ LQ YLYR DQG H[ YLYR LPPXQH IXQFWLRQ WHVWV DQG FKDQJHV LQ KRVW UHVLVWDQFH $Q DOWHUQDWLYHDSSURDFKXVHVDQLPDOLQIHFWLYLW\DQGWXPRUPRGHOVWRGHILQHELRORJ LFDOO\UHOHYDQWHIIHFWV 0RUWDOLW\LVWKHXVXDOHQGSRLQWPHDVXUHG
6WDWLVWLFDO$SSURDFKWR0RGHOLQJ,PPXQRVXSSUHVVLRQ 'DWDIURPWKH173VWXG\VKRZHGWKDWFRPSRXQGVQHJDWLYHIRULPPXQRWR[ LFLW\LQLPPXQHIXQFWLRQDVVD\VDUHQRWOLNHO\WRDIIHFWKRVWUHVLVWDQFH&RQYHUVH O\FRPSRXQGVLPPXQRWR[LFLQH[YLYRDVVD\VKDYHDFKDQFHRIDOWHULQJKRVW UHVLVWDQFH7DEOH :KHQRQHKRVWUHVLVWDQFHDVVD\ZDVXVHGIRUHDFKFKHPLFDO WHVWHG WKH FRQFRUGDQFH EHWZHHQ LPPXQH IXQFWLRQ DQG KRVW UHVLVWDQFH GHFUH
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
7DEOH 6HQVLWLYLW\ 6SHFLILFLW\ DQG&RQFRUGDQFH RI+RVW'HIHQVHDQG7XPRU0RGHOVLQ'HWHFWLQJ 5HOHYDQW,PPXQRVXSSUHVVLRQ 6SHFLILFLW\ 6HQVLWLYLW\ &KDOOHQJH $JHQW
7HVWV 1R
±±
7RWDO
/PRQRF\WRJHQHV 3<%WXPRU 6SQHXPRQLDH %)WXPRU 3\RHOLL ,QIOXHQ]D
$Q\WHVW
0RGLILHGIURP)XQGDPHQWDODQG$SSOLHG7R[LFRORJ\ /XVWHU HWDO E ZLWK SHUPLVVLRQ RI$FDGHPLF 5HVV
PHQWV LQFUHDVHGWR /XVWHU HWDO 7KHUHIRUH DOWHUDWLRQ LQ H[YLYR LPPXQHIXQFWLRQWHVWVSUHGLFWVELRORJLFDOO\UHOHYDQWLPPXQRVXSSUHVVLRQDSSUR[ LPDWHO\ RIWKHWLPH
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
$VVHVVPHQW RI %LRORJLFDO 6LJQLILFDQFH
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
7DEOH
(IIHFW RI 'RVH RI %DFWHULD (' RQ WKH 1XPEHU RI $QLPDOV 5HTXLUHG IRU D +RVW 'HIHQVH 6WXG\ (' 1R DIIHFWHG Q
&RQWURO 7HVW
(' S YDOXH
1RDIIHFWHG Q
(' S YDOXH
1R DIIHFWHG Q
SYDOXH
0RGLILHGIURP,QWHUQDWLRQDO3URJUDPRQ &KHPLFDO6DIHW\ 3ULQFLSOHVDQGPHWKRGVIRUDVVHVVLQJGLUHFWLPPXQRWR[ LFLW\DVVRFLDWHGZLWKH[SRVXUHWRFKHPLFDOV $QRQ\PRXV D*HQHYD
&KLVTXDUHRQHWDLOHGWHVW
6WDWLVWLFDOO\ VLJQLILFDQWS
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
7DEOH
%LRORJLFDOO\ 5HOHYDQW OPPXQRWR[LFLW\ ,QGXFHG E\ &KHPLFDOV LQ +RVW 'HIHQVH 0RGHOV
0RGHO
&KHPLFDO
/LVWHULD 6WUHSWRFRFFXV &\WRPHJDORYLUXV ,QIOXHQ]DYLUXV
7&'' 2UJDQRWLQ %HQ]R>D@S\UHQH %HQ]R>H@S\UHQH 0HWK\OLVRF\DQDWH 7&&' 'LPHWK\OQLWURVDPLQH 2UJDQRWLQ $F\FORYLU ¶7KLRELV UEXW\OPFUHVRO )LVKRLOVXSSOHPHQW 6W\UHQH
7ULFKLQHOOD 3ODVPRGLXP
5HIHUHQFH 0RUDKDQ HWDO :KLWH HWDO *DUVVHQ HWDO 0XQVRQDQG:KLWH /XVWHU HWDO +RXVHHWDO 7KRPDVHWDO 9RVHWDO 6WDKOPDQQHWDO +ROVDSSOHHWDO %ORN HWDO 'RJUDHWDO
DIIHFWHGWR DFKLHYHVWDWLVWLFDOVLJQLILFDQFH 2QO\DOLPLWHGQXPEHURIFKHPLFDOV KDYHEHHQWHVWHGLQKRVWGHIHQVH7DEOH RUWXPRUPRGHOV 7DEOH 7KH GRVH RIWKH LQIHFWLRXV DJHQWV DOVR LQIOXHQFHV WKH QXPEHU RI DQLPDOV QHHGHG LQ KRVWGHIHQVH DVVD\V :KHQ WKH VXEFOLQLFDO GRVH (' LVXVHG LQ WKH DVVD\RQO\RIDQLPDOVPXVWEHDIIHFWHGIRUVWDWLVWLFDOVLJQLILFDQFH$QRQ\ PRXV 'DWDIURPWKHKRVWUHVLVWDQFHDVVD\VFDQEHDQDO\]HGE\)LVKHU¶VH[DFWWHVW 7KHXVHRIWKLV WHVWUHTXLUHV VHYHUDOEDVLFDVVXPSWLRQV)LUVW LWLVDVVXPHGWKDW GHDWK LVWKHUHVXOWRIGLUHFWRU LQGLUHFWDFWLRQ RIWKHWHVWFKHPLFDO 6HFRQG LWLV DVVXPHGWKDWGHDWKLVWKHUHVXOWRIYLUDOEDFWHULDORUIXQJDOLQIHFWLRQV7KLUGLWLV DVVXPHGWKDWGHDWK IURPLQIHFWLRQ LVWKHHYHQWRILQWHUHVW
7DEOH
%LRORJLFDOO\ 5HOHYDQW OPPXQRWR[LFLW\ ,QGXFHG E\ &KHPLFDOV LQ 7XPRU 0RGHOV
0RGHO %)PHODQRPD
3<%ILEURVDUFRPD
0$'
&KHPLFDO
5HIHUHQFH
3KRUERO P\ULVWDWHDFHWDWH *DOOLXPDUVHQLGH ¶7KLRELVUEXW\OPFUHVRO $URFORU 'LPHWK\OEHQ]DQWKUDFHQH %HQ]HQH 1LFNHOFKORULGH
0XUUD\ HWDO 6LNRUVNL HWDO +ROVDSSOHHWDO /XVWHUHWDO 'HDQHWDO 5RVHQWKDO DQG6Q\GHU 6PLDORZLF]HWDO
$VVHVVPHQW RI %LRORJLFDO 6LJQLILFDQFH
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γ 7KH DFWLYDWHG PDFURSKDJHV DWWHPSW WR NLOO WKH H[WUDFHOOXODU RUJDQLVPV E\ SKDJRF\WRVLV 9DQ /RYHUHQ HW DO $IWHU RU GD\V &' F\WRWR[LF FHOOV O\VH LQIHFWHG SKDJRF\WLF FHOOVUHOHDVLQJEDFWHULDOSURWHLQDQWLJHQV &'7K FHOOVUHVSRQGWR WKHSURWHLQVZKHQSUHVHQWHGLQFRQWH[WZLWK0+&,,$FHOOPHGLDWHGUHVSRQVHLV HOLFLWHGUHVXOWLQJLQJUDQXORPDIRUPDWLRQLQWKHOLYHUDQGVSOHHQ ,QPLFHDGGL WLRQDO,)1γSURGXFWLRQFDXVHVWKH%FHOOVWRV\QWKHVL]H,J*DWKDWRSVRQL]HVWKH EDFWHULDDQGDFWLYDWHV FRPSOHPHQW ,Q WKH W\SLFDO OLVWHULD FKDOOHQJH VWXG\ WKUHH JURXSV RIPLFH PLFH SHU JURXS DUHLQMHFWHGLQWUDYHQRXVO\ZLWKEDFWHULDOQXPEHUVWKDWSURGXFHDQG PRUWDOLW\ 7KHLQWUDFHOOXODUEDFWHULDEHJLQ WRJURZ LQ WKH OLYHUDQG VSOHHQ ZLWKLQWRKU0RUWDOLW\LVREVHUYHGDWWR GD\VGHSHQGLQJRQWKHGRVH 6HYHUDOHQGSRLQWVFDQEHPHDVXUHG WKHQXPEHURIPLFURRUJDQLVPVUHWULHYHG IURP RUJDQV UHODWLYH WR WKH FRQWUROV 5H\QROGV DQG 7KRPVRQ WKH SHUFHQWPRUWDOLW\UHODWLYHWRFRQWUROV KLVWRSDWKRORJ\ FDXVHGE\OLVWHULD /H VLRQVDUHFKDUDFWHULVWLFO\PSKRF\WHIRFLZLWKKLVWLRF\WLFFHOOV%RWKWKHVHYHULW\ DQG WKHGXUDWLRQRIWKHOHVLRQ FDQ EHDOWHUHGE\LPPXQRWR[LFDQWV 6WUHSWRFRFFXVSQHXPRQLDH ,QWKHHDUO\SKDVHRILQIHFWLRQ&LVGHSRV LWHGRQWKHEDFWHULDOVXUIDFHDQGWKHDOWHUQDWHFRPSOHPHQWSDWKZD\LVDFWLYDWHG 2SVRQL]DWLRQ EDFWHULD DUH LQJHVWHG E\ PRQRF\WHV DQG RWKHU SKDJRF\WLF FHOOV 'XULQJ WKH ODWH SKDVH RIWKH LQIHFWLRQ VWUHSWRFRFFDO SRO\VDFFKDULGH D 7FHOO LQGHSHQGHQW DQWLJHQ HOLFLWV SURGXFWLRQ RI DQWLERGLHV ,J0 DQWLERG\ SURYLGHV SURWHFWLRQ DJDLQVWFLUFXODWLQJEDFWHULDDQGSUHYHQWV GLVVHPLQDWLRQ7LVVXHLQYD VLRQLVSUHYHQWHGE\WKHSURGXFWLRQRI,J*DQWLERGLHV$FWLYDWLRQRIWKHFODVVLFDO FRPSOHPHQW SDWKZD\ RSVRQL]DWLRQ DQG SKDJRF\WRVLV WHUPLQDWH WKH LQIHFWLRQ :LQNHOVWHLQ ,Q VXPPDU\ KRVWGHIHQVHDJDLQVW6 SQHXPRQLDHUHTXLUHV VHYHUDO HIIHFWRU PHFKDQLVPVLQFOXGLQJDQWLERG\UHVSRQVHWRD7FHOOLQGHSHQGHQWDQWLJHQ0R[ RQ SKDJRF\WRVLVE\PRQRF\WHVDQG301VDQGDFWLYDWLRQRIFRPSOHPHQW 6FKLIIPDQ 'HSHQGLQJ RQ ZKHWKHU WKH HDUO\ RU ODWH SKDVH RI WKH LQIHFWLRQ LV EHLQJ
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
SUREHG WZR VWUDLQV RIVWUHSWRFRFFXV DUH XVHG LQ WKH GHIHQVH PRGHO 6PRRWK HQFDSVXODWHG 6 SQHXPRQLDH ZKLFK FDXVHV UDSLG GHDWK LV XVHG WR SUREH WKH FRPSOHPHQW DFWLYDWLRQ REVHUYHG HDUO\ LQ WKH GLVHDVH $QRWKHU VWUDLQ RI VWUHS WRFRFFXV LV XVHG WR SUREH WKH ODWH±SKDVH LPPXQH UHVSRQVH 6 ]RRHSLGHPLFXV WHVWV IRUDQWLERG\PHGLDWHGUHVLVWDQFHGXULQJ WKHODWHSKDVH RIWKHLQIHFWLRQ 6 ]RRHSLGHPLFXV DQLPDOVKDYHDPXFKORQJHUWLPHWRGHDWK)XJPDQQHWDO 7KHHIIHFWRILPPXQRWR[LFDQWVRQWKHFRPSOHPHQWV\VWHPFDQEHGHILQHGLQ DFXWHSKDVHUHVSRQVHE\XVLQJGLIIHUHQWVWUDLQV RI6SQHXPRQLDH)RUH[DPSOH W\SH 6 SQHXPRQLDH $7&& DFWLYDWHV ERWKSDWKZD\V ZKHUHDV 6SQHX PRQLDH W\SH$7&&DFWLYDWHVRQO\WKHDOWHUQDWLYHSDWKZD\ ,QWKHDVVD\EDFWHULDDUHXVXDOO\DGPLQLVWHUHGLQWUDYHQRXVO\LQODUJHGRVHV DWDQGRIWKHOHWKDOGRVH'HDWKVRFFXUULQJZLWKLQWKHILUVWKUDUH UHODWHG WR D FRPSOHPHQW GHIHFW 'XULQJ WKH WR GD\ SHULRG GHDWKV FDQ EH DWWULEXWHGWRGHFUHDVHVLQSKDJRF\WRVLV'HIHFWVLQDQWLERG\SURGXFWLRQUHVXOWLQ GHDWKV DW± GD\V &\WRPHJDORYLUXV&09 0RGHO ,QIHFWLRQZLWK&09HOLFLWVDQXPEHURI GLIIHUHQWLPPXQHUHVSRQVHV,QWHUIHURQLVV\QWKHVL]HGGXULQJWKHILUVWKU7KLV LVIROORZHGE\DYLJRURXV1.FHOOUHVSRQVHWKDWSHDNVDWGD\%XWRZVNLHWDO 9LUXVVSHFLILF F\WRWR[LF 7 FHOOV DSSHDU LQ ODUJH QXPEHUV E\ GD\ 1HXWUDOL]LQJDQWLERGLHVDUHDOVRSURGXFHGODWHLQWKHUHVSRQVH$UROHIRUPDFUR SKDJHV LQ &09 LQIHFWLRQ LV GRXEWIXO +RZHYHU WKH &09 PD\ LQIHFW PDFUR SKDJHVWKDWVHUYH DVUHVHUYRLUV IRUIXWXUHLQIHFWLRQV %RRV 7HUPLQDWLRQ RIWKH LQIHFWLRQ LV SULPDULO\ EURXJKW DERXWE\ 1. FHOOV F\WRWR[LF7FHOOV DQG $'&&6HOJUDGHHWDO D 7ZRURXWHVRIDGPLQLVWUDWLRQKDYHEHHQXVHGLQWKHPRGHO0LFHDUHJHQHU DOO\ LPPXQL]HGE\ WKHLQWUDSHULWRQHDORULQWUDWUDFKHDOURXWH,QWUDSHULWRQHDO DG PLQLVWUDWLRQ LQLWLDWHV D V\VWHPLF LQIHFWLRQ 7KH KLJKHVW YLUXV FRQFHQWUDWLRQ LV IRXQGLQWKHVDOLYDU\ JODQGV IROORZHGE\WKHOLYHU VSOHHQ DQGOXQJ :KHQWKH YLUXVLVDGPLQLVWHUHGE\WKHLQWUDWUDFKHDOURXWHWKHYLUXVXVXDOO\ORFDOL]HVLQWKH VDOLYDU\JODQGVDQGGHDWKLVDUDUHHYHQW*HQHUDOO\WKHYLUDOUHSOLFDWLRQLVVORZ ZLWKSHDNYLUDO ORDGV DW GD\V 0RUWDOLW\ RU WKHFRQFHQWUDWLRQ RIYLUXV LQ WLVVXHDUHFRPPRQHQGSRLQWV%UXJJHPDQHWDO :LWKLQWUDWUDFKHDODGPLQLVWUDWLRQLQWKHUDWWKHUHDUHVSHFLHVVSHFLILFGLIIHU HQFHV LQ YLUXV ORFDOL]DWLRQ %UXJJHPDQ HWDO ,Q39*UDWV WKHKLJKHVW YLUDOORDGLVLQWKHVDOLYDU\JODQGV,QRWKHUUDWVWUDLQVVXFKDV/HZLVRU/1WKH YLUDOORDGLVKLJKHULQWKHNLGQH\WKDQLQWKHVDOLYDU\JODQG%UXQLQJ ,QWKHDVVD\V\VWHPSDWKRJHQIUHHZHHNROG&' PLFHDUHWKHVWUDLQRI FKRLFH7KLVVWUDLQLVVXVFHSWLEOHWRWKHYLUXV 2WKHUVWUDLQV DUHUHVLVWDQW5HVLV WDQFHRUVXVFHSWLELOLW\WR&09LVJHQHWLFDOO\GHWHUPLQHG0RXVHVWUDLQVFDUU\LQJ WKH +N KDSORW\SH DUH ±WLPHVPRUHUHVLVWDQWWRWKH YLUXV WKDQ DUH VWUDLQV
