)URQW3LHFH
1(7(QWHUSULVH'HVLJQZLWK9LVXDO%DVLF1(7DQG64/ 6HUYHU -LPP\1LOVVRQ
3XEOLVKHU6DPV3XEOLVKL...
31 downloads
710 Views
4MB 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
)URQW3LHFH
1(7(QWHUSULVH'HVLJQZLWK9LVXDO%DVLF1(7DQG64/ 6HUYHU -LPP\1LOVVRQ
3XEOLVKHU6DPV3XEOLVKLQJ )LUVW(GLWLRQ'HFHPEHU ,6%1SDJHV
7KHRQO\ERRNWKDWXVHV9LVXDO%DVLF1(764/6HUYHUDQG1(7 WRSURYLGHVWUDWHJLHVIRUVROYLQJWKHNH\SUREOHPVGHYHORSHUV HQFRXQWHUZKHQGHVLJQLQJFRPSRQHQWVHUYLFHVIRUHQWHUSULVH DSSOLFDWLRQV x x x
0RVWXSWRGDWHFRYHUDJHDYDLODEOHDERXW9%1(71(7 FRPSRQHQWVHUYLFHVDQG64/6HUYHU 8VHVDVRIWZDUHHQJLQHHULQJDSSURDFKWRGLVFXVVKRZWRXVH YDOXDEOHWHFKQLTXHVWRVROYHNH\SUREOHPVIDFHGZKHQGHDOLQJ ZLWKFRPSOH[GLVWULEXWHGV\VWHPV 'HWDLOHGGLVFXVVLRQRIWKHSURVDQGFRQVIRUHDFKSRWHQWLDO VROXWLRQE\ORRNLQJDWLVVXHVVXFKDVSHUIRUPDQFHVFDODELOLW\ DQGPDLQWDLQDELOLW\
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
1(7(QWHUSULVH'HVLJQZLWK9LVXDO%DVLF1(7DQG64/6HUYHU &RS\ULJKWE\6DPV3XEOLVKLQJ
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
,QJUHVLVDUHJLVWHUHGWUDGHPDUNRI&RPSXWHU$VVRFLDWHV
8QLFHQWHU71*LVDUHJLVWHUHGWUDGHPDUNRI&RPSXWHU$VVRFLDWHV :DUQLQJDQG'LVFODLPHU
(YHU\HIIRUWKDVEHHQPDGHWRPDNHWKLVERRNDVFRPSOHWHDQGDV DFFXUDWHDVSRVVLEOHEXWQRZDUUDQW\RUILWQHVVLVLPSOLHG7KH LQIRUPDWLRQSURYLGHGLVRQDQ³DVLV´EDVLV7KHDXWKRUDQGWKH SXEOLVKHUVKDOOKDYHQHLWKHUOLDELOLW\QRUUHVSRQVLELOLW\WRDQ\SHUVRQRU HQWLW\ZLWKUHVSHFWWRDQ\ORVVRUGDPDJHVDULVLQJIURPWKHLQIRUPDWLRQ FRQWDLQHGLQWKLVERRN $VVRFLDWH3XEOLVKHU /LQGD(QJHOPDQ 'HGLFDWLRQ
,GHGLFDWHWKLVERRNWRP\ZRQGHUIXOZLIH/RWWDRXUJUHDWVRQ7LP DQGRXUVHFRQGFKLOGZKRPZHDUHH[SHFWLQJHDUO\QH[W\HDU,ORYH \RXJX\VDQGZLWKRXW\RXQRWKLQJZRXOGPHDQDQ\WKLQJ
)RUHZRUG
,QHYHUDVNHG-LPP\ZK\H[DFWO\KHDVNHGPHWRZULWHWKLVIRUHZRUGEXW,DPLQFOLQHGWRWKLQN WKDWLWZDVIRU³KLVWRULFDOUHDVRQV´-LPP\SXEOLVKHGKLVILUVWDUWLFOHRQ076DQG&20 GHYHORSPHQWDERXWWZR\HDUVDJRRQ9%7KH0D[WKHVLWH,UXQZLWKRWKHU,WDOLDQDXWKRUVDQG GHYHORSHUV ,WZDVPRUHRUOHVV-LPP\ VILUVWHGLWRULDOH[SHULHQFHVR,ZDVSUHSDUHGWRGRVRPHHGLWLQJEHIRUH SXEOLVKLQJWKHDUWLFOH,DPQRWWDONLQJDERXWIL[LQJJUDPPDURUVW\OH²DIWHUDOOWKHFRPELQDWLRQRI DQ,WDOLDQJX\ZKRHGLWVDQ(QJOLVKGRFXPHQWE\D6ZHGLVKDXWKRULVQ WJRLQJWRGHOLYHUH[FLWLQJ UHVXOWV²EXW,DQWLFLSDWHGWKHQHHGWRUHRUJDQL]HWKHPDWHULDODVNIRUIXUWKHUFODULILFDWLRQVRQNH\ SRLQWVDQGVRRQ,QVKRUWWKHNLQGRIWKLQJVWKDWPDNHDWHFKQLFDODUWLFOHDJRRGUHDGDEOHDUWLFOH 7RP\VXUSULVH, GLGQ WILQGDQ\WKLQJZRUWKHGLWLQJLQWKHGUDIWPDQXVFULSWDQGLQIDFWWKHDUWLFOH ZHQWRQOLQHLQLWVRULJLQDOIRUP,ZDVUDWKHULPSUHVVHGEHFDXVHLWGRHVQ WKDSSHQIUHTXHQWO\²LQ JHQHUDODQGYLUWXDOO\QHYHUZLWKILUVWWLPHDXWKRUV
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²DIWHUDOO,DPWKHDXWKRURIRQHVXFKWH[WERRN²EXWLWLVHYLGHQWWKDW DSSOLFDWLRQGHVLJQFDQKDYHDIDUUHDFKLQJLPSDFWRQSHUIRUPDQFHVFDODELOLW\DQGH[WHQVLELOLW\
3UHIDFH
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
7DUJHW$XGLHQFHRI7KLV%RRN
7KHWDUJHWDXGLHQFHRIWKLVERRNLVUHDGHUVZKRZDQWWROHDUQPRUHDERXWEXLOGLQJHQWHUSULVH DSSOLFDWLRQVLQWKH1(7SODWIRUP,W VDVVLPSOHDVWKDW7KHERRNLVZULWWHQIRUDUFKLWHFWV GHYHORSHUVWHDPOHDGHUVDQGWHFKQLFDOPDQDJHUV ,KDYHWULHGWRPDNHWKHERRNFRPSRQHQWRULHQWHG7KDWLVLQVWHDGRIUHSHDWLQJZKDWHYHU\RWKHU ERRNVD\V DERXWVRPHWKLQJ,KDYHNHSWEDFNJURXQGLQIRUPDWLRQWRDPLQLPXPDQGH[SHFW\RXWR KDYHVRPHEDFNJURXQGNQRZOHGJHEHIRUHUHDGLQJWKLVERRNLQFOXGLQJH[SHULHQFHZLWKWKH IROORZLQJ x
9LVXDO%DVLF1(7RU&
x x x x
7KH1(7)UDPHZRUN &RPSRQHQW6HUYLFHVIURP076&20RU1(7 764/LQ64/6HUYHURU $'21(7
,WZLOOEHKHOSIXOIRU\RXWRKDYHVRPHH[SHULHQFHRI9%&20DQG$'2DVZHOO,I\RXGRQRW KDYHEDFNJURXQGNQRZOHGJHRUH[SHULHQFHZLWKWKHVHWRSLFV,SRLQW\RXLQWKHGLUHFWLRQRIRWKHU ERRNVWRUHDGWRJHWXSWRVSHHGDWDSSURSULDWHWLPHVLQWKHFKDSWHUV
)RFXVRI7KLV%RRN
/HW VORRNDWDSLFWXUHWKDWUHSUHVHQWVVRPHWKLQJWKDW,DVVXPH\RXDUHXVHGWRQDPHO\DOD\HUHG DUFKLWHFWXUH$QH[DPSOHLVIRXQGLQ)LJXUH3 )LJXUH3$OD\HUHGDUFKLWHFWXUHWKHIRFXVRIWKHERRN
7KHFRPSRQHQWVLQWKHDSSOLFDWLRQVHUYHU 7KHVWRUHGSURFHGXUHVLQWKHGDWDEDVHVHUYHU $KHOSHUOD\HUDWWKHFRQVXPHUVLGH
:K\,$P:ULWLQJ$ERXWWKH&KRVHQ3ODWIRUP ,QVWHDGRIJLYLQJ\RXDGLUHFWDQVZHUWRWKLV, GOLNHWRH[SODLQLWLQWKUHHSDUWV, OOGLVFXVVZK\, FKRVH9LVXDO%DVLF1(7DQG64/6HUYHUEXW,ZLOOVWDUWZLWKP\UHDVRQLQJEHKLQGXVLQJ1(7 &RPSRQHQW6HUYLFHV
:K\1(7&RPSRQHQW6HUYLFHV
)RUDFRXSOHRI\HDUVQRZ076DQG&20&RPSRQHQW6HUYLFHVKDYHEHHQYHU\VWURQJSODWIRUPV IRUEXLOGLQJHQWHUSULVHDSSOLFDWLRQV:LWK1(7LW VEHFRPLQJHDVLHUWRZULWHFRPSRQHQWVIRU&20 &RPSRQHQW6HUYLFHVRU1(7&RPSRQHQW6HUYLFHVDVLWLVQRZFDOOHG DQG\RXFDQH[SUHVVPDQ\ GHVLJQGHFLVLRQVLQ\RXUFRGHZLWKWKHKHOSRIDWWULEXWHV-XVWDVEHIRUH\RXZLOOEHQHILWJUHDWO\ IURPWKHLQIUDVWUXFWXUHKHOS\RXJHWIURPWKHVHUYLFHV$QGIRU9%GHYHORSHUVLW VQRZSRVVLEOHWR EHQHILWIURPVHUYLFHVVXFKDV2EMHFW3RROLQJIRUWKHILUVWWLPH 6RPHRIWKH&RPSRQHQW6HUYLFHV²RU(QWHUSULVH6HUYLFHVDV0LFURVRIWRIWHQFDOOVLW² KDYH HTXLYDOHQWVLQWKH1(7)UDPHZRUN7KLVLVQ WVRVWUDQJHEHFDXVHPXFKRIWKH1(7)UDPHZRUNZDV EXLOWE\WKHVDPHGHYHORSHUVZKREXLOW&20
;0/:HE6HUYLFHVWKDWDUHUHFHLYLQJPRVWRIWKHDWWHQWLRQ0\EHOLHILVWKDWWKLVZLOOFKDQJHYHU\ VRRQ%HKLQGWKHHQWU\SRLQWRI;0/:HE6HUYLFHVDQG$631(7&20FRPSRQHQWVDQG &RPSRQHQW6HUYLFHVZLOOVWLOOEHGRLQJWKHOLRQ VVKDUHRIWKHZRUN,WLVDVLIWKHRSHUDWLQJV\VWHP KDVJURZQDQGLVSURYLGLQJPRUHVHUYLFHV)RUWKHPRVWSDUWLW VEHQHILFLDOWRXVHWKRVHVHUYLFHV LQVWHDGRIZULWLQJVLPLODURQHVRI\RXURZQ,H[SHFWWRVHHWKHSURJUDPPLQJPRGHORI&RPSRQHQW 6HUYLFHVEHLQJXVHGIRUDORQJWLPHLQWKHIXWXUH
:K\9LVXDO%DVLF1(7
%HIRUH,VWDUWHGZRUNLQJRQWKLVERRN,WKRXJKWORQJDQGKDUGDERXWPRYLQJIURP9%WR& LQVWHDGRIWR9LVXDO%DVLF1(7,ILQDOO\GHFLGHGWKDW,FRXOGQ WZULWHDERRNIRUROG& SURJUDPPHUV:KHQ\RX UHPRVWO\ZRUNLQJLQDQHQYLURQPHQWVXFKDV9%\RXJHW³DVVLPLODWHG´WR LWDQGWDONDQGWKLQNLQDVSHFLILFZD\7KHRSSRVLWHLVDOVRWUXH,WZRXOGEHKDUGIRUD& SHUVRQWRZULWHDJRRGERRNDERXW9LVXDO%DVLF1(7 7KHUHIRUH,ZLOOIRFXVRQ9LVXDO%DVLF1(7 6WLOOSURJUDPPHUVZKRIRFXVRQ&FDQVWLOOEHQHILWIURPUHDGLQJWKHERRNDVORQJDVWKH\DUH SUHSDUHGIRULWV9%VW\OH7KLVLVHVSHFLDOO\WUXHIRU&SURJUDPPHUVFRPLQJIURP9%RIFRXUVH 7KH\MXVWKDYHWRWUDQVODWHWKHFRGHVDPSOHVWRWKHLURZQODQJXDJHZKLFKRXJKWWREHVLPSOH HQRXJK 1RPDWWHUZKDW1(7ODQJXDJH\RXFKRRVHZHDUHDOO1(7GHYHORSHUVDQGZHDUHDOOZULWLQJIRU WKHFRPPRQODQJXDJHUXQWLPH
:K\64/6HUYHU
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
2UJDQL]DWLRQRI7KLV%RRN
7KLVERRNLVGLYLGHGLQWRQLQHFKDSWHUVDQGLQFOXGHVDVHSDUDWHDSSHQGL[ZLWKVXJJHVWLRQVIRU IXUWKHUUHDGLQJ ,Q&KDSWHU³,QWURGXFWLRQ´,VHWWKHVFHQHIRUWKHUHVWRIWKHERRNE\EULHIO\GLVFXVVLQJ&20 &209%DQGSUHYLRXVYHUVLRQVRI64/6HUYHU,DOVRGHVFULEHWKH1(7)UDPHZRUNLQJHQHUDO 1(7&RPSRQHQW6HUYLFHV9LVXDO%DVLF1(7&DQG64/6HUYHU,Q&KDSWHU³)DFWRUVWR &RQVLGHULQ&KRRVLQJD6ROXWLRQWRD3UREOHP´,GLVFXVVWKHGLIIHUHQWFULWHULD,ZLOOXVHWKURXJKRXW WKHERRNWRHYDOXDWHP\SURSRVDOVWRNH\SUREOHPV ,Q&KDSWHU³7HVWLQJ´,VWDUWWRGHVFULEHNH\SUREOHPV DQGVROXWLRQV²DGLVFXVVLRQWKDWZLOO FRQWLQXHWKURXJKRXWWKHUHVWRIWKHERRN7KLVFKDSWHUORRNVDWWKHH[WUHPHO\LPSRUWDQW²\HWRIWHQ IRUJRWWHQ²DVSHFWRIWHVWDSSOLFDWLRQVWKRURXJKO\,QWKLVFKDSWHU,GLVFXVVDQGVKRZDVROXWLRQRI KRZ\RXFDQDXWRPDWH DJRRGGHDORIWHVWLQJWKXVVDYLQJ\RXUVHOIWLPHLQWKHIXWXUH,DOVRGLVFXVV VWUDWHJLHVIRUXVLQJDVVHUWLRQV&KDSWHU³$GGLQJ'HEXJJLQJ6XSSRUW´GLVFXVVHVLPSRUWDQW SUHSDUDWLRQV\RXVKRXOGFRQVLGHUZKHQEXLOGLQJHQWHUSULVHDSSOLFDWLRQVVXFKDVSUHSDULQJIRU GHEXJJLQJ:HORRNFORVHO\DWDGGLQJWUDFLQJVXSSRUWHUURUORJJLQJDQGKRZWRKDQGOH FRQILJXUDWLRQGDWD :LQGRZV'1$KDVEHHQDVXFFHVVIXODUFKLWHFWXUHIRUVHYHUDO\HDUVQRZ,Q&KDSWHU ³$UFKLWHFWXUH´,GHVFULEHDQHZDUFKLWHFWXUHSURSRVDOERWKVLPLODUDQGGLVVLPLODUWR:LQGRZV'1$ WKDW\RXFDQXVHWREHWWHUWDNHDGYDQWDJHRIWKHQHZSODWIRUP,DOVRGLVFXVVVXLWDEOHFRGH VWUXFWXUHVIRUWKHGLIIHUHQWOD\HUVLQWKHDUFKLWHFWXUH7KHQLQ&KDSWHU³7UDQVDFWLRQV´ZHORRNDW JRRGWUDQVDFWLRQDOGHVLJQDQGZK\LWLVFUXFLDOIRUEXLOGLQJDVXFFHVVIXOHQWHUSULVHDSSOLFDWLRQ,Q WKLVFKDSWHU,IRFXVRQKRZWRZULWHWKHPRVWHIILFLHQWWUDQVDFWLRQVZKLOHNHHSLQJFRUUHFWQHVVLQ PLQG,DOVRGLVFXVVPHWKRGVIRUPDNLQJWKHFRGHHDVLO\WRFKDQJHIURPSXUH764/WUDQVDFWLRQVWR &20WUDQVDFWLRQVLIWKHQHHGDULVHV 0RYLQJRQWR&KDSWHU³%XVLQHVV5XOHV´,GLVFXVVGLIIHUHQWEXVLQHVVUXOHVZKHUHWKH\VKRXOGEH ORFDWHGDQGKRZWKH\VKRXOGEHLPSOHPHQWHG,Q&KDSWHU³'DWD$FFHVV´,IRFXVRQDQHZO\ GHYHORSHGGDWDDFFHVVSDWWHUQDQGLWVKHOSHU7KLVSDWWHUQUHGXFHVURXQGWULSVEHWZHHQWKH %XVLQHVVWLHUDQGWKH'DWDWLHUDQGVKRUWHQVWUDQVDFWLRQOHQJWKVDQGLQFUHDVHVGHEXJJDELOLW\ )LQDOO\&KDSWHU³(UURU+DQGOLQJDQG&RQFXUUHQF\&RQWURO´GLVFXVVHVVWUDWHJLHVIRUHUURU KDQGOLQJERWKLQVWRUHGSURFHGXUHVDQGLQ1(7FRPSRQHQWV,WDOVRGLVFXVVHVVWUDWHJLHVRI
FRQFXUUHQF\FRQWUROIRUVLWXDWLRQVZKHQGDWDLVGLVFRQQHFWHGIURPWKHGDWDEDVHERWKRSWLPLVWLF DQGSHVVLPLVWLFSURWRFROV
7RSLFV7KDW$UHQ W&RYHUHG
,GHFLGHGHDUO\RQWKDW,ZDQWHGWRZULWHDFRQFLVHDQGIRFXVHGERRN7KHUHIRUH,KDGWRVNLSPDQ\ LQWHUHVWLQJDQGLPSRUWDQWWRSLFV%HFDXVHWKHIRFXVRIWKHERRNLVGHVLJQDQGSURJUDPPLQJIRUWKH DSSOLFDWLRQVHUYHUDQGWKHGDWDEDVHVHUYHU,ZRQ WGLVFXVV:HE)RUPV:LQGRZV)RUPVDQG:HE 6HUYLFHVLQJUHDWGHSWK,QDGGLWLRQLQGHSWKGLVFXVVLRQRIWKHIROORZLQJWRSLFVLVEH\RQGWKHVFRSH RIWKLVERRN x x x x x
1(75HPRWLQJ 06044XHXHG&RPSRQHQWV4& /RRVHO\&RXSOHG(YHQWV/&( &RPSHQVDWLQJ5HVRXUFH 0DQDJHU&50 0XOWLWKUHDGLQJ 'HOHJDWHVDQG(YHQWV $'21(7
(DFKRIWKHVHWRSLFVLVLQWHUHVWLQJDQGLPSRUWDQWEXWWKH\FDQILOOHQWLUHERRNVRQWKHLURZQ,UHIHU \RXWR$SSHQGL[$³6XJJHVWLRQVIRU)XUWKHU5HDGLQJ´IRUDOLVWRIVXJJHVWHGERRNVVKRXOG\RX ZDQWWRUHDGDERXWWKHVHWRSLFV
7KH%RRN V:HE6LWH
5HVXOWVRIVHYHUDOSHUIRUPDQFHWHVWVH[HFXWHGDIWHUYHUVLRQRI1(7KDVEHHQUHOHDVHG $FRQWLQXRXVO\XSGDWHGOLVWRIVXJJHVWLRQVIRUIXUWKHUUHDGLQJ 7KHFRGHIURPWKHVDPSOHVDQGWKHWRROVGLVFXVVHGLQWKHERRN 7KHHUUDWDIRUWKHERRN
$)HZ)LQDO&RPPHQWV
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
$ERXWWKH$XWKRU -LPP\1LOVVRQ LVWKHRZQHURIWKH6ZHGLVKFRQVXOWLQJFRPSDQ\-16.$%+HKDVEHHQZRUNLQJ ZLWKV\VWHPGHYHORSPHQWIRU\HDUVZLWK9%VLQFHYHUVLRQ DQGLQUHFHQW\HDUVKHKDV VSHFLDOL]HGLQFRPSRQHQWEDVHGGHYHORSPHQWPRVWO\LQWKH0LFURVRIWHQYLURQPHQW+HKDVDOVR EHHQGHYHORSLQJDQGSUHVHQWLQJFRXUVHVLQGDWDEDVHGHVLJQREMHFWRULHQWHGGHVLJQDQGVRRQDWD 6ZHGLVKXQLYHUVLW\IRUVL[\HDUV-LPP\LVDIUHTXHQWVSHDNHUDW)DZFHWWHDQG:UR[&RQIHUHQFHV DQGKDVZULWWHQQXPHURXVWHFKQLFDODUWLFOHV(YHQVRKH FRQVLGHUVKLPVHOIWREHPDLQO\D GHYHORSHU
$FNQRZOHGJPHQWV
7KHUHDUHVRPDQ\WRZKRP,RZHWKDQNV,DPLQGHEWHGWRWKHPIRUSURYLGLQJIHHGEDFNIRUEHLQJ VRXQGLQJERDUGVDQGIRUEHLQJVRXUFHVRILQVSLUDWLRQ,WLVLPSRVVLEOHWRWKDQNWKHPDOOEXW, ZRXOGOLNHWRPHQWLRQIRXUSHRSOHLQSDUWLFXODUZKRKDYHPHDQWPRUHWRPHWKDQDQ\ERG\HOVH GXULQJWKLVSURMHFW 7R)UDQFHVFR%DOHQD)RUEHLQJP\PHQWRUWKURXJKRXWP\ZULWLQJFDUHHUDQGIRUZULWLQJVXFKD QLFHIRUHZRUG 7R'DQ%\VWU|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lQGHIRUV.HQQHWK +HQQLQJVVRQ3HWHU/+HQU\7LERU.DUDV]L0DUWWL/DLKR-RH/RQJ0LFKDHO'/RQJ7RP0RUHDX 3HU2OD1LOVVRQ-RKQ5REELQV(QULFR6DEEDGLQ(JLGLR6EXUOLQR&KDUOLH6YDKQEHUJDQG-RKDQ 6YDQVWU|P ,DOVRRZHDELJWKDQNVWRWKHWHDPWKDWKHOSHGPHWUDQVIRUPP\LGHDVLQWRVRPHWKLQJ XQGHUVWDQGDEOHWKH6DPVWHDPZLWKZKRP, YHEHHQZRUNLQJYHU\FORVHO\ 6RQGUD6FRWW$FTXLVLWLRQV(GLWRUWDONHGPHLQWRZULWLQJWKHERRNLQWKHILUVWSODFHDQGKDVEHHQD WUHPHQGRXVVXSSRUWWKURXJKRXWWKHHQWLUHSURMHFW/\GLD:HVW/DQJXDJH(GLWRUWUDQVIRUPHGP\ ³6ZHQJOLVK´LQWR(QJOLVK6KDQQRQ/HXPD'HYHORSPHQW(GLWRUPDGHZRQGHUVRIHDFKDQGHYHU\ FKDSWHUERWKLQWHUPVRIVWUXFWXUHDQGWKHFODULW\+HDWKHU0F1HLOO3URMHFW(GLWRUZDVLQFKDUJHRI WKHSURGXFWLRQVLGHRIWKHERRN'HRQ6FKDIIHUDQG6XQGDU5DMDQ7HFKQLFDO(GLWRUVFKHFNHGWKH FRQWHQWIRUWHFKQLFDOHUURUVDQGSURSRVHGQXPHURXVLPSURYHPHQWV$QGILQDOO\3DW.LQ\RQ&RS\ (GLWRUKHOSHGPHFOHDQXSWKHPLVWDNHVWKHUHVWRIXVPLVVHG
&KDSWHU,QWURGXFWLRQ ,17+,6&+$37(5 x x x x x x
7KH+LVWRU\RI&20076&209%DQG64/6HUYHU 7KH1HZ:RUOGRI1(7 &20&RPSRQHQW6HUYLFHV 9LVXDO%DVLF1.(7 & 64/6HUYHU
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
7KH+LVWRU\RI&20076&209%DQG64/6HUYHU
$OWKRXJKZHDOONQRZWKDWSURJUDPPLQJGLGQ WVWDUWZLWK&20DPDMRUVKLIWLQWKHLQGXVWU\ RFFXUUHGZKHQ&20EHFDPHSRSXODULQWKHPLGVVRLWVHHPVDJRRGSODFHWRVWDUWRXUORRN DWWKHWHFKQRORJ\ VKLVWRU\)URPWKHUHZH OOPRYHRQWR076&20&RPSRQHQW6HUYLFHVEHIRUH WRXFKLQJRQ9%DQG64/6HUYHU
&20
3HUKDSVRQHRIWKHPRVWLPSRUWDQWLGHDVEHKLQG&20ZDVWRPDNHLWDWHFKQLTXHIRUPRYLQJDZD\ IURPPRQROLWKLFDSSOLFDWLRQVWRZDUGFRPSRQHQWEDVHGDSSOLFDWLRQV$VVXFK&20LVDELQDU\ PRGHOQRWDVRXUFHFRGHPRGHO7KLVPLJKWPDNHIUHTXHQWUHXVHDOLWWOHHDVLHUWRDFFRPSOLVK EHFDXVH\RXUHXVHELQDU\FRPSRQHQWVLQVWHDGRIVRXUFHFRGHFODVVHVZLWK&20$QRWKHULPSRUWDQW EHQHILWLVWKHXVHU VDELOLW\WRWDNHDGYDQWDJHRIEODFNER[UHXVHZKLFKPHDQVWKDWWKHUHXVHURQO\
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
076&20&RPSRQHQW6HUYLFHV
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³+RZFDQLWSRVVLEO\WDNHWZRGD\VWRFKHFNDFKHFNER["´KH DVNV,QIDFWZLWK076 VDWWULEXWHEDVHGSURJUDPPLQJP\IULHQG VVKRFNLVDELWPRUHMXVWLILHG EHFDXVHPRUHSURJUDPPLQJFDQEHDFFRPSOLVKHGWKURXJKVLPSOHGHFODUDWLRQRUE\VHWWLQJDQ DWWULEXWHYDOXH7UDQVDFWLRQVLQ&20LVRQHH[DPSOHUHIHUHQWLDOLQWHJULW\LQ64/6HUYHUDQRWKHU :LWK:LQGRZV076ZDVXSJUDGHGWR&20:KLOH076ZDVDFWXDOO\DQDGGRQWR:LQGRZV 17&20ZDVQDWLYHO\VXSSRUWHGE\:LQGRZV7KLVVLPSOLILHGWKHSURJUDPPLQJPRGHOTXLWH DELW,WZDVRIWHQVDLGWKDW076&20 &20,QHVVHQFH&20MRLQHGWKHVHWZRSUHYLRXVO\ VHSDUDWHGSDUWV,QDGGLWLRQ&20DGGHGFRPSRQHQWVHUYLFHVVXFKDV2EMHFW3RROLQJ23 &RPSHQVDWLQJ5HVRXUFH0DQDJHU&50 DQG4XHXHG&RPSRQHQWV4&
9%
,VWDUWHGP\DGYHQWXUHVLQ:LQGRZVSURJUDPPLQJZLWK9%,VWLOOUHPHPEHUP\ILUVWPDMRU PLVWDNHLQWKDWHQYLURQPHQW,W VDFWXDOO\UDWKHUHPEDUUDVVLQJWRVKDUHEXWLWPDNHVPH VHQWLPHQWDOLQDQLFHZD\,ZDVVXSSRVHGWREXLOGDPHQXDSSOLFDWLRQIURPZKLFKVHYHUDORWKHU DSSOLFDWLRQVVKRXOGEHVWDUWHG,WZDVDQHDUO\³SRUWDO´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
64/6HUYHU
,OHDUQHG64/DWWKHXQLYHUVLW\LQWKHODWHVDQGLWLVVWLOOXVHIXOWRGD\$FWXDOO\LW VPRUH LPSRUWDQWWRPDVWHUWKDQHYHUHVSHFLDOO\LI\RXILQGVFDODELOLW\YLWDOIRU\RXUDSSOLFDWLRQV6LQFH, VWDUWHGZRUNLQJZLWK64/6HUYHUYHUVLRQ LWVSURJUDPPLQJPRGHOZLWKLWVWULJJHUVDQGVWRUHG SURFHGXUHVKDVUHPDLQHGTXLWHFRQVLVWHQW)RUH[DPSOHWKHVKLIWIURPYHUVLRQWRYHUVLRQ ZDVDPDMRURQHDWWKHHQJLQHOHYHOEXW764/GLGQ WFKDQJHWKDWPXFKDWDOO
$IULHQGRIPLQHRQFHVDLG³'DWDEDVHGHVLJQLVLPSRUWDQW'DWDEDVHVDUHXVHGLQRIDOO DSSOLFDWLRQVWRGD\´,WKLQNPDQ\GHYHORSHUVDJUHHWKDWGDWDEDVHVDUHXVHGDORW,DOVRWKLQNWKDW WKHUHLVDODUJHGLIIHUHQFHLQRSLQLRQUHJDUGLQJZKHWKHUWKHGDWDEDVHWLHU²VXFKDV64/6HUYHU IRUH[DPSOH²VKRXOGEHXVHGIRUGDWDIRFXVHGORJLF ,IDOORQWKHH[WUHPH\HVVLGH
$)HZ,PSRUWDQW'HILQLWLRQV
%HIRUHZHJHWWRRIDUDORQJLQWKHERRN, GOLNHWRGHILQHDIHZWHUPV,ZLOO EHXVLQJLQWKHVHFKDSWHUVWKDWKDYHPDQ\GLIIHUHQWPHDQLQJVLQWKH LQGXVWU\ x
x
&RPSRQHQW² ,I\RXDJUHHZLWK6]\SHUVNLWKHZRUG³FRPSRQHQW´ UHIHUVWRD&20VHUYHUVXFKDVD'//RUD1(7DVVHPEO\WKDWLVD ELQDU\FROOHFWLRQRIFODVVHV7KH&20GHILQLWLRQRIWKHZRUGUHIHUV WRRQHVLQJOHELQDU\FODVV,SUHIHUWKLV&20GHILQLWLRQ 7LHUDQGOD\HU²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
7KH1HZ:RUOGRI1(7 1RZWKDWZHKDYHWDNHQDORRNDWWKHKLVWRU\RIWKHWHFKQRORJ\ZH UHUHDG\WRORRNDWWKHPDQ\ FKDQJHVWKDWKDYHFRPHDERXWZLWKWKHLQWURGXFWLRQRI1(7
1(7$:KROH1HZ3ODWIRUP
,UHPHPEHUZKHQ,ILUVWUHDG0DU\.LUWODQG VDUWLFOHV´2EMHFW2ULHQWHG6RIWZDUH'HYHORSPHQW 0DGH6LPSOHZLWK&205XQWLPH6HUYLFHV´ DQG´7KH&203URJUDPPLQJ0RGHO0DNHVLW(DV\WR :ULWH&RPSRQHQWVLQ$Q\/DQJXDJH´ LQ0LFURVRIW6\VWHPV-RXUQDO LQ,QKHUDUWLFOHV0DU\ GLVFXVVHGPDQ\RIWKHWKLQJVZHNQRZRIWRGD\DV1(7EXWVKHFDOOHGLW&20$WWKDWWLPHLW IHOWOLNHDKXJHVWHSDQGDVLWWXUQHGRXWLWZDVSUREDEO\WRRELJDOHDSIRU0LFURVRIWWRWDNHZLWK &20WKH\GLGQ WOHYHUDJHPRUHWKDQDKDQGIXORIWKHWKLQJV0DU\GLVFXVVHG,DOVRUHPHPEHU WKLQNLQJWKDWVHYHUDORIWKHFRQFHSWVZHUHIDPLOLDUWRPHDVD&20SURJUDPPHULQ9%DQGWKDWWKH &JX\VQRZZRXOGKDYHVRPHRIWKHVHSURGXFWLYLW\HQKDQFLQJIHDWXUHVWRR7KLVZDVDOVRWKH ILUVWWLPH,KHDUGWKHH[SUHVVLRQ³
$FRPPRQUXQWLPHWKDWFRXOGEHXVHGIURPDQ\SURJUDPPLQJODQJXDJH )XOOLQWHURSHUDELOLW\EHWZHHQODQJXDJHV $WWULEXWHVZLWKDFHQWUDOUROH 5LFKPHWDGDWD 1RQHHGIRUPDQXDOFRGHUHJDUGLQJJDUEDJHFROOHFWLRQFODVVIDFWRULHVDQGVRRQ 0HWKRGVXVHGGLUHFWO\RQFODVVHVDQGQRWRQO\YLDLQWHUIDFHV ,PSOHPHQWDWLRQLQKHULWDQFH 1RGHWHUPLQLVWLFILQDOL]DWLRQZKLFKPHDQVWKDW\RXGRQ WNQRZZKHQDQREMHFWLVILQDOL]HG EHFDXVHWKHJDUEDJHFROOHFWLRQPD\KDSSHQLPPHGLDWHO\RUPRVWRIWHQPXFKODWHU
x x x x x
GHWHUPLQLVWLFILQDOL]DWLRQZDVDOUHDG\PHQWLRQHGDWWKLVWLPH,ZRQGHUZK\LWGLGQ WXSVHW GHYHORSHUVDVPXFKWKHQ $VWURQJVHFXULW\PRGHOIRUWKHFRPSRQHQWV )XQFWLRQDOLW\VLPLODUWR6TO'DWD$GDSWHU LQ$'21(7$Q6TO'DWD$GDSWHU FDQEHXVHGWR UHJLVWHUZKLFKVWRUHGSURFHGXUHVKRXOGEHFDOOHGIRULQVHUWLQJQHZURZVWKDWKDYHEHHQ DGGHGWRD'DWD6HWIRUXSGDWLQJDQGVRRQ 1RQHHGIRUDVHSDUDWHLQWHUIDFHODQJXDJHVXFKDV,'/ $OOODQJXDJHVGHFLGHRQDFRPPRQVHWRIW\SHV 3DUDPHWHUL]HGFRQVWUXFWRUVDQGRYHUORDGLQJ
7KHJRRGQHZVLVWKDW1(7GRHVGHOLYHURQDOORIWKHVHLGHDVDQGHYHQ\HDUVODWHULW VDQ LPSUHVVLYHOLVW$OWKRXJK0DU\ VGLVFXVVLRQZDVEDVHGRQWKHLGHDWREXLOGWKHUXQWLPHDQG HYHU\WKLQJHOVHRQ&201(7LVQ WZULWWHQRQ&20LW VDFRPSOHWHO\QHZSODWIRUP ,QDGGLWLRQ1(7DOVRLQFOXGHVWKHIROORZLQJIHDWXUHV x x x x x x x x x x
5HPRWLQJIRUH[DPSOHZLWK62$3 $'21(7 $631(7 :LQGRZV)RUPV :HE)RUPV ;0/:HEVHUYLFHVVXSSRUW %DVH&ODVV/LEUDU\%&/ $QHZDQGDPXFKPRUHFRPSHWHQWYHUVLRQLQJVFKHPD $QHZODQJXDJHFDOOHG& 0DQ\FKDQJHVWR9%RUUDWKHUDUHZULWH WRPDNHLW9LVXDO%DVLF1(7
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
1(7&RPSRQHQW6HUYLFHV
1(7LVQ WUHDOO\DQHYROXWLRQLW VDUHYROXWLRQ(YHQVRZULWLQJVHUYLFHGFRPSRQHQWVWKDWLVXVLQJ FRPSRQHQWVHUYLFHVLQ1(7 LVLQHVVHQFHHYROXWLRQDU\,I\RXKDYHZRUNHGZLWKZULWLQJ FRPSRQHQWVWKDWXVH&20FRPSRQHQWVHUYLFHV\RXZLOOEHZHOOSUHSDUHG /LVWLQJVKRZVZKDWDYHU\VLPSOHVHUYLFHGFRPSRQHQWZRXOGORRNOLNHDVDFODVVLQ9LVXDO%DVLF 1(7)RULWWRZRUN\RXPXVWVHWDUHIHUHQFHWR6\VWHP(QWHUSULVH6HUYLFHVGOO /LVWLQJ$6LPSOH6HUYLFHG&RPSRQHQWLQ9LVXDO%DVLF1(7 ,PSRUWV6\VWHP(QWHUSULVH6HUYLFHV 3XEOLF&ODVV0\)LUVW6DPSOH ,QKHULWV6HUYLFHG&RPSRQHQW
3XEOLF)XQFWLRQ*HW7LPH $V6WULQJ 5HWXUQ1RZ7R6WULQJ (QG)XQFWLRQ (QG&ODVV :KHQWKLVFODVVLVXVHGIRUWKHILUVWWLPHLWZLOODXWRPDWLFDOO\EHUHJLVWHUHGDVDFRQILJXUHG&20 FRPSRQHQWZKLFKFRPHVLQKDQG\DWGHYHORSPHQWWLPH6WLOODWGHSOR\PHQWWLPHWKLVIHDWXUHLV PRVWRIWHQQRWXVHIXOEHFDXVHWKHXVHUUXQQLQJWKHDSSOLFDWLRQPXVWKDYHDGPLQLVWUDWRUSULYLOHJHV WRKDYHLWUHJLVWHUHG
$YHU\KDQG\IHDWXUHRI1(7LVWKDWWKHDWWULEXWHVFDQEHZULWWHQLQFRGH/LVWLQJVKRZVDQ H[DPSOHLQZKLFKDFODVVLVGHFRUDWHGZLWKDWWULEXWHVIRUREMHFWSRROLQJ /LVWLQJ$WWULEXWHV'HFRUDWLQJD&ODVV 2EMHFW3RROLQJ$WWULEXWH(QDEOHG 7UXHB 0LQ3RRO6L]H 0D[3RRO6L]H B &UHDWLRQ7LPHRXW !3XEOLF&ODVV0\3RROHG&ODVV 6SHFLDO&RQVLGHUDWLRQV
$VXVXDOFRQVXPHUVZRQ WKDYHWRNQRZZKHWKHUWKHXVHGFRPSRQHQWLVVHUYLFHGRUQRW2I FRXUVHWKHFRQVXPHUVFDQEHXQPDQDJHGFRGHVXFKDV9%ZULWWHQFRGH,QIDFWXVLQJ1(7WR ZULWHEHWWHU&20FRPSRQHQWVIRUXQPDQDJHGFRQVXPHUVZLOOOLNHO\EHDFRPPRQVFHQDULRLQWKH QHDUIXWXUH
&20&RPSRQHQW6HUYLFHV
:LQGRZV;3DQG:LQGRZV1(76HUYHUZLOOFRQWDLQ&20DQGZLWKLWDORWRIQHZIXQFWLRQDOLW\ LQFOXGLQJ x x x x x x x x x x
3URFHVVUHF\FOLQJ &RQILJXUDEOHLVRODWLRQOHYHO $SSOLFDWLRQVDV:LQGRZVVHUYLFHV 0HPRU\JDWHV 3DXVHGLVDEOHDSSOLFDWLRQV 3URFHVVGXPSLQJ 0RYLQJDQGFRS\LQJFRPSRQHQWV 3XEOLFSULYDWHFRPSRQHQWV $SSOLFDWLRQSDUWLWLRQV &20DSSOLFDWLRQVH[SRVHGDV;0/:HEVHUYLFHV
:HZLOOGLVFXVVHDFKRIWKHVHIHDWXUHVLQWKHUHVW RIWKLVVHFWLRQ
3URFHVV5HF\FOLQJ
$VLPSOHZD\RIHVFDSLQJWKHSUREOHPVZLWKPHPRU\OHDNDJHLVWRUHVWDUWWKHVHUYHUSURFHVVQRZ DQGWKHQ:LWKSURFHVVUHF\FOLQJ\RXFDQGHFODUDWLYHO\WHOOKRZDQGZKHQWKLVVKRXOGKDSSHQ²IRU H[DPSOHDIWHUDFHUWDLQDPRXQWRIUHTXHVWVRUHYHU\QLJKW 1RWH ,RQFHZURWHD:HEDSSOLFDWLRQWKDWKDGDPHPRU\OHDN7KHFXVWRPHUWKRXJKWLWZDVD FKHDSVROXWLRQIRUWKHPWRMXVWUHERRWWKHPDFKLQHHYHU\ZHHNHQGEHFDXVHWKH\KDG SHRSOHZRUNLQJWKHQDQ\ZD\,SUHIHUUHGWRWU\WRVROYHWKHSUREOHPLQVWHDGRIXVLQJD %DQG$LGEXWWKH\GLGQ WVHHWKLVDVDSUREOHPDWDOO2IFRXUVHSURFHVVUHF\FOLQJZRXOG KDYHEHHQPRUHFRQYHQLHQWIRUWKHP
&RQILJXUDEOH,VRODWLRQ/HYHO ,Q&20WKHWUDQVDFWLRQLVRODWLRQOHYHOZDVDOZD\V6(5,$/,=$%/( IRU&20WUDQVDFWLRQV DJDLQVW64/6HUYHU2UDFOHJHWVWKHVDPHUHTXHVWWRVHWWKHLVRODWLRQOHYHOWR6(5,$/,=$%/(EXW QHJOHFWVWKLVDQGXVHV5($'&200,77(' LQVWHDG7KLVLVEHFDXVH2UDFOHXVHVYHUVLRQLQJLQVWHDGRI ORFNLQJIRUFRQFXUUHQF\FRQWURODQGWKHQ5($'&200,77(' LVPRVWRIWHQHQRXJK ,QWKHSDVWWKLV
KDVEHHQDPDMRUFRQVWUDLQWWRNHHSLQPLQGZKHQGHVLJQLQJIRU&20EXWLQ&20LWZLOOEH SRVVLEOHWRFRQILJXUHWKHQHHGHGLVRODWLRQOHYHO
$SSOLFDWLRQVDV:LQGRZV6HUYLFHV
6RPHRIWKHFRPSRQHQWVHUYLFHVVXFKDVTXHXHGFRPSRQHQWVQHHGDVWDUWHG&20DSSOLFDWLRQWR ZRUN,Q&20LWLVSRVVLEOHWRUXQ&20DSSOLFDWLRQVDV:LQGRZVVHUYLFHV7KLVDOVRFRPHVLQ KDQG\LI\RXOLNHWRUXQWKHDSSOLFDWLRQDVWKHORFDOV\VWHPDFFRXQWWRPDNHLWSRVVLEOHWRDFWZLWK WKHSULYLOHJHVIURPWKDWXVHU7KLVLVDOVRDVROXWLRQWRWKHVKRUWGHOD\WKDWPLJKWRWKHUZLVHEH DSSDUHQWZKHQWKHILUVWUHTXHVWLVPDGHWRD&20VHUYHUDSSOLFDWLRQDIWHUV\VWHPERRWRUDIWHU WKHDSSOLFDWLRQKDVEHHQVKXWGRZQ
0HPRU\*DWHV
7KH0HPRU\*DWHVIHDWXUHSUHYHQWVWKHFUHDWLRQRIREMHFWVZKHQWKHDPRXQWRIIUHHPHPRU\IDOOV EHORZDFHUWDLQOHYHO7KHUHDVRQIRUWKLVIXQFWLRQDOLW\LVWRDYRLGDGGLQJREMHFWVZKHQWKHUH VQRW HQRXJKPHPRU\WRVXSSRUWWKHLURSHUDWLRQV6WUDQJHHUURUVRFFXUZKHQDV\VWHPUXQVRXWRI PHPRU\DQGLWLVKDUGWRWUDSIRUHUURUVLQFRPSRQHQWVLQWKLVHQYLURQPHQW,QIDFWPRVW FRPSRQHQWVDUHQ WWHVWHGIRUORZPHPRU\FRQGLWLRQVVRLWLVEHWWHUWKDWWKH\GRQ WJHWFDOOHGDWDOO LIWKHV\VWHPKDVUXQRXWRIPHPRU\
3DXVH'LVDEOH$SSOLFDWLRQV
,Q&20\RXFDQ WSDXVHD&20DSSOLFDWLRQ,QVWHDG\RXKDYHWRGHOHWHWKHFRPSRQHQWLI IRUDQ\UHDVRQ\RXGRQ WZDQWDQ\ERG\WRXVHLWIRUDFHUWDLQDPRXQWRIWLPH,Q&20\RX FDQERWKSDXVHDQGGLVDEOHDSSOLFDWLRQV 3URFHVV'XPSLQJ 7RPDNHGHEXJJLQJHDVLHULQ&20LWZLOOEHSRVVLEOHWRWDNHDVQDSVKRWRIWKHSURFHVV ZLWKRXWKDYLQJWRVWRSWKHSURFHVV7KLVVQDSVKRWFDQWKHQEHXVHGZLWKDGHEXJJHUWRH[DPLQH WKHH[DFWVWDWHZKHQWKHSUREOHPRFFXUUHG 0RYLQJDQG&RS\LQJ&RPSRQHQWV 2IWHQLWLVXVHIXOWREHDEOHWROHWWKHVDPHFRPSRQHQWDSSHDUVHYHUDOWLPHVLQVHYHUDO DSSOLFDWLRQV7KDWLVHVSHFLDOO\WKH FDVHIRUKHOSHUFRPSRQHQWV$VVXPHWKDWRQHKHOSHUFRPSRQHQW LVXVHGE\ILYHGLIIHUHQW&20DSSOLFDWLRQV,Q&20DOOILYHDSSOLFDWLRQVKDYHWREHXSJUDGHG DWWKHVDPHWLPHWRXVHWKHQHZYHUVLRQRIWKHKHOSHU,JHQHUDOO\SUHIHUWRXSJUDGHVWHSE\VWHS LQVWHDG7KHUHIRUHLW VFRPPRQWKDWKHOSHUVDUHUHXVHGLQVRXUFHFRGHIRUPLQVWHDGRIDVELQDU\ FRPSRQHQWV,Q&20LWZLOOEHSRVVLEOHWRFRQILJXUHWKHVDPHSK\VLFDOFRPSRQHQWVHYHUDO WLPHVDQGLQGLIIHUHQWZD\V
3XEOLF3ULYDWH&RPSRQHQWV
,Q&20DOOFRPSRQHQWVDUHSXEOLF,Q&20LWZLOOEHSRVVLEOHWRVHWDFRPSRQHQWWREH SULYDWHWRWKHFXUUHQWDSSOLFDWLRQ7KHOHVV\RXH[SRVHH[WHUQDOO\WKHHDVLHULWLVIRU\RXWRPDNH FKDQJHVLQWKHIXWXUHWRWKHDSSOLFDWLRQ
$SSOLFDWLRQ3DUWLWLRQV
7KHSXUSRVHRIDSSOLFDWLRQSDUWLWLRQVLVWRSDUWLWLRQDPDFKLQHVRWKDWDSSOLFDWLRQVGRQ WGLVWXUE HDFKRWKHU$W\SLFDOVLWXDWLRQZKHQDSSOLFDWLRQSDUWLWLRQVDUHRIJUHDWXVHLVLQGDWDFHQWHUV &RQVLGHUWKHSRVVLELOLW\RIUXQQLQJVHYHUDOLQVWDQFHVRI64/6HUYHULQRQHVLQJOHPDFKLQH
&20$SSOLFDWLRQV&DQ%H([SRVHGDV;0/:HE6HUYLFHV
,I\RXZDQWWRH[SRVHVRPHIXQFWLRQDOLW\RID&20DSSOLFDWLRQDV;0/:HEVHUYLFHV&20 PDNHVWKDWHDV\
9LVXDO%DVLF1(7
,IRURQHKDYHEHHQORQJLQJIRU9LVXDO%DVLF1(7IRUDORQJWLPH:K\\RXDVN"
3UREOHPV6ROYHGZLWK9LVXDO%DVLF1(7 9%KDVDOZD\VKDGJUHDWLGHDVIRUKRZDSSOLFDWLRQVVKRXOGEHEXLOWEXWWKHLPSOHPHQWDWLRQVKDYH KDGTXLUNV7KHIROORZLQJDUHDIHZH[DPSOHVRISUREOHPVWKDWZHUHIRXQGLQ9%EXWWKDWDUHQRZ VROYHGLQ9LVXDO%DVLF1(7 x
x
x
x
x
x x
x
:LWK(YHQWV FDQ WEHXVHGZLWKXVHUGHILQHGLQWHUIDFHV² 7KHILUVWWLPH,WULHGWRXVH :LWK(YHQWV ZLWKXVHUGHILQHGLQWHUIDFHVLWWRRNPHKDOIDGD\WRGHFLGHWKDWLWMXVWZDVQ W SRVVLEOH$FDOOEDFNVROXWLRQVROYHVWKHSUREOHPEXWLW VVWLOOLUULWDWLQJWKDWWKHV\VWHP SOXJJHGVROXWLRQGRHVQ WZRUN 6LQJOHWKUHDGHGDSDUWPHQWV67$ DUHQRWDOZD\VDVXIILFLHQWPRGHOIRUPXOWLWKUHDGLQJ² 9%SURWHFWVXVIURPRXUVHOYHV0RVWRIWKHWLPHWKLVLVDJRRGWKLQJ2QWKHRWKHUKDQG ZKHQZHKDYHDGYDQFHGQHHGVDQGNQRZZKDWZHDUHGRLQJLWZRXOGEHQLFHWRKDYHWKH FDSDELOLW\WRPRYHLQWRGDQJHURXVJURXQGV8VLQJIUHHWKUHDGLQJLVDW\SLFDOH[DPSOH7KLVLV GHILQLWHO\LQWHUHVWLQJIRU&20FRPSRQHQWV7KHEXLOWLQV\QFKURQL]DWLRQVXSSRUWLQ&20 KHOSVDORWZLWKZULWLQJWKUHDGVDIHFRGHZLWKRXW67$V :KHQ *OREDO0XOWL8VH LVXVHGWKHFODVVPXVWOLYHLQDQRWKHU'//² ,KDYHDOVRKDG SUREOHPVZLWK*OREDO0XOWL8VH LQ&20DSSOLFDWLRQV 7KHUHIRUH,LQVWHDGXVHROGVW\OH FRGHPRGXOHVIRUP\KHOSHUURXWLQHVLQ9%7KDWPHDQV,RIWHQHPSOR\FRGHUHXVHLQVWHDG RIELQDU\UHXVHEXW,DOVRVNLSVRPHLQVWDQWLDWLRQRYHUKHDGERWKZKHQ,ZULWHWKHFRGHDQG ZKHQWKHFRGHLVH[HFXWHG 7KHFODVVHGLWRULVQ WPDGHIRUZULWLQJXVHUGHILQHGLQWHUIDFHVDQG9%FUHDWHVDQXJO\W\SH OLEUDU\² %HFDXVHRIWKLVDOWKRXJKLWLVSRVVLEOHWRWDNHVRPHFRQWURORIWKHLQWHUIDFHVZLWK 9%VHULRXV9%GHYHORSHUVRIWHQZULWHWKHLQWHUIDFHVLQ,'/DQGFRPSLOHWKHPZLWK 0LFURVRIW,QWHUIDFH'HILQLWLRQ/DQJXDJH0,'/WKHFRPSLOHUWKDWWUDQVIRUPV,'/LQWRIRU H[DPSOHDW\SHOLE 7KHUHLVQRWDORWRI³9%IHHOLQJ´LQWKDWDSSURDFKEXWLWLVWKH SUHIHUUHGZD\ 7KHUHLVDODFNRIVWURQJW\SLQJ² ,I,IRUJHWWRGHFODUH WKHGDWDW\SHIRUDYDULDEOHRU SDUDPHWHU,FRQVLGHUWKLVDEXJDQG,GHILQLWHO\ZDQWWKHFRPSLOHUWRWHOOPHDERXWLW9% IRUJLYHVDQGRIIHUVD9DULDQW LQVWHDG$QRWKHUH[DPSOHLVWKDW9%IRUJLYHVZKHQ,IRUJHW WRGRDQH[SOLFLWFDVW,WPDNHVDQLPSOLFLWRQHDXWRPDWLFDOO\,VLWJRRGWREHIRUJLYLQJ"1R QRWLQWKLVFDVH+LGLQJULVNVDQGEXJVLVQRWDJRRGWKLQJ 7KHUHLVDZHDNHUURUKDQGOLQJVFKHPH² 7KHHUURUKDQGOLQJLQ9%LVTXLWHZHDNDQG GHILQLWHO\QRWZHOOXQGHUVWRRG8QIRUWXQDWHO\LW VQRWXQFRPPRQWRILQGLQVXIILFLHQWRU LQFRUUHFWHUURUKDQGOLQJFRGHLQDUWLFOHVSXEOLVKHGE\0LFURVRIWHLWKHU 7KHLPSOLFLWFOHDQXSLVVKDN\² (VSHFLDOO\LQDKLJKO\VWUHVVHGVHUYHUVLGHVFHQDULRWKHUH KDYHEHHQVHYHUDOUHSRUWVWKDWWKHLPSOLFLWFOHDQXSRI9%LVQ WFOHDQLQJXSFRUUHFWO\7KHUH LVDOVRWKHPRUHZHOONQRZQFLUFXODUUHIHUHQFHSUREOHPRI&20WKDW\RXKDYHWREUHDNXS PDQXDOO\7RXQGHUVWDQGWKHFLUFXODUUHIHUHQFHSUREOHPDVVXPHWKDW\RXKDYHWZR REMHFWVHDFKRIZKLFKNHHSVDUHIHUHQFHWRWKH RWKHUREMHFW,W VQRWHQRXJKWRVHWRQHRI WKRVHREMHFWVWR1RWKLQJ H[SOLFLWO\7KHUHIHUHQFHFRXQWLQJ±EDVHGFOHDQXSDOJRULWKPLQ&20 ZLOONHHSERWKREMHFWVDOLYH 7KHUHLVDODFNRIVKDUHGRUFODVVRUVWDWLF PHPEHUV² ,WULHGWRLPSOHPHQWDQRUGLQDU\ 6LQJOHWRQ ZKLFKPHDQVRQHVLQJOHREMHFWUHXVHGRYHUDQGRYHUDJDLQVLPLODUWRDJOREDO REMHFW ZLWKRXWDQ\OXFNZKHQ9%ZDVUHOHDVHGEHFDXVH9%GLGQ WKDYHPHPEHUVWKDW EHORQJWRWKHFODVVUDWKHUWKDQWKHREMHFWV7KHVDPHJRHVIRU9%DQG9%
,QDGGLWLRQWRWKHVHSUREOHPVWKHUHKDVDOVREHHQDODFNRIRWKHUREMHFWRULHQWHGFRQFHSWVWRR 7KHPRVWFRPPRQFRPSODLQWLQWKDWDUHDLVSUREDEO\WKHODFNRILPSOHPHQWDWLRQLQKHULWDQFH ,PSOHPHQWDWLRQLQKHULWDQFHPHDQVWKDWDFODVVFDQLQKHULWWKHLPSOHPHQWDWLRQIURPDQRWKHUFODVV :KHQDSURJUDPPHUUHIHUVWR³LQKHULWDQFH´KHRUVKHLVSUREDEO\UHIHUULQJWRWKLVW\SHRI LQKHULWDQFH $WILUVW,WKRXJKW0LFURVRIWZDV³FUHDWLQJ´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³ZDVWH´WKHVLQJOHLQKHULWDQFH SRVVLELOLW\ $V,PHQWLRQHGHDUOLHUWKHVHSUREOHPVKDYHDOOEHHQVROYHGZLWK9LVXDO%DVLF1(79LVXDO%DVLF 1(7 WKH9%ZD\ZLWKIHZHUTXLUNV
1HZ³3UREOHPV´ZLWK9LVXDO%DVLF1(7
8QIRUWXQDWHO\HYHQWKRXJK9LVXDO%DVLF1(7VROYHVDORWRISUREOHPVLWLQWURGXFHVVRPHDVZHOO )RURQH9LVXDO%DVLF1(7LVDPXFKKDUGHUODQJXDJHWROHDUQIRUQHZFRPHUVWKDQ9%,WLVPRUH FRPSHWHQWEXWDOVRIXOORIDGYDQFHGFRQFHSWV)RUPDOWUDLQLQJDQGRUPXFKH[SHULHQFHDUHDPXVW ,QIDFWIRUWKLVUHDVRQDQGRWKHUVVRPHGHYHORSHUVGRQ WOLNH9LVXDO%DVLF1(7DWDOO,QP\ RSLQLRQLW VDKXJHDQGJUHDWOHDSIRUZDUG2QHWKLQJ WKDWGRHVLUULWDWHPHLVWKDWEHWZHHQEHWD
DQG0LFURVRIWVXGGHQO\DQQRXQFHGWKDWWKH\ZHUHFKDQJLQJ9LVXDO%DVLF1(7VRWKDWLVZDV PRUHFRQVLVWHQWZLWK9%7KH\EDVHGWKLVGHFLVLRQRQWKHIHHGEDFNRUUDWKHUFULWLFLVP WKH\JRW IURPWKH9%093V :KHQ,GLVFXVVHGWKLVZLWK0LFURVRIW,ZDVWROGWKDWWKHVHFKDQJHVZRXOGRQO\ LQFUHDVHEDFNZDUGFRPSDWLELOLW\DQGWKDWWKLVZRXOGQ WDIIHFWWKHIXWXUHDWDOO,GRQ WDJUHH:H ZLOOKDYHWROLYHZLWKWKRVHPLVWDNHVDORQJWLPH 7KHIROORZLQJDUHWKHFKDQJHV0LFURVRIWPDGHEHWZHHQEHWDDQGEHWDRI9LVXDO%DVLF1(7 x x x x
7UXH VKRXOGEHUHSUHVHQWHGDV LQQXPHULFDOIRUPQRWDV ² ,QP\RSLQLRQLI\RXKDYH FRGHGVRWKDW\RXDUHGHSHQGHQWRQWKHQXPHULFDOUHSUHVHQWDWLRQ\RXVKRXOGEHSUHSDUHG WRPDNHFKDQJHVLQWKHIXWXUH $QG DQG 2U ZLOOQRWEHVKRUWFLUFXLWLQJ² 7KHPDLQULVNZDVVDLGWREHLIDXVHUKDGZULWWHQ DQ,I FODXVHDVIROORZV ,ID $QG,QLWLDOL]H6RPH 7KHQ $VVXPHWKDW,QLWLDOL]H6RPH VHWVVRPHJOREDOYDULDEOHV,I$QG ZRXOGEHVKRUWFLUFXLWLQJ DQGD LV)DOVH,QLWLDOL]H6RPH ZRXOGQRWH[HFXWHLQ9LVXDO%DVLF1(7,QP\ RSLQLRQWKLVW\SHRIFRGLQJLVDKDFNDQGWKHSURJUDPPHUVKRXOGEHSUHSDUHGIRUXJO\FRGH OLNHWKLVWREUHDNLQWKHIXWXUH,WZRQ WKDSSHQLQ9LVXDO%DVLF1(7 ,I\RXZDQWDVKRUWFLUFXLWLQJ$QG2U\RXVKRXOGXVH$QG$OVR2U(OVH LQVWHDG,DOZD\V ZDQWLWWRVKRUWFLUFXLWVR,KDYHWRJHWXVHGWRXVLQJWKRVHQHZV\QWDFWLFHOHPHQWV
x x x x
$QG2U ZLOOEHELWZLVHRSHUDWLRQVDJDLQDVLQ9%² %HIRUHWKLVFKDQJHWKH\ZHUHSXUHO\ ORJLFDORSHUDWRUVDQG%LW$QG%LW2U KDGWREHXVHGIRUELWZLVHRSHUDWLRQV $UUD\GHFODUDWLRQVVKRXOGVHWWKHXSSHUERXQGQRWWKHQXPEHURIHOHPHQWV² ,I\RX GHFODUHDQDUUD\DVIROORZV 'LP[ $V,QWHJHU \RXJHWDQDUUD\RIVL[HOHPHQWVQRWILYH2YHUWKH\HDUVWKLVKDVLUULWDWHGPHUHSHDWHGO\ ,W VQRWLQWXLWLYHDQG,FDQ WVHHWKHSRLQWLQGRLQJLWOLNHWKLV
'HVSLWHWKHVHFKDQJHVWKH093VDUHVWLOOXQKDSS\ZLWK9LVXDO%DVLF1(77KHRQO\WKLQJ0LFURVRIW DFKLHYHGZDVWRPDNHWKHODQJXDJH ZHDNHUDQGWRLUULWDWHDODUJHDQGTXLHWSDUWRIWKH9% FRPPXQLW\ ,GHFLGHGRQ9LVXDO%DVLF1(7DVP\1(7ODQJXDJHRIFKRLFHTXLWHHDUO\$IWHUWKDWZKHQ 0LFURVRIWGLGWKHLUPRYHPHQWEDFN,DOPRVWGHFLGHGWRXVH&LQVWHDG,W VDFWXDOO\QRWDGUDPDWLF GHFLVLRQ
&
$OWKRXJKVRPHZRXOGDUJXHWKDW&LV-DYDEDVHGLWLVSULPDULO\URRWHGLQ&7KHUHKDYHEHHQ VRPHUHVWULFWLRQVDQGDORWRIFOHDQXSLQWKHODQJXDJHLQWKHWUDQVLWLRQ&KDVDOVREHHQ9%LILHG WRDODUJHGHJUHHZKLFKPDGHLWVLPSOHUDQGPRUHSURGXFWLYHWRXVHWKDQLWVDQFHVWRU& $OWKRXJKWKH\GRGLIIHU&DQG9LVXDO%DVLF1(7DUHYHU\PXFKDOLNH,I\RXPDVWHURQHLW VTXLWH HDV\WRXVHWKHRWKHU$ORWRI\RXUWLPHLQYHVWPHQWZLOOEHSXWLQWKH%DVH&ODVV/LEUDU\%&/ DQG EHFDXVHLWLVVKDUHG E\ERWK&DQG9LVXDO%DVLF1(7\RXGRQ WKDYHWRVSHQGWLPHUHOHDUQLQJLWV FRQFHSWV
&9HUVXV9LVXDO%DVLF1(7
7KHGLIIHUHQFHVEHWZHHQ&DQG9LVXDO%DVLF1(7DUHPRVWO\WRVXLWGLIIHUHQWSURJUDPPHU V EDFNJURXQGV8QIRUWXQDWHO\WKHUHDUHVRPHRWKHU GLIIHUHQFHV7KHIROORZLQJLVDOLVWRWKHUWKDQ WKRVHWKDWZHUHPHQWLRQHGZKHQ,GLVFXVVHG0LFURVRIW V³JRLQJEDFN´ RIVRPHH[DPSOHVRIWKH GLIIHUHQFHVEHWZHHQ&DQG9LVXDO%DVLF1(7 x x x
&ZDUQV\RXLIDIXQFWLRQLVPLVVLQJDUHWXUQVWDWHPHQW² 7KLVFDWFKHVDIHZEXJV DXWRPDWLFDOO\ &UHTXLUHV;0/WDJJHGGRFXPHQWDWLRQWREHZULWWHQLQWKHFRGH² 6HHPVWREHDJRRG LGHDWRGUDJRXWWKHFRPPHQWVIURPWKHFRGHDQGXVHLWIRUGLIIHUHQWVFHQDULRV &FDQVZLWFKWR8QPDQDJHGPRGH² 7KLVFDQHDVLO\EHDFKLHYHGLQ9LVXDO%DVLF1(7E\ MXVWFDOOLQJD&FODVVWKDWWDNHVFDUHRILW6WLOO,ILQGLWQLFHWRKDYHWKHVDPHSRVVLELOLWLHV LQERWKHQYLURQPHQWV
x
7REHIDLU9LVXDO%DVLF1(7KDVVRPHDGYDQWDJHVRYHU&WRR x x x
9LVXDO%DVLF1(7GLIIHUV,QKHULWV IURP,PSOHPHQWV² ,Q&LW VZULWWHQLQERWKFDVHVZLWK DFRORQ 7KHHYHQWV\QWD[LVVLPSOHLQ9LVXDO%DVLF1(7² ,W VDVFOHDQDQGLQWXLWLYHDVLQ9%,Q &\RXKDYHWRWDNHFDUHRIPRUHE\KDQG 9LVXDO%DVLF1(7LVQRWFDVHVHQVLWLYH² 7KLVLVDPDWWHURIWDVWHEXW,SUHIHUQRQ±FDVH VHQVLWLYH2WKHUZLVHWKHUHLVDOZD\VVRPHERG\WKDWZLOOKDYHWZRPHWKRGVLQDVLQJOHFODVV QDPHGVRPHWKLQJOLNHJHW'DWD DQG*HW'DWD 1RWH 'HVSLWHWKHGLIIHUHQFHVEHWZHHQ&DQG9LVXDO%DVLF1(7\RXFDQXVHWKLVERRNZLWK HLWKHU&RU9LVXDO%DVLF1(77KHERRNLVSUREDEO\PRUH³GLUHFW´LI\RXKDYH\RXU EDFNJURXQGLQ9%EHFDXVHWKDWLVZKDW,KDYHWRR,WKLQNDQGUHDVRQPRUHDVD9% SURJUDPPHUWKDQDVD& SURJUDPPHU
64/6HUYHU
&RPSDUHGWR9LVXDO%DVLF1(764/6HUYHULVDOPRVWDQROGWLPHU6WLOO,WKLQNLW VLPSRUWDQW WRGLVFXVVVRPHRILWVQHZIHDWXUHV$OWKRXJK\RXPD\WKLQNWKDWWKHOHDSIURP64/6HUYHUWR ZRXOGEHDELJRQHWKHUHDOFKDQJHVDUHQ WDOOWKDWGUDPDWLF+RZHYHUWKHUHDUHVRPH LQWHUHVWLQJIHDWXUHVIRUGHYHORSHUVWRFRQVLGHULQFOXGLQJ;0/VXSSRUWXVHUGHILQHGIXQFWLRQVDQG GLVWULEXWHGSDUWLWLRQHGYLHZVDPRQJRWKHUV
;0/6XSSRUW
, PDJHHNDQGVR,ORYHWRXVHQHZWHFKQRORJ\:KHQ;0/FDPHRQWKHPDUNHWDFRXSOHRI\HDUV DJR,XVHGLWDVWKHILOHIRUPDWLQDSURMHFWIRUDFXVWRPHURIPLQH+H\,NQRZZKDW\RXWKLQN EXWP\FXVWRPHUDFWXDOO\WKRXJKW²DQGVWLOOWKLQNV²LWZDVDJRRGVROXWLRQ +RZHYHU,VRRQ OHDUQHGWKDW;0/²HVSHFLDOO\LWVWRROVXSSRUW²ZDVQRWWKHZRQGHUWHFKQRORJ\,KDGILUVW HQYLVLRQHG7KHSURMHFWZRUNHGRXWILQHLQWKHHQGEXW,EHFDPHUHOXFWDQWWRXVH;0/IRUVRPH WLPH6LQFHWKHQWKHVWDQGDUGVDQGWRROVXSSRUWIRU;0/KDYHJRQHWKURXJKWUHPHQGRXV GHYHORSPHQWDQGDUHVXUHWRFRQWLQXHLQWRWKHIXWXUH ,EHFDPHUHLQWHUHVWHGLQ;0/ZLWK64/6HUYHU7KHUHLVDORWRI;0/VXSSRUWLQ64/6HUYHU 7KHIROORZLQJDUHWKHPRVWLQWHUHVWLQJIHDWXUHV x x
3HUKDSVWKH;0/VXSSRUWLVWKHUHDVRQWKDW64/6HUYHUQRZLVFDOOHGD1(7VHUYHU,W VQRW ZULWWHQLQPDQDJHGFRGHDQGQRWKLQJKDVFKDQJHGVLQFHLWRQO\ZDVFDOOHG64/6HUYHUEXW KH\LWFDQWDON;0/:KDWFDQ,VD\"0DUNHWHUV«
8VHU'HILQHG)XQFWLRQV
,Q64/6HUYHUZHILQDOO\KDG8VHU'HILQHG)XQFWLRQV8')V 6LQFHZHKDYHZDLWHGVRORQJ 0LFURVRIWZDVNLQGHQRXJKWRJLYHXVWKUHHGLIIHUHQWYHUVLRQVRI8')V x x x
6FDODU)XQFWLRQV² 7KHVHFDQEHXVHGIRUFUHDWLQJIXQFWLRQVWREHXVHGWKHVDPHZD\DV FROXPQVLQ6(/(&7 VWDWHPHQWVVLPLODUWRIRUH[DPSOH&219(57 ,QOLQH7DEOH9DOXHG)XQFWLRQV,79)V ² ,79)VDUHVLPLODUWRYLHZVEXWFDQWDNH SDUDPHWHUV7KHUHVXOWLVFUHDWHGZLWKRQHVLQJOH6(/(&7 VWDWHPHQW 0XOWLVWDWHPHQW7DEOH9DOXHG)XQFWLRQV079) ² ,QWKLVFDVHWKHUHVXOWFDQEHFUHDWHGZLWK PXOWLSOHVWDWHPHQWV079)VDUHIRUH[DPSOHDJRRGVROXWLRQLQVLWXDWLRQVZKHUH\RX QRUPDOO\XVHWHPSRUDU\WDEOHV
7KH8')LPSOHPHQWDWLRQLQ64/6HUYHULVDW\SLFDOILUVWYHUVLRQZLWKVHYHUDOTXLUNV)RU H[DPSOHLWLVQRWSRVVLEOHWRXVH5$1' DQG*(7'$7( LQ079)V7KHVDPHJRHVIRUWRXFKLQJ WHPSRUDU\WDEOHVDQGFDOOLQJVWRUHGSURFHGXUHV0LFURVRIWZLOOSUREDEO\IL[VRPHRIWKHURXJKHGJHV LQDQXSFRPLQJYHUVLRQ
'LVWULEXWHG3DUWLWLRQHG9LHZV :LWKGLVWULEXWHGSDUWLWLRQHGYLHZV'39V DWDEOHFDQEHSDUWLWLRQHGRYHUVHYHUDOPDFKLQHVDQGLW ZLOOEHFRPSOHWHO\WUDQVSDUHQWWRWKHFOLHQWV7KLVLVFXUUHQWO\WKHWHFKQLTXH0LFURVRIWLVXVLQJWR DFKLHYHVKDUHGQRWKLQJFOXVWHULQJZLWK64/6HUYHU 1RWH ,ZLOOGLVFXVV'39VPRUHLQ&KDSWHU³$UFKLWHFWXUH´
2WKHU,QWHUHVWLQJ1HZ)HDWXUHV 7KHIROORZLQJDUHVRPHRWKHUQHZIHDWXUHVRI64/6HUYHURIKLJKLQWHUHVWWRGHYHORSHUV x x
x
,PSURYHGUHSOLFDWLRQVXSSRUW² ,WLVQRZSRVVLEOHWRXVHTXHXHGXSGDWHVZLWK0604,Q DGGLWLRQPHUJHUHSOLFDWLRQGRHVQ WKDYHWREHUHFRQILJXUHGIURPVFUDWFKIRUH[DPSOHHYHU\ WLPH\RXQHHGWRFKDQJHWKHVWUXFWXUHRIDWDEOH %,*,17 DQG7$%/( GDWDW\SHV²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² 3HRSOHKDYHEHHQZDLWLQJIRUWKLV64/ IHDWXUHDORQJ WLPH 1RWH ,QP\DSSOLFDWLRQVGHFODUDWLYHFDVFDGLQJUHIHUHQWLDOLQWHJULW\LVQ WYHU\LPSRUWDQW, SUHIHUWDNLQJFDUHRIWKLVH[SOLFLWO\LQWKHVWRUHGSURFHGXUHVWKDWDUHUHVSRQVLEOHIRUWKH GHOHWLRQV,ZLOOGLVFXVVWKLVPRUHLQ&KDSWHU³%XVLQHVV5XOHV´
x x x x x
x
x
,167($'2) WULJJHUV² ,167($'2) WULJJHUVH[HFXWHLQVWHDGRIDVSHFLILF83'$7( RSHUDWLRQ IRUH[DPSOHLQRWKHUZRUGVWKHRULJLQDO83'$7( ZLOOQRWH[HFXWH 7KLVLVWKHRQO\NLQGRI WULJJHU\RXFDQXVHRQDYLHZ 0XOWLSOHLQVWDQFHV² ,W VSRVVLEOHWRKDYHVHYHUDO64/6HUYHULQVWDQFHVRQDVLQJOHPDFKLQH 7KLVLVJUHDWIRUWHVWLQJDQDSSOLFDWLRQRQVHYHUDOYHUVLRQVRI64/6HUYHURQDVLQJOHER[,W LVDOVRYHU\XVHIXOLQFRQVROLGDWLRQVFHQDULRV ([WHQGHGSURSHUWLHV² ([WHQGHGSURSHUWLHVPDNHLWSRVVLEOHIRU\RXWRDGG\RXURZQ PHWDGDWDWRWKHVFKHPDVXFK DVDGGLQJGRFXPHQWDWLRQIRUHDFKFROXPQLQHDFKWDEOH VWRULQJHGLWPDVNVDQGVRRQ ,QGH[HGYLHZV² $QLQGH[HGYLHZZLOOKDYHDQLQGH[RILWVRZQDQGQRWRQO\DVWRUHGTXHU\ GHILQLWLRQDVZLWKDQRUGLQDU\YLHZ7KLVFDQJUHDWO\HQKDQFHSHUIRUPDQFHIRUVRPHTXHULHV 1HZEXLOWLQIXQFWLRQV² 7KHVHLQFOXGH*(787&'$7( DQG6&23(B,'(17,7< ZKLFKZLOO UHWXUQWKHODVW,'(17,7< YDOXHWKDWLVFUHDWHGLQWKHFXUUHQWVFRSHVXFKDVWKHVWRUHG SURFHGXUH7KLVZD\WKHSUREOHPZLWK##,'(17,7<LQZKLFKDWULJJHUFRXOGKDYHDGGHGD URZWRDQRWKHUWDEOHZLWKDQ,'(17,7< WKDWFKDQJHGWKHYDOXHRI##,'(17,7<LVDYRLGHG 2QFHDJDLQLI\RXGRQ WXVHWULJJHUVWKLVLVQRWDSUREOHPDQ\ZD\ 6DYH7(;7,0$*( DQGVRRQLQURZYDOXH² 4XLWHRIWHQWKHGDWDIRUD7(;7 RU,0$*( FROXPQLVTXLWHVPDOO,QWKHVHFDVHVLWZRXOGEHEHQHILFLDOIURPDSHUIRUPDQFHSRLQWRI YLHZWRVWRUHWKDWGDWDZLWKWKHUHVWRIWKHURZLQVWHDGRILQLWVRZQVWUXFWXUHDVZDV DOZD\VWKHFDVHLQSUHYLRXVYHUVLRQVRI64/6HUYHU 6HYHUDOSURGXFWLYLW\HQKDQFHPHQWVLQ4XHU\$QDO\]HU² 7KHVHLQFOXGHVXSSRUWIRU WHPSODWHVREMHFWEURZVHUDQGEXLOWLQGHEXJJLQJ
$QGDVLVWULHGZLWKHYHU\YHUVLRQWKHUHKDYHEHHQDORWRILPSURYHPHQWVZKHQLWFRPHVWR SHUIRUPDQFHDQGVFDODELOLW\2QHH[DPSOHLVWKDWHDFKFRQQHFWLRQLVQRZFRQVXPLQJOHVVPHPRU\ WKDQEHIRUH
2XWVWDQGLQJ3UREOHPVZLWK64/6HUYHU
8QIRUWXQDWHO\WKH764/SURJUDPPLQJODQJXDJHVWLOOIHHOVZHDNDQGROGIDVKLRQHG7KHIROORZLQJ DUHVRPHRIWKHEDVLFSUREOHPVLWVWLOOKDV
x x x x x
%H\RQG64/6HUYHU
7KHUHKDVQ WEHHQPXFKWDONDERXWWKHQH[W64/VHUYHUYHUVLRQ\HWFRGH QDPHG<XNRQEXWWKHIROORZLQJDUHWKHIHDWXUHVWKDW, YHKHDUGRIVRIDU x x x x
7KHSRVVLELOLW\WRVWRUH;0/GRFXPHQWVLQFROXPQVDQGEHLQJDEOHWR LQGH[WKHFRQWHQW %HWWHUDGPLQLVWUDWLYHVXSSRUWIRU'39 7KHSRVVLELOLW\WRXVHWKH1(7ODQJXDJHVWRZULWHWKH³VWRUHG SURFHGXUHV´ 7KHSRVVLELOLW\WROHW64/6HUYHUVWRUHWKHILOHV\VWHP
7LPHZLOOWHOOZKLFKRUDOORIWKHVHIHDWXUHVFRPHWRIUXLWLRQ
:KDW V1H[W
,QWKHQH[WFKDSWHU,ZLOOGLVFXVVWKHIDFWRUV,ZLOOXVHWRHYDOXDWHP\SURSRVDOVWRNH\SUREOHPV WKDWZHZLOOGLVFXVVWKURXJKRXWWKHUHVWRIWKHERRN
5HIHUHQFHV
0LFURVRIW6\VWHPV-RXUQDO1RYHPEHUKWWSZZZPLFURVRIWFRPPVMFRPSOXVKWP 0LFURVRIW6\VWHPV-RXUQDO'HFHPEHU KWWSZZZPLFURVRIWFRPPVMFRPSOXVFRPSOXVKWP 7(ZDOG7UDQVDFWLRQDO&20%XLOGLQJ6FDODEOH$SSOLFDWLRQV1HZ
&KDSWHU )DFWRUVWR&RQVLGHULQ&KRRVLQJD6ROXWLRQWRD 3UREOHP ,17+,6&+$37(5 x x x x x x x
7\SHRI&RQVXPHU 3K\VLFDO5HVWULFWLRQVDQG3RVVLELOLWLHV 3HUIRUPDQFH 6FDODELOLW\ 2WKHU³DELOLWLHV´6XFKDV0DLQWDLQDELOLW\5HOLDELOLW\5HXVDELOLW\7HVWDELOLW\'HEXJJDELOLW\ DQG,QWHURSHUDELOLW\ 6HFXUL.W\ )DUP DQG&OXVWHU(QDEOLQJ