$VVHVVPHQW RI %LRORJLFDO 6LJQLILFDQFH
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± GD\V $IWHU FRSXODWLRQ WKH JUDYLG IHPDOHV SHQHWUDWH WKH LQWHVWLQDO PXFRVD DQG SURGXFH RIIVSULQJ ODUYDH 7KLV HYHQW UHVXOWV LQ DQ LQIODPPDWRU\ UHVSRQVHFRQVLVWLQJRIPDVWFHOOVDQGHRVLQRSKLOV2YHUDZHHNSHULRGYLYLSD URXV ODUYDH HQWHU WKH O\PSKDWLF V\VWHP DQG PLJUDWH WR VWULDWHG PXVFOH ,Q WKH PXVFOH WKHODUYDH EHFRPHHQFDSVXODWHG DQGUHPDLQ YLDEOHIRUPRQWKV RU SHU KDSV \HDUV 7KHHQF\VWHGODUYDHHYRNHDYLJRURXV7FHOOGHSHQGHQW LQIODPPD WRU\UHVSRQVH
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
$VVHVVPHQW RI%LRORJLFD, 6LJQLILFDQFH
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±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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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±DFWLYLW\UHODWLRQVKLSVWRNQRZQDOOHUJHQVHJSKW KDODWHVLVRF\DQDWHV RU WKHH[SRVHGSRSXODWLRQLVYHU\ODUJH0RVWFRPSDQLHV YROXQWDULO\SHUIRUPWHVWVWRGHWHUPLQHZKHWKHUDQHZFRPSRXQGLVPRUHDOOHUJLF WKDQWKHRQHWKDWLWLVUHSODFLQJ 7KHUHLVDFULWLFDOQHHGWRGHYHORSDQGYDOLGDWHUDSLGFRVWHIIHFWLYH LQYLYR
$VVHVVPHQW RI %LRORJLFDO 6LJQLILFDQFH
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³PD\FDXVHVHQVLWL]DWLRQE\VNLQFRQWDFW´$QRQ\PRXV ,Q WKH 8QLWHG 6WDWHV *307 GDWD DUH H[SUHVVHG DV WKH VHQVLWL]DWLRQ UDWH QXPEHURIDQLPDOV ZLWKDSRVLWLYHUHDFWLRQQXPEHURIDQLPDOV WHVWHG ; :KHQ± RIWKHDQLPDOV VKRZDPRGHUDWHDQGGLIIXVHVNLQUHDFWLRQ*UDGH ,, WKH FKHPLFDO LV FRQVLGHUHG DPLOG VHQVLWL]HU $ VWURQJ VHQVLWL]HUKDV D±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
5LVN&KDUDFWHUL]DWLRQ
,1752'8&7,21 5LVNDVVHVVPHQWLVDJHQHULFWHUPXVHGE\LQGXVWULDODQGJRYHUQPHQWDOWR[LFROR JLVWVWRGHVFULEHWKHSURFHVVWKDWHVWDEOLVKHVTXDOLWDWLYHDQGTXDQWLWDWLYHHVWLPDWHV RIDGYHUVHHIIHFWV6FDOD ,QFOXGHGLQWKHSURFHVVDUH KD]DUGLGHQWLILFD WLRQWKDWLGHQWLILHVDGYHUVHHIIHFWVDQGWKHDVVHVVPHQWRIWKHELRORJLFDOUHOHYDQFH RIWKH HIIHFW D GRVH±UHVSRQVH DVVHVVPHQW WKDW GHILQHV WKH UHODWLRQVKLS EH WZHHQWKHHIIHFWRIH[SRVXUHDQGWKHVHYHULW\RIHIIHFWV H[SRVXUHDVVHVVPHQW WKDWGHILQHV WKHDFWXDOGRVHRUH[SRVXUHWR ZKLFKKXPDQV DUHH[SRVHG DQG ULVNFKDUDFWHUL]DWLRQWKDWHVWLPDWHVWKHIUHTXHQF\DQGVHYHULW\RIDGYHUVHHIIHFWV LQ DSRSXODWLRQ EHFDXVHRIH[SRVXUH $QRQ\PRXV 5LVNFKDUDFWHUL]DWLRQ FDQEHIRUPDOL]HGWR\LHOGDTXDQWLWDWLRQRIWKHLQFLGHQFHDQGVHYHULW\RIDGYHUVH HIIHFWVLQDSRSXODWLRQ5LVNUHGXFWLRQLVWKHSURFHVVXVHGWRUHGXFHWKHOLNHOLKRRG RIDGYHUVHHIIHFWV
7+5(6+2/'())(&76 ,PPXQRORJLFDOULVNDVVHVVPHQWDVVXPHV WKDWWKHUH LV DILQDOFRQFHQWUDWLRQ WKUHVKROG EHORZZKLFKWKHUHLVQRHIIHFWRQWKHLPPXQHV\VWHP7KUHVKROGVDUH WKHFRQVHTXHQFHRIG\QDPLFDQGFRPSOH[LQWHUDFWLRQVLQZKLFKPRGHVWFKDQJHV JLYHULVHWRFRPSHQVDWLQJIDFWRUVWKDWUHYHUVHWKHHIIHFWDQGRUUHVWRUHELRORJLFDO KRPHRVWDVLV ,WLVQHFHVVDU\WRGLIIHUHQWLDWHEHWZHHQWKHLQGLYLGXDODQGSRSXODWLRQWKUHVK
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
ROG %HFDXVH PRVW WR[LFRORJ\ VWXGLHV XVH FRORQ\ GHULYHG UDWV RU LQEUHG UDWV DQLPDOVWXGLHVRQO\GHILQHWKHLQGLYLGXDOWKUHVKROG7KHSRSXODWLRQWKUHVKROGLV WKH GRVH WKDW ZLOO QRW DIIHFW D VLQJOH LQGLYLGXDO LQ D PL[HG SRSXODWLRQ ZLWK GLIIHULQJVHQVLWLYLWLHV6HQVLWLYLWLHVLQWXUQGHSHQGRQGLIIHUHQFHVLQWKHDEVRUS WLRQ UDWH PHWDEROLF DFWLYDWLRQUDWHV RIGHWR[LILFDWLRQ DJH GLHW DQGIXQFWLRQDO UHVHUYH RIWKH LPPXQHV\VWHP
'26(5(63216(5(/$7,216+,36 1R2EVHUYDEOH$GYHUVH(IIHFW/HYHO12$(/ %HFDXVH WKHUH LV DWKUHVKROG LWLVSRVVLEOHWRGHWHUPLQH WKH12$(/IURP VWDQGDUG LPPXQRWR[LFRORJ\ VWXGLHV 7R GHWHUPLQH WKH 12$(/ DQLPDOV DUH GRVHG RYHUDUDQJHWKDWLQFOXGHV WKH PD[LPXPWROHUDWHGGRVH 07' RQHKDOI WKH07'DQGORZHUGRVHV7KHSULPDU\EDVLVIRUULVNHYDOXDWLRQLVWKHGHWHUPL QDWLRQ RI WKH ORZHVW REVHUYDEOH DGYHUVH HIIHFW OHYHO /2$(/ WKDW FDXVHV D ³FULWLFDOHIIHFW´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±UHVSRQVHFXUYH,WFRQVLGHUVRQO\RQHSRLQW
Risk Characterization
273
RQWKHGRVHUHVSRQVHcXUYHQHJOHFWLQJWKHUHPDLQLQJSRLQWVRQWKHFXUYH0RUH RYHUWKHYDULDELOLW\DURXQGWKH12$(/DQGWKHVORSHRIWKHFXUYHLVQRWWDNHQ LQWRFRQVLGHUDWLRQ$VDFRQVHTXHQFHWKH12$(/DSSURDFKFDQQRWGHWHFWVPDOO FKDQJHV RYHUEDFNJURXQG3RRUO\GHVLJQHG VWXGLHV\LHOGKLJK12$(/OHYHOV
%HQFKPDUN'RVH%0' %HFDXVHRIWKHFULWLFLVPVGLUHFWHGWRZDUGWKH12$(/WKH%0'ZDVGHYHO RSHG DV DQ DOWHUQDWH DSSURDFK &UXPS 7KH %0' LV D PDWKHPDWLFDOO\ GHULYHG GRVHUHVSRQVHPRGHOWKDW\LHOGVDVWDWLVWLFDOORZHUFRQILGHQFHOHYHO RQ WKH GRVH SURGXFLQJ D SUHGHWHUPLQHG OHYHO RIFKDQJH LQ D³FULWLFDO´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³ORZGRVH H[WUDSRODWLRQ´ DWGRVHV WKDWFDQQRWEH PHDVXUHGH[SHULPHQWDOO\ 3UHGLFDWLRQ RI ORZGRVHH[WUDSRODWLRQZLOOEHVHULRXVO\LQHUURUZLWKRXWLQFRUSRUDWLQJPHFKDQLV WLFLQIRUPDWLRQRQWKHDGYHUVHHIIHFW 7KH ILUVW VWHS LQ WKH GHWHUPLQDWLRQ RI WKH %0' LV WKH VHOHFWLRQ RI WKH ³FULWLFDOHIIHFWV´WREHPRGHOHG)URPDUHYLHZRIWKHOLWHUDWXUHHIIHFWVPD\EH HYLGHQWLQKLJKTXDOLW\VWXGLHVXVLQJWKHVDPHURXWHDQGGXUDWLRQ,QVWXGLHVXVLQJ FKHPLFDOVZLWKXQNQRZQWR[LFLW\WKHWR[LFRORJLVWPD\VKRZWKDWVRPHHQGSRLQWV DUHXQVXLWDEOHIRUPRGHOLQJEHFDXVHRIWKHURXWHRIH[SRVXUHLQDSSURSULDWHUDQJH RIKHDOWKHIIHFWVRUWKHODFNRIDGRVH±UHVSRQVHHIIHFW$IWHUWKHGDWDDUHFXOOHG RQH RU PRUH UHOHYDQW SRLQWV PD\ UHPDLQ HDFK ZLWK D GLIIHUHQW GRVH±UHVSRQVH SDWWHUQ 7KHUHDUHVHYHUDORSWLRQVWRWKHPRGHOLQJRIGLIIHUHQWHQGSRLQWV2QHRSWLRQ LV WR PRGHO DOO UHOHYDQW UHVSRQVHV +RZHYHU GDWD PD\ EH GLIILFXOW WR LQWHUSUHW
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
IURP PXOWLSOH GRVH UHVSRQVH DQDO\VHV $OWHUQDWLYHO\ PRGHOLQJ RQO\ ³FULWLFDO HIIHFWV´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±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
'RVH5HVSRQVH 0RGHOV 3URSRVHG IRU (VWLPDWLQJ %HQFKPDUN 'RVHV RI 4XDQWDO 'DWD
0RGHO 4XDQWDO OLQHDUUHJUHVVLRQ 4/5 4XDQWDOTXDGUDWLFUHJUHVVLRQ 445 4XDQWDOSRO\QRPLDOUHJUHVVLRQ435 4XDQWDO:HLEXOO4: /RJQRUPDO/1
)RUPXOD 3G 3G 3G 3G 3G
F ± F ^ ± H[S>TG ± G @` F ± F ^ ± H[S>TG ± G @` F ± F ^ ± H[S>TG TNGN@` F ± F ^ ± H[S>T,GN@` F ± F 1D E ORJ G
3G LVWKHSUREDELOLW\RIDUHVSRQVHDWWKHGRVHG 5HSULQWHGIURPWKH5LVN$VVHVVPHQW)RUXP&UXPS HWDO 86 (QYLURQPHQWDO3URWHFWLRQ$JHQF\ S
5LVN &KDUDFWHUL]DWLRQ
7DEOH
'RVH 5HVSRQVH 0RGHOV 3URSRVHG IRU (VWLPDWLQJ %HQFKPDUN 'RVHV RI &RQWLQXRXV 'DWD
0RGHO
)RUPXOD
&RQWLQXRXV OLQHDUUHJUHVVLRQ&/5 &RQWLQXRXVTXDGUDWLFUHJUHVVLRQ &45 &RQWLQXRXVOLQHDUTXDGUDWLFUHJUHVVLRQ&/45 &RQWLQXRXVSRO\QRPLDOUHJUHVVLRQ&35 &RQWLQXRXV SRZHU
PG PG PG PG PG
F TG ± G F TG ± G F TG TG F TG TNGN F TG N
PG LV WKH PHDQ UHVSRQVHDWWKH GRVH G 5HSULQWHG IURP WKH 5LVN$VVHVVPHQWIRUXP &UXPS HWDO 86 (QYLURQPHQWDO3URWHFWLRQ$JHQF\S
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³DGGLWLRQDOULVN´DQG³H[WUDULVN´DUHDGGLWLRQDOPHDVXUH PHQWVRILQFUHDVHGUHVSRQVH:KHQ3G LVWKHSUREDELOLW\RIDUHVSRQVHDWGRVHG DQG 3 LV WKH SUREDELOLW\ RIWKHUHVSRQVH LQ WKH DEVHQFH RIH[SRVXUH G DGGLWLRQDOULVNPHDQVWKH DGGLWLRQDOSURSRUWLRQ RIWRWDO DQLPDOV WKDWUHVSRQG LQ WKHSUHVHQFH RIWKHGRVH $GGLWLRQDOULVNFDQEHGHULYHGDV $5 G 3G ± 3 ([WUD ULVN LV GHWHUPLQHG E\ GLYLGLQJ WKH DGGLWLRQDO ULVN E\ WKH SURSRUWLRQ RI DQLPDOVWKDWZLOOQRWUHVSRQGLQWKHDEVHQFHRIH[SRVXUH,QHVVHQFHH[WUDULVNLV WKHIUDFWLRQRIDQLPDOVUHVSRQGLQJZKHQH[SRVHGWRDGRVHG DPRQJDQLPDOVWKDW ZRXOGRWKHUZLVHQRWUHVSRQG 5LVNFDQEHGHWHUPLQHG DV (5 G >3G ± 3 @ ± 3 %RWKUHVSRQVHV ZLOOFRLQFLGHIRUUHVSRQVHVWKDWGRQRWRFFXU VSRQWDQHRXVO\
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
:KHQFRQWLQXRXVGDWDDUH DQDO\]HG PHDVXUHPHQWV DQDORJRXVWRWKH DGGL WLRQDODQGH[WUDULVNDUHGHWHUPLQHG7KHVHPHDVXUHPHQWVLQFOXGHWKHGLIIHUHQFH EHWZHHQWKHPHDQUHVSRQVHH[SHFWHGDIWHUH[SRVXUHWRGRVHG RIDFKHPLFDODQG WKH PHDQ UHVSRQVH ZLWKRXW WKH H[SRVXUH 0DWKHPDWLFDOO\ WKH UHVSRQVH FDQ EH H[SUHVVHGDV
ZKHUH PG LV WKH PHDQ YDOXH RIWKHFRQWLQXRXV UHVSRQVH IRUGRVH G 9HUWLFDO OLQHVLQWKHHTXDWLRQLQGLFDWHDEVROXWHYDOXHV$QRWKHUPHDVXUHLVWKHQRUPDOL]HG GLIIHUHQFH LQWKHPHDQUHVSRQVHV GLYLGHGE\WKHEDFNJURXQGPHDQUHVSRQVH
,QGHILQLQJWKH%0'DQXPEHURIGHFLVLRQVDUHPDGHDWWKHLQLWLDWLRQRIWKH DQDO\VHV ,QLWLDOO\WKHSHUFHQWFKDQJHLVGHWHUPLQHGEHWZHHQ DQG %H FDXVH D O±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
8QFHUWDLQW\)DFWRUV ,QWKHH[WUDSRODWLRQRIULVN WKH(3$DSSOLHVXQFHUWDLQW\IDFWRUV 8)V DQG PRGLI\LQJ IDFWRUV 0)V WR WKH 12$(/ IRU WKH PRVW VHQVLWLYH VSHFLHV ,W LV DQWLFLSDWHG WKDW WKH VDPH IDFWRUV ZLOO EH DSSOLHG WR WKH %0' 7KH /2$(/ LV PXOWLSOLHGE\IDFWRUVRIWRDFFRXQWIRU YDULDWLRQLQVHQVLWLYLWLHVZLWKLQWKH KXPDQSRSXODWLRQ H[WUDSRODWLRQRIGDWDIURPDQLPDOVWRKXPDQV GLIIHU HQFHVLQDFXWHRUVXEFKURQLFWRFKURQLFH[SRVXUH LQDGHTXDF\RIWKHGDWDEDVH DQG DFRQYHUVLRQIURP/2$(/WR12$(/
5LVN &KDUDFWHUL]DWLRQ
0)VDUHDOVRXVHGLQULVNDVVHVVPHQW7KHVHIDFWRUVDUHXVXDOO\JUHDWHUWKDQ ]HURDQGOHVVWKDQRUHTXDO WR 7KHPDJQLWXGHRIWKH0)LVGHSHQGHQWRQ D SURIHVVLRQDO DVVHVVPHQWRIVFLHQWLILFXQFHUWDLQWLHVWKDWDUHQRWFRQVLGHUHGLQWKH 8) DSSURDFK HJ QXPEHU RI DQLPDOV RU URXWH RIDGPLQLVWUDWLRQ 7KH XVXDO GHIDXOWYDOXHLV $IWHUDSSO\LQJWKH8)VDQG0)VWRWKH/2$(/LWLVSRVVLEOHWRFDOFXODWH WKHUHIHUHQFHGRVH5I' $VGHILQHGE\WKH(3$WKH5I'LV³DQHVWLPDWHZLWK XQFHUWDLQWLHV RYHUVHYHUDO RUGHUVRIPDJQLWXGH RIDGDLO\H[SRVXUHRIDKXPDQ SRSXODWLRQLQFOXGLQJVHQVLWLYHVXEJURXSV WKDWLVOLNHO\WREHZLWKRXWDQDSSUH FLDEOH ULVN RIGHOHWHULRXV HIIHFWV GXULQJ D OLIHWLPH´ $QRQ\PRXV D 7KH 5I' FDQ EH FDOFXODWHG E\ GLYLGLQJ WKH DGMXVWHG 12$(/ RU /2$(/ E\ WKH SURGXFWRI8)V ; 0)V 7KH 5I' ZKLFK LV H[SUHVVHG LQ PLOOLJUDPVSHUNLORJUDPERG\ ZHLJKWSHU GD\WDNHVLQWRDFFRXQWWKHRYHUDOOTXDOLW\RIWKHVWXGLHV+RZHYHUGLIIHUHQW5I'V DUH REWDLQHG IURP GLIIHUHQW URXWHV RI H[SRVXUH HJ RUDO YHUVXV LQKDODWLRQ VSHFLILFHQGSRLQWVDQGH[SRVXUHGXUDWLRQ
5,6.$66(660(17$1',00812/2*,&$/'$7$ 0RVWULVNDVVHVVPHQWSDUDGLJPV ZHUHGHYHORSHG WR DVVHVV KHDOWK ULVNV IRU FDQFHU/HVVDWWHQWLRQKDVEHHQJLYHQWRPRGHOLQJQRQFDQFHUUHODWHGHIIHFWV7KH ODFN RIDWWHQWLRQ UHIOHFWV D ODFN RIFRQVHQVXV UHJDUGLQJ WKH VKDSH RIWKH GRVH±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±E\ XVLQJWKH)LVKHUH[DFWWHVWLQVWDWLVWLFDODQDO\VHV&RQYHUVLRQRIFRQWLQXRXVGDWD WRDTXDQWDORUFDWHJRULFDOIRUPDWPD\LQFUHDVHWKHIDOVHSRVLWLYHUDWHWRDQG
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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±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
5LVN &KDUDFWHUL]DWLRQ
)LJXUH 7KH (XURSHDQ KLVWRSDWKRO RJ\EDVHG ULVN DVVHVVPHQW SDUDGLJP 5HSULQWHG IURP ,PPXQRWR[LFLW\ +D] DUG ,GHQWLILFDWLRQ DQG 5LVN &KDUDFWHUL ]DWLRQ $QRQ\PRXV (&(72& %UXVVHOV
5,6.0$1$*(0(17 5LVNPDQDJHPHQWGHFLVLRQVDUHXVXDOO\PDGHRQD³FDVHE\FDVH´EDVLV7KH GLIIHUHQWULVNIDFWRUVUHJXODWRU\RSWLRQVDQGJRYHUQPHQWDOPDQGDWHVDUHHYDOX DWHGWRDUULYHDWDQ³DGHTXDWHVDIHW\PDUJLQ´7KLVPDUJLQLVIRUPDOL]HGLQWRWKH UHJXODWRU\GRVH5J' $QRQ\PRXV D
$66(660(172)+80$1+($/7+5,6. 1RQRFFXSDWLRQDO$SSURDFKHV 7KHUHDUH DQXPEHURIGLIIHUHQWDSSURDFKHV WKDWFDQEH XVHG WR DVVHVV WKH KXPDQ KHDOWK ULVN 7DEOH $ FODVVLFDO DSSURDFK LV WKH (3$ 12$(/VDIHW\ IDFWRUULVNDVVHVVPHQWSDUDGLJPGHVFULEHG DERYH 7KH5HQZLFNDQGWKH /HZLV /\QFK1LNLIRURYDSSURDFKHVDUHDOVRFRPPRQO\XVHGLQKXPDQULVNDVVHVVPHQW 5HQZLFN$SSURDFK 7KH WZRHOHPHQWV LQWKH H[WUDSRODWLRQ RIGDWDIURP DQLPDOWRKXPDQFDQEHVXEGLYLGHGLQWR[LFRNLQHWLFVHJGHOLYHU\WRWKHVLWHRI
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
7DEOH
&RPSDULVRQRIWKH'HIDXOW)DFWRUV8VHGLQ'LIIHUHQW5LVN $VVHVVPHQW3DUDGLJPV //1 5DQJH
,QWHUVSHFLHV .LQHWLF '\QDPLF ,QWUDVSHFLHV .LQHWLF '\QDPLF 5HOHYDQFH 'XUDWLRQ /2$(/12$(/ 'DWDEDVHDGHTXDF\ 8QFHUWDLQW\
5HQZLFN 'HIDXOW
5DQJH
(3$
'HIDXOW
5DQJH
'HIDXOW
6 ! 5
!± !±
+
!± !±
4 4
8
±
!± ±
0RGLILHGIURP$VVHVVPHQW)DFWRUVLQ+XPDQ+HDOWK5LVN$VVHVVPHQW $QRQ\PRXV E\7HFKQLFDO5HSRUW (&(72&%UXVVHOV
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±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
5LVN &KDUDFWHUL]DWLRQ
)LJXUH 0DWKHPDWLFDO GHULYDWLRQ RI WKH KXPDQ 1R $GYHUVH (IIHFW /HYHO 5HSULQWHG IURP $VVHVVPHQW )DF WRUV LQ +XPDQ +HDOWK 5LVN $VVHVVPHQW $QRQ\PRXV E 7HFKQLFDO 5HSRUW (&(72& %UXVVHOV
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¶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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
WKH UHJXODWRUV ZLOO H[WUDSRODWH DQG PRGHO EHORZ WKH PDWKHPDWLFDOO\ GHULYHG %0' 7KH12$(/%0'DSSURDFKHVKDYHQRWEHHQHPEUDFHGE\RWKHUFRXQWULHV :KHQ PRGHOLQJ LV DFFHSWDEOH WKH (XURSHDQ PHWKRG RIFKRLFH LV WKH5HQZLFN PRGLILFDWLRQRIWKH12$(/DSSURDFK$VDPDWWHURISROLF\RWKHUFRXQWULHVDUH UHOXFWDQWWRPRGHOELRORJLFDOGDWD
5HIHUHQFHV
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
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µ7+OLNH¶ FHOOVLQDOOHUJ\DQGDVWKPD SKDUPDFRORJLFDOSHUVSHFWLYHV 7UHQGV LQ3KDUPDFRORJLFDO6FLHQFHV $QGHUVRQ - $ $OOHUJLFUHDFWLRQVWRIRRG &ULWLFDO5HYLHZV LQ)RRG6FLHQFHDQG 1XWULWLRQ 66 $QGHUVRQ3&DOLTLXUL02¶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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
$QRQ\PRXV a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
5HIHUHQFHV
$XJHU , 7RXVVLURW ( DQG 5RXGLHU - 0ROHFXODU PHFKDQLVPV LQYROYHG LQ WKH DVVRFLDWLRQRI+/$'5DQGUKHXPDWRLGDUWKULWLV,PPXQRORJLF5HVHDUFK $XVWHQ.) ,QERUQDQGDFTXLUHGDEQRUPDOLWLHVRIWKHFRPSOHPHQWV\VWHPRIPDQ -RKQV +RSNLQV 0HGLFDO -RXUQDO %DGRODWR 5 DQG 2SSHQKHLP - - 5ROH RIF\WRNLQHV DFXWHSKDVH SURWHLQV DQG FKHPRNLQHVLQWKHSURJUHVVLRQRIUKHXPDWRLGDUWKULWLV6HPLQDUVLQ$UWKULWLV 5KHX PDWLVP %DJJLROLQL 0 DQG :\PDQQ 0 3 7XUQLQJ RQ WKH UHVSLUDWRU\ EXUVW 7UHQGV LQ %LRFKHPLFDO 6FLHQFHV %DJJLROLQL 0 /RHWVFKHU 3 DQG 0RVHU % ,QWHUOHXNLQ DQG WKH FKHPRNLQH IDPLO\ ,QWHUQDWLRQDO-RXUQDORI,PPXQRSKDUPDFRORJ\ %DJJLROLQL0'HZDOG%DQG0RVHU% +XPDQFKHPRNLQHVDQXSGDWH$QQXDO 5HYLHZ RI,PPXQRORJ\ %DNHU&&
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
FDUWLODJHVSHFLILFPHPEUDQHDQWLJHQ&+ FRPSDULVRQZLWKF\WRNHUDWLQVDQGKHDW VKRFN SURWHLQV ,PPXQRORJ\ %DQRV ' 0 /RSH] 6 $ULDV & ) DQG (VTXLYHO ) 5 ,GHQWLILFDWLRQ RI D 7KHOSHU FHOO HSLWRSH RQ WKH URWDYLUXV 93 SURWHLQ -RXUQDO RI 9LURORJ\ %DUEDUD-$9DQRVWDGH;DQG/RSH]$ 7XPRXUQHFURVLVIDFWRUDOSKD71) DOSKD WKHJRRGWKHEDGDQGSRWHQWLDOO\YHU\HIIHFWLYH,PPXQRORJ\ &HOO%LRORJ\ %DUFOD\ $ 1 %UDG\ 5 / 'DYLV6 - DQG /DQJH* &' DQG WKH LPPX QRJOREXOLQ VXSHUIDPLO\ 3KLORVRSKLFDO7UDQVDFWLRQVRIWKH5R\DO6RFLHW\RI/RQGRQ 6HULHV % %LRORJLFDO 6FLHQFHV %DULQDJD 0 *HWWLQJ VRPH ³EDFNERQH´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