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
3RUWDELOLW\
$OWKRXJKLWPLJKWVHHPVWUDQJH, PQRWJRLQJWRGLVFXVVSRUWDELOLW\PXFK LQWKLVERRN7KLVLVEHFDXVHWKLVERRNIRFXVHVRQKRZWRVROYHNH\ SUREOHPVZKHQGHYHORSLQJHQWHUSULVHV\VWHPVXVLQJ1(7&RPSRQHQW 6HUYLFHV9LVXDO%DVLF1(7DQG64/6HUYHU$V\RXUHDG\RXZLOO DOVRILQGWKDWWKHUHLVDORWRIHPSKDVLVRQVWRUHGSURFHGXUHV
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
7\SHRI&RQVXPHU
,XVHGWRUHIHUWRWKHILUVWWLHULQQWLHUDUFKLWHFWXUHVDVWKHSUHVHQWDWLRQWLHU+RZHYHUWKLVWHUPLV DELWWRRQDUURZ$IWHUDOOZKDWDERXWEDWFKSURFHVVHVDQG;0/:HEVHUYLFHVIRUH[DPSOH",WKLQN DEHWWHUWHUPLV³FRQVXPHUWLHU´UDWKHUWKDQSUHVHQWDWLRQWLHU'HSHQGLQJRQZKLFKFRQVXPHUW\SH \RXSODQWRXVH\RXUGHVLJQZLOOKDYHWRDGDSWWRLW$OWKRXJK,EHOLHYHWKHJHQHUDOUXOHVKRXOGEH WROHW\RXUGHVLJQEHDVFRQVXPHULQGHSHQGHQWDVSRVVLEOHLQUHDOLW\\RX OOKDYH WRPDNHDWOHDVW
VRPHGHFLVLRQVEDVHGRQWKHFRQVXPHUW\SH:KHQ,VSHDNRIVSHFLILFW\SHVRIFRQVXPHU, P UHIHUULQJWRZKHWKHUWKHFRQVXPHURI\RXUFRPSRQHQWVZLOOEHIRUH[DPSOH:HE)RUPV:LQGRZV )RUPV;0/:HE6HUYLFHVRUMXVWRWKHUFRPSRQHQWV+RZHYHUZKLOHLW VLPSRUWDQWWRNHHSWKH W\SHRIFRQVXPHULQPLQGGRQ WORRNVROHO\DWWKHFXUUHQWVLWXDWLRQ,WFDQDQGGRHVFKDQJH UDSLGO\%HSUHSDUHGIRUWKHVHFKDQJHVDV\RXGHVLJQ
1HHGIRU&RDUVH*UDLQHG0HWKRGV
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
,I:HE)RUPVLVWKHFRQVXPHUDW\SLFDOGHSOR\PHQWVFKHPDZRXOGEHRQWKHVDPHPDFKLQHDVWKH FRPSRQHQWV,IWKHFRPSRQHQWVDUHWROLYHLQD&20/LEUDU\$SSOLFDWLRQZKLFKPHDQVWKDWWKH FRPSRQHQWVZLOOH[HFXWHLQWKHVDPHSURFHVVDVWKH$631(7DSSOLFDWLRQ KDYLQJVRPDQ\PHWKRG FDOOVZLOOFDUU\TXLWHORZRYHUKHDG
,QWKHFDVHRI:LQGRZV)RUPVDVWKHFRQVXPHUHDFKPHWKRGFDOOWRWKHDSSOLFDWLRQVHUYHULV FRVWO\EHFDXVHWKHFRPSRQHQW, PGLVFXVVLQJKHUHW\SLFDOO\OLYHVDWWKHVHUYHUZKLOHWKH:LQGRZV )RUPVOLYHVDWWKHFOLHQWFRPSXWHU7KHUHLVKLJKRYHUKHDGLQWKLVFDVH7KHVROXWLRQFRXOGPHDQ WKDWVRPHIDXOWWROHUDQFHLVEXLOWLQVRWKDWLIWKHFOLHQWJRHVDZD\SUHPDWXUHO\WKHVHUYHUFRXOG UHPHPEHUWKHVWDWHXQWLOWKHFOLHQWJHWVEDFN
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
)LJXUH,QWHUDFWLRQGLDJUDPVKRZLQJKRZD)DFDGHFDQVROYHWKHSUREOHPV DVVRFLDWHGZLWKILQHJUDLQHGFDOOGHVLJQ
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
,Q&KDSWHU³'DWD$FFHVV´,ZLOOGLVFXVVKRZ,DFFHVVWKHGDWDEDVH7KHUH\RXZLOOVHH WKDWLQVWHDGRIGLUHFWO\XVLQJ6TO'DWD$GDSWHU,XVHDFXVWRPKHOSHU ,ZLOOGLVFXVVFRQFXUUHQF\FRQWUROLQGHSWKLQ&KDSWHU³(UURU+DQGOLQJDQG&RQFXUUHQF\ &RQWURO´ZKHUH,ZLOODOVRVKRZRWKHUSRVVLEOHWHFKQLTXHV
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²QRWDQXQKHDUGRIVLWXDWLRQDWDOO7KLVZLOO FUHDWHDORWRIZRUNDQGUHTXLUHPRUHPHPRU\WKDQXVLQJDVLQJOH52:9(56,21
3K\VLFDO5HVWULFWLRQVDQG3RVVLELOLWLHV
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±Q DUHFRQQHFWHGWRWKHGDWDEDVHVHUYHUYLDD:$1ZKLOH $SSOLFDWLRQ6HUYHULVFRQQHFWHGYLDD/$1
)LJXUH6DPSOHFRQILJXUDWLRQRIQDSSOLFDWLRQVHUYHUVFRQQHFWHGWRRQHGDWDEDVH VHUYHU
:KHQFRQQHFWLQJDQDSSOLFDWLRQVHUYHUWRWKHGDWDEDVHVHUYHUYLDD:$1WKHUH VD SHUIRUPDQFHSHQDOW\ZKHQKLWWLQJWKHGDWDEDVHZLWKPDQ\VPDOOFDOOV 1RWH
$URXQGWULSLVIRUH[DPSOHDUHTXHVWVHQWIURPWKHDSSOLFDWLRQVHUYHUWR WKHGDWDEDVHVHUYHUDQGWKHDQVZHUJRLQJEDFNDJDLQ,ZLOOGLVFXVVWKH LPSRUWDQFHRIDQGKRZWRUHGXFHWKHQXPEHURIURXQGWULSVLQGHSWKLQ &KDSWHUV³$UFKLWHFWXUH´DQG³'DWD$FFHVV´
)URPDSHUIRUPDQFHSHUVSHFWLYHLW VQRUPDOO\SRVLWLYHWRFKHFNWKHGDWDIRFXVHG EXVLQHVVUXOHVLQWKHGDWDEDVHWLHU ,QWKLVFDVHDVVXPHWKDWDVPXFKDVRI WKH83'$7( UHTXHVWVIDLOEHFDXVHDEXVLQHVVUXOHLVQRWPHW,WZRXOGSUREDEO\ WKHQEHGLVDGYDQWDJHRXVWRKDYHWKHEXVLQHVVUXOHVFKHFNHGLQVWRUHGSURFHGXUHV LQWKHGDWDEDVH$ORWRIWKHVFDUFHEDQGZLGWKZLOOEHFRQVXPHGZLWKRXWDQ\XVH
$V,KDYHVDLG,EHOLHYHDJRRGVWUDWHJ\LVWRSXWUHVSRQVLELOLWLHVZKHUHWKH\PDNH PRVWVHQVHLQWKHPRVWFRPPRQVLWXDWLRQ,I\RXQHHGWRRSWLPL]HIRUFHUWDLQ RWKHUFRQILJXUDWLRQVWKHQRIFRXUVHLW VQLFHLI\RXPDNHLWFRQILJXUDEOHVRWKDW GLIIHUHQWFXVWRPHUVFDQFRQILJXUHWKHDSSOLFDWLRQIRUWKHLUVSHFLILFVLWXDWLRQV /HW VWDNHDQRWKHUH[DPSOHRIDSK\VLFDOUHVWULFWLRQ&OLHQWVLGHFDFKLQJRIVWDWLF GDWDLVQRUPDOO\YHU\EHQHILFLDO²ERWKIURPWKHSHUIRUPDQFHDQGWKHVFDODELOLW\ SHUVSHFWLYH²EHFDXVH\RXFDQVDYHQHWZRUNURXQGWULSV+RZHYHULIWKHFOLHQW
FRPSXWHUVKDYHDVKRUWDJHRIPHPRU\LW VQRWDJRRGLGHDWRXVHDORWRI PHPRU\FRQVXPLQJFOLHQWVLGHFDFKLQJ
3HUIRUPDQFH
$OWKRXJK0RRUH V/DZVWDWHVWKDWFRPSXWLQJSRZHUZLOOEHGRXEOHGHYHU\ PRQWKVPRUHRIWHQWKDQQRWSHUIRUPDQFHLVVWLOODYHU\UHDOSUREOHP:K\"7KHUH LVQ WRQHVLQJOHDQVZHUWRWKDWTXHVWLRQ3RVVLEOHUHDVRQVFRXOGEH x x x x
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²RUZHDNHVWOLQNVLQWKHFKDLQ²DQG UHPRYHWKHP,QWKLVUHVSHFWLW VLPSRUWDQWWRVWDUWGHVLJQLQJZLWKSHUIRUPDQFHLQ PLQG$ZHOOGHVLJQHGV\VWHPFDQW\SLFDOO\JHWJRRGHQRXJKSHUIRUPDQFH DXWRPDWLFDOO\RUZLWKPLQRUILQHWXQLQJ$EDGO\GHVLJQHGV\VWHPZLOOSUREDEO\ QHHGDUHZULWH7RGHWHUPLQHLI\RXKDYHUHDFKHGWKHJRDOIRUSHUIRUPDQFH\RX PXVWGRVWUHVVWHVWLQJ
7KH,PSRUWDQFHRI7HVW5HVXOWV
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
6FDODELOLW\
(QJLQHHUVORYHGHILQLWLRQV0\IDYRULWHGHILQLWLRQRIVFDODELOLW\LV³+RZZHOOD VROXWLRQWRDSUREOHPZLOOZRUNZKHQWKHVL]HRIWKHSUREOHPLQFUHDVHV´ 1RDV ZH YHDOOKHDUGEHIRUHSHUIRUPDQFHDQGVFDODELOLW\DUHQ WV\QRQ\PRXV$VDQ H[DPSOHWDNHDIDLUO\FRPPRQTXHVWLRQLQWKH&20QHZVJURXSV³:K\LVQ WDQ DSSOLFDWLRQJLYLQJVKRUWHUUHVSRQVHWLPHVZKHQSDUWRILWLVSRUWHGWR&20 &RPSRQHQW6HUYLFHV"´7KHVLPSOHDQVZHULVWKDW&201(7&RPSRQHQW6HUYLFHV GRQ WUHDOO\WU\WRLQFUHDVHSHUIRUPDQFHRQO\VFDODELOLW\
:KDWGR,PHDQE\WKLV"$VVXPHWKDWWKHUHLVDXVHUUXQQLQJWKHDSSOLFDWLRQ1(7 &RPSRQHQW6HUYLFHVZLOOQRWKHOSKLPRUKHUE\VSOLWWLQJKLVRUKHUUHTXHVWVLQWR VHYHUDOSDUWVWKDWFDQH[HFXWHLQSDUDOOHOWRDFKLHYHDVKRUWHUUHVSRQVHWLPHIRU WKHWRWDOUHTXHVW²QRWHYHQLIWKHUHDUHPXOWLSOH&38VRIZKLFKVHYHUDOKDYHIUHH FDSDFLW\2QWKHRWKHUKDQGLIWKHUHDUHKXQGUHGVRIXVHUV1(7&RPSRQHQW 6HUYLFHVZLOOGRVRPHWULFNVWRWU\WRVHUYHDOOWKHXVHUUHTXHVWVZLWKUHVSRQVH WLPHVIRUHDFKUHTXHVWDVFORVHWRWKHVLQJOHXVHUVFHQDULRDVSRVVLEOH7KXV1(7 &RPSRQHQW6HUYLFHVIRFXVHVWRWDOO\RQKHOSLQJDSSOLFDWLRQVJHWJRRGVFDODELOLW\ SHUIRUPDQFHLVQRWLWVGHVLJQJRDO
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
$V,PHQWLRQHGHDUOLHUDOWKRXJKUHDGLQJRIILFLDOWHVWUHVXOWVLVLPSRUWDQW \RXVKRXOGDOZD\VEHZDU\RIWKHP²HYHQUHVXOWVWKDWDUHFKHFNHGDV FDUHIXOO\DVWKH7UDQVDFWLRQ3URFHVVLQJ3HUIRUPDQFH&RXQFLO73& RQHV :KHQLWFRPHVWRMXVW73&&LWIDYRUV³VKDUHGQRWKLQJ´FOXVWHULQJZKLFK LVZKDWERWK0LFURVRIW VDQG,%0 VGDWDEDVHSURGXFWVXVHDQG,ZLOO GLVFXVV³VKDUHGQRWKLQJ´FOXVWHULQJODWHULQWKLVFKDSWHU EHFDXVHWKHWHVW KDUQHVVZLOOSXWQRORDGDWDOORQWKH FRQQHFWLRQEHWZHHQWKHQRGHVLQWKH FOXVWHU ,QDUHDOZRUOGVKDUHGQRWKLQJFOXVWHUWKLVZLOOQRUPDOO\EHWKH ZHDNVSRW
$V,PHQWLRQHGSUHYLRXVO\ERWWOHQHFNVDUHWKHPDLQHQHP\$W\SLFDOH[DPSOHRI WKLVLVEORFNLQJZKHUHVHYHUDOUHTXHVWVZDLWIRUDVKDUHGUHVRXUFHWKDWUHTXLUHV
VHULDOL]HGDFFHVV)RUH[DPSOHLW VH[WUHPHO\LPSRUWDQWWRGHVLJQIRUVKRUWDQG VPDOOWUDQVDFWLRQVDJDLQVWWKHGDWDEDVHRWKHUZLVHWKLV ZLOONLOOWKHVFDODELOLW\$V \RXFDQVHHLQ)LJXUHLWGRHVQ WPDWWHUKRZZLGHWKHURDGLVIRUPLOHVDQG PLOHVLIDFRXSOHRIPHWHUVDUHQDUURZ )LJXUH%RWWOHQHFNVHIIHFWLYHO\GHFUHDVHWKURXJKSXW
6FDOLQJ8SDQG6FDOLQJ2XW
'HYHORSHUVRIWHQWHQGWRVROYHSUREOHPVE\HQKDQFLQJWKHFRGH7KDWJRHVIRU SUREOHPVLQVFDODELOLW\WRR:KHQ\RXFKHFNWKHSULFHOLVWIRUKDUGZDUH\RXVHH WKDW\RXUFXVWRPHUZLOOJHWDORWRIPHPRU\RU&38IRUWKHVDPHPRQH\DVLIKHRU VKHEX\VRQHZHHNRISURJUDPPLQJIURPDQ\FRQVXOWDQF\VKRS2IFRXUVHQRWDOO SUREOHPVVKRXOGEHVROYHGE\DGGLQJKDUGZDUHEXWTXLWHRIWHQLW VDFKHDSDQG VDIHVROXWLRQ 1RWH
'RQ WWU\WRDGGKDUGZDUHLI\RXUFXVWRPHUKDVGHFHQWKDUGZDUHDQG\RXU DSSOLFDWLRQRQO\VFDOHVWRILYHXVHUVRUVRZKHQWKHUHTXLUHPHQWLV KXQGUHGVRIXVHUV7KHUHLVSUREDEO\DGHVLJQSUREOHPRUWZRWKDW\RX VKRXOGVROYHLQVWHDG
0LFURVRIWRIWHQXVHVWKHWHUPV³VFDOHXS´DQG³VFDOHRXW´ZKHQGLVFXVVLQJ VFDODELOLW\$V,XQGHUVWDQGLW6XQXVHVWKHWHUPV³VFDOLQJYHUWLFDOO\´DQG³VFDOLQJ KRUL]RQWDOO\´LQVWHDG :KDW0LFURVRIWPHDQVZKHQWKH\UHIHUWRVFDOLQJXSLVWR DGGKDUGZDUHWR\RXUFXUUHQWER[²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
+RZHYHUWKHUHDUHVHYHUDOSUREOHPVZLWKVFDOLQJRXWRQHEHLQJDGPLQLVWUDWLYHLQ QDWXUH,W VVLPSO\PXFKKDUGHUWRWDNHFDUHRIVHYHUDOPDFKLQHVLQVWHDGRID VLQJOHRQH$UHWKH\DOOUXQQLQJWKHVDPHYHUVLRQRIWKH'//IRUH[DPSOH",Q DGGLWLRQDOOWKHWRROVQHHGHGIRUSURYLGLQJDVLQJOHV\VWHPLPDJHDUHQ WFXUUHQWO\ DYDLODEOH6WLOOWKLVORRNVYHU\SURPLVLQJIRUWKHIXWXUHEXW\RXUDSSOLFDWLRQZRQ W EHVXLWDEOHIRUVFDOLQJRXWDXWRPDWLFDOO\
(DUOLHUZKHQ,GLVFXVVHGYDULRXVSHUIRUPDQFHLVVXHV,PHQWLRQHG64/6HUYHU V UROHLQJHWWLQJJRRGSHUIRUPDQFHDQGVFDODELOLW\, GOLNHWRGLVFXVVWKLVDELWPRUH $V9%SURJUDPPHUVZHZLOOILQDOO\JHWDVWURQJHQYLURQPHQWDQGSODWIRUPZLWK 9LVXDO%DVLF1(7DQGZHFDQDWODVWXVHDOOWKHJRRGWRKDYHREMHFWRULHQWDWLRQ IHDWXUHV6WLOOGDWDEDVHFORVH WDVNVPRVWRIWHQFDQ WEHGRQHIDVWHUDQGPRUH HIILFLHQWO\WKDQE\WKHGDWDEDVH 1RWH
'DWDEDVHFORVHWDVNVDUHWDVNVWKDWZRUNDJUHDWGHDOZLWKWKHGDWDVWRUHG LQWKHGDWDEDVH)RUH[DPSOHVXFKDWDVNFRXOGEHWRMRLQWZRWDEOHVRUWR VHDUFKIRUDVSHFLILFFXVWRPHU
:KHQ,ZRUNHGDWDXQLYHUVLW\,ZDVUHVSRQVLEOHIRUWKHFRXUVHVLQGDWDEDVH GHVLJQ,ZDVTXLWHDORQHLQWKDWILHOGLQP\GHSDUWPHQW0RVWRIP\FROOHDJXHV ZHUHPRUHRUWKRGR[REMHFWRULHQWHGJX\V'D\DIWHUGD\,KHDUGWKDWWKH GDWDEDVHZDVMXVWDSODFHZKHUHWKHVWDWHVKRXOGEHVSRROHGRXWWRMXVWDVWRD ILOHV\VWHP7KHGDWDEDVHGHVLJQZDVQ WLPSRUWDQW3HUKDSVWKH\ZHUHMXVWWHDVLQJ PHEXW,GRQ WWKLQNVR,WZDVPRUHRIDVWURQJXQGHUO\LQJRSLQLRQ0\RSLQLRQ DOVRLVVWURQJDQG, VWLOOEHOLHYHWKDW, PULJKW²DWOHDVWIRUWKHW\SHRIDSSOLFDWLRQV WKDW,EXLOGQDPHO\LQIRUPDWLRQV\VWHPVWDNLQJFDUHRIODUJHDPRXQWVRIGDWD7KH RSSRVLWHRILQIRUPDWLRQV\VWHPVZRXOGSUREDEO\EHHPEHGGHGWHFKQLFDOFRQWURO V\VWHPVVXFKDVSURJUDPPLQJ URERWVRUGLJLWDOSKRQHVZLWFKHV 6RGRQ WEHIRROHG,I\RXKDYHEXVLQHVVUXOHVWKDWQHHGWREHHYDOXDWHGDQGLI WKHUXOHVUHTXLUHVRPHWKLQJWREHUHDGIURPWKHGDWDEDVHLWZLOOEHPRUHHIILFLHQW WRKDYHWKHUXOHVLQWKHVWRUHGSURFHGXUHWKDWZLOOWDNHFDUHRIWKH83'$7( LWVHOI LQVWHDGRILQD1(7FRPSRQHQWOLYLQJRQDQRWKHUWLHU
7REDODQFHP\IDYRULWLVPRIVWRUHGSURFHGXUHVDOLWWOH, GOLNHWRSRLQWRXWWKDWWKH GDWDEDVHWLHULVRIWHQWKHRQHWKDWLVKDUGHVWWRVFDOHRXW7KDWFRXOGEHRQH UHDVRQIRUQRWSXWWLQJDORWRIORJLFLQVWRUHGSURFHGXUHV7KHUHDVRQIRUWKH VFDOLQJRXWSUREOHPVLVWKDWWKHGDWDEDVHZLOOKDYHWRKROGVWDWH7KLVLVWKHQDWXUH RIWKHGDWDEDVH7KHUHIRUHSXUHFORQLQJRIWKHGDWDEDVHLVQ WDVVLPSOHDVRI:HE DQGDSSOLFDWLRQ VHUYHUV 1RWH
,ZLOOGLVFXVVVFDOLQJRXWWKHGDWDEDVHLQPRUHGHSWKLQ&KDSWHU ³$UFKLWHFWXUH´
8VLQJWKH'DWDEDVH
:DWFKRXW:KDW,MXVWVDLGLVQ WWKDWLW VPRUHVFDODEOHWRPRYHWKHUHTXHVWVIRU UHDGLQJGDWDIURPWKHVWRUHGSURFHGXUHVWRDQRWKHUWLHU,IWKHGDWDVWLOOKDVWREH UHDGDOO\RXKDYHDFKLHYHGDVDUHVXOWLVZRUVHSHUIRUPDQFHDQGORZHUVFDODELOLW\
\RXKDYHDVLPSOHEXVLQHVVUXOHVD\LQJWKDW\RXFDQ WOHWWKHFXVWRPHUDGG DQRWKHURUGHULIKHRUVKHKDVWKHVWDWXVRI³QRWWUXVWHG´,QWKHVWRUHGSURFHGXUH IRUDGGLQJDFXVWRPHU\RXKDYHDVLPSOHFKHFNWRVHHZKHWKHUKHRUVKHLV WUXVWHGZKLFKPLJKWORRNOLNHWKHFRGHLQ/LVWLQJ /LVWLQJ6LPSOH%XVLQHVV5XOH(YDOXDWHGLQ6WRUHG3URFHGXUH
6(/(&7#D7UXVWHG&XVWRPHU FWUXVWHG )520FXVWRPHUF :+(5(FLG #FXVWRPHU,G ,)#D7UXVWHG&XVWRPHU %(*,1 ,16(57,172RUGHUPDVWHU FXVWRPHUBLGRUGHUGDWH 9$/8(6 #FXVWRPHU,G*(7'$7( (1' (/6(%(*,1 5HSRUWWKHHUURU (1'
2WKHU³DELOLWLHV´6XFKDV0DLQWDLQDELOLW\5HOLDELOLW\5HXVDELOLW\ 7HVWDELOLW\'HEXJJDELOLW\DQG,QWHURSHUDELOLW\ ,QWKHVRIWZDUHHQJLQHHULQJILHOGWKHUHLVDORWRIGLVFXVVLRQDERXW³DELOLWLHV´ 2WKHUFROOHFWLYHQDPHVIRUWKHPDUH³TXDOLW\ DWWULEXWHV´DQG³QRQIXQFWLRQDO UHTXLUHPHQWV´8QIRUWXQDWHO\WKH\DUHRIWHQKDUGWRPHDVXUHEXWHYHQVRWKH\ DUHH[WUHPHO\LPSRUWDQWWRFRQVLGHU
,QDGGLWLRQLW VRIWHQGLIILFXOWWRJHWFXVWRPHUVWRGLVFXVVWKHQRQIXQFWLRQDO UHTXLUHPHQWV,I\RXDVNWKHPLI\RXVKRXOGDGGVXSSRUWIRU³GHEXJJDELOLW\´IRU H[DPSOHWKH\RIWHQWXUQDZD\IURPWKHLGHDDVVRRQDVWKH\XQGHUVWDQGWKDWLW ZLOOFRVWWKHPLQWKHVKRUWUXQ7KH\ZLOOWHOO\RXWRQRWFUHDWHEXJVLQVWHDG7RD ODUJHH[WHQWWKH³DELOLWLHV´DUHVRPHWKLQJ\RXKDYHWRWKLQNORQJDQGKDUGDERXW IRU\RXUVHOIWREHDVSURIHVVLRQDODVSRVVLEOH 1RWH
,I\RXDUHLQWHUHVWHGLQWKHVHWRSLFVWKHUHDUHSOHQW\RIERRNVIRUIXUWKHU UHDGLQJ7ZRH[DPSOHVDUH)UDQN%XVFKPDQQ5HJLQH0HXQLHU+DQV 5RKQHUW3HWHU6RPPHUODGDQG0LFKDHO6WDO V$6\VWHPRI3DWWHUQV 3DWWHUQ2ULHQWHG6RIWZDUH$UFKLWHFWXUH DQG**RUGRQ6FKXOPH\HUDQG -DPHV,0F0DQXV V+DQGERRNRI6RIWZDUH4XDOLW\ $VVXUDQFH
0DLQWDLQDELOLW\
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
6RPHRI\RXPLJKWIHHOWKDW([WUHPH3URJUDPPLQJ VD\VWKHRSSRVLWHWR ZKDW,MXVWVDLG,GRQ WDJUHH([WUHPH3URJUDPPLQJ VWDWHVWKH LPSRUWDQFHRIKDYLQJWKHFKDQFHWRPDNHFKDQJHV'RQ WSODQIRUDOO SRVVLEOHFKDQJHVEXWEHSUHSDUHGIRUWKHP
,W VDOVRLPSRUWDQWWKDWWKHDUFKLWHFWXUHLVQ WVRIOH[LEOHWKDWLWLVLPSRVVLEOHWR XQGHUVWDQG6RRQHUUDWKHUWKDQODWHUWKHFKDQJHVZLOOWKHQFRQIOLFWZLWKWKH DUFKLWHFWXUDOYLVLRQ2IFRXUVHGRFXPHQWDWLRQLVDOVRYHU\LPSRUWDQWWR FRPPXQLFDWHWKHDUFKLWHFWXUHVRGHYHORSHUVZRQ WXQLQWHQWLRQDOO\GHVWUR\LW7HVW GULYHUVDQGDVVHUWLRQVWKDW, GLVFXVVLQGHSWKLQ&KDSWHU³7HVWLQJ´ZLOODOVRDGG TXDOLW\SDUWVWRWKHGRFXPHQWDWLRQ
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³V\VWHP´WKDWLVQ WPDLQWDLQDEOHDWDOO7DNHRXWDFDUG DQGWKHFDUGKRXVHZLOOFUDVK )LJXUH$KRXVHRIFDUGVLVDQREYLRXVH[DPSOHRIVRPHWKLQJZLWKORZ PDLQWDLQDELOLW\
,Q&KDSWHU³(UURU+DQGOLQJDQG&RQFXUUHQF\&RQWURO´,ZLOOSUHVHQWD VROXWLRQWKDWGHPRQVWUDWHVDQDGPLQLVWUDWRUIULHQGO\WHFKQLTXHIRU SURYLGLQJ SHVVLPLVWLFORFNLQJLQDGLVFRQQHFWHGVFHQDULR
5HOLDELOLW\
5HOLDELOLW\LVRIWHQGLVFXVVHGLQWHUPVRIIDXOWWROHUDQFHDQGUREXVWQHVVEXWLWLV DOVRORRNHGDWLQWHUPVRIUHFRYHUDELOLW\+DUGZDUHFDQSURYLGH\RXZLWKVRPH IDXOWWROHUDQFHEXWLQWKLVERRN,ZLOORQO\GLVFXVVVRIWZDUHDVSHFWVRIUHOLDELOLW\ ,QDQHIIRUWWRDYRLGFRQIXVLRQGXHWRWKHP\ULDGWHUPVWKDWDUHXVHGLQWKH LQGXVWU\, OOGLVFXVVUHOLDELOLW\LQWHUPVRI x x x
8VLQJSUHYHQWDWLYHPHDVXUHV $FWLYHO\WDNLQJFDUHRIDSUREOHP 8VLQJUHFRYHU\IDLORYHUZKHQDSUREOHPRFFXUV
8VLQJ3UHYHQWDWLYH0HDVXUHV
$V, PVXUH\RXNQRZLQVWHDGRIOHWWLQJDSUREOHPRFFXUEHIRUHWDNLQJFDUHRILW \RXFDQWDNHSUHFDXWLRQVWRPDNHLWOHVVSUREDEOHWKDWDSUREOHPZLOORFFXUDWDOO )RUH[DPSOHPRVWRIXVZRXOGUDWKHUFKDQJHWKHRLOLQRXUFDU VHQJLQHHYHU\QRZ DQGWKHQLQVWHDGRIUHSODFLQJWKHHQJLQHZKHQLWFUDVKHVEHFDXVHRIEDGRLORUODFN RIRLO$W\SLFDOH[DPSOHRIDSUHYHQWDWLYHPHDVXUHLQDWHFKQLFDOVHQVHLVWRXVH WKHQHZIHDWXUHLQ&20WRUHTXHVWUHF\FOLQJRI\RXUVHUYHUSURFHVVHVVD\ RQFHDGD\ $FWLYHO\7DNLQJ&DUHRID3UREOHP
,ZLOODGGUHVVVXFKUHOLDELOLW\DVSHFWVLQ&KDSWHUZKHUH,GLVFXVV DVVHUWLRQVDQGGHVLJQE\FRQWUDFW
8VLQJ5HFRYHU\)DLO2YHU:KHQD3UREOHP2FFXUV
1(7&RPSRQHQW6HUYLFHVZLOOKHOSDJUHDWGHDOZKHQSUREOHPVRFFXU)RU H[DPSOHLIWKHUHLVDVHULRXVH[FHSWLRQWKHSURFHVVZLOOEHQDLOHGGRZQDQGD IUHVKSURFHVVZLOODXWRPDWLFDOO\EHVWDUWHG0HDQZKLOHRQHZD\WRJHWVDIH UHFRYHUDELOLW\LVWRXVHDWUDQVDFWLRQORJDV64/6HUYHUGRHV$QRWKHUZD\LV WRH[SHFWIDLORYHUWRGRWKHMREWKDWLVZKHQRQHPDFKLQHIDXOWVDQRWKHU PDFKLQHWDNHVRYHU$W\SLFDOSURGXFWWKDWKHOSVZLWKIDLORYHUVXSSRUWLV0LFURVRIW &OXVWHU6HUYLFHVLQ:LQGRZV 1RWH
3URGXFWVQHHGWREHFOXVWHUDZDUHWREHQHILWIURP0LFURVRIW&OXVWHU 6HUYLFHV2QHH[DPSOHRIVXFKDSURGXFWLV64/6HUYHU
/HW VHQGWKLVVHFWLRQZLWK\HWDQRWKHUH[DPSOH8VLQJOD]\LQLWLDOL]DWLRQLVOHVV HIILFLHQWWKDQPDNLQJWKHLQLWLDOL]DWLRQRQFHDWVWDUWXS$QH[DPSOHRILQLWLDOL]DWLRQ FRXOGEHWRUHDGWKHFRQQHFWLRQVWULQJWRXVHIURPDFRQILJXUDWLRQILOH 2QWKH RWKHUKDQGEHFDXVHWKHUHLVDFKHFNEHIRUHHDFKXVDJHWKDWWKHLQLWLDOL]DWLRQKDV EHHQGRQHDQGWKDWWKHLQVWDQFHLVRND\\RXFDQHDVLO\PDNH DUHIUHVKDFWLRQLID SUREOHPLVIRXQG 5HXVDELOLW\
)URPWKHEHJLQQLQJRIWKHREMHFWRULHQWDWLRQK\SHUHXVDELOLW\KDVEHHQLWV QLUYDQD6RIDUWKHSURPLVHVKDYHQ WOLYHGXSWRH[SHFWDWLRQV7KHUHDUHSUREDEO\ VHYHUDOUHDVRQVIRUWKLV)RUH[DPSOHVRPHPLJKWDUJXHWKDWFRPSRQHQWVDUHD EHWWHUUHXVHXQLWWKDQFODVVHVLQFRGH,QDQ\FDVHUHXVHUHTXLUHVDORWRIZRUN DQGZRQ WKDSSHQDXWRPDWLFDOO\ $QRWKHUZD\WRWKLQNDERXWUHXVDELOLW\LVWRQRWFUHDWHUHXVDEOHFRPSRQHQWVLQ DGYDQFHEXWWRWU\UHXVHZKHQ\RXIDFHWKHSUREOHPDJDLQ 1HYHUWKHOHVV\RX VKRXOGQ WFUHDWHEDUULHUVDQG,ZLOOEHHYDOXDWLQJWKHSURSRVDOVLQOLJKWRIWKLVLQ WKHFRPLQJFKDSWHUV
,W VLPSRUWDQWWRXQGHUVWDQGWKDWWKHUHDUHVHYHUDOJUDQXODULWLHVIRUZKHUHUHXVHLV SRVVLEOH
1RWH
$QDVVHPEO\LQ1(7LVDSDFNDJHRIFODVVHVDQGWKHUHLVW\SLFDOO\DRQH WRRQHPDSSLQJWRD'//$QDVVHPEO\FRQWDLQVRQHRUPRUHQDPHVSDFHV DQGDVVHPEOLHVDUHDOVRWKHVPDOOHVWYHUVLRQDEOHXQLWV
)RUDGHVLJQDVVKRZQLQ)LJXUHUHXVHRIVWRUHGSURFHGXUHVWKDWWDNHVFDUHRI XSGDWLQJLVLPSRVVLEOH RUDWOHDVWXQVXLWDEOH EHFDXVHWKHEXVLQHVVUXOHVDUH ORFDWHGLQWKHEXVLQHVVORJLFOD\HU7KHRQO\OD\HUVWKDWDUHUHXVDEOHDUHWKH
EXVLQHVVORJLFOD\HUDQGFRQVXPHUVWRWKDWOD\HU²DWOHDVWDVIDUDVRSHUDWLRQVWKDW UXQWUDQVDFWLRQVDJDLQVWWKHGDWDEDVHJR,I\RXUHXVHDPHWKRGWKDWIHWFKHV VRPHURZVWKDWGRHVQ WPDWWHU ,IRQWKHRWKHUKDQG\RXPRYHWKHEXVLQHVV UXOHVWRWKHVWRUHGSURFHGXUHV\RXFDQUHXVHHYHU\OD\HULQFOXGLQJWKHVWRUHG SURFHGXUHV 1RWH
,ZLOOGLVFXVVEXVLQHVVUXOHVLQPRUHGHWDLOLQ&KDSWHU³%XVLQHVV5XOHV´
,QDZD\UHXVDELOLW\RYHUODSVZLWKLQWHURSHUDELOLW\ZKLFK,ZLOOGLVFXVVODWHULQWKLV FKDSWHU
,ZLOOGLVFXVVWUDQVDFWLRQVLQWKHIDFHRIUHXVDELOLW\LQ&KDSWHU ³7UDQVDFWLRQV´
'RQ WIRUJHWWKDWLW VQRWRQO\WKHLPSOHPHQWDWLRQVWKDWFDQEHUHXVHG5HXVLQJ GHVLJQHOHPHQWVFDQEHDUHDOWLPHVDYHUWRRDQGFDQDOVRKHOSLQFUHDVHTXDOLW\ 2QHH[DPSOHRIWKLVLVZHOOGHVLJQHGXVHUGHILQHGLQWHUIDFHV$QRWKHUH[DPSOHLV GHVLJQSDWWHUQV 7HVWDELOLW\
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
$QH[DPSOHRIDUDFHFRQGLWLRQFDQEHWZRWKUHDGVWKDWERWKZDQWWR LQLWLDOL]HDYDOXH7KHILUVWWKUHDGFKHFNVWRVHHLIWKHYDOXHKDVEHHQ LQLWLDOL]HGDQGILQGVRXWWKDWLWKDVQ WVRLWVWDUWVWRJDWKHULQIRUPDWLRQVR LWFDQVHWWKHYDOXH0HDQZKLOHWKHVHFRQGWKUHDGKDVDOVRVHHQWKDWWKH YDOXHKDVQ WEHHQLQLWLDOL]HGVRLWVWDUWVWRJDWKHULQIRUPDWLRQWRR
1RWH
,ZLOOGLVFXVVWHVWLQJLQPRUHGHWDLOLQ&KDSWHU
'HEXJJDELOLW\
,DVNHGDIULHQGZKRLVD UHVHDUFKHULQVRIWZDUHDUFKLWHFWXUHLIWKH\WDONDERXW ³GHEXJJDELOLW\´WRRDQGDOWKRXJKKHXQGHUVWRRGZKDW,PHDQWLPPHGLDWHO\KH KDGQHYHUKHDUGRIWKHWHUP3HUKDSV,KDYHLQYHQWHGWKHZRUG
7KHUHDUHVHYHUDOWKLQJV\RXVKRXOGGRWRSUHSDUH\RXUDSSOLFDWLRQIRUHDV\DQG HIILFLHQWGHEXJJLQJEXWWKHVLQJOHPRVWLPSRUWDQWWHFKQLTXHLQP\RSLQLRQLVWR DGGWUDFLQJVXSSRUWVRWKDW\RXUDSSOLFDWLRQFDQWHOO\RXZKDWLVJRLQJRQ)RU H[DPSOHVD\DGLVWDQWFXVWRPHUFDOOV\RXDQGVD\VKHKDVDSUREOHPZLWK WKH DSSOLFDWLRQ\RXEXLOW%HFDXVHLWVHHPVWREHDVWUDQJHSUREOHPWKHRQO\DQVZHU \RXFDQJLYHKLPLVWKDW\RXZLOOKDYHWRDGGWUDFLQJWRWKHDSSOLFDWLRQDQGVHQG KLPDQHZYHUVLRQLQDFRXSOHRIGD\V,WZRXOGEHPXFKEHWWHUIRU\RXDQG\RXU FXVWRPHU LI\RXFRXOGMXVWWHOOKLPWR³WXUQDVZLWFK´IRUH[DPSOHE\DGGLQJD URZWRDFRQILJ ILOH WRWXUQWUDFHFDOOVRQUXQWKHVFHQDULRDQGVHQG\RXWKH WUDFHORJ
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
&KDSWHU³$GGLQJ'HEXJJLQJ6XSSRUW´LVGHGLFDWHGWRLQFUHDVLQJ
GHEXJJDELOLW\
,QWHURSHUDELOLW\
$OWKRXJKLQWHURSHUDELOLW\FDQPHDQVHYHUDOWKLQJV,ZLOOXVHLWLQWKHVHQVHRI1(7 FRPSRQHQWVFRH[LVWLQJZLWK&20DQG&20 FRPSRQHQWVFUHDWHGLQ9%DQG ZLWKSXUFKDVHGFRPSRQHQWV,QGRLQJVR,DVVXPHWKDWPRVWRIXVZLOOXVH9% IRUDWOHDVWDQRWKHUIHZ\HDUV,WMXVWGRHVQ WPDNHVHQVHWRUHZULWHDOOWKHROG FRPSRQHQWVLQD1(7ODQJXDJHGLUHFWO\ZKHQWKHUHDUHVRPDQ\RWKHUSURMHFWV WKDWPXVWEHGHYHORSHGIRUWKHILUVWWLPH0LFURVRIWLVDZDUHRIWKLVDQGKDV LQYHVWHGDORWRIWLPHDQGPRQH\LQFUHDWLQJVWURQJLQWHURSHUDELOLW\LQ1(7ZLWK
H[LVWLQJ&20FRPSRQHQWV7KHZD\,VHHLW WKLVLVFUXFLDOIRUWKHZLGHDFFHSWDQFH DQGVXFFHVVRI1(7
7KHFRH[LVWHQFHDQGLQWHURSHUDELOLW\EHWZHHQ1(7DQG&20FRPSRQHQWVLVUHDOO\ WZRIROG,W VLPSRUWDQWWKDW1(7FRPSRQHQWVDUHDEOHWRXVH&20FRPSRQHQWV DQGYLFHYHUVD$OWKRXJKLWLVSRVVLEOHMXVWKRZJRRGZLOOWKHLQWHURSHUDELOLW\LQ FHUWDLQVLWXDWLRQVEH"$QGKRZZLOOWKHQHHGIRUFRH[LVWHQFHZLWK&20FRPSRQHQWV DIIHFW\RXUGHVLJQGHFLVLRQV"7KHVHDUHTXHVWLRQV,ZLOOWU\WRDQVZHULQWKH HYDOXDWLRQVRIWKHYDULRXVVROXWLRQSURSRVDOVWKURXJKRXWWKLVERRN,ZLOODOVRIRFXV RQKRZWROHW1(7FRPSRQHQWVLQWHURSHUDWHZLWK\RXUVWRUHGSURFHGXUHV,QP\ RSLQLRQWKHUHKDVEHHQWRROLWWOHVDLGDERXWWKLVRYHUWKH\HDUV 7KHFRPPRQODQJXDJHUXQWLPHDOVRKDVDORWWRGRZLWKLQWHURSHUDELOLW\)RU H[DPSOHWKHJDUEDJHFROOHFWRUZLOOKHOSPDNHLQWHURSHUDELOLW\HDVLHUWRDFKLHYH 8VLQJWKHFRPPRQW\SHV\VWHPDQGWKH%DVH&ODVVHV/LEUDU\%&/ DUHWZRRWKHU ZD\VWRDIIHFWLQWHURSHUDELOLW\,QDGGLWLRQWKHUHDUHLQWHURSHUDELOLW\DVSHFWVIHZ EXWVRPH WRWKLQNDERXWHYHQEHWZHHQODQJXDJHVVXFKDV9LVXDO%DVLF1(7DQG &)RUH[DPSOHLI\RXFRGHLQ&UHPHPEHUWKDW9LVXDO%DVLF1(7LVQRWFDVH VHQVLWLYH
2QHUXOH,WU\WRDGKHUHWRLVQRWWRXVHGLVWULEXWHGWUDQVDFWLRQVZKLFKLVZKDW\RX JHWLI\RXXVHGHFODUDWLYHWUDQVDFWLRQV LIWKHUHLVRQO\RQH5HVRXUFH0DQDJHU 50 VXFKDV64/6HUYHU,QWKLVFDVH,XVHORFDOWUDQVDFWLRQVLQVWHDGVRDVQRW WRZDVWHUHVRXUFHV DQGWRJHWEHWWHUVFDODELOLW\2QHH[FHSWLRQWRWKLVUXOHRI WKXPELVZKHQ\RXKDYHWRGHDOZLWKDFRPSRQHQWZKHUHWKHLPSOHPHQWDWLRQLV XQNQRZQWR\RXDQGZKHUHWKHUHLVQRZD\RIDGGLQJWKHFRPSRQHQW VEHKDYLRU LQWR\RXUORFDOWUDQVDFWLRQV7KHQGLVWULEXWHGWUDQVDFWLRQVFRPHWRWKHUHVFXH 1RWH
,ZLOOGHYRWHDORWRIWLPHWRGLVFXVVLQJWUDQVDFWLRQVDQGWLSVRQKRZWR RSWLPL]HIRUHDFKFDVHLQ&KDSWHU³7UDQVDFWLRQV´
'RQ WIRUJHWWKDWLQWHURSHUDELOLW\DVSHFWVKDYHDJUHDWLQIOXHQFHRQZULWLQJVHUYLFHG FRPSRQHQWVEHFDXVHWKHVHUYLFHVZLOOVWLOOEHLQXQPDQDJHGFRGHDQG\RXU FRPSRQHQWVZLOOEHLQPDQDJHGFRGH%HFDXVHRIWKLV\RXFDQ WH[SHFWVWDWLF PHWKRGVDVURRWPHWKRGVWREHVHUYLFHGIRUH[DPSOH 3URGXFWLYLW\
&RPSXWHUVDUHJHWWLQJIDVWHUDOOWKHWLPHEXWRXUSURGXFWLYLW\LVQ WJURZLQJDW WKH VDPHSDFH0HDQZKLOHWKHSURGXFWLYLW\IDFWRUPLJKWEHLQFRQIOLFWZLWKVD\WKH SHUIRUPDQFHIDFWRU$QH[DPSOHRIWKLVLVWKDW\RXQHHGWRNQRZWKHQDPHVRI \RXUPHWKRGVGXULQJH[HFXWLRQWLPH7KLVLVXVHGIRUWUDFLQJIRUH[DPSOHZKLFK , OOGLVFXVVLQJUHDWHUGHWDLOLQ&KDSWHU,WZRXOGEHYHU\IDVWWRKDUGFRGHWKH QDPHRIWKHPHWKRGDVDFRQVWDQWDQGKDQGWKDWRYHULQHYHU\WUDFHFDOOLQWKH PHWKRGEXWZKHQLWFRPHVWRSURGXFWLYLW\LWZRXOGEHOHVVHIIHFWLYHWKDQXVLQJ UHIOHFWLRQWRJHWWRWKHPHWDGDWD
'LPVW$V1HZ6WDFN7UDFH 'LPVI$V6WDFN)UDPH VW*HW)UDPH
'LPD%XIIHU$V6WULQJ VI*HW0HWKRG1DPH7R6WULQJ ,W VYHU\FRPPRQWKDWGHYHORSHUVFRS\DQGSDVWHFRGHFRPPRQO\UHIHUUHGWRDV HGLWRURUFOLSERDUGLQKHULWDQFH DQGZLWKWKHPHWDGDWDDSSURDFK\RXZRQ WJHW DQ\H[WUDFRS\DQGSDVWHSUREOHPV$V\RXNQRZWKHUHDUHRWKHUPRUHVHULRXV SUREOHPVZLWKFRS\DQGSDVWHEXWWKDW VDQRWKHUVWRU\ $QRWKHUH[DPSOHRISURGXFWLYLW\EHLQJLQFRQIOLFWZLWKSHUIRUPDQFHLVWKDW\RX GRQ WKDYHWKHFKDQFHRIFUHDWLQJJOREDOFRQVWDQWVZKHQSURJUDPPLQJLQ764/ 7KHFORVHVWVROXWLRQLVSUREDEO\WRKDYHDWDEOHZLWKDOOWKHFRQVWDQWVDQGWKHQ HQFDSVXODWHWKHWDEOHZLWKWKHKHOSRID8VHU'HILQHG)XQFWLRQ8') IRUHDFK FRQVWDQW7KLVJLYHVYHU\UHDGDEOHDQGPDLQWDLQDEOHFRGHEXWWKLVH[DPSOHWRR VDFULILFHVSHUIRUPDQFH
)LQDOO\WZRRIWKHPRVWSURGXFWLYLW\NLOOLQJIHDWXUHVRIDSURMHFWFDQEHZKHQ WHVWLQJDQGGHEXJJLQJKDYHQ WEHHQSODQQHGIRUXSIURQW7KHEDGQHZVLVWKDWWKLV RIWHQZRQ WEHFRPHHYLGHQWXQWLOODWHLQWKHSURMHFW
6HFXULW\
/HW VIDFHLW'HYHORSHUVILQGVHFXULW\GLIILFXOWDQG³LQWKHZD\´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
)DUP DQG&OXVWHU(QDEOLQJ
2IFRXUVH,FRXOGKDYHGLVFXVVHGKRZWRIDUP DQGFOXVWHUHQDEOHFRPSRQHQWVLQ WKH³3K\VLFDO5HVWULFWLRQVDQG3RVVLELOLWLHV´VHFWLRQEXW,IHHOLWLVRIVXFK LPSRUWDQFHDQGVXFKDORQJGLVFXVVLRQWKDWLW VLPSRUWDQWWRORRNDWLWVHSDUDWHO\,
VWDUWHGGLVFXVVLQJVFDOLQJRXWHDUOLHULQWKHFKDSWHU/HW VFRQWLQXHZLWKWKLV GLVFXVVLRQDELWPRUH
$V,VDLGOHWWLQJVHYHUDOVPDOOPDFKLQHVZRUNWRJHWKHULQDQLQWHOOLJHQWZD\FDQ JLYHH[WUHPHO\JRRGVFDODELOLW\HVSHFLDOO\LIWKHVKDUHGQRWKLQJPRGHOLVXVHG,Q )LJXUH\RXFDQVHHWKDWHDFKGDWDEDVHVHUYHUKDVLWVRZQGLVNV\VWHP PHPRU\EXVDQGVRRQ7KDWZD\WKHUHLVQRERWWOHQHFNEHFDXVHRIVHYHUDO PDFKLQHVFRPSHWLQJIRUWKHVDPHEXVIRUH[DPSOH )LJXUH$VFKHPDWLFSLFWXUHRI³VKDUHGQRWKLQJ´
7KHUHDUHWKUHHEDVLFZD\VRIDFKLHYLQJ³VKDUHGQRWKLQJ´ x x x
&ORQLQJ 3DUWLWLRQLQJ 5HSOLFDWLRQ
,ZLOOGLVFXVVHDFKRIWKHVHDVZHOODVVKDUHGGLVNFOXVWHULQJQH[W &ORQLQJ
,QFORQLQJD:HEVHUYHUDQGDSSOLFDWLRQVHUYHULVGXSOLFDWHGVRWKDWWKHORDGLV VSOLWEHWZHHQWZRRUPRUHPDFKLQHVLQVWHDGRIRQH6RPHORDGEDODQFLQJ PHFKDQLVPLVQHHGHGEXWZKHQWKDWLVLQSODFHFORQLQJLVRIWHQHDVLO\XVHG7KH ORDGEDODQFLQJPHFKDQLVPLVVLPSOHWRVHWXSDQGJLYHVVRPHIDXOWWROHUDQFHDV IDLORYHU DXWRPDWLFDOO\1RWHLQ)LJXUHWKDWWKH:HEDQGDSSOLFDWLRQVHUYHUV DUHDOOHTXDODQGLWGRHVQ WPDWWHUZKLFKRQHWKHXVHUKLWV )LJXUH&ORQLQJ
3DUWLWLRQLQJ
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
7KH'H0LOLWDUL]HG=RQH'0= LQ6RIWZDUH $UFKLWHFWXUH
7KHLGHDRIWKH'0=LVWRFUHDWHDVHPLVHFXUH]RQHEHWZHHQWKHILUHZDOO DQGWKH,QWHUQHWDQGWKHILUHZDOODQGWKHFRUSRUDWHLQWUDQHW)RUH[DPSOH LI\RXZDQWWRSXWDVHQVLWLYH,QWHUQHW:HEDSSOLFDWLRQLQWKH'0=\RX FDQGLFWDWHWKDWWKHRQO\WLPHWKDWWUDIILFJRHVWKURXJKWKHVHFRQGILUHZDOO WRWKHFRUSRUDWHLQWUDQHWLVZKHQWKH:HEVHUYHUKDVWRFRQWDFWWKH GDWDEDVHVHUYHUIRUDFFHVVLQJGDWD
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
5HSOLFDWLRQ
,QVHYHUDOSDUWLWLRQLQJVFHQDULRVWKHUHZLOOEHDQHHGIRUGXSOLFDWLRQRIORRNXS WDEOHVDQGGXSOLFDWLRQRIWKHURZVLQWKRVHWDEOHV EHFDXVHWKHUHZLOOEH UHIHUHQWLDOLQWHJULW\UHODWLRQVKLSVWKDWQHHGWREHFKHFNHG:KHQWKRVHORRNXS WDEOHVDUHWREHXSGDWHGDWZRSKDVHFRPPLWWUDQVDFWLRQLVQHHGHGLI³UHDOWLPH FRQVLVWHQF\´LVDUHTXLUHPHQW5HSOLFDWLRQFDQJLYHD³UHDOHQRXJKWLPH FRQVLVWHQF\´VROXWLRQWRWKHSUREOHP
2QHSUREOHPZLWK'39VLVWKDWDOOTXHULHVFDQ WDOZD\VEHDQVZHUHGE\RQH PDFKLQH,QVWHDGVHYHUDOPDFKLQHVKDYHWRFRRSHUDWHWRSURGXFHWKHUHVXOW ZKLFKGHFUHDVHVSHUIRUPDQFH$PRUHKLJKSHUIRUPDQFHVROXWLRQZRXOGEHWR FORQHWKHGDWDEDVHVLQVWHDGVRWKDWDOOGDWDZLOOEHIRXQGDWHYHU\VHUYHU7KH UHDGLQJZLOOEHYHU\IDVWDQGWKHVROXWLRQZLOOEHYHU\VFDODEOH²WKDWLVXQWLO\RX WDNH83'$7(VLQFRQVLGHUDWLRQ,I\RXQHHGUHDOWLPHFRQVLVWHQF\EHWZHHQWKH GDWDEDVHV\RXQHHGWRXVHWZRSKDVHFRPPLWWUDQVDFWLRQVGLVWULEXWHG WUDQVDFWLRQV ZKLFKDUHQRWRQO\YHU\FRVWO\EXWDOVRYXOQHUDEOH,IRQHVHUYHULV GRZQDWWKHWLPHRIWKHWUDQVDFWLRQWKHWUDQVDFWLRQFDQ WEHIXOILOOHG)LJXUH VKRZVDVFKHPDWLFGHVFULSWLRQRIUHSOLFDWLRQ
6KDUHG'LVN&OXVWHULQJ
6RIDU, YHGLVFXVVHG³VKDUHGQRWKLQJ´FOXVWHULQJ$QRWKHUFOXVWHULQJPRGHOLVWKH VKDUHGGLVNWHFKQLTXH2QHZD\WRXVHWKHVKDUHGGLVNWHFKQLTXHLVWRKDYHDGLVN V\VWHPZLWKWKHGDWDEDVHWKDWLVVKDUHGE\VHYHUDOVHUYHUVDFWLQJDVGDWDEDVH VHUYHUV)LJXUHSURYLGHVDQH[DPSOHRIKRZVKDUHGGLVNFOXVWHULQJPLJKW ORRN )LJXUH6KDUHGGLVNFOXVWHULQJ
$V0LFURVRIWVHHVLWWKHPDLQUHDVRQIRUVKDUHGGLVNFOXVWHULQJQRZDGD\VLVWRJHW IDXOWWROHUDQFHE\XVLQJIDLORYHUWHFKQLTXHV:LWKVKDUHGGLVNFOXVWHULQJ\RXGRQ W KDYHWRWKLQNVRPXFKDERXWIDXOWWROHUDQFHZKHQ\RXGHVLJQ\RXUFRPSRQHQWVDV \RXGRZLWKVKDUHGQRWKLQJVFHQDULRV ,WZLOOSUREDEO\EHTXLWHFRPPRQWRFRPELQHVKDUHGGLVNZLWKVKDUHGQRWKLQJVR WKDWHDFKGDWDEDVHQRGHZLOOXVHDVKDUHGGLVNFOXVWHU)LJXUHVKRZVVXFKDQ H[DPSOH,QJHQHUDOVKDUHGQRWKLQJLVXVHGIRUVFDODELOLW\DQGVKDUHGGLVNLVXVHG IRUUHOLDELOLW\ )LJXUH&RPELQDWLRQRIVKDUHGGLVNDQGVKDUHGQRWKLQJ
&DFKLQJDQG &OXVWHULQJ
$WWKHVDPHWLPH\RXVWDUWZLWKIDUPVDQGFOXVWHULQJ\RXPXVWEHFDUHIXO ZLWK\RXUFDFKLQJVROXWLRQV$VVXPHWKDW\RXFDFKHGDWDDWDFORQHG:HE VHUYHUDQGWKDWSLHFHRIGDWDLVFKDQJHG+RZFDQ\RXPDNHWKHFKDQJH WRKLWWKHFDFKHDWDOOWKH:HEVHUYHUVDWWKHVDPHWLPH"'R\RXKDYHWR" ,I\RXGRLW VSUREDEO\EHWWHUQRWWRXVHFDFKLQJ
5HIHUHQFHV
(*DPPD5+HOP5-RKQVRQ-9OLVVLGHV'HVLJQ3DWWHUQV(OHPHQWVRI 5HXVDEOH2EMHFW2ULHQWHG6RIWZDUH$GGLVRQ:HVOH\ KWWSZRPEDWGRFLFDFXNIROGRF KWWSZZZWSFRUJ
*)3ILVWHU,Q6HDUFKRI&OXVWHUV6HFRQG(GLWLRQ 3UHQWLFH+DOO375
)%XVFKPDQQ 50HXQLHU+5RKQHUW36RPPHUODG06WDO$6\VWHPRI 3DWWHUQV3DWWHUQ2ULHQWHG6RIWZDUH$UFKLWHFWXUH :LOH\
*6FKXOPH\HU-0F0DQXV+DQGERRNRI6RIWZDUH4XDOLW\$VVXUDQFH7KLUG (GLWLRQ3UHQWLFH+DOO
.%HFN([WUHPH3URJUDPPLQJ([SODLQHG(PEUDFH&KDQJH $GGLVRQ:HVOH\
&KDSWHU7HVWLQJ ,17+,6&+$37(5 x x x x x x
$6KRUW,QWURGXFWLRQWR7HVWLQJ 6XSSRUWIRU$XWRPDWLF7HVWLQJZLWKD6WDQGDUGL]HG7HVW%HG $VVHUWLRQV 7KH'LDJQRVH0RQLWRU7RRO 0LVFHOODQHRXV7LSV (YDOXDWLRQRI3URSRVDOV
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³)DFWRUVWR&RQVLGHULQ&KRRVLQJD6ROXWLRQ WRD3UREOHP´
$6KRUW,QWURGXFWLRQWR7HVWLQJ
7KLVVHFWLRQLVQRWPHDQWWREHXVHGDVDJXLGHOLQHIRUWKH4XDOLW\$VVXUDQFHIRONV UDWKHULWLVDUHFDSRIWHVWLQJLVVXHVIRUGHYHORSHUV²ERWKFRQVLGHULQJWKHWHVWLQJ OHYHODQGWKHW\SHRIWHVWLQJQHHGHG²EHIRUHZHVWDUWJHWWLQJRXUKDQGVGLUW\ &RQVLGHULQJWKH7HVWLQJ/HYHO
%HIRUH\RXEHJLQWHVWLQJDQ\SURMHFW\RXPXVWILUVWFRQVLGHUWKHOHYHODWZKLFK \RXZDQW\RXUWHVWLQJHIIRUWVWREHDSSOLHG
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
'HSHQGLQJRQWKHOHYHODWZKLFK\RXZLOOWHVW\RXUV\VWHP\RXFDQDQGVKRXOGXVH GLIIHUHQWW\SHVRIWHVWLQJ,W VLPSRUWDQWWRQRWHWKDWQRVLQJOHWHFKQLTXHZLOOEHWKH RQO\RQHQHHGHG/HW VWDNHDORRNDWWKHGLIIHUHQWW\SHVRIWHVWLQJ\RXVKRXOG FRQVLGHU 'HYHORSPHQW7HVWLQJ
$VGHYHORSHUVZRUNZLWKDFRPSRQHQWWKH\REYLRXVO\PXVWWHVWWKHFRPSRQHQW IURPGLIIHUHQWSHUVSHFWLYHV'RHVLWZRUNLQWKLVFDVH"'R,JHWWKHUHVXOW,H[SHFW IRUDEXQFKRIGLIIHUHQWFRPELQDWLRQVRILQSXW"$QGVRRQ +LVWRULFDOO\9%KDVEHHQDJUHDWWRROIRUZULWLQJFRGHWHVWLQJLWDQGFRUUHFWLQJ SUREOHPVDV\RXWHVWFRQWLQXLQJWRZULWHPRUHFRGHDV\RXJR7KLVLVDYHU\ SURGXFWLYHDSSURDFK:KDWLVQRW DSURGXFWLYHDSSURDFKLVWRKDYHRQO\WKHILQDO 8VHU,QWHUIDFH8, DVWKHWHVWGULYHUZKHQ\RXEXLOGWKHFRPSRQHQWV7KHUHDUH VHYHUDOSUREOHPVZLWKWKLVLQFOXGLQJWKHIROORZLQJ x x x
7KH8,PLJKWQRWEHILQLVKHG\HW &OLFNLQJWKURXJKVHYHUDOGLDORJVEHIRUH\RXJHWWRZKHUH\RXFDQWHVW\RXU PHWKRGLVQRWMXVWWLPHFRQVXPLQJDQGIUXVWUDWLQJLWFDQDOVROHDGWRFDUSDO WXQQHOV\QGURPHOLNHV\PSWRPV ,WZLOOVHOGRPEHHDV\WRWHVWDOOWKHIXQFWLRQDOLW\RI\RXUFRPSRQHQWDVDORW RILWZLOOEH³KLGGHQ´E\WKH8,7KLVLVHVSHFLDOO\WUXHIRUHUURUKDQGOLQJ FRGH
0RVWGHYHORSHUVFRQGXFWGHYHORSPHQWWHVWLQJDVWKH\JRDORQJ+RZHYHUWKH SURFHVVRIGHYHORSPHQWWHVWLQJPD\QHHGWREHIRUPDOL]HG:H OOGLVFXVVWKLVLQ PRUHGHWDLOODWHULQWKHFKDSWHU &RGH5HYLHZLQJ
2QHSRZHUIXOWHVWLQJWHFKQLTXHLVVLPSO\WRUHYLHZ\RXUFRGH7KLVLVHVSHFLDOO\ HIILFLHQWLI\RXDVNVRPHRQHHOVHWRUHYLHZ\RXUFRGH,QP\ILUVWUHDOZRUOG SURMHFWDPHQWRUFDPHLQWRFKHFNRQXVQRZDQGWKHQ2QHWLPHKHVDLGWRPH ³-LPP\VKRZPH\RXUEHVWIXQFWLRQ´,TXLFNO\JXHVVHGWKDWKHZDQWHGWRVHH VRPHFRGHZLWKDORWRIFRPPHQWVDQG,UHPHPEHUHGRQHIXQFWLRQ,KDGUHFHQWO\ ZULWWHQWKDWZDVKHDYLO\FRPPHQWHG
$IHZRUJDQL]DWLRQVKDYHIRUPDOL]HGFRGHUHYLHZLQJVRWKDWHYHU\FRPSRQHQWPXVW EHVLJQHGE\DUHYLHZHUIRUH[DPSOH2QWKHRWKHUKDQGWKHPDMRULW\RI RUJDQL]DWLRQVKDYHRQO\MXVWEHJXQWRGLVFXVVLPSOHPHQWLQJDFRGHUHYLHZLQJ SROLF\,UHFRPPHQG\RXVWDUWFRQGXFWLQJFRGHUHYLHZLQJLI\RXKDYHQ WDOUHDG\
GRQHVR/HWVRPHERG\UHDG\RXUFRGHIRUDQKRXU\RXZLOOEHVXUSULVHGE\WKH DPRXQWRISRWHQWLDOSUREOHPVWKDWVRPHRQHRWKHUWKDQ\RXUVHOIFDQVHHHDVLO\
, YHHQFRXQWHUHGPDQ\H[DPSOHVRIWKHLPSRUWDQFHRIFRGHUHYLHZLQJ2QHLQ SDUWLFXODUVWDQGVRXW$FROOHDJXHRIPLQHRQFHEXLOWDQDSSOLFDWLRQWKDWZDVWREH XVHGRQDQDWLRQDOWHOHYLVLRQVKRZWKDWZDVFROOHFWLQJPRQH\IRUFKDULW\0\ FROOHDJXHKDGDKDUGWLPHFRQYLQFLQJWKHFXVWRPHUWKDWLWZDVLPSRUWDQWWRWHVW WKHDSSOLFDWLRQDQGVRKHZDVYHU\DQ[LRXVDERXWKLVDSSOLFDWLRQIDLOLQJGXULQJ SULPHWLPH7KHUHIRUHKHDVNHGPHWRUHYLHZWKHFRGH$OWKRXJKKHLVWKHPRVW VNLOOHGSURJUDPPHU,NQRZDQGKDGUHYLHZHGWKHFRGHVHYHUDOWLPHVKLPVHOIDQG FDUULHGRXWVWUHVVWHVWVDQGVXFKQHYHUWKHOHVVLQWZRKRXUV,ZDVDEOHWRSRLQW RXWWKUHHPDMRUULVNVWKDWKHZDVDEOHWRUHPRYHEHIRUHXVLQJWKHDSSOLFDWLRQ7KH DSSOLFDWLRQUDQZLWKQRSUREOHPVRQWKHVKRZ3HUKDSVLWVWLOOZRXOGKDYHZLWKRXW P\UHYLHZEXWLWZDVDPXFKVPDOOHU³SHUKDSV´ZLWKWKHUHYLHZ
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
$OWKRXJKHDFKXQLWVKRXOGEHWHVWHGVHSDUDWHO\WKH\PXVWREYLRXVO\ZRUN WRJHWKHUZKHQ\RXLQWHJUDWHWKHP7KHUHIRUHLW VLPSRUWDQWWRWHVWWKH FRPSRQHQWVDIWHUWKH\KDYHEHHQLQWHJUDWHG
,VXJJHVWWKDW\RXVFKHGXOHLQWHJUDWLRQWHVWVDWVSHFLILFSRLQWVLQWLPH²SHUKDSV RQFHDZHHNSHUKDSVDVDQLJKWO\EXLOGZLWKDXWRPDWLFLQWHJUDWLRQ²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
,W VLPSRUWDQWWRQRWHWKDWDVLVWKHFDVHLQRWKHUOHYHOVRIWHVWLQJLILQWHJUDWLRQ WHVWLQJLVQRWGRQHXQWLOWKHHQGRIWKHSURMHFW\RXDUHDVNLQJIRUWURXEOH6WDUW GRLQJLQWHJUDWLRQWHVWVDVVRRQDVWKHFRPSRQHQWVWDNHVKDSH²WKH\GRQ WKDYHWR EHILQLVKHG,QIDFWWKH\GRQ WHYHQKDYHWREHSURJUDPPHGDWDOOH[FHSWIRUWKH LQWHUIDFHVDQGDPLQLPDODPRXQWRIIDNHFRGH7KLVZLOODOORZIRULQWHJUDWLRQDV HDUO\DVSRVVLEOH 6WUHVV7HVWLQJ
6WUHVVWHVWLQJLVDOVRDJRRGRSSRUWXQLW\WRFRQGXFWUHFRYHU\WHVWLQJ:KDW KDSSHQVLI,SXOOWKHSOXJ":KHQGRHVWKHV\VWHPKLWWKHZDOODQGLVWKHUHD FRQYHQLHQWLQWHUYDOEHWZHHQWKHH[SHFWHGORDGDQGWKHZDOO":LOOWKHV\VWHP FRQWLQXHZRUNLQJDWSHDNZKHQLWKLWVWKHZDOO"$VNLQJWKHVHTXHVWLRQVDQGWHVWLQJ IRUDQVZHUVQRZZLOOVDYHWLPHODWHU
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
6RXQGREMHFWRULHQWHGDQGFRPSRQHQWEDVHGGHVLJQZLOOWKDQNVWRDKLJKGHJUHH RILQIRUPDWLRQKLGLQJPDNHLWPRUHSRVVLEOHWRFKDQJHFRPSRQHQWVZLWKRXW EUHDNLQJRWKHUSDUWVRIWKHV\VWHP6WLOODVVRRQDV\RXFKDQJHDQ\WKLQJLQDQ DSSOLFDWLRQWKHUHLVDULVNWKDWVRPHWKLQJHOVHZLOOVWRSZRUNLQJ
6XSSRUWIRU$XWRPDWLF7HVWLQJZLWKD6WDQGDUGL]HG7HVW%HG
'R\RXNQRZWKHPRVWFRPPRQUHDVRQGHYHORSHUVJLYHIRUZK\WKH\KDYHQ W WHVWHGWKHLUFRPSRQHQWV":HOOLWGHSHQGVRQZKHQWKH\DUHDVNHG(DUO\RQLQWKH SURMHFWWKH\PD\VD\³,W VQRXVHWHVWLQJP\RZQFRGH6RPHRQHHOVHKDVWRGR LW´,IWKH\DUHDVNHGDIWHUWKHSURMHFWLVFRPSOHWHGWKH\PD\VD\³7KHUHZDVQ W HQRXJKWLPH´, YHXVHGERWKRIWKHVHUHVSRQVHVP\VHOIDWRQHSRLQWLQWLPHRU DQRWKHU$QGDOWKRXJK,NQRZLWLV PRUHOLNHO\WKDWVRPHRQHHOVHZLOOILQGSUREOHPV ZLWKP\FRPSRQHQWVWKDQ,ZLOORQWKHRWKHUKDQGLI,OHDYHHDVLO\GHWHFWDEOH HUURUVWRWKHWHVWHUKHRUVKHZRQ WKDYHWLPHWRILQGWKHPRUHLPSRUWDQWQDVW\ SUREOHPV6RRIFRXUVHDVDSURJUDPPHU,PXVWUHPRYHDVPDQ\VLPSOHEXJVDV SRVVLEOHDVHDUO\DVSRVVLEOH3HUKDSVWKHVLQJOHPRVWHIILFLHQWZD\WRDFKLHYHWKLV LVWRDGGVXSSRUWIRUDXWRPDWLFWHVWLQJWR\RXUFRPSRQHQWV 1RWH
$OWKRXJKLQWKLVFKDSWHU,GLVFXVVDFXVWRPVROXWLRQIRUPDNLQJWHVWLQJ PRUHDXWRPDWLFWKHUHDUHVHYHUDOWKLUGSDUW\VROXWLRQVWKDWDUHYHU\ LQWHUHVWLQJWRR7ZRFRPPRQH[DPSOHVDUHWKHWRROVIURP5DWLRQDODQG &RPSXZDUH
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
7HVW'ULYHU7HVW%HGDQG7HVW6XLWH
%HIRUHZHJHWDQ\IXUWKHULQRXUGLVFXVVLRQLW VLPSRUWDQW\RXXQGHUVWDQG WKHPHDQLQJRIWKHIROORZLQJWHUPV x x x
7HVWGULYHU² $WHVWGULYHULV DSURJUDPWKDWH[HFXWHVVRPHWHVWVRI RQHRUPRUHFRPSRQHQWVRURQHRUPRUHVWRUHGSURFHGXUHV 7HVWEHG² $WHVWEHGLVDFRQWDLQHURUDFRQWUROOHUWKDWFDQH[HFXWH WKHWHVWGULYHUV 7HVWVXLWH² $WHVWVXLWHLVDFRXSOHRIWHVWGULYHUVWKDWDUHUHODWHG LQVRPHIDVKLRQ
'HYHORSHUVRIWKHVRXUFHFRGHDUHXVXDOO\WKHEHVWSHUVRQVWRZULWHDWHVWGULYHU IRUWKHFRPSRQHQW7KLVWHVWGULYHUVKRXOGEHDEOHWRKDQGOHDVPDQ\FDVHVDV SRVVLEOHDQGVKRXOGH[SRVHWKHPRVWVHQVLWLYHSDUWVRIWKHFRGHLQWKHFRPSRQHQW VRPHWKLQJZLWKZKLFKWKHRULJLQDOGHYHORSHUVDUHIDPLOLDU7KHGHYHORSHUVRIWKH FRPSRQHQWVFDQDOVRFRPSOHWHWKLVIDVWHUWKDQDQ\ERG\HOVHEHFDXVHWKH\NQRZ WKHFRGHLQVLGHRXWDQGLWZLOOUDUHO\EHDVTXLFNRUHIILFLHQWWRZULWHWKHWHVWGULYHU DVZKHQWKHFRGHLWVHOILVEHLQJZULWWHQ 1RWH
:KHQWKHWHVWHUNQRZVDERXWWKHLPSOHPHQWDWLRQDQGGRHVQ WMXVWVHHWKH XQLWDVDEODFNER[LWLVFRPPRQO\UHIHUUHGWRDVZKLWHER[WHVWLQJ7KH RSSRVLWHLVEODFNER[WHVWLQJ ,IWKHGHYHORSHURIDFRPSRQHQWDOVRZULWHV WKHWHVWGULYHUZKLWHER[WHVWLQJLVEHLQJXVHG
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
5HPHPEHUWKLVVLPSOHUXOH7KHFRPSRQHQWRU VWRUHGSURFHGXUHLVQ W ILQLVKHGXQWLOWKHUHLVDZHOOZULWWHQDQGVXFFHVVIXOO\H[HFXWHGWHVWGULYHU WKDWIROORZVWKHUXOHVHVWDEOLVKHGE\WKHVWDQGDUGL]HGWHVWEHG
:RUNLQJZLWKWKH7HVW%HG
/HW VORRNDWDVLPSOHWHVWEHGWKDW, YHXVHGWRWHVWWKHFRGH LQWKLVERRN7KHWHVW EHGLVFDOOHG-QVN7HVW7KHJHQHUDOUHTXLUHPHQWVWKDW,KDGIRUWKHWHVWEHGZHUH WKDWLWVKRXOG x x x x x
/RJWKHWHVWUHVXOWVLQDGDWDEDVH /RJZKRH[HFXWHGWKHWHVWVZKHQWKH\ZHUHVWDUWHGDQGZKHQWKH\HQGHG %HXVDEOHIRUWHVWLQJVWRUHG SURFHGXUHV1(7FRPSRQHQWVDQGFRPSRQHQWV ZULWWHQLQ9% +DYHWHVWGULYHUVWKDWDUHSRVVLEOHWRXVHZLWKRXWORJJLQJ IURPDQRWKHU WHVWWRROWKDWORJVGDWDRQLWVRZQVXFKDV0LFURVRIW V$SSOLFDWLRQ&HQWHU 7HVW$&7 0DNHLWSRVVLEOHWRVFKHGXOHH[HFXWLRQIRUH[DPSOHDIWHUWKHQLJKWO\EXLOG
,QWKLVVHFWLRQ,ZLOOGHPRQVWUDWHKRZ\RXFDQZRUNZLWKWKHWHVWEHG3OHDVHQRWH WKDWWKHWRROLWVHOILVQ WUHDOO\LPSRUWDQWLWLVWKHSULQFLSOH,KRSHZLOOLQVSLUH\RXRU JLYH\RXVRPHFRGHWRVWDUWZLWKWKDW\RXFRXOGWKHQH[SDQG,DOVRZDQWWRPDNH LWFOHDUWKDWWKHIROORZLQJIHZSDJHVDUHQ WW\SLFDORIWKHERRN, PQRW JRLQJWRILOO WKHERRNZLWKDORWRIVFUHHQVKRWV, PLQFOXGLQJWKHVHVFUHHQVKRWVRQO\DVD PHDQVWRFRPPXQLFDWHWKHLGHDVEHKLQGWKLV WRRO 1RWH
,QWKHIROORZLQJVHFWLRQV, PJRLQJWRVKRZ\RXHDFKRIWKHIRUPVLQWKHWHVWEHG DSSOLFDWLRQ-QVN7HVW7KHILUVWLVWKHRYHUYLHZIRUPZKLFKLVWKHPDLQIRUP.HHS WKLVLQPLQGZKHQ\RXUHDGWKURXJKWKHH[SODQDWLRQRIWKHWRRO7KHLGHDLVWKDW \RXFUHDWHWHVWGULYHUVIRU\RXUFRPSRQHQWVDQGVWRUHGSURFHGXUHV7KRVHWHVW GULYHUVDUHRUFKHVWUDWHGWRWHVWH[HFXWLRQV7KHWHVWH[HFXWLRQVDUHOLVWHGLQWKH RYHUYLHZIRUP 7KH2YHUYLHZ)RUPIRUWKH7HVW%HG
7KH-QVN7HVW WRROLV³RSHUDWHG´WKURXJKWKHRYHUYLHZIRUPZKHUHWHVWH[HFXWLRQV DUHOLVWHG+HUH\RXFDQVHWDILOWHUWRVHHRQO\FHUWDLQH[HFXWLRQVVXFKDVWKRVH WKDWZHUHH[HFXWHGGXULQJDFHUWDLQWLPHLQWHUYDORUWKRVHWKDWKDYHQ WEHHQ H[HFXWHG\HW%HIRUHWKHIRUPVKRZV\RXDUHDVNHGIRURUGLQDU\ORJLQLQIRUPDWLRQ DQGZKDWGDWDEDVHWRXVH)LJXUHVKRZVKRZWKHRYHUYLHZPLJKWDSSHDU+HUH \RXFDQVHHWKHWHVWH[HFXWLRQVEDVHGRQWKHFXUUHQWILOWHU )LJXUH$QRYHUYLHZRIWHVWH[HFXWLRQVEDVHGRQWKHFXUUHQWILOWHU
1RWH
$V \RXFDQVHHLQ)LJXUHDQGFRPLQJILJXUHV WKHXVHULQWHUIDFHIRU WKHWHVWEHGDSSOLFDWLRQLVFXUUHQWO\EXLOWLQ9%:KHQWKHERRNKDVEHHQ SXEOLVKHG\RXFDQILQGDYHUVLRQRIWKHWHVWEHGZKHUHWKHXVHULQWHUIDFH LVZULWWHQLQ:LQGRZV)RUPVDWWKH ERRN VZHEVLWHDW ZZZVDPVSXEOLVKLQJFRP
7KH)RUPIRU5HJLVWHULQJD7HVW'ULYHU
%HIRUH\RXFDQJHWVWDUWHG\RXPXVWUHJLVWHU\RXUWHVWGULYHUV
+RZHYHU,KDYHVNLSSHGWKDWIRUQRZDQGLQVWHDGZLOOVKRZ\RXKRZWRUHJLVWHU WKHWHVWGULYHUVE\KDQG)LJXUHVKRZVKRZWKHDSSURSULDWHGLDORJDSSHDUV,Q WKHH[DPSOHDVWRUHGSURFHGXUHWHVWGULYHULVEHLQJUHJLVWHUHG )LJXUH5HJLVWHULQJDVWRUHGSURFHGXUHWHVWGULYHU
5HJLVWUDWLRQDQG([HFXWLRQ
$IWHU\RXKDYHUHJLVWHUHG\RXUWHVWGULYHUV\RXFDQUHJLVWHUDQH[HFXWLRQE\ SRLQWLQJRXWZKLFKWHVWGULYHUVWRXVH7KHUHJLVWUDWLRQRIDQH[HFXWLRQLVVKRZQLQ )LJXUH )LJXUH5HJLVWHULQJWKHWHVWGULYHUVWKDWVKRXOGEHXVHGIRUDQH[HFXWLRQ
:KHQ\RXKDYHUHJLVWHUHGRQHRUPRUHH[HFXWLRQV\RXFDQH[HFXWHWKHPIURP WKHRYHUYLHZIRUPUHIHUWR)LJXUH E\VHOHFWLQJWKHGHVLUHGURZVDQGFOLFNLQJ WKH([HFXWHEXWWRQ$IWHUDZKLOH\RXZLOOJHWWKHUHVXOWRIWKHH[HFXWLRQ$WWKLV SRLQW\RXFDQVHHKRZORQJWKHH[HFXWLRQWRRNDQGZKHWKHULWZRUNHGRXWDV\RX H[SHFWHG
1RWH
7KH*8,FDOOVVWRUHGSURFHGXUHVDVWKHWHFKQLTXHWRDFFHVVWKHGDWDEDVH 7KHVWRUHGSURFHGXUHLQWHUIDFHFDQEHXVHGGLUHFWO\E\WKHXVHURIWKHWHVW EHGDVFDQWKHXQGHUO\LQJWDEOHVZKLFKZLOOEHGHVFULEHGLQWKHIROORZLQJ VHFWLRQ )RUPRUHLQIRUPDWLRQDERXWWKLV WRSLF\RXFDQGRZQORDGWKHWRRO IURPWKHERRN V:HEVLWHDWZZZVDPVSXEOLVKLQJFRP
8QGHUVWDQGLQJWKH'DWDEDVH6FKHPDIRUWKH7HVW%HG
:KHQHYHU,GHVLJQDFRPSRQHQW,WU\WRNHHSLQPLQGWKHLGHDWKDWVLPSOLFLW\LV EHDXWLIXO
x x
x
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
7KHGDWDEDVHVFKHPDMXVWGHVFULEHGLVVKRZQLQ)LJXUH
)LJXUH'DWDEDVHVFKHPDIRUWHVWEHG
7KHUHDUHVHYHUDOSRLQWVWKDWQHHGWREHPDGHDERXWXVLQJWKHGDWDEDVHIRU ORJJLQJGDWD)RURQH, YHDVNHGP\VHOIPRUHWKDQRQFHKRZORQJDFHUWDLQ VFHQDULRWRRNLQDQHDUOLHUYHUVLRQ,I,KDYHWKHGDWDDERXWWKDWHDVLO\DFFHVVLEOH ,KDYHDQDQVZHUWRWKLVTXHVWLRQ$QRWKHUDGYDQWDJHLVWKDWLWLVHDV\WRUXQ VWDWLVWLFUHSRUWVWRGHWHUPLQHIRUH[DPSOHZKHWKHUWKHSUREOHPIUHTXHQF\LV GHFUHDVLQJRYHUWLPH 8VLQJWKH7HVW'ULYHUWR7HVW6WRUHG3URFHGXUHV
,W VVLPSOHWRZULWHDWHVWGULYHUWRDVWRUHGSURFHGXUH-XVWZULWHDVWRUHG SURFHGXUHWKDWUHWXUQVIRUVXFFHVVDQGDQRWKHU,17(*(5 YDOXHW\SLFDOO\WKH HUURUFRGHIRUIDLOXUH
/LVWLQJ([DPSOHRID7HVW'ULYHUIRU6WRUHG3URFHGXUHV3DUW
&5($7(352&('85(2UGHUB,QVHUW0DVWHUBB7HVW'ULYHU$6 '(&/$5(#WKH6RXUFHXGGW6RXUFH #DQ(UURU,17 #DQ(UURU0HVVDJHXGGW(UURU0HVVDJH #D5HWXUQ9DOXH,17 6(712&281721 6(7#DQ(UURU 6(7#DQ(UURU0HVVDJH
6(7#WKH6RXUFH 2%-(&7B1$0(##352&,'
'(&/$5(#DQ2UGHU,G,17
,QWKHVHFRQGSDUWRIWKHWHVWGULYHUVKRZQLQ/LVWLQJWKHVWRUHGSURFHGXUHWR EHWHVWHGLVFDOOHG,QWKLVFDVH#D5HWXUQ9DOXH RI LVH[SHFWHGPHDQLQJWKDWDQ RUGHUUHJLVWUDWLRQIRUFXVWRPHU DWDFHUWDLQGDWHH[HFXWHGMXVWILQH$V\RXFDQ VHHE\WKHHUURUKDQGOLQJPRGHOWKHH[HFXWLRQRIWKHWHVWGULYHUZLOOEHHQGHGE\ D*272 WRWKH([LW+DQGOHU LIWKHUHLVDQHUURU /LVWLQJ([DPSOHRID7HVW'ULYHUIRU6WRUHG3URFHGXUHV3DUW
(;(&#D5HWXUQ9DOXH 2UGHUB,QVHUW0DVWHU #DQ2UGHU,G287387
6(7#DQ(UURU ##(5525 ,)#DQ(UURU!25#D5HWXUQ9DOXH!%(*,1 6(7#DQ(UURU0HVVDJH
3UREOHPZLWKLQVHUWLQJRUGHU
,)#DQ(UURU %(*,1 6(7#DQ(UURU #D5HWXUQ9DOXH (1' *272([LW+DQGOHU (1' ,QWKHWKLUGSDUWRIWKHWHVWGULYHUVKRZQLQ/LVWLQJWKHVWRUHGSURFHGXUHWREH WHVWHG2UGHUB,QVHUW0DVWHU LVFDOOHGDJDLQEXWWKLVWLPHLWLVFDOOHGZLWK SDUDPHWHUVWKDWIRUFHDQHUURU,I#DQ(UURU HTXDOVWRHYHU\WKLQJLVILQHDQG LWZRQ WEHWUHDWHGDVDQHUURUE\WKHWHVWGULYHU2WKHUZLVHWKHUHZDVDQ XQH[SHFWHGHUURUZKLFKZLOOEHUHSRUWHGE\WKHWHVWGULYHU /LVWLQJ([DPSOHRID7HVW'ULYHUIRU6WRUHG3URFHGXUHV3DUW
(;(&#D5HWXUQ9DOXH 2UGHUB,QVHUW0DVWHU [[ #DQ2UGHU,G287387 6(7#DQ(UURU ##(5525 ,)#DQ(UURU %(*,1 6(7#DQ(UURU (1'
,)#DQ(UURU!25#D5HWXUQ9DOXH!%(*,1 ,)#DQ(UURU %(*,1 6(7#DQ(UURU0HVVDJH
3UREOHPZLWKLQVHUWLQJRUGHU
6(7#DQ(UURU #D5HWXUQ9DOXH (1' (/6(%(*,1 6(7#DQ(UURU0HVVDJH
8QH[SHFWHGYDOXHIRU##(5525
(1' *272([LW+DQGOHU
(1'
,QWKHIRXUWKSDUWRIWKHWHVWGULYHUVKRZQLQ/LVWLQJ\RXFDQVHHWKH ([LW+DQGOHU,IDQHUURUKDVEHHQIRXQGLWLVUHSRUWHGWKURXJKDFHQWUDOL]HG VWRUHGSURFHGXUHFDOOHG-QVN(UURUB5DLVH )LQDOO\WKHVWRUHGSURFHGXUHLV HQGHGZLWK5(7851 RIWKHHUURUFRGH 1RWH
7KHHUURUKDQGOLQJPRGHOZLOOEHGLVFXVVHGLQGHWDLOLQ&KDSWHU³(UURU +DQGOLQJDQG&RQFXUUHQF\&RQWURO´
/LVWLQJ([DPSOHRID7HVW'ULYHUIRU6WRUHG3URFHGXUHV3DUW
([LW+DQGOHU ,)#DQ(UURU!%(*,1 (;(&-QVN(UURUB5DLVH#WKH6RXUFH #DQ(UURU#DQ(UURU0HVVDJH (1' 5(7851#DQ(UURU
,VXJJHVWWKDW\RXJLYH\RXUWHVWGULYHUWKHQDPHRIWKHVWRUHGSURFHGXUHWKDWLV WHVWHGZLWKDBB7HVW'ULYHU VXIIL[7KDWZD\\RXFDQHDVLO\VHHWKHVWRUHG SURFHGXUHVWKDWODFNDWHVWGULYHU 1RWH
,RULJLQDOO\KDGWZRYHUVLRQVRIWKHFRQWUROOHUIRUWKHH[HFXWLRQRQHIRU VWRUHGSURFHGXUHVDQGRQHIRUFRPSRQHQWV,KDYHGURSSHGWKDWGHVLJQ DQGOHWWKHRYHUYLHZIRUPLQ)LJXUHWRJHWKHUZLWKD1(7FODVV EHWKH FRQWUROOHUIRUDOOW\SHVRIWHVWGULYHUVLQVWHDG7KLVLVHDVLHUDQGFOHDQHU7R PDNHLWDVHDV\DVSRVVLEOHWRZULWHWKHWHVWGULYHUVWKHFRQWUROOHUZLOO WDNHFDUHRIDOOWKHORJJLQJ
8VLQJWKH7HVW'ULYHUWR7HVW1(7&RPSRQHQWV
:KHQ\RXDUHWHVWLQJ1(7FRPSRQHQWVZLWKWKHWHVWGULYHU\RXZLOOXVHWKHVDPH WDEOHVDVZHUHGLVFXVVHGHDUOLHUDQGVKRZQLQ)LJXUH7KHWHVWGULYHUVZLOOEH 9LVXDO%DVLF1(7FRPSRQHQWVDVDPSOHRIZKLFKLVVKRZQLQ/LVWLQJ,QWKH VDPSOHDPHWKRGFDOOHG6DOHV2I7RGD\ LVWHVWHGLQDQ2UGHU FODVV /LVWLQJ([DPSOHRID&RPSRQHQW7HVW'ULYHU
3XEOLF&ODVV2UGHUBB7HVW'ULYHU ,PSOHPHQWV-QVN7HVW,7HVW'ULYHU
3XEOLF6XE([HFXWH B ,PSOHPHQWV-QVN7HVW,7HVW'ULYHU([HFXWH 'LPDQ2UGHU$V1HZ2UGHU 7U\
,IDQ2UGHU6DOHV2I7RGD\ 7KHQ 7KURZ1HZ$SSOLFDWLRQ([FHSWLRQB 6WUDQJH6DOHV2I7RGD\UHVXOW (QG,I
)LQDOO\ DQ2UGHU'LVSRVH (QG7U\ (QG6XE
(QG&ODVV
$V\RXFDQVHHWKHWHVWGULYHUFRPSRQHQWPXVWLPSOHPHQW -QVN7HVW,7HVW'ULYHUEXWH[FHSWIRUWKLVWKHUHLVQRWKLQJHOVHVSHFLDO UHTXLUHG
&KDQJHRI6W\OH
)RUVHYHUDO\HDUV, YHEHHQDIDQRISUHIL[LQJYDULDEOHVZLWKGDWDW\SHV DQGDGGLQJSUHIL[HVIRUWKHVFRSHRIYDULDEOHVDQGIRU%\9DO%\5HI RI SDUDPHWHUV)RUWKH1(7ODQJXDJHV0LFURVRIWUHFRPPHQGVFDPHO&DVH ILUVWOHWWHUORZHUFDVHLQLWLDOOHWWHULQWKHQH[WZRUGXSSHUFDVH DVWKH QDPLQJFRQYHQWLRQIRUSDUDPHWHUV²QRGDWDW\SHSUHIL[HV0LFURVRIW DFWXDOO\RQO\FRPPHQWVRQSXEOLFHOHPHQWV9DULDEOHVDQGVRRQDUHQ W LPSRUWDQWLQ0LFURVRIW VYLHZRIVWDQGDUGL]LQJ
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
8QGHUVWDQGLQJWKH&RQWUROOHURIWKH7HVW%HG
7KH8,ZLOODFWDVWKHFRQWUROOHURIWKHWHVWEHGUHIHUWR)LJXUH 7KHFRQWUROOHU ZLOOFDOO-QVN7HVW VWRUHGSURFHGXUHVWRIHWFKLQIRUPDWLRQDERXWWHVWGULYHUVORJ ZKDWLVJRLQJRQDQGVDYHWKHILQDOUHVXOW7KHVDPHJRHVIRUFDOOLQJWKHVWRUHG SURFHGXUHWHVWGULYHUV7KHWHFKQLTXHWKDWLVXVHGIRUFDOOLQJFRPSRQHQWWHVW
GULYHUVE\QDPHLVIRXQGLQWKHVQLSSHWIURPWKH FRQWUROOHUFRGHVWDUWLQJLQ/LVWLQJ ,Q9%\RXFRXOGDFFRPSOLVKWKHVDPHWKLQJHDVLHUXVLQJ&UHDWH2EMHFW EXWLI\RXXVH&UHDWH2EMHFW LQ9LVXDO%DVLF1(7\RXSDVVWKHLQWHURSHUDELOLW\ OD\HUDQGXVHWKHWHVWGULYHUDVD&20REMHFW
,Q/LVWLQJWKHDVVHPEO\ZLWKWKHWHVWGULYHULVORDGHGE\XVLQJWKHQDPHRIWKH DVVHPEO\IRUZKHUHWKHWHVWGULYHULVORFDWHGFRQWDLQHU IRUH[DPSOH $FPH2UGHU7KHQWKHFODVVQDPHIRUH[DPSOH6WG2UGHUBB7HVW'ULYHUZKHUH 6WG LVWKHQDPHVSDFH LVXVHGIRUJHWWLQJWKHFODVV /LVWLQJ6DPSOH&RQWUROOHU&RGH3DUW
'LPDQ$VVHPEO\$V6\VWHP5HIOHFWLRQ$VVHPEO\ B 6\VWHP5HIOHFWLRQ$VVHPEO\/RDGB FRQWDLQHU
'LPD7\SH$V7\SH BDQ$VVHPEO\*HW7\SHWHVW'ULYHU1DPH7UXH7UXH 1RWH
7KHFRQWDLQHU SDUDPHWHUPD\ FRQWDLQDIXOO\VSHFLILHGUHIHUHQFHWRDQ DVVHPEO\IRUH[DPSOH $FPH2UGHU&XOWXUH QHXWUDO3XEOLF.H\7RNHQ DEF 9HUVLRQ
7KHQDV\RXVHHLQ/LVWLQJWKHWHVWGULYHUFODVVLVLQVWDQWLDWHGDQGWKHQFDVW WRWKH-QVN7HVW,7HVW'ULYHU LQWHUIDFH)LQDOO\WKH([HFXWH PHWKRGLVXVHG WRUXQWKHWHVWVFHQDULRLQWKHWHVWGULYHU /LVWLQJ6DPSOH&RQWUROOHU&RGH3DUW
'LPD7HVW'ULYHU$V-QVN7HVW,7HVW'ULYHU B &7\SH$FWLYDWRU&UHDWH,QVWDQFHD7\SH B -QVN7HVW,7HVW'ULYHU D7HVW'ULYHU([HFXWH 1RWH
7KLVWRROLVIXOO\XVDEOHIRUFRPSRQHQWVZULWWHQLQ9%DVZHOODVIRU FRPSRQHQWVZULWWHQLQDQRWKHU1(7ODQJXDJHVXFKDV&
:ULWLQJWKH7HVW'ULYHUV,VVXHVWR&RQVLGHU
6RIDUZHKDYHGLVFXVVHGKRZWRXVHDWHVWEHGDQGZULWHWKHWHVWGULYHUV1RZLW V WLPHWRGLVFXVVVRPHLVVXHV\RXVKRXOGWKLQNDERXWZKHQ\RXZULWHWHVWGULYHUVWR PDNHWKHPDVXVHIXODVSRVVLEOH%XWEHIRUHZHGRWKDW, GOLNHWRVKDUHDWLSIRU FKRRVLQJWHVWFDVHVLQDGGLWLRQWRWKHWHVWLQJ\RXGRIRUHDFKDQGHYHU\ FRPSRQHQWDQGVWRUHGSURFHGXUHV7KHXVHFDVHVDUHDJUHDWVRXUFHWRXVH,I HDFKDQGHYHU\SDUWRI\RXUXVHFDVHV²ERWKWKHQRUPDODQGWKRVHZLWKH[SHFWHG H[FHSWLRQV²ZRUNVILQH\RXKDYHFRPHDORQJZD\ , YHRIWHQKHDUGWKDWWKHSDUWRIWKHV\VWHPWKDWLVPRVWRIWHQIXOORIHUURUVLVWKH HUURUKDQGOLQJFRGH$OWKRXJKLWLVUDUHO\XVHGLWLVVWLOOLPSRUWDQWWKDWLWZRUNV
FRUUHFWO\0DNHVXUHWKDW\RXKDQGOHGLIIHUHQWHUURUVLWXDWLRQVLQFOXGLQJ XQH[SHFWHGRQHVZKHQFUHDWLQJWKHHUURUKDQGOLQJFRGH
,QDGGLWLRQ\RXVKRXOGVHWDJRDOIRUKRZPXFKFRGHVKRXOGEHH[HFXWHGRU FRYHUHGLQWKHWHVWV%HFDXVH\RXZLOOZULWH WKHWHVWGULYHUWRJHWKHUZLWKWKH FRPSRQHQWLWLVWKHEHVWRSSRUWXQLW\WRHQVXUHVXFKFRGHFRYHUDJH
,ZLOOGLVFXVVWUDFLQJLQGHSWKLQ&KDSWHU³$GGLQJ'HEXJJLQJ6XSSRUW´
,W VDOVRLPSRUWDQWWKDW\RXWHVWDWWKHOLPLWVLIWKHUHLVDQLQWHUYDORISRVVLEOH YDOXHV7U\WKHVPDOOHVWYDOXHWKHODUJHVWYDOXHDQGWKHYDOXHVMXVWRXWVLGHWKH LQWHUYDO$QRWKHUH[DPSOHRIZKHUHLWLVLPSRUWDQWWRWHVWDWWKHOLPLWVLV$UUD\V 7KLVLVGXHWR0LFURVRIW VGHFLVLRQWROHWGHYHORSHUVGHILQHWKHVL]HRI$UUD\V LQ 9LVXDO%DVLF1(7WKHVDPHZD\WKDWWKH\GHILQHGWKHPLQ9%, PVXUHWKDWZLOO OHDGWREXJVHVSHFLDOO\DPRQJWKHPDQ\SURJUDPPHUVZKRGRQ WSURJUDP H[FOXVLYHO\LQ9LVXDO%DVLF1(7EXWDOVRLQ&
´&RPELQDWRULDOEXJV´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«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
&UHDWHIDNHFRPSRQHQWVWKDW\RXUFRPSRQHQWLVGHSHQGHQWRQWRPDNHHDUO\ WHVWLQJSRVVLEOH
WKHFRPSRQHQWVKDYHUHDOLPSOHPHQWDWLRQVWKH\DUHVZLWFKHGDQGWKH8,ZRUNV MXVWILQH
:ULWH\RXUWHVWGULYHUVDWOHDVWVRPHRIWKHP VRWKDWWKH\FDQDOVREHXVHGIRU VWUHVVWHVWLQJDQGQRWMXVWIRUIXQFWLRQDOWHVWLQJ7KDWZD\\RXFDQXVHWKHVDPH WHVWGULYHUVLQVHYHUDOGLIIHUHQWVFHQDULRV )LQDOO\ZULWHDFRXSOHRIJHQHUDWRUVWKDWFDQFUHDWHVWXEVIRUWHVWGULYHUVYHU\ TXLFNO\7KDWZD\\RXFDQLQFUHDVHWKHSURGXFWLYLW\HYHQIXUWKHUIRUWKHWHVWLQJ 'LVFRYHULQJ3UREOHPVZLWKWKH7HVW%HG3URSRVDO
2IFRXUVHWHVWGULYHUVGRLQWURGXFHVRPHSUREOHPV2QHSUREOHPLVWKDW\RXZLOO ILQG\RXUVHOIPDNLQJFRGHFKDQJHVLQWZRSODFHV²ILUVWLQWKHFRGHLWVHOIDQGWKHQ LQWKHWHVWGULYHUV,I\RXGRQ WFKDQJHWKHWHVWGULYHUVDVWKHV\VWHPHYROYHVWKH\ ZLOOTXLFNO\EHFRPHREVROHWH $QRWKHUSUREOHPLVWKDWLQWKHNLQGRIV\VWHPV,EXLOG,LQWHUDFWDORWZLWKWKH GDWDEDVH7KHUHIRUHWKHWHVWVWRRZLOOEHGDWDEDVHFHQWULFVRWKH\PXVWNQRZ VRPHWKLQJDERXWZKDWGDWDWRH[SHFW,I\RXGHOHWHDOOWKHURZVLQDWDEOHIRU H[DPSOHWKHWHVWGULYHUVZLOOSUREDEO\QRWZRUNDVH[SHFWHG
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
$V\RXVDZEHIRUHLW VSRVVLEOHWRJLYHYHUVLRQLQIRUPDWLRQIRUWKH DVVHPEO\RIDWHVWGULYHULQWKHYHUVLRQRIWKHWHVWEHGWKDW,KDYH GLVFXVVHGKHUH
$VVHUWLRQV
,I\RXH[SHFWDYDULDEOHDWDFHUWDLQSODFHWRKDYHDYDOXHEHWZHHQDQGIRUH[DPSOH\RXFDQ H[SUHVVWKLVLQWKHFRGH,Q9%WKH'HEXJ REMHFWKDVDPHWKRGFDOOHG$VVHUW WKDW\RXFDQXVH WRWHVW\RXUDVVXPSWLRQV8QIRUWXQDWHO\WKDWPHWKRGZLOOQRWEHFRPSLOHGLQWRWKHH[HFXWDEOHDQG
LQP\RSLQLRQWKLVPDNHVWKHPHWKRGXVHOHVV%HFDXVHRIWKLV,ZURWHP\RZQYHUVLRQRI $VVHUW IRUP\9%FRPSRQHQWV 7KH1(7)UDPHZRUNDQGWKHUHIRUH9LVXDO%DVLF1(7 KDVDQHZYHUVLRQRI$VVHUW LQWKH 6\VWHP'LDJQRVWLFV'HEXJ DQG7UDFH FODVVHV8VHWKH7UDFH FODVVLI\RXZDQWWKHFDOOVWRVWD\ LQWKHUHOHDVHYHUVLRQ 7KLVQHZYHUVLRQLVPXFKEHWWHUWKDQWKH9%HTXLYDOHQW
$OWKRXJKWKH EXLOWLQ$VVHUW LVTXLWHJRRG,KDYHZULWWHQP\RZQRQHDVZHOO7KLVLVEHFDXVH x x x
,ZDQWWKHWRROWRLQWHJUDWHZLWKP\WUDFLQJVROXWLRQ² :KHQ\RXVLWOLVWHQLQJWR\RXU DSSOLFDWLRQE\XVLQJWUDFLQJ LW VLPSRUWDQWWRJHWEURNHQDVVHUWLRQVDVWUDFHFDOOVWRR, ZLOOGLVFXVVP\WUDFLQJVROXWLRQLQGHSWKLQWKHQH[WFKDSWHU , SUHIHUDVLPLODUWRROIRUERWK9LVXDO%DVLF1(7FRPSRQHQWVDQGVWRUHGSURFHGXUHVDQGIRU 9%FRPSRQHQWVDVZHOO ² $OWKRXJKWKLVIHDWXUHLVQRWSDUDPRXQWLQLPSRUWDQFHLWLV XVHIXO , ZDQWDFHQWUDOL]HGVROXWLRQWKDW,FDQHDVLO\FKDQJH² )RUH[DPSOH,OLNHDEURNHQ DVVHUWLRQWRWHUPLQDWHWKHDSSOLFDWLRQIRUWKHXVHUDQG,ZDQWWRKDYHWKHSUREOHPORJJHG, DOVRSUHIHUWRKDYHLWLQWHJUDWHGZLWKP\RZQORJJLQJVROXWLRQ 1RWH )RUVHUYHUVLGHGHYHORSPHQWXVLQJWKHEXLOWLQDVVHUWLRQVROXWLRQFDQEHDUHDO VKRZVWRSSHU
%HIRUH,GHVFULEHP\VROXWLRQIRUDVVHUWLRQVLQPRUHGHWDLOOHW VGLVFXVVWKHDVVHUWLRQVLQJHQHUDO $OWKRXJK,VSHQGDORWRIWLPHGHVFULELQJP\RZQVROXWLRQIRUDVVHUWLRQVWKHPRVWLPSRUWDQWWKLQJ LVWKDW\RXXVHWKHFRQFHSWVRPHKRZ
*HWWLQJWKH%DVLF,GHD
5HJDUGOHVVRIZKHWKHU\RXXVHP\DVVHUWLRQWRRORUWKHEXLOWLQRQH\RXPXVWFRQVLGHUZKHUH\RX VKRXOGXVHDVVHUWLRQVLQ\RXUVRXUFHFRGH,VXJJHVW\RXFUHDWHDSODQIRUZKHQDVVHUWLRQVZLOOEH XVHG %HIRUHGRLQJVROHW VWDNHDVWHSEDFNIRUD PLQXWH,QDQRWKHUSURJUDPPLQJODQJXDJHFDOOHG(LIIHO FUHDWHGE\%HUWUDQG0H\HUDFRQFHSWFDOOHGGHVLJQE\FRQWUDFW'%& LVXVHGDJUHDWGHDO7KH LGHDRI'%&LVWRVHWXSFRQWUDFWVEHWZHHQFRQVXPHUVDQGVHUYHUVDFRQVXPHUXVHVDFODVVDQGLWV PHWKRGVDVHUYHULVWKHFODVV 7KHVHUYHUVD\VZKDWLWH[SHFWVUHTXLUH DQGZKDWLWSURPLVHV
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
7RPDNHWKHGHVLJQE\FRQWUDFWFRQFHSWDOLWWOHELWPRUHFRQFUHWHDPHWKRGFDOOHG'HOLYHU LQD 0DLO FODVVLVVKRZQLQ/LVWLQJ7KHUH\RXFDQVHHWKDWDOOWKHH[SHFWDWLRQVRIWKHPHWKRGDUH FKHFNHGEHIRUHDQ\WKLQJHOVHLVGRQH7KHQEHIRUHWKHPHWKRGLVH[LWHGWKHSURPLVHLVFKHFNHG WRR /LVWLQJ([DPSOHRI+RZ$VVHUWLRQV&DQ%H8VHG 3XEOLF6XE'HOLYHU
5HTXLUH 7UDFH$VVHUW2Q7LPH 2Q7LPH 7UDFH$VVHUW&RUUHFW$GGUHVV B &RUUHFW$GGUHVV 7UDFH$VVHUW&RUUHFW6WDPS &RUUHFW6WDPS
'RWKHUHDOGHOLYHU\VWXII
(QVXUH 7UDFH$VVHUW&RUUHFWO\'HOLYHUHG B &RUUHFWO\'HOLYHUHG
(QG6XE
8QGHUVWDQGLQJ&ODVV,QYDULDQWV
%HUWUDQG0H\HU V'%&LQFOXGHVDFRQFHSWFDOOHG³FODVVLQYDULDQWV´,IZHWDNHWKH863RVW2IILFH H[DPSOHGLVFXVVHGHDUOLHUZHZLOOILQGWKDWWKHUHDUH³VRFLDO´FRQWUDFWVDQGODZVWKDWVD\ZH UHQRW DOORZHGWRVHQGIRUH[DPSOHQDUFRWLFVDQGH[SORVLYHVE\PDLO+RZHYHUWKLVGRHVQRWPHDQWKDW HYHU\WLPH\RXVHQGDOHWWHU\RXQHHGWRVLJQVXFKDFRQWUDFW,QGHHGWKHSURFHVVZRXOGEH H[WUHPHO\ORQJLIZHKDGWRUHSHDWWKRVHFRQWUDFWVDQGODZVRYHUDQGRYHUDJDLQ7KHVDPHJRHV IRUFODVVHVLQVRIWZDUH,IDFODVVIRUDSHUVRQKDVDPHPEHUYDULDEOHFDOOHGPB$JHIRUH[DPSOH WKHYDULDEOHPD\QHYHUKDYHDYDOXHRIOHVVWKDQDQGPRUHWKDQ7KLVFRQGLWLRQVKRXOGQ W KDYHWREHH[SUHVVHGUHSHDWHGO\LQDOOWKHPHWKRGVRIWKHFODVV6WLOOLWVKRXOGEHFKHFNHGLQHYHU\ 5HTXLUHDQG(QVXUHVHFWLRQWRKHOSGLVFRYHUDQ\QDVW\EXJV+RZGRZHDUUDQJHIRUWKLV"$ SRVVLEOHVROXWLRQZRXOGEHWRKDYHDVXEDVLVVKRZQLQWKHFODVVLQ/LVWLQJ
/LVWLQJ([DPSOHRI&ODVV,QYDULDQWV+HOSHU 3ULYDWH6XE$VVHUW,QYDULDQWVB %\9DOVRXUFH$V6WULQJ B ,PSOHPHQWV-QVN,QVWUXPHQWDWLRQ,$VVHUW,QYDULDQWV$VVHUW,QYDULDQWV
&DOO$VVHUW IRUHDFKFRQWUDFWSDUWWRFKHFN (QG6XE 7KHVXELQ/LVWLQJVKRXOGEHFDOOHGIURPWKH5HTXLUHDQG(QVXUHVHFWLRQVLQDOOWKH3XEOLF PHWKRGV
([DPLQLQJ0\6ROXWLRQIRU$VVHUWLRQVLQ9LVXDO%DVLF1(7
$V\RXKDYHSUREDEO\VXVSHFWHGE\QRZ,FHQWUDOL]HP\DVVHUWLRQVWR -QVN,QVWUXPHQWDWLRQ$VVHUW$VVHUW WRJHWVHYHUDOSRVLWLYHEHQHILWVVXFKDVWKRVH\RX XVXDOO\JHWRXWRIJHQHUDOL]HGFRGH 7KHFDOOWKHQORRNVOLNHWKDWVKRZQLQ/LVWLQJ /LVWLQJ&DOOWR&XVWRPL]HG$VVHUW
-QVN,QVWUXPHQWDWLRQ$VVHUW$VVHUWB DEDEH[H2U'OO1DPHWKH6RXUFH 0\FXVWRPL]HG$VVHUW FRXOGMXVWZUDSWKHRUGLQDU\6\VWHP'LDJQRVWLFV7UDFH$VVHUW RULW FRXOGGRFXVWRPL]HGZRUN,I,XVHWKHRUGLQDU\7UDFH$VVHUW YHUVLRQ,ZLOOJHWRQHH[WUDOHYHO LQWKHFDOOVWDFNEXWWKDWLVQRWVXFKDELJSUREOHP 0\FXUUHQWYHUVLRQDSSHDUVLQ/LVWLQJ /LVWLQJ&XVWRPL]HG$VVHUW 0HWKRG
3XEOLF&ODVV$VVHUW 3XEOLF6KDUHG6XE$VVHUWB %\9DOUHVXOW2I/RJLFDO([SUHVVLRQ$V%RROHDQB %\9DOORJLFDO([SUHVVLRQ$V6WULQJB %\9DOH[H2U'OO1DPH$V6WULQJB %\9DOVRXUFH$V6WULQJB %\9DOXVHU,G$V6WULQJB %\9DOUDLVH([FHSWLRQ$V%RROHDQ ,I1RWUHVXOW2I/RJLFDO([SUHVVLRQ7KHQ 'LPD0HVVDJH$V6WULQJ B 6WULQJ)RUPDWB %URNHQ$VVHUWLRQ^`^`^` )RU^`B ORJLFDO([SUHVVLRQ B H[H2U'OO1DPHVRXUFHXVHU,G
6HQGDWUDFHFDOO -QVN,QVWUXPHQWDWLRQ7UDFH7UDFH$VVHUWB H[H2U'OO1DPHVRXUFHORJLFDO([SUHVVLRQ
,QVWDQWLDWHDFXVWRPH[FHSWLRQ 'LPDQ([FHSWLRQ$VB 1HZ$SSOLFDWLRQ([FHSWLRQD0HVVDJH
/RJWRDSSOLFDWLRQVRZQHUURUORJ -QVN,QVWUXPHQWDWLRQ(UU/RJB H[H2U'OO1DPHVRXUFHDQ([FHSWLRQXVHU,G
/RJWRWKHXVXDOHYHQWORJ (YHQW/RJ:ULWH(QWU\VRXUFHD0HVVDJHB (YHQW/RJ(QWU\7\SH(UURU
6KRZPHVVDJHER[GHSHQGLQJXSRQ
WKHFXUUHQWFRQILJXUDWLRQ 6KRZ0HVVDJH%R[D0HVVDJH
,IUDLVH([FHSWLRQ7KHQ 7KURZ DQ([FHSWLRQ (QG,I (QG,I (QG6XE
(QG&ODVV
$V\RXVHHLQ/LVWLQJWKHRXWSXWIURPDEURNHQDVVHUWLRQZLOOEHZULWWHQWRWKHHYHQWORJWKH ORJIRUWKHDSSOLFDWLRQDVDWUDFHFDOODQGDVD0VJ%R[ -RKQ5REELQVFUHDWHGD VROXWLRQWKDW\RX FRXOGXVHWRGHWHUPLQHLIWKHDSSOLFDWLRQLVH[HFXWHGIURPWKH,'(RUQRW 7KHVROXWLRQ,KDYHXVHG LQVWHDGXVHVWKHVDPHVROXWLRQIRUKDQGOLQJFRQILJXUDWLRQGDWDDVLVGLVFXVVHGLQWKHQH[WFKDSWHU 1RWH ,Q/LVWLQJVHYHUDOPHWKRGVZHUHXVHGVXFKDV7UDFH$VVHUW DQG:ULWH7R/RJ ZKLFKZLOOEHGLVFXVVHGLQGHSWKLQ&KDSWHU $OVRQRWHWKDW,7KURZ DQ$SSOLFDWLRQ([FHSWLRQ LQVWHDGRIDFXVWRP([FHSWLRQ7KH UHDVRQIRUWKLVLVWKDW,GRQ WZDQWWKHFRQVXPHUWRKDYHWRUHIHUHQFHP\ ,QVWUXPHQWDWLRQ DVVHPEO\RUDQRWKHUDVVHPEO\ZLWKP\FXVWRP([FHSWLRQV )LQDOO\WKHUHLVDQRYHUORDGHGYHUVLRQRIWKH$VVHUW PHWKRGWKDWLVXVHGPRVWRIWHQ,W GRHVQ WKDYHWKHUDLVH([FHSWLRQ SDUDPHWHUDQGLWFDOOVWKHPHWKRGVKRZQLQ/LVWLQJ ZLWKUDLVH([FHSWLRQ DV7UXH
([DPLQLQJ0\6ROXWLRQIRU$VVHUWLRQVLQ6WRUHG3URFHGXUHV 8QIRUWXQDWHO\764/GRHVQ WKDYHEXLOWLQVXSSRUWIRUDVVHUWLRQVEXW\RXFDQHDVLO\FRPHXSZLWK DVROXWLRQRQ\RXURZQ/LVWLQJVKRZVDQH[DPSOHRIDQDVVHUWLRQEHLQJFKHFNHG /LVWLQJ&DOOWR6WRUHG3URFHGXUH9HUVLRQRI$VVHUW ,)127#VRPH3DUDPHWHU! %(*,1 (;(&-QVN$VVHUWB$VVHUW
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
$6 '(&/$5(#DQ(UURU,17 #D0HVVDJH9$5&+$5 #WKH1RZ'$7(7,0( 6(712&281721
7UDFHWKHSUREOHP (;(&-QVN7UDFHB$VVHUW#VRXUFH #ORJLFDO([SUHVVLRQ#XVHU,G
/RJWKHSUREOHP 6(7#DQ(UURU 6(7#D0HVVDJH $VVHUWEURNHQ
#ORJLFDO([SUHVVLRQ 6(7#WKH1RZ *(7'$7(
(;(&-QVN(UURUB/RJ#VRXUFH#DQ(UURU #D0HVVDJH#WKH1RZ XQNQRZQ XQNQRZQ
#XVHU,G
)LQDOO\UDLVHDQHUURUWKDWFORVHVWKHFRQQHFWLRQ 6(7#D0HVVDJH #D0HVVDJH #VRXUFH
5$,6(5525#D0HVVDJH :,7+/2* 5(7851#DQ(UURU
$V\RXVHHLQ/LVWLQJWKHVDPHRXWSXWZLOOEHXVHGDVIRUWKH9LVXDO%DVLF1(7VROXWLRQ H[FHSWIRUDPHVVDJHER[ 7KHFDOOWR5$,6(5525 ZLOOPDNHEURNHQDVVHUWLRQVYLVLEOHLQWKH64/ 6HUYHU4XHU\$QDO\]HUDQGEHFDXVHVHYHULW\OHYHOLVXVHGWKHFRQQHFWLRQLVFORVHG7KHUHDVRQ IRUWKDWGHJUHHRIYLROHQFHLVWRGLUHFWO\WHUPLQDWHWKHRSHUDWLRQEXWDOVRWRPDNHLWHDV\WRXVH FDOOVWR-QVN$VVHUWB$VVHUW EHFDXVHQRHUURUFKHFNLQJLVQHFHVVDU\DIWHUWKHFDOOVDV\RXVDZLQ /LVWLQJ
8VH2WKHU:D\VIRU&KHFNLQJ$UJXPHQWV
0LFURVRIWUHFRPPHQGVWKDW\RXFKHFNDUJXPHQWVIRUYDOLGLW\DQGUDLVH$UJXPHQW([FHSWLRQ RUD VXEFODVVH[FHSWLRQ /LVWLQJJLYHVDQH[DPSOHZKHUHDSDUDPHWHUFDOOHGVL]H LVQ WDOORZHGWR EHOHVVWKDQ]HUR /LVWLQJ+RZWR&KHFNIRUDQ$UJXPHQW2XW2I5DQJH([FHSWLRQ ,IVL]H7KHQ 7KURZ1HZ$UJXPHQW2XW2I5DQJH([FHSWLRQB VL]HPXVWEH! (QG,I $V,VHHLWWKLVLVGHIHQVLYHSURJUDPPLQJ6WLOOWRFRPSO\ZLWKWKHVWDQGDUG,GRWKLVLQWKH PHWKRGVWKDWDUHHQWU\SRLQWVIRUWKHFRQVXPHU:LWKPHWKRGVLQOD\HUVWKDWDUHRQO\LQWHUQDOWR P\RZQFRGH,XVHDVVHUWLRQVLQVWHDGRIFKHFNLQJDUJXPHQWV7KDWVHHPVWREHDKDSS\PHGLXP
&UHDWLQJ'RFXPHQWDWLRQ
$ERQXVWRWKHPHWKRGVZHKDYHMXVWGLVFXVVHGLVWKDWWKHFRQWUDFWVZULWWHQLQWKHFRGHZLOO SURYLGHJUHDW GRFXPHQWDWLRQ, YHVHHQWKHXVHRIFRQWUDFWVHYHQZLWKRXWWKHDXWRPDWLFDQGEXLOW LQWHVWLQJWKDW, YHGLVFXVVHGKHUHMXVWEHFDXVHWKHFRQWUDFWVH[SUHVVPXFKRIWKHVHPDQWLFVRIWKH FODVVHVDQGWKHLUPHWKRGV
&KHFNLQJIRU7UDSV
7KHPRVWFRPPRQWUDSLVWKDW\RXUDVVHUWFKHFNVFKDQJHWKHH[HFXWLRQLQDQ\ZD\%HFDUHIXORI WKLV$W\SLFDOH[DPSOHLVWKDWWKHDVVHUWFRGHPRYHVWKH³FXUVRU´LQD'DWD6HWIRUH[DPSOH0DNH VXUH\RXXVHDFORQHLQWKDWFDVH1RPDWWHUZKDWWKHUHZLOOEHVRPHPLQRUGLIIHUHQFHVZKHQ\RX XVHDVVHUWLRQVDQGZKHQ\RXGRQ WEHFDXVHWKHFRGHLVQ WWKHVDPH-XVWEHFDUHIXOWKDW\RX UHQRW DIIHFWHG
6XPPLQJ8S)LQDO7KRXJKWV$ERXW$VVHUWLRQV
,PHQWLRQHGHDUOLHUWKDW,SUHIHUWKHFRQVXPHUDSSOLFDWLRQWRWHUPLQDWHLIDQDVVHUWLRQKDVEHHQ EURNHQ,QWKLVFDVH,GRQ WZDQWWKHDSSOLFDWLRQWRFRQWLQXHZLWKXQSUHGLFWDEOHDQGSUREDEO\ GDPDJLQJUHVXOWV7RPDNHWHUPLQDWLRQKDSSHQ,7KURZ DQH[FHSWLRQLQWKH -QVN,QVWUXPHQWDWLRQ$VVHUW$VVHUW PHWKRGDQG,XVH5$,6(5525 LQ -QVN$VVHUWB$VVHUW VWRUHGSURFHGXUHZLWKDVHYHULW\OHYHOWKDWFORVHVWKHFRQQHFWLRQ,QERWK FDVHVWKHFRQVXPHUFDQFRQWLQXHWRUXQEXWKRSHIXOO\KHZRQ WZDQWWRFRQWLQXHZKHQ XQH[SHFWHGHUURUFRGHVDUHFRPLQJLQ 6KRXOGWKHDVVHUWLRQVEHOHIWLQWKH FRPSLOHGFRGHVRWKDWWKH\H[HFXWHDWUXQWLPH"7KHUHLVDFRVW LQRYHUKHDGRIFRXUVH2QWKHRWKHUKDQGPRVWRIWHQWKHFRVWLVTXLWHVPDOODQGLW VJUHDWWRKDYH WKHV\VWHPWHOO\RXZKHQLW VQRWIHHOLQJJRRGDQGHYHQZKDWLVZURQJVRPHWLPHV/HW VIDFHLW PRVWGHYHORSPHQWSURMHFWVDUHUXQLQ,QWHUQHWWLPHDQGWKHUHDUHQ WVL[PRQWKVRIWHVWLQJEHIRUH WKHFRPSRQHQWVDUHUROOHGRXW:K\QRWGLVWULEXWHERWKDYHUVLRQZLWKDVVHUWLRQVDFWLYHDQGRQH ZLWKRXWWKHPWRWKHFXVWRPHU"
,ZLOOVKRZ\RXVRPHUHDOZRUOGH[DPSOHVRIDVVHUWLRQVLQWKHFRPLQJFKDSWHUV,Q DGGLWLRQ\RXFDQGRZQORDGWKHFRGHVDPSOHVIURPWKHERRN V:HEVLWHDWMQVNVHERRN
7KH'LDJQRVH0RQLWRU7RRO
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x x x x
3HUIRUPDQFHPRQLWRUPHWULFV ,WHPVLQWKHHYHQWORJ64/6HUYHU VHUURUORJDQG\RXUDSSOLFDWLRQ VHUURUORJ 9HUVLRQLQIRUPDWLRQIRUFHUWDLQ'//V26DQGVRRQ +DUGZDUHLQIRUPDWLRQIRUH[DPSOHWKHQXPEHURI&38V
0RVWRIWKLVLQIRUPDWLRQLVTXLWHHDVLO\FDXJKWZLWKWKHKHOSRI6\VWHP'LDJQRVWLFV QDPHVSDFH
0LVFHOODQHRXV7LSV
)LQDOO\WKHIROORZLQJDUHWZRDGGLWLRQDOWLSVIRUWHVWLQJ x x
6HFXULW\ LVVXHVDUHRIWHQ³IRUJRWWHQ´E\GHYHORSHUV7KHVDPHDSSOLHVWRWHVWLQJWRR6SHQG VRPHH[WUDWLPHRQWHVWLQJVHFXULW\LVVXHVDQGWKHGHSOR\PHQWZLOOUXQPRUHVPRRWKO\ 3HUKDSVWKHPRVWLPSRUWDQWWLSRIDOOUHJDUGLQJWHVWLQJLVWRKDYHDVLPLODUWHVWLQJ HQYLURQPHQW²KDUGZDUHFRPPXQLFDWLRQVL]HRIGDWDEDVHDQGVRRQ²WRWKHRQH\RXZLOO KDYHLQWKHUHDOVLWXDWLRQ$FRPPRQSUREOHPLVWKDWWKHFXVWRPHUKDVD6\PPHWULF 0XOWL3URFHVVLQJ603 PDFKLQH²DPDFKLQHZLWKVHYHUDOSURFHVVRUV²EXW\RXGRQ WKDYH WKDWLQ \RXUWHVWLQJHQYLURQPHQW,W VFRPPRQWRILQGSUREOHPVWKDWRQO\VKRZXSZLWKDQ 603PDFKLQH$WWKHVDPHWLPHLW VXQXVXDOWKDWFRPSDQLHVKDYHWKHVHNLQGVRIPDFKLQHV LQWKHLUWHVWLQJHQYLURQPHQW,FDQ WVD\WKLVHQRXJK,WLVLPSRUWDQWWRKDYHDUHDOLVWLF WHVWLQJHQYLURQPHQW3HULRG
(YDOXDWLRQRI3URSRVDOV
1RZLW VWLPHWRZUDSXSWKLVFKDSWHUE\HYDOXDWLQJWKHSURSRVDOV,KDYHSUHVHQWHGDJDLQVWWKH IDFWRUVZHGLVFXVVHGLQ&KDSWHU,KRSHLWLVFOHDUWKDWDOOWKHSURSRVDOVDUHJRRGLQWHUPVRI WHVWDELOLW\EHFDXVHWKH\DOOKDYHWKLVDVWKHLUSULPDU\IRFXV$SDUWIURPWKDWOHW VGLJLQWRWKH HYDOXDWLRQRIHDFKRIWKHSURSRVDOVLQPRUHGHWDLO
(YDOXDWLRQRIWKH7HVW%HG3URSRVDO
7KHWHVWEHGZLOOQRWGLUHFWO\LPSURYHWKHSHUIRUPDQFHDQGVFDODELOLW\RI\RXUSURMHFW+RZHYHULW ZRQ WGHFUHDVHLWHLWKHUEHFDXVHWKHWHVWGULYHUVDUHQRWLQWKHELQDU\WKDWZLOOEHXVHGE\WKH DSSOLFDWLRQ²WKHWHVWGULYHUVDUHVHSDUDWHXQLWV2QWKHRWKHUKDQG\RXGRJHWDWRROWKDWFDQKHOS \RXWRJHWRQWKHULJKWWUDFNDQGWRILQGRXWERWWOHQHFNVLQGLIIHUHQWVLWXDWLRQV
7KHWHVWEHGFDQKHOSLPSURYHGHEXJJDELOLW\EHFDXVHLWFDQEHKDUGWRVHWXSDFHUWDLQSUREOHP VLWXDWLRQZLWKRQO\WKHDSSOLFDWLRQ VRUGLQDU\8,
(YDOXDWLRQRI$VVHUWLRQV3URSRVDO
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
:KDW V1H[W
,QWKHQH[WFKDSWHU,ZLOOGLVFXVVDWRSLFFORVHO\UHODWHGWRWHVWLQJQDPHO\GHEXJJLQJ:KHQ\RX KDYHSURYHGWKDWVRPHWKLQJLVEURNHQZLWKWKHKHOSRIWHVWLQJGHEXJJLQJZLOOKHOS\RXWR GHWHUPLQHZKDWLVZURQJ,ZLOOIRFXVRQKRZWRSUHSDUHIRUGHEXJJLQJ
5HIHUHQFHV
.%HFN([WUHPH3URJUDPPLQJ([SODLQHG(PEUDFH&KDQJH$GGLVRQ:HVOH\ KWWSPVGQPLFURVRIWFRPOLEUDU\WHFKDUWIPNLQWURKWP '065HHQJLQHHULQJ7RRONLWDW KWWSZZZVHPGHVLJQVFRP&RPSDQ\3XEOLFDWLRQV7HVW&RYHUDJHSGI -5REELQV³%XJVOD\HU+DQGOLQJ$VVHUWLRQVLQ$631(7:HE$SSV´ 06'10DJD]LQH2FWREHU 0LFURVRIW %0H\HU2EMHFW2ULHQWHG6RIWZDUH&RQVWUXFWLRQ6HFRQG(GLWLRQ3UHQWLFH+DOO -5REELQV³%XJVOD\HU$VVHUWLRQVDQG7UDFLQJLQ1(7´ 06'10DJD]LQH)HEUXDU\ 0LFURVRIW
&KDSWHU$GGLQJ'HEXJJLQJ6XSSRUW ,17+,6&+$37(5 x x x x x
7UDFLQJ (UURU/RJJLQJ 5HIOHFWLRQ,QWHUFHSWLRQDQG$WWULEXWHVWR
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
7UDFLQJ
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
7UDFLQJLQWKH'DUN$JHV
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²'HEXJ3ULQWORJWRILOHDQG2XWSXW'HEXJ6WULQJ ²UHSUHVHQWRQO\D VPDOOVHOHFWLRQRIWKHDYDLODEOHWHFKQLTXHV7KHUHDUHDOVRPDQ\WKLUGSDUW\VROXWLRQV
$YRLGLQJ7UDFH&DOOV:KHQ1RERG\,V /LVWHQLQJ
,W VH[WUHPHO\LPSRUWDQWWKDWGHEXJWRROVLQWHUIHUHDVOLWWOHDVSRVVLEOH ZLWKWKHH[HFXWLRQ2WKHUZLVHWKHUHLVDULVNWKDWWKH\ZLOOKLGHEXJVWKDW DUHGHSHQGHQWRQWLPLQJ0\IULHQG-RKQ5REELQV WKH³%XJVOD\HU´ KLPVHOI VD\VWKDW2XWSXW'HEXJ6WULQJ GRHVVRPHZRUNUHJDUGOHVVRI ZKHWKHU\RXDUHXQGHUD GHEXJJHU³'LVDVVHPEOLQJ:. V 2XWSXW'HEXJ6WULQJ$ VKRZVLWFDOOV5DLVH([FHSWLRQ ZLWKDQH[FHSWLRQ FRGHRI[´-RKQVD\V³7KDW VDJXDUDQWHHGWULSLQWRNHUQHO PRGHDQGDFRQWH[WVZLWFK´+HFRQWLQXHV³$OOWKLVZRUNLQ 2XWSXW'HEXJ6WULQJ KDSSHQVZKHWKHU\RXDUHXQGHUDGHEXJJHURUQRW *LYHQWKDWFRQWH[WVZLWFK\RXFDQVHHZK\0LFURVRIWFRPEHGWKH:. VRXUFHFRGHDQGHQVXUHGWKDWWKH\RQO\FDOO2XWSXW'HEXJ6WULQJ ZKHQ DEVROXWHO\SRVLWLYHO\QHFHVVDU\´
6RFRQWUDU\WRZKDWPRVWGHYHORSHUVWKLQNLW VQRWZLWKRXWLQWHUIHUHQFH WRWKHV\VWHPWROHDYH2XWSXW'HEXJ6WULQJ FDOOVLQWKHH[HFXWDEOHHYHQ ZKHQ\RXDUHQRWOLVWHQLQJWRWKHP 7KH%XLOW,Q7UDFLQJ6ROXWLRQLQ1(7 $VZLWKVRPDQ\RWKHUWKLQJV0LFURVRIWWRRNDWRWDOO\QHZWDFNRQWUDFLQJLQWKH1(7)UDPHZRUN 7KHVROXWLRQLVHIIHFWLYHDQGUHSUHVHQWVDELJOHDSIRUZDUG,QWKLVVHFWLRQ,ZLOOEULHIO\LQWURGXFH KRZWRXVHWKHEXLOWLQVROXWLRQ &ODVVHV ,QWKH6\VWHP'LDJQRVWLFV QDPHVSDFHWKHUHDUHWZRFODVVHVFDOOHG'HEXJ DQG7UDFHWKDWFDQ EHXVHGWRVHQGWUDFHFDOOV
$V\RXFDQVHHLQ/LVWLQJ\RXFDQFKRRVHZKHWKHU\RXZDQWWRKDYHDOLQHIHHGDIWHUWKHWUDFH FDOO
1RZ\RXNQRZKRZWRVHQGPHVVDJHV+RZHYHUWKDWZRQ WKHOS\RXPXFKLI\RXFDQ WOLVWHQWR WKHP7KLVKROHLVZKDWWKH7UDFH/LVWHQHU FODVVILOOV%\GHIDXOWWKHUHLVD'HIDXOW7UDFH/LVWHQHU LQWKHWUDFH/LVWHQHUV FROOHFWLRQ,WOLVWHQVWR\RXUWUDFHFDOOVDQGVHQGVWKHPRQYLD 2XWSXW'HEXJ6WULQJ WRVD\DGHEXJJHU7KH'HIDXOW7UDFH/LVWHQHU DOVRPDNHVD/RJ FDOOWR DGHEXJJHULIRQHLVDWWDFKHG ,I\RXZDQWLW VYHU\HDV\WRDGGDQRWKHUOLVWHQHUWRWKHWUDFH/LVWHQHUV FROOHFWLRQ
7UDFH6ZLWFK/HYHO 7UDFH/HYHO2II
1XPHULF5HSUHVHQWDWLRQ
7UDFH/HYHO:DUQLQJ
7UDFH/HYHO(UURU 7UDFH/HYHO,QIR
7UDFH/HYHO9HUERVH
/LVWLQJ8VLQJDFRQILJ )LOHIRU&RQILJXULQJ7UDFH&DOOV 'LPD6ZLWFK$V1HZ7UDFH6ZLWFKD6ZLWFKB 'HVFULSWLRQWRWKLVWUDFHVZLWFK 7UDFH:ULWH/LQH,ID6ZLWFK7UDFH(UURUB $QHUURUWUDFHFDOO
7UDFH:ULWH/LQH,ID6ZLWFK7UDFH9HUERVHB $YHUERVHWUDFHFDOO
:LWKWKHFRGHVKRZQLQ/LVWLQJDQGWKHFRQILJ ILOHVKRZQLQ/LVWLQJRQO\WKHILUVWWUDFH FDOODFWXDOO\WDNHVSODFH 1RWH ,ZLOOGLVFXVVVRPHGLIILFXOWLHVZLWKXVLQJFRQILJ ILOHVIURPVHUYLFHGFRPSRQHQWVODWHULQ WKHFKDSWHU
0\3URSRVDOIRUD&XVWRP7UDFLQJ6ROXWLRQ 'RHVWKHZRUOGUHDOO\QHHGDQRWKHUWUDFLQJVROXWLRQ",FDQWKLQNRIDQXPEHURIVKRUWFRPLQJVWKH EXLOWLQVROXWLRQKDV x x x x x x x
x
,WLVQRWGLUHFWO\SRVVLEOHWRWUDFHWKHFRPSOHWHH[HFXWLRQSDWKRYHUDOOWKHWLHUV:LQGRZV )RUPV$631(71(7VHUYLFHGFRPSRQHQWVVWRUHGSURFHGXUHV ,WGRHVQRWGLUHFWO\³IRUFH´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³SRRUPDQ V LQWHUFHSWLRQ´FRGH%HIRUHDQ\WKLQJVSHFLILFDFWXDOO\KDSSHQV\RXFDQLQWHUFHSWWKHFDOODQGGR VRPHWKLQJHOVHILUVWRULQVWHDG$W\SLFDOH[DPSOHLVZKHQ\RXZDQWWRDGGDWUDFHFDOOMXVWEHIRUH DQHUURULVUDLVHGZKLFKLVHDVLO\GRQHLIDOOHUURUVDUHUDLVHGLQDJHQHUDOPHWKRG ,QP\RSLQLRQLW VDOPRVWDOZD\VDJRRGLGHDWRFHQWUDOL]HFRGH7KHGUDZEDFNLVHIILFLHQF\EXW PRVWRIWHQWKHRYHUKHDGLVQHJOLJLEOHFRPSDUHGWRWKHWLPHLWWDNHVWRH[HFXWHWKHRUGLQDU\FRGH $QRWKHUPLQRUGUDZEDFNUHODWHVWR UHIOHFWLRQ7KHFRQWH[WZLOOEHGLIIHUHQWZKHQUHIOHFWLRQLVXVHG LQDFHQWUDOL]HGPHWKRGLQVWHDGRILQOLQH &DWHJRUL]DWLRQ 7KHEXLOWLQWUDFLQJVROXWLRQLQ1(7PDNHVLWSRVVLEOHWRFDWHJRUL]HWUDFHFDOOVLQ(UURU:DUQLQJ ,QIRUPDWLRQDQG9HUERVH,FDQXQGHUVWDQGWKHEHQHILWVRIWKLVXVHEXWLQJHQHUDO,SUHIHUWR FDWHJRUL]HLQDQRWKHUZD\%DVLFDOO\,ZDQWWRNQRZWKHUHDVRQIRUDFDOO,VLWEHFDXVHRIDPHWKRG EHLQJHQWHUHGRUH[LWHG",VLWEHFDXVHRIDQHUURURUDEURNHQDVVHUWLRQ"2ULVLWSHUKDSVMXVW EHFDXVHLWLVVKRZLQJWKDWDFHUWDLQSLHFHRIFRGHKDVEHHQXVHGDQGWKDWDSDUWLFXODUYDULDEOH V YDOXHVDUHLQWHUHVWLQJWRORRNDW",QP\FXVWRPWUDFLQJVROXWLRQ,KDYHOHWWKHGHYHORSHUFKRRVH WKHFDWHJRUL]DWLRQ,IWKHEXLOWLQVROXWLRQLVXVHGXQGHUWKHKRRGRQHRIWKHEXLOWLQFDWHJRUL]DWLRQV
LVXVHGDVZHOO7DEOHOLVWVWKHPHWKRGV,XVHDVZHOODVWKH1(7FDWHJRUL]DWLRQXVHGIRUHDFK RIWKHP 0\7UDFH0HWKRGV 7UDFH%HJLQ 7UDFH(QG 7UDFH(UURU 7UDFH$VVHUW 7UDFH0HVVDJH
7DEOH 0\7UDFH0HWKRGVDQG&RUUHVSRQGLQJ1(77UDFH/HYHOV 1(77UDFH /HYHOV8VHG 7UDFH9HUERVH 7UDFH9HUERVH 7UDFH(UURU 7UDFH(UURU 7UDFH,QIRUPDWLRQ
1RWH
6RPHRIWKHWUDFHPHWKRGVZLOOEHH[HFXWHGDXWRPDWLFDOO\EHFDXVH7UDFH(UURU ZLOOEHEXULHGLQ WKHFHQWUDOL]HGPHWKRGFDOOHGZKHQUDLVLQJHUURUVDQG7UDFH$VVHUW LQWKHPHWKRGFKHFNLQJ DVVHUWLRQV7UDFH%HJLQ DQG7UDFH(QG ZLOOJHWLQVHUWHGDXWRPDWLFDOO\E\WKHXVHRIDWHPSODWH VHH&KDSWHU³$UFKLWHFWXUH´IRUPRUHLQIRUPDWLRQ ,W VRQO\7UDFH0HVVDJH WKDWWKHGHYHORSHU KDVWRLQVHUWPDQXDOO\EHFDXVHWKHLQWHUHVWLQJSODFHVIRUWKDWFDQ WEHGHFLGHGDXWRPDWLFDOO\ 6WDQGDUGL]HG,QIRUPDWLRQ $SDUWIURPWKHFDWHJRUL]DWLRQ,DOVRZDQWWKHGHYHORSHUWRDGGVRPHVSHFLILFLQIRUPDWLRQZLWK HYHU\WUDFHFDOO x x
6RXUFHVXFKDVPHWKRGQDPHRUQDPHRIVWRUHGSURFHGXUH 6SHFLILFPHVVDJHIRU7UDFH$VVHUW 7UDFH(UURU DQG7UDFH0HVVDJH RQO\ $SDUWIURPWKDWWKHWUDFLQJPHWKRGVZLOODXWRPDWLFDOO\FROOHFWVRPHPRUHLQIRUPDWLRQ QDPHO\ R R R R R R R R
7LPH &RPSXWHUQDPH 1DPHRI(;('// 3URFHVV,' 7KUHDG,' 8VHU,''LUHFW&DOOHU1DPH IRUVHFXULW\HQDEOHGVHUYLFHGFRPSRQHQWVDQG SDUDPHWHUIRURWKHUFRPSRQHQWVDQGIRUVWRUHGSURFHGXUHVLIRQHH[LVWVIRUWKH SDUWLFXODUPHWKRGDQGVWRUHGSURFHGXUH ,Q7[,Q7UDQVDFWLRQ IRUVHUYLFHGFRPSRQHQWVDQG##75$1&2817 IRUVWRUHG SURFHGXUHV 6HFXULW\,V6HFXULW\(QDEOHG IRUVHUYLFHGFRPSRQHQWVEODQNIRUVWRUHGSURFHGXUHV
)RUPDWRID7UDFH&DOO ,GHFLGHGWRXVHDVLPSOHIRUPDWIRUWKHWUDFHFDOOVWKDWZRXOGQ WLQFXUPXFKRYHUKHDG(DFKSDUWLV VHSDUDWHGZLWKDWDE7KLVZD\,FDQDOVRFRQVXPHWKHPHVVDJHVIURPDQRWKHU 2XWSXW'HEXJ6WULQJ UHFHLYHUDQGLWZLOOVWLOOEHHDV\WRUHDGWKHRXWSXW 1RWH 7KHUHLVDULVNLQXVLQJDFRPPRQFRQWUROFKDUDFWHUVXFKDVDWDELIWKHUHLVQDWLYHO\DWDE LQDVWULQJ7RVROYHWKLVSUREOHP,FRXOGILOWHUHDFKVWULQJEHIRUHDGGLQJLWWRWKHWUDFH FDOOEXW,KDYHQ WH[SHULHQFHGWKLVSUREOHPLQP\ DSSOLFDWLRQVVRIDU
5HFHLYHU )LQDOO\WKHUHZLOOEHVRPH2XWSXW'HEXJ6WULQJ FDOOVWRFDWFK7RGRWKLV,XVHDQ 2XWSXW'HEXJ6WULQJ UHFHLYHUFDOOHG-QVN7UDFH9LHZGOOZKLFKLVD&20FRPSRQHQW,WXVHV FDOOEDFNVWRVHQGWKH2XWSXW'HEXJ6WULQJ FDOOVWR WKHFRQVXPHU7KH2XWSXW'HEXJ6WULQJ
UHFHLYHULVEXLOWDVDQ$7/FRPSRQHQWLQ9LVXDO&DQGLWLVHDVLO\FRQVXPHGDV\RXFDQVHHLQ /LVWLQJ9% /LVWLQJ9%&RGH6KRZLQJ+RZ0\2XWSXW'HEXJ6WULQJ 5HFHLYHU&DQ%H8VHG 2SWLRQ([SOLFLW ,PSOHPHQWV-QVN7UDFH9LHZ,7UDFH(YHQW 3ULYDWHPB7UDFH9LHZ$V-QVN7UDFH9LHZ7UDFH9LHZ
3ULYDWH6XE)RUPB/RDG 6HWPB7UDFH9LHZ 1HZ-QVN7UDFH9LHZ7UDFH9LHZ PB7UDFH9LHZ6HW&DOOEDFN0H (QG6XE
3ULYDWH6XE,7UDFH(YHQWB'HEXJ6WULQJB %\9DOSURFHVV,'$V/RQJ%\9DOPHVVDJH$V6WULQJ
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
5HPRWH5HFHLYHU ,KDYHQ WDFWXDOO\EXLOWDUHPRWHUHFHLYHUIRUDQXPEHURIUHDVRQV x x x x
7KH8,VKRZQLQ)LJXUHKDVWKHFDSDELOLW\WRLPSRUWILOHVIURPGLIIHUHQWPDFKLQHVVRWKDW WKHFRPSOHWHFDOOVWDFNFDQEHDQDO\]HGDIWHUZDUG 0RVWRIWHQLW VQRWWKHLQWHUDFWLRQEHWZHHQWKHGLIIHUHQWWLHUVWKDWLVWKHSUREOHP:KHQWKH WLHUZLWKWKHSUREOHPLVIRXQGLWFDQEHDQDO\]HGLQLVRODWLRQ ,W VTXLWHRIWHQWKHFDVHWKDWDWOHDVWWZRWLHUVVXFKDVWKH:HEDSSOLFDWLRQDQGWKH&20 FRPSRQHQWV SK\VLFDOO\H[HFXWHDWRQHPDFKLQH6RPHWLPHVEXWOHVVRIWHQ WKH64/ 6HUYHUH[HFXWHVWKHUHWRR ,W VLQFUHDVLQJO\ FRPPRQWRILQGSURGXFWVIRUUHPRWHDGPLQLVWUDWLRQLQVWDOOHGDWWKHVHUYHUV ,FDQWKHQLQVWDOOP\WUDFHUHFHLYHUDWWKHVHUYHUDVXVXDOEXWVLWDQGYLHZWKDWVSHFLILF VHUYHUIURPDUHPRWHFRPSXWHU 1RWH 8QIRUWXQDWHO\²LQP\WHVWV²P\WUDFHUHFHLYHUGRHVQ W ZRUNLQD7HUPLQDO6HUYLFHV VHVVLRQEXWLWZRUNVMXVWILQHZLWKRWKHUSURGXFWVIRUUHPRWHDGPLQLVWUDWLRQ
$OWKRXJK,KDYHQ WKDGDXVHIRULW\HW,KDYHSODQQHGKRZ,FDQEXLOGDVROXWLRQ$VLPSOHRQH ZRXOGEHWRFUHDWHD&20FRPSRQHQWWKDWFRQVXPHVP\2XWSXW'HEXJ6WULQJ UHFHLYHUDWWKH
UHPRWHVHUYHU7KDW&20FRPSRQHQWZLOOWKHQVHQGDFDOOEDFNRUSHUKDSVD&20HYHQW WR DQRWKHUFRPSRQHQWOLYLQJDWWKHPDLQUHFHLYHUPDFKLQH7KHFDOOVZRXOGEHEXIIHUHGLQWKLVFDVH WRRDQGVHQWRQO\SHULRGLFDOO\ 7KHVHFRQG&20FRPSRQHQWZLOOUHSOD\WKH 2XWSXW'HEXJ6WULQJ FDOOORFDOO\DQGWKHQHYHU\WKLQJZRUNVRXWDVQRUPDO :KDW,FRQVLGHUWKHPDLQSUREOHPLVWKHWLPHV\QFKURQL]DWLRQEHWZHHQFRPSXWHUV+RZHYHU, FRXOGDGGDQ³H[HUFLVHVFHQDULR´ZLWKQXPEHUHGPHVVDJHVVRWKDWWKHVROXWLRQFDQOHDUQDERXWWKH WLPHGLIIHUHQFHEHWZHHQWKHFRPSXWHUVDQGDGMXVWIRULW 1RWH
)LOWHULQJ ,ZDQWWREHDEOHWRXVHILOWHULQJERWKDWWKHVHQGHUDQGDWWKHUHFHLYHU7KHPRWLYDWLRQIRUKDYLQJ ILOWHULQJDYDLODEOHDWWKHVHQGHULVWRDYRLGH[SHQVLYHFDOOVZKHQWKH\DUHQRWQHHGHG7KLVLVHYHQ PRUHLPSRUWDQWLI\RXUHFHLYHIURPDUHPRWHFRPSXWHUZKHQWKHWUDQVSRUWPHFKDQLVPLWVHOILV H[SHQVLYH6RPHRIWKHDYDLODEOHILOWHULQJSRVVLELOLWLHVDUHDVIROORZV x x x x x x x
&DWHJRU\VXFKDVRQO\PDNLQJFDOOVWR7UDFH(UURU DQG7UDFH$VVHUW &RPSXWHUQDPH (;('// 3URFHVV,' 7KUHDG,' 6RXUFH 8VHU
,W VDOVRSRVVLEOHRQWKHUHFHLYHU VVLGHWRILOWHUDZD\2XWSXW'HEXJ6WULQJ FDOOVIURPRWKHU DSSOLFDWLRQVIRUH[DPSOH062IILFHDQG,QWHUQHW([SORUHU WKDWZRXOGRWKHUZLVHLQWHUIHUHZLWKWKH YLHZRI\RXUFDOOV
&RQILJXUDWLRQ 7KHFRQILJXUDWLRQLQIRUPDWLRQVXFKDVVHQGHUVLGHILOWHULQJDQGWUDFLQJDFWLYDWLRQLVVWRUHGLQ;0/ IRUPDWLQDFRXSOHRIFRQILJ ILOHV 7KHUHZLOOEHRQHIRUWKHPDFKLQHRQHIRUHYHU\DSSOLFDWLRQ DQGRQHIRUWKHUHFHLYHU8,LWVHOIZLWKWKHFOLHQWILOWHULQJ 7KHDSSOLFDWLRQFRQILJ ILOHZLOOEHUHDG ILUVWDQGWKHQWKHPDFKLQHFRQILJ ILOHZLOOEHUHDG $JUHDWGHDORIFRQILJXUDWLRQLQIRUPDWLRQRWKHUWKDQWUDFLQJLVDOVRIRXQGLQWKHVHILOHVVXFKDVWKH FRQQHFWLRQVWULQJDQGKRZRIWHQWKHFRQILJXUDWLRQILOHVKRXOGEHFKHFNHGIRUQHZLQIRUPDWLRQ
/LVWLQJVKRZVDQH[DPSOHRIVXFKDFRQILJXUDWLRQILOHEXWRQO\ZLWKWKHWUDFLQJVHWWLQJV 1RWH WKHZLOGFDUGVDQGPXOWLSOHFKRLFHVIRUILOWHULQJRQWKHVRXUFHPHWKRG /LVWLQJ([DPSOHRIFRQILJ )LOH
FRQILJXUDWLRQ! MQVNLQVWUXPHQWDWLRQWUDFHDFWLYH ! ILOWHULQJ! DGGQDPH HUURUYDOXH ! DGGQDPH DVVHUWYDOXH ! DGGQDPH PHVVDJHYDOXH ! DGGQDPH VRXUFHYDOXH $GG )HWFK! ILOWHULQJ! MQVNLQVWUXPHQWDWLRQWUDFH! FRQILJXUDWLRQ! 7KHFRQILJ ILOHVZLOOEHDGPLQLVWHUHGE\WKHILOWHUGLDORJDVZDVVKRZQLQ)LJXUHEXWWKH\FDQ DOVREHDGPLQLVWHUHGPDQXDOO\ /HW VWDNHDFORVHUORRNDWKRZFHQWUDOL]DWLRQDQGFDWHJRUL]DWLRQKDYHEHHQLPSOHPHQWHGIRUWKH GLIIHUHQWWLHUV)LUVWOHW VORRNDWKRZ,LPSOHPHQWHGLWLQWKHGDWDEDVHWLHU
7UDFLQJLQ6WRUHG3URFHGXUHV
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
7KHVLJQDWXUHRIWKH-QVN7UDFHB0HVVDJH SURFHGXUHLVRQO\VOLJKWO\ODUJHUWKDQIRUWKH -QVN7UDFHB%HJLQ SURFHGXUHVHH/LVWLQJ +HUHDSDUDPHWHULVDGGHGZKLFKLVPRVWRIWHQ XVHGIRULQVSHFWLQJDYDULDEOHQDPHDQGLWVYDOXH /LVWLQJ6LJQDWXUHIRU-QVN7UDFHB0HVVDJH 6WRUHG3URFHGXUH &5($7(352&('85( -QVN7UDFHB0HVVDJH #VRXUFHXGGW6RXUFH #PHVVDJH9$5&+$5 #XVHU,GXGGW8VHU,G
7KHODVWVWRUHGSURFHGXUHLQWKHSUHYLRXVOLVW-QVN7UDFHB:ULWH FRXOGEHXVHGE\DOORWKHUWUDFH SURFHGXUHVIRUFHQWUDOL]LQJWKHILQDOFDOOWR2XWSXW'HEXJ6WULQJ
,I,ZDQWWRFDOO2XWSXW'HEXJ6WULQJ IURPP\VWRUHGSURFHGXUHVWKHUHDUHVHYHUDOZD\VWRGR WKLV,ZLOOGLVFXVVWKUHHRIWKHPLQDOLWWOHPRUHGHWDLO ,PSOHPHQWDWLRQ2SWLRQ&20$XWRPDWLRQ ,W VTXLWHVLPSOHWRZUDSWKH2XWSXW'HEXJ6WULQJ FDOOLQD&20FRPSRQHQWDQGWKHQXVH&20 $XWRPDWLRQRU2/($XWRPDWLRQDV64/6HUYHUVWLOOFDOOVLW IURPWKHVWRUHGSURFHGXUHVWR LQVWDQWLDWHWKHFRPSRQHQWDQGFDOODPHWKRG
,WZRXOGEHHDV\WRZULWHDQ(;(WKDWPDNHVDQ2XWSXW'HEXJ6WULQJ FDOOE\XVLQJWKHFRPPDQG SDUDPHWHU7KLV(;(FRXOGEHFDOOHGIURPVWRUHGSURFHGXUHVZLWKKHOSIURP[SBFPGVKHOO 7KLV ZLOOFRQVXPHDORWRIUHVRXUFHV7KHUHIRUH,ILQGWKLVVROXWLRQOHDYHVDORWWREHGHVLUHG (YHQVRWKHUHDUHFHUWDLQO\VLWXDWLRQVZKHQ[SBFPGVKHOO FRPHVLQKDQG\
64/6HUYHUVXSSRUWVDQ$3,FDOOHG2SHQ'DWD6HUYLFHV2'6
$6 '(&/$5(#WKH'E1DPH9$5&+$5 6(7#WKH'E1DPH '%B1$0(
(;(&PDVWHU[SBMQVNWUDFHZULWH#WUDFH7\SH #VRXUFH #PHVVDJH#XVHU,G ##75$1&2817#WKH'E1DPH )LQDOO\WREULQJWKHZKROHWUDFLQJVROXWLRQIRUVWRUHGSURFHGXUHVWRJHWKHUWKH-QVN7UDFHB%HJLQ VWRUHGSURFHGXUHLVVKRZQLQ/LVWLQJ /LVWLQJ&RGHIRUWKH-QVN7UDFHB%HJLQ 6WRUHG3URFHGXUH &5($7(352&('85(-QVN7UDFHB%HJLQ #VRXUFHXGGW6RXUFH #XVHU,GXGGW8VHU,G
$6 (;(&-QVN7UDFHB:ULWH#VRXUFH
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
,NHHSDQLQVWDQFHRIDOOWKHVWRUHGSURFHGXUHVPHQWLRQHGLQWKLVVHFWLRQLQHYHU\GDWDEDVH7KLV ZD\,FDQVWDUWWUDFLQJLQMXVWRQHVSHFLILFGDWDEDVHDQGQRWKDYHLWVWDUWHGIRUDOOWKHGDWDEDVHVRI WKDWSDUWLFXODU64/6HUYHULQVWDQFH 6HQGHU)LOWHULQJRI7UDFH&DOOVIRU6WRUHG3URFHGXUHV ,I\RXOHW-QVN7UDFHB%HJLQ DQGVRRQFRPSOHWHWKHWUDFHFDOOVGLUHFWO\\RXKDYHDVLPSOHZD\ RIILOWHULQJVXFKDVRQO\DOORZLQJWUDFHFDOOVRIDFHUWDLQW\SHWREHGRQH,WZLOODOVRJLYH\RXD VPDOOSHUIRUPDQFHJDLQEHFDXVH\RXVNLSFDOOLQJWKH-QVN7UDFHB:ULWH SURFHGXUH2QWKHRWKHU KDQG,ILQGLWHDVLHUWRDOZD\VXVH-QVN7UDFHB:ULWH ,WPHDQV,RQO\KDYHRQHSODFHWRDGGDOO VHQGHUILOWHULQJ7KLVZRUNVIRUH[DPSOHLI,DPLQWHUHVWHGRQO\LQWKHWUDFHFDOOVIURPWKUHH VSHFLILFVWRUHGSURFHGXUHVRUFRQFHUQHGRQO\DERXW0HVVDJH WUDFHFDOOVFRQWDLQLQJDFHUWDLQ YDULDEOHDQGVRRQ$QGDV,VDLGHDUOLHUZKHQ\RXGRQ WZDQWWRKDYHWUDFLQJDFWLYDWHG\RXMXVW FRPPHQWRXWWKHFRGHLQ-QVN7UDFHB:ULWH DQGRSWLRQDOO\LQ-QVN7UDFHB%HJLQ DQGVRRQ 1RWH ,WZRXOGEHSRVVLEOHWRFRQWUROWKHVHUYHUVLGHILOWHULQJIRUVWRUHGSURFHGXUHWUDFLQJIURP WKH8VHU,QWHUIDFH,VKRZHGLQ)LJXUHEXW,KDYHQ WLPSOHPHQWHGWKLV,ILQGLW FRQYHQLHQWWRWDNHFDUHRILWGLUHFWO\DQGPDQXDOO\LQWKH-QVN7UDFHB:ULWH VWRUHG SURFHGXUH
7UDFLQJ1HHGVLQ1(7&RPSRQHQWV )RUP\WUDFLQJQHHGVLQ1(7FRPSRQHQWV,XVHDVLPSOHUVROXWLRQWKDQWKHEXLOWLQ%DVH&ODVV /LEUDU\%&/ WUDFLQJVROXWLRQ,FUHDWHGDQHZFODVVZLWKLQP\RZQQDPHVSDFH/HW VWDNHDORRNDW WKHFODVV $1HZ&ODVV-QVN,QVWUXPHQWDWLRQ7UDFH
,QWKLVVHFWLRQ,SURSRVHWKDW\RXXVH-QVN,QVWUXPHQWDWLRQ7UDFH LQVWHDGRI 6\VWHP'LDJQRVWLFV7UDFH7KHFODVVHVDUHTXLWHGLIIHUHQW7KHILUVWWKLQJ\RX OO QRWLFHLVWKH VHOHFWLRQRIPHWKRGVLQP\FODVV7KHRQO\PHWKRGVRIWKHFODVVDUH7UDFH%HJLQ 7UDFH(QG 7UDFH0HVVDJH 7UDFH(UURU DQG7UDFH$VVHUW 7KHLUVLJQDWXUHVDUHDOOVLPLODULQWKDWWKH\ DOOUHTXLUHWKHIROORZLQJSDUDPHWHUV x
x
VRXUFH² ,WZRXOGEHHDV\WRDGGDQRYHUORDGHGYHUVLRQRIHDFKPHWKRGWKDW\RXFDQXVHLI \RXGRQ WZDQWWRJLYHWKHVRXUFH\RXUVHOI7KHQUHIOHFWLRQZLOOEHXVHGWRGHFLGHIURP ZKHUHWKHFDOOZDVPDGH+DQGLQJRYHUDFRQVWDQWVWULQJLVPXFKIDVWHUEXWOHVV SURGXFWLYH$QRWKHUUHDVRQIRUH[SOLFLWO\KDQGLQJRYHUVRXUFH DVD6WULQJ LVWKDWLWGRHVQ W PDWWHULIWKHWUDFHPHWKRGKDVEHHQZUDSSHGZLWKLQDQRWKHUPHWKRG H[H2U'OO1DPH² -XVWDVZLWKVRXUFHUHIOHFWLRQFRXOGEHXVHGWRILQGRXWIURPZKDW(;(RU '//WKHFDOOZDV PDGH2QFHDJDLQLW VIDVWHUWRKDQGWKDWLQIRUPDWLRQRYHUWRWKHWUDFH PHWKRGDQGLQWKLVFDVHDOOWKDWLVQHHGHGLVD3XEOLF&RQVW IRUWKHFRPSOHWHSURMHFW