5HIHUHQFHV
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
%RQQHIR\-<*DXFKDW-)/LIH3*UDEHU30D]]HL*DQG$XEU\-3 3DLUV RI VXUIDFH PROHFXOHV LQYROYHG LQ KXPDQ ,J( UHJXODWLRQ &'±&' DQG &'±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
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
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¶V FRPSOHWH DGMXYDQW &RQWDFW'HUPDWLWLV %XHKOHU(9DQG5LW]+/ 0HWKRGVDQG$SSURDFKHVIRU$VVHVVPHQWRI&RQWDFW +\SHUVHQVLWLYLW\ 5DYHQ 3UHVV 1HZ
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
%XWFKHU % -RQHV 5 1 DQG 2¶1HLO & ( /RQJLWXGLQDO VWXGLHV RI ZRUNHUV HPSOR\HGLQWKH PDQXIDFWXUHRIWROXHQHGLLVRF\DQDWH $PHULFDQ5HYLHZRI5HVSLUD WRU\'LVHDVH %XWFKHU% 2¶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
5HIHUHQFHV
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±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²-DSDQHVH -RXUQDO RI &OLQLFDO 3DWKRORJ\ &KULVWHQ6+DJHQ706KLJHQDJD0 .DQG$PHV%1 &KURQLF,QIHFWLRQ DQG,QIODPPDWLRQ/HDGWR0XWDWLRQDQG&DQFHU 2[IRUG8QLYHUVLW\3UHVV/RQGRQ SS &KULVWHQVHQ1''LOOQHU-(NOXQG&&DUWHU--:LSI*&5HHG&$&ODGHO 1 0 DQG *DOORZD\ '$ 6XUIDFH FRQIRUPDWLRQDO DQG OLQHDUHSLWRSHV RQ +39 DQG+39 / YLUXVOLNH SDUWLFOHV DVGHILQHGE\ PRQRFORQDODQWLERGLHV 9LURORJ\ &LFFRQH(*URVVL&(DQG9HODUGL$ 2SSRVLQJIXQFWLRQVRIDFWLYDWRU\7FHOO
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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¶+DUD- %RQG0 :&DUW\- =ORWQLN$ DQG3DXO: ( %FHOOVWLPXODWRU\IDFWRU HQKDQFHVWKH,J(UHVSRQVHRIOLSRSRO\VDFFKDULGHDFWLYDWHG % FHOOV -RXUQDO RI,PPXQRORJ\ &RKHQ , 5 DQG 0RU ) 2Q WKH UHJXODWLRQ RI($( ,QWHUQDWLRQDO 5HYLHZV RI ,PPXQRORJ\ &RKHQ- ([SORLWLQJWKH +,9±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
5HIHUHQFHV
&RRPEV55DQG0F/DXJKODQ3 $OOHUJHQLFLW\RIIRRGSURWHLQVDQGLWVSRVVLEOH PRGLILFDWLRQ $QQDOV RI $OOHUJ\ &RRQURG- ' DQG
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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¶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¶$OHVVLR ' - $FDVHFRQWUROVWXG\RIJURXS% FR[VDFNLHYLUXVLPPXQRJOREXOLQ 0DQWLERG\ SUHYDOHQFHDQG+/$'5DQWLJHQVLQQHZO\GLDJQRVHGFDVHVRILQVXOLQ GHSHQGHQW GLDEHWHV PHOOLWXV $PHULFDQ -RXUQDO RI(SLGHPLRORJ\ 'DOJOHLVK $ * 7KH LPPXQH UHVSRQVH WR +,9 SRWHQWLDO IRU LPPXQRWKHUDS\ ,PPXQRORJ\ 7RGD\ 'DPOH1.DQG%UDGOH\(& ,QWHUOHXNLQDFWLYDWHGNLOOHUO\PSKRF\WHVLQPDQ
5HIHUHQFHV
'HDUPDQ-DQG.LPEHU, 'LYHUJHQWLPPXQHUHVSRQVHVWRUHVSLUDWRU\DQGFRQWDFW FKHPLFDODOOHUJHQVDQWLERGLHVHOLFLWHGE\SKWKDOLFDQK\GULGHDQGR[D]RORQH&OLQLFDO DQG([SHULPHQWDO$OOHUJ\ 'HDUPDQ5 -%DVNHWWHU'$ DQG.LPEHU, 'LIIHUHQWLDOF\WRNLQHSURGXFWLRQ IROORZLQJFKURQLFH[SRVXUHRIPLFHWRFKHPLFDODQGUHVSLUDWRU\DOOHUJHQV,PPXQRO RJ\ GH%RHU%$.UXL]H<&5RWPDQV3-DQG
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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±/LVV 1HZ
5HIHUHQFHV
'UDSLHU-&DQG+LEEV-%-U 'LIIHUHQWLDWLRQRIPXULQHPDFURSKDJHVWRH[SUHVV QRQVSHFLILFF\WRWR[LFLW\IRUWXPRUFHOOVUHVXOWVLQ/DUJLQLQHGHSHQGHQWLQKLELWLRQRI PLWRFKRQGULDOLURQVXOIXUHQ]\PHVLQWKHPDFURSKDJHHIIHFWRUFHOO-RXUQDORI,PPX QRORJ\ 'UHHV& $VHSWLFPHQLQJLWLVDQG0XURPRQDE&' WKHUDS\'&,3 'UH\IXV'+.HOOHKHU&$-RQHV-)DQG*HOIDQG(: (SVWHLQ%DUUYLUXV LQIHFWLRQ RI 7 FHOOV LPSOLFDWLRQV IRU DOWHUHG 7O\PSKRF\WH DFWLYDWLRQ UHSHUWRLUH GHYHORSPHQW DQG DXWRLPPXQLW\ ,PPXQRORJLFDO5HYLHZV '¶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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
+RHEHNH-DQG/HYLQ0- 6WUXFWXUDODQGIXQFWLRQDODQDO\VLVRIWKH%FHOO HSLWRSHVUHFRJQL]HGE\DQWLUHFHSWRUDXWRDQWLERGLHVLQSDWLHQWVZLWK&KDJDV¶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
5HIHUHQFHV
)DLUFKLOG 3 - DQG :UDLWK ' & 3HSWLGH±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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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³VXSHUDQWLJHQV´,PPX QRORJLF 5HVHDUFK )OHLVFKHU% E7KHKXPDQ7FHOOUHVSRQVHWRPLWRJHQLFPLFURELDOH[RWR[LQV&XUUHQW 7RSLFV LQ0LFURELRORJ\ ,PPXQRORJ\ )OHLVFKHU%F7O\PSKRF\WHVWLPXODWLQJPLFURELDOWR[LQVDV³VXSHUDQWLJHQV´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
5HIHUHQFHV
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
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
JHUKDQVFHOOVGHUPDOGHQGULWLFFHOOVNHUDWLQRF\WHVDQGEDVHPHQWPHPEUDQH]RQHLQ KXPDQ VNLQ -RXUQDO RIWKH $PHULFDQ$FDGHP\ RI'HUPDWRORJ\ *DG6& 7KHPRXVHHDUVZHOOLQJWHVW0(67 LQWKHV7R[LFRORJ\ *DG 6 & 7KHPRXVHHDUVZHOOLQJWHVW ,Q0HWKRGV LQ,PPXQRWR[LFRORJ\ * 5 %XUOHVRQ-+'HDQDQG$(0XQVRQHGV :LOH\±/LVV1HZ
5HIHUHQFHV
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¶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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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¶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
5HIHUHQFHV
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¶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
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
&'UHFHSWRUIDPLOLHVLQDXWRLPPXQLW\DQGLPPXQHHYDVLRQ &OLQLFDO,PPXQRORJ\ ,PPXQRSDWKRORJ\ +DUULV'39RUGHUPHLHU+0$U\D$%RJGDQ.0RUHQR&DQG,YDQ\L- ,PPXQRJHQLFLW\RISHSWLGHVIRU%FHOOVLVQRWLPSDLUHGE\RYHUODSSLQJ7FHOOHSLWRSH WRSRORJ\ ,PPXQRORJ\ +DUULVRQ6&:DQJ-
5HIHUHQFHV
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±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¶ RSKWKDOPRSDWK\ 7K\URLG +LEEV-%-U9DYULQ=DQG7DLQWRU55 /$UJLQLQHLVUHTXLUHGIRUH[SUHVVLRQ RIWKHDFWLYDWHGPDFURSKDJHHIIHFWRUPHFKDQLVPFDXVLQJVHOHFWLYHPHWDEROLFLQKLEL WLRQ LQ WDUJHW FHOOV -RXUQDORI,PPXQRORJ\ +LEL01DNDMLPD.DQG+LUDQR7 ,/F\WRNLQHIDPLO\DQGVLJQDOWUDQVGXF WLRQ D PRGHO RIWKH F\WRNLQH V\VWHP -RXUQDORI0ROHFXODU0HGLFLQH +LJJLQV & ) $%& WUDQVSRUWHUV IURP PLFURRUJDQLVPV WRPDQ$QQXDO5HYLHZRI &HOO %LRORJ\
,PPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
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
5HIHUHQFHV
+RSSH + - DQG5HLG .% &ROOHFWLQVVROXEOHSURWHLQV FRQWDLQLQJFROODJHQRXV UHJLRQV DQG OHFWLQ GRPDLQV DQG WKHLU UROHV LQ LQQDWH LPPXQLW\ 3URWHLQ 6FLHQFH +RUDN,/RKOHU-0D$DQG6PLWK.$ ,QWHUOHXNLQGHILFLHQWPLFHDQHZ PRGHOWRVWXG\DXWRLPPXQLW\DQGVHOIWROHUDQFH ,PPXQRORJLFDO5HYLHZV +RUXN5 7KHLQWHUOHXNLQUHFHSWRUIDPLO\IURPFKHPRNLQHVWRPDODULD,PPXQRO RJ\7RGD\ +RUXN5DQG3HLSHU6& &KHPRNLQHVPROHFXODUGRXEOHDJHQWV&XUUHQW%LRORJ\ +RUZLW]0$ 7KHUROHVRIWKH)FDQG&UHFHSWRUVLQWKHSKDJRF\WRVLVDQGNLOOLQJ RIEDFWHULDE\KXPDQSKDJRF\WHV-RXUQDORIWKH5HWLFXORHQGRWKHOLDO6RFLHW\V V +RVKLQR $ 7DNHQDND+ 0L]XNRVKL 2 ,PDQLVKL - .LVKLGD7 DQG7RYH\0 * (IIHFWRIDQWLLQWHUIHURQVHUXPRQLQIOXHQ]DYLUXVLQIHFWLRQLQPLFH$QWLYLUDO 5HVHDUFK +RVW\QHN--/DXHUPD$,0DJHH36%ORRP(DQG0DLEDFK+, $ORFDO O\PSKQRGH DVVD\ YDOLGDWLRQ VWXG\ RI D VWUXFWXUHDFWLYLW\UHODWLRQVKLS PRGHO IRU FRQWDFW DOOHUJHQV $UFKLYHV RI'HUPDWRORJLFDO5HVHDUFK +RX-6DLG&)UDQFKL''RFNVWDGHU3DQG&KDWWHUMHH1. $QWLERGLHVWR JOXWDPLF DFLG GHFDUER[\ODVH DQG 3& SHSWLGHV LQ VHUD IURP FR[VDFNLH YLUXV % LQIHFWHG PLFH DQG ,''0 SDWLHQWV 'LDEHWHV +RXQVHOO( ) &KDUDFWHUL]DWLRQRIWKHJO\FRV\ODWLRQVWDWXVRISURWHLQV0ROHFXODU %LRWHFKQRORJ\ +RXVH 5 9 3DOODUG\ 0 - DQG 'HDQ - + 6XSSUHVVLRQ RIPXULQH F\WRWR[LF 7O\PSKRF\WHLQGXFWLRQIROORZLQJH[SRVXUHWRGLPHWK\OEHQ]>D@DQWKUDFHQH G\V IXQFWLRQ RI DQWLJHQ UHFRJQLWLRQ ,QWHUQDWLRQDO -RXUQDO RI ,PPXQRSKDUPDFRORJ\ +RXVH59/DXU/ '0XUUD\0-7KRPDV37(KUOLFK-3%XUOHVRQ*5 DQG'HDQ-+([DPLQDWLRQRILPPXQHSDUDPHWHUVDQGKRVWUHVLVWDQFHPHFKD QLVPVLQ%&) PLFHIROORZLQJDGXOWH[SRVXUHWRWHWUDFKORURGLEHQ]RSGL R[LQ -RXUQDO RI7R[LFRORJ\ DQG(QYLURQPHQWDO+HDOWK +RZDUG-&6XSSO\DQGWUDQVSRUWRISHSWLGHVSUHVHQWHGE\FODVV,0+&PROHFXOHV &XUUHQW 2SLQLRQ LQ ,PPXQRORJ\ +RZDUG02¶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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