6RPHRIWKHPHWKRGV7UDFH0HVVDJH DQG7UDFH$VVHUW WDNHDWKLUGSDUDPHWHUQDPHO\ x
PHVVDJH² +HUHWKHYDOXHRIDFHUWDLQYDULDEOHFDQEHLQVSHFWHGRUDQHUURUPHVVDJHFDQ EHVKRZQ
7UDFH(UURU WDNHVDQH[FHSWLRQDVSDUDPHWHULQVWHDGRIWKHPHVVDJHSDUDPHWHU0RUHDERXW WKLVLQ&KDSWHU³(UURU+DQGOLQJDQG&RQFXUUHQF\&RQWURO´ 'LIIHUHQW6LJQDWXUHV 7RPDNHWKHFODVVDVXVDEOHDVSRVVLEOH,GHFLGHGWRRYHUORDGWKHPHWKRGV$OOPHWKRGVFDQDOVR WDNHRQHRUERWKRIWKHIROORZLQJSDUDPHWHUV x x
XVHU,G² 7KLVLVWKHXVHUZKRLVXVLQJWKHFRPSRQHQWULJKWQRZLILWLVNQRZQDVD SDUDPHWHURUYLD6HFXULW\&DOO&RQWH[W WUDQVDFWLRQ² 7KLVLQGLFDWHVZKHWKHUWKHLQVWDQFHLVSDUWLFLSDWLQJLQDWUDQVDFWLRQ
7RPDNHLWHDV\WRXVHWUDFLQJZLWKVHUYLFHGFRPSRQHQWV,DOVRFUHDWHGWKH -QVN,QVWUXPHQWDWLRQ6HUYLFHG7UDFH FODVVZKLFKLQKHULWVIURP-QVN,QVWUXPHQWDWLRQ7UDFH +HUHWKHWUDFHPHWKRGVJUDED&RQWH[W8WLO REMHFWVRWKDWWKHUHTXLUHGLQIRUPDWLRQXVHU,G DQG WUDQVDFWLRQ FDQEHWDNHQIURPWKHUH
7RVXPPDUL]HWKHGHVLJQ,KDYHSURYLGHGWKHFODVVGLDJUDPLQ)LJXUH+HUH\RXFDQVHHWKH FODVVHV,MXVWGLVFXVVHG )LJXUH&ODVVGLDJUDPIRUWKHWUDFLQJVROXWLRQ
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
'LPDQ7PS$V6WULQJ 6WULQJ)RUPDW^`_^`_^`B +HOOR:RUOG7RGD\ 8QIRUWXQDWHO\,KDYHQ WIRXQGRXWKRZWRDGGYE7DE WRWKHWHPSODWHVWULQJDSDUWIURPKDYLQJD SODFHKROGHUVXFKDV^`IRU LW ,Q&?W LVXVHGIRUWKHFRQWUROFKDUDFWHUWDE:KHQ,GLGDTXLFN DQGGLUW\WHVWFRPSDULQJ6WULQJ)RUPDW DQGD6WULQJ%XLOGHU REMHFWIRUEXLOGLQJWKHWUDFH PHVVDJHWKH6WULQJ%XLOGHU VROXWLRQZDVPXFKIDVWHU7KHUHIRUH,GHFLGHGWRXVH6WULQJ%XLOGHU LQVWHDG6WULQJ%XLOGHU ZRUNVYHU\ZHOODQGWKHFRGHLVDOPRVWDVUHDGDEOHDVZLWK
6WULQJ)RUPDW 7KHUHDOSRZHURI)RUPDW LVWKHFDSDELOLW\WRDFFHSWFXVWRPIRUPDWVDQG ,)RUPDW3URYLGHU REMHFWV 0DNLQJDQ2XWSXW'HEXJ6WULQJ &DOO
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²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²EHFDXVHRIDOOWKHRYHUORDGHG PHWKRGVWKHUHLVTXLWHDORWRIFRGH+RZHYHU, GOLNHWRJLYH\RXDVDPSOH
7UDFH:ULWH7UDFH7\SH7UDFH7\SH0HVVDJHB H[H2U'OO1DPHVRXUFHPHVVDJHDQ8VHU,GB (QWHU3ULVH6HUYLFHV&RQWH[W8WLOB ,V,Q7UDQVDFWLRQ7R6WULQJ B DQ,V6HFXULW\(QDEOHG7R6WULQJ
(QG6XE 1RWH
$OOWKHGLIIHUHQWWUDFHPHWKRGV ERWKLQ7UDFH DQG6HUYLFHG7UDFHZLOOFDOO7UDFH:ULWH LQWKH 7UDFH FODVV/LVWLQJVKRZVWKHFRGHIRUWKLVPHWKRG /LVWLQJ7KH3URWHFWHG7UDFH0HWKRG7KDW$OO3XEOLF7UDFH0HWKRGV&DOO 3URWHFWHG6KDUHG6XE7UDFH:ULWHB %\9DOWUDFH7\SH$V7UDFH7\SHB %\9DOH[H2U'OO1DPH$V6WULQJB %\9DOVRXUFH$V6WULQJ%\9DOPHVVDJH$V6WULQJB %\9DOXVHU,G$V6WULQJB %\9DOWUDQVDFWLRQ,QIR$V6WULQJB %\9DOVHFXULW\,QIR$V6WULQJ &RQVWD'HOLPLWHU$V6WULQJ YE7DE 'LPD%XIIHU$V1HZ7H[W6WULQJ%XLOGHU
7\SHRIWUDFHFDOO 6HOHFW&DVHWUDFH7\SH &DVH7UDFH7\SH7UDFH7\SH0HVVDJH D%XIIHU$SSHQG7UDFH7\SH0HVVDJH7H[W &DVH7UDFH7\SH7UDFH7\SH(UURU D%XIIHU$SSHQG7UDFH7\SH(UURU7H[W &DVH7UDFH7\SH7UDFH7\SH%HJLQ D%XIIHU$SSHQG7UDFH7\SH%HJLQ7H[W &DVH7UDFH7\SH7UDFH7\SH(QG D%XIIHU$SSHQG7UDFH7\SH(QG7H[W &DVH7UDFH7\SH7UDFH7\SH$VVHUW D%XIIHU$SSHQG7UDFH7\SH$VVHUW7H[W &DVH(OVH 7KURZ1HZ([FHSWLRQ3URJUDPPLQJHUURU (QG6HOHFW D%XIIHU$SSHQGD'HOLPLWHU
&XUUHQWWLPH 'LPWKH1RZ$V'DWH7LPH 'DWH7LPH1RZ D%XIIHU$SSHQGWKH1RZ7R/RQJ7LPH6WULQJ D%XIIHU$SSHQG D%XIIHU$SSHQGWKH1RZ0LOOLVHFRQG D%XIIHU$SSHQGD'HOLPLWHU
1DPHRI(;('// D%XIIHU$SSHQGH[H2U'OO1DPH D%XIIHU$SSHQGD'HOLPLWHU
6RXUFH D%XIIHU$SSHQGVRXUFH D%XIIHU$SSHQGD'HOLPLWHU
0HVVDJH D%XIIHU$SSHQGPHVVDJH D%XIIHU$SSHQGD'HOLPLWHU
7KUHDG,G D%XIIHU$SSHQG$SS'RPDLQB *HW&XUUHQW7KUHDG,G7R6WULQJ D%XIIHU$SSHQGD'HOLPLWHU
7UDQVDFWLRQLQIRUPDWLRQ D%XIIHU$SSHQGWUDQVDFWLRQ,QIR D%XIIHU$SSHQGD'HOLPLWHU
6HFXULW\LQIRUPDWLRQ D%XIIHU$SSHQGVHFXULW\,QIR D%XIIHU$SSHQGD'HOLPLWHU
8VHU,G D%XIIHU$SSHQGXVHU,G D%XIIHU$SSHQGD'HOLPLWHU
&RPSXWHU1DPH D%XIIHU$SSHQGFRPSXWHU1DPH D%XIIHU$SSHQGD'HOLPLWHU
2GVD%XIIHU7R6WULQJ (QG6XE
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
9%&RPSRQHQWV:LQGRZV)RUPV$63DQG$631(7
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
&KHFNLQJWKH6ROXWLRQ$JDLQVWWKH5HTXLUHPHQWV
7KHUHLVGHILQLWHO\DSHUIRUPDQFHSHQDOW\ZLWKWUDFLQJ:KHQQRRQHLVOLVWHQLQJLW VTXLWHORZDQG ZKHQLW VDOVRGHDFWLYDWHGLW VYHU\ORZZKLFKLVMXVWWKHZD\,ZDQWLW,FDQDFFHSWWKDWWKH SHUIRUPDQFHSHQDOW\LVKLJKRQWKHUDUHRFFDVLRQVZKHQ,DPOLVWHQLQJ:KHQ,OLVWHQWKHUHLVD JRRGUHDVRQDQGLIWKHWKURXJKSXWVXIIHUVDELWIRUDIHZPLQXWHVWKDWLVW\SLFDOO\OHVVRID SUREOHPWKDQWKHRQH, PWU\LQJWRVROYH7KHLPSRUWDQWWKLQJWRUHPHPEHULVWRXVHWUDFHFDOOVLQ
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
(UURU/RJJLQJ
/HWPHWHOO\RXDVWRU\WKDWKDSSHQVRIWHQLQP\SURIHVVLRQDOOLIHDQGWKDW\RX UHVXUHWRUHFRJQL]H \RXUVHOI7KHVWRU\VWDUWVZKHQ,JRWRVHHDFXVWRPHUWRGLVFXVVDQHZSURMHFW ³+L-LPP\1LFHWRVHH\RX´ ³+L-RKQ'RH1LFHWRVHH\RXWRR´ ³%HIRUHZHJHWVWDUWHGRQHRIWKHXVHUVKDGDSUREOHPODVWZHHNZLWKWKHRWKHUDSSOLFDWLRQ´ ³2KWKDW VQRWJRRG:KDWZDVWKHSUREOHP"´ ³+PP«,GRQ WUHPHPEHU,WKLQNLWZDV6DUDKRUSHUKDSVLWZDV7HG«7KHUHZDVDQHUURU PHVVDJHVD\LQJVRPHWKLQJDERXWDSUREOHP´ :KDWGR\RXGRLQWKLVVLWXDWLRQ"6XUH\RXFDQDVNWKHPWRZULWHGRZQWKHVSHFLILFHUURUPHVVDJH LQGHWDLOHYHU\WLPH%XWLWLVQ WWKHLUUHVSRQVLELOLW\WRORJLQIRUPDWLRQDERXWHUURUV²LW V\RXUV7KH VWRU\HQGVZLWK\RXVD\LQJ³1RSUREOHP, OOWDNHDTXLFNORRNLQWKHHUURUORJDQGVHHZKDWWKH SUREOHPZDVDQGSUREDEO\ZKDWFDXVHGLWWRR´,ORYHKDSS\HQGLQJV 1RWH $IULHQGRIPLQHKDVWUDLQHGKLVFOLHQWVYHU\ZHOO2QFHRQHRIKLVFOLHQWVJDYHKLPDOOWKH LQIRUPDWLRQIRXQGRQVFUHHQDWWKHHYHQWRID³EOXHVFUHHQ´ZKLFKZDVWZRKDQGZULWWHQ SDJHVIXOORIKH[FRGHV+LVFOLHQWGLGZKDWKHKDGEHHQWROGWRGR
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
7KH%XLOW,Q/RJJLQJ6ROXWLRQLQ1(7
7KHEXLOWLQVROXWLRQIRUORJJLQJLQ1(7LVDFWXDOO\DQRWKHUVXEFODVVRIWKH7UDFH/LVWHQHU FODVV FDOOHG(YHQW/RJ7UDFH/LVWHQHU,WFDQEHXVHGWROLVWHQIRUIDLOHGDVVHUWLRQVDQGWUDFHGHUURUV
0\3URSRVDOIRUD/RJJLQJ6ROXWLRQ
,QHDUOLHUORJJLQJVROXWLRQV,KDYHXVHG,ZURWHLQIRUPDWLRQDERXWSUREOHPVWRWKHHYHQWORJ, WKRXJKWDERXWXVLQJWKHGDWDEDVHEXWP\DUJXPHQWIRUQRWGRLQJVRZDVWKDWWKHSUREOHP, ZDQWHGWRORJFRXOGEHWKDWWKHGDWDEDVHVHUYHUZDVQ WXSDQGUXQQLQJ7KHWZRPDLQSUREOHPV ZLWKZULWLQJWRHYHQWORJVDUH x x
, GZDQWP\ORJJLQJVROXWLRQWRXVHDPRUHFRQYHQLHQWVWRUDJHYHKLFOHWKDQWKHHYHQWORJ,DOVR ZDQWP\VROXWLRQWR³IRUFH´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
,XVXDOO\SRSDQHUURURQHOD\HUXSRUMXVWOHDYHLW WRWKHFDOOHHXQWLO,UHDFKWKHURRWPHWKRG, KDYHWULHGWRKDYHWKHSUREOHPORJJHGLQHDFKOD\HUEXW,FRXOGQ WILQGDJRRGVROXWLRQWRWKDW ZKHQVWRUHGSURFHGXUHVFDOOVWRUHGSURFHGXUHV7KHUHDUHSUREOHPVZLWK764/HUURUKDQGOLQJDQG WKHEHVWZD\WRHVFDSHWKHPLVWRXVH5(7851 IRUUHWXUQLQJWKHUHVXOWWRDFDOOLQJVWRUHG SURFHGXUHDQG5$,6(5525 IRUUHWXUQLQJLQIRUPDWLRQIURPHDFKVWRUHGSURFHGXUHEDFNWRD1(7 FRPSRQHQWWKDWFDQWDNHFDUHRIWKHORJJLQJ 1RWH
/HW VWDNHDORRNDWWKHLQIUDVWUXFWXUHIRUWKHORJJLQJVROXWLRQ7KHGDWDEDVHWDEOHIRUWKHORJJLQJ VROXWLRQLVVKRZQLQ)LJXUH
)LJXUH'DWDEDVHWDEOHIRUWKHORJJLQJVROXWLRQ
1RWH %HIRUH1(7,XVHGDQ,17 IRUHUURUFRGHQRZDGD\V,XVHD9$5&+$5 LQVWHDGVRWKDW, FDQZULWHWKHQDPHRIWKHH[FHSWLRQLQVWHDGRID+5(68/7
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
6WRUHG3URFHGXUHVIRUWKH/RJJLQJ6ROXWLRQDQG/RJJLQJ(UURUVLQ6WRUHG 3URFHGXUHV
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³7UDQVDFWLRQV´,GLVFXVVZK\,ZDQWWREHDEOHWRUHGHFODUHWKHDWWULEXWHYDOXHVIRUWUDQVDFWLRQV
REMHFWRILWVRZQ,ZLOOGLVFXVVORFDWLRQRIREMHFWVLQFRQWH[WREMHFWVDORWLQ&KDSWHU 7KHEHVW VROXWLRQ,KDYHFRPHXSZLWKLVWRXVH[SBFPGVKHOO WRFDOORVTOZKLFKLQWXUQZLOOH[HFXWHWKH VWRUHGSURFHGXUHWKDWZLOOZULWHWRWKHMQVNHUURUBHUURUORJ WDEOH%\XVLQJWKLVWULFNWKHORJJLQJ ZLOOUXQLQLWVRZQWUDQVDFWLRQDQGWKHSUREOHPLVVROYHG7KHVROXWLRQLVDELWRIKDFNEXWLWZRUNV ILQH7RVSHHGWKLQJVXSDELW,RQO\XVHWKLVVROXWLRQZKHQ,ILQGDQDFWLYHWUDQVDFWLRQDWORJJLQJ WLPHRWKHUZLVH,VNLS WKLVH[WUDRYHUKHDGDQGMXVWFDOOWKHVWRUHGSURFHGXUHIRUORJJLQJGLUHFWO\ ,Q/LVWLQJ\RXFDQVHHWKHFRGHWKDWGHFLGHVKRZWRZULWHWRWKHMQVNHUURUBHUURUORJ WDEOH $V\RXVHHLIWKHUHLVDQDFWLYHWUDQVDFWLRQDVWRUHGSURFHGXUHLVFDOOHGLWZLOOXVH[SBFPGVKHOO DV,GHVFULEHGHDUOLHU,IWKHUHLVQ WDQDFWLYHWUDQVDFWLRQDQRWKHUVWRUHGSURFHGXUHZLOOEHFDOOHG WKDWZLOOZULWHWRWKHMQVNHUURUBHUURUORJ WDEOHGLUHFWO\ /LVWLQJ7KH6WRUHG3URFHGXUH7KDW,VWKH(QWU\3RLQWIRU/RJJLQJ &5($7( 352&('85(-QVN(UURUB/RJ#VRXUFHXGGW6RXUFH #HUURU9$5&+$5 #GHVFULSWLRQ9$5&+$5 #HUURU'DWH7LPH'$7(7,0( #RWKHU,QIRUPDWLRQ9$5&+$5 #HUURU6WDFN9$5&+$5 #XVHU,GXGGW8VHU,G $6 6(712&281721
,)##75$1&2817!%(*,1 (;(&-QVN(UURUB/RJ:ULWH,Q1HZ7UDQVDFWLRQ #VRXUFH#HUURU #GHVFULSWLRQ#HUURU'DWH7LPH#RWKHU,QIRUPDWLRQ #HUURU6WDFN#XVHU,G (1' (/6(%(*,1 (;(&-QVN(UURUB/RJ:ULWH#VRXUFH#HUURU #GHVFULSWLRQ#HUURU'DWH7LPH#RWKHU,QIRUPDWLRQ #HUURU6WDFN#XVHU,G (1' )LJXUHVKRZVDQLQWHUDFWLRQGLDJUDPIRUWKHGLIIHUHQWFDOOVWDFNVXVHGGHSHQGLQJRQZKHWKHU WKHUHLVDQDFWLYHWUDQVDFWLRQ )LJXUH,QWHUDFWLRQGLDJUDPIRUWKHGLIIHUHQWFDOOVWDFNV
)RUFRPSOHWHQHVVDQGWRPDNHLWHDVLHUWRXQGHUVWDQGWKHFRQFHSW,KDYHVKRZQWKH -QVN(UURUB/RJ:ULWH,Q1HZ7UDQVDFWLRQ LQ/LVWLQJDQG-QVN(UURUB/RJ:ULWH LQ/LVWLQJ 3OHDVHQRWHWKDW,VNLSSHGWRVKRZWKHHUURUWUDSSLQJFRGHKHUH /LVWLQJ7KH6WRUHG3URFHGXUH7KDW&UHDWHVD1HZ7UDQVDFWLRQ%HIRUH/RJJLQJ &5($7(352&('85(-QVN(UURUB/RJ:ULWH,Q1HZ7UDQVDFWLRQ #VRXUFHXGGW6RXUFH #HUURU9$5&+$5 #GHVFULSWLRQ 9$5&+$5 #HUURU'DWH7LPH'$7(7,0( #RWKHU,QIRUPDWLRQ9$5&+$5 #HUURU6WDFN9$5&+$5 #XVHU,GXGGW8VHU,G
$6
'(&/$5(#D7PS9$5&+$5 #D5HWXUQ9DOXH,17 6(712&281721
6(7#D7PS RVTO(G '%B1$0( 4-QVN(UURUB/RJ:ULWH
#VRXUFH
#HUURU
#GHVFULSWLRQ
&219(579$5&+$5 #HUURU'DWH7LPH
#RWKHU,QIRUPDWLRQ
#HUURU6WDFN
#XVHU,G
(;(&#D5HWXUQ9DOXH PDVWHU[SBFPGVKHOO#D7PS
/LVWLQJ7KH6WRUHG3URFHGXUH7KDW:ULWHVWRWKH7DEOH &5($7(352&('85(-QVN(UURUB/RJ:ULWH#VRXUFHXGGW6RXUFH #HUURU9$5&+$5 #GHVFULSWLRQ9$5&+$5 #HUURU'DWH7LPH'$7(7,0( #RWKHU,QIRUPDWLRQ9$5&+$5 #HUURU6WDFN9$5&+$5 #XVHU,GXGGW8VHU,G $6 '(&/$5(#DQ(UURU,17 #D5RZ&RXQW,17 #D7PS9$5&+$5
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³(UURU+DQGOLQJDQG &RQFXUUHQF\&RQWURO´
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
7KH/RJ 0HWKRG,WVHOI ,Q/LVWLQJ \RXFDQVHHRQHRIWKH/RJ PHWKRGVLQ-QVN,QVWUXPHQWDWLRQ(UU,WJDWKHUV DOOWKHLQIRUPDWLRQDQGWKHQVHQGVLWRYHUWR/RJ:ULWH ZKLFKZLOOVDYHWKHLQIRUPDWLRQWRWKH GDWDEDVH 1RWH 2QFHDJDLQ7U\ DQG&DWFK DUHOHIWRXWLQWKHFRGHLQ/LVWLQJEXWWKLVLVGRQH LQWHQWLRQDOO\,ZLOOGLVFXVVWKLVLVVXHDJUHDWGHDOLQWKHIROORZLQJFKDSWHUV7KDWVDLG\RX GHILQLWHO\VKRXOGXVHH[FHSWLRQKDQGOLQJLQWKHFRGHLQ/LVWLQJ)RUVRPHHUURUV\RX ZLOOORJWRWKHHYHQWORJRQO\DQGIRUVRPH HUURUV\RXZLOOSUREDEO\GRQRWKLQJDQGMXVW ³HDW´WKHH[FHSWLRQ
/LVWLQJ7KH/RJ 0HWKRG7KDW([WUDFWV$OOWKH,QIRUPDWLRQWR/RJDQG7KHQ&DOOV WKH/RJ:ULWH IRU6DYLQJWRWKH'DWDEDVH 3ULYDWH6KDUHG6XE/RJ%\9DOH[H2U'OO1DPH$V6WULQJB %\9DOVRXUFH$V6WULQJB %\9DODQ([FHSWLRQ$V([FHSWLRQB %\9DOXVHU,G$V6WULQJ 'LPDQ([FHSWLRQ1DPH$V6WULQJ B DQ([FHSWLRQ*HW7\SH7R6WULQJ 'LPD'HVFULSWLRQ$V6WULQJ B DQ([FHSWLRQ0HVVDJH 'LPDQ(UURU'DWH7LPH$V'DWH7LPH 'DWH7LPH1RZ
%XLOGWKH(UURU6WDFN 'LPDQ(UURU6WDFN$V6WULQJ B %XLOG(UURU6WDFNDQ([FHSWLRQ
:KDWRWKHULQIRUPDWLRQWRJUDE"
2QO\H[H2U'OO1DPHIRUQRZ
([WHQGODWHURQ 'LPDQ2WKHU,QIRUPDWLRQ$V6WULQJ B %XLOG2WKHU,QIRUPDWLRQH[H2U'OO1DPH
:ULWHWRWKHGDWDEDVH /RJ:ULWHVRXUFHDQ([FHSWLRQ1DPHB DQ'HVFULSWLRQDQ(UURU'DWH7LPHB DQ(UURU6WDFNDQ2WKHU,QIRUPDWLRQXVHU,G (QG6XE 1RWH $W\SLFDOH[WHQVLRQWRWKHFRGHLQ/LVWLQJFRXOGEHWRDGG(QYLURQPHQW6WDFN7UDFH WRQRWRQO\FROOHFWWKH6WDFN7UDFH IURPWKH([FHSWLRQ EXWDOVRWKHFRPSOHWHFDOOVWDFN
-QVN,QVWUXPHQWDWLRQ6HUYLFHG(UU LQKHULWVIURP-QVN,QVWUXPHQWDWLRQ(UU WRJHWWKHVDPH DGYDQWDJHVDVIRUWKH7UDFH DQG6HUYLFHG7UDFH FODVVHV$V\RXVDZLQ/LVWLQJ,GLGQ WVKRZ WKHVHUYLFHGYHUVLRQWKLVWLPHEXWLQWKHFODVVGLDJUDPLQ)LJXUH\RXFDQVHHERWKWKHFODVVHV ZLWKDOOWKHLURYHUORDGHGPHWKRGV )LJXUH&ODVVGLDJUDPVKRZLQJWKH(UU DQGWKH6HUYLFHG(UU FODVVHV
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
5HIOHFWLRQ,QWHUFHSWLRQDQG$WWULEXWHVWR
,W VWHGLRXVWRDGGVSHFLILFFRGHVQLSSHWVRYHUDQGRYHUDJDLQWRHYHU\PHWKRG,WZLOODOVRJLYH\RX FRGHWKDWLVKDUGHUWRUHDGEHFDXVH\RX³ZRQ WVHHWKHIRUHVWIRUWKHWUHHV´GXHWRDOOWKHQRLVH %HFDXVHRIWKLV,FUHDWHGDJHQHUDWRUEDFNLQWKH9%GD\VWKDWPDGHDFRS\RIDOOWKHVRXUFHFRGH DQGWKHQLQVHUWHGFRGHVQLSSHWVDWVWDQGDUGL]HGSODFHVLQWKHFRS\)RUH[DPSOHLWDGGHGFDOOVWR 7UDFH%HJLQ DQG7UDFH(QG WRDOOP\PHWKRGV:KHQLWZDVWLPHWRZRUNRQWKHFRGHDJDLQ, ZHQWEDFNWRWKHRULJLQDOVRXUFHFRGHZLWKRXWDOOWKHURXWLQHXVHGWUDFHFDOOV:KHQ,VWDUWHGWR SOD\ZLWK1(7LWZDVP\LGHDWKDW,FRXOGFRPELQHDWWULEXWHVDQGUHIOHFWLRQWRKDYHWKHFDOOV JHQHUDWHGIRUPH,QWKHIROORZLQJVHFWLRQV,ZLOOGLVFXVVVHYHUDOZD\V\RXFDQEHQHILWIURP DWWULEXWHVDQGUHIOHFWLRQLQ1(7
&XVWRP$WWULEXWHV+HOSLQJWR*HQHUDWH&RGH
:KHQ,VWDUWHGWRWKLQNDERXWFXVWRPDWWULEXWHVLQ1(7,WKRXJKWWKH\ZRXOGFRPHWRWKHUHVFXH DQGFUHDWHFRGHIRUPH8QIRUWXQDWHO\, PQRWWKHFRPSLOHUDQGWKHUHIRUH,GRQ WKDYHWKDW RSSRUWXQLW\:KDW,FDQGRLVWRDVNLIDFHUWDLQDWWULEXWHLVVHWDQGXVHWKDWLQDQRUGLQDU\,I FODXVH+RZHYHUWKLVZRQ WVDYHPHDQ\FRGHLWZLOORQO\DGGWRLW,WZLOODOVRFRVWTXLWHDELWRI UXQWLPHRYHUKHDG
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
6WLOO%HQHILWLQJIURP&XVWRP$WWULEXWHV
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
3XWWLQJ5HIOHFWLRQWR*RRG8VH2QFH$JDLQ
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
D3URJUDPPHU$VSHFW)RUPDWD3URJUDPPHU$VSHFW*HW7\SHB D3URJUDPPHU$VSHFW* 7KHUHVXOWRI/LVWLQJZRXOGWKHQEHIRULQVWDQFH*HHN\´:HZRXOGSUREDEO\JHWDPRUH XVHIXO(QXP LQWKLVFDVHE\DGGLQJWKH)ODJV DWWULEXWHEHFDXVHDSURJUDPPHUZLOOPRVWRIWHQ KDYHPRUHWKDQRQHRIWKHJLYHQDVSHFWV,Q/LVWLQJWKHVDPH(QXP DVLQ/LVWLQJLV VKRZQEXWWKLVWLPHZLWKWKH)ODJV DWWULEXWHVHW /LVWLQJ$Q(QXP:KHUHWKH)ODJV $WWULEXWH+DV%HHQ6HW )ODJV !3XEOLF(QXP3URJUDPPHU$VSHFW (DJHU *HHN\ 7RS/HYHO /D]\ (QG(QXP 1RZWKHUHVXOWRI/LVWLQJFRXOGIRUH[DPSOHEH(DJHU*HHN\7RS/HYHO EHFDXVHWKH YDULDEOHWKLVWLPHKDVWKHILUVWWKUHHELWVVHW
7KH&RQGLWLRQDO $WWULEXWH
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
&RQILJXUDWLRQ'DWD
(YHQWKRXJKWKLV LVDFKDSWHUDERXWKRZWRDGGGHEXJJLQJVXSSRUW,ZRXOGOLNHWRGLVFXVVLQPRUH GHWDLOKRZ\RXFDQGHDOZLWKFRQILJXUDWLRQGDWD,KRSHQRQHRIP\UHDGHUVDUHWKH³,GRQ WFUHDWH DQ\EXJVVR,GRQ WKDYHWRUHDGDERXWGHEXJJLQJ´W\SHVDQGKDYHWKHUHIRUHVNLSSHGWKLVFKDSWHU $VZHDOONQRZWHFKQLTXHVIRUGHDOLQJZLWKFRQILJXUDWLRQGDWDDUHFOHDUO\XVHIXOLQPDQ\VLWXDWLRQV QRWRQO\IRUDGGLQJGHEXJJLQJVXSSRUW :KHQ,UHIHUWRFRQILJXUDWLRQGDWD, PWDONLQJDERXWWKHNLQGRIFRQILJXUDWLRQGDWDWKDW\RXQHHG WRUHIUHVKRQWKHIO\VXFKDVHQDEOLQJGLVDEOLQJWUDFLQJ DVZHOODVPRUHVWDWLFFRQILJXUDWLRQGDWD VXFKDVFRQQHFWLRQVWULQJV%HIRUHZHORRNDWKRZWRGHDOZLWKFRQILJXUDWLRQGDWD, GOLNHWRVD\D IHZPRUHZRUGVDERXWWKHGDWDLWVHOI 1RWH
,W VQRWMXVWSRVVLEOHWRHQDEOHGLVDEOHWUDFLQJE\FKDQJLQJFRQILJXUDWLRQGDWD,WLVDOVR HDV\IRUH[DPSOHWRVZLWFKEHWZHHQGLIIHUHQWWUDFLQJLPSOHPHQWDWLRQVWREHXVHGE\ FKDQJLQJWKHFRQWHQWRIWKHFRQILJXUDWLRQGDWD
'LIIHUHQW7\SHVRI&RQILJXUDWLRQ 'DWD 7KHIROORZLQJDUHWKHGLIIHUHQWW\SHVRIFRQILJXUDWLRQGDWD x x x
)HWFKHGRQFHXVHGPDQ\WLPHV )HWFKHGHYHU\QRZDQGWKHQXVHGPDQ\WLPHV )HWFKHGHDFKWLPHLWLVXVHG
,MXVWPHQWLRQHGFRQQHFWLRQVWULQJVDQGWKLVNLQGRIFRQILJXUDWLRQGDWDLVDW\SLFDOH[DPSOHRI ³IHWFKHGRQFHXVHGPDQ\WLPHV´:KHQ\RXUVHUYHUDSSOLFDWLRQLVUXQQLQJLW VSHUIHFWO\ILQHWRVD\ WKDWIRUWKHDSSOLFDWLRQWRUHIUHVKWKHFRQQHFWLRQVWULQJWRZRUNZLWKDQRWKHUGDWDEDVHVHUYHU LQVWHDGRIWKHFXUUHQWRQH\RXKDYHWRVKXWGRZQ WKHVHUYHUDSSOLFDWLRQVRWKDWWKHQH[WUHTXHVW ZLOOOHDGWRWKHFRQQHFWLRQVWULQJEHLQJUHDGDJDLQDQGWKHQHZYDOXHLVWKHQIRXQG 7KHVHFRQGFDWHJRU\³)HWFKHGHYHU\QRZDQGWKHQXVHGPDQ\WLPHV´FDQEHH[HPSOLILHGZLWK VHWWLQJVIRUFRQILJXULQJWUDFLQJ
'HDOLQJZLWK&RQILJXUDWLRQ'DWDLQ9%
:KHQZHZURWH&20FRPSRQHQWVLQ9%WKH\ZHUH6LQJOH7KUHDGHG$SDUWPHQW67$ FRPSRQHQWV7KLVPHDQWWKDWLQRQHVSHFLILF67$RQO\RQHPHWKRGFRXOGUXQDWWKHVDPHWLPH7R JHWPXOWLWDVNLQJVHYHUDO67$VZHUHDYDLODEOHDWWKHVDPHWLPHIRUDSURFHVV,QWKHFDVHRIWKH &20VHUYHUDSSOLFDWLRQWKHUHZHUHDSSUR[LPDWHO\WHQ67$VPXOWLSOLHGE\WKHQXPEHURI SURFHVVRUVLQWKHPDFKLQH$VVXPHWKDW\RXZHUHXVLQJDPDFKLQHZLWKWZRSURFHVVRUV\RXU &20VHUYHUDSSOLFDWLRQZRXOGWKHQKDYHKDGDSSUR[LPDWHO\WKUHDGV(DFKWKUHDGZRXOGKDYH KDGLWVRZQSXEOLFGDWD²WKDWLVJOREDOYDULDEOHVPRGXOHJOREDOYDULDEOHVDQGVWDWLFYDULDEOHVEXW QRWPHPEHUGDWD 7KHSXEOLFGDWDZDVVWRUHGLQ:LQ V7KUHDG/RFDO6WRUDJH7/6 7KLVLPSOHPHQWDWLRQFRXOGEHDPDMRUSUREOHPLQVRPHVLWXDWLRQV'HYHORSHUVZKRGLGQ WNQRZWKDW JOREDOYDULDEOHVZHUHORFDOWRWKUHDGVDQGVKDUHGEHWZHHQXVHUVFUHDWHGKRUULEOHKDUGWRILQG EXJVEHFDXVHVHYHUDOXVHUVZHUHVKDULQJWKHJOREDOGDWD
7KH'HVLJQ3HUVSHFWLYH )LUVWUHPHPEHUWKDWLQWKLVERRNZHDUHGLVFXVVLQJZULWLQJVHUYLFHGFRPSRQHQWVDQGLWLVIURPWKLV SHUVSHFWLYHWKDW,QHHGWKHDELOLW\WRUHIUHVKWKHYDOXHVRQWKHIO\)RUDQ(;(WKLVLVQRWXVXDOO\D SUREOHPLW VMXVWDPDWWHURIUHVWDUWLQJWKH(;(+RZHYHUUHVWDUWLQJD&20VHUYHUDSSOLFDWLRQ ZLOORIWHQDIIHFWPDQ\XVHUV 1RWH ,Q&KDSWHU,SRLQWRXWWKDW\RXVKRXOGEHSUHSDUHGIRUWKHSUREOHPRIZKHQWKH&20 DSSOLFDWLRQLVVKXWGRZQDQGGLVFXVVKRZ WRSUHSDUHIRULW
%HFDXVH, PWDONLQJDERXWVHUYLFHGFRPSRQHQWVWKLVDOVRPHDQVWKDW,KDYHPRUHRSWLRQVIRUKRZ WRGHDOZLWKWKHFRQILJXUDWLRQGDWD, OOGLVFXVVWKLVPRUHODWHULQWKHFKDSWHU
&HQWUDOL]DWLRQ
3HUVLVWHQW6WRUDJH
7KHUHDUHPDQ\WHFKQLTXHVIURPZKLFKWRFKRRVH7KHIROORZLQJLVDOLVWRIDQXPEHURIWKHP DOWKRXJKWKHOLVWLVQRWH[KDXVWLYH x x x x x
8VLQJWKHXVXDOGDWDEDVH 8VLQJWKH5HJLVWU\ 8VLQJ$FWLYH'LUHFWRU\ 8VLQJ2EMHFW&RQVWUXFWLRQ2& 8VLQJDFRQILJ ILOH
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
3URWHFWHG2YHUULGHV6XE&RQVWUXFWB %\9DOFRQVWUXFW6WULQJ$V6WULQJ PB'DWD FRQVWUXFW6WULQJ (QG6XE
$QGVRPHPRUHPHWKRGV
(QG&ODVV
8VLQJDFRQILJ )LOH FRQILJ ILOHVDUHILOHVLQ;0/IRUPDWIRUKROGLQJFRQILJXUDWLRQGDWD7KH\ZHUHLQWURGXFHGLQ1(7 DVDVROXWLRQIRUKHOSLQJZLWK;&23< GHSOR\PHQW:LWK;&23< GHSOR\PHQWDVLQJOH;&23< FRPPDQGGHSOR\VDQDSSOLFDWLRQDWDQRWKHUVHUYHU7KHUHDUHQR5HJLVWU\VHWWLQJVWKDWKDYHWREH ZULWWHQQRUHJLVWUDWLRQVRI'//VDQGVRRQ
IRUWKHSURFHVV7KLVLVQRWDELJSUREOHPIRUD:LQGRZV)RUPVDSSOLFDWLRQEXWLWPLJKW EHDKXJHSUREOHPIRUD&20DSSOLFDWLRQ
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´0RQLWRULQJLQ 1(7'LVWULEXWHG$SSOLFDWLRQ'HVLJQ´ 7KHSDSHUGLVFXVVHV:LQGRZV0DQDJHPHQW ,QVWUXPHQWDWLRQ:0, DQGKRZLWFDQEHXVHGIRUXSGDWLQJFRQILJ ILOHVZKLFKLVMXVW DQRWKHUDGYDQWDJHRIWKHWHFKQLTXHRIFRQILJ ILOHV
$FFHVV0HFKDQLVPDQG7UDQVLHQW6WRUDJH
8VLQJWKH6KDUHG3URSHUWLHV0DQDJHU630 8VLQJ2EMHFW&RQVWUXFWLRQ2& 8VLQJD6KDUHG VWDWLF PHPEHU 8VLQJWKH7KUHDG6WDWLF DWWULEXWH 8VLQJ2EMHFW3RROLQJ23 1RWH
2QFHDJDLQOHW VORRNDWHDFKRIWKHVHWHFKQLTXHVLQGHWDLOVWDUWLQJZLWKWKH630 8VLQJWKH6KDUHG3URSHUWLHV0DQDJHU630 7KH6KDUHG3URSHUWLHV0DQDJHU630 LVDQROGIDLWKIXOFRPSRQHQWVHUYLFHWKDWLVVWLOODURXQG
3XEOLF)XQFWLRQ7HVW $V6WULQJ 'LPWKH([LVW$V%RROHDQ 'LPD0DQDJHU$V1HZ6KDUHG3URSHUW\*URXS0DQDJHU 'LPD*URXS$V6KDUHG3URSHUW\*URXS B D0DQDJHU&UHDWH3URSHUW\*URXS0\*URXSB 3URSHUW\/RFN0RGH6HW*HWB 3URSHUW\5HOHDVH0RGH3URFHVVWKH([LVW
'LPD3URSHUW\$V6KDUHG3URSHUW\ B D*URXS&UHDWH3URSHUW\0\3URSHUW\WKH([LVW ,I1RWWKH([LVW7KHQ D3URSHUW\9DOXH 1RZ7R6WULQJ (QG,I 5HWXUQD3URSHUW\9DOXH7R6WULQJ
(QG)XQFWLRQ (QG&ODVV
8VLQJ2EMHFW&RQVWUXFWLRQ2& ,QWKHSUHYLRXVVHFWLRQ,WDONHGDERXW2&DVDPHFKDQLVPIRUSHUVLVWHQWVWRUDJHEXWLWLVDOVRD PHFKDQLVPIRUDFFHVVLQJWUDQVLHQWVWRUDJH5HIHUWR/LVWLQJIRUDFRGHVDPSOH 8VLQJD6KDUHG 6WDWLF 0HPEHU
8VLQJD6KDUHG PHPEHUYDULDEOHLVE\QRPHDQVVSHFLILFWRVHUYLFHGFRPSRQHQWVRIFRXUVH,W VD VLPSOHDQGHIILFLHQWPHFKDQLVP,WVPDLQSUREOHPLVWKDW\RXRQO\KDYHRQHVLQJOHLQVWDQFHWKDWLV VKDUHGE\DOOXVHUVDQGWKHLUFRPSRQHQWVZKLFKFDQOHDGWRFRQFXUUHQF\FRQIOLFWVZKHQWKHYDOXH LVQ WUHDGRQO\%HFDXVHRIWKLV\RXKDYHWRSURWHFWWKHYDOXHE\ZULWLQJWKUHDGVDIHFRGH7KLV ZLOO UHVXOWLQZDLWVWDWHVLQDKLJKO\VWUHVVHGHQYLURQPHQWZKHQWKH6KDUHG PHPEHULVWREHXVHGDOO WKHWLPH0RVWRIWHQLWZRQ WFDXVH\RXDQ\SUREOHPVEXWLQVRPHVLWXDWLRQV²DV,VDLGXQGHU H[WUHPHORDG²LWPLJKWEHDVKRZVWRSSHU 7RJHWDFKHDSHUORFNLQJVROXWLRQ\RXFDQLPSOHPHQWD5HDGHU:ULWHU ORFNLQVWHDG7KDWPHDQV WKDWWKHUHPLJKWEHVHYHUDOUHDGHUVDWWKHVDPHWLPHEXWRQO\RQHZULWHU'R\RXJHWDGpMjYX IURPWKHGDWDEDVHDUHD"
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³IHWFKRQFHXVHPDQ\WLPHV´W\SHRIGDWD 1RWH %RWK2EMHFW&RQVWUXFWLRQDQG2EMHFW3RROLQJFDQEHXVHGHYHQZKHQWKHREMHFWLVORFDWHG LQWKHFRQWH[WRIWKHFDOOHUEHFDXVHQHLWKHURIWKHVHVHUYLFHVDUHEXLOWZLWKLQWHUFHSWLRQ
6XPPDU\RI3HUVLVWHQW6WRUDJHDQG$FFHVV 0HFKDQLVPV 1RWDOODFFHVVPHFKDQLVPVFDQEHXVHGZLWKDOOSHUVLVWHQWVWRUDJHPHFKDQLVPV7DEOHSUHVHQWV WKHSRVVLEOHFRPELQDWLRQV 7DEOH 3RVVLEOH&RPELQDWLRQVRI$FFHVV0HFKDQLVPVDQG3HUVLVWHQW6WRUDJH0HFKDQLVPV 630 2& 6KDUHG0HPEHU 7KUHDG 6WDWLF
'DWDEDVHVHUYHU
2.
1$
2.
2.
$FWLYH'LUHFWRU\
2.
1$
2.
2.
5HJLVWU\ 2&
FRQILJ ILOH
2. 2. 2.
1$ 2.
1$
2. 2. 2.
2. 2. 2.
23
2. 2. 2. 2. 2.
$V\RXVHHLQ7DEOHRQO\2&LVDELWLQIOH[LEOHDVDQDFFHVVPHFKDQLVPEHFDXVHLWLVVRFORVHO\ UHODWHGWRLWVVWRUDJH
+RZDQG:KHQWR5HIUHVKWKH&DFKHG&RQILJXUDWLRQ'DWD
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
(YDOXDWLRQRI&RQILJXUDWLRQ'DWD6ROXWLRQ
)RUVRPHW\SHVRIFRQILJXUDWLRQGDWDWKHGDWDZLOOEHUHDGH[WUHPHO\IUHTXHQWO\)ODJVIRUWUDFLQJ LVDJRRGH[DPSOHRIWKLV:LWKWKHVHW\SHVRIFRQILJXUDWLRQGDWDSUREDEO\WKHVLQJOHPRVW LQIOXHQWLDORIWKHIDFWRUVGLVFXVVHGLQ&KDSWHU³)DFWRUVWR&RQVLGHULQ&KRRVLQJD6ROXWLRQWRD 3UREOHP´LVSHUIRUPDQFH%HFDXVHRIWKLV,KDYHGHFLGHGQRWWRSULQWP\HYDOXDWLRQLQWKLVERRN EHFDXVH,ZLOOILQLVKWKHERRNEHIRUH1(7LVDYDLODEOHLQYHUVLRQ)RUWKLVUHDVRQ,FRQVLGHULW GDQJHURXVDQGPLVOHDGLQJWRUXQSHUIRUPDQFHWHVWV,QVWHDG\RXZLOOILQGSHUIRUPDQFHUHVXOWVDQG P\UHFRPPHQGDWLRQUHJDUGLQJFRQILJXUDWLRQGDWDDWWKHERRN V:HEVLWHDW ZZZVDPVSXEOLVKLQJFRP
7KHVHZHUHDIHZZRUGVDERXWWKHDVSHFWRIDFFHVVLQJFRQILJXUDWLRQGDWD:KHQLWFRPHVWR SHUVLVWHQWO\VWRULQJFRQILJXUDWLRQGDWD,WHQGWRILQGWKHFRQILJ VROXWLRQLVWKHEHVWRQH7KH VHFRQGEHVWLVXVLQJWKHGDWDEDVHVHUYHURU$FWLYH'LUHFWRU\
(YDOXDWLRQRI3URSRVDOV
,WLVWLPHWRHYDOXDWHP\SURSRVDOVDJDLQ7KLVWLPH,ZLOOHYDOXDWHP\WUDFLQJDQGORJJLQJ SURSRVDOVWRVHHKRZWKH\VWDQGXSWRWKHFULWHULDZHGLVFXVVHGLQ&KDSWHU
(YDOXDWLRQRIWKH7UDFLQJ3URSRVDO
,WKLQNP\WUDFLQJVROXWLRQLVPRUH³FRQVXPHUW\SHIULHQGO\´WKDQWKH EXLOWLQVROXWLRQLQ1(7 EHFDXVHLWZRUNVZHOODQGLQH[DFWO\WKHVDPHZD\ZLWK$631(7WRR,W VDOVRHDV\WRFROOHFWWUDFH LQIRUPDWLRQIURPVHYHUDOSURFHVVHVLQRQHVLQJOHOLVWRIWUDFHFDOOV ,W VH[WUHPHO\LPSRUWDQWWKDWWKHWUDFLQJVROXWLRQGRHVQ WFUHDWHDORWRIRYHUKHDGHVSHFLDOO\ZKHQ HYHU\WKLQJLQWKHV\VWHPLVILQHDQGQRERG\LVOLVWHQLQJ0\SURSRVDOLVDWDKLJKDEVWUDFWLRQOHYHO EHFDXVHLWLVDGGHGGLUHFWO\LQWKHVRXUFHFRGH,W VQRWZLWKRXWSHQDOWLHVWRSHUIRUPDQFHDQG VFDODELOLW\EXWVWLOO,WKLQNWKDWLQUHDOZRUOGDSSOLFDWLRQVWKHRYHUKHDGLVQRWWRRKLJK
:KDW V1H[W"
1(7RSHQVXSDORWRIQHZSRVVLELOLWLHVIRU\RXWRGHVLJQ\RXUV\VWHPDQGLWVGLIIHUHQWSDUWV
5HIHUHQFHV
-5REELQV'HEXJJLQJ$SSOLFDWLRQV0LFURVRIW3UHVV KWWSPVGQPLFURVRIWFRPPVGQPDJWKH³%XJVOD\HU´FROXPQ KWWSZZZV\VLQWHUQDOVFRP'HEXJ9LHZ .%HFN([WUHPH3URJUDPPLQJ([SODLQHG(PEUDFH&KDQJH$GGLVRQ:HVOH\ KWWSPVGQPLFURVRIWFRPOLEUDU\GHIDXOWDVS"XUO OLEUDU\HQ XVRGVVTORGVBBFRQBBV]DVS 66XQGEODGDQG36XQGEODG'HVLJQLQJIRU6FDODELOLW\ZLWK0LFURVRIW:LQGRZV'1$0LFURVRIW 3UHVV 7(ZDOG7UDQVDFWLRQDO&20%XLOGLQJ6FDODEOH$SSOLFDWLRQV$GGLVRQ:HVOH\ KWWSZZZUD]RUVRIWQHW VHH7UDFH+RRN1(7 $-H]LHUVNLDQG(-H]LHUVNL0RQLWRULQJLQ1(7'LVWULEXWHG$SSOLFDWLRQ'HVLJQ KWWSPVGQPLFURVRIWFRPOLEUDU\HQXVGQEGDKWPOPRQLWRUGRWQHWDVS
&KDSWHU$UFKLWHFWXUH ,17+,6&+$37(5 x x x x x x x
7KUHH([DPSOHVRI$UFKLWHFWXUHV 6DPSOH$SSOLFDWLRQ$FPH+HOS'HVN 0\$UFKLWHFWXUH3URSRVDO$1(7$GMXVWHG9HUVLRQRI'1$ 1HZ&RQFHSWVWR&RQVLGHU:KHQ&UHDWLQJD1HZ$UFKLWHFWXUH7RGD\ 3K\VLFDO3DUWLWLRQLQJ 3URSRVDOVIRU6WDQGDUGL]HG&RGH6WUXFWXUHV (YDOXDWLRQRI3URSRVDOV
6RIDUZHKDYHGLVFXVVHGZD\VLQZKLFK\RXFDQSUHYHQWSUREOHPVE\SODQQLQJDQGWHVWLQJLQWKH EHJLQQLQJSKDVHVRIDSURMHFW2QHH[DPSOHZDVWRDGGVXSSRUWIRUWUDFLQJWR\RXUFRPSRQHQWV DQGVWRUHGSURFHGXUHVHDUO\+RZHYHUWKHPRVWLPSRUWDQWDVSHFWRIDSURMHFWLQWHUPVRI SUHSDUDWLRQLVGHFLGLQJRQLWVDUFKLWHFWXUH,QPDNLQJVXFKSUHSDUDWLRQ\RXVKRXOGWKLQNLQWHUPV RIVFDOH,I\RXUSURMHFWKDVDVPDOOVFDOHVXFKDVRQO\RQHRUDIHZHQGXVHUVDVKRUWDSSOLFDWLRQ OLIHH[SHFWDQF\DQGRQO\RQHGHYHORSHU KDYLQJDZHOO±WKRXJKWRXWDUFKLWHFWXUHLVQ WDOOWKDW LPSRUWDQW2QWKHRWKHUKDQGLI\RXNQRZWKDWWKHDSSOLFDWLRQZLOOVXSSRUWPDQ\XVHUVRULI\RX ZDQWWRSUHSDUHIRUIXWXUHJURZWKLQDQ\ZD\DJRRGDUFKLWHFWXUDOSODQLVFUXFLDO$QGUHPHPEHUD VKRUWOLIHH[SHFWDQF\IRUDV\VWHPFDQDFWXDOO\ODVWDYHU\ORQJWLPHPDNLQJLWQRIXQWRKDYHD TXLFNDQGGLUW\V\VWHPWRPDLQWDLQIRU\HDUV0HDQZKLOH1(7&RPSRQHQW6HUYLFHVDQG64/ 6HUYHUDUHDOVRYHU\PXFKDERXWVFDOH
7KUHH([DPSOHVRI$UFKLWHFWXUHV
$VZHDOONQRZDYDVWQXPEHURIDUFKLWHFWXUHH[DPSOHVKDYHEHHQSUHVHQWHGLQOLWHUDWXUHDQG PDJD]LQHVRYHUWKHODVWIHZ\HDUV7RQDUURZWKHVFRSHLQWKLVFKDSWHU,ZLOOGLVFXVVRQO\ H[DPSOHVZKHUHUHODWLRQDOGDWDEDVHVDUHXVHGEHFDXVHWKDWLVWKHPRVWW\SLFDOGDWDEDVHWHFKQLTXH IRUEXVLQHVVDSSOLFDWLRQV7KLVVHFWLRQZLOOORRNDWWKUHHVXFKH[DPSOHVDGDWDEDVH LQGHSHQGHQW DQGSXUHREMHFWRULHQWHGDUFKLWHFWXUHDGDWDEDVHFHQWULFDUFKLWHFWXUHDQGWKHFODVVLF:LQGRZV '1$DUFKLWHFWXUH
([DPSOH7KH'DWDEDVH,QGHSHQGHQWDQG3XUH2EMHFW 2ULHQWHG $UFKLWHFWXUH
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
([DPSOH7KH'DWDEDVH&HQWULF$UFKLWHFWXUH
6RPHDUFKLWHFWVDQGGHYHORSHUV²P\VHOILQFOXGHG²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
([DPSOH7KH&ODVVLF:LQGRZV'1$$UFKLWHFWXUH
0LFURVRIW VILUVWDWWHPSWDWJLYLQJDUFKLWHFWXUDOJXLGDQFHZDVZKHQWKH\VXJJHVWHGXVLQJ:LQGRZV '1$DVDZD\WREXLOGQWLHUDSSOLFDWLRQV&RPSDUHGWRSXUHREMHFWRULHQWHGDUFKLWHFWXUHVWKLV DUFKLWHFWXUHSDLGPRUHDWWHQWLRQWRSK\VLFDODVSHFWV²IRUH[DPSOHYDOXHW\SHVLQVWHDGRI UHIHUHQFHVZHUHVHQWRYHUWKHQHWZRUNEHWZHHQWLHUV7KHFRQFHSWZDVWDUJHWHGDWXVLQJ0LFURVRIW SURGXFWVDQGWHFKQRORJLHVVXFKDV$63&20DQG64/6HUYHU7KHUHKDYHEHHQWKRXVDQGVRI DSSOLFDWLRQVEXLOWLQWKLVVW\OH7KHDSSURDFKLVSUHWW\PXFKVWUXFWXUHGXSRQOD\HUV )LJXUH VKRZVDSLFWXUH\RXSUREDEO\KDYHVHHQPRUHWLPHVWKDQ\RXFDQUHPHPEHUGHVFULELQJWKH GLIIHUHQWOD\HUVDFFRUGLQJWR:LQGRZV'1$ )LJXUH&ODVVLF:LQGRZV'1$WLHUV3UHVHQWDWLRQ%XVLQHVV/RJLFDQG'DWD
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
6DPSOH$SSOLFDWLRQ$FPH+HOS'HVN
%HIRUH,SUHVHQWP\RZQDUFKLWHFWXUHSURSRVDO, OOEULHIO\GLVFXVVWKHVDPSOHDSSOLFDWLRQWKDW, P JRLQJWRXVHIRUWKHH[DPSOHVIURPQRZRQ 2YHUWKHFRXUVHRIP\FDUHHU,KDYHEXLOWVHYHUDOGLIIHUHQWDSSOLFDWLRQVIRUHUUDQGKDQGOLQJIRU KHOSGHVNVDPRQJRWKHUWKLQJV&KDQFHVDUHWKDW\RXKDYHEXLOWVLPLODUDSSOLFDWLRQVRUKDYHKDG VRPHSUDFWLFDOH[SHULHQFHZLWKRQH,QDQ\FDVHLWVKRXOGEHHDV\IRU\RXWRTXLFNO\JHWDQLGHDRI WKHQDLYHYHUVLRQRIWKHVDPSOHDSSOLFDWLRQ, PJRLQJWRSUHVHQWKHUH)LUVWOHW VWDNHDORRNDWWKH VDPSOHDSSOLFDWLRQ VUHTXLUHPHQWV
6DPSOH$SSOLFDWLRQ5HTXLUHPHQWV
6RPHRI WKHUHTXLUHPHQWVIRUWKLVVLPSOLILHGYHUVLRQRIWKHDSSOLFDWLRQDUHDVIROORZV x x x x
8VHUVVKRXOGEHDEOHWRUHSRUWDQHUUDQGWKHUHE\UHYHDOLQJDORWRILQIRUPDWLRQDERXWWKH SUREOHPLQTXHVWLRQ 7KHSUREOHPVROYHUVVKRXOGEHDEOHWRORJDOODFWLRQVWDNHQWRVROYHWKHSUREOHP 7KHSUREOHPVROYHUVVKRXOGEHDEOHWRURXWHWKHUHVSRQVLELOLW\RIVROYLQJWKHSUREOHP 7KHXVHUZKRUHSRUWHGWKHHUUDQGVKRXOGEHDEOHWRVHHKRZWKHSUREOHPKDVDWWHPSWHGWR KDYHEHHQVROYHGSUHFLRXVO\
1RZOHW VPRYHRQWRWKHGDWDEDVH VFKHPD
6DPSOH$SSOLFDWLRQ'DWDEDVH6FKHPD )LJXUHVKRZVWKHGDWDEDVHVFKHPDRIWKHVDPSOHDSSOLFDWLRQ$V\RXFDQVHHPDQ\FROXPQV WDEOHVDQGUHODWLRQVKLSVDUHPLVVLQJIURPWKLVILJXUH+RZHYHUWKHILJXUHLVPHDQWWRSURYLGHD VLPSOHGDWDEDVHWRVKRZDUFKLWHFWXUHDQGRWKHUWHFKQLTXHV )LJXUH7KHVLPSOHGDWDEDVHVFKHPDIRUWKHVDPSOHDSSOLFDWLRQ$FPH+HOS'HVN VKRZLQJWKHHUUDQG DQGDFWLRQ WDEOHV
)URPWKLVSUHVHQWDWLRQRIWKHVDPSOHDSSOLFDWLRQ\RXPLJKWWKLQNWKDW,EHOLHYHPRGHOLQJVKRXOGEH GRQHIURPWKHGDWDEDVHXS7KLVLVQRWWKHFDVH,DPVKRZLQJLWWKLVZD\RQO\WRSURYLGHD EDFNJURXQGIRUGLVFXVVLQJWKHDUFKLWHFWXUH 7KHWZRH[WUHPH²DQGTXLWHSRSXODU²LGHDVIRUPRGHOLQJDUHWR x x
&UHDWHWKHGDWDEDVHPRGHOPRUHRUOHVVDXWRPDWLFDOO\LQDFFRUGDQFHZLWKKRZWKH FRPSRQHQWVZHUHFUHDWHG &UHDWHWKHFRPSRQHQWVPRUHRUOHVVDXWRPDWLFDOO\LQDFFRUGDQFHZLWKKRZWKHGDWDEDVH PRGHOZDVFUHDWHG
$VDOZD\V,WKLQNWKHDQVZHUOLHVVRPHZKHUHLQEHWZHHQDQGWKDWJRHVIRUWKHPRGHOLQJH[DPSOH DVZHOO'DWDEDVHPRGHOLQJLVVRPHWKLQJRIDSDUDOOHODFWLYLW\WRREMHFWPRGHOLQJ7\SLFDOTXHVWLRQV IDFHGDUH:KDWPHWKRGVDUHQHHGHG":KDWGDWDLVQHHGHGIRUWKLVXVHFDVH":KDWPXVWWKLVXVH FDVHORRNOLNHWRVXSSRUWWKLVGDWD"DQGVRRQ
0\$UFKLWHFWXUH3URSRVDO$1(7$GMXVWHG9HUVLRQRI'1$
$V,ZULWHWKLVERRNWKHUHLVQ WPXFKJXLGDQFHRQDUFKLWHFWXUHLQWKH1(7ZRUOG*LYHQWKLVGHDUWK , GOLNHWRVWLFNP\QHFNRXWDQGSUHVHQWZKDWLVFXUUHQWO\P\SUHIHUUHGDUFKLWHFWXUHSURSRVDO,Q GRLQJVR,ZLOOFRPELQHP\H[SHULHQFHZLWKGLIIHUHQWDUFKLWHFWXUHV,KDYHVXFFHVVIXOO\LPSOHPHQWHG RYHUWKH\HDUVZLWKP\NQRZOHGJHRI1(7)LUVWZH OOGLVFXVVWKHNH\DVVXPSWLRQVXQGHUO\LQJP\ SURSRVDODQGWKHQZH OOORRNDWWKHDUFKLWHFWXUHSURSRVDOOD\HUE\OD\HUFLWLQJRWKHULPSRUWDQW FRQVLGHUDWLRQV
0\3URSRVDO%XLOGLQJ%ORFNV
%HIRUH,H[SODLQP\DUFKLWHFWXUHSURSRVDOLQGHWDLOLW VLPSRUWDQWWKDW\RXXQGHUVWDQGDIHZRILWV NH\DVVXPSWLRQVDQGFRPSRQHQWV
6HUYLFHG&RPSRQHQWV 7KURXJKRXWWKLVERRN,ZLOOXVHVHUYLFHGFRPSRQHQWVWRDVVLVWZLWKHQWHUSULVHLQIUDVWUXFWXUH VHUYLFHV([DPSOHVRIVHUYLFHVWKDW,ZLOOXVHLQVXLWDEOHVLWXDWLRQVDUHDVIROORZV x x x
2EMHFWSRROLQJ 7UDQVDFWLRQVDQG-XVW,Q7LPH-,7 DFWLYDWLRQ 6\QFKURQL]DWLRQ
0RUHRUOHVVDXWRPDWLFDOO\,ZLOODOVRUHFHLYH x x
5HVRXUFHSRROLQJ $GPLQLVWUDWLYHDQGSURGXFWLRQVXSSRUW
7KHFKRLFHWRXVHVHUYLFHGFRPSRQHQWVZLOODIIHFWWKHDUFKLWHFWXUHEHFDXVHVHUYLFHGFRPSRQHQWV VHWDQXPEHURIUXOHVIRU1(7FRPSRQHQWVVXFKDVVWDWLQJWKDWQRQGHIDXOWFRQVWUXFWRUVDQG VKDUHGPHWKRGVDVHQWU\SRLQWVFDQ WEHXVHG 1RWH :KHQVHUYLFHGFRPSRQHQWVDUHXVHG1(7VHFXULW\PXVWEHRSHQHGXS2QWKHRWKHU KDQGLW VTXLWHFRPPRQWREHIRUFHGWRWUXVWVHUYHUVLGHFRPSRQHQWV:LWKRUZLWKRXW 1(7VHFXULW\WKLVFDQEHDVHFXULW\ULVN
6WRUHG3URFHGXUHV ,VWURQJO\EHOLHYHWKDWLWLVH[WUHPHO\LPSRUWDQWWRXVHVWRUHGSURFHGXUHV:KLOHWKHUHDUH GUDZEDFNVVXFKDVODFNRISRUWDELOLW\DQGDUHTXLUHPHQWIRU764/VNLOOVWKHUHDUHPDQ\PRUH DGYDQWDJHVLQXVLQJVWRUHGSURFHGXUHVLQFOXGLQJWKHIROORZLQJ x x x x x x x
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²EHLQJDXWKRUL]HGWRXVHWKHVWRUHGSURFHGXUHLVQ WHQRXJK$JRRGVROXWLRQ LVWREHYHU\UHVWULFWLYHUHJDUGLQJWKHWDEOHVEXWWRXVHYLHZVXVHUGHILQHGIXQFWLRQV 8')V LQWKHG\QDPLF64/DQGWKHQJLYHRXWHQRXJKULJKWVWRWKHYLHZV8')V
,IDOOGDWDEDVHDFFHVVLVGRQHWKURXJK\RXUVWRUHGSURFHGXUHV\RXJHWDFRQWUROOHGVHWRIHQWU\ SRLQWV:K\LVWKLVJRRG" x x x x
$XGLWLQJLVHDVLO\VROYHG 'LVFRQQHFWHGSHVVLPLVWLFORFNLQJLVHDVLO\VROYHG 'DWDFORVHEXVLQHVVUXOHVFDQEHSXWLQVWRUHGSURFHGXUHV 7KHUHLVQRQHHGIRU WULJJHUVZKLFKLVJRRGIRUGHEXJJDELOLW\DQGPDLQWDLQDELOLW\ 1RWH ,QVWHDGRIXVLQJWKHSXEOLFVWRUHGSURFHGXUHVDVHQWU\SRLQWVIRUDXGLWLQJ\RXFDQXVHWKH WUDQVDFWLRQORJLWVHOILQ64/6HUYHU7KHORJFDQ WEHXVHGGLUHFWO\ZLWKRUGLQDU\6(/(&7 VWDWHPHQWVRUZLWKDQHGLWRUEXWWKHUHDUHSURGXFWVWKDWFDQKHOS2QHSUREOHPZLWKWKLV VROXWLRQLVLI\RXZDQWWRDXGLW6(/(&7VWRR
, PQRWFRQYLQFHGWKDWWKHXVH RIVWRUHGSURFHGXUHVLVRQO\QHJDWLYHLQWKHSRUWDELOLW\VHQVH:KHQ ,KDYHUHYLHZHGV\VWHPVZKHUHVWRUHGSURFHGXUHVKDYHQ WEHHQXVHGEHFDXVHRISRUWDELOLW\ UHDVRQVWKH\KDYHKDGWKH64/FRGHVSUHDGDOORYHUWKHSODFHDQGWKH64/FRGHKDVEHHQIXOORI GDWDEDVHVSHFLILFFRQVWUXFWV,I\RXSXWDOO64/LQVWRUHGSURFHGXUHV\RXKDYHLWDWOHDVWDWRQH SODFHDQGLI\RXVWD\64/±FRPSOLDQWZKHQSRVVLEOHDORWRIWKHFRQWHQWRI\RXUVWRUHG SURFHGXUHVLVSRUWDEOH ,Q&KDSWHU³%XVLQHVV5XOHV´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
$UH6WRUHG3URFHGXUHVRI/HVV,PSRUWDQFH WR2UDFOH"
,KDYHJRWWHQWKHLPSUHVVLRQVHYHUDOWLPHVIURPGLIIHUHQWVRXUFHVWKDWLWLV PRUHLPSRUWDQWWRXVHVWRUHGSURFHGXUHVZLWK64/6HUYHUWKDQZLWKVD\ 2UDFOH%HFDXVH,GRQ WKDYHFXUUHQWH[SHULHQFHZLWK2UDFOH,DVNHGP\ IULHQGDQGH[SHULHQFHGGHYHORSHU0LFKDHO'/RQJDERXWWKLV+HWROGPH WKDWVWRUHGSURFHGXUHVDUHMXVWDVLPSRUWDQWIRURSHUDWLRQVWKDWZLOO XSGDWHDODUJHQXPEHURIURZV³2UDFOH'DWD%DVH$GPLQLVWUDWRUV'%$V ZLOOEHRIWKHRSLQLRQWKDWVWRUHGSURFHGXUHVZLOOLPSURYHRYHUDOOVFDODELOLW\ RIWKHGDWDEDVHVHUYHU´0LFKDHOVD\V³EXW,KDYHREVHUYHGWKDWWKH LQHIILFLHQF\RIWKHFOLHQWOD\HUFDQKDYHMXVWDVPXFKLPSDFW´
,QDGGLWLRQGXULQJ0LFKDHO VEHQFKPDUNLQJRI2UDFOH[[DQG LDQG KHWROGPHKHREVHUYHGWKDWIRURSHUDWLRQVLQYROYLQJ DVLQJOHURZ,16(57 RU83'$7(DG\QDPLF64/VWDWHPHQWXVHGIHZHU UHVRXUFHVDQGUHTXLUHGOHVVWLPHWKDQFDOOLQJDVWRUHGSURFHGXUHWR SHUIRUPWKHVDPHDFWLYLW\0LFKDHOVD\V³7KHFKDUDFWHULVWLFLVPRUHDVLGH HIIHFWRIWKHFOLHQWVWDFNWKDQWKHHIILFLHQF\RI2UDFOH6HUYHU7KHFKDWWHU EDFNDQGIRUWKEHWZHHQWKHFOLHQWDQGVHUYHULVJUHDWHUZKHQVHWWLQJXS WKHVWRUHGSURFHGXUH7KH/XFHQW'%$VKDGQRWHGVWUDQJH64/VWDWHPHQWV EHLQJH[HFXWHG2UDFOH V%XJ'LDJQRVLVDQG(VFDODWLRQWHDPODWHUIRXQG WKHVHZHUHJHQHUDWHGE\WKH0LFURVRIWGDWDDFFHVVOD\HU´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³'DWD$FFHVV´
0\$UFKLWHFWXUH3URSRVDO7LHUE\7LHUDQG/D\HUE\/D\HU
$V,KDYHVDLGP\SURSRVDOLVPRVWO\LQVSLUHGE\:LQGRZV'1$+RZHYHULWLVPRUHGDWDEDVH IRFXVHGWKDQLV:LQGRZV'1$WKDWLVLWLVIRFXVHGRQVROYLQJDOODFWLRQVZLWKRQHVLQJOHURXQGWULS EHWZHHQWLHUV,QDGGLWLRQ,KDYHDGDSWHGLWWR1(7)LJXUHLVDQRYHUYLHZRIP\DUFKLWHFWXUH SURSRVDO VGLIIHUHQWOD\HUVDQGWKHLUUHODWLRQVKLSV7KHILJXUHDOVRVKRZVWLHUPHPEHUVKLSIRUWKH GLIIHUHQWOD\HUV )LJXUH0\DUFKLWHFWXUHSURSRVDO VGLIIHUHQWWLHUVOD\HUVDQGWKHLUUHODWLRQVKLSV
7KHILUVWLPSUHVVLRQ\RXJHWPLJKWEHRQHRIRYHUNLOO3OHDVHUHPHPEHUWKDWWKLVDUFKLWHFWXUH VKRXOGEHXVHGDVDVWDUWLQJSRLQWDQGRIWHQVHYHUDOOD\HUVZLOOEHVNLSSHGRUPHUJHGWRJHWKHU ,W VH[WUHPHO\LPSRUWDQWWKDW\RXDGDSWWKHDUFKLWHFWXUHWR\RXUVSHFLILFDSSOLFDWLRQDQGVLWXDWLRQ 1RWH )LJXUHVKRZVRQO\WKHOD\HUVSDFNDJHVLQ8QLILHG0RGHOLQJ/DQJXDJH>80/@ SDUODQFH UHJDUGLQJWKHPDLQFDOOVWDFNIRUXVHFDVHV7KHUHZLOORIFRXUVHEHVHYHUDO KHOSHUFODVVHVDQGSDFNDJHVDVZHOO6RIDU\RXKDYHEHHQLQWURGXFHGWR -QVN,QVWUXPHQWDWLRQ LQ&KDSWHU³7HVWLQJ´DQG&KDSWHU³$GGLQJ'HEXJJLQJ 6XSSRUW´
$VVHPEO\DQG/D\HU /D\HUVDUHRIWHQLPSOHPHQWHGDVVHSDUDWHDVVHPEOLHVEXW,FDQWKLQNRISXWWLQJWKH&RQVXPHU OD\HUDQG&RQVXPHU+HOSHUOD\HULQRQHDVVHPEO\RUH[H DQGWKH'RPDLQOD\HUDQGWKH3HUVLVWHQW $FFHVVOD\HULQDQDVVHPEO\RUGOO 7KLVLVHVSHFLDOO\WKHFDVHIRUVPDOOHUV\VWHPVDQGRUZKHQLW V QRWLPSRUWDQWWRKDYHWKHSRVVLELOLW\WRGLVWULEXWHDQGGHSOR\FKDQJHGOD\HUVLQLVRODWLRQ(YHQVR WKHGHIDXOWVROXWLRQLVWROHWHDFKOD\HUEHDQDVVHPEO\RILWVRZQ 3URSRVDO8VHGIRU6DPSOH$SSOLFDWLRQ$FPH+HOS'HVN ,I,DSSO\WKHFRQFHSWXDODUFKLWHFWXUHWRWKHVDPSOHDSSOLFDWLRQ$FPH+HOS'HVNGLVFXVVHGHDUOLHULW ZLOODSSHDUDVLQ)LJXUH$V\RXFDQVHH,KDYHSURYLGHGSK\VLFDOQDPHVLQWKHSDFNDJHV7KH QDPHVSDFHVDQGQDPHVRIDVVHPEOLHVZLWKH[HRUGOODVH[WHQVLRQ ZLOOEH
)LJXUH0\DUFKLWHFWXUHSURSRVDODSSOLHGWRWKHVDPSOHDSSOLFDWLRQ$FPH+HOS'HVN
x x x x x
$FPH+HOS'HVN IRUWKH&RQVXPHUOD\HU $FPH+HOS'HVN&RQVXPHU+HOSHU IRUWKH&RQVXPHU+HOSHUOD\HU $FPH+HOS'HVN$SSOLFDWLRQ IRUWKH$SSOLFDWLRQOD\HU $FPH+HOS'HVN'RPDLQ IRUWKH'RPDLQOD\HU $FPH+HOS'HVN3HUVLVWHQW$FFHVV IRUWKH3HUVLVWHQW$FFHVVOD\HU
,ZLOOSURYLGHDWKRURXJKGLVFXVVLRQDERXWHDFKOD\HUVKRUWO\ 1RWH ,ZLVKZHKDGVXFKDWKLQJDVQDPHVSDFHVIRUVWRUHG SURFHGXUHVWRREXWXQIRUWXQDWHO\ ZHGRQ W,SUHIL[P\SXEOLFVWRUHGSURFHGXUHVZLWKDB WRFDWHJRUL]HWKHVWRUHG SURFHGXUHV
/HW VQRZGHOYHGHHSHULQWRWKHGLIIHUHQWWLHUVDQGOD\HUVRIP\DUFKLWHFWXUHSURSRVDO,QWKLV GLVFXVVLRQ,ZLOOXVHDQH[DPSOHLQZKLFKWKHXVHUZDQWVWROLVWDOOHUUDQGVWKDWKDYHV\PEROLF QDPHVVXFKDV³3ULQWHU ´RUDOOHUUDQGVIRUDVSHFLILFUHSRUWHUEHLQJUHSRUWHGEHWZHHQWZRGDWHV 7KHQWKHXVHUFDQVHOHFWRQHRIWKHHUUDQGVLQWKHOLVWWRVHHDOOWKHGHWDLOHGLQIRUPDWLRQDERXWWKDW HUUDQGLQFOXGLQJLWVDFWLRQV &RQVXPHU7LHU 7KHFRQVXPHUWLHUFDQGLIIHUDORWGHSHQGLQJRQZKLFKFRQVXPHUW\SHLVXVHG)RU:LQGRZV)RUPV LWLVW\SLFDOO\RQHH[HFRQWDLQLQJERWKWKH&RQVXPHUOD\HUDQGWKH&RQVXPHU+HOSHUOD\HU)RU:HE )RUPVLWZLOOEHDGOORQFHDJDLQFRQWDLQLQJERWKOD\HUV$VPHQWLRQHGHDUOLHUDQRWKHUW\SLFDO VROXWLRQLVWROHWWKH&RQVXPHU+HOSHUOD\HUEHLQDVHSDUDWHGOO &RQVXPHU/D\HU
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x x x
7KH\HDVLO\WDNHDGYDQWDJHRISDUWLWLRQVZKLFKLVDQHZIHDWXUHLQ&20 7KH\FDQKLGHZKHWKHUWKHVHUYLFHGFRPSRQHQWLVXVHGDVD TXHXHGFRPSRQHQW 7KH\KLGHZKDWFODVVLVSURYLGLQJWKHUHDOLPSOHPHQWDWLRQ
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³WKLQ´DVSRVVLEOHDQGIDFWRURXW ORJLF$JRRGSODFHWRSXWWKH ORJLFLVLQWKH&RQVXPHU+HOSHUOD\HUEHFDXVHVHYHUDOIRUPVFDQW\SLFDOO\VKDUHRQHKHOSHUFODVV 7KH&RQVXPHU+HOSHUOD\HUFDQDOVRSURYLGHEDVLFLQSXWKHOSVRWKDWWKHHQGXVHUKDVDVPDOOHUULVN RIJLYLQJLQFRUUHFWGDWDWKDWZLOOEHFDXJKWE\WKHEXVLQHVVUXOHVLQ³ODWHU´OD\HUV +LGLQJ&RQVXPHU6LGH&DFKLQJ ,QVRPHVLWXDWLRQVLW VYDOXDEOHWRKDYHFRQVXPHUVLGHFDFKLQJ,ILWLVWKHFRQVXPHUOD\HU VKRXOGQ WEHDZDUHRILWRUKDYHWRFRGHDSSURSULDWHO\IRULW,QVWHDGWKH&RQVXPHU+HOSHUOD\HU FDQKLGHFRQVXPHUVLGHFDFKLQJVRWKDWZKHQWKH&RQVXPHUOD\HUDVNVIRUDVSHFLILFSLHFHRIGDWD WKH&RQVXPHU+HOSHUOD\HUSURYLGHVLW,IWKH&RQVXPHU+HOSHUOD\HUILQGVWKHGDWDLQWKHFDFKHRU DVNVWKH$SSOLFDWLRQOD\HUIRULWLWGRHVQ WPDWWHUWRWKH&RQVXPHUOD\HU 1RWH
,QHDUOLHUDWWHPSWVZLWKFRQVXPHUVLGHFDFKLQJ,KDGDFDFKHFODVVWKDWIRUH[DPSOHWKH 8VHU,QWHUIDFH8, IRUPILUVWFKHFNHGWRVHHLILWZDVXSWRGDWH,ILWZDVQ WWKH $SSOLFDWLRQOD\HUZDVFRQWDFWHG,QWKLVFDVHWKHFDFKLQJGHILQLWHO\ZDVQ WWUDQVSDUHQWWR WKHFRQVXPHU,WZDVDPDLQLQJUHGLHQWRIWKHSURJUDPPLQJPRGHO,FRQVLGHUWKLVD PLVWDNH,QIRUPDWLRQKLGLQJLVSUHIHUDEOH
7UDQVODWLQJ(UURU0HVVDJHV 7KH&RQVXPHU+HOSHUOD\HUFDQKHOSWUDQVODWHHUURUPHVVDJHVQRWRQO\EHWZHHQODQJXDJHVEXW DOVRIURPSURJUDPPHUIULHQGO\PHVVDJHVWRHQGXVHU±IULHQGO\PHVVDJHV $FWLQJDV3UR[\+LGLQJ6WDWHOHVV%XVLQHVV7LHU 7KH&RQVXPHU+HOSHUOD\HUVKRXOGEHGHVLJQHGVRWKDWFDOOVEHWZHHQWKH&RQVXPHUKHOSHUDQGWKH VHUYLFHGFRPSRQHQWDUHIHZDQGHIILFLHQWEHFDXVHWKHUHZLOORIWHQEHSURFHVVWRSURFHVV FRPPXQLFDWLRQEHWZHHQWKH&RQVXPHUWLHUDQGWKH%XVLQHVVWLHU7KLVUHTXLUHVWKHVW\OHRI³RQH PHWKRGFDOOSHUXVHFDVH´ZKLFKLVHIILFLHQWEXWOHVVLQWXLWLYH WKDQDQRUGLQDU\REMHFWEDVHGVW\OH ZKHUHVRPHSURSHUWLHVDUHVHWDQGWKHQVRPHPHWKRGVDUHFDOOHG7KHKHOSHUREMHFWZLOODFWDVD SUR[\DQGFDQKLGHWKH³ODUJH´PHWKRGFDOOVDQGSURYLGHDQRUGLQDU\REMHFWEDVHGVW\OHLQVWHDG 1RWH
5HFRYHULQJIURP3UREOHPV 7KH&RQVXPHU+HOSHUOD\HUFDQGLVFRYHUDQGUHFUHDWHDQLQVWDQFHZKHQWKHVHUYHUVLGHLQVWDQFHLV ORVWEHFDXVHWKH&20DSSOLFDWLRQKDVEHHQVKXWGRZQ7KH&RQVXPHU+HOSHUOD\HUFDQDOVRKHOS WRUHFRYHUIURPGHDGORFNV 1RWH ,ZLOOGLVFXVV IXUWKHUWKHSUREOHPVZLWKVKXWGRZQDQGGHDGORFNVLQ&KDSWHU³(UURU +DQGOLQJDQG&RQFXUUHQF\&RQWURO´
$W\SLFDO&RQVXPHU+HOSHUFODVVFRXOGORRNDVVKRZQLQ)LJXUH7KHUH\RXFDQVHHWKH (UUDQG%URZVLQJ+HOSHU FODVV,QWKLVH[DPSOHRQO\WKUHHRIZKLFKWZRDUHRYHUORDGHG PHWKRGV DUHVKRZQIRUIHWFKLQJDOLVWRIHUUDQGVDQGIHWFKLQJDOOGHWDLOVDERXWDVSHFLILFHUUDQGE\,' )LJXUH ([DPSOHRID&RQVXPHU+HOSHUFODVV
$V\RXFDQVHHLQ)LJXUH(UUDQG%URZVLQJ+HOSHU LQKHULWVIURP -QVN&RQVXPHU&RQVXPHU+HOSHU-QVN&RQVXPHU&RQVXPHU+HOSHU LPSOHPHQWV,'LVSRVDEOHWKDW ZD\WKHDPRXQWRIFRGHIRU(UUDQG%URZVLQJ+HOSHU ZLOOEHUHGXFHGDQGWKHSDWWHUQLVVLPLODUWR
KRZWKHVHUYLFHGFRPSRQHQWVDUHEXLOW,W VDOVRWKHFDVHWKDWWKH-QVN&RQVXPHU&RQVXPHU+HOSHU XVHVWKH7HPSODWH0HWKRGSDWWHUQ WRIRUFHWKHVXEFODVVZLWKWKHKHOSRI0XVW2YHUULGH WRZULWHD 'LVSRVH PHWKRG 1RWH ,ZLOOFRPHEDFNWRWKH'LVSRVH SUREOHPODWHULQWKLVFKDSWHUZKHUH\RXZLOODOVRILQG FRGHIRUWKHHQWLUHVROXWLRQ
7KH&RQVXPHU+HOSHUFODVVVXFKDV(UUDQG%URZVLQJ+HOSHU ZLOORIWHQPLUURUWKH³SDUDOOHO´FODVV LQWKH$SSOLFDWLRQOD\HUEXWPRVWRIWHQWKHUHZLOOEHPRUHPHWKRGV)XUWKHUPRUHDV,VDLGHDUOLHU HYHQWKRXJKWKLVLVQ WWKHFDVHLQ)LJXUHLWZLOOEHFRPPRQWRKDYHSURSHUWLHVWKDWKLGHWKH IDFWWKDWWKH$SSOLFDWLRQOD\HULVEHLQJRSHUDWHGRQE\³ODUJH´PHWKRGFDOOVZKHUHDOOVWDWHLV SURYLGHGLQHYHU\FDOO %XVLQHVV7LHU 1RZOHW VWXUQRXUDWWHQWLRQWRWKH%XVLQHVVWLHUZKLFKZLOOEHEXLOWZLWKVHUYLFHGFRPSRQHQWVDQG H[HFXWHGDWDQDSSOLFDWLRQVHUYHU7KLVWLHULVPDGHXSRIWKHIROORZLQJOD\HUV x x x
$SSOLFDWLRQOD\HU 'RPDLQOD\HU 3HUVLVWHQW$FFHVVOD\HU
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
$V\RXFDQVHHLQ)LJXUH(UUDQG%URZVLQJ LVGHULYHGIURP6HUYLFHG&RPSRQHQW+HOSHUDQG 6HUYLFHG&RPSRQHQW+HOSHU LVGHULYHGIURP6HUYLFHG&RPSRQHQW6HUYLFHG&RPSRQHQW ZLOOSURYLGH WKHLPSOHPHQWDWLRQIRU,'LVSRVDEOH6HUYLFHG&RPSRQHQW+HOSHU WDNHVFDUHRIPRVWRIWKH 'LVSRVH LPSOHPHQWDWLRQIRULWVVXEFODVVHV7KH7HPSODWH0HWKRGSDWWHUQLVXVHG 7KLVOD\HULVGHILQLWHO\DFRUHOD\HUDQGVKRXOGQ WEHVNLSSHGLQVPDOOV\VWHPV+RZ\RXGHVLJQWKLV OD\HULVFUXFLDO7KLVLVEHFDXVH\RXZLOO³EOHQG´LWLQWRWKH&RQVXPHUWLHUEHFDXVHWKLVOD\HUZLOOEH WKHHQWU\SRLQWIRUWKH&RQVXPHUWLHU,W VHDVLHUWRFKDQJHWKHVW\OHRIWKHOD\HUVWKDWFRPHDIWHU WKH$SSOLFDWLRQOD\HUVRLW VLPSRUWDQW\RXJHWWKLVOD\HUULJKW 0DQ\XVHFDVHVZLOOXVHWKHVDPHPHWKRGVVXFKDV)HWFK3UREOHP6ROYHUV ,ILQGLWFRQYHQLHQW WRKDYHWKDWPHWKRGLQDOOWKHXVHFDVHVWKDW³ZDQW´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
$V\RXVHHLQ)LJXUH,XVHGDSUHIL[GR IRUWKHFODVVQDPH,WKLQNWKDW LWGRHVQ WKDYHDELJ GUDZEDFNEHFDXVHWKDWQDPHLVLQWHUQDOWRWKH%XVLQHVVWLHU7KHDGYDQWDJHLVWRHDVLO\ GLIIHUHQWLDWHFODVVHVIURPGLIIHUHQWWLHUV&ODVVHVLQWKH3HUVLVWHQW$FFHVVOD\HUZLOOKDYHSD DV SUHIL[ 1RWH 7KHH[DPSOHVLQWKHSUHYLRXVVHFWLRQVIURPWKHGHVFULSWLRQVRIWKH&RQVXPHUOD\HUVDQG WKH$SSOLFDWLRQOD\HUGHDOWZLWKEURZVLQJHUUDQGVZKLFKGRQRWLQYROYHWKLVOD\HU7KH $SSOLFDWLRQOD\HUZLOOFDOOGLUHFWO\WRWKH3HUVLVWHQW$FFHVVOD\HULQVWHDG
$OVRDV\RXVHHLQ)LJXUH,VKRZHGWKDWWKH'RPDLQFODVVHVLQKHULWIURP 6HUYLFHG&RPSRQHQW+HOSHU MXVWDVWKH$SSOLFDWLRQFODVVHV $QRWKHUVROXWLRQLVWROHWWKHPHWKRGVLQWKH'RPDLQFODVVHVEH6KDUHG7KHQ\RXZRQ WLQVWDQWLDWH WKHFODVVHVDQGWKH\ZRQ WLQKHULWIURP6HUYLFHG&RPSRQHQW (YHU\WKLQJDERXW'LVSRVH LVJRQH \RXGRQ WKDYHWRWKLQNDERXW&20FRQWH[WVDQGWKHPHWKRGVRIWKH6KDUHG FODVVZLOOEH H[WUHPHO\IDVWWRFDOO7KHGUDZEDFNLVOHVVIOH[LELOLW\DQGWKDW\RXKDUGFRGHWKHNQRZOHGJHWKDW WKHPHWKRGVRIWKHFODVVHVDUH6KDUHG
7KHFODVVHVLQWKH$SSOLFDWLRQOD\HUDUHVDLGWREHXVH FDVH±VSHFLILF WKDWLVWKHUHLVRQHFODVVIRU HDFKXVHFDVH7KHFODVVHVLQWKH'RPDLQOHYHODUHXVHGE\VHYHUDOXVHFDVHVDQGWKDWDOVRJRHV
IRUWKHODWHUOD\HUV ,QVPDOOHUV\VWHPV,KDYHVXFFHVVIXOO\VNLSSHGWKH'RPDLQOD\HUDQGKDYH PRYHGWKHUHVSRQVLELOLWLHVWRVWRUHGSURFHGXUHVLQVWHDG
:KDW6HFXULW\³6W\OH´6KRXOG,8VH"
7KHUHDUHVHYHUDOGLIIHUHQWVHFXULW\³VW\OHV´RUGHVLJQVWRFKRRVHIURP EXWWKHRQH,XVHPRVWRIWHQLVOHWWLQJWKHHQGXVHUEHDXWKHQWLFDWHGE\ WKH$SSOLFDWLRQOD\HUZKLFKZLOOXVH&20VHFXULW\DWWKHFRPSRQHQW OHYHO7KHQWKH'RPDLQDQG3HUVLVWHQW$FFHVVOD\HUVZLOOQRW XVH&20 VHFXULW\DWWKHFRPSRQHQWOHYHO,W VQRWSRVVLEOHWRXVHFRPSRQHQWOHYHO VHFXULW\IRU\RXU&20DSSOLFDWLRQLI\RXZDQWWRFRORFDWHWKHREMHFWV ZLWKLQWKHFRQWH[WRIWKHLUFDOOHU
7KLVJLYHVWKHLPSOLFDWLRQWKDWLIWKH'RPDLQOD\HURU³ODWHU´OD\HUVQHHG LQIRUPDWLRQDERXWWKHXVHUWKDWPXVWEHSURYLGHGIURPWKH$SSOLFDWLRQ OD\HUDVSDUDPHWHUVWRWKHIROORZLQJOD\HUV)RUH[DPSOHWKH$SSOLFDWLRQ OD\HUFDQILQGWKHDFFRXQWQDPHRIWKHFXUUHQWXVHUE\ FDOOLQJ (QWHUSULVH6HUYLFHV 6HFXULW\&DOO&RQWH[W&XUUHQW&DOO'LUHFW&DOOHUB $FFRXQW1DPH7R6WULQJ $V\RXFDQVHHLQ)LJXUH,KDYHVLPSOLILHGWKHPHWKRGVLJQDWXUHV VRPHZKDWDQG,KDYHQ WVKRZQSDUDPHWHUVIRUVHQGLQJRYHUXVHU LQIRUPDWLRQ
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³7UDQVDFWLRQV´
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
1RWH $WILUVWWKHLQWHUIDFHVVKRZQLQ)LJXUHDQG)LJXUHPD\ORRNVWUDQJHZLWKUHJDUGWR WKHSDUDPHWHUVEDWFK&RPPDQGIHWFK7\SHDQGILOWHU7KLVLVEHFDXVHRIWKHSDWWHUQ, XVHIRUFDOOLQJWKHVWRUHGSURFHGXUHVLQWKHGDWDEDVH7KH'RPDLQOD\HUDQGWKH 3HUVLVWHQW$FFHVVOD\HUZLOOEXLOGXSDQ64/VFULSWWKDWWKH$SSOLFDWLRQOD\HUZLOODFWDVD FRQWUROOHUZKHQEXLOGLQJ7KHUHDOFDOOWRWKHGDWDEDVHZLOOEHGHOD\HGXQWLOWKHFRPSOHWH VFULSWKDVEHHQEXLOW7KLVSDWWHUQZLOOEHGLVFXVVHGLQ&KDSWHU
5HPHPEHUZKDW,VDLGDERXW6KDUHG FODVVHVLQWKHVHFWLRQDERXWWKH'RPDLQOD\HU7KDWJRHVIRU WKH3HUVLVWHQW$FFHVVOD\HUWRR,Q)LJXUH\RXFDQVHHDGLDJUDPVLPLODUWRWKHRQHLQ)LJXUH EXWWKLVWLPHRQO\6KDUHG PHWKRGVDUHXVHG )LJXUH([DPSOHRIDFODVVLQWKH3HUVLVWHQW$FFHVVOD\HURQO\ZLWK6KDUHG PHWKRGV
1RWH $V\RXPD\UHPHPEHUIURP)LJXUHWKHUHZDVDWDEOHFDOOHGHUUDQG DQGDOVRD 3HUVLVWHQW$FFHVVFODVVWKDWUHDGVIURPDQGZULWHVWRWKDWWDEOH+RZHYHUSOHDVHGRQ W
FRPHWRWKHFRQFOXVLRQWKDWHYHU\WDEOHVKRXOGKDYHDFODVVLQWKH3HUVLVWHQW$FFHVVOD\HU EHFDXVHWKLVLVPRVWRIWHQQRWWKHFDVH/RRNXSWDEOHVIRUH[DPSOHZLOOXVXDOO\RQO\ KDYHRQH3HUVLVWHQW$FFHVVFODVV$QGWKHUHLVQRWKLQJWKDWVWRSVPHIURPOHWWLQJ SD(UUDQG FDOOWKHVSURFV IRUWKHDFWLRQ WDEOHWRR
64/6HUYHU$XWKHQWLFDWLRQRU:LQGRZV $XWKHQWLFDWLRQ:KLFK2QH,V 5HFRPPHQGHG"
64/6HUYHUFDQEHUXQLQWZRPRGHV x x
64/6HUYHUDXWKHQWLFDWLRQDQG:LQGRZVDXWKHQWLFDWLRQ³PL[HG PRGH´ :LQGRZVDXWKHQWLFDWLRQRQO\
$FRPPRQGHEDWHLVRYHUZKHWKHUWKH64/6HUYHUVKRXOGEHDFFHVVHG XVLQJ64/6HUYHUDXWKHQWLFDWLRQRUE\:LQGRZVDXWKHQWLFDWLRQ64/ 6HUYHUDXWKHQWLFDWLRQPHDQVWKDWWKH&20DSSOLFDWLRQFDQORJLQDVVD RUSUHIHUDEO\ZLWKDFXVWRP64/6HUYHUDFFRXQW :LWK:LQGRZV DXWKHQWLFDWLRQXVHUVORJLQWR17:LQGRZVDQGWKLVDXWKHQWLFDWLRQLV WKHQXVHGLQ64/6HUYHUDVZHOO ,W VWUXHWKDWLWLVVLPSOHWRXVH64/6HUYHUDXWKHQWLFDWLRQ$Q\ERG\FDQ VSHOOVD DQGUHPHPEHUDEODQNSDVVZRUG2.,DPMRNLQJKHUHEXW VRPHRQHSUHVHQWHGVWDWLVWLFVWKDWVDLG²LI,UHPHPEHUFRUUHFWO\²WKDW VRPHWKLQJOLNHRIWKHZRUOG V64/6HUYHUVLQSURGXFWLRQXVHDEODQN SDVVZRUGIRUVD (YHQZLWKDSDVVZRUGIRUVDDQGZKHQVD LVQ WXVHGDV WKHGDWDEDVHXVHUE\WKHFRPSRQHQWV64/6HUYHUDXWKHQWLFDWLRQLVOHVV VDIHWKDQ:LQGRZVDXWKHQWLFDWLRQ
,I\RXXVH:LQGRZVDXWKHQWLFDWLRQZLWKDVHUYHUVLGHDSSOLFDWLRQ\RXGR QRWKDYHWRKDUGFRGHDSDVVZRUGLQWRWKHDSSOLFDWLRQRUNHHSWKH SDVVZRUGHOVHZKHUH DQG\RXFDQFKDQJHWKHSDVVZRUGZLWKRXWFKDQJLQJ WKHDSSOLFDWLRQ17:LQGRZVSDVVZRUGVDOVRKDYHDJLQJZKLFKLV \HWDQRWKHUDGYDQWDJH
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²\RXKDYHVRPH JRRGUHDVRQVIRUVSOLWWLQJWKHSURFHGXUHLQWRDSXEOLFRQHDQGDSULYDWHRQH
7DEOHV9LHZVDQG8VHU'HILQHG)XQFWLRQV
6RRQHURUODWHUZHZLOODFFHVVWKHWDEOHVLQWKHGDWDEDVH,IZHZDQWHGZHFRXOGDGGRQHPRUH OHYHOLQWKHIRUPRIYLHZVRU8')V,I\RXXVHVLQJOHVWDWHPHQWWDEOHYDOXHGIXQFWLRQVRQHRIWKH WKUHHW\SHVRI8')V WKHFRGHWKDWZLOOEHH[HFXWHGZLOOEHWKHVDPHDVLIDYLHZKDGEHHQXVHG +RZHYHU,VWLOOWKLQNWKDW8')VKDYHDQDGYDQWDJHRYHUYLHZVQDPHO\WKHSRVVLELOLW\RIXVLQJ SDUDPHWHUV
%HFDXVH,XVHVWRUHGSURFHGXUHVDVWKHRQO\HQWU\SRLQWWRWKHGDWDEDVHYLHZVDQG8')VDUHOHVV RIDPXVWWKDQLQRWKHUV\VWHPV6WLOOWKH\FDQEHYHU\KHOSIXOLQWKHORQJUXQIRUH[DPSOHZKHQ QRWLI WKHUHLVDQHHGIRUVFKHPDFKDQJH$YLHZ RUD8')FDQRIWHQJUDFHIXOO\KLGHWKLVFKDQJH IURPWKHUHVWRIWKHV\VWHP)RUVLPSOHUV\VWHPV,DOVRVNLSYLHZVDQG8')VDWOHDVWDVVRPHWKLQJ WKDWVKRXOGEHXVHGDFURVVWKHERDUG)URPWLPHWRWLPHWKHUHDUHSUREOHPVWKDWDUHVROYHG HOHJDQWO\ZLWKD YLHZRUD8')LQDQ\V\VWHP 1RWH 7KURXJKRXWDOOWKHOD\HUV,XVHGDYHU\EDVLFH[DPSOH
&RPPXQLFDWLRQRYHUWKH1HWZRUNWRWKH$SSOLFDWLRQ/D\HU $WWKHWLPHZRUNRQWKLVERRNEHJDQDFRPPRQTXHVWLRQZDVKRZFRQVXPHUVZRXOGWDONWR VHUYLFHGFRPSRQHQWVRYHUWKHQHWZRUN:LWK9%'&20ZDVPRVWRIWHQXVHGEXWZLWK1(7 WKHUHDUHVHYHUDOGLIIHUHQWPHWKRGVIURPZKLFKWRFKRRVH x x x
;0/:HEVHUYLFHV 5HPRWLQJ '&20DVEHIRUH
%HIRUHZHGLVFXVVWKHVHRSWLRQVDELWPRUH, GOLNHWRJLYHDVFKHPDWLFH[DPSOHRIHDFKRQHLQWKH FRQWH[WRIP\SURSRVHGDUFKLWHFWXUH 1RWH 8QIRUWXQDWHO\WKH1(7FRPSRQHQWVHUYLFHVZRQ WWUDYHORYHU;0/:HEVHUYLFHVDQG 5HPRWLQJ,WVWLOOZRUNVZKHQ'&20LVXVHG 7KHPDLQSUREOHPZLWKWKLVLVWKDW&20 5ROH%DVHG6HFXULW\5%6 FDQ WEHXVHGEHWZHHQPDFKLQHV,Q P\RSLQLRQWKLVLVWKH PRVWVHULRXVSUREOHPZLWKWKH&20LQWHJUDWLRQLQ1(7
;0/:HEVHUYLFHVLVGHVLJQHGIRUVLWXDWLRQVZKHQDQH[WHUQDODSSOLFDWLRQLVQ WLQRXUFRQWURO7KDW LVDVWDQGDUGL]HGZD\WREXLOGYHU\ORRVHO\FRXSOHGV\VWHPV)LJXUHVKRZVWKHDSSHDUDQFHRI WKH%XVLQHVVWLHUZKHQLWLVGHSOR\HGDVDQ;0/:HEVHUYLFH7KHUHDUHVHYHUDOZD\VWRKDYHWKH %XVLQHVVWLHUEHGHSOR\HGDVDQ;0/:HEVHUYLFHRQHEHLQJWRXVH&207KHQWKH&20 DSSOLFDWLRQFDQEHGHSOR\HGGLUHFWO\IURPWKH&RPSRQHQW6HUYLFHVPDQDJHPHQWFRQVROH,,6PXVW EHRQWKHPDFKLQHWRSURYLGHDOLVWHQHUZLWKWKHFDOOVWRWKH;0/:HEVHUYLFH )LJXUH$Q;0/:HEVHUYLFHDQGP\SURSRVHGDUFKLWHFWXUH
1RWH ,QWKHIXWXUHWKH3HUVLVWHQW$FFHVVOD\HUZLOOSUREDEO\QRWRQO\IHWFKGDWDIURPWUDGLWLRQDO GDWDVWRUHVVXFKDVGDWDEDVHVILOHV\VWHPVDQGVXFKEXWZLOODOVRIHWFKGDWDIURP;0/ :HEVHUYLFHV/HWWLQJWKH%XVLQHVVWLHUFRQVXPHH[WHUQDO;0/:HEVHUYLFHVDOVRILWVLQ QLFHO\ZLWKWKHSURSRVHGDUFKLWHFWXUH
,QWKHVFHQDULRVKRZQLQ)LJXUHD:LQGRZV)RUPVDSSOLFDWLRQLVWDONLQJWRWKH%XVLQHVVWLHU 7KLVLVDPRUHWLJKWO\FRXSOHGVFHQDULRWKDQWKHRQHVKRZQLQ)LJXUH,QWKLVFDVHJRRGROG '&20FRXOGEHXVHGRU\RXFRXOGXVH5HPRWLQJ,Q)LJXUH\RXFDQVHHWKDW'&20DQG 5HPRWLQJDUHVLPLODUVFKHPDWLFDOO\EXWZLWK'&20\RXJHWWKHSUR[\DQGWKHVWXEDXWRPDWLFDOO\ :LWK5HPRWLQJ\RXKDYHWRZULWHDOLVWHQHURQ\RXURZQIRUVRPHFRQILJXUDWLRQVW\SLFDOO\DVD :LQGRZV6HUYLFH )LJXUH$:LQGRZV)RUPVDSSOLFDWLRQDQGWKHSURSRVHGDUFKLWHFWXUH
1RWH 2IFRXUVH,FRXOGMXVWDVZHOOKDYHVKRZQ;0/:HEVHUYLFHVDVWKHZD\IRUWKH:LQGRZV )RUPVDSSOLFDWLRQWRWDONWRWKH%XVLQHVVWLHU
$QRWKHUW\SLFDOVFHQDULRLVZKHQD:HEEURZVHULVXVHGZLWKDQ$631(7:HE)RUPVDSSOLFDWLRQ EXWWKHQWKH%XVLQHVVWLHULVPRVWRIWHQSXWDWWKHVDPHPDFKLQHDVWKH$631(7DSSOLFDWLRQ 2WKHUZLVH'&20RU5HPRWLQJZLOOXVXDOO\EHWKHFKRLFHIRUFRPPXQLFDWLRQDVLQ)LJXUH )LJXUHVKRZVDVFHQDULRLQZKLFKWKH$631(7DSSOLFDWLRQDQGWKH%XVLQHVVWLHUDUHSXWRQWKH VDPHPDFKLQH )LJXUH$Q$631(7DSSOLFDWLRQDQGWKHSURSRVHGDUFKLWHFWXUH
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
3UREOHPVZLWK0\$UFKLWHFWXUH3URSRVDO
%HFDXVHWKHUHDUHVHYHUDOGLIIHUHQWVFHQDULRVWKDWFDQEHFRQVLGHUHGWKLVFRXOGSRWHQWLDOO\EHD YHU\OHQJWK\VHFWLRQ$VLQRWKHUFKDSWHUVDWWKHHQGRIWKLVFKDSWHU,ZLOOHYDOXDWHP\SURSRVDO EDVHGRQWKHFULWHULD,HVWDEOLVKHGLQ&KDSWHU)RUQRZOHW VWDNHDTXLFNORRNDWVRPHEDVLF SUREOHPVZLWKP\SURSRVDO x x x
2QHVL]HGRHVQ WILWDOO²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³UHDO´H[FHSWLRQ
1HZ&RQFHSWVWR&RQVLGHU:KHQ&UHDWLQJD1HZ$UFKLWHFWXUH 7RGD\
$VZHDOONQRZLI\RXFRPSDUH9%DQG9LVXDO%DVLF1(7RU& FRGH\RX OOILQGPDQ\ GLIIHUHQFHVZKHQLWFRPHVWRVHUYLFHGFRPSRQHQWVIRUH[DPSOH ,ZLOOGLVFXVVVRPHRIWKHVH GLIIHUHQFHVEULHIO\LQWKHIROORZLQJVHFWLRQVDVZHOODV&20FRQWH[WVVRPHRIWKHQHZIHDWXUHVLQ 64/6HUYHUDQGVRPHXQXVXDOGHVLJQLGHDV,ZLOOVWDUWZLWKGLVFXVVLQJ&RQVXPHUV
1HZ&RQFHSWVWR&RQVLGHU5HJDUGLQJ&RQVXPHUV
7KHUHLVRQHLPSRUWDQWFRQFHSWWKDW\RXKDYHWRJUDVSIRUEXLOGLQJFRQVXPHUVIRUVFDUFHUHVRXUFHV 6HUYLFHGFRPSRQHQWVDUHDQH[DPSOHRIVXFKDUHVRXUFHDQGWKHFRQFHSW,DPWKLQNLQJDERXWLV 'LVSRVH /HW VORRNDWWKLVLQGHWDLOQRZ
'LVSRVH
,W VQRWDPXVWEXWLQP\RSLQLRQIRUWKHFXUUHQWYHUVLRQUHFRPPHQGHGWKDW\RXXVH'LVSRVH ZKHQ\RXDUHGRQHZLWKDQREMHFWRIDVHUYLFHGFRPSRQHQW7KLVVDPHUHFRPPHQGDWLRQDSSOLHVWR DOOVFDUFHUHVRXUFHV,WKLQNWKLVLVLURQLFZKHQ\RXWKLQNWKDWJDUEDJHFROOHFWLRQVKRXOGUHOHDVHXV IURPWKHEXUGHQRI6HW[ 1RWKLQJ DVLQ9%DQGIURP5HOHDVH LQ&,QVWHDGZHKDYHWKH QHZUHTXLUHPHQWRIFDOOLQJ'LVSRVH LQPDQ\VLWXDWLRQV
:K\'R:H+DYHWR&DOO'LVSRVH "
$WILUVWWKHQHHGWRFDOO'LVSRVH SX]]OHGPH,WKRXJKWWKDWZLWKREMHFW SRROLQJLWZDVQDWXUDOWRKDYHWRFDOO'LVSRVH VRWKDWXVHGREMHFWVZHUH JLYHQEDFNWRWKHSRRODVIDVWDVSRVVLEOHLQVWHDGRIZDLWLQJIRUWKH JDUEDJHFROOHFWLRQ,GLGQ WXQGHUVWDQGZK\LWZDVSUHIHUDEOHWRXVH 'LVSRVH IRUDOORWKHUVHUYLFHGFRPSRQHQWV:KHQ,GLVFXVVHGWKLVZLWK 0LFURVRIW(JLGLR6EXUOLQR'HYHORSHU(QJLQHHU/HDGLQWKH&20JURXS DQG'DYH'ULYHU'HYHORSHU(QJLQHHULQWKH&20JURXSH[SODLQHGLWD ELWPRUH7KH\VDLG³,QWKHFDVHRI-,7DFWLYDWLRQZLWK$XWR&RPSOHWH PHWKRGVZHGR NQRZZKHQWRFDOO'LVSRVH %XWLQDOORWKHUFDVHV ZKHUH\RXGRQ WZDQWWRZDLWIRUWKHJDUEDJHFROOHFWRUWRNLFNLQWRUHOHDVH \RXUREMHFW VUHVRXUFHV\RXPXVWFDOO'LVSRVH ´7KH\DOVRWROGPHWKDW FXUUHQWO\2EMHFW3RROLQJZLWKRXW-,7DFWLYDWLRQDQG$XWR&RPSOHWH LV WKHRQO\IHDWXUHZKHUHFDOOLQJ'LVSRVH LVDPXVW ZKHQWKHJDUEDJH
FROOHFWRUNLFNVLQLWLVWRRODWHWRUHF\FOHWKHREMHFWEHFDXVHRIWKH JDUEDJHFROOHFWRUQRQGHWHUPLQLVWLFEHKDYLRUZKHQLWILQDOL]HVWKHREMHFWV LHPDQDJHGREMHFWVUHIHUHQFHGE\\RXUREMHFW VGDWDPHPEHUVPD\ KDYHDOUHDG\EHHQILQDOL]HG
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
7KH8VLQJ VWDWHPHQWLQ&LVDJRRGVROXWLRQWRWKHSUREOHPRIREMHFWVDWWKHPHWKRGOHYHOEXW ZHGRQ WKDYH8VLQJ LQ9LVXDO%DVLF1(7WKHFOLHQWKDVWRUHPHPEHUWRFDOO'LVSRVH LQWKH )LQDOO\ EORFN)XUWKHUPRUHZKHQLWFRPHVWRLQVWDQFHOHYHOREMHFWV8VLQJ LQ&LVRIQRXVHLI \RXZDQWWKHREMHFWWROLYHRYHUVHYHUDOPHWKRGVEHFDXVH8VLQJ KDVWREHXVHGDWWKHPHWKRG OHYHO7RFRQFOXGHDOOWKLVQRQGHWHUPLQLVWLFILQDOL]DWLRQLVDUHDOSUREOHPLQVRPHVLWXDWLRQV HVSHFLDOO\IRUWKRVHFRQVXPHUVRYHUZKRP\RXKDYHQRFRQWURO7KHVHUYLFHGFRPSRQHQWVVKRXOG EHOHVVRIDSUREOHPEHFDXVH\RXKDYHIXOOFRQWURORIWKHVH5HPHPEHUWRRWKDWLW VXVXDOO\QRWD FDWDVWURSKHLI'LVSRVH LVQ WFDOOHGDVVRRQHURUODWHUWKHJDUEDJHFROOHFWRUZLOONLFN LQDQGFOHDQ XS ,ZLOOFRQWLQXHWKLVGLVFXVVLRQDERXW'LVSRVH LQWKH³6WDQGDUGL]HG&RGH6WUXFWXUHIRU6HUYLFHG &RPSRQHQW´VHFWLRQODWHULQWKHFKDSWHUZKHUH,VKRZ FRGHVWUXFWXUHVIRUFRQVXPHUVDQGVHUYLFHG FRPSRQHQWV
1HZ&RQFHSWVWR&RQVLGHU5HJDUGLQJ6HUYLFHG&RPSRQHQWV
7KHUHTXLUHPHQWRUDWOHDVWUHFRPPHQGDWLRQ IRU'LVSRVH ZHMXVWGLVFXVVHGDSSOLHVWRVHUYLFHG FRPSRQHQWV$V,VDLGEHIRUHZKDW,VHHDVWKHUHDOSUREOHPLVWKHUHVSRQVLELOLW\SXWRQWKH FRQVXPHUSURJUDPPHUWRFDOO'LVSRVH %XWWKHUHDUHRWKHULVVXHVWRFRQVLGHUUHJDUGLQJVHUYLFHG FRPSRQHQWV:H OOVWDUWE\ORRNLQJDWRYHUORDGLQJ 2YHUORDGLQJ 7KHSRVVLELOLW\RIRYHUORDGLQJLQ9LVXDO%DVLF1(7LVJUHDW:LWKLWVKHOS,FDQDYRLGVRPHXJO\ WULFNVWKDW,RIWHQXVHGLQ9%VXFKDVVHQGLQJHPSW\SDUDPHWHUVDQGWRKDYHGLIIHUHQWQDPHVIRU WKH³VDPH´PHWKRGZKHQWKHPHWKRGVMXVWGLIIHUE\WKHSDUDPHWHUOLVWV7KHSRVVLELOLW\RI RYHUORDGLQJKHOSVWRFUHDWHDQRWKHUOD\HURIDEVWUDFWLRQVEHFDXVH\RXFDQWDONDERXWDPHWKRG ILUVWZLWKRXWWKLQNLQJWKDWPXFKWKDWWKHUHDUHUHDOO\WHQGLIIHUHQWVLJQDWXUHVIRUWKDWYHU\PHWKRG
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³UHTXLUHVWUDQVDFWLRQV´DQGWKHGHULYHG FODVVLVPDUNHGDV³WUDQVDFWLRQVGLVDEOHG´,IWKHLPSOHPHQWDWLRQRIDSXEOLFPHWKRGLQWKHGHULYHG FODVVFDOOVRQDSXEOLFPHWKRGLQWKHEDVHFODVVDWUDQVDFWLRQJHWVVWDUWHGXSZKLFKPD\QRWEH REYLRXVWRFOLHQWVJLYHQWKHDWWULEXWHVRQWKHGHULYHGFODVV,GRQ WXVHDQ\&20UHODWHG DWWULEXWHVRQP\6HUYLFHG&RPSRQHQW+HOSHU 2EMHFW3RROLQJ ,WKDVEHHQSRVVLEOHWRXVHREMHFWSRROLQJZLWK&20IRUDORQJWLPHQRZEXWLWZDVQ W SRVVLEOHIRUFRPSRQHQWVZULWWHQZLWK9%1RZWKDWSUREOHPKDVGLVDSSHDUHGWKDQNVWR1(7DQG ZH9%SURJUDPPHUVFDQXVHREMHFWSRROLQJWRR
7KHFRPSRQHQWLVH[SHQVLYHWRFUHDWHRUGHVWUR\IRUH[DPSOHEHFDXVHLWQHHGVWRJUDE VRPHUHVRXUFHVRUFOHDQXSVRPHUHVRXUFHV
,GRQ WWKLQNLWLVDJRRGLGHDWROHWWKHFRPSRQHQWVLQWKH$SSOLFDWLRQOD\HUXVHREMHFWSRROLQJ PDLQO\EHFDXVHFDOOLQJ'LVSRVH LVDPXVWZLWKSRROHGREMHFWVDQG\RXFDQ WEHVXUHWKH FRQVXPHUZLOOEHKDYHZHOO 1RWH :HZLOOGLVFXVVREMHFWSRROLQJPRUHLQ&KDSWHU
7R-,7RU1RWWR-,7" :KHQLWFRPHVWRKDYLQJWKHQHHGIRUGLVWULEXWHGWUDQVDFWLRQVWDNHQFDUHRIE\WKH1(7FRPSRQHQW VHUYLFHVDQVZHULQJZKHWKHU\RXVKRXOGXVH-,7DFWLYDWLRQLVHDV\
x
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
FRPSRQHQWVDVFRQVXPHUV,FRGHVRWKDWWKHUHVRXUFH LVGLVSRVHGDWWKHHQGRIWKHPHWKRG,I\RX XVHREMHFWSRROLQJLQWKH$SSOLFDWLRQOD\HULWPLJKWEHDJRRGLGHDWRXVH-,7 , YHDOVRKHDUGWKHPRWLYDWLRQWKDW-,7LVJRRGWRPRYHWKHUHVSRQVLELOLW\RIZKHQDQREMHFWVKRXOG EHGHDFWLYDWHGIURPWKHFRQVXPHUWRWKHVHUYHU,I\RXGRQ WDFTXLUHH[SHQVLYHUHVRXUFHVLQWKH $SSOLFDWLRQOD\HUWKLVLVQRWDYDOLGUHDVRQLQP\RSLQLRQEHFDXVHWKHLQVWDQFHIURPWKH $SSOLFDWLRQOD\HULVSUREDEO\QRWPRUHH[SHQVLYHWRKROGRQWRWKDQD-,7HQDEOHGFRQWH[W,IWKLV LVWKHFDVH²WKDWLVWKHREMHFWKDVDORWRIGDWD²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
,PSURYHG&RQWH[W$FWLYDWLRQ6HWWLQJLQ &20
&20KDVDQHZFRQWH[WDFWLYDWLRQ VHWWLQJFDOOHG³0XVWEHDFWLYDWHG LQWKHGHIDXOWFRQWH[W´7KLVPHDQVWKDWWKHUHZLOOEHQR³FDOO´ LQWHUFHSWLRQDQGWKHREMHFWZLOOEHFRORFDWHGZLWKVHYHUDORWKHUREMHFWVLQ WKHGHIDXOWFRQWH[W7KHGHIDXOWFRQWH[WLVDVSHFLILFFRQWH[WIRUHDFK DSDUWPHQWWKDWZLOOKRVWDOOREMHFWVZLWKWKLVVHWWLQJ,WZLOODOVRKRVWDOO OHJDF\XQFRQILJXUHG&20FRPSRQHQWV
6LQFH&20ZHKDYHKDGWKHFKDQFHWRXVHWKHVHWWLQJ³0XVWEH DFWLYDWHGLQFDOOHU VFRQWH[W´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³0XVWEH DFWLYDWHG LQWKHGHIDXOWFRQWH[W´EXW7LP(ZDOG VERRN7UDQVDFWLRQDO &20%XLOGLQJ6FDODEOH$SSOLFDWLRQV LVDJRRGVRXUFHIRUUHDGLQJPRUH DERXWFRQWH[WV
%HFDXVHRIWKHFRQWH[WLVVXHV,SXWWKHFRPSRQHQWVRIWKH'RPDLQOD\HUDQG3HUVLVWHQW$FFHVV OD\HULQ'//VRIWKHLURZQ7KRVH'//VZLOOWKHQEHFRQILJXUHGLQDVHSDUDWH&20OLEUDU\ DSSOLFDWLRQ%DVLFDOO\QRVHUYLFHVZLOOEHXVHGIRUWKDWDSSOLFDWLRQRULWVFRPSRQHQWV$OOVHUYLFHV WKDWUHTXLUHLQWHUFHSWLRQZLOOEHXVHGIRUWKHFRPSRQHQWVLQWKH$SSOLFDWLRQOD\HULQVWHDG )LQDOO\WKHUXOHRIWKXPELVILUVWWRFRQILJXUH\RXUFRPSRQHQWVWRXVHWKHVHUYLFHVWKH\QHHG 7KHQIRUUHVRXUFHVDYLQJDQGSHUIRUPDQFHUHDVRQVLI\RXQHHGLQWHUFHSWLRQXVHDQRQGHIDXOW
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
2QFHDJDLQLI\RXXVH6KDUHG PHWKRGVRQO\IRUWKH'RPDLQDQG3HUVLVWHQW$FFHVVOD\HUV\RXGRQ W KDYHWRZRUU\DERXWWKHFRQWH[WLVVXHV
1HZ&RQFHSWVWR&RQVLGHU5HJDUGLQJWKH'DWDEDVH
6RIDU,KDYHGLVFXVVHGDQXPEHURIQHZGHVLJQSRVVLELOLWLHV\RXKDYHDW\RXUGLVSRVDOWKDQNVWR 1(7(YHQWKRXJK64/6HUYHULVQ WWKDWQHZWKHUHDUHVRPHFRQFHSWVWKDWWKLVYHUVLRQ PDNHVSRVVLEOH,QWKLVVHFWLRQ, OOSUHVHQWWKHVHDQGDIHZRWKHUWLSV 8VHU'HILQHG)XQFWLRQV8')V $V,VDLGHDUOLHU8')VFDQEHXVHIXO2QHH[DPSOHLVWKHVLQJOHVWDWHPHQWWDEOHYDOXHGIXQFWLRQV ZKLFKZLOOEHLPSOHPHQWHGDV9,(:VEHKLQGWKHVFHQHVEXWZLWKSDUDPHWHUL]DWLRQ
7KHUHLV³QR´ULVNRIRXWJURZLQJWKHVL]HRIWKHGDWDW\SH7KDWLVDFWXDOO\DFRPPRQ SUREOHPZLWKWKHELW,17 GDWDW\SH
7KHPRVWW\SLFDOVROXWLRQWRFUHDWLQJD*8,'LVWRXVH*XLG1HZ*XLG RUWRXVHWKH&U\SWR$3, LQ9LVXDO%DVLF1(7FRGHDQGWRXVH1(:,' LQ764/ x x x x
$QHZ*8,'LVQRWRQO\XQLTXHSHUWDEOHEXWPRVWRIWHQLWLVDOVRXQLTXHSHUGDWDEDVH,Q VRPHVLWXDWLRQVDQGV\VWHPVWKLVFDQEHDUHDODGYDQWDJH +DYLQJD*8,'DVWKH,'IRUDOOWDEOHVLVFRQVLVWHQWDQGPDNHVWKHSURJUDPPLQJRIWKH FRPSRQHQWOD\HUVHDVLHU
x
2EYLRXVO\WKHUHDUHDOVRGUDZEDFNVWRXVLQJ81,48(,'(17,),(5VIRUSULPDU\NH\V x x x
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²ZKDWHYHU\RXSUHIHUWRFDOOWKHP
:KHQYHUVLRQRI1(7KDVVKLSSHG\RXZLOOILQGWKHUHVXOWVRIVRPHSHUIRUPDQFHWHVWVUHJDUGLQJ 81,48(,'(17,),(5VDVSULPDU\NH\VDWWKHERRN V:HEVLWHDWZZZVDPVSXEOLVKLQJFRP 'DWDEDVHVDV&RPSRQHQWV )RUVRPHWLPHQRZ,KDYHKDGZKDW,WKRXJKWZDVDZLOGLGHD²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
3K\VLFDO3DUWLWLRQLQJ
,Q)LJXUH\RXVDZWKDWW\SLFDOSK\VLFDOVSOLWWLQJLVGRQHEHWZHHQWKH&RQVXPHU+HOSHUOD\HU DQGWKH$SSOLFDWLRQOD\HUDQGEHWZHHQWKH3HUVLVWHQW$FFHVVOD\HUDQGWKH3XEOLF6WRUHG 3URFHGXUHVOD\HU,IWKHILUVWWLHULV:HE)RUPVFRPELQLQJWLHURQHDQGWZRLVUHFRPPHQGHG)RU VPDOOVLWHVLW VFRPPRQWRFRPELQHWLHUDQGUHJDUGOHVVRIZKHWKHUWKHFRQVXPHUW\SHLV:HE )RUPVRUZKDWHYHU %XWZKDWLI\RXZDQWWRKDYHPRUHWKDQRQHPDFKLQHIRUDWLHU"/HW V LQYHVWLJDWHWKLVVWDUWLQJZLWKWKHVHUYLFHGFRPSRQHQWV
3K\VLFDO3DUWLWLRQLQJRI6HUYLFHG&RPSRQHQWV
,W VSUHIHUDEOHWRFORQHLQVWHDGRISK\VLFDOO\SDUWLWLRQ\RXUVHUYLFHGFRPSRQHQWV7KLVLVHVSHFLDOO\ WUXHLIWKHFORQLQJRUSDUWLWLRQLQJLVWREHGRQHIRUSHUIRUPDQFHRUVFDODELOLW\UHDVRQV,IWKHUHDUH RWKHUUHDVRQVIRUH[DPSOHWKDWVRPHSURFHVVLQJPXVWEHVHSDUDWHIURPWKHRWKHUIRUVHFXULW\ UHDVRQV\RXPD\QRWKDYHDFKRLFH ,ISDUWLWLRQLQJLVQHHGHGZLWKLQDWLHUEHWZHHQZKLFKOD\HUVVKRXOGLWEHGRQH"7KHUHLVQRVWDQGDUG DQVZHUWRWKDWTXHVWLRQ,SUHIHUWRIDFWRURXWZKDWPXVWEHGRQHDWDQRWKHUVHUYHUDQGFDUHIXOO\ WXQHWKHFDOOVWRPLQLPL]HWKHQXPEHURIURXQGWULSV
3K\VLFDO3DUWLWLRQLQJRIWKH'DWDEDVH
%HIRUHYHUVLRQRI64/6HUYHULWZDVQRWFRPPRQWRSDUWLWLRQWDEOHVLQ2Q/LQH7UDQVDFWLRQ 3URFHVVLQJ2/73 V\VWHPVLQWKDWHQYLURQPHQW:KHQSDUWLWLRQLQJZDVXVHGLWZDVPRVWO\GRQH IRUFRPSOHWHWDEOHVRUIRUUHDVRQVRWKHUWKDQORDGEDODQFLQJ+HUH, PJRLQJWRGLVFXVVDQHZ VROXWLRQIRUSDUWLWLRQLQJDQ64/6HUYHUGDWDEDVHFDOOHG'LVWULEXWHG3DUWLWLRQHG9LHZ'39
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
3URSRVDOVIRU6WDQGDUGL]HG&RGH6WUXFWXUHV
%RWKWKH9LVXDO6WXGLR1(7,'(DQG64/6HUYHU V64/4XHU\$QDO\]HUSURYLGHVXSSRUWIRU WHPSODWHV 7KHVHDUHJUHDWIHDWXUHVWKDW,XVHDORWWRJHWVWDUWLQJSRLQWVIRUP\FRPSRQHQWVDQG VWRUHGSURFHGXUHV:K\VKRXOGVWDQGDUGL]HGFRGHVWUXFWXUHVEHXVHG" x x x
,QP\RSLQLRQLW VPXFKHDVLHUWRPDLQWDLQDEXQFKRIVWRUHGSURFHGXUHVWKDWVKDUHD FRPPRQVWUXFWXUHWKDQLIHDFKRIWKHPKDVDVSHFLILFRQH7KLVJRHVIRUFRPSRQHQWVWRR2I FRXUVH\RXPXVWEHIOH[LEOHWRKDQGOHYDULRXVVLWXDWLRQVEXWLW VJRRGWRKDYHVRPHWKLQJWR XVHDVDUXOHRIWKXPEDQGDVDVWDUWLQJSRLQW 6RPHSDUWVDUHTXLWHGLIILFXOWWRFRGHE\KDQGDQGLQDFFXUDFLHVZLOORFFXUIURPWLPHWR WLPH$W\SLFDOH[DPSOHRIWKLVLVWKHHUURUKDQGOLQJLQWKHVWRUHGSURFHGXUHV 6RPHWDVNVVKRXOGEHGRQHLQHYHU\PHWKRGDQGVWRUHGSURFHGXUHWRPDNHWKHWRWDO DUFKLWHFWXUHZRUN2QHH[DPSOHRIWKLVLVXVLQJWUDFHFDOOVZKHQHQWHULQJDQGH[LWLQJWKH PHWKRGVWRUHGSURFHGXUH$QRWKHUH[DPSOHLVH[DPLQLQJLIWKHUHLVDQH[WHUQDOWUDQVDFWLRQ DFWLYHEHIRUHVWDUWLQJDQHZRQHLQWKHVWRUHGSURFHGXUHV
, PJRLQJWRVKRZ\RXP\SURSRVDOVIRUVWDQGDUGL]HGFRGHVWUXFWXUHVVKRUWO\
6RPHGHYHORSHUVZRXOGDUJXHWKDWLWLVEHWWHUWRWKLQNWKDQWRMXVWFRS\DQGSDVWHFRGH,WRWDOO\ DJUHHEXWVRPHSDUWVMXVWGRQ WKDYHWREHWKRXJKWDERXWHDFKDQGHYHU\WLPHDQHZPHWKRGLV
QHHGHG$QRWKHU ZD\RIORRNLQJDWLWLVWKDWLQVWHDGRIWKLQNLQJDERXWPDWWHUVIURPVFUDWFKSURYLGH DVWDUWLQJSRLQWZLWKDWHPSODWHDQGVWDUWWKHWKLQNLQJDWDKLJKHUOHYHO 2IFRXUVHWKHUHDUHPDQ\IDFWRUVWRFRQVLGHULQKRZWKHW\SLFDOFRGHVKRXOGORRN,ZLOOZDON\RX WKURXJKRQHH[DPSOHIRUDFRQVXPHURQHIRUDFRQVXPHUKHOSHUDQGLWVVXSHUFODVVRQHIRUD VHUYLFHGFRPSRQHQWDQGRQHIRUDVWRUHGSURFHGXUH2QWKHZD\,ZLOOGLVFXVVDQXPEHURI DVSHFWV
7\SLFDO&RGH6WUXFWXUHIRU&RQVXPHUWR6HUYLFHG&RPSRQHQW
,QVWHDGRI³6WDQGDUGL]HG&RGH6WUXFWXUH´,KDYHZULWWHQ³7\SLFDO&RGH6WUXFWXUH´LQWKLVKHDGHU 7KLVGLIIHUVIURPWKHVHFWLRQVZKHUH,GLVFXVVFRGHVWUXFWXUHIRUVHUYLFHGFRPSRQHQWDQGVWRUHG SURFHGXUH7KHUHDVRQIRUWKLVLVWKDWWKHERRNLVQ WIRFXVLQJRQWKHFRQVXPHU,MXVWZDQWWR SURYLGHDQH[DPSOHRIW\SLFDOFRGHWRJLYH\RXDEHWWHUIHHOLQJRIWKHRYHUDOOSLFWXUH :KHQ\RXKDYHVRPHJRRGFRGHVWUXFWXUHVWKDW\RXDUHKDSS\ZLWK\RXVKRXOGVDYHWKHPWREH XVHGDVWHPSODWHVERWKIRU9LVXDO%DVLF1(7DQGIRU764/ -XVWRQHPRUHWKLQJEHIRUHZHVWDUW
3ULYDWHP(UUDQG%URZVLQJ+HOSHUB $V1HZ$FPH+HOS'HVN&RQVXPHU+HOSHU(UUDQG%URZVLQJ+HOSHU
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
DQGDORWRISUHVHQWDWLRQORJLF
(QG&ODVV
:HOFRPHWRWKH:RUOGRI1RQGHWHUPLQLVWLF )LQDOL]DWLRQ
0\IULHQG)UDQFHVFR%DOHQDDXWKRURI3URJUDPPLQJ0LFURVRIW9LVXDO%DVLF DQGWKHXSFRPLQJ3URJUDPPLQJ9LVXDO%DVLF1(7 DQG,GLVFXVVHGWKH LVVXHRIEXLOGLQJVRPHWKLQJVLPLODUWRDVPDUWSRLQWHULQ1(7WRKHOSZLWK DXWRPDWLFDOO\FDOOLQJ'LVSRVH ZKHQWKHVPDUWSRLQWHUJRHVRXWRI
VFRSH+HWROGPHWKDWDVIDUDVKHNQRZVWKHUHLVDEVROXWHO\QRZD\RI LPSOHPHQWLQJDVPDUWSRLQWHULQ1(7UHJDUGOHVVRIWKHODQJXDJH+H VDLG³7KH8VLQJ VWDWHPHQWLVQRWKLQJEXWDVKRUWFXWIRUHQFORVLQJDQ REMHFWFUHDWLRQLQD7U\(QG7U\ EORFNDQGKDYLQJWKH)LQDOO\ EORFN DXWRPDWLFDOO\FDOO'LVSRVH LIWKHREMHFWH[SRVHVWKH,'LVSRVDEOH LQWHUIDFH
7RUHFDS1(7SURJUDPPLQJUHTXLUHVDORWPRUHFROODERUDWLRQZLWKFOLHQWV WRZRUNFRUUHFWO\²RIFRXUVH\RXFDQDOZD\VUHO\RQ)LQDOL]H EXWLW LVQ WFDOOHGLPPHGLDWHO\ DIWHUWKHREMHFWLVORJLFDOO\GHVWUR\HGDQGLWDOVR VORZVGRZQSHUIRUPDQFHEHFDXVHILQDOL]HGREMHFWVUHTXLUHRQHPRUH JDUEDJHFROOHFWLRQWREHUHFODLPHGFRPSOHWHO\ )LQDOO\)UDQFHVFRVD\V\RXFDQRQO\VWDWHDIHZJXLGHOLQHVIRU SURJUDPPHUVZKRXVHWKHREMHFWVXFKDV x x x x
x x
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
3ULYDWH&RQVWWKH7\SH1DPH$V6WULQJ (UUDQG%URZVLQJ+HOSHU 3ULYDWHP(UUDQG%URZVLQJB $V1HZ$FPH+HOS'HVN$SSOLFDWLRQ(UUDQG%URZVLQJ
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
/LVWLQJ7KH&XVWRP,PSOHPHQWDWLRQRI'LVSRVH%RROHDQ 3URWHFWHG2YHUORDGV2YHUULGHV6XE'LVSRVH%\9DOGLVSRVLQJ$V%RROHDQ ,IGLVSRVLQJ7KHQ PB(UUDQG%URZVLQJ'LVSRVH (OVH
,IWKLVPHWKRGZDVFDOOHGIURPWKHILQDOL]HU
WKDWLVDQHUURU -QVN,QVWUXPHQWDWLRQ$VVHUW$VVHUWB )DOVH1RWGLVSRVHGB $VVHPEO\*OREDO([H2U'OO1DPHB WKH7\SH1DPH)DOVH (QG,I (QG6XE
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
3XEOLF)XQFWLRQ)HWFK%\9DOLG$V*XLG $V'DWD6HW &RQVWWKH6RXUFH$V6WULQJ B WKH7\SH1DPH )HWFK ,I'LVSRVHG7KHQ 7KURZ1HZB 2EMHFW'LVSRVHG([FHSWLRQWKH6RXUFH (QG,I
7KH)HWFK PHWKRGFRQWLQXHVLQ/LVWLQJZLWKPDNLQJDWUDFHFDOOZKLFKVD\VWKDWWKHPHWKRG LVVWDUWLQJ7KHQD7U\ EORFNVWDUWVLQZKLFKWKH$SSOLFDWLRQOD\HUZLOOEHFDOOHGDQGWKHUHVXOWRI WKDWPHWKRGZLOOEHUHWXUQHG 1RWH ,QWKHUHDOYHUVLRQRIWKLVPHWKRGWKHUHDUHDFRXSOHRI&DWFK EORFNVDVZHOO,ZLOO GLVFXVVWKHVHLQGHWDLOLQ&KDSWHU³(UURU+DQGOLQJDQG&RQFXUUHQF\&RQWURO´
/LVWLQJ6HFRQG3DUWRIWKH)HWFK 0HWKRG -QVN,QVWUXPHQWDWLRQ7UDFH7UDFH%HJLQ $VVHPEO\*OREDO([H2U'OO1DPHWKH6RXUFH 7U\ 5HWXUQPB(UUDQG%URZVLQJ)HWFKLG
, OOOHDYHWKHGLVFXVVLRQDERXW&DWFK
IRU&KDSWHU )LQDOO\DV\RXFDQVHHLQ/LVWLQJ WKHPHWKRGHQGVZLWKD)LQDOO\ EORFNZKHUHDQHZWUDFH FDOOLVPDGH,W VTXLWHFRPPRQWRVHHD'LVSRVH FDOOLQWKH)LQDOO\ EORFNEXWLQWKLVOLVWLQJ, KDYHNHSWWKHUHVRXUFHWKDWVKRXOGEHGLVSRVHGRIDWWKHLQVWDQFHOHYHOQRWDWWKHPHWKRGOHYHO /LVWLQJ7KLUG3DUWRIWKH)HWFK 0HWKRG )LQDOO\
-QVN,QVWUXPHQWDWLRQ7UDFH7UDFH(QGB $VVHPEO\*OREDO([H2U'OO1DPHWKH6RXUFH (QG7U\ (QG)XQFWLRQ (QG&ODVV , PVXUH\RXDUHZRQGHULQJZKDWWKHFRGHIRU&RQVXPHU+HOSHU ORRNVOLNHVROHW VWDNHDORRNDW WKDWFRGHWRREHIRUHZHPRYHRQWRWKHVHUYLFHGFRPSRQHQWV ,Q/LVWLQJ\RXFDQVHHWKDW,XVH0XVW,QKHULW EHFDXVHLW VQRWLQWHUHVWLQJWRLQVWDQWLDWHWKH &RQVXPHU+HOSHU FODVV,DOVRLPSOHPHQW,'LVSRVDEOH LQWKLVFODVVDQG,NHHSDIODJLQGLFDWLQJ ZKHWKHUWKHLQVWDQFHKDVEHHQGLVSRVHGDOUHDG\ /LVWLQJ)LUVW3DUWRIWKH&RQVXPHU+HOSHU &ODVV
1DPHVSDFH-QVN&RQVXPHU 3XEOLF0XVW,QKHULW&ODVV&RQVXPHU+HOSHU ,PSOHPHQWV,'LVSRVDEOH 3ULYDWHPB'LVSRVHG$V%RROHDQ )DOVH 3URWHFWHG5HDG2QO\3URSHUW\'LVSRVHG $V%ROOHDQ *HW 5HWXUQPB'LVSRVHG (QG*HW (QG3URSHUW\ 7KHLPSOHPHQWDWLRQRIWKH,'LVSRVDEOH LQWHUIDFHLVVWUDLJKWIRUZDUG7KHRQO\SDUWWKDWLVVWUDQJH LVWKDW'LVSRVH7UXH LVFDOOHG7KDQNVWRWKDWWKHFDOOZLOOJRWRWKHVXEFODVVZKLFKPLJKWEH LQWHUHVWHGLQGLVSRVLQJVRPHUHVRXUFHVDVVKRZQLQ/LVWLQJ /LVWLQJ6HFRQG3DUWRIWKH&RQVXPHU+HOSHU &ODVV
3XEOLF6XE'LVSRVH ,PSOHPHQWV,'LVSRVDEOH'LVSRVH ,I1RWPB'LVSRVHG7KHQ 'LVSRVH7UXH PB'LVSRVHG 7UXH *&6XSSUHVV)LQDOL]H0H (QG,I (QG6XE 3URWHFWHG0XVW2YHUULGH6XEB 'LVSRVH%\9DOGLVSRVLQJ$V%RROHDQ )LQDOO\WKH)LQDOL]H LVRYHUULGGHQWRRDQGHYHQLQWKLVFDVH'LVSRVH RIWKHVXEFODVVLV FDOOHGDVVKRZQLQ/LVWLQJ /LVWLQJ7KLUG3DUWRIWKH&RQVXPHU+HOSHU &ODVV 3URWHFWHG2YHUULGHV6XE)LQDOL]H ,I1RWPB'LVSRVHGWKHQ 'LVSRVH)DOVH PB'LVSRVHG 7UXH (QG,I (QG6XE
(QG&ODVV (QG1DPHVSDFH
6WDQGDUGL]HG&RGH6WUXFWXUHIRU6HUYLFHG&RPSRQHQW 7KHFRGHIRUDW\SLFDOVHUYLFHGFRPSRQHQWLVTXLWHVLPLODUWRWKDWRIWKHFRQVXPHUKHOSHU,ZLOORQO\ SRLQWRXWWKHGLIIHUHQFHVDQGQRWUHSHDWZKDWZDVVDLGLQWKHSUHYLRXVVHFWLRQ 6HUYLFHG&RPSRQHQW&RGH6HFWLRQE\6HFWLRQ ,Q/LVWLQJ\RXFDQVHHWKDW,XVHDQ,PSRUWV VWDWHPHQWWRVDYHP\VHOIVRPHZRUNZKHQ ZULWLQJDOOWKH(QWHUSULVH6HUYLFHVUHODWHGDWWULEXWHV7KHQIRUWKHFODVVDZKROHEXQFKRI DWWULEXWHVDUHVHW
1DPHVSDFH$FPH+HOS'HVN$SSOLFDWLRQ
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³VPDUW´DGPLQLVWUDWRU FKDQJHGDQDWWULEXWHIRUDFRXSOHRIFRPSRQHQWVWRLQFUHDVHWKURXJKSXW 2WKHUDQG-XVW,Q7LPH$FWLYDWLRQ ZLOOQRWEHDIIHFWHGLI\RXFKDQJHWKHYDOXHV LQWKH &6(WRRO7KHPHWDGDWDLQWKHDVVHPEO\ZLOOUXOH
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
6RPH$WWULEXWHVWR7KLQN$ERXW,I
,Q6\VWHP5XQWLPH,QWHURS6HUYLFHVWKHUHDUHVRPHDWWULEXWHV, UHFRPPHQG\RXXVHZLWK\RXUFODVVHVDQGLQWHUIDFHVWRSUHSDUHWKHP IRU EHLQJXVHGE\9%FRQVXPHUVVD\7KHDWWULEXWHV, PWKLQNLQJDERXWDUH &ODVV,QWHUIDFH&ODVV,QWHUIDFH7\SH1RQH DQG ,QWHUIDFH7\SH$WWULEXWH&RP,QWHUIDFH7\SH,QWHUIDFH,V,8QNQRZQ
&ODVV,QWHUIDFH&ODVV,QWHUIDFH7\SH1RQH PHDQVWKDWDPDQDJHG FODVVZLOOEHH[SRVHGRQO\WKURXJKLWVLPSOHPHQWHGXVHUGHILQHG LQWHUIDFHV ,QWHUIDFH7\SH$WWULEXWH&RP,QWHUIDFH7\SH,QWHUIDFH,V,8QNQRZQ PHDQVWKDW\RXUPDQDJHGLQWHUIDFHZLOO EHH[SRVHGDVDQ,8QNQRZQEDVHG
&20LQWHUIDFH,I\RXWUHDW\RXUPDQDJHGLQWHUIDFHVDVLPPXWDEOHWKLV ZLOOYHUVLRQMXVWILQHIRUXQPDQDJHGFOLHQWVWRR
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
3ULYDWH&RQVWWKH7\SH1DPH$V6WULQJ (UUDQG%URZVLQJ
7KHVLPLODULW\EHWZHHQWKHFRQVXPHUKHOSHUDQGWKHVHUYLFHGFRPSRQHQWFRQWLQXHVIRUWKHFXVWRP LPSOHPHQWDWLRQRI'LVSRVH%RROHDQ DVVKRZQLQ/LVWLQJ7KHUHLVQ WDQ\WKLQJQHZ,QHHGWR DGGKHUH /LVWLQJ7KH&XVWRP,PSOHPHQWDWLRQRI'LVSRVH%RROHDQ
3URWHFWHG2YHUORDGV2YHUULGHV6XE'LVSRVH%\9DOGLVSRVLQJ$V%RROHDQ
'LVSRVHUHVRXUFHVKHUH
1RQHLQWKLVH[DPSOH ,IQRWGLVSRVLQJWKHQ
,IWKLVPHWKRGZDVFDOOHGIURPWKHILQDOL]HU
WKDWLVDQHUURU -QVN,QVWUXPHQWDWLRQ6HUYLFHG$VVHUW$VVHUWB )DOVH1RWGLVSRVHGB $VVHPEO\*OREDO([H2U'OO1DPHB WKH7\SH1DPH)DOVH (QG,I (QG6XE
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
/LVWLQJ)LUVW3DUWRIWKH)HWFK 0HWKRG $XWR&RPSOHWH)DOVH !B 3XEOLF)XQFWLRQ)HWFK%\9DOLG$V*XLG $V'DWD6HW &RQVWWKH6RXUFH$V6WULQJ B WKH7\SH1DPH )HWFK
'LPD)HWFKHU$V$FPH+HOS'HVN,QWHUIDFHV,)HWFKDEOH%\,G
$IWHUWKDW,VWDUWZLWKDWUDFHFDOODV\RXFDQVHHLQWKHVHFRQGSDUWRIWKH)HWFK PHWKRGVKRZQ LQ/LVWLQJ7KLVWLPHWKHWUDFHFDOOLVPDGHWR-QVN,QVWUXPHQWDWLRQ6HUYLFHG7UDFH LQVWHDG RIWR-QVN,QVWUXPHQWDWLRQ7UDFH%HFDXVHRIWKLVVRPHPRUHLQIRUPDWLRQIURP&RQWH[W8WLO
IRULQVWDQFH ZLOOEHFROOHFWHGDQGXVHGLQWKHWUDFHFDOO7KHPHWKRGWKHQFRQWLQXHVZLWKWKH LQVWDQWLDWLRQRIWKHFRPSRQHQWZKLOHWKH3HUVLVWHQW$FFHVVOD\HUWDNHVSODFH$IWHUWKDWWKHUHLVD 7U\ EORFNLQZKLFKWKHUHVRXUFHLVXVHG /LVWLQJ6HFRQG3DUWRIWKH)HWFK 0HWKRG -QVN,QVWUXPHQWDWLRQB 6HUYLFHG7UDFH7UDFH%HJLQB $VVHPEO\*OREDO([H2U'OO1DPHWKH6RXUFH
D)HWFKHU 1HZB $FPH+HOS'HVN3HUVLVWHQW$FFHVVSD(UUDQG 7U\
&DOOPHWKRGVRQWKHD)HWFKHULQVWDQFH
0RUHDERXWWKLVLQ&KDSWHU
, OOOHDYHWKHGLVFXVVLRQDERXW&DWFK
IRUFKDSWHU 1RWH 7KHLGHDEHKLQGP\XVHRIVWUXFWXUHGH[FHSWLRQKDQGOLQJLVWRXVHD7U\ EORFNIRUZKHQ WKHUHVRXUFHLVXVHG7KH'LVSRVH FDOOIRUWKHUHVRXUFHZLOOEHPDGHLQWKH)LQDOO\ EORFN,IWKHLQVWDQWLDWLRQIDLOVWKHUHLVQRUHVRXUFHWR'LVSRVH 7KLVQHVWLQJZLOOEH VHYHUDOOHYHOVIRUPRUHFRPSOLFDWHGPHWKRGV
)LQDOO\WKHPHWKRGHQGVZLWKD)LQDOO\ EORFNDVVKRZQLQ/LVWLQJ+HUHWKHUHVRXUFHLV GLVSRVHGZLWKKHOSIURP'LVSRVH+HOSHU ZKLFKFDVWVWKHREMHFW,'LVSRVDEOH7KHQDQRWKHU WUDFHFDOOLVPDGHKHUHWRVLJQDOWKDWWKHPHWKRGLVHQGHG /LVWLQJ7KLUG3DUWRIWKH)HWFK 0HWKRG
)LQDOO\ -QVN'LY'LVSRVH+HOSHU&7\SHD5HDGHU2EMHFW -QVN,QVWUXPHQWDWLRQ6HUYLFHG7UDFH7UDFH(QGB $VVHPEO\*OREDO([H2U'OO1DPHWKH6RXUFH (QG7U\ (QG)XQFWLRQ
7KHWZRRWKHUPHWKRGVDUHQRWVKRZQKHUH
(QG&ODVV (QG1DPHVSDFH
8VLQJ,'LVSRVDEOH 7KURXJK6HUYLFHG&RPSRQHQW
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
FODVVHVZLWKRXWGHFODULQJWKHREMHFWDVDQLQWHUIDFH ,GRQ WKDYHWRGR WKHFDVW7KLVZDVVKRZQLQ/LVWLQJ )LQDOO\EHIRUHZHPRYHRYHUWRGLVFXVVLQJWKHFRGHVWUXFWXUHIRUVWRUHGSURFHGXUHV, GOLNHWR PHQWLRQWKDWWKHFRGHIRUWKH6HUYLFHG&RPSRQHQW+HOSHU LVVLPLODUWRWKHFRGHIRUWKH &RQVXPHU+HOSHU7KHNH\GLIIHUHQFHLVWKDW6HUYLFHG&RPSRQHQW+HOSHU LQKHULWVIURP 6HUYLFHG&RPSRQHQW
6WDQGDUGL]HG&RGH6WUXFWXUHIRU6WRUHG3URFHGXUHV ,QDZD\LWIHHOVHYHQPRUHLPSRUWDQWWRVKRZDVWDQGDUGL]HGFRGHVWUXFWXUHIRUVWRUHGSURFHGXUHV EHFDXVHOLWWOHKDVEHHQZULWWHQDERXWWKLVDQGLWLVKDUGHUWRJHWLWULJKW 1RWH 1RWHWKDWXVLQJDVWDQGDUGL]HGFRGHVWUXFWXUHLVQ WWKDWLPSRUWDQWIRUXWLOLWLHV7KHUHIRUH \RX OOILQGWKDW,RIWHQVNLSLWLQWKDWNLQGRIFRGH6HHIRUH[DPSOH -QVN$VVHUWB$VVHUW LQ&KDSWHU
6WDQGDUGL]HG6WRUHG3URFHGXUH&RGH6HFWLRQE\6HFWLRQ /HW VORRNDWDW\SLFDOVWRUHGSURFHGXUH)LUVWWKHQDPHIRUWKHVWRUHGSURFHGXUHDQGLWV SDUDPHWHUVLVJLYHQ
6(712&281721 6(7#DQ(UURU 6(7#DQ(UURU0HVVDJH
6(7#WKH6RXUFH DB(UUDQGB)HWFK%\,G
(;(&-QVN7UDFHB%HJLQ#WKH6RXUFH
$V\RXFDQVHHLQ/LVWLQJWKHUHDUHQRVSHFLILFGHFODUDWLRQVRULQLWLDOL]DWLRQVLQWKLVH[DPSOH RWKHUZLVHWKH\ZRXOGKDYHEHHQVHSDUDWHIURPWKHJHQHUDORQHVIRXQGLQ/LVWLQJ
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
,Q/LVWLQJ\RXFDQVHHDQH[DPSOHRIZKHQWZRVHFRQGDU\VWRUHGSURFHGXUHVDUHFDOOHG7KH ILUVWZLOOIHWFKWKHHUUDQGDQGWKHVHFRQGZLOOIHWFKDOOWKHDFWLRQURZVIRUWKHHUUDQG /LVWLQJ)HWFKLQJWKH(UUDQGDQG,WV$FWLRQV (;(&#D5HWXUQ9DOXH (UUDQGB)HWFK%\,G#LG /HDYHHUURUKDQGOLQJIRUFKDSWHU
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
([LW+DQGOHU ,)#WKH7UDQ&RXQW$W(QWU\ $1'##75$1&2817!%(*,1 ,)#DQ(UURU %(*,1 &200,775$1 (1' (/6(%(*,1 52//%$&.75$1 (1' (1' ,)#DQ(UURU!%(*,1 (;(&-QVN(UURUB5DLVH#WKH6RXUFH #DQ(UURU#DQ(UURU0HVVDJH (1' (;(&-QVN7UDFHB(QG#WKH6RXUFH 5(7851#DQ(UURU 1RWH :HZLOOGLVFXVVILQGLQJDQGWDNLQJFDUHRIHUURUVLQGHSWKLQ&KDSWHU³(UURU+DQGOLQJ DQG&RQFXUUHQF\&RQWURO´
(YDOXDWLRQRI3URSRVDOV
$VLQSUHYLRXVFKDSWHUVLW VWLPHIRUPHWRHYDOXDWHWKHSURSRVDOV,KDYHSUHVHQWHGLQWKLV FKDSWHU²WKHDUFKLWHFWXUHDQGVWDQGDUGL]HGFRGHSURSRVDOV
(YDOXDWLRQRI0\$UFKLWHFWXUH3URSRVDO
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
(YDOXDWLRQRI6WDQGDUGL]HG&RGH6WUXFWXUHV3URSRVDO
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
:KDW V1H[W
$QLPSRUWDQWDVSHFWRIDUFKLWHFWXUHVDQGVRPHWKLQJWKDWKDV PDQ\LPSOLFDWLRQVIRUP\SURSRVHG DUFKLWHFWXUHLVWUDQVDFWLRQV,QWKHQH[WFKDSWHU,ZLOOGLVFXVVVXFKWUDQVDFWLRQV²QRWPXFKDERXW ZKDWWKH\DUHDQGKRZWKH\ZRUNDVLVGHDOWZLWKLQSUDFWLFDOO\DOOERRNV EXWKRZWRUHDVRQZKHQ FKRRVLQJDFHUWDLQVW\OHIRUWDNLQJFDUHRIWUDQVDFWLRQVDQGWKHUHZLOOEHVHYHUDOWLSVWRXVHDORQJ WKHZD\
5HIHUHQFHV
3+HLQFNLHQV%XLOGLQJ6FDODEOH'DWDEDVH$SSOLFDWLRQV$GGLVRQ:HVOH\ 06WRQHEUDNHUDQG3%URZQ2EMHFW5HODWLRQDO'%06V7UDFNLQJWKH1H[W *UHDW:DYH6HFRQG (GLWLRQ0RUJDQ.DXIPDQQ3XEOLVKHUV ,QWURGXFWLRQWRWKH'XZDPLVK2QOLQH6DPSOH$SSOLFDWLRQ KWWSPVGQPLFURVRIWFRPOLEUDU\GHIDXOWDVS"XUO OLEUDU\HQ XVGQGXZRQKWPOGGSO\ZLQGQDDVS
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
&KDSWHU7UDQVDFWLRQV ,17+,6&+$37(5 x x x x x x x x
&KRRVLQJD7UDQVDFWLRQ7HFKQLTXH 7UDQVDFWLRQVLQWKH3URSRVHG$UFKLWHFWXUH $)OH[LEOH7UDQVDFWLRQ'HVLJQ 1HZ3RVVLELOLWLHVWR&RQVLGHUZLWK1(7 7LSVRQ0DNLQJ7UDQVDFWLRQVDV6KRUWDV3RVVLEOH 7LSVRQ'HFUHDVLQJWKH5LVNRI'HDGORFNV 2EVFXUH'HFODUDWLYH7UDQVDFWLRQ'HVLJQ7UDSV (YDOXDWLRQRI3URSRVDOV
7UDQVDFWLRQDOGHVLJQLVFUXFLDOIRUDVXFFHVVIXO2QOLQH7UDQVDFWLRQV3URFHVVLQJ2/73 DSSOLFDWLRQ DQG\HWLWLVRIWHQWRWDOO\³IRUJRWWHQ´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³)DFWRUVWR&RQVLGHULQ&KRRVLQJD6ROXWLRQWRD3UREOHP´ 1RWH 7KLVFKDSWHUGLVFXVVHVJHQHUDOVROXWLRQVIRUWUDQVDFWLRQV,Q&KDSWHU³'DWD$FFHVV´, OO ELQGWKHVROXWLRQVWRP\GDWDDFFHVVSURSRVDODQGVSHFLILFDOO\WRWKHDUFKLWHFWXUH /RFNLQJDQGFRQFXUUHQF\FRQWURODUHDWWKHKHDUWRIWUDQVDFWLRQV:HZLOOWRXFKRQWKH VXEMHFWLQWKLVFKDSWHUEXWZH OODOVRGLVFXVVORFNLQJDQGFRQFXUUHQF\FRQWUROLQPRUH GHWDLOLQ&KDSWHU³(UURU+DQGOLQJDQG&RQFXUUHQF\&RQWURO´
%HIRUHZHJHWVWDUWHGLW VLPSRUWDQWWKDW\RXKDYHDILUPJUDVSRIWKHIROORZLQJWRSLFVUHJDUGLQJ JHQHUDOWUDQVDFWLRQWKHRU\DQGDXWRPDWLFWUDQVDFWLRQVLQ1(7EHFDXVH,ZLOOQRWGLVFXVVWKHPLQ GHWDLOLQWKLVFKDSWHURUDQ\ZKHUHLQWKLVERRN x x x x x x
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
&KRRVLQJD7UDQVDFWLRQ7HFKQLTXH
$V\RXNQRZ\RXFDQFKRRVHIURPVHYHUDOGLIIHUHQWWHFKQLTXHVZKHQGHDOLQJZLWKWUDQVDFWLRQV,Q WKLVVHFWLRQ,FRPSDUHGLVWULEXWHGWUDQVDFWLRQVZLWKORFDOWUDQVDFWLRQVDQGGLVFXVVWKHGLIIHUHQW DSSURDFKHVWRZRUNLQJZLWKWKRVHW\SHVRIWUDQVDFWLRQVVXFKDVXVLQJWUDQVDFWLRQDOVHUYLFHG FRPSRQHQWV$'21(7DQGVWRUHGSURFHGXUHV)LUVWOHW VVWDUWE\ORRNLQJDWWKHPDLQJRDORIDQ\ FKRVHQWUDQVDFWLRQWHFKQLTXH
7KH0DLQ*RDORI$Q\&KRVHQ7UDQVDFWLRQ7HFKQLTXH