+XGVRQ / DQG +D\ ) & 3UDFWLFDO,PPXQRORJ\ UG HG %ODFNZHOO 6FLHQWLILF 2[IRUG SS +XPEULD$'LD]*RQ]DOH])&DPSDQHUR05$UUR\R$*/DIIRQ$*RQ]DOH] $PDUR5DQG6DQFKH]0DGULG) ([SUHVVLRQRI/VHOHFWLQ&'DQG&' LQ V\QRYLDOQHXWURSKLOV IURPSDWLHQWV ZLWKLQIODPPDWRU\MRLQWGLVHDVH HYLGHQFHIRU VROXEOH IRUPV RI /6HOHFWLQ LQ WKH V\QRYLDO IOXLG $UWKULWLV DQG 5KHXPDWRORJ\ +XPSKUH\-+DQG)UDQN00 7KHORFDOL]DWLRQRIQRQPLFURELDODQWLJHQVLQWKH GUDLQLQJO\PSKQRGHVRIWROHUDQW QRUPDODQGSULPHGUDEELWV ,PPXQRORJ\ +XQWHU&$DQG5HPLQJWRQ-6 7KHUROHRI,/LQWR[RSODVPRVLV5HVHDUFKLQ ,PPXQRORJ\ +XUWHQEDFK 8 *OHLFKPDQQ + 1DJDWD 1 5DGDV]NLHZLF] 7 DQG *OHLFKPDQQ ( ,PPXQLW\WR'SHQLFLOODPLQHJHQHWLFFHOOXODUDQGFKHPLFDOUHTXLUHPHQWVIRU LQGXFWLRQRISRSOLWHDOO\PSKQRGHHQODUJHPHQWLQWKHPRXVH-RXUQDORI,PPXQRORJ\ +XWFKFURIW-(DQG%LHUH%( 6LJQDOLQJWKURXJK&'&7/$IDPLO\UHFHS WRUV -RXUQDO RI,PPXQRORJ\ ,$5& %HU\OOLXP &HVLXP0HUFXU\DQG([SRVXUHVLQWKH*ODVV,QGXVWU\ ,QWHUQD WLRQDO$JHQF\ IRU5HVHDUFKRQ &DQFHU /\RQ SS ,NDJDZD 60DWVXVKLWD 6&KHQ< = ,VKLNDZD7 DQG1LVKLPXUD< 6LQJOH DPLQRDFLGVXEVWLWXWLRQVRQD-DSDQHVHFHGDUSROOHQDOOHUJHQ&U\M GHULYHGSHSWLGH LQGXFHGDOWHUDWLRQVLQKXPDQ7FHOOUHVSRQVHVDQG7FHOOUHFHSWRUDQWDJRQLVP-RXU QDO RI$OOHUJ\ &OLQLFDO ,PPXQRORJ\ ,NDUDVKL < 7VXFKL\D 7 DQG 1DNDPXUD $ 'HWHFWLRQ RIFRQWDFW VHQVLWLYLW\ RI PHWDO VDOWVXVLQJWKHPXULQHORFDO O\PSKQRGH DVVD\ 7R[LFRORJ\/HWWHUV ,NDUDVKL<7VXFKL\D7DQG1DNDPXUD$ $VHQVLWLYHPRXVHO\PSKQRGHDVVD\ ZLWKWZRDSSOLFDWLRQSKDVHVIRUGHWHFWLRQRIFRQWDFWDOOHUJHQV$UFKLYHVRI7R[LFRORJ\ ,ORQHQ - 0XVWRQHQ $ $NHUEORP + . DQG .RXYDODLQHQ . ,PPXQRORJLFDO IHDWXUHVLQ WKHFRXUVHRIW\SH GLDEHWHV$QQDOVRI&OLQLFDO5HVHDUFK ,QGLN=.3DUN-*+XQWHU6DQG6FKUHLEHU$' 7KHPROHFXODUGLVVHFWLRQ RI)F JDPPD UHFHSWRU PHGLDWHG SKDJRF\WRVLV %ORRG ,QRXH - 7KH 75$) IDPLO\ SURWHLQPHGLDWHG % FHOO SUROLIHUDWLRQ VLJQDO DQG WKH PHFKDQLVPRI/03LQGXFHG%FHOOSUROLIHUDWLRQ1LSSRQ5LQVKR -DSDQHVH-RXUQDO RI&OLQLFDO 0HGLFLQH ,URQV5' +LVWRSDWKRORJ\RIWKH,PPXQH6\VWHP6WUXFWXUHDQG)XQFWLRQ 5DYHQ 3UHVV 1HZ
5HIHUHQFHV
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±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
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
-XQH&+%OXHVWRQH-$1DGOHU/0DQG7KRPSVRQ&%7KH%DQG&' UHFHSWRU IDPLOLHV ,PPXQRORJ\ 7RGD\ -XWLOD0$5RWW/%HUJ(/DQG%XWFKHU(& )XQFWLRQDQGUHJXODWLRQRIWKH QHXWURSKLO0(/DQWLJHQLQYLYRFRPSDULVRQZLWK/)$ DQG0$& -RXUQDORI ,PPXQRORJ\ .DEHOLW] ' )XQFWLRQ DQG VSHFLILFLW\ RIKXPDQ SRVLWLYH 7FHOOV &ULWLFDO 5H YLHZVLQ,PPXQRORJ\ .DHVHU+( 'UXJLQGXFHGP\DVWKHQLFV\QGURPHV$FWD1HXURORJLFD6FDQGLQDYLFD 6XSSOHPHQWXP .DJDQ%/*DQ]7DQG/HKUHU5, 'HIHQVLQV DIDPLO\RIDQWLPLFURELDODQG F\WRWR[LF SHSWLGHV 7R[LFRORJ\ .DJH\DPD7
5HIHUHQFHV
QRWR[LFRORJ\ 9ROXPH * 5 %XUOHVRQ - + 'HDQ DQG $ ( 0XQVRQ HGV :LOH\±/LVV 1HZ
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
.LVKLPRWR 7 ,QWHUOHXNLQ DQGLWV UHFHSWRULQ DXWRLPPXQLW\ -RXUQDORI$XWRLP PXQLW\ .LVKRUH 8 6RQWKHLPHU5' 6DVWU\.1=DSSL( *+XJKHV*5.KDPDVKWD 0$5HLG.%DQG(JJOHWRQ3 7KHV\VWHPLFOXSXVHU\WKHPDWRVXV6/( GLVHDVHDXWRDQWLJHQFDOUHWLFXOLQFDQLQKLELW&TDVVRFLDWLRQZLWKLPPXQHFRPSOH[HV &OLQLFDO ([SHULPHQWDO,PPXQRORJ\ .LWD++LURLVKL. 0RUL\DPD72NDPRWR+ .DQHNR72KQLVKL6
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
.RVFR9LOERLV0+=HQWJUDI+*HUGHV-DQG%RQQHI\-< 7R³%´RUQRWWR ³%´ DJHUPLQDOFHQWHU ,PPXQRORJ\ 7RGD\ .UDGLQ5/;LD:3LNH0%\HUV+5DQG3LQWR& ,QWHUOHXNLQSURPRWHV WKHPRWLOLW\RIGHQGULWLFFHOOVDQGWKHLUDFFXPXODWLRQLQOXQJDQGVNLQ 3DWKRELRORJ\ .UDNDXHU7 +XPDQLQWHUOHXNLQ &ULWLFDO5HYLHZVLQ,PPXQRORJ\ .URHPHU*DQG:LFN* 7KHUROHRILQWHUOHXNLQLQDXWRLPPXQLW\,PPXQRORJ\ 7RGD\ .URHVH)*07LPHQV:DQG1LHXZHQKXLV3 *HUPLQDO&HQWHU5HDFWLRQDQG %/\PSKRF\WHV 0RUSKRORJ\DQG)XQFWLRQ 6SULQJHU9HUODJ %HUOLQ SS .URQFNH5/RSSQRZ+)ODG+'DQG*HUGHV- +XPDQIROOLFXODUGHQGULWLF FHOOVDQGYDVFXODUFHOOVSURGXFHLQWHUOHXNLQDSRWHQWLDOUROHIRULQWHUOHXNLQLQWKH JHUPLQDO FHQWHU UHDFWLRQ (XURSHDQ-RXUQDO RI,PPXQRORJ\ .URSVKRIHU++DPPHUOLQJ*-DQG9RJW$% +RZ'0HGLWVWKH0+&FODVV ,,SHSWLGH UHSHUWRLUH VXUYLYDORIWKHILWWHVW ,PPXQRORJ\7RGD\ .U\VWHN 6 5 'LDV - $ 5HLFKHUW / ( DQG $QGHUVRQ 7 7 3UHGLFWLRQ RI DQWLJHQLF VLWHV LQ IROOLFOH VWLPXODWLQJ KRUPRQHV GLIIHUHQW SURILOHV HQKDQFH DQWL JHQLFLW\ (QGRFULQRORJ\ .U\VW\QLDN.%URXODQG-33DWULDUFD&9HUGLHU)5HYLOODUG-3DQG'HVFRWHV- $FWLYDWLRQ RI&' DQG &' O\PSKRF\WH VXEVHWV E\ VWUHSWR]RWRFLQ LQ WKH PXULQH SRSOLWHDO O\PSK QRGH WHVW -RXUQDO RI$XWRLPPXQLW\ .XERWD $ 1DJDIXML . +DUDGD 0 2WVXND 7 +DUDGD 1 (WR 7 7DNDPDWVX < )XNXGD 7 6KLPRGD . ,QDED 6 2NDPXUD 6 DQG 1LKR < ,PPX QRSKHQRW\SLQJ RI SHULSKHUDO EORRG PRQRQXFOHDU FHOOV FROOHFWHG E\ F\WRWR[LF DQG F\WRWR[LF*&6) PRELOL]DWLRQ &OLQLFDODQG/DERUDWRU\ +DHPDWRORJ\ .XE\- ,PPXQRORJ\ )UHHPDQ1HZ
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
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
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
/HZ 3 ' 6RXWKZLFN )6 6WRVVHO )6 $ YDULDQW RIFKURQLF JUDQXORPDWRXV GLVHDVH GHILFLHQWR[LGDWLYHPHWDEROLVP GXHWR ORZ DIILQLW\ 1$'3+ R[LGDVH 1HZ (QJODQG -RXUQDO RI0HGLFLQH /HZLV - * 6WDWHRIPDFURSKDJH DFWLYDWLRQ WXPRUFHOO F\WRO\VLV ,Q 0HWKRGV LQ ,PPXQRWR[LFRORJ\ 9ROXPH*5%XUOHVRQ-+'HDQDQG$(0XQVRQHGV :LOH\±/LVV 1HZ
5HIHUHQFHV
/LVDN53/HYLQVRQ$,DQG=ZHLPDQ% $XWRLPPXQHDVSHFWVRIP\DVWKHQLD JUDYLV &RQFHSWVLQ ,PPXQRSDWKRORJ\ /LWH+6DQG%UDOH\0XOOHQ+ ,QGXFWLRQRI,J*PHPRU\UHVSRQVHVZLWKSRO\ YLQ\OS\UUROLGLQH393 LVDQWLJHQGRVHGHSHQGHQW -RXUQDORI,PPXQRORJ\ /LX&DQG=KDQJ< D7KHHQKDQFLQJHIIHFWRIFDOFLXPLRQRSKRUH$RQWKH DFFHVVRU\ IXQFWLRQ RIPRXVH GHQGULWLF FHOOV &KXQJ.XR L+VXHK .¶R +VXHK <XDQ +VXHK 3DR$FWD$FDGHPLDH0HGLFLQDH 6LQLFDH /LX&DQG=KDQJ< E3KRUEROP\ULVWDWHDFHWDWHDQGFDOFLXPLRQRSKRUH$ PRGXODWH WKH DFFHVVRU\ FHOO IXQFWLRQ RI PRXVH GHQGULWLF FHOOV &KLQHVH 0HGLFDO 6FLHQFHV -RXUQDO /LX & DQG =KDQJ < (IIHFW RIWKH WXPRU SURPRWHU SKRUERO P\ULVWDWH DFHWDWH 30$ RQFHOOPHGLDWHGLPPXQLW\,930$LQGXFHGPRGXODWLRQRIPRXVHGHQGULWLF FHOO IXQFWLRQ &KXQJ.XR L +VXHK .¶R +VXHK <XDQ +VXHK 3DR $FWD $FDGHPLDH 0HGLFLQDH 6LQLFDH /LX && :DOVK & 0 DQG
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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¶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
5HIHUHQFHV
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
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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±+LOO 1HZ
5HIHUHQFHV
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