$V,PHQWLRQHGLQ&KDSWHUWKHPDLQJRDORIDQ\FKRVHQWUDQVDFWLRQWHFKQLTXHLVWKDWLWSURGXFHV FRUUHFW UHVXOWVZKHQQHHGHGIRUFHUWDLQVFHQDULRV.HHSWKLVLQPLQGZKHQ\RXUHDGWKLVFKDSWHU V GLVFXVVLRQVRISHUIRUPDQFHVFDODELOLW\PDLQWDLQDELOLW\DQGVRRQ&RUUHFWQHVVLVPRVWLPSRUWDQW
$OWKRXJK\RXPD\WKLQNWKDWLWLVDJLYHQWKDWFRUUHFWQHVVLVH[WUHPHO\LPSRUWDQWWKLVQRWLRQJRHV RQHVWHSIXUWKHUZLWKWUDQVDFWLRQV5HFDOOZKDW,VDLGLQ&KDSWHU³,QWURGXFWLRQ´DERXWWKHQHZ IHDWXUHRI&20FDOOHGSURFHVVUHF\FOLQJ$OWKRXJKQRERG\OLNHVDPHPRU\OHDNDQGZHDOOWU\ WRDYRLGDQGRUWU\WRILQGWKHPWKH\ UHRIWHQQRWDODUJHSUREOHPHYHQIRUFULWLFDO:HEVLWHV²\RX MXVWUHF\FOHWKHSURFHVVRQFHDGD\DQGQRERG\QRWLFHV+RZHYHULIDWWKHYHU\VDPH:HEVLWHV RQHWUDQVDFWLRQDGD\RUDPRQWKSURGXFHVDQLQFRUUHFWUHVXOWOHDGLQJWRDQLQFRQVLVWHQWGDWDEDVH VXFKOHDNVEHFRPHGLVDVWHUV7KHJRRGQHZVLVWKDWDOOWKHWHFKQLTXHV,GLVFXVVLQWKLVFKDSWHUFDQ EHXVHGWRFUHDWHFRUUHFWWUDQVDFWLRQV+DYLQJVDLGWKDWOHW VIRFXVRQLVVXHVRIUDZSHUIRUPDQFH
'HVFULSWLRQRIWKH6HOHFWLRQRI7UDQVDFWLRQ7HFKQLTXHV
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
7KHILQDOFDWHJRU\LVFRQWUROOHUWHFKQRORJ\VXFKDV$'21(7WKDWZUDSVORFDO764/WUDQVDFWLRQV DQGWKHWZRZUDSSHUVIRU'7&WUDQVDFWLRQQDPHO\&20WUDQVDFWLRQVDQG764/GLVWULEXWHG WUDQVDFWLRQV 7KHODVWDQGYHU\FRPPRQWUDQVDFWLRQZUDSSHULVQ WUHDOO\DZUDSSHU, PUHIHUULQJ WRPDNLQJSXUH764/ WUDQVDFWLRQV,IZHXVHWKHZUDSSHUVDVFDWHJRULHVWKHVLWXDWLRQVKRZQLQ 7DEOHRFFXUV :UDSSHU
&20WUDQVDFWLRQV
$'21(7WUDQVDFWLRQV
'LVWULEXWHG764/WUDQVDFWLRQV 3XUH764/WUDQVDFWLRQV
7DEOH 7UDQVDFWLRQ:UDSSHU7HFKQLTXHV 0DQXDO$XWRPDWLF3URJUDPPHG'HFODUHG $XWRPDWLF 0DQXDO 0DQXDO 0DQXDO
/RFDO'LVWULEXWHG 'LVWULEXWHG /RFDO
'LVWULEXWHG /RFDO
1RWH ,Q7DEOH\RXVHHWKDWXVLQJ&20WUDQVDFWLRQVDOVRPHDQVXVLQJGLVWULEXWHG WUDQVDFWLRQV7KLVLVRIWHQRYHUNLOOHVSHFLDOO\LI\RX KDYHRQO\RQH5HVRXUFH0DQDJHU50 SDUWLFLSDWLQJLQWKHWUDQVDFWLRQ(YHQWKRXJKDGHOHJDWHGFRPPLWZLOOEHXVHGWRRSWLPL]H DZD\VRPHRYHUKHDGIURPWKH3&SURWRFROWKLVNLQGRIWUDQVDFWLRQLVH[SHQVLYH
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
1RWH $OWKRXJK\RXREYLRXVO\GRQRWKDYHWRXVHVWRUHGSURFHGXUHV,KLJKO\UHFRPPHQGLW,Q &KDSWHU³$UFKLWHFWXUH´,UHFRPPHQGHGWKDW\RXDOZD\VXVHVWRUHGSURFHGXUHVZKHQ FRPSRQHQWVFDOOWKHGDWDWLHU7KLVSUHVHQWVDQXPEHURISUREOHPVEXWWKH\DUHVROYDEOH ,Q&KDSWHU³'DWD$FFHVV´,SUHVHQWDIHZH[DPSOHVRIVXFKSUREOHPV DQGRIIHU VXJJHVWLRQVIRUWKHLUVROXWLRQ
/LVWLQJ$Q([DPSOHRID&20&RQWUROOHG7UDQVDFWLRQ D&RPPDQG([HFXWH1RQ4XHU\ 1RWH ,W VQRWRQO\GDWDEDVHHQJLQHVWKDWDUH50V'RQ WIRUJHWWKDW4XHXHG&RPSRQHQWV4& DQG0604DUHRWKHUH[DPSOHVRI50V,Q WKHIXWXUH,KRSHWRVHH'7&HQDEOHG50VIRU ([FKDQJH VGDWDVWRUDJHWKH:LQGRZVILOHV\VWHPDQGVRRQ
$PDMRUDGYDQWDJHZLWKDXWRPDWLFWUDQVDFWLRQVLVWKDW\RXFDQRIWHQUHXVHFRPSRQHQWVZLWKRXW FRGHFKDQJHVDQGWKH\FDQGLUHFWO\SDUWLFLSDWHLQWKH WUDQVDFWLRQVRIWKHQHZFRQVXPHUV2QH UHDVRQIRUWKLVLVWKDWDOOWKHFRPSRQHQWVSDUWLFLSDWLQJLQRQHWUDQVDFWLRQFDQRSHQDFRQQHFWLRQRI WKHLURZQ7KHFRQQHFWLRQVZLOODXWRHQOLVWLQWKHWUDQVDFWLRQ $'21(77UDQVDFWLRQV $'21(7WUDQVDFWLRQVDUHFRQFHSWXDOO\UHDOO\MXVWDZUDSSHUDURXQGRUGLQDU\764/WUDQVDFWLRQV /LVWLQJVKRZVDQH[DPSOHRIKRZ$'21(7WUDQVDFWLRQVFDQEHXVHG,QWKLVFDVHWKHUHLVD WUDQVDFWLRQDURXQGDFDOOWRDVWRUHGSURFHGXUH2IFRXUVHWKHUHLVPRUHWRLWWKDQWKDW²\RXKDYH WRPDNHDQD&RQQHFWLRQ5ROOEDFN7UDQV DWWKHWLPHRIDQH[FHSWLRQ /LVWLQJ$Q([DPSOHRIDQ$'21(7&RQWUROOHG7UDQVDFWLRQ D7UDQVDFWLRQ D&RQQHFWLRQ%HJLQ7UDQVDFWLRQ D&RPPDQG7UDQVDFWLRQ D7UDQVDFWLRQ D&RPPDQG([HFXWH1RQ4XHU\ D7UDQVDFWLRQ&RPPLW 3XUH764/7UDQVDFWLRQV $OWKRXJK764/WUDQVDFWLRQVDUHXVHGE\$'21(7WUDQVDFWLRQVZKHQ,UHIHUWR³SXUH´764/ WUDQVDFWLRQV, PUHIHUULQJWR764/WUDQVDFWLRQVFRQWUROOHGE\64/VFULSWVRUE\VWRUHGSURFHGXUHV /LVWLQJVKRZVDQH[DPSOHRIKRZWKLVPLJKWORRN2QFHDJDLQ,KDYHH[FOXGHGWKHFRGHIRU 52//%$&.75$1 DQGWKHFRPSOHWHFRGHVWUXFWXUHGLVFXVVHGLQ&KDSWHU /LVWLQJ6LPSOLILHG([DPSOHRID3XUH764/7UDQVDFWLRQ %(*,175$16$&7,21
83'$7(HUUDQG 6(7FORVHGE\ #XVHU,G FORVHGGDWHWLPH *(7'$7( VROXWLRQ #VROXWLRQ :+(5(LG #LG ,16(57,172DFWLRQ LGHUUDQGBLG GHVFULSWLRQFUHDWHGE\ FUHDWHGGDWHWLPHFDWHJRU\ 9$/8(6 #DQ$FWLRQ,G#LG #GHVFULSWLRQ#XVHU,G *(7'$7( #D&DWHJRU\ &200,775$16$&7,21
:K\&DUH$ERXW:KLFK7UDQVDFWLRQ7HFKQLTXHWR8VH"
7KHUHDUHKXJHGLIIHUHQFHVEHWZHHQWKHGLIIHUHQWWHFKQLTXHVZKHQLWFRPHVWRSHUIRUPDQFHDQG VFDODELOLW\7KHELJJHVWGLIIHUHQFHLVEHWZHHQORFDOWUDQVDFWLRQVDQGGLVWULEXWHGWUDQVDFWLRQV EHFDXVHWKH3&SURWRFROXVHGE\GLVWULEXWHGWUDQVDFWLRQVLVSUHWW\H[SHQVLYHDVIDUDVRYHUKHDGLV FRQFHUQHG7DEOHSUHVHQWVDVXEMHFWLYHRYHUYLHZRIWKHDGYDQWDJHVDQGGLVDGYDQWDJHVRIHDFK WHFKQLTXHZKHQ\RXZRUNZLWKRQH501RWHWKDWWKHORZHUWKHYDOXHWKHEHWWHU
)DFWRU
7KURXJKSXW
7DEOH &RPSDULVRQRIWKH7UDQVDFWLRQ7HFKQLTXHVIRU2QH50 &20 $'2 7UDQVDFWLRQV 7UDQVDFWLRQV
3DUWLFLSDWLRQLQWUDQVDFWLRQVWRJHWKHUZLWKRWKHU XQNQRZQ FRPSRQHQWV *HWWLQJSRUWDEOHFRGHZLWKUHJDUGWRGLIIHUHQW GDWDEDVHSURGXFWV )LQHJUDLQHGFRQWURORIZKHQWRVWDUWDQGHQG WUDQVDFWLRQV
3XUH764/ 7UDQVDFWLRQV
$'2DQG6\PPHWULF0XOWL3URFHVVLQJ 0DFKLQHV
$IHZ\HDUVDJR,UDQDWHVWRI&20WUDQVDFWLRQV$'2WUDQVDFWLRQVQRW $'21(7 DQGSXUH764/WUDQVDFWLRQVZLWK9%ZULWWHQFRPSRQHQWV, ZDVSX]]OHGZKHQ,VDZWKDWWKH&20FRQWUROOHGWUDQVDFWLRQVKDGD KLJKHUWKURXJKSXWWKDQWKH$'2 FRQWUROOHGWUDQVDFWLRQV,WWRRNPHD ZKLOHWRXQGHUVWDQGWKDWLWZDVRQO\WUXHRQ6\PPHWULFDO0XOWL3URFHVVLQJ 603 PDFKLQHV:KHQ,WXUQHGRIIRQHRIWKHWZR&38VLQP\WHVW DSSOLFDWLRQVHUYHUWKHWKURXJKSXWIRUWKH$'2FRQWUROOHGWUDQVDFWLRQV DFWXDOO\LQFUHDVHGDQGWKHUHVXOWLQJUHODWLRQEHWZHHQ$'2WUDQVDFWLRQV DQG&20WUDQVDFWLRQVWXUQHGRXWDVH[SHFWHG
7KHUHLVPRUHWKDQRQH50² ,I\RXKDYHPRUHWKDQRQH50WKDWPXVWSDUWLFLSDWHLQWKH WUDQVDFWLRQV\RXVKRXOGXVHGLVWULEXWHGWUDQVDFWLRQV &RPSRQHQWVWKDWDUH³XQDZDUH´RIHDFKRWKHUFRH[LVW² ,I\RXQHHGWRUHXVHDFRPSRQHQW WKDWLVRXWRI\RXUFRQWURORULI\RXGRQ WZDQWWRUHZULWHWKHFRPSRQHQWWRILWLQWR\RXU DUFKLWHFWXUHRIORFDOWUDQVDFWLRQV\RXFDQHDVLO\VROYHWKHSUREOHPZLWKGLVWULEXWHG WUDQVDFWLRQVLQVWHDG7KLVLVDOVRDXVHIXOWHFKQLTXHIRUXVLQJOHJDF\FRPSRQHQWVLQWKH1(7 ZRUOG
&RQFOXVLRQDQG3URSRVDO&KRRVLQJD7UDQVDFWLRQ7HFKQLTXH
0\SURSRVDOIRUFKRRVLQJDWUDQVDFWLRQWHFKQLTXHLVVLPSOH²XVHSXUH764/WUDQVDFWLRQVLI\RX RQO\KDYHRQH50RWKHUZLVHXVH&20WUDQVDFWLRQV$OVRXVH&20WUDQVDFWLRQVLI\RXQHHG WUDQVDFWLRQVWRVSDQXQNQRZQFRPSRQHQWVWKDWDUHQRWDOOZLWKLQ\RXUFRQWURO7KLVLVDQRWKHU VLWXDWLRQZKHUH&20WUDQVDFWLRQVVKLQH
7UDQVDFWLRQVLQWKH3URSRVHG$UFKLWHFWXUH
7UDQVDFWLRQGHVLJQLVH[WUHPHO\LPSRUWDQWDQGZDVDNH\IDFWRU,HYDOXDWHGZKHQFUHDWLQJWKH DUFKLWHFWXUH,GHVFULEHGLQWKHODVWFKDSWHU,QWKLVVHFWLRQ, OOGLVFXVVKRZWKHWUDQVDFWLRQVILWLQ WKHDUFKLWHFWXUH%XWEHIRUHZHGRWKLVOHW VUHYLHZWKHSURSRVHGDUFKLWHFWXUH
5HYLHZRIWKH3URSRVHG$UFKLWHFWXUH
)LJXUHSUHVHQWVWKHDUFKLWHFWXUHIRUWKHVDPSOHDSSOLFDWLRQ$FPH+HOS'HVNZKLFK\RXILUVWVDZ LQ&KDSWHU.HHSWKLVILJXUHLQPLQGLQWKHIROORZLQJGLVFXVVLRQRIZKDW,FRQVLGHUWREHLPSRUWDQW LQIRUPDWLRQDERXWDQHDUOLHUDWWHPSWRIDQDUFKLWHFWXUH,PDGH7KHILJXUHDSSOLHVWRERWKP\ROG DQGQHZDWWHPSW )LJXUH0\DUFKLWHFWXUHSURSRVDODSSOLHGWRWKHVDPSOHDSSOLFDWLRQ$FPH+HOS'HVN
(DUOLHU$UFKLWHFWXUH$WWHPSW
, YHXVHGVHYHUDOGLIIHUHQWDUFKLWHFWXUHSURSRVDOVRYHUWKH\HDUV2QHWKDW ,XVHGDORW²OHW VFDOOLWWKH³ROGDUFKLWHFWXUH´²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
7KHPDLQGUDZEDFNZDVWKDWXVLQJWUDQVDFWLRQVRQO\LQWKH3HUVLVWHQW $FFHVVOD\HUKDGDKXJHLQIOXHQFHRQGHVLJQ$OOWUDQVDFWLRQVKDGWRUHDFK RQHPHWKRGLQWKH3HUVLVWHQW$FFHVVOD\HULQRQHFDOO2IFRXUVHWKLVLV SRVVLEOHEXWLWJDYHXQLQWXLWLYHFRGHIRUWKH$SSOLFDWLRQDQG'RPDLQ OD\HUVDQGLWDOVRPDGHUHXVLQJWKH'RPDLQDQG3HUVLVWHQW$FFHVVFODVVHV IRUGLIIHUHQW$SSOLFDWLRQFODVVHVKDUGHU
$QRWKHUGUDZEDFNZKHQ,XVHGWKHDUFKLWHFWXUHZLWKPDQXDOWUDQVDFWLRQV ZDVWKDW,UHOLHGRQWKHVWRUHGSURFHGXUHVWRFRQWUROWKHWUDQVDFWLRQV7KH SUREOHPZDVZKHQVHYHUDOVWRUHGSURFHGXUHVKDGWREHFDOOHGIURPD 3HUVLVWHQW$FFHVVOD\HUFODVVWRSDUWLFLSDWHLQRQHVLQJOHWUDQVDFWLRQ,Q
WKLVVLWXDWLRQ,OHW$'2FRQWUROWKHWUDQVDFWLRQ
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
ZKHQWRVWDUWDQGVWRSWUDQVDFWLRQV,ILWLVDUHDOSUREOHPZLWKDXWRPDWLFWUDQVDFWLRQVWKDWIHWFKLQJ PHWKRGVDOVRVWDUWV'7&WUDQVDFWLRQVWKHFODVVHVLQWKH$SSOLFDWLRQOD\HUKDYHWREHVSOLW7KLVLV XQIRUWXQDWHEHFDXVHWKHXVHFDVHWKHQQHHGVWZRGLIIHUHQW$SSOLFDWLRQOD\HUFODVVHV)RUWXQDWHO\ WKH&RQVXPHU+HOSHUOD\HUFDQKLGHWKHIDFWWKDWWKHFODVVKDVEHHQVSOLWIURPWKH&RQVXPHUOD\HU
$)OH[LEOH7UDQVDFWLRQ'HVLJQ
,I\RXIROORZWKHUHFRPPHQGDWLRQWRXVHORFDOWUDQVDFWLRQVZKHQ\RXRQO\KDYHRQH50EXWZDQW WRSUHSDUHIRUDSRVVLEOHIXWXUHFKDQJHWRGLVWULEXWHGWUDQVDFWLRQVDQGKDYHDVIHZSURJUDPPLQJ FKDQJHVDVSRVVLEOHWKHUHDUHDFRXSOHRIWKLQJVWRWKLQNDERXW
7UDQVDFWLRQ&RQWURO
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
/LVWLQJ([FHUSW IURP6WRUHG3URFHGXUH6KRZLQJD6LPSOLILHG3XUH764/7UDQVDFWLRQ %(*,175$16$&7,21
83'$7(HUUDQG 6(7FORVHGE\ #XVHU,G FORVHGGDWHWLPH *(7'$7( VROXWLRQ #VROXWLRQ :+(5(LG #LG ,16(57,172DFWLRQ LGHUUDQGBLG 9$/8(6 #DFWLRQ,G#LG &200,775$16$&7,21
7UDQVDFWLRQ$WWULEXWH9DOXH +RZVKRXOG\RXGHFODUHWKHWUDQVDFWLRQUHODWHGDWWULEXWHVIRUWKHFRPSRQHQWVLQWKLVVLWXDWLRQ ZKHQSXUH764/WUDQVDFWLRQVDUHXVHG"7KHUHDUHVHYHUDOFRUUHFWZD\VWRGRLW2QHSRVVLEOH SURSRVDOLVWRXVHWKHVHWWLQJVVKRZQLQ7DEOH 1RWH ,DVVXPHKHUHWKDWSD+HOSHU LVQ W6KDUHG$V\RXUHDGLQ&KDSWHULWLVSUHIHUDEOHWR XVH 6KDUHG ZKHQHYHUSRVVLEOHIURPDSHUIRUPDQFHSHUVSHFWLYH
&RPSRQHQW (UUDQG6ROYLQJ SD+HOSHU
7DEOH 7UDQVDFWLRQ6HWWLQJV3URSRVDO 7UDQVDFWLRQ7UDQVDFWLRQ2SWLRQ 6XSSRUWHG 6XSSRUWHG
%HFDXVH(UUDQG6ROYLQJ LVWKHURRWFRPSRQHQWIRUWKLVVFHQDULRDQGXVHV6XSSRUWHG WUDQVDFWLRQV WKHUHZLOOEHQR'7&WUDQVDFWLRQVWDUWHG7KLVLVH[DFWO\WKHUHVXOW,ZDQW%XWGLG,DFKLHYHWKH UHVXOWLQWKHFKHDSHVWZD\"1R,FDQGREHWWHUWKDQWKLV$VOLJKWLPSURYHPHQWZRXOGEHWRFKDQJH SD+HOSHU WRKDYH'LVDEOHG LQVWHDGRI6XSSRUWHG7KLVPDNHVLWSRVVLEOHWRVDYHRQHFRQWH[WEXW , PVWLOOQRWVDWLVILHG/HW VLQYHVWLJDWHZK\QRW :KHQ6XSSRUWHG LVXVHGDVWKH7UDQVDFWLRQ7UDQVDFWLRQ2SWLRQ YDOXHLWPHDQVWKDW\RXKDYH WRXVHMXVWLQWLPHDFWLYDWLRQ-,7 $V\RXUHFDOOIURPWKHGLVFXVVLRQDERXW-,7LQ&KDSWHU,
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
7DEOH 7UDQVDFWLRQ6HWWLQJV3URSRVDO 7UDQVDFWLRQ7UDQVDFWLRQ2SWLRQ 'LVDEOHG 'LVDEOHG
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x x
7KHFXUUHQWFRPSRQHQWVDOVRQHHGWRKLWDQRWKHU50 7KHFXUUHQWFRPSRQHQWVQHHGWREHXVHGE\RWKHUFRPSRQHQWVZKLFKLQWXUQKLWDQRWKHU 50RUWKH\XVHDQRWKHUDUFKLWHFWXUHIRUFRQWUROOLQJWUDQVDFWLRQV
,QWKHILUVWFDVHLWZLOOXVXDOO\EHWKHGHYHORSHUVZKRPDNHWKDWFKDQJHDQ\ZD\,QWKHVHFRQG FDVH,WKLQNLW VUHDVRQDEOHWRFRQWDFWWKHGHYHORSHUVWRR $QRWKHUUHDVRQ²DQGFHUWDLQO\DELJRQH²IRUQRWOHWWLQJDGPLQLVWUDWRUVFKDQJHWKHVHWWLQJVLQWKH &RPSRQHQW6HUYLFHV([SORUHUIRUFHUWDLQDWWULEXWHVLVWKDWWKHFRPPRQODQJXDJHUXQWLPHZRQ W ORRNLQWKH&20FDWDORJEXWUDWKHULQWKHPHWDGDWDIRUWKHDVVHPEO\WRNQRZKRZWRGHDOZLWK FRPSRQHQWVUHJDUGLQJ2EMHFW3RROLQJIRUH[DPSOH7KHRQO\YDOXHVWKDWVKRXOGEHFKDQJHGLQWKH &RPSRQHQW6HUYLFHV([SORUHUDUHGHSOR\PHQWUHODWHGYDOXHVVXFKDVREMHFWFRQVWUXFWLRQVWULQJV QXPEHURIREMHFWVLQWKHREMHFWSRROVDQGVLPLODUGHSOR\PHQWUHODWHGYDOXHV²QRWWKHVHWWLQJVIRU H[DPSOHWKDWHQDEOHREMHFWFRQVWUXFWLRQVWULQJVRUREMHFWSRROLQJ
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²RUKDVEHHQUHOHDVHGZKHQ \RXUHDGWKLV²ZLOOVXSSRUWWUDQVDFWLRQVWKDWVSDQVHYHUDOFRQQHFWLRQVEXWLWLVQ WGRFXPHQWHGDVD UHTXLUHPHQWE\0LFURVRIWWKDW³7LJKWO\&RXSOHG;$7KUHDGV´DUHDPXVWIRUDQ50WRVXSSRUW'7& WUDQVDFWLRQV $VDIHUHFRPPHQGDWLRQLVWRXVHRQO\RQHFRQQHFWLRQLQ\RXU'7&WUDQVDFWLRQVWRR 2QWKHRWKHUKDQGEHFDUHIXOWKDW\RXGRQ WVHQGDFRQQHFWLRQEHWZHHQSURFHVVHVRUPDFKLQHV 1RWH
7KHUHDUHWZRSUREOHPVLQVWDUWLQJZLWKPDQXDOWUDQVDFWLRQVDQGWKHQH[SHFWLQJ\RXUFRPSRQHQWV WRZRUNZLWKDXWRPDWLFWUDQVDFWLRQVZLWKRXWFRGHFKDQJHV7KHILUVWLVWKDW\RXKDYHWRUHPHPEHU WKDWDXWRPDWLFWUDQVDFWLRQVUHTXLUH-,7VRWKDWWKHPHPEHUVWDWHLVORVWZKHQWKHWUDQVDFWLRQ HQGV:KDW,PHDQLVWKDW\RXKDYHWRFRGH\RXUORFDOWUDQVDFWLRQVDVLI-,7ZHUHEHLQJXVHG7KDW LVGHILQLWHO\P\LQWHQWLRQZLWKWKHDUFKLWHFWXUHSURSRVDO 7KHVHFRQGSUREOHPLVWKDW\RXJHWVOLJKWO\GLIIHUHQWWUDQVDFWLRQVHPDQWLFVLQWKHWZRFDVHV
2QH&RQWUROOLQJ3DUW
,W VSRVVLEOHWRXVHVD\%(*,175$16$&7,21 DQG&200,775$16$&7,21 LQ\RXUVWRUHGSURFHGXUHV HYHQLIWKH\DUHWREHXVHGIURP&20FRPSRQHQWV64/6HUYHUZLOONHHSWUDFNRIWKHFXUUHQW ##75$1&2817 WRGHWHUPLQHZKHWKHU&200,775$16$&7,21 UHDOO\PHDQVD&200,7 RUZKHWKHULWLV RQO\VXEWUDFWLQJRQHIURP##75$1&28177KDW VSHUIHFWO\DFFHSWDEOH
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
([LW+DQGOHU ,)#WKH7UDQ&RXQW$W(QWU\ $1'##75$1&2817!%(*,1 ,)#DQ(UURU %(*,1 &200,775$1 (1' (/6( %(*,1 52//%$&.75$1 (1' (1' 1RWH 2UDFOH'%DQGHYHQWKH64/VWDQGDUGGRQRWVXSSRUW%(*,175$16$&7,21EXWWKH ILUVW64/FRPPDQGZLOOVWDUWWKHWUDQVDFWLRQ
6RPHWKLQJHOVH\RXPD\QHHGWRDGGWRWKLVVROXWLRQLVKDQGOLQJWKHWUDQVDFWLRQVWKDWVSDQRYHU VHYHUDOVWRUHGSURFHGXUHVIURP\RXU$'21(7FRGH7KHQ\RXFDQXVH &RQWH[W8WLO,V,Q7UDQVDFWLRQ WRGHWHUPLQHZKHWKHU\RXVKRXOGVWDUWDQHZ$'21(7 WUDQVDFWLRQ
7UDQVDFWLRQ,VRODWLRQ/HYHO7,/ ,I\RXXVH&20WUDQVDFWLRQVWKH7UDQVDFWLRQ,VRODWLRQ/HYHO7,/ ZLOOEHVHWIRU\RX,QWKHFDVH RI&20\RXFDQFRQILJXUHWKH7,/\RXZDQWWRKDYH)RU&20LWZLOODOZD\VEH 6(5,$/,=$%/(,W VEHWWHUWREHVDIHWKDQVRUU\ 1RWH
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
,IDWUDQVDFWLRQLVQHHGHGLWZLOOEHVWDUWHGEXWRQO\LIWKHUHLVQ WDFXUUHQWWUDQVDFWLRQ 7,/LVQRW6(7 LIDWUDQVDFWLRQLVDOUHDG\VWDUWHGH[FHSWLI6(5,$/,=$%/( LVWKHQHHGHGOHYHO 7KDWLV6(5,$/,=$%/( ZLOOEH6(7HYHQLIWKHUHLVDFXUUHQWWUDQVDFWLRQ
,XVHWKHIROORZLQJUXOHVZKHQ,JHQHUDWHWKH64/VFULSWLQWKHFRPSRQHQWV x x
,IWKH64/VFULSWRQO\FDOOVRQHVWRUHGSURFHGXUHDWUDQVDFWLRQLVQRWVWDUWHGIURPWKH64/ VFULSW7KHVWRUHGSURFHGXUHVWDUWVDWUDQVDFWLRQLILWLVQHHGHG ,IWKH64/VFULSWFDOOVPRUHWKDQRQHVWRUHGSURFHGXUHWKH64/VFULSWVWDUWVDWUDQVDFWLRQ LILWLVQHHGHG 8QIRUWXQDWHO\WKHRQO\VROXWLRQKHUHLVWKDWWKHLQYROYHGVWRUHGSURFHGXUHV PXVWEHLQYHVWLJDWHGWRGHFLGHZKHWKHUDWUDQVDFWLRQLVQHHGHGDQGVKRXOGEHVWDUWHGIURP WKH64/VFULSWDQGZKDW7,/LVQHHGHG7KLVFDQEHWURXEOHVRPHEXWWKHUHLVQRVKRUWFXW
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
$XWR&RPSOHWH 9HUVXV6HW&RPSOHWH 6HW$ERUW
$V\RXNQRZZLWK&20WUDQVDFWLRQV\RXPXVWYRWHRQWKHRXWFRPH6KRXOGLWEH&200,7 RU 52//%$&."(YHQLQWKLVFDVH\RXKDYHWRSD\H[WUDDWWHQWLRQWRVXSSRUWWKHIOH[LELOLW\SDWWHUQWKDW, GLVFXVVLQWKLVVHFWLRQ
1HZ3RVVLELOLWLHVWR&RQVLGHUZLWK1(7
1(7EULQJVXVDIORRGRIQHZSRVVLELOLWLHVDOWKRXJKQRWDOORIWKHPDUHHYHQFORVHWRRSWLPDO,Q WKLVVHFWLRQ,SRLQWRXWDIHZZHDNQHVVHVWKDWWKHPDUNHWLQJGHSDUWPHQWLQ5HGPRQGGRHVQ WWDON PXFKDERXW
7UDQVDFWLRQVDQG;0/:HE6HUYLFHV
$PHWKRGRQDQ;0/:HEVHUYLFHFDQXVHDQDXWRPDWLFWUDQVDFWLRQRZLQJWRDSDUDPHWHURIWKH :HE0HWKRG DWWULEXWH 7KDWWUDQVDFWLRQFDQVSDQVHYHUDO1(7REMHFWVEXWLWFDQQRWVSDQVHYHUDO ;0/:HEVHUYLFHV7KHWUDQVDFWLRQZRQ WIORZ$WILUVWWKLVPD\VHHPOLNHDJUHDWOLPLWDWLRQEXWLW PDNHVVHQVHEHFDXVHRIWKHIROORZLQJUHDVRQV x
x x x
5RXQGWULSVEHWZHHQFRPSXWHUVDUHDOZD\VH[SHQVLYH:KHQ;0/:HEVHUYLFHVDUHXVHGLW LVQRWEHFDXVHWKH\DUHWKHPRVWSHUIRUPDQFHHIILFLHQWZD\RIFRPPXQLFDWLQJLWLVEHFDXVH RIRWKHUUHDVRQV:KDW,PHDQLVWKDWWUDQVDFWLRQVVSDQQLQJVHYHUDOFDOOVWR;0/:HE VHUYLFHVZRXOGEHORQJHUWKDQZLWKRWKHUFRPPXQLFDWLRQPHFKDQLVPVDQG\RXGRQ WZDQW WRKDYHORQJWUDQVDFWLRQV 7\SLFDOSURWRFROVIRUGLVWULEXWHGWUDQVDFWLRQVVXFKDV2/(WUDQVDFWLRQVDVDUHXVHGE\ '7& DUHLQKHUHQWO\FRQQHFWLRQRULHQWHG;0/:HEVHUYLFHVDUHQRW
)RUWKHPRPHQWWKHZD\WRSURFHHGWRJHWWUDQVDFWLRQVHPDQWLFVRYHUVHYHUDO;0/:HEVHUYLFHVLV WRXVHDFRPSHQVDWLQJPHFKDQLVPLQVWHDG,WZRQ WEHSRVVLEOHWRIXOILOOWKH$&,'SURSHUWLHVEXW WKLVLVWKHEHVW\RXFDQGR8QIRUWXQDWHO\WKH&RPSHQVDWLQJ5HVRXUFH0DQDJHU&50 ZRQ WKHOS \RXLQWKLVVLWXDWLRQHYHQWKRXJKLWVQDPHVXJJHVWVWKDWLWZLOO
7KH&RPSHQVDWLQJ5HVRXUFH0DQDJHU&50
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
7LSVRQ0DNLQJ7UDQVDFWLRQVDV6KRUWDV3RVVLEOH
7KHOHQJWKRIWUDQVDFWLRQVDIIHFWVVFDODELOLW\(DFK WUDQVDFWLRQKROGVRQWRUHVRXUFHVVXFKDVORFNV LQWKHGDWDEDVH,I\RXFDQVKRUWHQ\RXUWUDQVDFWLRQV\RXFDQVHUYLFHPRUHXVHUVDQG WUDQVDFWLRQV ZLWKWKHVDPHKDUGZDUH7KHIROORZLQJDUHWLSV,WKLQNDUHLPSRUWDQWLQPDNLQJ WUDQVDFWLRQVDVVKRUWDVSRVVLEOH
$YRLGLQJ/DUJH8SGDWHV
,I\RXKDYHWRXSGDWHVHYHUDOURZVLQDWUDQVDFWLRQWKHWUDQVDFWLRQZLOOWDNHORQJHUWKDQLIRQO\D IHZURZVDUHWREHXSGDWHG1RURFNHWVFLHQFHKHUH(YHQVRLWLVZRUWKWKLQNLQJDERXWEHFDXVH IRUH[DPSOHWKLVPD\DIIHFW\RXUEDWFKSURFHVVHVZKLFKRIWHQXSGDWHWKRXVDQGVRIURZVLQHDFK WUDQVDFWLRQ,WLVLQFUHDVLQJO\VRWKDW\RXGRQ WKDYHDQ\GRZQWLPHZKHQ\RXFDQUXQEDWFK SURFHVVHVOLNHWKLVZLWKRXWLQWHUIHULQJZLWKRWKHUWUDQVDFWLRQV7KHUHIRUHLWPD\EHLPSRUWDQWWR XVHDVWUDWHJ\RWKHUWKDQXVLQJKXJHWUDQVDFWLRQV)RUH[DPSOH\RXFRXOGXVHDFRPSHQVDWLQJ VROXWLRQLQVWHDGVRWKDWLI\RXKDYHWRXSGDWHURZV\RXFDQXSGDWHWKHPLQFKXQNVRI VD\LQHDFKWUDQVDFWLRQ,IRQHWUDQVDFWLRQIDLOV\RXZLOOVHHWKDWWKHWRWDORSHUDWLRQLVQ W DWRPLF$VDUHVXOW\RXZLOOKDYHWRFRPSHQVDWHIRUWKLV)RUH[DPSOHWU\DJDLQZLWKWKRVH WUDQVDFWLRQVWKDWZHUHQ WXSGDWHGWKHODVWWLPHRUXQGRWKHUHVXOWRIWKHWUDQVDFWLRQVWKDWZHUH XSGDWHGEHIRUH:DWFKRXW²WKHVHFDQEHGDQJHURXVGHVLJQFKDQJHVWRPDNHDQG\RXKDYHWR PDNHFDUHIXOHYDOXDWLRQVEHIRUHPRYLQJDORQJ 1RWH
1RWHWKDWEDWFKSURFHVVHVGRQ WJRZHOOZLWK&20WUDQVDFWLRQV)LUVWZHKDYHWKH WLPHRXWVD\LQJWKDWWKHFRPSOHWHWUDQVDFWLRQPD\QRWWDNHPRUHWKDQ[VHFRQGV 1RUPDOO\LQSURGXFWLRQ[LVVHWWRRUORZHU 7KHQZHKDYHWKH-,7EHKDYLRUWKDWOHDGV WRORQJHUH[HFXWLRQWLPHZLWKRXWDQ\UHDOXVHLQWKLVVLWXDWLRQ'LVWULEXWHGWUDQVDFWLRQV DUHDOVRDGUDZEDFNEHFDXVHWKH\ZLOOEHPRUHUHVRXUFHFRQVXPLQJZKLFKLVQRWZDQWHG LI\RXGRQ WQHHGGLVWULEXWHGWUDQVDFWLRQV
$QRWKHUW\SLFDOVLWXDWLRQDULVLQJIURPWRRODUJHXSGDWHVLVZKHQ\RXKDYHQ WXVHGDKLJKHQRXJK QRUPDOIRUP,WWKHQPLJKWEHWKHFDVHWKDWDFHUWDLQYDOXHLVORFDWHGLQWKRXVDQGVRIURZVDQG ZKHQWKHYDOXHKDVWREHXSGDWHG\RXKDYHDYHU\ODUJHWUDQVDFWLRQWRGHDOZLWK7KHVROXWLRQWR WKLVLVVLPSOH²XVHDKLJKHQRXJKQRUPDOIRUPIRU\RXUGDWDEDVHGHVLJQXVXDOO\WKHWKLUGQRUPDO IRUPRUKLJKHU
$YRLGLQJ6ORZ8SGDWHV
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²FKHFNWKDWLWLVQ WDGHVLJQEXJ /RRSV $OWKRXJK\RXZDQWWRDYRLGORRSV\RXPD\VRPHWLPHVQHHGWRXVHDORRSDIWHUDOO7\SLFDOUHDVRQV IRUWKLVDUH x x x
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
6(/(&7#D&DWHJRU\ 0,1FDWHJRU\ )520SURGXFW :+,/(#D&DWHJRU\,612718//%(*,1 83'$7(SURGXFW 6(7SULFH SULFH#DGG :+(5(FDWHJRU\ #D&DWHJRU\
6(/(&7#DQ(UURU ##(5525#D5RZFRXQW ##52:&2817 ,)#DQ(UURU!25#D5RZFRXQW %(*,1 6(7#DQ(UURU0HVVDJH 3UREOHPZLWK
,)#DQ(UURU %(*,1 6(7#DQ(UURU $QH[DPSOH (1' *272([LW+DQGOHU (1'
,Q/LVWLQJ\RXFDQVHHWKDW,VDYHWKHODVWSURFHVVHGFDWHJRU\LQDQROGYDULDEOHDQGWKHQ, VHDUFKIRUWKHVPDOOHVWFDWHJRU\ODUJHUWKDQWKHODVWSURFHVVHG /LVWLQJ:+,/( ([DPSOH3DUW
6(7#D&DWHJRU\2OG #D&DWHJRU\
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
$YRLGLQJ3XUH2EMHFW2ULHQWHG'HVLJQ $V\RXUHFDOOIURP&KDSWHU,VWUHVVLQWKLVERRNWKDWREMHFWRULHQWDWLRQLVJUHDWEXWLWKDVWREH XVHGZLVHO\, YHVHHQSXUHREMHFWRULHQWHGGHVLJQXVHGRIWHQIRU&20DSSOLFDWLRQVDQGWKHUHVXOW KDVW\SLFDOO\EHHQVFDODELOLW\WKDW VWRRORZ, YHQRWRQO\VHHQLWXVHG, YHEHHQFRQWDFWHGE\H PDLODQGLQSHUVRQVHYHUDOWLPHVDQGDVNHGZKDWWRGRLQWKHVHVLWXDWLRQV0\DQVZHUKDVDOZD\V EHHQ³5HGHVLJQ´ 1RWH :KHQ,VD\SXUHREMHFWRULHQWHGGHVLJQ,PHDQFODVVLFREMHFWRULHQWDWLRQIRUH[DPSOH ZLWKPDQ\SURSHUWLHV(DFKURZDQGFROXPQIURPWKHGDWDEDVHKDVOHDGWRLQVWDQWLDWHG REMHFWVDQGPHWKRGVKDYHEHHQSULPLWLYHVRWKDWWRDFFRPSOLVKDWDVNVHYHUDOPHWKRG FDOOVPXVWEHPDGH
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
$YRLGLQJ3HVVLPLVWLF&RQFXUUHQF\&RQWURO6FKHPDV
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
8VLQJDQ(IILFLHQW3DWWHUQIRU'DWD$FFHVV ,ZRQ WJRLQWRGHWDLODERXWP\SDWWHUQIRUGDWDDFFHVVXQWLO&KDSWHUEXWLWLVFUXFLDOWKDW\RX KDYHDQHIIHFWLYHSDWWHUQIRUGDWDDFFHVV$V\RXFDQJXHVV,WKLQNP\SDWWHUQLVDYHU\HIILFLHQW RQH,GHIHUDOODFFHVVWRWKHGDWDEDVHXQWLOWKH HQGRIDVFHQDULR8QWLOWKHQDQ64/VFULSWLVEXLOW ZLWKDOOWKHFDOOVWRGLIIHUHQWVWRUHGSURFHGXUHV$WUDQVDFWLRQZRQ WEHVWDUWHGXQWLOLW VQHHGHGLQ WKH64/VFULSW:KHQWKH64/VFULSWKDVVWDUWHGWRUXQWKHUHDUHQRRWKHUURXQGWULSVDQGQR RSHUDWLRQVRWKHUWKDQWKHFDOOVWRVWRUHGSURFHGXUHVXQWLOWKHWUDQVDFWLRQLVWREHHQGHG
6WDUWLQJ7UDQVDFWLRQV/DWHDQG(QGLQJ7KHP(DUO\
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
6(/(&7#D&DWHJRU\ )520FDWHJRU\ :+(5(GHVFULSWLRQ UHSRUW
%(*,175$16$&7,21
,16(57,172HUUDQG LGGHVFULSWLRQFUHDWHGE\ 9$/8(6 #DQ(UUDQG,G#HUUDQG'HVFULSWLRQ#XVHU,G ,16(57,172DFWLRQ LGHUUDQGBLG GHVFULSWLRQFUHDWHGE\ FUHDWHGGDWHWLPHFDWHJRU\ 9$/8(6 #DQ$FWLRQ,G#DQ(UUDQG,G #DFWLRQ'HVFULSWLRQ#XVHU,G *(7'$7( #D&DWHJRU\ &200,775$16$&7,21 1RWH ,KDYHFXWRXWWKHHUURUWUDSSLQJFRGHIURP/LVWLQJ,ZLOOIRFXVRQHUURUWUDSSLQJLQ &KDSWHU
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
ZLOOEHJLYHQDVSDUDPHWHUVLQVWHDG,WPLJKWUHVXOWLQDOLWWOHPRUHQHWZRUNWUDIILFEHFDXVHPRUH GDWDZLOOEHVHQWRYHUWKHQHWZRUNEXWLW VXVXDOO\ZRUWKLW 7KDWZDVWKHXVXDOUHFRPPHQGDWLRQ-XVWEHFDUHIXOWKDW\RXGRQ WRYHUXVHLWVRWKDW\RXIHWFK URZVIURPWKHGDWDEDVHWKDWZLOOQRWNHHSWKHLUVKDUHGORFNGXULQJWKHFRPSOHWHWUDQVDFWLRQ EHFDXVH\RXKDGWKHIHWFK EHIRUHWKHWUDQVDFWLRQVWDUWHG
8VLQJ&RUUHFW7,/
%HFDUHIXOWKDW\RXXVHWKHFRUUHFW7,/2YHUXVLQJ6(5,$/,=$%/( FDQGHILQLWHO\DIIHFWVFDODELOLW\, FDQ WWHOO\RXKRZPDQ\WLPHV, YHKHDUGGHYHORSHUVDW&20QHZVJURXSVDVNZK\WKHUHLVVR PXFKEORFNLQJ LQWKHGDWDEDVHZKHQWKH\VWDUWXVLQJ&207KH\DUHQ WGRLQJDQ\WKLQJXQXVXDO,I \RXRQO\H[HFXWHD6(/(&7&2817 )520P\WDEOHRWKHUWUDQVDFWLRQVZLOOQRWEHDOORZHGWR ,16(57 URZV,172P\WDEOH XQWLOWKHILUVWWUDQVDFWLRQLVGRQH&20DOZD\VXVHV 6(5,$/,=$%/( IRUDXWRPDWLFWUDQVDFWLRQVZLWK64/6HUYHU
$YRLGLQJ3&ZLWKWKH+HOSRI5HSOLFDWLRQ ,I\RXDUHJRLQJWRXVHPRUHWKDQRQH50LQ\RXUWUDQVDFWLRQV\RXKDYHWRXVHGLVWULEXWHG WUDQVDFWLRQVLI\RXOLNHWRKDYHWUDQVDFWLRQVHPDQWLFVRYHUWKH50V'LVWULEXWHGWUDQVDFWLRQVZLOO RSHUDWHZLWKWKH3&SURWRFROZKLFKLVYHU\H[SHQVLYHZKHQLWFRPHVWRSHUIRUPDQFHFRPSDUHGWR ORFDOWUDQVDFWLRQV$QDOWHUQDWHVROXWLRQLVWRRQO\83'$7( RQHRIWKH50VDQGWKHQOHWWKH83'$7( DIIHFWWKHRWKHU50ZLWKWKHKHOSRIUHSOLFDWLRQ
7LSVRQ'HFUHDVLQJWKH5LVNRI'HDGORFNV
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
7DNLQJ83'/2&. :KHQ5HDGLQJ%HIRUH:ULWLQJ
$QRWKHUFRPPRQUHDVRQIRUDGHDGORFNLVWKDWWZRWUDQVDFWLRQVILUVWDFTXLUHVKDUHGORFNVRQRQH DQGWKHVDPHURZDQGWKHQERWKRIWKHPWU\WRHVFDODWHWKHLUORFNVWRH[FOXVLYHORFNV1RQHRIWKH WUDQVDFWLRQVVXFFHHGVXQWLORQHRIWKHWUDQVDFWLRQVLVLQWHUUXSWHG7KHVROXWLRQLVVLPSOH²ZKHQ\RX NQRZ\RXQHHGDQH[FOXVLYHORFNDFTXLUHLWLPPHGLDWHO\LQVWHDGRIVWDUWLQJZLWKDVKDUHGORFNWKDW
\RXODWHUHVFDODWHWRDQH[FOXVLYHORFN
:RUNLQJZLWK7DEOHVLQWKH6DPH2UGHUIRU$OO 7UDQVDFWLRQV 2QHVLPSOHWLSLVWRDOZD\VZRUNZLWK\RXUWDEOHVLQWKHVDPHRUGHULQDOOWUDQVDFWLRQV,Q/LVWLQJ \RXVHHWKDWRQHURZLVLQVHUWHGLQWRHUUDQG DQGWKHQRQHURZLVLQVHUWHGLQWRDFWLRQ7KDW RUGHUVKRXOGEHXVHGIRUDOOWUDQVDFWLRQV, XVXDOO\VD\WKDWWKHPDVWHUWDEOHVKRXOGEHXVHGEHIRUH WKHGHWDLOWDEOH
2EVFXUH'HFODUDWLYH7UDQVDFWLRQ'HVLJQ7UDSV
8VLQJ&20WUDQVDFWLRQVLVRIWHQWKRXJKWRIDVEHLQJVLPSOHEHFDXVHWKHV\VWHPZLOOGHDOZLWKWKH WUDQVDFWLRQVIRU\RXGHFLGLQJZKHQWR&200,7 DQGZKHQWR52//%$&.(YHQVRLW VLPSRUWDQWWR XQGHUVWDQGKRZ&20WUDQVDFWLRQVZRUNDQGKRZ\RXUVHWWLQJVZLOODIIHFWWKHRXWFRPH $OOWKUHHWUDSVWKDWIROORZDUHWDNHQIURPVLWXDWLRQVZKHUHP\SURSRVHGDUFKLWHFWXUHZDVQRWXVHG (YHQVR,ZDQWWRSRLQWRXWDIHZ³JRWFKDV´VR\RXGRQ WIDOOLQWRWKHVHWUDSVLI\RXGHFLGHWRXVH DQRWKHUDUFKLWHFWXUH
([DPSOH,QFRUUHFW(UURU7UDSSLQJ
7KHUHDUHVHYHUDOH[DPSOHVRIKRZHUURUWUDSSLQJPLJKWJRZURQJVRPHREYLRXVDQGVRPHQRWVR REYLRXV7KHUHVXOWPLJKWEHWKDW6HW$ERUW LVQ WFDOOHGDWDOODQGWKDWWKHWUDQVDFWLRQZLOO WKHUHIRUHEH&200,7HG,W VSUREDEO\REYLRXVZK\WKHH[DPSOHLQ/LVWLQJLVQ WRQH\RXZDQWWR KDYHLQ\RXUFRGH:KHQWKH7KURZ VWDWHPHQWH[HFXWHVLQ/LVWLQJWKHPHWKRGZLOOVWRS H[HFXWLQJH[FHSWIRURQHRUPRUHSRVVLEOH)LQDOO\ DQGRU&DWFK EORFNVRQDQRXWHUOHYHO /LVWLQJ,QFRUUHFW([DPSOHRI(UURU7UDSSLQJ &DWFKH$V([FHSWLRQ 7KURZH &RQWH[W8WLO6HW$ERUW
([DPSOH,QFRUUHFW8VHRI1RW6XSSRUWHG ,QWKLVH[DPSOHZHZLOOOHWDURRWFRPSRQHQWFRQWURODWUDQVDFWLRQDQGDVNIRUKHOSIURPWZR VHFRQGDU\FRPSRQHQWVIRUGRLQJVXEWDVNV$VVXPH\RXKDYHWKHFRPSRQHQWVOLVWHGLQ7DEOH 7DEOH ([DPSOH,QVWDQFHV&RPSRQHQWVDQG7UDQVDFWLRQ$WWULEXWHV ,QVWDQFHVDQG&RPSRQHQWV 7UDQVDFWLRQ $WWULEXWH 7UDQVDFWLRQ2SWLRQ5HTXLUHG D5RRW LQVWDQFHRIFRPSRQHQW$ D6HFRQGDU\ LQVWDQFHRIFRPSRQHQW%
DQRWKHU6HFRQGDU\ LQVWDQFHRIFRPSRQHQW&
7UDQVDFWLRQ2SWLRQ5HTXLUHG
7UDQVDFWLRQ2SWLRQ1RW6XSSRUWHG
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
WKHFDVHWKDWDUHGHVLJQQHHGVWRWDNHSODFH3HUKDSVWKH6(/(&7 LVQ WUHDOO\QHHGHGEHFDXVHWKHUH PD\EHQR83'$7(75,**(5 IRUWKHWDEOH
([DPSOH,QFRUUHFW8VHRI5HTXLUHV1HZ
7KHWKLUGH[DPSOHLVSHUKDSVDELWVWUDQJHEXWLVVWLOOSRVVLEOH7KLVWLPHZHDOVRKDYHWKUHH LQVWDQFHVDQGFRPSRQHQWV
DQRWKHU6HFRQGDU\ LQVWDQFHRIFRPSRQHQW&
7UDQVDFWLRQ2SWLRQ6XSSRUWHG
7UDQVDFWLRQ2SWLRQ5HTXLUHV1HZ
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³$GGLQJ'HEXJJLQJ6XSSRUW´,XVHDQRWKHUWULFNLQVWHDGIRUKDYLQJWKHHUURUORJJHGLQDVHSDUDWH WUDQVDFWLRQ7KHVROXWLRQWRWKLVSUREOHPPXVWEHDUHGHVLJQEXWILUVWZHKDYHWRDVNRXUVHOYHV ZKHWKHULWLVFRUUHFWDWDOOWKDW&VKRXOGUXQLQDWUDQVDFWLRQRILWVRZQ7KHVFHQDULR,SUHVHQWHG KHUHZDVDV,VDLGDELWVWUDQJH
7UDSV6XPPDU\
$OOWKUHHH[DPSOHVRIWUDSVWKDW,VHOHFWHGDQGGLVFXVVHGKHUHZHUHSUREOHPVDULVLQJZKHQVHYHUDO FRPSRQHQWVLQWHUDFWHG1RQHRIWKHSUREOHPVZRXOGKDYHH[LVWHGLIDOOWKHFRGHKDGEHHQSXWLQD VLQJOHPHWKRGLQVWHDG%XWWKDWLVQRW WKHPRUDORIWKLVVWRU\7KDWZRXOGOHDGWRFRGHEORDW ,QVWHDGZKDW, PVD\LQJLVWKDW\RXPXVWXQGHUVWDQGKRZGLIIHUHQWVHWWLQJVDIIHFW\RXU WUDQVDFWLRQVDQGEHYHU\FDUHIXOZLWKHUURUWUDSSLQJ$VXVXDO&20WUDQVDFWLRQVGRQ WFKDQJH WKDW
(YDOXDWLRQRI3URSRVDOV
$VLQSUHYLRXVFKDSWHUVLW VWLPHIRUPHWRHYDOXDWHWKHSURSRVDOV,KDYHSUHVHQWHGLQWKLVFKDSWHU DJDLQVWWKHFULWHULD,HVWDEOLVKHGLQ&KDSWHU
(YDOXDWLRQRI7UDQVDFWLRQ7HFKQLTXH3URSRVDO
$V,VDLGHDUOLHUWKHWUDQVDFWLRQWHFKQLTXHWRIDYRULVWRFRQWUROWUDQVDFWLRQVLQWKHVWRUHG SURFHGXUHV²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
(YDOXDWLRQRI7UDQVDFWLRQVLQWKH$UFKLWHFWXUH3URSRVDO
0\SURSRVDORIKRZWRGHDOZLWKWUDQVDFWLRQVLQWKHQHZDUFKLWHFWXUHLVWRWDOO\LQGHSHQGHQWRIWKH W\SHRIFRQVXPHUDWOHDVWDVORQJDV\RXOHWWKHFRQVXPHUVWD\RXWRIWKHWUDQVDFWLRQZKLFKLV GHILQLWHO\KRZLWVKRXOGEH7KHH[FHSWLRQWRWKLVLVZKHQWKHFRQVXPHULVDFRPSRQHQWWKDWXVHV DXWRPDWLFWUDQVDFWLRQVEXWWKDWLVPRUHDPDWWHURILQWHURSHUDELOLW\
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
(YDOXDWLRQRIWKH)OH[LEOH7UDQVDFWLRQ'HVLJQ3URSRVDO
7KHPDLQUHDVRQIRUWKHIOH[LEOHWUDQVDFWLRQGHVLJQLVWRLQFUHDVHPDLQWDLQDELOLW\%HFDXVHRIWKDW UHXVDELOLW\DQGLQWHURSHUDELOLW\DUHLPSURYHGDVZHOO,QWKHVKRUWUXQLWPLJKWEHWKHFDVHWKDW SURGXFWLYLW\LVGHFUHDVHGEXWLQWKHORQJUXQLWZLQV ,I\RXZDQW\RXUFRPSRQHQWVWRZRUNZHOOERWKZLWKDXWRPDWLFDQGPDQXDOWUDQVDFWLRQV\RXKDYH WR WHVWERWKVLWXDWLRQVWKRURXJKO\7KHSURSRVHGGHVLJQZLOOLQFUHDVHWHVWDELOLW\EHFDXVHLWLVHDV\ WRMXVWFKDQJHWKHVHWWLQJVIRUVRPHDWWULEXWHVDQGWHVWDJDLQ
:KDW V1H[W
7KHUHKDVEHHQDORWRIWDONDERXWEXVLQHVVUXOHVLQWKHODVWIHZ\HDUVEXWUHODWLYHO\IHZFRQFUHWH UHFRPPHQGDWLRQVIRUKRZWRKDQGOHWKHPKDYHEHHQVKRZQ,QWKHQH[WFKDSWHU,ZLOOGLVFXVV VHYHUDOGLIIHUHQWSURSRVDOVIRUKRZWRWDNHFDUHRIEXVLQHVVUXOHVERWKLQVHUYLFHGFRPSRQHQWVDQG LQVWRUHGSURFHGXUHV
5HIHUHQFHV
7(ZDOG7UDQVDFWLRQDO&20%XLOGLQJ6FDODEOH$SSOLFDWLRQV$GGLVRQ:HVOH\ 73DWWLVRQ3URJUDPPLQJ'LVWULEXWHG$SSOLFDWLRQVZLWK&20DQG9LVXDO%DVLF0LFURVRIW 3UHVV -*UD\DQG$5HXWHU7UDQVDFWLRQ3URFHVVLQJ&RQFHSWVDQG7HFKQLTXHV0RUJDQ.DXIPDQQ 3%HUQVWHLQDQG(1HZFRPHU3ULQFLSOHVRI7UDQVDFWLRQ3URFHVVLQJ0RUJDQ.DXIPDQQ *%ULOO$SSO\LQJ&201HZ5LGHUV '3ODWW8QGHUVWDQGLQJ&200LFURVRIW3UHVV
&KDSWHU%XVLQHVV5XOHV ,17+,6 &+$37(5 x x x x x
$6KRUW,QWURGXFWLRQWR%XVLQHVV5XOHV /RFDWLRQDQG6ROXWLRQVRI%XVLQHVV5XOHV 3URSRVDOIRU:KHUHWR/RFDWH'LIIHUHQW%XVLQHVV5XOHV %XVLQHVV5XOHV7LSV (YDOXDWLRQRI3URSRVDO
0RVWSXEOLVKHGDUFKLWHFWXUHVVXFKDV:LQGRZV'1$UHFRPPHQGKDYLQJDWLHUIRUEXVLQHVVORJLF RUEXVLQHVVUXOHVDQGXVLQJDFRPSRQHQWOD\HUWRKDQGOHWKLVEXVLQHVVORJLF
$6KRUW ,QWURGXFWLRQWR%XVLQHVV5XOHV
:KDWGR,PHDQE\EXVLQHVVUXOHV" 7KHWHUPFDQEHDOLWWOHPLVOHDGLQJ:KHQ,UHIHUWREXVLQHVV UXOHV,DPUHIHUULQJQRWRQO\WRYDOLGDWLRQVRIUXOHV²YDOLGDWLRQVDUHDQLPSRUWDQWSDUW²EXWDOVRWR RUGLQDU\ORJLFVXFKDVFRUHDOJRULWKPVWUDQVIRUPDWLRQVFRPSHQVDWLRQVFDOFXODWLRQVDQG DXWKRUL]DWLRQV3HUKDSV\RXSUHIHUWKHWHUP³EXVLQHVVORJLF´RUMXVW³ORJLF´(LWKHUZD\WKHWHUP LVQ WLPSRUWDQWLW VZKDWWKHWHUPUHIHUVWRWKDWPDWWHUV %XVLQHVVUXOHVDSSO\QRWMXVWWREXVLQHVVV\VWHPVRIFRXUVH%XVLQHVVUXOHVFDQEHIRXQGLQ WHFKQLFDOV\VWHPVDVZHOODOWKRXJKGHYHORSHUVRIWHFKQLFDOV\VWHPVRIWHQUHIHUWR³GRPDLQ´DQG ³GRPDLQUXOHV´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
1RZWKDW\RXNQRZZKDW,PHDQZKHQ,UHIHUWREXVLQHVVUXOHVLW VWLPHWRJHWGRZQWRWKHQLWW\ JULWW\RIKRZDQGZKHUHWRGHDOZLWKWKHP
/RFDWLRQDQG6ROXWLRQVRI%XVLQHVV5XOHV
$V\RXUHFDOOIURP&KDSWHU³$UFKLWHFWXUH´,XVHWKHWLHUVDQGOD\HUVVKRZQLQ)LJXUHLQP\ DUFKLWHFWXUHSURSRVDODVDVWDUWLQJSRLQWIRUPDQ\DSSOLFDWLRQV )LJXUH7LHUVDQGOD\HUVLQP\SURSRVHGDUFKLWHFWXUH
/HW VWDNHDFORVHUORRNDWWKHGLIIHUHQWWLHUVZHFDQFKRRVHDPRQJIRUORFDWLQJWKHEXVLQHVVUXOHV
/RFDWLQJWKH%XVLQHVV5XOHVLQWKH&RQVXPHU7LHU
:KHUHFDQ,ORFDWHP\EXVLQHVVUXOHVLQWKLVDUFKLWHFWXUH"/HW VGHFLGHWKDWWKH&RQVXPHUWLHULV QRWDVXLWDEOHSODFHIRUEXVLQHVVUXOHV:K\QRW\RXPD\DVN"7KHUHDUHVHYHUDOUHDVRQV x x x x
8VHU,QWHUIDFH8, WUHQGV² 7KHUHLVDQHZ8,WUHQGHYHU\\HDUDQGPDQ\RUJDQL]DWLRQV RIWHQDGMXVWWRWKHVHQHZWUHQGV%HFDXVHRIWKDWWKH\KDYHWRUHEXLOGWKH8,DQGWKH &RQVXPHUWLHU RUEXLOG\HWDQRWKHU8, 8,DSSOLFDWLRQV² 7KHUHDUHRIWHQVHYHUDOGLIIHUHQW8,DSSOLFDWLRQVIRUDVSHFLILFVHWRI FRPSRQHQWV7KHVDPHUXOHVPXVWDSSO\IRUDOOWKH8,DSSOLFDWLRQV 'HFHQWUDOL]HGFRQVXPHUV² 6RPHW\SHVRIFRQVXPHUVZLOOEHGHFHQWUDOL]HGIRUH[DPSOH :LQGRZV)RUPVDSSOLFDWLRQV DQGLWPLJKWEHGLIILFXOWWRIRUFHDQXSGDWHWRWDNHSODFHIRU HYHU\FRQVXPHUDWWKHVDPHWLPH 1RWLQRXUFRQWURO² ,W VFRPPRQWKDWDQRWKHUJURXSRIGHYHORSHUVZLOOGHYHORSWKH FRQVXPHUV DQGWKLVJURXSZLOOQRWEHWKHVDPHDVWKHJURXSWKDWZLOOGHYHORSWKH %XVLQHVVDQG'DWDWLHUV
+RZHYHUDOWKRXJKLW VQRWDJRRGLGHDWRORFDWHEXVLQHVVUXOHVLQWKH&RQVXPHUWLHULWLVDJRRG LGHDWRFDUU\RXWHDUO\WHVWV²VXFKDVUHTXLUHGILHOGVIRUPDWVDQGVRRQ²LQWKH&RQVXPHUWLHUIRU VFDODELOLW\UHDVRQVVRWKDWXVHOHVVH[SHQVLYHDQGUHVRXUFHFRQVXPLQJURXQGWULSVFDQEHVNLSSHG 6WLOOWKLVPLJKWPHDQPRUHPDLQWDLQDELOLW\ZRUN/DWHULQWKHFKDSWHU,ZLOOGLVFXVVDQDSSURDFK WKDWDOORZV\RXWRKDYH\RXUFDNHDQGHDWLWWRR
/RFDWLQJWKH%XVLQHVV5XOHVLQWKH%XVLQHVV7LHU
7XUQLQJWRWKH%XVLQHVVWLHUWKHEDVLFLGHDRIWKH'RPDLQOD\HULVVLPSO\WKDWLWVKRXOGWDNHFDUHRI JHQHULFEXVLQHVVUXOHV'RLQJWKLVLVSRVVLEOHLQWKH$SSOLFDWLRQOD\HULQVWHDGEXWWKHPRUHUXOHV
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³GXPE´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
$VVXPLQJWKDWZHGHFLGHWKDWWKHWZRPDLQSODFHVIRUSURJUDPPHGEXVLQHVVUXOHVDUHWKH'RPDLQ OD\HUDQGWKH3ULYDWH6WRUHG3URFHGXUHVOD\HUOHW VWDNHDFORVHUORRNDWWKHDGYDQWDJHVIRUHDFK DSSURDFKDQGKRZWKHUXOHVFDQEHFRQVWUXFWHG
/RFDWLQJWKH%XVLQHVV5XOHVLQWKH'RPDLQ/D\HU
)RUJHQHULFFRQFHSWRULHQWHGEXVLQHVVUXOHVWKH'RPDLQOD\HULVRIWHQDYHU\ILWWLQJORFDWLRQ(YHQ WKRXJKWKHUHDUHQXPHURXVSRVVLELOLWLHVOHW VWDNHDORRNDWKRZWKHUXOHVFDQEHLPSOHPHQWHG KHUH +RZ%XVLQHVV5XOHV&DQ%H,PSOHPHQWHGLQWKH'RPDLQ/D\HU /HW VUHYLHZWKHDUFKLWHFWXUHLQ&KDSWHU WRVHHKRZWKHFODVVHVLQWKH'RPDLQ/D\HUDSSHDU,Q )LJXUH LQ&KDSWHU\RXFDQVHHWKHGR(UUDQG FODVVDQGWKH,6DYHDEOH LQWHUIDFHWKDWWKH $SSOLFDWLRQOD\HUXVHVZKHQFDOOLQJWKHFODVV /RFDWLRQDQG&DOO0HFKDQLVP +DYLQJVDLGWKDW, GOLNHWRVWDUWWKHGLVFXVVLRQE\ORRNLQJDWZKHUHWKHUXOHVFKHFNLVORFDWHGDQG KRZLWFDQEHDFFHVVHG$QREYLRXVVROXWLRQIRUZKHUHWRORFDWHEXVLQHVVUXOHVLVWROHWWKH GR(UUDQG6DYH PHWKRGKLGHDFDOOWRDSULYDWH&KHFN PHWKRG7KLVLVWRHQVXUHWKDWWKH SURYLGHG'DWD6HW LVFKHFNHGDFFRUGLQJWRWKRVHUXOHVWKHFODVVLVUHVSRQVLEOHIRUFKHFNLQJ 1RWH %HFDUHIXOWKDW\RXGRQ WPLVVWKHIDFWWKDWWKHGDWDFDUULHUIRUH[DPSOHD'DWD6HW KDV EHHQFKDQJHGZLWKVFUROOLQJEHIRUH\RXVWDUWFKHFNLQJWKHUXOHVDJDLQVWWKH'DWD6HW $OVREHFDUHIXOWKDW\RXGRQ WWRXFKWKHVWDWHRIWKHGDWDFDUULHUEHFDXVHWKHUHLVRWKHU FRGHH[SHFWLQJWKHGDWDFDUULHUWREHLQDSDUWLFXODUVWDWH8VLQJ&ORQH LVRIWHQDJRRG LGHD
$QRWKHUZD\WRFKHFNWKHUXOHVLVWKURXJKDSXEOLFLQWHUIDFHIRUH[DPSOH,&KHFNDEOHWREHXVHG EHWZHHQFODVVHVLQWKH'RPDLQOD\HU7KHVLWXDWLRQWKDWVKRXOGEHVROYHGKHUHLVZKHQD'RPDLQ FODVVQHHGVDQRWKHU'RPDLQFODVVWRFKHFNUXOHVRQEHKDOIRIWKHILUVWFODVV,XVHGWKLVVHFRQG DSSURDFKDORWLQP\ROGDUFKLWHFWXUHZKLFK,GLVFXVVHGLQ&KDSWHU DQG&KDSWHU ³7UDQVDFWLRQV´ ,QWKHQHZDUFKLWHFWXUHLWLVOHVVXVHIXOEHFDXVHLWLVWRWDOO\DFFHSWDEOHIRUWKH $SSOLFDWLRQOD\HUWRPDNHVHYHUDOFDOOVWRWKH'RPDLQOD\HUZLWKLQWKHVDPHWUDQVDFWLRQ 3URFHVVLQJ :KHQ\RXKDYHGHFLGHGRQWKHORFDWLRQDQGFDOOPHFKDQLVPIRU\RXUEXVLQHVVUXOHVLQWKH'RPDLQ OD\HULW VWLPHWRWKLQNDERXWKRZWKH\VKRXOGEHSURFHVVHG$VXVXDOWKHUHDUHVHYHUDORSWLRQV x x x
8VHRUGLQDU\9%FRGHDQGFKHFNUXOHE\UXOH² 1RURFNHWVFLHQFHKHUH7KLVLVWKHPRVW W\SLFDODQGWKH SUHIHUUHGZD\WRJRIRUUXOHVLQWKH'RPDLQOD\HU $GGURZVWRWKH64/VFULSWZLWKWKHKHOSRIWKH3HUVLVWHQW$FFHVVOD\HU² %\GRLQJWKLV\RX DFWXDOO\GHOD\WKHH[HFXWLRQRIWKHFKHFNVXQWLOWKHFRPSOHWHVFULSWLVH[HFXWHGDJDLQVWWKH GDWDEDVH,WLVDOVRWKHGDWDEDVHLWVHOIWKDWGRHVWKHUHDOFKHFNLQJRIWKHUXOHV &UHDWHDQRWKHU64/VFULSWIRUUHWULHYLQJGDWDIURPWKHGDWDEDVHZLWKWKHKHOSRIWKH 3HUVLVWHQW$FFHVVOD\HUDVXVXDO DQGXVHWKRVHYDOXHVWRFKHFNUXOHE\UXOHZLWKRUGLQDU\ 9%FRGH² 1RWHWKDWWKLVVROXWLRQSDUWO\GHIHDWVRQHRIWKHPDLQSXUSRVHVRIWKH64/VFULSW VROXWLRQEHFDXVHWKHUHZLOOEHVHYHUDOURXQGWULSVWRWKHGDWDEDVH$GGLWLRQDOO\LI\RXNHHS ORFNVDWWKHUHDGURZV\RXPD\VHYHUHO\DIIHFWWKURXJKSXW 1RWH ,ZLOOGLVFXVVWKH SDWWHUQRIXVLQJ64/VFULSWVIRUDFFHVVLQJWKHGDWDEDVHLQGHSWKLQ &KDSWHU³'DWD$FFHVV´
0RWLYDWLRQIRU8VLQJWKH'RPDLQ/D\HUIRU0RVW%XVLQHVV5XOHV $V\RXKDYHSUREDEO\XQGHUVWRRGE\QRZRUFHUWDLQO\ZLOOXQGHUVWDQGDV\RXUHDGRQ,GRQ WWKLQN WKH'RPDLQOD\HULVWKHRQO\VXLWDEOHOD\HUWRORFDWHEXVLQHVVUXOHVEXWLWFHUWDLQO\KDVLWVPHULWV
x x x
&HUWDLQUXOHVDUHPXFKHDVLHUWRZULWHLQ9LVXDO%DVLF1(7WKDQLQ764/² $PRQJRWKHU WKLQJVWKHVRSKLVWLFDWLRQSURGXFWLYLW\FRPSUHKHQVLYHQHVVSRZHUIXOQHVVIOH[LELOLW\DQG H[WHQVLELOLW\DUHPXFKEHWWHUIRU9LVXDO%DVLF1(7DVDODQJXDJHFRPSDUHGWR764/ 5HODWLRQDOGDWDEDVHVDUHYHU\JRRGDWVHWEDVHGSURFHVVLQJEXWQRWDWURZE\URZ SURFHGXUDOSURFHVVLQJ² 6WLOOSURFHGXUDOUXOHVDUHQRWWKDWXQFRPPRQDIWHUDOO 7KHSURFHVVLQJZLOOWDNHSODFHDWDWLHUWKDWLVHDV\WRVFDOHRXW² ,KDYHPHQWLRQHGLW EHIRUHEXWLW VZRUWKPHQWLRQLQJDJDLQ²WKHGDWDEDVHLVKDUGHUWRVFDOHRXWWKDQWKH DSSOLFDWLRQVHUYHU%HFDUHIXOWKDW\RXGRQ WXVHWRRPDQ\UHVRXUFHVIURPWKHGDWDEDVH EHFDXVHRIWKLV,QWKHFDVHRIVWDWLFFKHFNVZKHQGDWDGRHVQ WKDYHWREHIHWFKHGIURPWKH GDWDEDVHIRUFKHFNLQJ WKHUXOHVWKH'RPDLQOD\HULVDYHU\HIILFLHQWDQGVXLWDEOHORFDWLRQIRU UXOHV 1RWH ,Q&KDSWHU,PHQWLRQHGWKDWIRU³VPDOO´V\VWHPVDQG³VLPSOH´V\VWHPVLW VSRVVLEOHWR VNLSWKH'RPDLQOD\HU,DOVRVDLGWKDWWKLVDSSOLHGWRWKH3ULYDWH6WRUHG3URFHGXUHVOD\HU EXW, POHVVLQFOLQHGWRVNLSWKH3ULYDWH6WRUHG3URFHGXUHVOD\HU,QDQ\FDVHWKLQNWZLFH EHIRUH\RXVNLSHLWKHURI WKHVHOD\HUV3UHSDUHIRUIXWXUHJURZWKE\WKLQNLQJODUJHEXW LQLWLDOO\EXLOGLQJVPDOO
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
83'$7(HUUDQG 6(7UHVSRQVLEOH #UHVSRQVLEOH :+(5(LG #LG (UURUWUDSSLQJJRHVKHUH ,)#VWDWXV %(*,1
,)6(/(&7&2817 )520HUUDQG :+(5(UHVSRQVLEOH #UHVSRQVLEOH $1'VWDWXV !%(*,1 6(7#DQ(UURU 6(7#DQ(UURU0HVVDJH
7RRPDQ\RSHQHUUDQGVIRUWKLVSUREOHPVROYHU
*272([LW+DQGOHU (1' (1' &200,775$16$&7,21
/LVWLQJ6LPSOLILHG([DPSOHRI:KHQWKH6HFRQG6WUDWHJ\,V8VHGIRU&KHFNLQJD %XVLQHVV5XOHLQD3ULYDWH6WRUHG3URFHGXUH ,)#VWDWXV %(*,1
,)6(/(&7&2817 )520HUUDQG :+(5(UHVSRQVLEOH #UHVSRQVLEOH $1'VWDWXV !%(*,1 6(7#DQ(UURU 6(7#DQ(UURU0HVVDJH
7RRPDQ\RSHQHUUDQGVIRUWKLVSUREOHPVROYHU
*272([LW+DQGOHU (1' (1' %(*,175$16$&7,21
83'$7(HUUDQG 6(7UHVSRQVLEOH #UHVSRQVLEOH :+(5(LG #LG (UURUWUDSSLQJJRHVKHUH &200,775$16$&7,21 1RWH $V\RXVHHLQ/LVWLQJVDQG,GLGQ WVKRZUHDO WUDQVDFWLRQFRGHDQGHUURUWUDSSLQJ
$V\RXJXHVVHGLWERWKVW\OHVKDYHWKHLUPHULWV7KHDGYDQWDJHWROHWWLQJWKH83'$7( WDNHSODFHLV WKDWLWLVVLPSOHUDQGPRUHSURGXFWLYHWRSURJUDPEHFDXVH\RXGRQ WKDYHWRVHQGDURXQGDORWRI SDUDPHWHUVEHWZHHQVWRUHGSURFHGXUHVZLWKWKHRQO\SXUSRVHRIHYDOXDWLQJUXOHV,I\RXXVH WULJJHUV,GRQ W DQRWKHUDGYDQWDJHLVWKDW\RXFKHFNWKHUXOHVDIWHUWULJJHUVKDYHGRQHWKHLUMRE ZKLFKFRXOGEHJRRGEHFDXVHWKHWULJJHUVPLJKWKDYHFKDQJHGWKHGDWD 7KHDGYDQWDJHRIFKHFNLQJSDUDPHWHUVEHIRUHVWDUWLQJWKH83'$7( LVDPDWWHURIHIILFLHQF\
:K\,'RQ W8VH7ULJJHUV$Q\PRUH
,QWKHSDVW,XVHGWULJJHUVDORW²WRRPXFKUHDOO\,OLNHGWKHLGHDRI WULJJHUVDQGZURWHYHU\FRPSOLFDWHGRQHV+RZHYHUZKHQWKHWLPHFDPH WRPDNHFKDQJHVLWZDVDUHDOPHVV,QDGGLWLRQLW VGLIILFXOWWRWHVW WULJJHUVFRPSOHWHO\WRIROORZH[HFXWLRQVHTXHQFHVDQGWRZULWH FRPSOLFDWHGWULJJHUVFRUUHFWO\:ULWLQJVHWVDIHWULJJHUVFDQDOVROHDGWR VORZH[HFXWLRQ7KHUHDUHRWKHUSUREOHPVDVVRFLDWHGZLWKWULJJHUVWRR EXW, OOVWRSKHUH
%HFDXVHWKHRQO\ZD\WRFDOOWKHGDWDEDVHLQP\DSSOLFDWLRQVLVWKURXJK VWRUHGSURFHGXUHV,GRQ WUHDOO\QHHGWULJJHUV$VDUHVXOW,KDYHVWRSSHG XVLQJWKHPFRPSOHWHO\ 0RWLYDWLRQIRU8VLQJWKH3ULYDWH6WRUHG3URFHGXUHV/D\HUIRU0RVW%XVLQHVV5XOHV (DUOLHU,VDLGWKDWDQDGYDQWDJHRIORFDWLQJEXVLQHVVUXOHVLQWKH'RPDLQOD\HULVWKDWLWLVKDUGHUWR VFDOHRXWWKHGDWDEDVH$VDOZD\VDGYDQWDJHVFDQEHFRPHGLVDGYDQWDJHV'XHWRLWEHLQJPRUH
GLIILFXOWWRVFDOHRXWWKHGDWDEDVHLVPRUHFHQWUDOL]HGWKDQWKHDSSOLFDWLRQVHUYHUEHFDXVHWKH GDWDEDVHZLOOEHVFDOHGRXWOHVVRIWHQ7KDWZDVDVXEWOHDGYDQWDJH/HW VWDNHDORRNDWVRPHRWKHU PRUHREYLRXVDGYDQWDJHVWRORFDWLQJEXVLQHVVUXOHVLQWKH3ULYDWH6WRUHG3URFHGXUHVOD\HU x x x x
7KHUHDUHPRUHUHXVHOHYHOV² ,I\RXZDQWWR\RXFDQUHXVHDOOOD\HUVLQERWKWKH%XVLQHVV WLHUDQGWKH 'DWDWLHULI\RXSODFHDOO\RXUEXVLQHVVUXOHVLQWKH3ULYDWH6WRUHG3URFHGXUHV OD\HU,I\RXSODFHVRPHUXOHVLQWKH'RPDLQOD\HU\RXFDQRQO\UHXVHWKH'RPDLQOD\HUDQG WKH$SSOLFDWLRQOD\HU ,WLVHDVLHUWRZRUNZLWKGDWD² %XVLQHVVUXOHVDUHRIWHQDERXWGDWD'DWDEDVHVDUHJRRGDW ZRUNLQJZLWKGDWD ,WLVPRUHHIILFLHQWIRUFHUWDLQUXOHV² )RUH[DPSOHWKLVLVWUXHZKHQ\RXQHHGWRUHDGGDWD ILUVWIURPWKHGDWDEDVH7KLVZD\\RXUHGXFHURXQGWULSVEHWZHHQWKHDSSOLFDWLRQVHUYHU DQGGDWDEDVHVHUYHU
7KHELJJHVWGUDZEDFNWRSXWWLQJWKHUXOHVLQWKH3ULYDWH6WRUHG3URFHGXUHVOD\HULVWKHODFNRI SRUWDELOLW\EHWZHHQGLIIHUHQWGDWDEDVHSURGXFWV$V,VDLGLQWKH3UHIDFH\RXPXVWGHFLGHZKDW \RXUILUVWSULRULW\LV²ZKHWKHULWLVWRFUHDWHDQDSSOLFDWLRQWKDWLVSRUWDEOHEHWZHHQGLIIHUHQW RSHUDWLQJV\VWHPVW\SHVRIPDFKLQHVDQGGDWDEDVHSURGXFWVRUZKHWKHULWLVWRXVHWKHFKRVHQ SODWIRUPDVHIIHFWLYHO\DVSRVVLEOH
3URSRVDOIRU:KHUHWR/RFDWH'LIIHUHQW%XVLQHVV5XOHV
:HKDYHQRZGLVFXVVHGWZRW\SLFDOORFDWLRQVIRUEXVLQHVVUXOHV²WKH'RPDLQOD\HUDQGWKH3ULYDWH 6WRUHG3URFHGXUHVOD\HU²DVZHOODVWKHLUDGYDQWDJHVDQGGLVDGYDQWDJHV6RZKLFKRQHVKRXOG\RX FKRRVH"$VDOZD\VWKHDQVZHUWRWKHTXHVWLRQGHSHQGVRQPDQ\ IDFWRUV)XUWKHUPRUH,KDYH DOUHDG\UHFRPPHQGHGWKDW\RXORFDWHFHUWDLQUXOHVLQWKH$SSOLFDWLRQOD\HUWKH3XEOLF6WRUHG 3URFHGXUHVOD\HURURQWKHEDVHWDEOHVIRUH[DPSOHZLWKWKHKHOSRIFRQVWUDLQWV 7RJLYH\RXD IHHOLQJIRUKRZ,FKRRVHZKHUHWR SODFHEXVLQHVVUXOHV,ZLOOGHVFULEHVRPHW\SLFDOUXOHVLQWKHQH[W VHFWLRQDQGWKHQH[SODLQZKHUH,ZRXOGORFDWHDQGKRZ,ZRXOGLPSOHPHQWWKRVHUXOHV
/RFDWLRQRI%XVLQHVV5XOHVLQ&ODVVLF:LQGRZV'1$
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
3OHDVHQRWHWKDW\RXVKRXOGFRQVLGHUP\GLVFXVVLRQWKDWIROORZVRQO\DVDVHOHFWLRQRIH[DPSOHV² LW VQRWH[KDXVWLYHE\DQ\PHDQV+DYLQJVDLGWKDWOHW VUHYLHZWKHGDWDEDVHPRGHOVKRZQLQ )LJXUH LQ&KDSWHU IRUWKH$FPH+HOS'HVNVDPSOHDSSOLFDWLRQ$V\RXVHHLQWKDWILJXUHWKHUH DUHWZRWDEOHVQDPHGHUUDQG DQGDFWLRQ,QHUUDQGWKHSUREOHPLVGHVFULEHGDQGLQDFWLRQWKH DWWHPSWVWRVROYHWKHSUREOHPDUHGHVFULEHG1RZOHW VORRNDWWKHILUVWEXVLQHVVUXOHH[DPSOH
%XVLQHVV5XOH([DPSOH:KHQDQ( UUDQG,V'HOHWHG$OO,WV$FWLRQV 6KRXOG%H'HOHWHG7RR
2IWHQ,SUHIHUQRWWRGHOHWHURZVIURPWKHGDWDEDVHEXWLQVWHDGWRPDUNWKHPDVGLVDEOHGWRQRW ORVHWKHORJVRWRVD\6RPHWLPHV\RXQHHGWRGHOHWHURZV,IWKLVLVWKHFDVHIRUWKHPDVWHUURZV \RX DOVRZDQWWRGHOHWHWKHGHWDLOURZVLIDQ\VRUHIHUHQWLDOLQWHJULW\LVQ WYLRODWHG %HFDXVH64/6HUYHUVXSSRUWVGHFODUDWLYHFDVFDGLQJGHOHWHIRUIRUHLJQNH\VLWLVDFDQGLGDWH WHFKQLTXHIRUKDQGOLQJWKLVEXVLQHVVUXOH+RZHYHU,SUHIHUWRSURJUDP WKHUXOHLQWKH3ULYDWH 6WRUHG3URFHGXUHOD\HULQVWHDGEHFDXVH\RXPD\DOVRZDQWWR³LQWHUFHSW´WKH'(/(7( RIWKHGHWDLO URZVDQGSHUIRUPVRPHWKLQJHOVHEHIRUHWKH'(/(7( WDNHVSODFH0\SURSRVDOLVWRXVHWKH3ULYDWH 6WRUHG3URFHGXUHVOD\HUIRUWKLVUXOH
%XVLQHVV5XOH([DPSOH,W6KRXOG%H,PSRVVLEOHWR5HSRUWDQ(UUDQG ZLWKDQ8QNQRZQ&DWHJRU\
$V\RXZLOOVHH,DPQRWJRLQJWRLQFOXGHDQH[DPSOHRIDEXVLQHVVUXOHZKHUHXQLTXHQHVVLV UHTXLUHG,WKLQNLW VREYLRXVWKDWDFRQVWUDLQWVKRXOGEHXVHGLQWKHGDWDEDVH
%XVLQHVV5XOH([DPSOH7KH3ULFH&DOFXODWLRQRIWKH(UUDQG6KRXOG 'HSHQGRQD&RPSOH[DQG'\QDPLF'LVFRXQW0RGHO
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
%XVLQHVV5XOH([DPSOH$Q(UUDQG0XVW%HRID&RUUHFW6WDWH 6WDWXVFRGHVDUHH[WUHPHO\FRPPRQLQZRUNIORZDSSOLFDWLRQV7KHUXOHWKDWDQHUUDQGPXVWEHRID FRUUHFWVWDWHFRXOGPHDQVHYHUDOGLIIHUHQWWKLQJVPDLQO\GHSHQGLQJRQKRZWKHVWDWHLVPDUNHG,I LWLVDVLQJOHFROXPQLWLVVLPSOHWRFKHFNWKDWWKHFROXPQKDVDYDOLGYDOXHIRUH[DPSOHZLWKWKH KHOSRIDIRUHLJQNH\WRDORRNXSWDEOHRUPRUHW\SLFDOO\EHFDXVHWKLVLVV\VWHPLQIRUPDWLRQUDWKHU WKDQXVHULQIRUPDWLRQ²DVDFKHFNFRQVWUDLQWLQWKHGDWDEDVH
7KHVWDWHFRXOGDOVREHXQGHUVWRRGIURPWKHYDOXHVRIVHYHUDOGLIIHUHQWFROXPQV)RUH[DPSOHLID FRXSOHRIFROXPQVKDYHKDGYDOXHVWKHVWDWHRIWKHHUUDQGLVDWDQ\UDWH³UHSRUWHG´,IWKH FORVHGE\ FROXPQKDVDYDOXHWKHHUUDQGLVDWDQ\UDWH³FORVHG´DQGVRRQ,QWKLVFDVHWKHUXOH ZLOOEHWRGHWHUPLQHWKHVWDWHRIDVSHFLILFHUUDQGUDWKHUWKDQWRFKHFNWKDWLWLVDFRUUHFWVWDWH %HFDXVHVHYHUDOVWDWLFUXOHVGLIIHUEHWZHHQGLIIHUHQWVWDWXVHVXVLQJDFROXPQWRPDUNWKHVWDWXVRI DURZPDNHVRWKHUUXOHVHDVLHUWRLPSOHPHQW
%XVLQHVV5XOH([DPSOH$Q(UUDQG0D\2QO\7UDQVIRUPIURP2QH6WDWH WRD6SHFLILF6HWRI2WKHU6WDWHV
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
%XVLQHVV5XOH([DPSOH2QO\8VH UVRI6SHFLILF*URXSV0D\8VHD 6SHFLILF%XVLQHVV)XQFWLRQ
:KHQ\RXZDQWRQO\XVHUVRIVSHFLILFJURXSVWRXVHDVSHFLILFEXVLQHVVIXQFWLRQ&20UROHEDVHG VHFXULW\5%6 LVRQHZD\WRJR
%XVLQHVV5XOH([DPSOH
%XVLQHVV5XOH([DPSOH(YHU\$FWLRQ0XVW%H³6WDPSHG´ZLWK'DWH 7LPHDQG8VHU,G IRUWKH5HSRUWHU 7KLVLVDVLPSOH\HWFRPPRQUXOH,QP\RSLQLRQWKHPRVWW\SLFDOSODFHWRKDQGOHWKLVLVLQWKH 3ULYDWH6WRUHG3URFHGXUHVOD\HU
%XVLQHVV5XOH([DPSOH:KHQDQ(UUDQG,V&ORVHGDQ$FWLRQ6KRXOG%H &UHDWHG
7KLVUXOHLVDQH[DPSOHRIDFRPSHQVDWLQJUXOH³,IWKLVKDSSHQVWKLVVKRXOGDOVRKDSSHQ´
%XVLQHVV5XOH([DPSOH(YHU\(UUDQG 0XVW%H0DUNHGZLWKD8QLTXH 5XQQLQJ9DOXH ,WLVYHU\FRPPRQWKDW\RXQHHGDUXQQLQJYDOXHRIVRPHNLQGVXFKDV RU 1111
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
:K\6FDODELOLW\:RQ W6XIIHU,I
, YHKHDUGLWVDLGPDQ\WLPHV²SDUWLFXODUO\IURP2UDFOHH[SHUWV²WKDWWKH GDWDEDVHVKRXOGQ WEHXVHGIRUORJLFDWOHDVWQRWLIDVFDODEOHDSSOLFDWLRQ LVUHTXLUHG7KHPDLQDUJXPHQWLVWKDWLWLVGLIILFXOWDQGH[SHQVLYHWRVFDOH RXWWKHGDWDEDVHVRLWVKRXOGGRDVOLWWOHDVSRVVLEOHWRDYRLGEHFRPLQJD ERWWOHQHFN
,QP\RSLQLRQWKHUHLVRQHSUREOHPZLWKWKHLUUHDVRQLQJ,IWKHGDWDKDV WREHIHWFKHGDQ\ZD\IRUHYDOXDWLQJDVLPSOHUXOHLWZRQ WKXUWVFDODELOLW\ WRVWD\LQWKHGDWDEDVHDQGHYDOXDWHWKHUXOHWKHUHLQVWHDGRIWUDQVSRUWLQJ WKHGDWDWRWKHFRPSRQHQWVDQGWKHQHYDOXDWLQJWKHUXOHLQWKH FRPSRQHQWV$VDPDWWHURIIDFWLWZLOORIWHQEHEHWWHUIRUVFDODELOLW\7KH VDPHZRUNPXVWEHGRQHLQERWKFDVHVIRUWKHGDWDEDVH,QRQHFDVHWKH GDWDPXVWEHWUDQVSRUWHGWRWKHFRPSRQHQWVDQGLQWKHRWKHUFDVHWKHUH ZLOOEHDVLQJOH,) FODXVH
KDYHWRWUDQVSRUWWKHGDWDWRWKH%XVLQHVVWLHUWKDWORFNZLOOEHNHSW ORQJHUDQGWKURXJKSXWPLJKWVXIIHU
7KH\DUHULJKWWKDWWKHGDWDEDVHZLOOEHFRPHDERWWOHQHFNIDVWHULIWKHUXOH LVHYDOXDWHGLQWKHGDWDEDVHEXWWKDWLVMXVWEHFDXVHPRUHXVHUVFDQEH VHUYLFHGZLWKRQHDSSOLFDWLRQVHUYHUDQGRQHGDWDEDVHVHUYHU,IWKH GDWDEDVHGRHVQRWKLQJHOVHWKDQSHUIRUPSXUH6(/(&783'$7(,16(57 DQG'(/(7( VWDWHPHQWVWKHUHZLOOSUREDEO\EHPXFKPRUHURXQGWULS XWLOL]DWLRQVRWKDWWKHURXQGWULSVFDQEHWKHILUVWERWWOHQHFN$OWHUQDWLYHO\ WKHDSSOLFDWLRQVHUYHUPXVWEHFORQHGWREHDEOHWRVWUHVVWKHGDWDEDVH HQRXJKWRPDNHWKHGDWDEDVHEHFRPHWKHERWWOHQHFN:KHQWKHGDWDEDVH ILQDOO\EHFRPHVWKHERWWOHQHFNLQWKLVFDVH\RXKDYHSHUKDSVIRXU DSSOLFDWLRQVHUYHUVEXWLWPLJKWDOVREHVRWKDWWKHUHLVDQRWKHU ERWWOHQHFNEHIRUHWKHGDWDEDVHEHFRPHVRQHLQWKLVFDVHWRR 7KHRQO\ SUREOHPLVWKDWWKHQXPEHURIVHUYLFHGXVHUVLVWKHVDPHDVZLWKRQH DSSOLFDWLRQDQGRQHGDWDEDVHVHUYHUZKHQWKHGDWDEDVHLVH[HFXWLQJORJLF WRRDQGQRWRQO\SXUH6(/(&783'$7(,16(57DQG'(/(7( VWDWHPHQWV :KLFKVROXWLRQGR\RXILQGPRUHVFDODEOH" %XVLQHVV5XOH([DPSOH7KH'DWHIRU&ORVLQJ0D\1RW%H(DUOLHU7KDQ WKH5HSRUW'DWH 7KLVLVDQH[DPSOHRIDUHODWLRQVKLSUXOHEHWZHHQSURSHUWLHV,WLVDW\SLFDOH[DPSOHRIDUXOHWKDW, WKLQNVKRXOGEHGHDOWZLWKDVDFKHFNFRQVWUDLQWEXWXVLQJWKH'RPDLQOD\HUKHUHLVDOVRDJRRG VROXWLRQ 1RWH 2QHGUDZEDFNZLWKWKHGHFODUDWLYHDSSURDFKIRUFKHFNLQJUXOHVLVWKDWLWLVKDUGHUWR GHWHUPLQHZKDWWKHSUREOHPLV
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
5(7851#WKH5HWXUQ (1'
/LVWLQJ&RQVWUDLQWIRU6ROYLQJ([DPSOH >GER@>2SHQ(UUDQGV)RU3UREOHP6ROYHU@>UHVSRQVLEOH@
%XVLQHVV5XOH([DPSOH2QO\6ROYHDQ(UUDQG,IWKH5HSRUWHU+DV3DLG +LVRU+HU0HPEHUVKLS 2QFHDJDLQ\RXKDYHWRUHDGLQIRUPDWLRQIURPWKHGDWDEDVHWRGHFLGHZKHWKHUWKLVUXOHKDVEHHQ PHWRUQRW$VXVXDOZKHQWKLVLVWKHFDVH,SUHIHUWRGHDOZLWKWKHUXOHLQWKH'DWDWLHULISRVVLEOH DVDFKHFNFRQVWUDLQWRURWKHUZLVHLQWKH3ULYDWH6WRUHG3URFHGXUHVOD\HU
%XVLQHVV5XOH([DPSOH&ORVLQJ'DWH0D\1RW%H/DWHU7KDQ7RGD\
,QDZD\WKLVLVDVWDWLFUXOHWRFKHFN7RGD\ VGDWHLVQRWVWDWLFEXWQRXVHUQHHGVWRDGMXVWLWDW LQWHUYDOV7KHGDWHLVZHOONQRZQVRWRVD\,QWKLVFDVH,WKLQNWKH'RPDLQOD\HULVWKHEHVWSODFH IRUWKHUXOHEXWDFKHFNFRQVWUDLQWRUWKH3ULYDWH6WRUHG3URFHGXUHV OD\HUZRUNVZHOOWRR :KHQLWLVDPDWWHURIWLPHLQVWHDGRIGDWHVLWLVLPSRUWDQWWRVHHWKDW\RXKDYH\RXUPDFKLQHV WLPHV\QFKURQL]HG2IFRXUVH\RXGRQ WDOZD\VKDYHFRQWURORIWKHFOLHQWPDFKLQHVZKLFKLVD SUREOHPZRUWKWKLQNLQJPRUHDERXW
%XVLQHVV5XOH([DPSOH,W6KRXOG%H,PSRVVLEOHWR&DWHJRUL]H7RR +LJKD/HYHORI³6HULRXVQHVV´'HSHQGLQJRQWKH&XVWRPHU&RQ WUDFW
,MXVWGLVFXVVHGDVWDWLFUXOHEXWWKLVH[DPSOHLVGHSHQGHQWRQG\QDPLFLQIRUPDWLRQWKDWWKHHQG XVHUVKDYHWKHRSWLRQRIFKDQJLQJ
%XVLQHVV5XOH([DPSOH,W6KRXOG%H3RVVLEOHWR&UHDWHD+DOIZD\ 6ROYHG(UUDQG%HFDXVHRIDQ$XWRPDWLF$ODUP
7KLVLVDQH[DPSOHRIZKHQ,FUHDWHDQLQVWDQFHRXWRIDG\QDPLFWHPSODWH:KHQWKHDODUP VRXQGHGDFRXSOHRIDFWLRQVZHUHGRQHDXWRPDWLFDOO\E\WKHV\VWHPDQGWKRVHVKRXOGEHORJJHGDV DFWLRQVLQWKHGDWDEDVH7KHWHPSODWHFRXOGEHNHSWLQDWDEOHLQWKHGDWDEDVHDQGLWZLOOEHPRVW HIILFLHQWWRGHDOZLWKWKLVUXOHLQWKH3ULYDWH6WRUHG3URFHGXUHVOD\HU7KHUHLVWKHQQRQHHGWRVHQG DORWRIGDWDIURPWKH%XVLQHVVWLHUWRWKH'DWDWLHU 1RWH $OWKRXJKWKLVH[DPSOHLVDELWVWUDQJHWKHFRQFHSWLVFRPPRQLQUHDOZRUOGDSSOLFDWLRQV
%XVLQHVV5XOH([DPSOH&DOFXODWH3ULRULW\RI(UUDQGLQ$FFRUGDQFHZLWK &RPSOH[EXW6WDWLF5XOHV ,KDYHDOUHDG\LQGLFDWHGVREXWKHUH,JRDJDLQ,WLVEHWWHUWRKDYHFRPSOH[DOJRULWKPVWKDWGRQ W QHHGPRUHLQIRUPDWLRQIURPWKHGDWDEDVHWRH[HFXWHLQWKH'RPDLQOD\HUWKDQLQWKH3ULYDWH6WRUHG 3URFHGXUHVOD\HU, PYHU\DGDPDQWDERXWWKLV,W VMXVWVRPXFKHDVLHUWRZULWHWKLVNLQGRIFRGHLQ 9LVXDO%DVLF1(7IRUH[DPSOHWKDQLQ764/
6XPPDU\RI%XVLQHVV5XOHV([DPSOHVDQG6ROXWLRQV 7DEOHVXPPDUL]HVWKHH[DPSOHVZHMXVWGLVFXVVHGDQGWKHVROXWLRQV,UHFRPPHQGHG.HHSLQ PLQGWKDWZKHQLWLVQHFHVVDU\IRUWKHXVHUWRG\QDPLFDOO\XSGDWHWKHYDOXHVDJDLQVWZKLFKWKH UXOHVZLOOEHFKHFNHGWKHGDWDEDVHLVWKHEHVWSODFHIRUWKHUXOHV,QDGGLWLRQIRUVWDWLFYDOXHVWKH 'RPDLQOD\HURUFRQVWUDLQWVLQWKHGDWDEDVHDUHWKHEHVWRSWLRQV)LQDOO\RIFRXUVH,PD\KDYH FKRVHQH[DPSOHVWKDWDUHPRUHGDWDEDVHFHQWULFWKDQLVFRPPRQ IRU\RXUDSSOLFDWLRQV,QDQ\
FDVH,WKLQNWKHVHH[DPSOHVSDLQWDFOHDUSLFWXUHRIP\UHDVRQLQJZKHQ,GHFLGHZKHUHWRSXWD UXOH %XVLQHVV5XOH 'HVFULSWLRQ 1XPEHU
7DEOH %XVLQHVV5XOH([DPSOHVDQG5HFRPPHQGDWLRQV 5HFRPPHQGHG/RFDWLRQIRUWKH 0RVW 7\SLFDO6LWXDWLRQ
:KHQDQHUUDQGLVGHOHWHGDOOLWVDFWLRQVVKRXOGEH GHOHWHGWRR
3ULYDWH6WRUHG3URFHGXUHV OD\HU
7KHSULFHFDOFXODWLRQRIWKHHUUDQGGHSHQGVXSRQD FRPSOH[DQGG\QDPLFGLVFRXQWPRGHO
3ULYDWH6WRUHG3URFHGXUHV OD\HU
,WVKRXOGEHLPSRVVLEOHWRUHSRUWDQHUUDQGZLWKDQ XQNQRZQFDWHJRU\ $QHUUDQGPXVWEHRIDFRUUHFWVWDWH
'DWDEDVHFRQVWUDLQW
'DWDEDVHFRQVWUDLQW
$QHUUDQGPD\RQO\WUDQVIRUPIURPRQHVWDWHWRDVSHFLILF'RPDLQOD\HU VHWRIRWKHUVWDWHV
2QO\XVHUVRIVSHFLILFJURXSVPD\XVHDVSHFLILFEXVLQHVV $SSOLFDWLRQOD\HU IXQFWLRQ
(YHU\DFWLRQPXVWEH³VWDPSHG´ZLWKGDWHWLPHDQG XVHU,G IRUWKH5HSRUWHU
:KHQDQHUUDQGLVFORVHGDQDFWLRQVKRXOGEHFUHDWHG (YHU\HUUDQGVKDOOEHPDUNHGZLWKDXQLTXHUXQQLQJ YDOXH
7KHGDWHIRUFORVLQJPD\QRWEHHDUOLHUWKDQWKHUHSRUW GDWH
3ULYDWH6WRUHG3URFHGXUHV OD\HU 3ULYDWH6WRUHG3URFHGXUHV OD\HU 3ULYDWH6WRUHG3URFHGXUHV OD\HU 3ULYDWH6WRUHG3URFHGXUHV OD\HU 'DWDEDVHFRQVWUDLQW
7KRVHUHVSRQVLEOHIRUVROYLQJHUUDQGVPD\QRWKDYHPRUH 'DWDEDVHFRQVWUDLQW WKDQWHQRSHQHUUDQGV 2QO\VWDUWWRVROYHDQHUUDQGLIWKHUHSRUWHUKDVSDLGKLV 'DWDEDVHFRQVWUDLQW RUKHUPHPEHUVKLS &ORVLQJGDWHPD\QRWEHODWHUWKDQWRGD\
'RPDLQOD\HU
,WVKRXOGEHSRVVLEOHWRFUHDWHDKDOIZD\VROYHGHUUDQG EHFDXVHRIDQDXWRPDWLFDODUP
3ULYDWH6WRUHG3URFHGXUHV OD\HU
,WVKRXOGEHLPSRVVLEOHWRFDWHJRUL]HWRRKLJKDOHYHORI ³VHULRXVQHVV´GHSHQGLQJRQWKHFXVWRPHUFRQWUDFW &DOFXODWHSULRULW\RIHUUDQGLQDFFRUGDQFHZLWKFRPSOH[ EXWVWDWLFUXOHV
3ULYDWH6WRUHG3URFHGXUHV OD\HU 'RPDLQOD\HU
%XVLQHVV5XOH7LSV
,QWKLVVHFWLRQ,ZLOOVKDUHZLWK\RXVRPHPLVFHOODQHRXVDQGGLVSDUDWHWLSV,KDYHFROOHFWHGUHODWHG WREXVLQHVV UXOHV
7LS'HILQH2QFH([HFXWHDW6HYHUDO7LHUV
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
7KLVVRXQGVSUHWW\FRROGRHVQ WLW"$QGLW VJUHDWIRUVFDODELOLW\EXWRQFHDJDLQPDNHVXUH\RX KDYH\RXUEXVLQHVVUXOHVILUPO\LPSOHPHQWHGDWRQHSODFHILUVWEHIRUH\RXHYHQVWDUWWKLQNLQJDERXW WKLVLGHD ,QDZD\'DWD6HWVVRUWRISURYLGHV\RXZLWKWKLVHIIHFWEHFDXVHLWLVKHUH\RXFDQVWDWHWKDW UHODWLRQVKLSVEHWZHHQPDVWHUDQGGHWDLOURZVLQWKHIRUPRI 'DWD7DEOHV DQGWKH'DWD6HW ZLOO HYDOXDWHWKRVHUXOHVIRU\RX$VVXPHD'DWD6HW FRQWDLQVLQIRUPDWLRQDERXWGRJVDQGRZQHUV,ID UXOHLVWKDWDGRJPXVWKDYHDQRZQHUVXFKDUXOHFDQEH³WROG´WRWKH'DWD6HW VRLW VQRWSRVVLEOH WRDGGGRJVWRWKH'DWD6HW ZLWKRXWKDYLQJFRUUHFWRZQHUVIRUWKRVHGRJV7KDWLVWKHUHIHUHQWLDO LQWHJULW\FKHFNFDQH[HFXWHDWWKH&RQVXPHUWLHUWRRDVDQHDUO\WHVW ;0/6FKHPD'HILQLWLRQV;6' LVDWHFKQLTXHWKDW\RXFDQXVHPDQXDOO\VRWRVSHDNWRHDVLO\ KDYHVRPHUXOHVHYDOXDWHGDWVHYHUDOWLHUV7KHEXLOWLQRSWLRQWRXVHUHJXODUH[SUHVVLRQVLQ1(7 FRXOGDOVREHKHOSIXOLI\RXZDQWWRZULWHDJHQHULFUXOHHQJLQHIRUZKLFKWKHUXOHVFDQEHPRYHG EHWZHHQWLHUV
7LS'HDOZLWK:DUQLQJV2QO\
,I\RXOLNHWRMXVWJLYHDZDUQLQJEDFNWRWKHXVHULWFDQEHDELWWULFN\²WKDWLVUDLVLQJDQ H[FHSWLRQZLWK7KURZ LVQ WWKHULJKWPHFKDQLVPIRUZDUQLQJVRQO\)RUH[DPSOHMXVWWKLQNDERXW ZKDWZDUQLQJH[FHSWLRQVZRXOGGRWRWUDQVDFWLRQDOFODVVHVWKDWXVHWKH$XWR&RPSOHWH DWWULEXWH $EHWWHUDSSURDFKLVWRXVHDFXVWRPPHWKRGWRVLJQDOWKHZDUQLQJWRWKHXVHU
7LS5HSRUW6HYHUDO3UREOHPVDW2QFH
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
7LS5HPHPEHU:KLFK/D\HU,V5HVSRQVLEOHIRU'LVSOD\LQJ(UURU 0HVVDJHVWRWKH8VHUV
, YHVHHQHUURUPHVVDJHVLQWKHVWRUHGSURFHGXUHVEHLQJXVHGLQWKHFRQVXPHUWLHULQHUURUGLDORJV PRUHWKDQRQFH7KLVDFWXDOO\PHDQVWKDW,KDYHGRQHLWP\VHOIVHYHUDOWLPHV 8QGHUVWUHVVWKLV LVDFRPPRQPLVWDNHEXW²DV,VD\LQWKHKHDGLQJ²UHPHPEHUWKDW LWLVWKH&RQVXPHU+HOSHU OD\HU VUHVSRQVLELOLW\WRSURGXFHXVHUIULHQGO\HUURUPHVVDJHVIRUWKHHQGXVHUV7KHHUURU PHVVDJHV\RXXVHLQWKHVWRUHGSURFHGXUHVDUHIRUSURJUDPPHUV 1RWH ,Q&KDSWHU,ZLOOGLVFXVVHUURUKDQGOLQJDQGHUURUPHVVDJHVLQJUHDWHUGHWDLO
(YDOXDWLRQRI3URSRVDO
7KHHYDOXDWLRQRIP\SURSRVDOLVGLIIHUHQWLQWKLVFKDSWHUWKDQLQRWKHUFKDSWHUV,QWKLVFKDSWHU, ZLOORQO\KDYHRQHHYDOXDWLRQVHFWLRQHYHQWKRXJKWKHUHKDYHEHHQVHYHUDOGLIIHUHQWSURSRVDOV,Q VRGRLQJ,ZLOOHYDOXDWHWKHRYHUDOOSKLORVRSK\RIWKHFKDSWHU²WKDWDOOUXOHVVKRXOGEHHYDOXDWHG ZKHUHWKH\PDNHPRVWVHQVH)RULQIRUPDWLRQV\VWHPVWKDW LVYHU\RIWHQLQWKH'DWDWLHU
(YDOXDWLRQRI3URSRVDOIRU:KHUHWR/RFDWH'LIIHUHQW%XVLQHVV5XOHV
,WVKRXOGQ WPDWWHUDWDOOZKLFKW\SHRIFRQVXPHULVXVHGIRUGHWHUPLQLQJZKHUHWKHEXVLQHVVUXOHV VKRXOGEHORFDWHG7KH%XVLQHVVWLHUDQG'DWDWLHUVKRXOGQ WEHLQIOXHQFHGE\WKH&RQVXPHUWLHU DQGLQWKHFDVHRIEXVLQHVVUXOHVWKH\VKRXOGGHILQLWHO\QRWEHLQIOXHQFHGE\LW +RZHYHUSK\VLFDOUHVWULFWLRQVLQIOXHQFHWKHGHFLVLRQVYHU\PXFK:KLFKRIWKHVHUYHUVDUHIDVW" :KLFKRIWKHVHUYHUVPXVW\RXEHH[WUHPHO\FDUHIXOZLWKORDGLQJ":KHUHGR\RXKDYHVORZ FRQQHFWLRQV"7KHVHDUHWKHNLQGVRITXHVWLRQV\RXPXVWDVN\RXUVHOI,I\RXQHHGGDWDIURPWKH GDWDEDVHWRHYDOXDWHDUXOHWKHFKDQFHVDUHWKDWWKLVUXOHVKRXOGOLYHLQWKH'DWDWLHU,QDGGLWLRQ
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
:KDW V1H[W
)RUVHYHUDOFKDSWHUVQRZ,KDYHEHHQJRLQJRQDERXWP\SURSRVDOIRUKRZWRDFFHVVWKHGDWDEDVH ZLWKWKHKHOSRIFUHDWLQJDQ64/VFULSWWKDWLVVHQWLQRQHJR,QWKHQH[WFKDSWHU,ZLOOH[SORUHWKLV SDWWHUQLQGHSWK,ZLOODOVRGLVFXVVVHUYHUVLGHFDFKLQJDQGKRZWRVHQGDORWRIGDWDLQHDFKVWRUHG SURFHGXUHFDOO
5HIHUHQFHV
55RVV7KH%XVLQHVV5XOH%RRN6HFRQG(GLWLRQ%XVLQHVV5XOH6ROXWLRQV -0DUWLQDQG-2GHOO2EMHFW2ULHQWHG0HWKRGV6HFRQG(GLWLRQ3UHQWLFH+DOO 7+DOSLQ,QIRUPDWLRQ0RGHOLQJDQG5HODWLRQDO'DWDEDVHV0RUJDQ.DXIPDQQ 66XQGEODGDQG36XQGEODG'HVLJQLQJIRU6FDODELOLW\ZLWK0LFURVRIW:LQGRZV'1$0LFURVRIW 3UHVV
&KDSWHU'DWD$FFHVV ,17+,6&+$37(5 x x x x x x
0\3URSRVDOIRUD'DWD$FFHVV3DWWHUQ 7KH'DWD$FFHVV3URSRVDOLQWKH$UFKLWHFWXUH 6D\LQJ0RUHLQ)HZHU:RUGV:KHQ&DOOLQJ6WRUHG3URFHGXUHV 6HUYHU6LGH&DFKLQJ 'HDOLQJZLWK6FKHPD&KDQJHV (YDOXDWLRQRI0\3URSRVDO
)RUVHYHUDOFKDSWHUVQRZ, YHEHHQGLVFXVVLQJKRZLPSRUWDQWLWLVWRSUHSDUHIRUGHEXJJLQJWR PDNHXVHRIDJRRGDUFKLWHFWXUHWRIRFXVRQWUDQVDFWLRQVDQGVRRQ,QWKLVFKDSWHUZH OOORRNDW DQRWKHUDVSHFWWKDWLVH[WUHPHO\LPSRUWDQWZKHQ\RXZDQWWREXLOGVFDODEOHUHOLDEOHDQG PDLQWDLQDEOHV\VWHPV²GDWDDFFHVV$V6FRWW*XWKULHWKHDUFKLWHFWRI$631(7VD\V³7KLQNKDUG DERXWGDWDDFFHVV7KLVLVUHDOO\WKHGLIIHUHQFHEHWZHHQVXFFHVVIXODSSOLFDWLRQVDQGXQVXFFHVVIXO DSSOLFDWLRQV´ 7KLVFKDSWHUZLOOIRFXVRQDQXQXVXDOEXWYHU\HIIHFWLYHSDWWHUQIRUKRZWRLQWHUDFWZLWKWKH'DWD WLHU,KDYHWRXFKHGRQWKLVSDWWHUQLQHDUOLHUFKDSWHUVDQG,ZLOODOVREHGLVFXVVLQJLWLQWKHFRQWH[W RIWKHDUFKLWHFWXUHSUHVHQWHGLQ&KDSWHU³$UFKLWHFWXUH´$IWHUWKDW,ZLOOGLVFXVVKRZWRVHQGDQ ³DUUD\RIURZV´WRDVWRUHGSURFHGXUHDVZHOODVORRNDWDVPDOOVDPSOLQJRIVHUYHUVLGHFDFKLQJ )LQDOO\ZH OOGLVFXVVKRZWRSUHSDUH\RXUFRGHIRUIXWXUHVFKHPDFKDQJHV
0\3URSRVDOIRUD'DWD$FFHVV3DWWHUQ
+RZ6WRUHG3URFHGXUHV$UH1RUPDOO\&DOOHGZLWK$'21(7
,Q/LVWLQJ\RXFDQVHHDQH[DPSOHRIFRGHWKDWXVHV$'21(7IRUFDOOLQJDVWRUHGSURFHGXUH FDOOHGDB(UUDQGB'HOHWH /LVWLQJ7\SLFDO&RGHIRU8VLQJ$'21(7WR&DOOD6WRUHG3URFHGXUH 'LPD&RQQHFWLRQ$V1HZ6TO&OLHQW6TO&RQQHFWLRQFRQQHFWLRQ6WULQJ 'LPD&RPPDQG$V1HZ6TO&OLHQW6TO&RPPDQGDB(UUDQGB,QVHUWD&RQQHFWLRQ 7U\
D&RPPDQG&RPPDQG7\SH &RPPDQG7\SH6WRUHG3URFHGXUH
D&RPPDQG3DUDPHWHUV$GG1HZ6TO&OLHQW6TO3DUDPHWHU#5(7851B9$/8(B 6\VWHP'DWD6TO'E7\SH,QWB 6\VWHP'DWD3DUDPHWHU'LUHFWLRQ5HWXUQ9DOXH)DOVH&7\SH%\WH B &7\SH%\WH 6\VWHP'DWD'DWD5RZ9HUVLRQ&XUUHQW1RWKLQJ D&RPPDQG3DUDPHWHUV$GG1HZ6TO&OLHQW6TO3DUDPHWHU#LGB 6TO'E7\SH8QLTXH,GHQWLILHU 9DOXH *XLG1HZ*XLG D&RPPDQG3DUDPHWHUV$GG1HZ6TO&OLHQW6TO3DUDPHWHU#GHVFULSWLRQB 6TO'E7\SH9DU&KDU 9DOXH 3UREOHPZLWK
$QGVRRQIRUWKHUHVWRIWKHSDUDPHWHUV D&RQQHFWLRQ2SHQ D&RPPDQG([HFXWH1RQ4XHU\
0RUHDERXW&DWFKEORFNVLQWKHQH[WFKDSWHU )LQDOO\ -QVN'E+HOSHU5HOHDVH&RQQHFWLRQD&RQQHFWLRQ (QG7U\ $V\RXVHHLQ/LVWLQJLW VUHODWLYHO\VWUDLJKWIRUZDUGWRPDNHDFDOOWRDVWRUHGSURFHGXUHZLWK $'21(70RVWGHYHORSHUVZLOOEHDFFXVWRPHGWRXVLQJWKLVWHFKQLTXHEXW, PQRWWRWDOO\VDWLVILHG ZLWKWKLVDSSURDFK,VHHDIHZVKRUWFRPLQJVZLWKWKHW\SLFDO$'21(7ZD\RIFDOOLQJVWRUHG SURFHGXUHVLQFOXGLQJWKHIROORZLQJ x x
x
2EMHFWV5'2 WR$FWLYH;'DWD2EMHFWV$'2 WR$'21(7DOVRSURYLGHVVXSSRUWIRUWKLV DUJXPHQW
$QRWKHUW\SLFDODSSURDFKGHYHORSHUVXVHIRUDFFHVVLQJWKHGDWDEDVHWKURXJK$'21(7LV ³UHJLVWHULQJ´ZKLFKVWRUHGSURFHGXUHWRXVHIRUFKDQJHGURZVLQD'DWD6HWZKLFKVWRUHGSURFHGXUH WRXVHIRUDGGHGURZVDQGZKLFKVWRUHGSURFHGXUHWRXVHIRUGHOHWHGURZV/LVWLQJSURYLGHVD FRGHVDPSOHLQZKLFKDB(UUDQGB,QVHUW LVUHJLVWHUHGDVWKHVWRUHGSURFHGXUHWRXVHIRUDGGHG URZVWRWKH'DWD6HW,QWKLVFDVHWKHFRGHVKRZQLVZKDW\RXFDQDXWRJHQHUDWHZLWKWKHKHOSRI WKHFRPSRQHQWGHVLJQHU /LVWLQJ&RGHIRU5HJLVWHULQJD6WRUHG3URFHGXUHWR([HFXWH2QFHIRU(DFK$GGHG5RZ LQD'DWD6HW 0H6TO,QVHUW&RPPDQG 1HZ6\VWHP'DWD6TO&OLHQW6TO&RPPDQG
0H6TO,QVHUW&RPPDQG&RPPDQG7H[W >DB(UUDQGB,QVHUW@ 0H6TO,QVHUW&RPPDQG&RPPDQG7\SH 6\VWHP'DWD&RPPDQG7\SH6WRUHG3URFHGXUH 0H6TO,QVHUW&RPPDQG&RQQHFWLRQ 0H6TO&RQQHFWLRQ 0H6TO,QVHUW&RPPDQG3DUDPHWHUV$GGB 1HZ6\VWHP'DWD6TO&OLHQW6TO3DUDPHWHU#5(7851B9$/8(B 6\VWHP'DWD6TO'E7\SH,QWB 6\VWHP'DWD3DUDPHWHU'LUHFWLRQ5HWXUQ9DOXH)DOVHB &7\SH%\WH &7\SH%\WH B 6\VWHP'DWD'DWD5RZ9HUVLRQ&XUUHQW1RWKLQJ 0H6TO,QVHUW&RPPDQG3DUDPHWHUV$GGBB 1HZ6\VWHP'DWD6TO&OLHQW6TO3DUDPHWHU#LGB 6\VWHP'DWD6TO'E7\SH8QLTXH,GHQWLILHU
0H6TO,QVHUW&RPPDQG3DUDPHWHUV$GGB 1HZ6\VWHP'DWD6TO&OLHQW6TO3DUDPHWHU#GHVFULSWLRQB 6\VWHP'DWD6TO'E7\SH9DU&KDU 0H6TO'DWD$GDSWHU,QVHUW&RPPDQG 0H6TO,QVHUW&RPPDQG
7KHGLVDGYDQWDJHVPHQWLRQHGZLWKWKH³PDQXDO´WHFKQLTXHOHQJWK\FRGHWLJKWFRXSOLQJWR $'21(7DQGQRSXUH764/WUDQVDFWLRQV DOVRDSSO\KHUH$IXUWKHUGLVDGYDQWDJHLVWKDW\RXORVH VRPHFRQWURORYHUH[DFWO\ZKDWLVJRLQJRQDQG\RXKDYHWROHDUQDQRWKHUWHFKQLTXHIRUKDQGOLQJ SUREOHPVDSDUWIURPFDOOLQJWKHVWRUHGSURFHGXUHVRQ\RXURZQ,WPLJKWQRWEHFRPSOHWHO\IDLUWR PDNHFRPSDULVRQVZLWKWKHGUHDGHG8SGDWH%DWFK RI$'2²WKHQHZDSSURDFKLQ$'21(7LV PXFKEHWWHUEHFDXVH\RXKDYHVRPHFRQWURORYHUZKDWPHWKRGVZLOOEHXVHGLQGLIIHUHQWFDVHV 6WLOOWKHGHJUHHRIFRQWURO\RXKDYHLVQ WDOZD\VHQRXJK7KHULVNRIIXWXUHFKDQJHVE\0LFURVRIW DQGQRGLUHFWRSSRUWXQLW\WRXVHSXUH764/ WUDQVDFWLRQVDSSO\KHUHWRR7KHUHIRUHOHW VWDNHD ORRNDWP\QHZSURSRVDOZKLFKDYRLGVVRPHRIWKHVHSUREOHPV
0\'DWD$FFHVV3URSRVDOLQ'HWDLO
,ZURWHWKHILUVWYHUVLRQRIP\GDWDDFFHVVSDWWHUQLQ9%IRUDQDSSOLFDWLRQLQZKLFK,KDGDVORZ FRQQHFWLRQEHWZHHQWKH%XVLQHVVWLHUDQGWKH'DWDWLHU6LQFHWKHQ, YHXVHGLWIRUDSSOLFDWLRQV ZLWKRUGLQDU\FRQILJXUDWLRQVWRR,I\RXZDQWWRUHDGDERXWWKH9%YHUVLRQ\RX OOILQGDQDUWLFOH FDOOHG³5RXQG7ULSV$UH(YLO²5HGXFH7KHP´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
1RWH 1RUPDOO\,KDWHVFULSWVVXFKDVWKRVHZULWWHQLQ9%6FULSWIRUROG$63IRUH[DPSOHEXW DXWRJHQHUDWHG64/VFULSWVDUHVRPHWKLQJHOVH
7KH*HQHUDWHG64/6FULSW
%HIRUHZHJHWJRLQJRQKRZP\GDWDDFFHVVSDWWHUQSURSRVDOFDQEHXVHGDQGKRZLWZRUNVOHW V WDNHDORRNDWWKHUHVXOWZHKRSHWRDFKLHYH,Q/LVWLQJ\RXFDQVHHDQH[DPSOHRIDQ64/ VFULSWFUHDWHGZLWKWKHGDWDDFFHVVSDWWHUQ,QWKH64/VFULSWWKHSXEOLFVWRUHGSURFHGXUH DB(UUDQGB,QVHUW LVFDOOHG 1RWH ,QWKHFRGHLQ/LVWLQJ,GHFLGHGWRRQO\VKRZWZRSDUDPHWHUV$GGLQJPRUH SDUDPHWHUVGRHVQ WUHDOO\DGGDQ\YDOXHWRWKHGHVFULSWLRQ7KLVDSSOLHVWRVHYHUDORIWKH FRGHH[DPSOHVLQWKLVFKDSWHU
/LVWLQJ6FULSW&UHDWHGZLWKWKH'DWD$FFHVV3URSRVDO '(&/$5(#WKH6RXUFHXGGW6RXUFH #DQ(UURU,17 #DQ(UURU0HVVDJHXGGW(UURU0HVVDJH #D5HWXUQ9DOXH,17
6(712&281721 6(7#DQ(UURU 6(7#DQ(UURU0HVVDJH
6(7#WKH6RXUFH 64/VFULSWXVHGE\(UUDQG5HSRUW
(;(&-QVN7UDFHB%HJLQ#WKH6RXUFH
'(&/$5(#WKH7UDQ&RXQW$W(QWU\,17 6(7#WKH7UDQ&RXQW$W(QWU\ ##75$1&2817 ,)#WKH7UDQ&RXQW$W(QWU\ %(*,1 6(775$16$&7,21,62/$7,21/(9(/5($'81&200,77(' %(*,175$1 (1' (;(&#D5HWXUQ9DOXH DB(UUDQGB,QVHUW #LG $)&)$%%'I'))())$)()
#GHVFULSWLRQ 3UREOHPZLWK
6(7#DQ(UURU ##(5525 ,)#DQ(UURU!%(*,1 6(7#DQ(UURU0HVVDJH
##(5525SUREOHPZLWKFDOOWRDB(UUDQGB,QVHUW
*272([LW+DQGOHU (1' (/6(,)#D5HWXUQ9DOXH!%(*,1 6(7#DQ(UURU #D5HWXUQ9DOXH 6(7#DQ(UURU0HVVDJH
#D5HWXUQ9DOXHSUREOHPZLWKFDOOWRDB(UUDQGB,QVHUW
*272([LW+DQGOHU (1'
([LW+DQGOHU ,)#WKH7UDQ&RXQW$W(QWU\ $1'##75$1&2817!%(*,1 ,)#DQ(UURU %(*,1 &200,775$1 (1' (/6(%(*,1 52//%$&.75$1 (1' (1'
,)#DQ(UURU!%(*,1 (;(&-QVN(UURUB5DLVH#WKH6RXUFH #DQ(UURU#DQ(UURU0HVVDJH (1' (;(&-QVN7UDFHB(QG#WKH6RXUFH
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³(UURU+DQGOLQJDQG&RQFXUUHQF\&RQWURO´
7KH64/VFULSWVKRZQLQ/LVWLQJZLOOWKHQEHVHQWWRWKHGDWDEDVHDQGH[HFXWHGZLWKRXWDQ\ H[WUDURXQGWULSVEHWZHHQWKH%XVLQHVVWLHUDQGWKH'DWDWLHU7KLVLVZKDWZHDUHDIWHU1RWH HVSHFLDOO\KRZWKHWUDQVDFWLRQLVKDQGOHG,W VH[DFWO\WKHVDPHDSSURDFKDVWKHRQH,GLVFXVVHGIRU 764/WUDQVDFWLRQVLQVWRUHG SURFHGXUHVLQ&KDSWHU³7UDQVDFWLRQV´,IWKHUHLVDOUHDG\DQDFWLYH WUDQVDFWLRQZKHQWKH64/VFULSWVWDUWVWRH[HFXWHIRUH[DPSOHD&20WUDQVDFWLRQ ,GRQ W KDQGOHWUDQVDFWLRQVLQWKH64/VFULSW
([WHUQDO'HVLJQRI0\'DWD$FFHVV3URSRVDO
:KHQ,UHIHUWR³H[WHUQDOGHVLJQ´,PHDQWKHSDUWRIWKHGHVLJQWKDWWKHFRQVXPHURIWKHSDWWHUQ ZLOOVHHDQGLQWHUDFWZLWK7RVSHDNSODLQO\WKHVHDUHWKHFODVVHVDQGWKHLUSXEOLFPHPEHUV $VIDUDVWKHFRQVXPHURIWKHGDWDDFFHVVSURSRVDONQRZVKHRUVKHLVVXSSRVHGWRFUHDWHD -QVN'E%DWFK&RPPDQG LQVWDQFHDQGFDOO$GG6SURF&DOO RQHRUPRUHWLPHV7KH%DWFK&RPPDQG ZLOOUHPHPEHUZKDWFDOOVWRVWRUHGSURFHGXUHVVKRXOGEHGRQH)LQDOO\WKH%DWFK&RPPDQG LQVWDQFH VKRXOGEHVHQWWRWKH$FPH+HOS'HVN3HUVLVWHQW$FFHVVSD+HOSHU FODVVIRUH[HFXWLQJDOOWKH VWRUHGSURFHGXUHFDOOV
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
)LJXUHVKRZVWKHVWDWLFYLHZRIWKHGHVLJQ,Q)LJXUH\RXFDQVHHWKHFODVVHVLQDFWLRQ, KDYHDGGHGDIHZFODVVHV²(UUDQG5HSRUW IURPWKH$SSOLFDWLRQOD\HUDQGGR(UUDQG IURPWKH 'RPDLQOD\HU²LQWKLVILJXUHWRJLYHDFRPSOHWHH[DPSOH,ZLOOGLVFXVVWKRVHFODVVHVLQPRUHGHWDLO ODWHULQWKHFKDSWHU )LJXUH,QWHUDFWLRQGLDJUDPIRUP\GDWDDFFHVVSURSRVDO
1RWH ,WLVFRPPRQO\UHJDUGHGDVEDGGHVLJQLISXEOLFPHWKRGVPXVWEHFDOOHGLQFHUWDLQ VHTXHQFHVWRJLYHWKHFRUUHFWUHVXOW$V\RXQRWLFHIURP)LJXUHWKHUHLVDVWULFW VHTXHQFHWRIROORZWRJHWWKHH[SHFWHGUHVXOW)RUH[DPSOH\RXKDYHWRFDOO %HJLQ7UDQVDFWLRQ EHIRUH\RXFDOO$GG6SURF&DOO IRUWKHVWRUHGSURFHGXUHFDOOVWKDW \RXZDQWWRKDYHLQWKHWUDQVDFWLRQ7KLVLVQDWXUDOWRPRVWGHYHORSHUVVRLWVKRXOGQ W FDXVHDQ\SUREOHPV)RUH[DPSOHDVLPLODUSURWRFRODOVRDSSOLHVIRUWUDQVDFWLRQVLQ$'2
$V\RXFDQVHHLQ)LJXUHWKHGHVLJQXVHVDQLQVWDQFHRI%DWFK&RPPDQG DVDVWUHDPRUEDJRI ZKDWLVWREHGRQH7KHLQVWDQFHLVVHQWDURXQGEHWZHHQWKHOD\HUVDQGILQDOO\XVHGE\WKH SD+HOSHU FODVVLQWKH3HUVLVWHQW$FFHVVOD\HUWRH[HFXWHDOOWKHVWRUHGSURFHGXUHVLQRQHURXQGWULS WRWKHGDWDEDVH
6DPSOH&RGH8VLQJWKH([WHUQDO'HVLJQ (QRXJKLVHQRXJKOHW VJHWGRZQWREXVLQHVVDQGORRNDWVRPHFRGHWKDWXVHVWKHH[WHUQDOGHVLJQ &RGHWKDW*HQHUDWHVDQ64/6FULSWDQG6HQGV,WIRU([HFXWLRQ )LUVWWKH64/VFULSWKDVWREHJHQHUDWHG
3XEOLF6XE5HSRUW%\9DOGDWD6HW$V'DWD6HW &RQVWWKH6RXUFH$V6WULQJ WKH7\SH1DPH 5HSRUW
'LPD%DWFK&RPPDQG$V1HZ-QVN'E%DWFK&RPPDQGWKH6RXUFH 7U\ D%DWFK&RPPDQG%HJLQ7UDQVDFWLRQ,VRODWLRQ/HYHO5HDG8QFRPPLWWHG $FPH+HOS'HVN'RPDLQGR(UUDQG6DYHGDWD6HWD%DWFK&RPPDQG
$FPH+HOS'HVN3HUVLVWHQW$FFHVVSD+HOSHU([HFXWHD%DWFK&RPPDQG
6RPH&DWFKEORFNV (QG7U\ (QG6XE 1RWH
7KHFRQVWUXFWRURIWKH%DWFK&RPPDQG FODVVWDNHVIURP6RXUFH DVDSDUDPHWHU7KLVLVXVHG DV\RXFDQVHHLQ/LVWLQJ ZKHQEXLOGLQJWKH64/VFULSWDQGZKHQDGGLQJWUDFHFDOOV IRUH[DPSOH
)LQDOO\ZKHQWKH(UUDQG5HSRUW LQVWDQFHKDVFROOHFWHGDOOWKHGDWDLQWKH%DWFK&RPPDQG LQVWDQFHLW VHQGVLWWRSD+HOSHU IRUH[HFXWLRQDJDLQVWWKHGDWDEDVH$V\RXVHH,GLGQ WFDOO (QG7UDQVDFWLRQ
$P,3URPRWLQJD:HDN3URWRFRO"
,WPLJKWVHHPWKDW,DPSURPRWLQJDZHDNSURWRFROLQVD\LQJWKDWWKH SURJUDPPHUGRHVQ WKDYHWRHQGWKHWUDQVDFWLRQH[SOLFLWO\EHFDXVHWKH VFULSWZLOOHQGWKHWUDQVDFWLRQDXWRPDWLFDOO\2IFRXUVH,GRQ WZDQWWR HQFRXUDJHVORSS\SURJUDPPLQJ7KHUHDVRQZK\\RXGRQ WKDYHWRFDOO (QG7UDQVDFWLRQ H[SOLFLWO\LQWKLVGHVLJQLVWKDWWKHHUURUKDQGOLQJ WHFKQLTXH,XVHIRU64/VFULSWVDQGVWRUHGSURFHGXUHVUHTXLUHVDQ ([LW+DQGOHU VHFWLRQWKDWZLOOKDQGOHRSHQWUDQVDFWLRQVLIDSSURSULDWH
,Q/LVWLQJ\RXFDQVHHKRZWKHSD(UUDQG DGGVDFDOOWRWKHVWRUHGSURFHGXUH DB(UUDQGB,QVHUW :HFDPHKHUHIURPGR(UUDQG6DYH $V\RXFDQVHHPDQ\FRQVWDQWVDUH UHTXLUHGQRWRQO\IRUWKHQDPHVRIWKHVWRUHGSURFHGXUHVEXWDOVRIRUWKHQDPHVRIWKH SDUDPHWHUVLQWKHVWRUHGSURFHGXUHV7KHFRQVWDQWVDUHFDOOHGIRUH[DPSOH 6SURFV'DWD7DEOHVHUUDQG DQG6SURFV1DPHVDBHUUDQGB,QVHUW /LVWLQJSD(UUDQG6DYH
3XEOLF6KDUHG6XE6DYH%\9DOGDWD6HW$V'DWD6HWB %\5HIEDWFK&RPPDQG$V-QVN'E%DWFK&RPPDQG 'LPD'DWD5RZ$V'DWD5RZ 'LPD'DWD7DEOH$V'DWD7DEOH B GDWD6HW7DEOHV6SURFV'DWD7DEOHVHUUDQG *HW&KDQJHV'DWD5RZ6WDWH$GGHG )RU(DFKD'DWD5RZ,QD'DWD7DEOH5RZV EDWFK&RPPDQG$GG6SURF&DOO6SURFV1DPHVDB(UUDQGB,QVHUW EDWFK&RPPDQG$GG3DUDPHWHU6SURFV3DUDPHWHUVLGB &7\SHD'DWD5RZ6SURFV3DUDPHWHUVLG *XLG )DOVH
EDWFK&RPPDQG$GG3DUDPHWHU6SURFV3DUDPHWHUVGHVFULSWLRQB &7\SHD'DWD5RZ6SURFV3DUDPHWHUVGHVFULSWLRQ B 6WULQJ 6SURFV3DUDPHWHU6L]HVGHVFULSWLRQ)DOVH
$QGVRRQIRUDOOSDUDPHWHUV 1H[W (QG6XE 1RWH
$WILUVW,XVHGD6SURF&DOO FODVVWKDWZDVLQVWDQWLDWHGRQFHIRUHDFK FDOOWRDVWRUHG SURFHGXUHDQGWKHQWKHLQVWDQFHVZHUHDGGHGWRWKH%DWFK&RPPDQG LQVWDQFH,ILQGWKH FXUUHQWGHVLJQZLWKRXWWKH6SURF&DOO FODVVWREHVOLJKWO\PRUHHQFDSVXODWHG,ID 6SURF&DOO LVXVHGLQWHUQDOO\LQWKH%DWFK&RPPDQG RUQRWWKDWLVLQYLVLEOHWRWKHFRQVXPHU RIWKH%DWFK&RPPDQG
&RGH7KDW([HFXWHVWKH64/6FULSW ,W VQRZWLPHWRXVHWKH64/VFULSWDQGVHQGLWWRWKHGDWDEDVH7KHUHDUHWKUHHGLIIHUHQWPHWKRGV IRUGRLQJWKLVGHSHQGLQJRQZKHWKHUWKHUHZLOOEHDUHVXOWVHWIURPWKH64/VFULSWRUQRWDQGKRZ WKDWUHVXOWVHWVKRXOGEHXVHG,Q/LVWLQJ,VKRZ\RXWKHILUVWSDUWRIWKH([HFXWH PHWKRG ZKLFKLVXVHGZKHQQRUHVXOWVHWLVH[SHFWHG /LVWLQJ%DWFK&RPPDQG+HOSHU([HFXWH 3DUW
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
7KHFRGHLQ/LVWLQJLVIURPWKH%DWFK&RPPDQG+HOSHU FODVVEXWWKHFDOOWR&RQQHFW ZLOO DFWXDOO\JRWRWKHSD+HOSHU FODVVZKLFKRYHUULGHV&RQQHFW LQ%DWFK&RPPDQG+HOSHU 1RWH 7KHFRQQHFWLRQVWULQJLVGHDOWZLWKLQDFRQILJ ILOHDQGFDFKHGLQWKH ZD\WKDWZDV GLVFXVVHGLQ&KDSWHU³$GGLQJ'HEXJJLQJ6XSSRUW´
/LVWLQJ%DWFK&RPPDQG+HOSHU([HFXWH 3DUW 'LPD&RQQHFWLRQ$V6TO&OLHQW6TO&RQQHFWLRQ 7U\ D&RQQHFWLRQ &RQQHFW )LQDOO\LW VWLPHWRVHQGWKHVFULSWWRWKHGDWDEDVH'RLQJWKLVLVVWUDLJKWIRUZDUGDV\RXFDQVHHLQ /LVWLQJ
/LVWLQJ%DWFK&RPPDQG+HOSHU([HFXWH 3DUW 'LPD&RPPDQG$V1HZ6TO&OLHQW6TO&RPPDQGDQ6TO6FULSWD&RQQHFWLRQ D&RPPDQG&RPPDQG7\SH &RPPDQG7\SH7H[W D&RPPDQG([HFXWH1RQ4XHU\
$QGVRPHFDWFKEORFNV
)LQDOO\ -QVN'E+HOSHU5HOHDVH&RQQHFWLRQD&RQQHFWLRQ (QG7U\ (QG6XE
,QWHUQDO'HVLJQRI0\'DWD$FFHVV3URSRVDO
,KDYHWULHGWRPDNHWKHH[WHUQDOGHVLJQDVIUHHDVSRVVLEOHIURPWKHLPSOHPHQWDWLRQLWVHOIDQG IURPWKHIDFWWKDWLQWKHHQGDQ64/VFULSWZLOOH[HFXWHDJDLQVWWKHGDWDEDVH)RUH[DPSOHWKH $GG3DUDPHWHU PHWKRGVKDYHDEXQFKRIRYHUORDGHGYHUVLRQVRQHIRUHDFKVXSSRUWHGGDWDW\SH HYHQWKRXJKWKH64/VFULSWZLOORIFRXUVHEHLQSODLQWH[W%\QRWH[SRVLQJLPSOHPHQWDWLRQGHWDLOV LQWKHH[WHUQDOGHVLJQ\RXFDQFKDQJHWKHLPSOHPHQWDWLRQDQGXVHDSODLQ$'21(7 LPSOHPHQWDWLRQLQVWHDGIRUH[DPSOHLQWHUQDOO\
1DPHG3DUDPHWHUV :KHQ$GG6SURF&DOO LVXVHGLWZLOOILQDOO\OHDGWRDFDOOIRUDVWRUHGSURFHGXUHLQWKH64/VFULSW (DFKFDOOWR$GG3DUDPHWHU ZLOODGGDSDUDPHWHUWRWKHVWRUHGSURFHGXUHFDOO6RDVQRWWRFUHDWH \HWDQRWKHURUGHUGHSHQGHQF\IRUWKHRUGHULQZKLFKWRPDNHWKHFDOOVWR$GG3DUDPHWHU , GHFLGHGWRXVHQDPHGSDUDPHWHUVLQVWHDG7KHUHVXOWLQWKH64/VFULSWFDQEHVHHQLQ/LVWLQJ /LVWLQJ([DPSOH6KRZLQJ7KDW1DPHG3DUDPHWHUV$UH8VHGIRU&DOOLQJ6WRUHG 3URFHGXUHV (;(&#D5HWXUQ9DOXH DB(UUDQGB,QVHUW #LG $)&)$%%'I'))())$)()
#GHVFULSWLRQ 3UREOHPZLWK $QRWKHUDGYDQWDJHRIXVLQJQDPHGSDUDPHWHUVDSDUWIURPWKHIDFWWKDWWKHSDUDPHWHURUGHU GRHVQ WPDWWHULVWKDW\RXFDQFKRRVHWRXVHRQO\FHUWDLQSDUDPHWHUV,W VDOVRDELJKHOSZKHQ\RX GHEXJPDOIXQFWLRQLQJ64/VFULSWV
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
%HZDUHRIWKH,62'DWH)RUPDW
:KHQ\RXDUHIRUPDWWLQJGDWHVWRZULWHWRWKH64/VFULSW\RXPXVWEH FDUHIXOLI\RXZDQW\RXUFRGHWREHLQVHQVLWLYHWRUHJLRQDOGDWHVHWWLQJV 0\IULHQG7LERU.DUDV]L64/6HUYHU0LFURVRIW093 ZDUQVWKDWZHPXVW ZDWFKRXWIRUWKH,62IRUPDW7KHFRGHVKRZQLQ/LVWLQJLOOXVWUDWHV WKHGDQJHURIWKH,62GDWHIRUPDW /LVWLQJ7KH'DQJHU,QKHUHQWLQWKH,62'DWH)RUPDW
6(7ODQJXDJHXVBHQJOLVK 6(/(&7&$67 $6GDWHWLPH 6(7/$1*8$*(IUHQFK 6(/(&7&$67 $6GDWHWLPH
7U\VSBKHOSODQJXDJH DQG\RXZLOOVHHWKDWODQJXDJHFDUULHVWKH³\PG´ IRUPDW,QRWKHUZRUGV.DUDV]LVD\VWKDWLI\RX UHDERXWWRXVH$16,64/ GDWHIRUPDWWLQJVHHWRLWWKDW\RXUFRQQHFWLRQKDV6(7'$7()250$7\PG VHW$OWHUQDWLYHO\\RXFDQIRUPDWWKHGDWHDVVKRZQLQ/LVWLQJ /LVWLQJ$Q$OWHUQDWH'DWH)RUPDW
6(7ODQJXDJHXVBHQJOLVK 6(/(&7&$67 $6GDWHWLPH 6(7/$1*8$*(IUHQFK 6(/(&7&$67 $6GDWHWLPH <<00''LV³VDIH´,WLVRND\WRGURSWKHVHSDUDWRUVDFFRUGLQJWR,62 EXWQRWDFFRUGLQJWR$16,64/$V.DUDV]LQRWHVWKLVLVVWUDQJH EHFDXVH$16,64/LVVDLGWREXLOGRQ,62UHJDUGLQJUHSUHVHQWDWLRQ RIGDWHVDQGWLPHV 'HEXJJLQJ $V,PHQWLRQHGHDUOLHULQWKHFKDSWHUWKHGHEXJJLQJH[SHULHQFHZLWKWKHGDWDDFFHVVSDWWHUQLV YHU\JRRG
1RWHHVSHFLDOO\KRZ#DQ(UURU0HVVDJH LVXVHGLQ/LVWLQJ,WKROGVFRQWH[WLQIRUPDWLRQVRWKDWLI WKH64/VFULSWKDVVHYHUDOVWRUHGSURFHGXUHFDOOV\RXZLOOVHHH[DFWO\ZKLFKFDOOKDGWKHSUREOHPLQ WKHHUURUPHVVDJH,IWKHVDPHVWRUHGSURFHGXUHLVFDOOHG VHYHUDOWLPHVWKH#DQ(UURU0HVVDJH YDULDEOHFDQDOVRFRQWDLQLQIRUPDWLRQDERXWZKLFKRIWKHFDOOVLWZDV
$QRWKHUEHQHILWRIWKHFHQWUDOL]DWLRQRIDOOWKHVWRUHGSURFHGXUHFDOOVWRDKHOSHULVWKDW\RXFDQ HDVLO\DGGWUDFHFDOOVWKDWVKRZDOOWKHSDUDPHWHUYDOXHVXVHGZKHQFDOOLQJWKHVWRUHGSURFHGXUHV 7KH$GG3DUDPHWHU RU$GG6SURF&DOO FDQEHFKDQJHGVRLWKHOSVJHQHUDWHVFULSWFRGHIRU WUDFLQJDVVKRZQLQ/LVWLQJ /LVWLQJ([WUDFWIURP64/6FULSW:KHUH7UDFLQJ&RGH+DV%HHQ$GGHG$XWRPDWLFDOO\ IRU7UDFLQJ$OO3DUDPHWHU9DOXHV 6(7#D7UDFH0HVVDJH
#LG $)&)$%%'I'))())$)() #GHVFULSWLRQ 3UREOHPZLWK
(;(&-QVN7UDFHB0HVVDJH#WKH6RXUFH#D7UDFH0HVVDJH (;(&#D5HWXUQ9DOXH DB(UUDQGB,QVHUW #LG $)&)$%%'I'))())$)()
#GHVFULSWLRQ 3UREOHPZLWK
&RQQHFWLRQ6WUDWHJ\ $FRPPRQGLVFXVVLRQLQQHZVJURXSVLVKRZWKHFRQQHFWLRQWRWKHGDWDEDVHLQQWLHUDSSOLFDWLRQV VKRXOGEHKDQGOHG6RPHGHYHORSHUVKDYHGHFLGHGWRJRDOOWKHZD\ZLWKWKH³IDVWLQIDVWRXW´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
287387 3DUDPHWHUV
,I\RXZDQWWRFDWFKWKH287387 SDUDPHWHUIURPRQHVWRUHGSURFHGXUHDQGXVHLWLQDQRWKHUVWRUHG SURFHGXUH\RXFDQXVHWKH$GG&XVWRP'HFODUDWLRQ PHWKRGRIWKH%DWFK&RPPDQG WRGHFODUHWKH YDULDEOH)RUWKHVWRUHGSURFHGXUHFDOOZLWKWKH287387 SDUDPHWHU\RXXVH$GG3DUDPHWHU DV XVXDOEXWWKHRXWSXW SDUDPHWHUPXVWEH7UXHDQGWKHYDOXH SDUDPHWHUVKRXOGEHWKHQDPHRI WKHYDULDEOH²IRUH[DPSOH#LG)RUWKHVWRUHGSURFHGXUHWKDWLVWKHQWRXVHWKHYDULDEOH\RXMXVW XVHWKHQDPHRIWKHYDULDEOHDJDLQDVWKHYDOXH SDUDPHWHUZKHQ\RXFDOO$GG3DUDPHWHU 1RWH 7KLVSDUWRIWKHSURSRVDOVKRZVLQWHUQDOLQIRUPDWLRQDERXWWKH64/VFULSWVROXWLRQ,I \RX UHDERXWWRDGGVXSSRUWIRU*HW6TO&RPPDQGV IRUH[DPSOH\RXQHHGWRWDNHD FORVHUORRNDWWKLV
7ULFN\&DVHVRI64/ 7ZRRIWKHSUREOHPVZLWKXVLQJRQO\VWRUHGSURFHGXUHVIRULQWHUDFWLQJZLWKWKHGDWDEDVHDUHZKHQ \RXKDYHWRXVHDQ,1 FODXVHLQ\RXU6(/(&7 VWDWHPHQWRUZKHQWKHXVHUVKRXOGEHDEOHWRGHFLGH ZKLFKFROXPQWRXVHIRUWKH25'(5%< FODXVH,QERWKFDVHV,VWLOOXVHVWRUHGSURFHGXUHV, W\SLFDOO\SDFNWKH,1 FODXVHDVD9$5&+$5 WKDW,VHQGWRWKHVWRUHGSURFHGXUH7KHVWRUHG SURFHGXUHZLOOWKHQKDYHWRXVHG\QDPLF64/2QHRIWKHSUREOHPVZLWKG\QDPLF64/LVWKDWWKH XVHUPXVWKDYHJUDQWHGULJKWVWRXVHWKHREMHFWWKDWLVXVHGE\G\QDPLF64/,W VQRWHQRXJKWR KDYHJUDQWHGULJKWVWRWKHVWRUHGSURFHGXUHWKDWH[HFXWHVWKHG\QDPLF64/7RWDNHFDUHRIWKLV SUREOHPDVPXFKDVSRVVLEOH,DOZD\VXVHYLHZVRUXVHUGHILQHGIXQFWLRQV8')V IURPWKH G\QDPLF64/DQGVHHWRLWWKDWLW VREYLRXVIURPWKHQDPHRIWKHYLHZRU8')WKDWWKHXVHUPXVW KDYHJUDQWHGULJKWVWRLW 1RWH
:KHQ,VD\WKHXVHUPXVWKDYHJUDQWHGULJKWVWKHXVHULVWKHRQHZKRDFWVDVWKH SULQFLSDOIRUH[HFXWLQJWKH&20DSSOLFDWLRQQRWWKHHQGXVHU7KDWLV\RXVKRXOGXVHD GHGLFDWHGDFFRXQWWKDWGRHVQ WEHORQJWRDQHQGXVHU IRUH[HFXWLQJWKH&20 DSSOLFDWLRQ
,QWKHFDVHRIWKH25'(5%< FODXVHWKHVWRUHGSURFHGXUHZLOOWDNHDSDUDPHWHUGHVFULELQJWKH 25'(5%< FODXVHWKDWLVUHTXHVWHG,RIWHQVWD\ZLWKVWDWLF64/VR,KDYHWRUHSHDWWKHVDPH 6(/(&7 VWDWHPHQWRQFHIRUHDFKSRVVLEOH25'(5%< FODXVH:KHQWKHUHDUHWRRPDQ\SRVVLEOH 25'(5%< FODXVHVIRUWKLVDSSURDFK,XVHG\QDPLF64/DV,GLGZLWKWKH,1 FODXVH
'LVDGYDQWDJHVZLWKWKH3URSRVDO $VXVXDO,ZLOOHYDOXDWHWKHGDWDDFFHVVSURSRVDODWWKHHQGRIWKHFKDSWHUDJDLQVWWKHFULWHULDZH GLVFXVVHGLQ&KDSWHU³)DFWRUVWR&RQVLGHULQ&KRRVLQJD6ROXWLRQWRD3UREOHP´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±RQO\VROXWLRQ
2WKHU$SSURDFKHVWR'DWD$FFHVV+HOSHUV
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
7KH'DWD$FFHVV3URSRVDOLQWKH$UFKLWHFWXUH
,Q&KDSWHU,HVWDEOLVKHGP\IDYRULWHDUFKLWHFWXUHDQGLQWKLVVHFWLRQ, GOLNHWRSXWWKHGDWD DFFHVVSURSRVDOLQWKHFRQWH[WRIWKDWDUFKLWHFWXUH ,Q)LJXUH\RXVDZDFRPSOHWHFDOOVWDFNIRUDVFHQDULRLQZKLFKDQ$SSOLFDWLRQOD\HUFODVV (UUDQG5HSRUW FRQWUROVWKHSURFHVVRIFDOOLQJWKHVWRUHGSURFHGXUHDB(UUDQGB,QVHUW $V\RX VDZWKHSURSRVDODIIHFWVDOOWKUHHOD\HUVLQWKH%XVLQHVVWLHU,QDZD\WKLVLVQRWVWULFWO\OD\HULQJ
EXWRIWHQVRPHFODVVHVDUH³JOREDO´WRVHYHUDOOD\HUVLQOD\HUHGDUFKLWHFWXUHV,QWKHGDWDDFFHVV SURSRVDOFODVVHVLQVHYHUDOOD\HUVDUHDZDUHRIDQGXVHWKH%DWFK&RPPDQG FODVV $QRWKHUH[DPSOHRIDFODVVWKDWVHYHUDOOD\HUVRIWHQDUHDZDUHRIDQGXVHLVWKH$'21(7'DWD6HW %HFDXVH,RIWHQXVH'DWD6HWVIRUFDUU\LQJGDWD'DWD6HWVZLOORIWHQEHVHQWWRWKHFRQVXPHUWRR
:KDWWR8VHIRU&DUU\LQJ'DWD
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³KDFN´DSSURDFKHVIRUWKLVWKHEHVWRQHEHLQJWRXVHDUUD\VRI5HFRUGVHWV 2WKHUJUHDW IHDWXUHVLQFOXGHWKHRSSRUWXQLW\WRFUHDWHVWURQJO\W\SHG'DWD6HWVDQGWRKDYHFRQVWUDLQWVLQWKH 'DWD6HW VRWKDWVRPHHUURQHRXVGDWDFDQEHFDXJKWEHIRUHJRLQJLQWRWKH'DWD6HW DWDOO$FWXDOO\ ,VRPHWLPHVHYHQXVHD'DWD6HW IRUUHWXUQLQJRQHURZ7KH'DWD6HW LVJRRGLQWKLVVLWXDWLRQ EHFDXVHLWKDVDORWRIPHWDGDWDEXWWKHGUDZEDFNLVODUJHRYHUKHDG
2QHODVWFRPPHQW
6D\LQJ0RUHLQ)HZHU:RUGV:KHQ&DOOLQJ6WRUHG3URFHGXUHV
&RPSDUHGWRDQRUGLQDU\SURJUDPPLQJODQJXDJH764/DQGVWRUHGSURFHGXUHVKDYHVHYHUDO SUREOHPV2QHRIWKHZRUVWSUREOHPVLVWKDWDUUD\VFDQ WEHXVHGDVSDUDPHWHUVWRVWRUHG SURFHGXUHV,QDZD\WKHGDWDDFFHVVSDWWHUQWKDW,KDYHSURSRVHGLQWKLVFKDSWHUPDNHVWKLVOHVV RIDSUREOHPEHFDXVHZKHQWKHSDWWHUQLVXVHGWKHQXPEHURIURXQGWULSVEHWZHHQWKH%XVLQHVV WLHUDQGWKH'DWDWLHUZLOOEHUHGXFHGWRD PLQLPXP6WLOOLQVRPHVLWXDWLRQVVHQGLQJVHYHUDOURZV LQRQHVWRUHGSURFHGXUHFDOOFDQEHYHU\XVHIXO/HW VWDNHDORRNDWDIHZWHFKQLTXHV\RXFDQXVH
;0/
64/6HUYHUFRPHVZLWKVRPHQDWLYH;0/VXSSRUW2QHSRVVLEOHZD\WREHQHILWIURPWKHEXLOW LQVXSSRUWIRU;0/LQ64/6HUYHULVWRXVHVWRUHGSURFHGXUHVWRSDUVH;0/GRFXPHQWV 7KDQNVWRWKLVVXSSRUW\RXFDQVHQGVHYHUDOURZVWRLQVHUWLQDQ;0/GRFXPHQWLQDSDUDPHWHUWR DVWRUHGSURFHGXUH $VVXPH\RXKDYHDQ;0/GRFXPHQWZLWKDFRXSOHRI HUUDQGVWKDWKDYHWREHUHSRUWHG7KH GRFXPHQWLVWKHQVHQWWRDVWRUHGSURFHGXUHWKDWXVHVVSB[POBSUHSDUHGRFXPHQW WRSDUVHWKH GRFXPHQWDQGWRLQVWDQWLDWHDQREMHFWPRGHO/LVWLQJVKRZVKRZWKLVPD\ORRN
/LVWLQJ3DUVLQJDQ;0/'RFXPHQWLQ764/ (;(&VSB[POBSUHSDUHGRFXPHQW#D'RFXPHQW287387#[PO :KHQWKLVLVGRQH\RXFDQXVH23(1;0/ WRILQGLQIRUPDWLRQLQWKH;0/GRFXPHQW,Q/LVWLQJ \RXFDQVHHDQH[DPSOHLQZKLFK,XVHDQ;0/GRFXPHQWDVWKHVRXUFHIRUDQ,16(57 /LVWLQJ8VLQJ DQ;0/'RFXPHQWDVWKH6RXUFHIRUDQ,16(57 ,16(57,172SUREOHPVROYHULGILUVWQDPHODVWQDPH 6(/(&7 )52023(1;0/#D'RFXPHQW
URRWSUREOHPVROYHU :,7+LG81,48(,'(17,),(5 #LG ILUVWQDPH9$5&+$5 #ILUVWQDPH ODVWQDPH9$5&+$5 #ODVWQDPH )LQDOO\LW VLPSRUWDQWWRUHPRYHWKHGRFXPHQWVRZHIUHHUHVRXUFHVDVVKRZQLQ/LVWLQJ /LVWLQJ5HPRYLQJWKH;0/'RFXPHQWIURP0HPRU\ (;(&VSB[POBUHPRYHGRFXPHQW#D'RFXPHQW
2WKHU)RUPDWV
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
%LWPDSV
%\VHQGLQJDELWPDSDVDSDUDPHWHU\RXPDNHLWSRVVLEOHWRVHQGVHYHUDOYDOXHVLQRQH SDUDPHWHU,QDZD\LWZLOOEUHDNW\SHVDIHW\EHFDXVH\RXFDQDGGDQRWKHUYDOXHZLWKRXWKDYLQJWR DGGDQRWKHUSDUDPHWHU$OWKRXJK\RX FDQ WXVHWKLVWHFKQLTXHDOOWKHWLPHDQGLWLVVRPHZKDW DZNZDUGWRXVHZKHQ\RXQHHGDQRSWLPL]DWLRQWHFKQLTXHLWFDQRIWHQEHYHU\HIILFLHQW
6PDUW &RPPLWWHG /D]\ )DVW