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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lGLDWULH 0LOOHU - ) ,QIOXHQFH DQG IDWH RI 7 O\PSKRF\WHV LQ DXWRLPPXQLW\ -RXUQDO RI $XWRLPPXQLW\ 0LOOHU-)$OOLVRQ-DQG0RUDKDQ*7ROHUDQFHDQGGLDEHWHVLQWUDQVJHQLFPLFH RYHUH[SUHVVLQJFODVV,KLVWRFRPSDWLELOLW\PROHFXOHVLQSDQFUHDWLFEHWDFHOOV-RXUQDO RI $XWRLPPXQLW\ 0LOOHU6'9DQGHUOXJW&//HQVFKRZ'-3RSH-*.DUDQGLNDU1-'DO&DQWR 0 & DQG %OXHVWRQH - $ %ORFNDGH RI &'%LQWHUDFWLRQ SUHYHQWV HSLWRSH VSUHDGLQJ DQG FOLQLFDO UHODSVHV RIPXULQH($( ,PPXQLW\ 0LOOV&' 0ROHFXODUEDVLVRI³VXSSUHVVRU´PDFURSKDJHV$UJLQLQHPHWDEROLVPYLD WKH QLWULF R[LGH V\QWKHWDVH SDWKZD\ -RXUQDORI,PPXQRORJ\ 0LQFKLQ6$/HLWHQEHUJ'6WXQ]//DQG)HOGEXVK7/ 3RO\FORQDODFWLYD
5HIHUHQFHV
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¶ ,J*DQG+DVKLPRWR¶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¶*DUUD$GH:DDO0DOHI\W59LHLUD3 DQG0RVPDQQ7 5 ,QWHUOHXNLQ $QQXDO 5HYLHZRI,PPXQRORJ\ 0RUDKDQ 36 .O\NNHQ 3 & 6PLWK6 + +DUULV /6 DQG 0XQVRQ$ ( (IIHFWV RI FDQQDELQRLGV RQ KRVW UHVLVWDQFH WR /LVWHULD PRQRF\WRJHQHV DQG KHUSHV VLPSOH[ YLUXV ,QIHFWLRQ DQG,PPXQLW\ 0RUHDX -) /H 6DYUH 3 DQG GH /XFD + *HQHUDO WR[LFLW\ RI ZDWHUVROXEOH LRGLQDWHG FRQWUDVW PHGLD 3DWKRJHQLF FRQFHSWV ,QYHVWLJDWLYH 5DGLRORJ\ 6XSSOH PHQW 6
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
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
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
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¶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¶*DUUD $ D ,QWHUOHXNLQVDQGWKHLPPXQHV\VWHP /DQFHW 2¶*DUUD $ E ,QWHUOHXNLQVDQGWKHLPPXQH V\VWHP /DQFHW 2¶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
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
3DVSDUDNLV0$OH[RSRXORX/'RXQL(DQG.ROOLDV* 7XPRXUQHFURVLVIDFWRUV LQLPPXQHUHJXODWLRQHYHU\WKLQJWKDW¶VLQWHUHVWLQJLV QHZ&\WRNLQHDQG*URZWK )DFWRU 5HYLHZV 3DWWHUVRQ6 +HOEHUW 0 (QJOLVK 1 5 3LQFKLQJ $ - DQG .QLJKW6 & 7KH HIIHFWRI$=7RQGHQGULWLFFHOOQXPEHUDQGSURYLUXV ORDGLQWKHSHULSKHUDOEORRGRI $,'6 SDWLHQWV DSUHOLPLQDU\VWXG\ 5HVHDUFKLQ 9LURORJ\ 3DXO1/DQG5XGGOH1+ /\PSKRWR[LQ$QQXDO5HYLHZRI,PPXQRORJ\ 3DZORZVNL7-DQG6WDHU]8( 7K\PLFHGXFDWLRQ²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
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
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¶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
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
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¶VSDWFKHVLQIHWDODQGSRVW QDWDO VKHHS (XURSHDQ -RXUQDO RI,PPXQRORJ\ 5H\QROGV - ' .HQQHG\ / 3HSSDUG - DQG3DEVW 5 ,OHDO3H\HU¶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±& SURWHLQ DQGKHDW VKRFNSURWHLQ PHGLDWHVQRPROHFXODUPLPLFU\RIDXWRDQWLERGLHV-RXUQDORI([SHULPHQWDO0HGLFLQH 5LJJV0:
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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±/LVV 1HZ
5HIHUHQFHV
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±/LVV 1HZ
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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³7ZRVWHS´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
5HIHUHQFHV
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
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
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±/LVV 1HZ
,PPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
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²EULGJLQJWKHJDSEHWZHHQDQLPDOUHVHDUFKDQGKXPDQ KHDOWK HIIHFWV )XQGDPHQWDO DQG$SSOLHG 7R[LFRORJ\ 6HQSXNX+,L]LPD7
5HIHUHQFHV
GH 6KD]R 5 ' /RSH] 0 DQG 6DOYDJJLR - ( 8VH DQG LQWHUSUHWDWLRQV RI GLDJQRVWLFLPPXQRORJLFDO ODERUDWRU\WHVWV -$0$ 6KH-; 6XVFHSWLELOLW\WRW\SH,GLDEHWHV+/$'4DQG'5UHYLVLWHG,PPXQRORJ\ 7RGD\ 6KHDUPDQ & : 3ROORFN ' :KLWH * +HKLU . 0RRUH * 3 .DQ]\ ( - DQG .XUUOH 5 &RQVWUXFWLRQ H[SUHVVLRQ DQGFKDUDFWHUL]DWLRQ RIKXPDQL]HGDQWL ERGLHV GLUHFWHG DJDLQVW WKH DOSKDEHWD 7 FHOO UHFHSWRU -RXUQDO RI ,PPXQRORJ\ 6KHSKDUG 5 - 5KLQG 6 DQG6KHN 3 1 ([HUFLVHDQG WUDLQLQJ LQIOXHQFHV RQ F\WRWR[LFLW\LQWHUOHXNLQ LQWHUOHXNLQDQGUHFHSWRUVWUXFWXUHV,QWHUQDWLRQDO-RXU QDO RI6SRUWV 0HGLFLQH 6 6KL-5RVV&5&KHQJDSSD006\OWH0-0F9H\'6DQG%OHFKD) $QWLEDFWHULDO DFWLYLW\ RI D V\QWKHWLF SHSWLGH 35 GHULYHG IURP 35 SUROLQH DUJLQLQH ULFK QHXWURSKLO DQWLPLFURELDO SHSWLGH $QWLPLFURELDO $JHQWV DQG &KHPR WKHUDS\ 6KLEDNL $ 0HXQLHU/5D & 6KLPDGD 6 2KNDZDUD $DQG&RRSHU . ' 'LIIHUHQWLDOUHVSRQVLYHQHVVRI/DQJHUKDQVFHOOVXEVHWVRIYDU\LQJSKHQRW\SLFVWDWHVLQ QRUPDO KXPDQ HSLGHUPLV -RXUQDO RI,QYHVWLJDWLYH 'HUPDWRORJ\ 6KLPDGD$.DVDWDQL77DNHL,0DUX\DPD71RPDJXFKL+2]DZD<,VKLL0 .DVXJD$7DVKLUR)0L\D]DNL-
,PPXQRWR[LFRORJ\ DQG 5LVN$VVHVVPHQW
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±/LVV 1HZ
5HIHUHQFHV
WUDQVIHUUHG IURP WKH O\PSK QRGH VSOHHQ EORRG RU O\PSK RI D SULPDU\ UHFLSLHQW &HOOXODU,PPXQRORJ\ 6QDSSHU & 0 DQG 0RQG - - $ PRGHO IRU LQGXFWLRQ RI 7 FHOO LQGHSHQGHQW KXPRUDO LPPXQLW\ LQ UHVSRQVH WR SRO\VDFFKDULGH DQWLJHQV -RXUQDORI,PPXQRORJ\ 6R( / DQG3HQU\- . $GYHUVHHIIHFWVRISKHQ\WRLQRQSHULSKHUDOQHUYHVDQG QHXURPXVFXODUMXQFWLRQ DUHYLHZ (SLOHSVLD 6RELHV]F]DQVND%DQG3U]RQGR0RUGDUVND$ &URVVUHDFWLYLW\EHWZHHQ%RUUHOLD EXUJGRUIHUL DQG ³DUWKURJHQLF´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
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
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
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
6XJDPXUD.$VDR+.RQGR07DQDND1,VKLL12KER.1DNDPXUD0DQG 7DNHVKLWD7 7KHLQWHUOHXNLQUHFHSWRUJDPPDFKDLQLWVUROHLQWKHPXOWLSOH F\WRNLQH UHFHSWRUFRPSOH[HV DQG 7 FHOO GHYHORSPHQW LQ ;6&,' $QQXDO5HYLHZ RI ,PPXQRORJ\ 6XPLGD 7 1DPHNDZD 7 0DHGD 7 DQG 1LVKLRND . 1HZ 7FHOO HSLWRSH RI 5R66$ N'D SURWHLQ LQ ODELDO VDOLYDU\ JODQGV IURP SDWLHQWV ZLWK 6MRJUHQ¶V V\QGURPH /DQFHW 6XQJ<-+RWFKNLVV-+$XVWLF5(DQG'LHWHUW55/$UJLQLQHGHSHQGHQW SURGXFWLRQRIUHDFWLYHQLWURJHQLQWHUPHGLDWHE\PDFURSKDJHVRIDXULFRWHOLFVSHFLHV -RXUQDO RI/HXNRF\WH %LRORJ\ 6XSHU07KLHO6/X-/HYLQVN\5-DQG7XUQHU0: $VVRFLDWLRQRIORZ OHYHOV RI PDQQDQELQGLQJ SURWHLQ ZLWK D FRPPRQ GHIHFW RI RSVRQL]DWLRQ /DQFHW 6ZDLQ 6 / /\PSKRNLQHV DQG WKH LPPXQH UHVSRQVH WKH FHQWUDO UROH RILQWHU OHXNLQ &XUUHQW 2SLQLRQ LQ,PPXQRORJ\ 6ZHHW 5 : 7UXQHK $ DQG +HQGULFNVRQ : $ &' LWV VWUXFWXUH UROH LQ LPPXQHIXQFWLRQDQG$,'6SDWKRJHQHVLVDQGSRWHQWLDODVDSKDUPDFRORJLFDOWDUJHW &XUUHQW 2SLQLRQ LQ %LRWHFKQRORJ\ 6\PWK 0 - DQG7UDSLDQL- $ *UDQ]\PHV H[RJHQRXV SURWHLQDVHV WKDWLQGXFH WDUJHWFHOO DSRSWRVLV ,PPXQRORJ\ 7RGD\ 6]DNDO $ . DQG 7HZ - * 6LJQLILFDQFH RILFFRVRPHV LQ WKH JHUPLQDO FHQWUH UHDFWLRQ 5HVHDUFK LQ ,PPXQRORJ\ 6]DNDO$ . .RVFR 0 + DQG7HZ- * D $QRYHOLQYLYRIROOLFXODUGHQGULWLF FHOOGHSHQGHQW LFFRVRPHPHGLDWHG PHFKDQLVP IRU GHOLYHU\ RI DQWLJHQ WR DQWLJHQ SURFHVVLQJ FHOOV -RXUQDO RI,PPXQRORJ\ 6]DNDO $ . .RVFR 0 + DQG7HZ - * E )'&LFFRVRPH PHGLDWHG DQWLJHQ GHOLYHU\ WR JHUPLQDO FHQWHU% FHOOV DQWLJHQ SURFHVVLQJ DQGSUHVHQWDWLRQ WR 7 FHOOV $GYDQFHV LQ ([SHULPHQWDO0HGLFLQH DQG %LRORJ\ 6]DNDO $ . .RVFR 0 + DQG 7HZ - * 0LFURDQDWRP\ RIO\PSKRLG WLVVXH GXULQJDKXPRUDOLPPXQHUHVSRQVH VWUXFWXUHIXQFWLRQUHODWLRQVKLSV$QQXDO5HYLHZ RI ,PPXQRORJ\ 6]DNDO$..DSDVL=)0DVXGD$DQG7HZ-* )ROOLFXODUGHQGULWLFFHOOVLQ WKHDOWHUQDWLYHDQWLJHQWUDQVSRUWSDWKZD\PLFURHQYLURQPHQWFHOOXODUHYHQWVDJHDQG UHWURYLUXV UHODWHG DOWHUDWLRQV 6HPLQDUV LQ ,PPXQRORJ\ 6]DPHO 0 (EHO 8 8FLHFKRZVNL3 .DHYHU 9 DQG5HVFK. 7FHOO DQWLJHQ UHFHSWRU GHSHQGHQW VLJQDOLQJ LQ KXPDQ O\PSKRF\WHV FKROHUD WR[LQ LQKLELWV LQWHU OHXNLQUHFHSWRUH[SUHVVLRQEXWQRWLQWHUOHXNLQV\QWKHVLVE\SUHYHQWLQJDFWLYDWLRQ RIDSURWHLQNLQDVH&LVRW\SH3.&DOSKD %LRFKLPLFDHW%LRSK\VLFD$FWD 7DJD 7 DQG .LVKLPRWR 7 *S DQG WKH LQWHUOHXNLQ IDPLO\ RI F\WRNLQHV $QQXDO 5HYLHZ RI,PPXQRORJ\ 7DJD7.DUL\D<6KLPDGD0DQG8FKLGD$ 6XSSUHVVLRQRIQDWXUDONLOOHUFHOO DFWLYLW\E\JUDQXORF\WHVLQSDWLHQWVZLWKDSODVWLFDQHPLDUROHRIJUDQXORF\WHFRORQ\ VWLPXODWLQJ IDFWRU ,PPXQRORJ\ /HWWHUV 7DJERWR 6 . ,QWHUOHXNLQHRVLQRSKLOVDQGWKHFRQWURORIKHOPLQWKLQIHFWLRQVLQ PDQ DQG ODERUDWRU\ DQLPDOV -RXUQDORI+HOPLQWKRORJ\
5HIHUHQFHV
7DJOLDEXH$DQG%RUDVFKL'&\WRNLQHVDVYDFFLQHDGMXYDQWVLQWHUOHXNLQDQGLWV V\QWKHWLF SHSWLGH 9DFFLQH 7DJXFKL7 DQG.LPRWR< /$.FHOOVDQGFDQFHU *DQWR.DJDNX5\RKR-DSD QHVH -RXUQDO RI&DQFHU &KHPRWKHUDS\ 7DNDWVX.7DNDNL6+LWRVKL<0LWD6.DWRK6D@S\UHQHDQGF\FORSKRVSKDPLGH)XQGDPHQWDODQG $SSOLHG 7R[LFRORJ\ 7HQQHU $- 5RELQVRQ6 / DQG(]HNRZLW]5 $% 0DQQRVHELQGLQJSURWHLQ
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
7KRUSH&- 2XWVL]HSHSWLGHVEXOJHRXWRIWKHJURRYH,PPXQRORJ\7RGD\ 7LQJ & &:DQJ- DQG
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
7XUQHU0:6H\PRXU1'.D]DWFKNLQH0'DQG0RZEUD\-) 6XERSWL PDO &E&EL GHSRVLWLRQ DQG GHIHFWLYH \HDVW RSVRQL]DWLRQ , (YLGHQFH IRU WKH DE VHQFH RIFRIDFWRU DFWLYLW\ &OLQLFDO DQG([SHULPHQWDO,PPXQRORJ\ 7XWW$6WHYHQVRQ*7DQG*OHQQLH0- 7ULVSHFLILF)DE¶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¶W(UYH ( + 'HVFRWHV - DQG /RYHUHQ + (DUO\ LQGLFDWRUV RI LPPXQRWR[LFLW\ 'HYHORSPHQW RIPROHFXODU ELRORJLFDO WHVWEDWWHULHV +XPDQDQG([SHULPHQWDO 7R[ LFRORJ\ 6 9DQGHNHUFNKRYH%$( .URZND-) 0F&XQH- 0'H9ULHV-( 6SLWV+DQG 5RQFDUROR0* &ORQDODQDO\VLVRIWKHSHULSKHUDO7FHOOFRPSDUWPHQWRIWKH 6&,'KX PRXVH -RXUQDO RI,PPXQRORJ\ 9DQGHQ(HUWZHJK $-0%RHUVPD: -$ DQG&ODDVVHQ( ,PPXQRORJLFDO IXQFWLRQVDQGLQYLYRFHOOFHOOLQWHUDFWLRQVRI7FHOOVLQWKHVSOHHQ &ULWLFDO5HYLHZV RI,PPXQRORJ\
5HIHUHQFHV
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±/LVV 1HZ
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
9ROSH 5 ,PPXQRUHJXODWLRQLQDXWRLPPXQHWK\URLGGLVHDVH 7K\URLG 9RQJVDNXO 0 &KDUDFWHUL]DWLRQ RILPPXQRORJLFDO PHPRU\ FHOOV $ PLQLUHYLHZ $VLDQ 3DFLILF -RXUQDO RI$OOHUJ\ ,PPXQRORJ\ 9RQ:LOOHEUDQG0-DVFXU7%RQQHIR\%HUDUG1OHWWHU@ -RXUQDO RI 3HGLDWULFV :DLQEHUJ0$DQG0LOOV(/ 0HFKDQLVPVRIYLUXVLQGXFHGLPPXQHVXSSUHV VLRQ &DQDGLDQ 0HGLFDO$VVRFLDWLRQ-RXUQDO :DNLO$(:DQJ=(DQG/RFNVOH\50 /HLVKPDQLDPDMRUWDUJHWLQJ,/LQ VXFFHVVIXO LPPXQRPRGXODWLRQ RI PXULQH LQIHFWLRQ ([SHULPHQWDO 3DUDVLWRORJ\
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
5HIHUHQFHV
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± 'QD-±*US( FKDSHURQH WHDP LQ SURWHLQ VHFUHWLRQ LQ (VFKHULFKLD FROL -RXUQDORI %DFWHULRORJ\ :LOOLDPV ' % DQG :DWWV7 + 0ROHFXODUFKDSHURQHV LQDQWLJHQSUHVHQWDWLRQ &XUUHQW 2SLQLRQLQ ,PPXQRORJ\ :LOOLDPV* 0 DQG 1RVVDO*-9 2QWRJHQ\ RIWKH LPPXQH UHVSRQVH , 7KH GHYHORSPHQWRIWKH IROOLFXODU DQWLJHQWUDSSLQJ PHFKDQLVP -RXUQDORI([SHULPHQWDO 0HGLFLQH RU FKURQLF EHU\OOLXP GLVHDVH :LOOLDPV : - %HU\OOLXP ZRUNHUVVDUFRLGRVLV 6DUFRLGRVLV VXSSOHPHQW
,PPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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¶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
5HIHUHQFHV
OPPXQRWR[LFRORJ\ DQG 5LVN $VVHVVPHQW
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
,QGH[
$FFHVVRU\SURWHLQV , DFHW\O WHWUDK\GUR[\EXW\OLPLGD]ROH $FLGSURWHDVHV $FTXLUHGLPPXQLW\ $FTXLUHGUHVSRQVH $&7+LQGXFHG VWHURLGRJHQHVLV $FWLYDWLRQ V\QGURPH $GGLVRQ¶VGLVHDVH $GHQRVLQHGHDPLQDVHGHILFLHQF\ $GHQRYLUXV $GKHVLRQPROHFXOHV $JLQJ $JUHWRSH $,'6HSLGHPLF VHHDOVR+,9 $OELQLVP $OEXPLQJOREXOLQ UDWLR $ON\OSKRVSKDWHV $OOHOHV $OOHUJHQV HSLWRSHPDSSLQJ , $OOHUJHQLFLW\ $OOHUJLFUHDFWLRQV ,J(PHGLDWHG $OORDQWLJHQV $OORJUDIWV
DFLG $PSKRWHULFLQ % $QDPQHVWLFUHVSRQVH, $QDSK\ODFWRLGUHDFWLRQV $QDSK\OD[LV $QDSK\ODWR[LQ $QGURJHQV $QLPDO PRGHOV RIDXWRLPPXQLW\ $QN\ORVLQJ VSRQG\OLWLV $QWKUD[ $QWLDUUK\WKPLFGUXJV $QWLERGLHV DGYHUVHHIIHFWVRIDGPLQLVWUDWLRQ DFWLYDWLRQV\QGURPH DVHSWLFPHQLQJLWLV 6HUXPVLFNQHVV FURVVOLQNDJHRI , HIIHFWRIFKHPLFDOVRQ SURGXFWLRQRI KD]DUG LGHQWLILFDWLRQ LQGXFWLRQ RI DQWLERG\ SURGXFWLRQ VWDWLFPHDVXUHPHQWVRILPPXQRJOREXOLQV LPPXQRGHILFLHQFLHVRQ SURGXFWLRQ RI
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±DQWLERG\ FRPSOH[ $QWLJHQLF GHWHUPLQDQW $QWLJHQLFGULIW $QWLJHQLFVKLIW $QWLJHQLFLW\ $QWLJHQSUHVHQWLQJFHOOVVHHDOVR$QWLJHQV FODVVLILFDWLRQRI DPDWHXU SURIHVVLRQDO %FHOOV GHQGULWLF FHOOV PDFURSKDJHV PRQRF\WHV
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¶V V\QGURPH *UDYH¶VGLVHDVH P\DVWKHQLDJUDYLV SHUQLFLRXVDQHPLD V\VWHPLFOXSXVHU\WKHPDWRVXV
,QGH[ $XWRLPPXQLW\ FRQW DXWRLPPXQHUHVSRQVH KHPRO\WLFDQHPLDV PRGLILFDWLRQRIVHOIDQWLJHQV QHRDQWLJHQV GLVHDVHRFFXUUHQFH HIIHFWRIFKHPLFDOVRQ HWLRORJ\RI %FHOOV FU\SWLF ³VHOI¶ DFWLYDWLRQ LPPXQHGHYLDWLRQ LPPXQHG\VUHJXODWLRQ PRGLILHG³VHOIµ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¶V V\QGURPH
%RQHPDUURZWR[LFLW\ %RUGHWHOODSHUWXVVLV %RUHOOLDEXUJGRUIHUL %RYLQHFRQJOXWLQLQ %UDG\NLQLQ %URQFKRVSDVP %URZQ1RUZD\ UDW PRGHO %UXFHOODRYLV %UXJLDPDOD\L %XGGLQJ %XHKOHUJXLQHDSLJVHQVLWL]DWLRQ WHVW %XHKOHUWHVW %XUNLWW¶V O\PSKRPD %XUVDRI)DEULFXV %\VWDQGHUFHOOV &DGPLXP &DOFLXPUHJXODWLRQ &DOFLXPELQGLQJSURWHLQ &DOQH[LQ &DOUHWLFXOLQ &DPS\OREDFWHU &DQGLGDDOELFDQV &DUERIXUDQ &DUGLDFDEQRUPDOLWLHV &DUGLROLSLQ &DUWLODJHKDLUK\SRSODVLD &DWKHSVLQ &HOLDFGLVHDVH &HOODGKHVLRQPROHFXOH &HOOO\VLV &HOOPHGLDWHGGHIHFWV &HOOXODUUHVSRQVH &HOOXODUF\WRWR[LFLW\ &HOOXODUVLJQDOLQJ &HOOXODULW\ &HWLHGLOFLWUDWH &KDJDV¶GLVHDVH &KDUJHUDWLR &KHGLDN±+LJDVKL V\QGURPH &KHPRDWWUDFWDQWV &KHPRNLQHV LPPXQRGHILFLHQF\RQ PHFKDQLVP RIDFWLRQ PLFURELDO DQG YLUDO HYDVLRQ UROH LQ GLVHDVH &KHPRNLQHVLV &KODP\GLDWUDFKRPDWLV &KORULQHGLR[LGH FKORURRSKHQ\OHQHGLDPLQH &KORURTXLQH
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
,QGH[ 'LHWK\OVWLOEHVWURO 'L*HRUJHV\QGURPH 'LPHWK\OEHQ]>D@DQWKUDFHQFH 'LR[LQ 'RVH±UHVSRQVH UHODWLRQVKLSV EHQFKPDUNGRVH GDWD HYDOXDWLRQ ORZHVWREVHUYDEOHDGYHUVHHIIHFWOHYHO /2$(/ PD[LPXPWROHUDWHGGRVH PRGHOLQJ QRREVHUYDEOHDGYHUVHHIIHFWOHYHO 12$(/ 'RXEOHQHJDWLYHFHOOV 'RZQ¶V V\QGURPH 'XDOODEHOLQJPHWKRG
(FKHULFKLDFROL (FWRGHUPDO G\VSODVLD (OHFWURPHOLD (/,6$ (PEGHQ±0H\HUKRISDWKZD\ (QFHSKDOLWLVYLUXVLQIHFWLRQV (QGRF\WRVLV (QGRWR[LQV (QGSRLQWVSHFLILF UHIHUHQFHGRVH (QWDPRHEDKLVWRO\WLFD (QWHURWR[LQV (Q]\PDWLF FOHDYDJH (Q]\PHOLQNHG LPPXQRVRUEHQWDVVD\ (RVLQRSKLOV (SLGHUPLV (3,3/27 (SLWRSHVSUHDGLQJ (SLWRSHV DQWLJHQLF SRWHQF\ %FHOO UHFRJQLWLRQ RI IOH[LELOLW\RI UHODWLRQVKLSZLWKSHSWLGHV VWUXFWXUH RI 7FHOO UHFRJQLWLRQ RI W\SHVRI (SVWHLQ%DUU YLUXV (VWURJHQV (WK\OQLWURVRXUHD ([YLYRDVVD\V ([RWR[LQ ([WUDYDVFXODUL]DWLRQ )DPLOLDO PLFURHQFHSKDO\ )DPLOLDOV\QGURPHV
)HWDODEQRUPDOLWLHV )HYHU )LEURVDUFRPD )LVKHUH[DFWWHVW )ODYLQRLGV )ORSS\VWDWH )ORZF\WRPHWU\ )ROLF DFLG GHILFLHQF\ )RRGDOOHUJHQV )UHHUDGLFDOVFDYHQJLQJ )UHXQG¶VFRPSOHWHDGMXYDQW )XQJDOWR[LQV )XQJXV )XVDULXP *DPPDJOREXOLQV VHH $QWLERGLHV *DVWULWLV , *HQHWUDQVORFDWLRQ, *HQHWLFSRO\PRUSKLVP *HQHWLF V\QGURPHV ZLWKDVVRFLDWHGLPPXQHHIIHFWV *OREXODU SURWHLQV *OXWDPLFDFLGGHFDUER[\ODVH *OXWDUDOGHK\GH *O\FRSURWHLQV *O\FRVDPLQRJO\FDQSRO\VXOIDWH *RRGSDVWXUH¶V V\QGURPH *SURWHLQ *UDIWUHMHFWLRQ DFXWHYDVFXODU FHOOXODUJUDIW KD]DUGLGHQWLILFDWLRQ K\SHUDFXWH *UDIWYVKRVWUHDFWLRQV GUXJVDQGFKHPLFDOWHVWV *UDPQHJDWLYHEDFWHULD *UDPSRVLWLYHEDFWHULD *UDQ]\PH O\VLV *UDQ]\PHV *UDYH¶VGLVHDVH *XLQHDSLJ LQKDODWLRQ WHVWV *XLQHDSLJ PD[LPL]DWLRQ WHVW +LQIOXHQ]DH +DEHU±:HLVVUHDFWLRQ +DHPRSKLOXV +DSORW\SH +DSWHQFDUULHUFRPSOH[ +DSWHQV +DVKLPRWR¶VWK\URLGLWLV
+D]DUGLGHQWLILFDWLRQKHPDWRORJ\ KLVWRSDWKRORJ\ O\PSKRF\WH SKHQRW\SLQJ RUJDQZHLJKWV RYHUYLHZRI VSOHQLFFHOOXODULW\ VSOHQLFYLDELOLW\ +HDUWYDOYHGDPDJH +HDWVKRFNSURWHLQV +HOLJLPRVPRLGHVSRO\DUXV +HOPLQWKV +HPDWRSRLHVLV +HPRO\WLFDQHPLD +HSDWLWLV%LQIHFWLRQ +HSDWLWLVYLUXV +HUELP\FLQ$ +HUHGLWDU\DQJLRQHXURWLFHGHPD +HUSHVVLPSOH[YLUXV +HUSHV]RVWHU +HUSHVYLUXV VDLPLUL +HYLQ +H[RVHPRQSKRVSKDWHVKXQW +LJK HQGRGWKHOLDOYHQXOHFHOOV +LVWDPLQHUHOHDVHDVVD\ +LVWDPLQH +LVWLRF\FWRVLV +LVWRSDWKRORJ\EDVHG ULVN FKDUDFWHUL]DWLRQ +LVWRSODVPDFDSVXODWXP +,9 VHH DOVR $,'6 HSL GHPLF LQIHFWLRQV WUHDWPHQW +RGJNLQ¶VGLVHDVH +ROLVWLFDVVD\V +RPRORJRXVUHVWULFWLRQIDFWRU +RPR]\JRVLW\ +RUPRQHV +RVWGHIHQVH PRGHO VWXGLHV +XPDQKHDOWKULVN +XPDQ0+&FRPSOH[ +XPDQQHXWURSKLOSHSWLGH +XPDQ SDSLOORPDYLUXV +XPDQSHULSKHUDOEORRG +XPDQUHG EORRGFHOODQWLJHQV +XPDQUHSHDWLQVXOWSDWFK WHVW +XPRUDOUHVSRQVH +\GURJHQSHUR[LGH +\GUR[\ZRUWPDQQLQ
,QGH[ +\SHUPXWDWLRQ +\SHUVHQVLWLYLW\ DOOHUJLF UHDFWLRQV HIIHFWRIFKHPLFDOVRQ LQJXW LQOXQJ LQVNLQ EDFWHULDOHYDVLRQRILPPXQHV\VWHP FKDUDFWHULVWLFVRIDOOHUJLFSDWLHQWV LQLWLDOUHVSRQVH UROH RIUHFHSWRUV GHOD\HG DOWHUQDWH WHVWV IRU HIIHFWRIFKHPLFDOVRQ LQDOORJUDIWV LQOXQJ LQVNLQ UHDFWLRQV KD]DUG LGHQWLILFDWLRQ GHOD\HG UHDFWLRQV VWUXFWXUH±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
Index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
,PPXQRORJLFDO PHPRU\ FRQW KD]DUG LGHQWLILFDWLRQ PDLQWHQDQFHRI RYHUYLHZRI SKHQRW\SLFPDUNHUVRQPHPRU\FHOOV %FHOOV 7FHOOV UHJXODWRU\SRVLWLRQRQ ,PPXQRWR[LFRORJ\ DVVHVVPHQWRIKXPDQ ULVN SDUDOOHORJUDPPRGHOLQJRI LQGH[RILPPXQRWR[LFLW\ RYHUYLHZRI ,QIHFWLRQLQGXFHGIHYHU ,QIODPPDWLRQ , ,QIOXHQ]DYLUXV PRGHO ,QKDODWLRQWHVWV ,QKHULWDQFH SDWWHUQ ,QQDWHLPPXQLW\ DQDWRPLFEDUULHUVLQ DQWLPLFURELDOSHSWLGHVRQ FROOHFWLQV GHIHQVLQV RQ GHILQLWLRQRI HIIHFWRILPPXQRGHILFLHQF\ KD]DUG LGHQWLILFDWLRQ QDWXUDONLOOHUFHOOVRQ QLWULFR[LGHRQ SK\VLRORJLFDOEDUULHUVLQ UHJXODWRU\SRVLWLRQRQ UROHLQGLVHDVH UROHLQQHRQDWHV ,QVXOLQGHSHQGHQWGLDEHWHV PHOOLWXV ,QWHUIHURQ ,QWHUOHXNLQ ,QWHVWLQDO FDUFLQRPD ,QWHVWLQDOLQIHFWLRQV ,QWUDFHOOXODUNLOOLQJ ,QWUDFHOOXODUVLJQDOLQJ ,Q YLWUR DVVD\V ,Q YLWUR VHQVLWL]DWLRQ ,VRIRUPV ,VRW\SLFPDUNHUV ,VRW\SLFVZLWFKLQJ -HUQHSODTXHIRUPLQJFXOWXUHDVVD\ .DSRVL¶VVDUFRPD .HUDWLQRF\WHV .H\KROHOLPSHWKHPRF\DQLQ
,QGH[ .LGQH\GDPDJH .LOOHUFHOOV DQWLERG\GHSHQGHQW FHOOXODUF\WRWR[LFLW\ FODVVLFDO F\WRWR[LF 7FHOOV UHJXODWRU\SRVLWRQRQ HIIHFWRQLPPXQHUHVSRQVH IXQFWLRQDOWHUDWLRQE\FKHPLFDOV KD]DUGLGHQWLILFDWLRQ O\VLV RIWDUJHW FHOOV SUROLIHUDWLRQ RIF\WRWR[LF 7FHOOV LPPXQRGHILFLHQFLHV DVVRFLDWHG ZLWK O\PSKRNLQHDFWLYDWHG PDFURSKDJH PHFKDQLVPV RIO\VLV JUDQ]\PHV SHUIRULQV WDUJHW FHOOV QDWXUDO DFWLYDWLRQ RI LQKLELWLRQ RIIXQFWLRQ UROHLQGLVHDVH 7FHOOO\VLV WXPRUFHOO HYDVLRQ RI WXPRULQILOWUDWLQJO\PSKRF\WHV YLUDOHYDVLRQRI DQWLJHQLFGULIW VKLIW YLURNLQHV .LQLQ .OHEVLHOOD LQIHFWLRQV .OHEVLHOODSQHXPRQLDH
/DFWREDFLOOXV ODFWXV /DQJHUKDQVFHOOV /DWHQW YLUXVHV /D]\OHXNRF\WHV\QGURPH /HDG /HFWLQFRPSOHPHQWDFWLYDWLRQ SDWKZD\ /HJLRQHOOD SQHXPRQLDH /HJLRQHOOD /HLVKPDQLD EUDVLOLHQVLV /HLVKPDQLD GRQRYDQL /HLVKPDQLDPDMRU /HLVKPDQLD , /HSURV\ /HXNRF\WHDGKHVLRQGHILFLHQF\ /HXNRF\WHFKHPRNLQHVLV /HXNRF\WHFRPPRQDQWLJHQ
,QGH[ /HYDPLVROH /LHEHUNXKQFU\SWV /LQGDQH /LQNDJHGLVHTXLOLEULXP /LSLGELOD\HU /LSLGV /LSRSRO\VDFFKDULGH /LVWHULD PRQRF\WRJHQHV PRGHO /LVWHULD PRQRF\WRJHQHV /LYHUGDPDJH /RFDOO\PSKQRGHDVVD\ /RZHVWREVHUYDEOHDGYHUVHHIIHFWOHYHO /2$(/ /XQJVXUIDFWDQWV /\PSK QRGH /\PSKRF\WHV DFWLYDWLRQRI GHYHORSPHQW DQG PDWXUDWLRQ O\VLV PDWXUDWLRQRI SKHQRW\SLQJ UHFLUFXODWLRQRI WUDQVIRUPDWLRQDVVD\ /\PSKRNLQHDFWLYDWHGNLOOHUFHOOV /\PSKRNLQH /\PSKRWR[LQ 0DFURSKDJH NLOOHU FHOOV 0DFURSKDJHV PDUJLQDO PHWDOORSKLOLF 0DMRUEDVLFSURWHLQ 0DODULD KRVWGHIHQVH PRGHO 0DPPDU\DGHQRFDUFLQRPD 0DQJDQHVH 0DQQRVHELQGLQJ OHFWLQ 0DWUL[ PHWDOORSURWHLQDVHV , 0HDVOHVYLUXV 0HODQRPD 0HPEUDQHFRIDFWRUSURWHLQV 0HPEUDQHSHUPHDELOLW\ 0HPEUDQHSRODUL]DWLRQ 0HPRU\FHOOV 0HUFXU\ 0HWDVWDVLV 0HWK\OFKRODQWKUHQH 0+&PDUNHUV 0LFURELDO LQVXOW 0L[HGO\PSKRF\WHUHDFWLRQ P1LWURWROXHQH
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±3LFN¶V GLVHDVH 1JO\FRV\ODWLRQ 1LFNHO 1LSSRVWURQJ\OXV EUDVLOLHQVLV 1LWULF R[LGH 1LWUREOXHWHWUD]ROLXPWHVW 1RREVHUYDEOHDGYHUVHHIIHFWOHYHO 12$(/ 1RQVWHURLGDO DQWLLQIODPPDWRU\ GUXJV O 1XFOHDUWUDQVFULSWLRQ IDFWRU 2FFXSDWLRQDODVWKPD 2QFRUQDYLUXVHV 2SSRUWXQLVWLF LQIHFWLRQV 2SSRUWXQLVWLFSDWKRJHQV 2SVRQLQ 2SVRQL]DWLRQ
2UDODOOHUJ\V\QGURPH 2UJDQUHMHFWLRQ 2UJDQWUDQVSODQWDWLRQ 2VPRWLF O\VLV 2[D]RORQH 2[\JHQPHWDEROLVP 3DQHWKFHOOV 3DSDLQ 3DUDFULQH DFWLYLW\ 3DUDFULQHHIIHFW 3DUDVLWLF LQIHFWLRQV 3DUR[\VPDOQRFWXUQDO KHPRJOREXOLQXULD 3DVVLYH FXWDQHRXV DQDSK\OD[LV DVVD\ 3DWHUQLW\ 3DWKRJHQLFEDFWHULD 3&5 W\SLQJ PHWKRGV 3HGLDWULF LPPXQL]DWLRQ VWUDWHJLHV 3HQLFLOOLXP 3HQWDFKORURSKHQRO 3HSWLGHELQGLQJ 3HSWLGH ORDGLQJ 3HSWLGH YDFFLQHV 3HUIRULQ 3HUQLFLRXVDQHPLD 3HVWLFLGHV 3H\HU¶VSDWFKHV S+RIVWRPDFK 3KDJRF\WRVLV VHHDOVR :KLWHEORRGFHOOV DVVHVVPHQW RI HIIHFW RIFKHPLFDOVRQ HIIHFWRIUHVSLUDWRU\ EXUVWRQ DGYHUVHKHDOWKHIIHFWV PRGXODWLRQRI QLWULFR[LGHSURGXFWLRQ HIIHFWRQFRPSOHPHQWSDWKZD\DFWLYDWLRQ IUHHUDGLFDOVFDYHQJLQJ KD]DUG LGHQWLILFDWLRQ LPPXQH GHILFLHQFLHV DVVRFLDWHG ZLWK LQWHUQDOL]DWLRQ RIRSVRQL]HG SDUWLFOHV , LQWUDFHOOXODUVLJQDOLQJ PLFURELDOHYDVLRQRI RYHUYLHZRI UHFHSWRUH[SUHVVLRQ LQ UHJXODWRU\SRVLWLRQ RQ UROHRQ LPPXQHFRPSOH[HV WUDQVPHPEUDQHPLJUDWLRQ
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¶VV\QGURPH 5HQDO WUDQVSODQWDWLRQ 5HQZLFNPRGHO
,QGH[ 5HVSLUDWRU\ EXUVW 5HVSLUDWRU\LQIHFWLRQV 5HWLFXODUG\VJHQHVLV 5KHXPDWRLGDUWKULWLV 5LVNDVVHVVPHQW GRVH±UHVSRQVH UHODWLRQVKLSV EHQFKPDUN GRVH PRGHOV QRREVHUYDEOHDGYHUVHHIIHFWOHYHO 12$(/ XQFHUWDLQW\IDFWRUV KXPDQ KHDOWK /HZLV/\QFK1LNRIRURY DSSURDFK 5HQZLFNDSSURDFK LPPXQRORJLFDO GDWD /HZLV/\QFK1LNRIRURY PRGHO RYHUYLHZRI SDUDGLJP UHJXODWRU\ SRVLWLRQ RQ 5HQZLFN PRGHO WKUHVKROGHIIHFWV WR[LFRNLQHWLF FRUUHFWLRQ IDFWRU 5LVNFKDUDFWHUL]DWLRQ 5LVNPDQDJHPHQW 5LVN DGGLWLRQDO H[WUD 5RXVVDUFRPDYLUXV 6DFFKDURP\FHV 6DOPRQHOOD FKROHUDHVXV 6DOPRQHOOD W\SKLPXULXP 6DOPRQHOODW\SKRVD 6FKLPNH¶V LPPXQRRVVHRXV G\VSODVLD 6FKLVURVRPDPDQVRQL , 6FKZDFKPDQV\QGURPH 6FOHURGHUPD 6FUHHQLQJDVVD\ 6HFRQGDU\ O\PSKRLG RUJDQV O\PSK QRGH VSOHHQ 6HOHQLXP 6HQVLWL]HUV 6HTXHVWHUHGDQWLJHQV 6HURORJLFDOW\SLQJ 6HUXP HQGSRLQWV 6HUXP VLFNQHVV 6HYHUHFRPELQHGLPPXQRGHILFLHQF\ 6&,' PRXVHDVH[SHULPHQWDOPRGHO 6KHHSUHGEORRGFHOOSODTXHIRUPLQJDVVD\
6KLJHOODIOH[QHUL 6KRUWOLPEHGGZDUILVP 6LDOLFDFLG 6LJQDOSDWKZD\V 6LJQDO WUDQVGXFWLRQ 6MRJUHQ¶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
,QGH[ 8QLYHUVDO GRQRUV 8UHWKDQH 8UWLFDULD 9DFFLQLDFRQWUROSURWHLQV 9DFFLQLDYLUXV 9DVFXODUSHUPHDELOLW\ 9HVLFXODUVWRPDWLWLVYLUXV 9LDELOLW\ 9LEULR FKROHUDH 9LEURQHFWLQ 9LUDODQWLJHQ 9LUDOJHQRPH 9LUDOLQIHFWLRQV F\WRWR[LF 7FHOO UHVSRQVH WR , (SVWHLQ±%DUU YLUXV KD]DUG LGHQWLILFDWLRQ +,9 UHJXODWRU\SRVLWLRQRQPRGHOLQJRI VXVFHSWLELOLW\ DQGFKHPLFDOV 9LUDOLQIHFWLYLW\PRGHOV 9LUDOSURWHLQV 9LUDOYLUXOHQFH 9LURNLQHV 9LUXVSODTXHDVVD\ 9LUXVHV UROHLQ0+&UHJXODWLRQIXQFWLRQ 9LWDPLQGHILFLHQF\ 9ROWDJHGHSHQGHQWFKDQQHOV :+,0V\QGURPH :KLWHEORRGFHOOV EDVRSKLOV HRVLQRSKLOV PRQRF\WHV SRO\PRUSKRQXFOHDUOHXNRF\WHV :LVNRWW±$OGULFK V\QGURPH :RUWPDQQLQ$ ;HQRELRWLFV ;OLQNHG DJDPPDJOREXOLQHPLD