/HW VGLVFXVVWKLVDOLWWOH IXUWKHU,I\RXDUHDERXWWRUHJLVWHUDQHZSUREOHPVROYHU\RXRQO\KDYH WRZULWHRQHURZLI\RXXVHDELWPDSHYHQLIWKHVSHFLILFSUREOHPVROYHUKDVWKUHHGLIIHUHQW GHVFULSWLRQV:LWKWKHRUGLQDU\VROXWLRQ\RXZRXOGKDYHWRZULWHIRXUURZVRQHWRWKH SUREOHPVROYHU WDEOHDQGWKUHHWRWKHSUREOHPVROYHUGHVFULSWLRQ WDEOH
:KHQLWLVWLPHWRVHDUFKRQO\IRUWKHSUREOHPVROYHUVWKDWDUH6PDUWDQG/D]\EHFDXVH\RXZDQW WRWU\WRVWLPXODWHWKHPWREHFRPH6PDUWDQG&RPPLWWHG\RXFDQSDFNDELWPDSOLNHWKHRQH VKRZQLQ/LVWLQJ /LVWLQJ3DFNLQJD%LWPDSLQDQ,17 9DULDEOHZLWKWKH8VHRIRU 6(7#D%LWPDS2I'HVFULSWLRQV _
'DWD7UDQVSRUWDWLRQ%HWZHHQ6WRUHG3URFHGXUHV
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
6HUYHU6LGH&DFKLQJ
,WGRHVQ WPDWWHUKRZIDVWVRPHWKLQJLVQRWGRLQJLWDWDOOLVIDVWHUDQGDOVRFRQVHUYHVUHVRXUFHV &DFKLQJLVRQHZD\RIDFKLHYLQJWKLVDELOLW\WR³GRQRWKLQJ´,QVWHDGRIJRLQJWRWKHGDWDEDVHVHUYHU WRIHWFKWKHOLVWRISUREOHPVROYHUV\RXFDQFDFKHWKHOLVWLQPHPRU\LQWKHDSSOLFDWLRQVHUYHUDQG WKHQ\RXGRQ WKDYHWRGRDQ\WKLQJ7KHRSHUDWLRQLVPXFKIDVWHUDQG\RXDOVRVDYHUHVRXUFHVDW WKHGDWDEDVHVHUYHU7KLVVRXQGVWRRJRRGWREHWUXHULJKW"7KHFDWFKLVWKDW\RXZLOOKDYHWURXEOH NHHSLQJWKHFDFKHLQV\QFZLWKWKHRULJLQDOGDWD7KLVLVHVSHFLDOO\KDUGLI\RXKDYHVFDOHGRXWWKH DSSOLFDWLRQVHUYHU²WKDWLVVHWXSDIDUPRIDSSOLFDWLRQVHUYHUVHDFKUXQQLQJWKHVDPHDSSOLFDWLRQ
%HFDUHIXO,QDQHQYLURQPHQWZKHUH\RXKDYHVFDOHGRXWWKHDSSOLFDWLRQVHUYHU\RXVKRXOG SUREDEO\RQO\FDFKHVWDWLFGDWDRWKHUZLVH\RXULVNWKHPDLQJRDORI\RXUDSSOLFDWLRQQDPHO\ FRUUHFWQHVV :KHQ\RXRQO\KDYHRQHDSSOLFDWLRQVHUYHU\RXFDQXVHVHUYHUVLGHFDFKLQJIRUVHPLVWDWLFGDWD WRRDVORQJDVDOOXSGDWHVRIWKHGDWDDUHGRQHYLDWKHDSSOLFDWLRQVHUYHUDQGQRWGLUHFWO\WRWKH GDWDVRXUFH+RZHYHU\RXPXVWEHYHU\FDUHIXO,UHFRPPHQGWKDW\RXVNLSFDFKLQJXQWLO\RX UHDOO\QHHGLWDQGDQDO\]HWKHFRPSOHWHSLFWXUHWKRURXJKO\EHIRUHXVLQJFDFKLQJ*RLQJWRWKH GDWDEDVHHDFKWLPHLVXVXDOO\DTXLFNHQRXJKVROXWLRQ,WLVDOVRVLPSOHDQGKDVIHZHUULVNV 1RWH ,FUHDWHGVHYHUDOFDFKLQJVROXWLRQVLQWKH\HDUVEHIRUH1(77KHUHDUHWZRDUWLFOHV\RX FDQUHDGPRUHDERXWWKHWHVWHGPHWKRGVDQGFRQFOXVLRQVQDPHO\´6HUYHU6LGH&DFKLQJ LQ&20DQG9%´ DQG´6HUYHU6LGH&DFKLQJRU%X\6SHHGZLWK&DFKH ´
1HZ6HUYHU6LGH&DFKLQJ3RWHQWLDOZLWK1(7 :LWKWKHKHOSRI1(7WZRQHZWHFKQLTXHVRSHQXSWKDWDUHJUHDWIRUVHUYHUVLGHFDFKLQJRQH EHLQJWKHXVHRIWKH&20&RPSRQHQW6HUYLFH2EMHFW3RROLQJDQGWKHRWKHUEHLQJWKHXVHRI $'21(7'DWD6HWVIRUFDUU\LQJFRPSOH[VWUXFWXUHVRIGDWDIRUH[DPSOHLQSRROHGREMHFWV
)LQDOO\DQHYHQEHWWHUSODFHWRXVHFDFKLQJWKDQLQWKH%XVLQHVVWLHULVLQWKH&RQVXPHUWLHUIRU H[DPSOHLQ$631(7RULQWKHORFDOH[HFXWDEOH%\XVLQJFDFKLQJLQWKLVWLHU\RXFRQVHUYH UHVRXUFHVDWWKHDSSOLFDWLRQVHUYHUDQGRSHUDWLRQVZKHUHFDFKHGGDWDDUHXVHGZLOOEHHYHQIDVWHU )RUVHUYHUVLGHFDFKLQJ\RXVKRXOGPRVWSUREDEO\RQO\FDFKHVKDUHGGDWDEXWLW VDOOULJKWWR FDFKHSHUVRQDOGDWDLILWLVKHOGDWWKHXVHU VZRUNVWDWLRQ /HWPHVWDWHDJDLQWKDW WKHUHFDQEHHQRUPRXVEHQHILWVWRVHUYHUVLGHFDFKLQJLQVRPHVLWXDWLRQV
'HDOLQJZLWK6FKHPD&KDQJHV
8VLQJ8VHU'HILQHG'DWD7\SHV
,I\RXXVH8VHU'HILQHG'DWD7\SHV8''7V IRU\RXUGDWDW\SHVERWKLQWKHWDEOHVDQGLQWKH VWRUHGSURFHGXUHVLWZLOOEHPXFKHDVLHUWRLQFUHDVHWKHOHQJWKRID9$5&+$5IRUH[DPSOHDQG KDYHWKHFKDQJHWDNHHIIHFWLQDOOWKHVWRUHGSURFHGXUHVZLWKWKHPLQLPXPDPRXQWRIZRUN +RZHYHUWKLVZLOOQRWVROYHWKHZKROHSUREOHP)RUH[DPSOHLWZRQ WKHOS\RXWKDWPXFKLI\RX ZDQWWRFKDQJHIURP,17(*(5 WR81,48(,'(17,),(5EHFDXVHDORWRIWKHFRGHPLJKWDVVXPH ,17(*(5 1RWH
8''7VFDQ WEHXVHGZLWKWKH7$%/( GDWDW\SHZKLFKLVXQIRUWXQDWHEHFDXVHWKH7$%/( GDWDW\SHLVFUXFLDOIRU8')V
:KHQLWFRPHVWR9%FRGH8''7VDUHRIOLWWOHXVH
8VLQJ7RR/DUJH&+$5 DQG9$5&+$5 3DUDPHWHUV
2QHVWUDWHJ\IRUILQGLQJEXJV²EHFDXVHRIFKDQJHGGDWDEDVHVFKHPDVIRUH[DPSOH²LVWRXVHWRR ODUJH&+$5 DQG9$5&+$5 SDUDPHWHUVIRUWKHVWRUHGSURFHGXUHV,IZHDVVXPHWKDWWKHGHVFULSWLRQ FROXPQLVRIGDWDW\SH9$5&+$5 LWFDQWKHQEHGHFODUHGDV9$5&+$5 LQWKHVWRUHG SURFHGXUH6XEVHTXHQWO\WKHILUVWWKLQJWRGRLQWKHVWRUHGSURFHGXUHZRXOGEHWRDVVHUWWKDWWKH '$7$/(1*7+ RIWKH#GHVFULSWLRQ SDUDPHWHULVOHVVWKDQ ,QRUPDOO\XVH8''7VVRWRXVHWKHDSSURDFKGLVFXVVHGKHUH,ZRXOGKDYHWRKDYHWZR8''7VIRU HDFKVWULQJGDWDW\SH²RQHWKDWLVWKHFRUUHFWOHQJWKWRXVHIRUWKHWDEOHDQGRQHWKDWLVRQHVLJQ ODUJHUWRXVHIRUWKHSDUDPHWHUV $EHWWHUDSSURDFKLVSUREDEO\WROHWVRPHRIWKH$GG3DUDPHWHU PHWKRGVWDNHDVL]H SDUDPHWHU DVZHOODQGWKDWLVH[DFWO\ZKDW,GLGDV\RXFDQVHHLQ)LJXUH 7KHQLW VHDV\WRFKHFNWKDW WKHSURYLGHGVWULQJYDOXHLVQ WODUJHUWKDQWKHVL]HDQGLIVRUDLVHDQH[FHSWLRQRUOHWDQDVVHUWLRQ VLJQDO7RDYRLGFUHDWLQJDPDLQWHQDQFHSUREOHP\RXQHHGWRKROGPRUHPHWDGDWDLQ\RXU1(7 FRPSRQHQWVDERXWWKHVWRUHGSURFHGXUHVDQGWKHLUSDUDPHWHUVZKLFKLVH[DFWO\ZKDWWKHQH[W VHFWLRQGLVFXVVHV
'UDJJLQJ2XW3DUDPHWHUVIURP6WRUHG3URFHGXUHVDQG8VLQJ7KHPDV &RQVWDQWV
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
8VLQJ9LHZVDQGRU8')V
9LHZVDQG8')VFDQVHUYHYHU\ZHOOLQPDNLQJPDQ\VFKHPDFKDQJHVWUDQVSDUHQWWRWKHVWRUHG SURFHGXUHV2IWHQLWIHHOVOLNHRYHUNLOOWRPDSHYHU\WDEOHZLWKRQHRUPRUHYLHZV8')VEXWLW V ZHOOZRUWKWKHHIIRUWZKHQFKDQJHVQHHGWREHPDGHLQWKHWDEOHVWUXFWXUH
(YDOXDWLRQRI0\3URSRVDO
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
P\GDWDDFFHVVSURSRVDOERWKIRUZKHQVHYHUDOVWRUHGSURFHGXUHFDOOVDUHPDGHLQDVLQJOH WUDQVDFWLRQDQGZLWKRQO\ RQHVWRUHGSURFHGXUHFDOODQGQRH[SOLFLWWUDQVDFWLRQ 6FDODELOLW\ZLOOLQFUHDVHZLWKP\SURSRVDOEHFDXVHWKHWUDQVDFWLRQVZLOOEHVKRUWHUDQGWKHUHZLOOEH QRURXQGWULSVGXULQJDWUDQVDFWLRQ6KRUWHUWUDQVDFWLRQVPHDQVKRUWHUORFNVZKLFKLQWXUQ GHFUHDVHVFRQWHQWLRQ ,GRQ WVHHDQ\PDMRUDGYDQWDJHVRUGLVDGYDQWDJHVZLWKWKHSURSRVDOUHJDUGLQJUHOLDELOLW\ UHXVDELOLW\WHVWDELOLW\DQGLQWHURSHUDELOLW\EXW,WKLQNWKHHIIHFWRQGHEXJJDELOLW\LVSRVLWLYH, PHQWLRQHGHDUOLHULQWKHFKDSWHUWKHHDV\ZD\ WRDXWRPDWLFDOO\WUDFHSDUDPHWHUYDOXHVDQGWRUXQD FRPSOHWHVFHQDULRE\FRS\LQJWKHVFULSWDQGH[HFXWLQJLWRYHUDQGRYHUDJDLQLQ64/6HUYHU4XHU\ $QDO\]HU 0DLQWDLQDELOLW\LVLQFUHDVHGWKDQNVWRWKHIDFWWKDWWKHSURSRVDOLVFRQVWUXFWHGDVDKHOSHUURXWLQH 7KLVHIIHFWZLOOEHDFKLHYHGE\PRVWRWKHUKHOSHUVWRRRIFRXUVH 7KHSURGXFWLYLW\LVLQFUHDVHG GXHWRWKHKHOSHUEXWDOVREHFDXVHGHEXJJDELOLW\LVLQFUHDVHG,VXJJHVW\RXZULWHDFRXSOHRI JHQHUDWRUVWKDWIRUH[DPSOHJHQHUDWHDOOWKHFRGHIRUFDOOLQJDVWRUHGSURFHGXUHWRLQFUHDVH SURGXFWLYLW\HYHQPRUH
:KDW V1H[W
7KHQH[WDQGILQDOFKDSWHUZLOOGLVFXVVHUURUKDQGOLQJDQGFRQFXUUHQF\FRQWURO,WFDQEHH[WUHPHO\ WULFN\WRKDQGOHHUURUVFRUUHFWO\LQDOOVLWXDWLRQVHVSHFLDOO\LQ764/FRGH DQGWKHUHLVDORWWR FRQVLGHUUHJDUGLQJ1(7FRGHWRR:H OOVWDUWE\GLVFXVVLQJHUURUKDQGOLQJWHPSODWHVIRUFHUWDLQ VLWXDWLRQVDQGZLOOWKHQORRNDWSUHSDULQJIRUW\SLFDOHUURUVVR\RXGRQ WKDYHWRILQGWKHPRXWWKH KDUGZD\)LQDOO\ZH OOGLVFXVVKRZWRGHDOZLWKFRQFXUUHQF\FRQWUROLQGLVFRQQHFWHGVFHQDULRV ZLWKERWKRSWLPLVWLFDQGSHVVLPLVWLFVROXWLRQV
5HIHUHQFHV
6.LUNDQG-%R\ODQ³7HFK(G1(7$SSOLFDWLRQ$UFKLWHFWXUH3DQHO'LVFXVVLRQ´ -XQH KWWSPVGQPLFURVRIWFRPOLEUDU\HQXVGQEGDKWPOEGDGRWQHWDUFKDVS -1LOVVRQ³5RXQG7ULSV$UH(YLO²5HGXFH7KHP´ 3LQQDFOH3XEOLVKLQJ V9LVXDO%DVLF'HYHORSHU -XO\KWWSZZZSLQQDFOHSXEOLVKLQJFRP9% 7(ZDOG7UDQVDFWLRQDO&20%XLOGLQJ6FDODEOH$SSOLFDWLRQV$GGLVRQ:HVOH\ )%XVFKPDQQ50HXQLHU+5RKQHUW36RPPHUODGDQG06WDO3DWWHUQ2ULHQWHG6RIWZDUH $UFKLWHFWXUH$6\VWHPRI3DWWHUQV:LOH\ (*DPPD5+HOP5-RKQVRQDQG-9OLVVLGHV'HVLJQ3DWWHUQV(OHPHQWVRI5HXVDEOH2EMHFW 2ULHQWHG6RIWZDUH$GGLVRQ:HVOH\ 'HYHORSPHQW$FFHOHUDWRUVIRU1(71RSXEOLF:HEDGGUHVV\HW -1LOVVRQ³6HUYHU6LGH&DFKLQJLQ&20DQG9%´ KWWSZZZYEWKHPD[FRP+WPO'RFDVS"7DEOH $UWLFOHV ,' -1LOVVRQ³6HUYHU6LGH&DFKLQJRU%X\6SHHGZLWK&DFKH´ KWWSZZZYE[POFRPFRQIHUHQFHZUR[BYHJDVWH[WMLPP\BFDFKHSGI
&KDSWHU(UURU+DQGOLQJDQG&RQFXUUHQF\&RQWURO ,17+,6&+$37(5 x x x x
0\3URSRVDOIRU+RZWR+DQGOH(UURUV ([FHSWLRQVWR%H3UHSDUHG)RU $SSURDFKHVWR&RQFXUUHQF\&RQWUROIRU'LVFRQQHFWHG6FHQDULRV (YDOXDWLRQRI3URSRVDOV
,RQFHKHDUGDGHYHORSHUVD\³,GRQ WMXGJHWKHFRROQHVVRIDQDSSOLFDWLRQIURPLWVIHDWXUHOLVWEXW IURPKRZJUDFHIXOO\LWKDQGOHVH[FHSWLRQV´(YHQLI\RX UHQRWVWULYLQJWRZULWHWKH³FRROHVW´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
0\3URSRVDOIRU+RZWR+DQGOH(UURUV
,Q&KDSWHU³$GGLQJ'HEXJJLQJ6XSSRUW´ZHGLVFXVVHGKRZWRORJHUURUVWRSURYLGHYDOXDEOH GHEXJJLQJLQIRUPDWLRQVRWKDWDSUREOHPFRXOGEHXQGHUVWRRGDQGWUDFNHGGRZQ)RUWKLVHUURU ORJJLQJIXQFWLRQWRZRUN\RXPXVWFRQVLGHUVHYHUDOSRLQWVLQERWKWKHVWRUHGSURFHGXUHVDQGLQWKH 1(7FRPSRQHQWV)RUDVWDUWHUURUVPXVWEHFDXJKW7KHUHIRUHOHW VVWDUWWKLVFKDSWHUE\WDNLQJD FORVHORRNDWKRZHUURUKDQGOLQJFDQEHLPSOHPHQWHGHIILFLHQWO\LQVWRUHGSURFHGXUHV,QWKLV GLVFXVVLRQ\RX OOVHHWKHREYLRXVGLIIHUHQFHVEHWZHHQWKH764/DQG9LVXDO%DVLF1(7ODQJXDJHV ZKHQLWFRPHVWRHUURUKDQGOLQJ
+DQGOLQJ(UURUVLQ6WRUHG3URFHGXUHV
7KHUHDUHIRXUGLIIHUHQWW\SHVRIFDVHVWKDW\RXKDYHWRWKLQNDERXWZKHQ\RXDUHKDQGOLQJHUURUV LQVWRUHGSURFHGXUHV7KHVHDUH x x x x
(;(& RIVWRUHGSURFHGXUH ,16(5783'$7('(/(7( 6(/(&7 9LRODWLRQRIEXVLQHVVUXOH
,QWKLVFKDSWHU,ZLOOLQFOXGHWHPSODWHFRGHWKDW\RXFDQXVHIRUKDQGOLQJHUURUVLQVWRUHG SURFHGXUHVLQHDFKFDVHEXWDVXVXDOWKHDSSURSULDWHQHVVRIWKHWHPSODWHFRGHGHSHQGVRQ\RXU SDUWLFXODUVLWXDWLRQ'RQ WXVHLWZLWKRXWSURSHUFRQVLGHUDWLRQ+RZHYHUEHIRUHZHLQYHVWLJDWHWKH IRXUGLIIHUHQWFDVHVIRUHUURUKDQGOLQJLQVWRUHGSURFHGXUHVOHW VORRNDWWKHJHQHUDODSSURDFKWKDW, XVHIRUHUURUKDQGOLQJLQVWRUHGSURFHGXUHV
7KH*HQHUDO$SSURDFKIRU(UURU+DQGOLQJLQ6WRUHG3URFHGXUHV
,Q&KDSWHU³$UFKLWHFWXUH´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
WRDVHFRQGDU\VWRUHGSURFHGXUH4XLWHRIWHQ#D5RZ&RXQW LVDOVRXVHG,WLVXVHGIRUWUDFNLQJKRZ PDQ\URZVZHUHDIIHFWHGE\D6(/(&7,16(5783'$7(RU'(/(7( VWDWHPHQW /LVWLQJ(UURU+DQGOLQJ5HODWHG9DULDEOHV '(&/$5(#WKH6RXUFHXGGW6RXUFH #DQ(UURU,17 #DQ(UURU0HVVDJHXGGW(UURU0HVVDJH #WKH7UDQ&RXQW$W(QWU\,17 #D5HWXUQ9DOXH,17 $V\RXKDYHVHHQLQVHYHUDOFKDSWHUVRIWKLVERRN,XVHDQ([LW+DQGOHU DWWKHHQGRIDOO P\ VWRUHGSURFHGXUHV$IWHUHDFK³GDQJHURXV´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
5HDVRQVIRU8VLQJ%RWK5(7851 DQG5$,6(5525
:KHUHLQWKHFDOOVWDFNRIWKHVWRUHGSURFHGXUHVGLGWKHHUURURFFXU" :KLFKHUURUVGLGWKHLQYROYHGVWRUHGSURFHGXUHVUDLVHIURPWKHHUURUDQG³XS´"WKDWLVWKH HUURUVWDFN :KHUHLQWKHVWRUHGSURFHGXUHGLGWKHHUURURFFXU"
7KLVODVWTXHVWLRQLVDQLQWHUHVWLQJRQHLIWKHVDPHHUURUFRXOGRFFXULQVHYHUDOSODFHVLQRQHVWRUHG SURFHGXUHZKLFKLVDFRPPRQVLWXDWLRQ 7KHRWKHUDSSURDFKLVWRXVH5$,6(5525 LQVWHDGRI5(7851 7KLVVROYHVWKHSUREOHPV FRQFHUQLQJODFNRIFRQWH[WLQIRUPDWLRQ+RZHYHU5$,6(5525 LQWURGXFHV QHZSUREOHPVLQWKH FRQWH[WRIVWRUHGSURFHGXUHV7KHUHDUHWZRZD\VWRXVH5$,6(5525
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
/HW VQRZWDNHDORRNDWWKHIRXUGLIIHUHQWW\SHVRIFDVHVWKDW\RXKDYHWRWKLQNDERXWZKHQ\RX DUHKDQGOLQJHUURUVLQVWRUHGSURFHGXUHV, OOVWDUWZLWKWKHILUVWW\SHRIFDVH²HUURUKDQGOLQJDIWHU (;(& RIDVWRUHGSURFHGXUH (UURU+DQGOLQJ$IWHU(;(& RID6WRUHG3URFHGXUH
7KHEXLOWLQHUURUKDQGOLQJLQ764/LVWRSXWLWQLFHO\RXWGDWHG:LWKLW\RXKDYHWRFKHFN ##(5525 DIWHUHDFKVWDWHPHQWWRVHHZKHWKHULWLVGLIIHUHQWIURP,ILWLVDSUREOHPKDVRFFXUUHG 7KLVIHDWXUHPDNHVWKH 764/FRGHFOXWWHUHGDQGXQQHFHVVDULO\ORQJEXW\RXGRQ WKDYHDFKRLFH²
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
6(7#DQ(UURU ##(5525 ,)#DQ(UURU!25#D5HWXUQ9DOXH!%(*,1 6(7#DQ(UURU0HVVDJH ,QVHUWSUREOHP
,)#DQ(UURU %(*,1 6(7#DQ(UURU #D5HWXUQ9DOXH (1' *272([LW+DQGOHU (1' ,W VREYLRXVWKDW, PSDUDQRLGEHFDXVH,FKHFNIRU##(5525 DIWHUDVWRUHGSURFHGXUHFDOO
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
6(/(&7#DQ(UURU ##(5525#D5RZ&RXQW ##52:&2817 ,)#DQ(UURU!25#D5RZ&RXQW %(*,1 6(7#DQ(UURU0HVVDJH 3UREOHPZLWKLQVHUW
,)#DQ(UURU %(*,1 6(7#DQ(UURU 8QH[SHFWHGHUURU (1' *272([LW+DQGOHU (1' ,QWKHHUURUKDQGOLQJIRUDVWRUHGSURFHGXUHFDOO,W\SLFDOO\ZDQWWRNHHSWKHHUURUFRGH,ILQG,Q WKHFDVHRIHUURUKDQGOLQJIRU,16(57V83'$7(VDQG'(/(7(V,NHHSWKHHUURUFRGHDVLWLV EHFDXVH##(5525 ZDVGLIIHUHQWWKDQ,IWKHHUURULVEHFDXVH##52:&2817 LV,KDYHWRGHFLGH ZKDWHUURUFRGHWRVHWRQP\RZQ $FRPPRQUHDVRQIRUZK\##52:&2817 HTXDOV DIWHU83'$7( DQG'(/(7( LVWKDWWKHUHZDVDFRQFXUUHQF\FRQIOLFWZKLFK,ZLOOGLVFXVVODWHULQWKLVFKDSWHU 1RWH
+RZWR&KRRVH&XVWRP(UURU&RGHV
$V\RXNQRZE\QRZ\RXDUHIUHHWRFKRRVHHUURUFRGHVIURPDQG JUHDWHU%HORZLVUHVHUYHGIRU64/6HUYHU VRZQXVH,I\RXZDQW \RXFDQVDYHHUURUFRGHVLQWKHV\VPHVVDJHV WDEOHDQGWKHQXVH 5$,6(5525 ZLWKWKHFRGHWRJHWWKHWH[WIURPV\VPHVVDJHV,DFWXDOO\ SUHIHUWRXVHDWDEOHRIP\RZQZLWKP\RZQHUURUPHVVDJHVEHFDXVH, SUHIHUWRXVHDFXVWRPVWULQJWR5$,6(5525 LQVWHDGRIDQHUURUFRGH 7KHFXVWRPVWULQJLVIRUPDWWHGDV;0/WRPDNHLWHDV\IRUWKHORJJLQJ VROXWLRQWRILQGDOOWKHLQIRUPDWLRQLWQHHGVIRUHYHU\ HUURU (UURU+DQGOLQJ$IWHUD6(/(&7 6WDWHPHQW
*HWWLQJDFDWFKDEOH##(5525 SUHVHQWVRQO\K\SRWKHWLFDOULVNVDIWHU6(/(&7 VWDWHPHQWV0RVWHUURUV VXFKDVLQFRUUHFWFROXPQQDPHVZLOODERUWWKHEDWFKVR\RXFDQ WGHDOZLWKWKH##(5525,QDQ\ FDVHWKHUHDUHVRPHLQVWDQFHVZKHQ\RXFDQILQGDYDOXHLQ##(5525 GLIIHUHQWIURPVR,XVH HUURUKDQGOLQJIRULWDOOWKHWLPH/LVWLQJVKRZVDQH[DPSOHRIHUURUKDQGOLQJDIWHUD6(/(&7 VWDWHPHQW /LVWLQJ(UURU+DQGOLQJ$IWHUD6(/(&7 6WDWHPHQW 6(/(&7HLG HGHVFULSWLRQ )520HUUDQGH :+(5(HLG #LG
6(7#DQ(UURU ##(5525 ,)#DQ(UURU!%(*,1 6(7#DQ(UURU0HVVDJH 3UREOHPZLWKVHOHFW
*272([LW+DQGOHU (1' 1RWH ([DPSOHVRI##(5525 SUREOHPV\RXFDQFDWFKDIWHUD6(/(&7 VWDWHPHQWDUH x x x
$ULWKPHWLFRYHUIORZDVZKHQ\RX&$67 DYDOXHWRDWRRVPDOOGDWDW\SH 'LYLVLRQE\]HUR 7LPHRXWZKHQDORFNFRXOGQ WEHJUDQWHGDIWHU/2&.B7,0(287 KDVEHHQ6(7 WRD YDOXHGLIIHUHQWWKDQ
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
7KHSURYLGHGSD\PHQWLVWRRORZ
*272([LW+DQGOHU (1' 1RWH
1RWHWKDWLQ/LVWLQJLWZRXOGEHYDOXDEOHWRDGGWKHUHDOYDOXHVRIWKHWZRYDULDEOHVWR WKH#DQ(UURU0HVVDJH VWULQJDVZHOO3URYLGLQJLQIRUPDWLRQOLNHWKLVLVLQYDOXDEOHIRU TXLFNO\GHWHFWLQJZKDWWKHSUREOHPLV7KHUXQWLPHFRVWLVPRVWRIWHQQHJOLJLEOHDWOHDVW ZKHQLWLVQRWWKHQRUPDOVLWXDWLRQEXWRQO\DQDEQRUPDOH[FHSWLRQ
$Q$GGLWLRQDO6WRUHG3URFHGXUH-QVN(UURUB5DLVH $V\RXVDZLQ/LVWLQJWKH([LW+DQGOHU FHQWUDOL]HVWKHUDLVLQJRIHUURUVWKURXJKDVWRUHG SURFHGXUHFDOOHG-QVN(UURUB5DLVH , GOLNHWRGLVFXVVWKHLPSOHPHQWDWLRQRIWKLVVWRUHG SURFHGXUHEHIRUHZHORRNDWH[FHSWLRQKDQGOLQJLQ1(7FRPSRQHQWV /LVWLQJVKRZVWKHILUVWSDUWRIWKHLPSOHPHQWDWLRQRI-QVN(UURUB5DLVH $V\RXFDQVHHWZR SDUDPHWHUVVHHPDELWREVFXUHDWILUVW²#VSHFLILF(UURU0HVVDJH DQG#VHYHULW\/HYHO #VSHFLILF(UURU0HVVDJH LVW\SLFDOO\WKH#DQ(UURU0HVVDJH IURPWKHFDOOHUVWRUHGSURFHGXUHWKDW JHWVLWVYDOXHDVFORVHWRZKHQWKHSUREOHPKDVEHHQIRXQGDVSRVVLEOH
,)#HUURU! %(*,1 6(/(&7#D%XIIHU MGHVFULSWLRQ )520MQVNHUURUBPHVVDJHM :+(5(MLG #HUURU (1'
$V\RXVHHLQ/LVWLQJWKH#VHYHULW\/HYHO JHWVWKHGHIDXOWYDOXHDVZDVWKHFDVHLQ/LVWLQJ 7KHUHZDVQRH[SOLFLWYDOXHSURYLGHGIRUWKLVSDUDPHWHUZKLFKLVPRVWRIWHQWKHFDVH VRWKH GHIDXOWYDOXHZLOOEHXVHG 7KHQWZRORFDOYDULDEOHVDUHGHFODUHG,Q#D%XIIHUWKHFRPSOHWHVWULQJZLOOEHFRQVWUXFWHGWREH XVHGE\5$,6(5525 ODWHU#D6WDQGDUG(UURU0HVVDJH LVWKHRSSRVLWHRIWKH #VSHFLILF(UURU0HVVDJH SDUDPHWHU,Q#D6WDQGDUG(UURU0HVVDJH,ZLOOVWRUHDVWULQJWKDW,PLJKW ILQGIURPP\FXVWRPWDEOHRIHUURUPHVVDJHV$VVXPHWKDWHUURULVODEHOOHGDVDQ ³8QH[SHFWHGHUURU´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³UHDVRQ´FROXPQLQWKHHUURUORJWRR
,QWKHVHFRQGSDUWRIWKHLPSOHPHQWDWLRQRI-QVN(UURUB5DLVH DV\RXFDQVHHLQ/LVWLQJ, IRUPDWDQ;0/VWULQJZLWKLQIRUPDWLRQDERXWWKHSUREOHP7KLV;0/VWULQJZLOOVXEVHTXHQWO\EH XVHGDVWKHVWULQJWR5$,6(5525 DQGDOVRIRUWKHWUDFHFDOOVLJQDOOLQJDQHUURU /LVWLQJ7KH,PSOHPHQWDWLRQRI-QVN(UURUB5DLVH 3DUW
6(7#D%XIIHU HUURU0HVVDJHHUURU
&$67#HUURU$69$5&+$5
GHVFULSWLRQ
#VSHFLILF(UURU0HVVDJH _
#D%XIIHU
VRXUFH #VRXUFH !
5$,6(5525#D%XIIHU#VHYHULW\/HYHO (;(&-QVN7UDFHB(UURU#VRXUFH#D%XIIHU
/LVWLQJVKRZVDQH[DPSOHRIWKHFRQWHQWRI#D%XIIHU IURP/LVWLQJ /LVWLQJ([DPSOHRIWKH&RQWHQWRI#D%XIIHU
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²ERWKDVDSDUDPHWHU RQLWVRZQDQGDOVRDVSDUWRIWKH#D%XIIHU7KLVLVDPLQRUSUREOHPEXWRQHWKDWLV SHUKDSVZRUWKORRNLQJDW
1RWHWKDWZKHQWKHUHLVDYDOXHLQ##(5525 GLIIHUHQWIURP64/6HUYHUZLOOPDNHD5$,6(5525 FDOOIRU\RXDQGWKDWZLOORIFRXUVHQRWEHIRUPDWWHGOLNHWKHRQHLQ/LVWLQJ7KH1(7FRGH WKDWH[DPLQHVWKHHUURUVWDFNDQGZULWHVWRWKHHUURUORJLVSUHSDUHGDQGZLOOUHIRUPDWWKDW 5$,6(5525 PHVVDJHDFFRUGLQJO\ 7KLVOHDGVXVQLFHO\LQWRH[FHSWLRQKDQGOLQJLQ1(7RXUQH[W VXEMHFWRIGLVFXVVLRQ
+DQGOLQJ([FHSWLRQVLQ1(7&RPSRQHQWV
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³H[FHSWLRQ KDQGOLQJ´LQVWHDGRI³HUURUKDQGOLQJ´LQWKLVVHFWLRQ:KHQLWFRPHVWR9%DQG764/WKHPRVW FRPPRQWHUPWRXVHLV³HUURUKDQGOLQJ´EXWLQ1(7LW VPRVWO\UHIHUUHGWRDV³H[FHSWLRQ KDQGOLQJ´ 1RWH $V,VDLGWKHUHLVDZHDOWKRILQIRUPDWLRQDERXWH[FHSWLRQKDQGOLQJDYDLODEOHWR\RX,I \RXZDQWWROHDUQPRUHDERXWKDQGOLQJH[FHSWLRQVVHH'DQLHO$SSOHPDQ V0RYLQJWR 9%1(76WUDWHJLHV&RQFHSWVDQG&RGHDQG.HLWK)UDQNOLQ V9%1(7IRU'HYHORSHUV
, GOLNHWRVWDUWWKLVVHFWLRQE\UHFDSSLQJKRZ,WKLQN7U\&DWFKDQG)LQDOO\ VKRXOGEHXVHG 5HFDSRIWKH%DVLF6WUXFWXUHRI7U\&DWFKDQG)LQDOO\
$OWKRXJKZHGLVFXVVHGWKHEDVLFVWUXFWXUHRI7U\&DWFKDQG)LQDOO\ LQ&KDSWHUOHW VUHFDSWKH EDVLFLGHDV$VVXPHWKDW\RXDUHJRLQJWRXVHDUHVRXUFH²VD\DQLQVWDQFHRIDFODVVFDOOHG GR(UUDQG DQGDPHWKRGFDOOHG(VFDODWH ²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³LQJUHGLHQWV´%HIRUHZHJHWWRWKHH[DPSOHVOHW V WDNHDORRNDWWKHGLIIHUHQWHOHPHQWVRIH[FHSWLRQKDQGOLQJDQGWKHFRPELQDWLRQVWKDWDUHSRVVLEOH x x x
x
&DWFK² :LOOWKHH[FHSWLRQEHFDXJKWRUQRW" &RPSHQVDWH² :LOOWKHUHEHFRGHFRPSHQVDWLQJRUDFWLQJEHFDXVHRIWKHH[FHSWLRQ" 7KURZ² +RZVKRXOGWKHH[FHSWLRQEHUDLVHGEDFNWRWKHFDOOLQJPHWKRG"7KHUHDUHVHYHUDO PHFKDQLVPVIRUWKURZLQJDQH[FHSWLRQ)LUVW\RXFDQXVH7KURZ MXVWWRUHWKURZWKH H[FHSWLRQ7KURZH WRWKURZDQHZH[FHSWLRQRIWKHVDPHW\SHWKDWZDVFDXJKWDQG7KURZ 1HZ WRWKURZDQHZH[FHSWLRQRIDQRWKHUW\SH,ZLOOGLVFXVVWKHGLIIHUHQFHVODWHULQWKLV VHFWLRQ ,QQHU² :LOOWKHFDXJKWH[FHSWLRQEHZUDSSHGDVDQLQQHUH[FHSWLRQDQGVHQWZLWKWKH 7KURZ VRWKDWWKHUHFHLYHUFDQVHHERWKWKHH[FHSWLRQDQGWKHSUHYLRXVH[FHSWLRQ"
7DEOH &RPELQDWLRQVRI([FHSWLRQ+DQGOLQJ(OHPHQWVDQG7KHLU9DOLGLW\ &DWFK &RPSHQVDWH 7KURZ 1R
1R
7KURZ
1R 1R 1R 1R 1R 1R
1R
7KURZ
7KURZH 7KURZH
7KURZ1HZ
7KURZ1HZ 1R
7KURZ 7KURZ
7KURZH 7KURZH
7KURZ1HZ 7KURZ1HZ
,QQHU
1R
1R
/HW VQRZORRNDWWKHVHYHQPRVWW\SLFDODSSURDFKHVIRUKRZWR KDQGOHDQH[FHSWLRQ 'RQ W&DWFK
,I\RXGRQ WKDYHD&DWFK EORFN\RXZRQ W&DWFK WKHH[FHSWLRQDQGLWZLOOEXEEOHXSWKHFDOOVWDFN ,Q9%WKLVDSSURDFKZDVXQFRPPRQEHFDXVHRIWKHQHFHVVLW\RIDOZD\VH[SOLFLWO\FOHDQLQJXSDOO PHWKRGLQVWDQWLDWHGUHVRXUFHVLQWKHPHWKRG7KHUHIRUHHUURUVKDGWREHFDXJKWORFDOO\WRDOORZ
WKHPHWKRGWRGRWKHFOHDQXSEHIRUHUHUDLVLQJWKHHUURU7KLVLVQRWDSUREOHPLQ1(7EHFDXVH\RX KDYHWKH)LQDOO\ FODXVHVRWKHFOHDQXSLVGHFRXSOHGIURPWKHFDWFKLQJRIH[FHSWLRQV 1RWH 7KLVLVQRWWRVD\WKDWH[SOLFLWFOHDQXSLVQ WLPSRUWDQWLQ1(7, PVXUH\RXUHPHPEHUWKH GLVFXVVLRQDERXW,'LVSRVDEOH IURP&KDSWHU:KHQ\RXLQVWDQWLDWHUHVRXUFHVWKDW LPSOHPHQW,'LVSRVDEOH DWWKHPHWKRGOHYHOWKH\VKRXOGDOZD\VEHGLVSRVHGRILQD )LQDOO\ EORFN
,I\RX UHQRWJRLQJWRGRDQ\WKLQJVSHFLDOZLWKDSUREOHPORFDOO\WKHUHLVUHDOO\QRSRLQWLQFDWFKLQJ WKHH[FHSWLRQDWDOO2IFRXUVHVRRQHURUODWHU\RXZLOOKDYHWR&DWFK WKHH[FHSWLRQEXWWKLV GRHVQ WQHFHVVDULO\PHDQLWKDVWREHDWWKHORZHVWOHYHO 7KLVVROXWLRQ²QRWXVLQJ&DWFK DWDOO²LVWKHHDV\RQH/HW VQRZWXUQRXUDWWHQWLRQWRWHFKQLTXHVWR XVHZKHQH[FHSWLRQVDUHFDXJKW
&DWFK DQG(DW
,W VYHU\VLPSOHMXVWWR&DWFK DQH[FHSWLRQDQGWKHQQRWGRDQ\WKLQJDERXWLW,W VGRDEOHEXWLW V MXVWDVGDQJHURXVDVLWLVIRURWKHUSODWIRUPV,I\RXWUHDWYHU\VSHFLILFH[FHSWLRQVWKLVZD\RI FRXUVHLWZRQ WEHDSUREOHPEXWLI\RXKDYHDODVWUHVRUW&DWFK WKDWHDWVHYHU\SUREOHPWKHUHLV SRWHQWLDOO\DKLJKULVNRIIXWXUHEXJVRFFXUULQJ
&DWFK DQG&RPSHQVDWH
6RPHWLPHV\RXILQGWKDW\RXFDQ&DWFK DQH[FHSWLRQLQYHVWLJDWHLWDQGWKHQXVHVRPH FRPSHQVDWLQJFRGHWKDWGHDOVZLWKWKHH[FHSWLRQDVDZKROHVR\RXGRQ WKDYHWRUDLVHDQHZ H[FHSWLRQWRWKHFDOOHU$W\SLFDOH[DPSOHZRXOGEHDUHWU\PHFKDQLVP
&DWFK DQG7KURZ
:KHQ\RXXVH&DWFK DQG7KURZ\RXDUHPRUHRUOHVVVD\LQJWKDW\RXKDGWR&DWFK WKHH[FHSWLRQ EHFDXVH\RXKDGWRXVHVRPHFRPSHQVDWLQJFRGHEXWWKHQ\RXGRQ WZDQWWRGHDOZLWKWKHUHDO H[FHSWLRQ5DWKHU\RXZDQWWKHFDOOHUWRWDNHFDUHRIWKDWVR\RXMXVWUHWKURZWKHH[FHSWLRQ
&DWFK DQG7KURZH
&DWFKLQJDQH[FHSWLRQ²IRUH[DPSOH$V([FHSWLRQ²DQGWKHQXVLQJWKDWYDULDEOHWR7KURZ LVRIWHQ DEDGKDELWWRJHWLQWR,WPHDQVWKDW\RXWUHDWDOOH[FHSWLRQVDVRQHDQGWKHQ\RXJLYHWKDW LQIRUPDWLRQWRWKHFDOOHU,I\RXXVHDQLQQHUH[FHSWLRQLWLVSRVVLEOHIRUWKHFDOOHUWRILQGWKH SUHYLRXVH[FHSWLRQEXWWKLVLVQRWWKHZD\WKHFDOOHUZDQWVWRILQGRXWZKDWWKHSUREOHPZDV7KH FDOOHUZLOOKDYHWRXVHPXFKWRRPXFKFRGHLQWKLVVLWXDWLRQ 1RWH ,KDYHGHFLGHGWRXVHH IRUH[FHSWLRQVHYHQWKRXJKLWLVDOVRWKHFRPPRQYDULDEOHQDPH IRUHYHQWV,WVKRXOGEHREYLRXVIURPWKHFRQWH[WZLWKZKLFKZHDUHGHDOLQJ
&DWFK DQG7KURZ1HZ :LWK&DWFK DQG7KURZ1HZWKHH[FHSWLRQLVFDXJKWEXWZKHQLW VWLPHWRUDLVHDQH[FHSWLRQD QHZH[FHSWLRQLVFUHDWHGDQGWKURZQ7KLVVROXWLRQLVW\SLFDODW³ERUGHUV´VXFKDVLQWKHFODVVHVLQ WKH$SSOLFDWLRQOD\HUVRWKDWWKHFRQVXPHUZLOORQO\VHHQLFHQHDWH[FHSWLRQV2QO\VKRZWKH FRQVXPHUH[FHSWLRQVWKDW\RXKDYHGRFXPHQWHGDVFRPLQJIURP\RXDQGH[FHSWLRQVWKDWUHYHDODV OLWWOHDVSRVVLEOHDERXW\RXULQQHUZRUNLQJV)RUH[DPSOHLI\RXOHWWKHFRQVXPHUUHFHLYHDVHUYLFHG FRPSRQHQWUHODWHGH[FHSWLRQ\RXKDYHUHYHDOHGLQIRUPDWLRQWRWKHFRQVXPHUWKDWKHRUVKH VKRXOGQ WNQRZ
&DWFK DQG7KURZ LQ$Q\:D\ ZLWK,QQHU([FHSWLRQ
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
-QVN,QVWUXPHQWDWLRQ7UDFH(UURUH[H2U'OO1DPHVRXUFHB FDXJKW([FHSWLRQXVHU,G 5HWXUQH[FHSWLRQ7R7KURZ (QG)XQFWLRQ 1RWH 7KHFRGHLQ/LVWLQJORRNVDELWXQLQWXLWLYH%HSDWLHQWLWZLOOEHH[SODLQHGLQMXVWD IHZSDUDJUDSKV
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
$OVRZRUWKPHQWLRQLQJDERXW/LVWLQJLVWKDW([FHSWLRQV8QH[SHFWHG([FHSWLRQ LVDFRQVWDQW FRQWDLQLQJWKHYDOXH8QH[SHFWHG([FHSWLRQ 1RWH (YHQWKRXJK,GLGQ WVKRZLWKHUHWKHUHLVDOVRD6HUYLFHG(UU FODVVWKDWXVHVWKH 6HUYLFHG7UDFH FODVVIRUWUDFLQJ,GLVFXVVHGWKLVLQ&KDSWHU
'LIIHUHQW6WUDWHJLHVIRU'LIIHUHQW/D\HUV ,W VEHHQDZKLOHVLQFH ,SUHVHQWHGP\DUFKLWHFWXUHSURSRVDOLQ&KDSWHU³$UFKLWHFWXUH´
:KHQZHFRQVLGHUH[FHSWLRQKDQGOLQJLQWHUPVRIP\DUFKLWHFWXUDOSURSRVDOZHPXVWORRNDW ZKHWKHUDOOOD\HUVPXVWFDWFKH[FHSWLRQVRUQRW,QRWHGHDUOLHUWKDWLI\RXDUHQ WJRLQJWRGR DQ\WKLQJZLWKDQH[FHSWLRQGRQ WFDWFKLW2QWKHRWKHUKDQGVRRQHURUODWHU\RXUHDFKWKHHQWU\ SRLQWZKLFKLVWKH$SSOLFDWLRQOD\HU
$V,VDLGLQ&KDSWHUWKH&RQVXPHU+HOSHUOD\HUZLOOWUDQVODWHH[FHSWLRQLQIRUPDWLRQIURP SURJUDPPLQJLQIRUPDWLRQWRXVHUIULHQGO\LQIRUPDWLRQ:KHQ,VDLGWKDW,ZDVWKLQNLQJDERXWZKDW WH[WWRH[SRVH7KHSURJUDPPHURIWKHFRQVXPHUZDQWVWRVHHGHVFULSWLYHLQIRUPDWLRQIURPWKH $SSOLFDWLRQOD\HUEXWRQQRDFFRXQWVKRXOG\RXH[SRVHVHQVLWLYHLQIRUPDWLRQ
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
([FHSWLRQVWR%H3UHSDUHG)RU
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
'HDGORFN
(YHQWKRXJK\RXPD\KDYHXVHGDOOWKHWLSV,JDYH\RXLQ&KDSWHU³7UDQVDFWLRQV´WROHVVHQ WKH ULVNRIGHDGORFNV\RXZLOOVRPHWLPHVH[SHULHQFHWKHPDQ\ZD\6RRQHURUODWHU\RXZLOOJHWHUURU FRGH IURP64/6HUYHUOHWWLQJ\RXNQRZWKDW\RXKDYHEHHQVHOHFWHGDVDGHDGORFNYLFWLP 8QIRUWXQDWHO\WKHHUURUKDQGOLQJLQ\RXUVWRUHGSURFHGXUHV LVRIQRKHOSZKDWVRHYHUDQGWKH VWRUHGSURFHGXUHLQZKLFKWKHGHDGORFNRFFXUUHGZLOOEHLQWHUUXSWHGDQGVRZLOOWKHFDOOLQJEDWFK 7KHUHIRUH\RX UHULJKWEDFNLQWKH3HUVLVWHQW$FFHVVOD\HUDJDLQ 1RWH
,I\RXGRXVH&20WUDQVDFWLRQVWKHWUDQVDFWLRQLVGRRPHGDQG\RXKDYHWROHDYHWKHWUDQVDFWLRQ VWUHDP
:KDW,V'HDGORFN"
$VLPSOHZD\WRGHVFULEHDGHDGORFNLVWKDWWZRWUDQVDFWLRQVDUHERWK UHTXHVWLQJUHVRXUFHVH[FOXVLYHO\KHOGE\WKHRWKHUWUDQVDFWLRQ1HLWKHU WUDQVDFWLRQZLOOUHOHDVHDQ\UHVRXUFHXQWLOLWKDVJUDEEHGWKHVHFRQG UHVRXUFHEXWWKLVZRQ WKDSSHQWKXVGHDGORFNRFFXUV 7LPHRXW $VLPLODUVLWXDWLRQWRGHDGORFNWKDWLVIRXQGLQD5HVRXUFH0DQDJHU50 LVZKHQWKH&20 WUDQVDFWLRQWLPHVRXW7KHH[FHSWLRQZLOOVKRZXSDV6\VWHP'DWD6TO&OLHQW6TO([FHSWLRQ ³7LPHRXWH[SLUHG´LQ\RXU1(7FRPSRQHQW7KLVPD\EHEHFDXVHWKHUHLVDGLVWULEXWHGGHDGORFNRU EHFDXVH\RXKDYHVHWWKHWLPHRXWWRDYDOXHWRRVKRUWIRUWKHFXUUHQWORDG 1RWH 7KHGHIDXOWYDOXHIRUWUDQVDFWLRQWLPHRXWRIVHFRQGVLVQRWDSSURSULDWHIRURSHUDWLRQDO DSSOLFDWLRQVEXWRQO\IRUGHEXJJLQJ
:KDWHYHUWKHUHDVRQWKHUHLVQRWKLQJ\RXFDQGRDERXWWKHSUREOHPLQWKHFXUUHQW&20 WUDQVDFWLRQ,QVWHDG\RXKDYHWRWUXVWWKH&RQVXPHU+HOSHUOD\HUFODVVWRWDNHFDUHRIWKHSUREOHP DJDLQE\UHWU\LQJWKHFDOOWRWKH$SSOLFDWLRQOD\HUFODVVDFRXSOHRIWLPHVEHIRUHJLYLQJXS 1RWH 8QIRUWXQDWHO\\RXZRQ WJHWWKHH[FHSWLRQXQWLOWKH&RPPDQG7LPHRXW RIWKH6TO&RPPDQG REMHFWKDVEHHQUHDFKHGDQGWKHH[FHSWLRQLVDOVRWKHVDPHDVZKHQWKH &RPPDQG7LPHRXW KDVEHHQUHDFKHGEHFDXVHRIDQRWKHUUHDVRQWKDQWKDWWKH&20 WUDQVDFWLRQWLPHRXWKDVRFFXUUHG
6KXWGRZQ 6RPHWLPHVWKH&20DSSOLFDWLRQWHUPLQDWHVDQG\RXJHW ³6\VWHP5XQWLPH,QWHURS6HUYLFHV&20([FHSWLRQ7KH53&VHUYHULVXQDYDLODEOH[%$ ´ ZKHQ\RXWU\WRXVHWKH$SSOLFDWLRQOD\HULQVWDQFHIURPWKH&RQVXPHU+HOSHUOD\HU7KHUHDVRQIRU WKLVSUREOHPFRXOGEHWKDWWKHUHLVDVHULRXVSUREOHPDQG&20KDVGHFLGHGWRWHUPLQDWHWKH &20DSSOLFDWLRQDQGUHVWDUWLWRUHOVHDQDGPLQLVWUDWRUKDVGHFLGHGWRVKXWGRZQWKHDSSOLFDWLRQ 1RWH ,WGRHVQ WPDWWHULI\RXXVH-XVW,Q7LPH-,7 DFWLYDWLRQRUQRWEHFDXVHWKLVSUREOHPFDQ VKRZXSLQERWKVLWXDWLRQV2IFRXUVHWKHULVNRIWKLVH[FHSWLRQRFFXUULQJLVJUHDWHULI\RX NHHSDUHIHUHQFHGXULQJDSHULRGRIWLPHDQGGRQ WWHDUGRZQWKHUHIHUHQFHEHWZHHQ UHTXHVWVEXWLWGRHVQ WPDWWHU
,QDQ\FDVHWKH$SSOLFDWLRQOD\HULQVWDQFHZLOOEHORVWIRUWKH&RQVXPHU+HOSHUOD\HUFODVV2QFH DJDLQWKH&RQVXPHU+HOSHUOD\HUFODVVZLOOKHOS\RXRXWKHUHDQGWKHVROXWLRQLVVLPSOH²WKH
&RQVXPHU+HOSHUOD\HUFODVVMXVWFUHDWHVDQHZLQVWDQFH([DFWO\DVLQWKHFDVHZLWKWKHGHDGORFN VLWXDWLRQVWKH&RQVXPHU +HOSHUOD\HUFODVVZLOOUHWU\DFRXSOHRIWLPHVEHIRUHJLYLQJXS
$SSURDFKHVWR&RQFXUUHQF\&RQWUROIRU'LVFRQQHFWHG6FHQDULRV
7KHWHUP³FRQFXUUHQF\FRQWURO´LVDEURDGRQH,QWKHQH[WFRXSOHRISDJHV,ZLOOGLVFXVVLWLQYHU\ VSHFLILFEXWVWLOOFRPPRQVFHQDULRV²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
2SWLPLVWLF&RQFXUUHQF\&RQWURO
7DEOH ([DPSOHRIWKH/RVW8SGDWH3UREOHP
7LPH 7UDQVDFWLRQ% W
'LVFRQQHFWIURPGDWDEDVH/RFNVDUHUHOHDVHGQRPDWWHUZKDWZDVWKH 7UDQVDFWLRQ,VRODWLRQ/HYHO7,/ W
W W
%(*,175$1
6(/(&7#[ H[ )520HUUDQGH :+(5(HLG ³&KDQJH´#[ 83'$7(HUUDQG 6(7[ #[ :+(5(LG
³&KDQJH´#[
&RQQHFWWRWKHGDWDEDVH 83'$7(HUUDQG 6(7[ #[ :+(5(LG
W
&200,775$1
W
1RWH ,QDZD\FDOOLQJLW7UDQVDFWLRQ$LVDPLVQRPHUEHFDXVHLWLVDFWXDOO\WZRWUDQVDFWLRQV )LUVWWKHRQHWKDWUHDGVWKHYDOXHDQGWKHQDIWHUUHFRQQHFWWKHUHLVDVHFRQGWUDQVDFWLRQ ZKHQWKHYDOXHLVZULWWHQ
1RWHWKDW7UDQVDFWLRQ%PLJKWORRNQDw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
6(/(&7#[ H[ )520HUUDQGH83'/2&. :+(5(HLG 7KHUHVXOWRIWKLVZRXOGEHWKDW7UDQVDFWLRQ$LVJUDQWHGDQH[FOXVLYHORFNDWWLPHW7UDQVDFWLRQ% ZRQ WEHJUDQWHGDQH[FOXVLYHORFNDWWEXWVWRSVLQDZDLWVWDWH7UDQVDFWLRQ$FDQFRQWLQXHDOO WKHZD\WRDIWHUWLPHWZKHUH&200,775$1 LVH[HFXWHG WKHORFNLVWKHQUHOHDVHGDQG 7UDQVDFWLRQ% VZDLWVWDWHLVRYHU7UDQVDFWLRQ%JHWVDQH[FOXVLYHORFNDQGFDQPRYHRQ 6RIDUVRJRRGEXWWKHUH VMXVWRQHSUREOHP%HIRUHWKHVHH[SODQDWLRQV,VDLGWKDWZHVKRXOG IRUJHWWKDW7UDQVDFWLRQ$LVGLVFRQQHFWLQJIURPWKHGDWDEDVH$VVXPHZHFDQ WIRUJHWLW$VVXPH WKDW7UDQVDFWLRQ$QHHGVXVHULQWHUDFWLRQLQVLGHWKHWUDQVDFWLRQVRLWNQRZVKRZWRFKDQJH[ LQ WLPHW+DYLQJWKDWXVHULQWHUDFWLRQZRXOGEHDPLQRUGLVDVWHUIRUWKURXJKSXWLIWKHH[FOXVLYHORFN ZHUHNHSW,PDJLQHWKDW\RXDUH7UDQVDFWLRQ%,I\RX UHOXFN\\RXZRXOGKDYHWRZDLWIRUVHFRQGV DQGLI\RX UHOHVVOXFN\PLQXWHV0HDQZKLOHWKHFRQQHFWLRQXVHGE\7UDQVDFWLRQ$LVRFFXSLHG GXULQJWKHXVHULQWHUDFWLRQVRWKDWUHVRXUFHFDQ WEHXVHGE\DQRWKHUXVHU7KLVPHWKRGRORJ\ ZRXOGJUHDWO\KDUPVFDODELOLW\ 'RZHKDYHDSUREOHPWKDW VLPSRVVLEOHWRVROYHKHUH"2IFRXUVHQRWEXWLWUHTXLUHVDQDSSURDFK WKDWLVDOLWWOHGLIIHUHQWWKDQZKDWPRVWFODVVLFGDWDEDVHWH[WERRNVGLVFXVV, GOLNHWRGLVFXVVWKUHH GLIIHUHQWDSSURDFKHVWRWKHSUREOHPDQGZKLOHGRLQJVRFRPHXSZLWKDSURSRVDOIRUWKH UHFRPPHQGDWLRQ,ILQGWREHWKHEHVW 3UREOHP6ROXWLRQ52:9(56,21 &ROXPQ
3UREDEO\WKHPRVWW\SLFDOVROXWLRQWRWKHRSWLPLVWLFFRQFXUUHQF\SUREOHPLVWRXVHD52:9(56,21 FROXPQRQWKHWDEOH7KH52:9(56,21 YDOXHLVUHDGLQWKH6(/(&7 WLPHWLQWKHH[DPSOH LQ7DEOH DQGUHPHPEHUHGXQWLOLW VWLPHWRVDYHWKHFKDQJHV7KH83'$7( VWDWHPHQWLQDVWRUHG SURFHGXUHPLJKWWKHQORRNDVLVVKRZQLQ/LVWLQJ 1RWH ,QWKHFRGHLQ/LVWLQJDQGPRVWRIWHQDIWHUWKDW,KDYHMXVWDGGHGFRPPHQWVDV SODFHKROGHUVIRUWKHUHJXODUGHFODUDWLRQVLQLWLDOL]DWLRQVHUURUKDQGOLQJDQG([LW+DQGOHU
/LVWLQJ52:9(56,21 9HUVLRQRI&RQFXUUHQF\&RQWURO &5($7(352&('85((UUDQGB8SGDWH#LG81,48(,'(17,),(5 #[XGGW;#URZ9HUVLRQ2OG52:9(56,21$6 7KHXVXDOGHFODUDWLRQVDQGLQLWLDOL]DWLRQV 83'$7(HUUDQG 6(7[ #[ :+(5(LG #LG $1'UY #URZ9HUVLRQ2OG 7KHXVXDOHUURUKDQGOHUDQG([LW+DQGOHU
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
3UREOHP6ROXWLRQ3URVDQG&RQV 7KHSURVRIWKH52:9(56,21 VROXWLRQDUHDVIROORZV
x x x
,WLVFRPPRQO\XVHGDQGZHOONQRZQ ,WLVLQDVHQVHDXWRPDWLFDQGQRWPXFKH[WUDFRGHLVQHHGHG ,WZLOO DOVRZRUNZKHQFKDQJHVDUHGRQHWRWKHGDWDIURPRWKHUFRGHRUE\KDQGZLWKRXWWKH RWKHUFRGHKDYLQJWRNQRZDERXWWKHSURWRFRO
$QGWKHFRQVRIWKLVVROXWLRQDUHDVIROORZV x
x x
6RPHWLPHVLWLVWRRFRDUVHJUDQXODU$VVXPH\RXZDQWWRFKDQJHWKHFROXPQFDOOHG GHVFULSWLRQ DQGDQRWKHUXVHUKDVFKDQJHGWKHFROXPQFDOOHGUHVSRQVLEOH6KRXOGWKDW UHDOO\VWRS\RXU83'$7("3UREDEO\QRWEXWWKDWLVH[DFWO\ZKDWPLJKWKDSSHQZKHQ 52:9(56,21 LVXVHGIRUFRQFXUUHQF\FRQWUROEHFDXVHWKHUHFDQRQO\EHRQH52:9(56,21 RQ DWDEOH7KLVLVSDUWLFXODUO\DSUREOHPIRUZLGHWDEOHVRUUDWKHUWDEOHVWKDWDUHXVHGIRU VHYHUDOGLIIHUHQWSXUSRVHV
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
,)#WKH&XUUHQW; #[2OG%(*,1 83'$7(HUUDQG 6(7[ #[1HZ :+(5(LG #LG 7KHXVXDOHUURUKDQGOHU (1' (/6(%(*,1 6(7#DQ(UURU 6(7#DQ(UURU0HVVDJH &RQIOLFWLQXSGDWH
*272 ([LW+DQGOHU (1' 7KHXVXDO([LW+DQGOHU 1RWH ,W VLPSRUWDQWWRXQGHUVWDQGWKDWWKHFRGHLQ/LVWLQJPXVWH[HFXWHLQDQDFWLYH WUDQVDFWLRQWRZRUNFRUUHFWO\
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
$1'[ #[2OG 7KHXVXDOHUURUKDQGOHUDQG([LW+DQGOHU 3UREOHP6ROXWLRQ3URVDQG&RQV 7KHSURVRIWKHEHIRUHDQGDIWHUYDOXHVVROXWLRQDUHDVIROORZV x x x x
,WLVDVJUDQXODUDV\RXZDQW
7KHFRQVRIWKLVVROXWLRQDUHDVIROORZV x
x
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
'LPDQ,QWHJHU$V,QWHJHU &RQVROH:ULWH/LQHDQ,QWHJHU0D[9DOXH7R6WULQJ ,W VQRVHFUHWWKDW764/LVQ WDWDOODVSRZHUIXODVWKH1(7ODQJXDJHVEXWLWVWLOOIUXVWUDWHVPH 3UREOHP6ROXWLRQ3URVDQG&RQV 7KHSURVRIWKHFXVWRPFROXPQVVROXWLRQDUHDVIROORZV x x x x
,WKDVIXOOIOH[LELOLW\%HFDXVH\RXSURJUDPWKLVVROXWLRQRQ\RXURZQ\RXKDYHDFHUWDLQ DPRXQWRIIUHHGRP
7KHFRQVRIWKLVVROXWLRQDUHDVIROORZV x x x
,W VFRPSOHWHO\PDQXDOVR\RXKDYHWRSURJUDPWKLVVROXWLRQFRPSOHWHO\RQ\RXURZQ$V \RXVDZLQWKHSUHYLRXV³SURV´VHFWLRQ,OLVWHGWKLVDVDQDGYDQWDJHDOVR:KHWKHULW VDQ DGYDQWDJHRUGLVDGYDQWDJHGHSHQGVRQWKHVLWXDWLRQ
:KDW,I,'RQ W/LNH6WRUHG3URFHGXUHV"
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²DV\RX NQRZIOH[LELOLW\RIWHQPHDQVPRUHZRUN
3HVVLPLVWLF&RQFXUUHQF\&RQWURO
:HKDYHQRZGLVFXVVHGVHYHUDOVROXWLRQVIRUKRZWRJHWRSWLPLVWLFFRQFXUUHQF\FRQWUROZKHQWKH GDWDKDVEHHQGLVFRQQHFWHGIURPWKHGDWDEDVH,QFHUWDLQVLWXDWLRQV\RXQHHGSHVVLPLVWLF FRQFXUUHQF\FRQWUROLQVWHDG$VVXPHWKDW\RXDUHWKLQNLQJRIEX\LQJWZRIOLJKWWLFNHWVWR6ZHGHQ IRU\RXDQG\RXUORYHGRQH:KDW VWKDW"
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
,IDOO\RXUUHDGLQJRIHUUDQGVJRHVWKURXJKDVWRUHGSURFHGXUHZKLFK,UHFRPPHQGDQ\ZD\ \RX FDQXVHFRGHOLNHWKDWVKRZQLQ/LVWLQJ /LVWLQJ8VHRI/RFNB*UDQW5HDG
(;(&#D5HWXUQ9DOXH /RFNB*UDQW5HDG#LG #XVHU,G
6(/(&7#DQ(UURU ##(5525 ,)#DQ(UURU!25#D5HWXUQ9DOXH!%(*,1 6(7#DQ(UURU0HVVDJH 3UREOHPZKHQJUDQWLQJUHDG
,)#DQ(UURU %(*,1 6(7#DQ(UURU #D5HWXUQ9DOXH (1' *272([LW+DQGOHU (1' 6(/(&7HLGHGHVFULSWLRQ )520HUUDQGH :+(5(HLG #LG 7KHXVXDOHUURUKDQGOHU
,IWKHXVHUWULHVWRUHDGDQHUUDQGIURPWKHGDWDEDVHWKDWLVQ WORFNHGKHRUVKHZLOOUHFHLYH DV WKHUHWXUQYDOXHIURPWKH/RFNB*UDQW5HDG VWRUHGSURFHGXUH7KH/RFNB*UDQW5HDG VWRUHG
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
&5($7(352&('85(/RFNB*UDQW5HDG#LG81,48(,'(17,),(5 #XVHU,GXGGW8VHU,G $6 7KHXVXDOGHFODUDWLRQVDQGLQLWLDOL]DWLRQV '(&/$5(#D&XUUHQW8VHU,GXGGW8VHU,G #D/RFNHG'DWHWLPH'$7(7,0(
6(7#WKH7UDQ&RXQW$W(QWU\ ##75$1&2817 6(775$16$&7,21,62/$7,21/(9(/6(5,$/,=$%/( ,)#WKH7UDQFRXQW$W(QWU\ %(*,1 %(*,175$1 (1' 6(/(&7#D&XUUHQW8VHU,G XVHULG #D/RFNHG'DWHWLPH ORFNHGGDWHWLPH )520ORFN83'/2&. :+(5(LG #LG
6(7#DQ(UURU ##(5525 ,)#DQ(UURU!%(*,1 6(7#DQ(UURU0HVVDJH 3UREOHPZLWK6(/(&7IURPORFNWDEOH
*272([LW+DQGOHU (1' ,)#D&XUUHQW8VHU,G,618// 25#D&XUUHQW8VHU,G #XVHU,G 25'$7($''QGER/RFN9DOLG10LQXWHV #D/RFNHG'DWHWLPH *(7'$7( %(*,1 '(/(7()520ORFN :+(5(LG #LG
6(7#DQ(UURU ##(5525 ,)#DQ(UURU!%(*,1 6(7#DQ(UURU0HVVDJH 3UREOHPZLWK'(/(7(IURPORFNWDEOH
*272([LW+DQGOHU (1' ,16(57,172ORFN LG XVHULGORFNHGGDWHWLPH 9$/8(6 #LG#XVHU,G*(7'$7(
6(/(&7#DQ(UURU ##(5525#D5RZFRXQW ##52:&2817 ,)#DQ(UURU!25#D5RZFRXQW %(*,1 6(7#DQ(UURU0HVVDJH 3UREOHPZLWK,16(57WRORFNWDEOH
,)#DQ(UURU %(*,1 6(7#DQ(UURU (1' *272([LW+DQGOHU (1'
(1' (/6(%(*,1 6(7#DQ(UURU 6(7#DQ(UURU0HVVDJH 5HDGORFNFDQQRWEHJUDQWHG
(1' 7KHXVXDO([LW+DQGOHU
$V\RXFDQVHHWKHORFNLVJUDQWHGLQRQHRI WKHIROORZLQJFLUFXPVWDQFHV x x x
:KHQWKHUHLVQRORFNIRUWKHURZ :KHQ,KDYHWKHFXUUHQWORFNIRUWKHURZ :KHQWKHUHLVDORFNIRUWKHURZEXWLWLVWRRROG
,WLVDOVRZRUWKPHQWLRQLQJWKDWLQWKHLPSOHPHQWDWLRQRI/RFNB*UDQW5HDG ,XVHDVFDODU8') FDOOHG/RFN9DOLG10LQXWHV IRUSURYLGLQJWKHFRQVWDQWRIKRZPDQ\PLQXWHVWKHORFNLVYDOLG ,Q/LVWLQJWKHVWRUHGSURFHGXUHIRUJUDQWLQJDUHDGDQGWDNLQJDORFN ZDVVKRZQEXW\RX DOVRQHHGDVLPLODUVWRUHGSURFHGXUHWREHXVHGEHIRUH\RXXSGDWHWKHURZ7KHVDPHUXOHVDSSO\ DVLQ/LVWLQJEXWWKHURZZLOOEHXQORFNHGLQVWHDGRIORFNHG0\LPSOHPHQWDWLRQRIWKDWVWRUHG SURFHGXUHLVFDOOHG/RFNB*UDQW8SGDWH DQGFDQEHGRZQORDGHGIURPWKHERRN V:HEVLWHDW ZZZVDPVSXEOLVKLQJFRP
6RPHXVHUVDUHQ WDXWKRUL]HGWRFKDQJHDVSHFLILFHUUDQGLQZKLFKFDVHWKHUHLVQRSRLQWLQOHWWLQJ WKHPJUDEDORFNHLWKHU7KHVDPHJRHVIRUFDOOVWRDB/RFNB5HOHDVH ,W VQRXVHFDOOLQJWKDW VWRUHGSURFHGXUHLIWKHXVHUORRNVDWDQHUUDQGWKDWKHRUVKHLVQ WDOORZHGWRXSGDWH,I\RXEXLOG ORJLFOLNHWKLVLQ\RXUDSSOLFDWLRQ\RXZLOOGHFUHDVHWKHRYHUKHDGRIWKHVROXWLRQ)LQDOO\DQRWKHU ZD\WRGHFUHDVHWKHRYHUKHDGLVWRWDNHFDUHRIWKHSHVVLPLVWLFORFNLQJDWDFRDUVHJUDQXODUOHYHO 'RQ WXVHWKHFXVWRPORFNLQJRQVHSDUDWHDFWLRQVEXWRQO\RQWKHFRPSOHWHHUUDQG
(YDOXDWLRQRI3URSRVDOV
,W VQRZWLPHWRHYDOXDWHWKHSURSRVDOV,SUHVHQWHGLQWKLVFKDSWHUDJDLQVWWKHFULWHULDZH HVWDEOLVKHGLQ&KDSWHU:H OOILUVWHYDOXDWHWKHFRPSOHWHSURSRVDOIRUKRZWRFDWFKHUURUVLQERWK VWRUHGSURFHGXUHVDQG1(7FRPSRQHQWVDQGWKHQZH OOORRNDWWKHRSWLPLVWLFFRQFXUUHQF\FRQWURO SURSRVDO)LQDOO\ZH OOORRNDWWKHSHVVLPLVWLFFRQFXUUHQF\FRQWUROSURSRVDO,MXVWSUHVHQWHG
(YDOXDWLRQRI3URSRVDOIRU+DQGOLQJ(UURUV
7KHSURSRVDOIRUKRZWRGHDOZLWKHUURUVLVDFWXDOO\TXLWHDODUJHRQH)LUVWDFRPSOHWHSURWRFRO PXVWEHIXOILOOHGLQWKHVWRUHGSURFHGXUHVDQGWKHQLQWKH1(7FRPSRQHQWVDFHQWUDOL]HGPHWKRG ZLOOEHXVHGIRU³UDLVLQJ´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
(YDOXDWLRQRI3URSRVDOIRU$SSURDFKLQJ2SWLPLVWLF&RQFXUUHQF\&RQWURORI 'LVFRQQHFWHG'DWD
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
WKDWGRQ WIROORZWKHSURWRFRO,WLVH[DFWO\WKHVDPHIRUUHXVDELOLW\RIFRXUVH3URGXFWLYLW\LVILQH WRRHVSHFLDOO\FRPSDUHGWRZKHQEHIRUHDIWHUYDOXHVDUHXVHG
(YDOXDWLRQRI3URSRVDOIRU$SSURDFKLQJ3HVVLPLVWLF&RQFXUUHQF\&RQWURORI 'LVFRQQHFWHG'DWD&XVWRP/RFN7DEOH (YHQKHUHLQWKHFDVHRIFRQFXUUHQF\FRQWURO,GHFLGHGWRKDQGOHLWLQP\VWRUHGSURFHGXUHV :KHQ,FRPHWRWKHIDFWRURIIDUPFOXVWHUHQDEOLQJ\RXZLOOVHHWKDWWKLVKDVDGYDQWDJHVEXW OHW VVWDUWIURPWKHEHJLQQLQJ 3HUIRUPDQFHDQGVFDODELOLW\ZLOOGHILQLWHO\EHQHJDWLYHO\DIIHFWHGZKHQ\RXXVHWKHSURSRVHG VROXWLRQ'RQ WRYHUXVHLW²,UHSHDWGRQ WRYHUXVHLW7RJLYH\RXDSLFWXUHRIWKHRYHUKHDG,KDYH FRPSDUHGWKHUHFRPPHQGHGVROXWLRQIRUSHVVLPLVWLFFRQFXUUHQF\FRQWURORIGLVFRQQHFWHGGDWDZLWK WKHUHFRPPHQGHGVROXWLRQRILWVRSWLPLVWLFVLEOLQJ
:KDW V1H[W
%HFDXVHWKLVLVWKHODVWFKDSWHULQWKHERRNZKDW VQH[WLVZKDWWKHIXWXUHKDVWREULQJ7KHQHZ SODWIRUPRI1(7LVWKHPRVWSURPLVLQJDQGSRZHUIXOSODWIRUPVRIDUQRTXHVWLRQDERXWWKDW6WLOO WKHUHDUHDORWRIQHZSUREOHPVDQGGHVLJQGHFLVLRQVZDLWLQJDURXQGWKHFRUQHU,KRSHWKLVERRN KDVLQVSLUHG\RXZLWKLGHDVRIKRZWRGHDOZLWKVRPHRIWKHSUREOHPV\RXZLOOIDFHDQGKDVKHOSHG \RXSUHSDUHIRUZKDWPXVWEHGRQHHDUO\RQZKHQEXLOGLQJHQWHUSULVHDSSOLFDWLRQV*RRGOXFN
5HIHUHQFHV
'$SSOHPDQ0RYLQJWR9%1(76WUDWHJLHV&RQFHSWVDQG&RGH$SUHVV .)UDQNOLQ9%1(7IRU'HYHORSHUV6DPV (*XQQHUVRQ³:ULWLQJ([FHSWLRQDO&RGH´ KWWSPVGQPLFURVRIWFRPOLEUDU\HQ XVGQFVFROKWPOFVKDUSDVS (*XQQHUVRQ³7KH:HOO7HPSHUHG([FHSWLRQ´ KWWSPVGQPLFURVRIWFRPOLEUDU\HQ XVGQFVFROKWPOFVKDUSDVS .-RQHVDQG(-H]LHUVNL³([FHSWLRQ0DQDJHPHQWLQ1(7´ KWWSPVGQPLFURVRIWFRPOLEUDU\HQXVGQEGDKWPOH[FHSWGRWQHWDVS &-'DWH$Q,QWURGXFWLRQWR'DWDEDVH6\VWHPV6HYHQWK(GLWLRQ$GGLVRQ:HVOH\ 7&RQQROO\DQG&%HJJ'DWDEDVH6\VWHPV$3UDFWLFDO$SSURDFKWR'HVLJQ,PSOHPHQWDWLRQ DQG0DQDJHPHQW$GGLVRQ:HVOH\
$SSHQGL[$6XJJHVWLRQVIRU)XUWKHU5HDGLQJ
7KHIROORZLQJLVDOLVWRIERRNV\RXPD\ILQGKHOSIXODV\RXOHDUQDERXW1(7DQG64/6HUYHU DQGIRUGHYHORSLQJ\RXUSURIHVVLRQDOVNLOOVLQJHQHUDO
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
0H\HU%2EMHFW2ULHQWHG6RIWZDUH&RQVWUXFWLRQ6HFRQG(GLWLRQ3UHQWLFH+DOO,6%1 3DWWLVRQ73URJUDPPLQJ'LVWULEXWHG$SSOLFDWLRQVZLWK&20DQG9LVXDO%DVLF6HFRQG(GLWLRQ 0LFURVRIW3UHVV,6%1; 3ODWW'6,QWURGXFLQJ0LFURVRIW1(70LFURVRIW3UHVV,6%1; 3ILVWHU*),Q6HDUFKRI&OXVWHUV6HFRQG(GLWLRQ3UHQWLFH+DOO,6%1 5REELQV-'HEXJJLQJ$SSOLFDWLRQV0LFURVRIW3UHVV,6%1 6FKPLGW'6WDO05RKQHUW+DQG)%XVFKPDQQ3DWWHUQ2ULHQWHG6RIWZDUH$UFKLWHFWXUH 9ROXPH3DWWHUQVIRU&RQFXUUHQWDQG1HWZRUNHG2EMHFWV:LOH\,6%1 6FKXOPH\HU**DQG-,0F0DQXV+DQGERRNRI6RIWZDUH4XDOLW\$VVXUDQFH7KLUG(GLWLRQ 3UHQWLFH+DOO,6%1 6RPPHUYLOOH,6RIWZDUH(QJLQHHULQJ6L[WK(GLWLRQ$GGLVRQ:HVOH\!,6%1; 6WRQHEUDNHU0DQG3%URZQ2EMHFW5HODWLRQDO'%06V7UDFNLQJWKH1H[W*UHDW:DYH6HFRQG (GLWLRQ0RUJDQ.DXIPDQQ,6%1 6XQGEODG6DQG36XQGEODG'HVLJQLQJIRU6FDODELOLW\ZLWK:LQGRZV'1$0LFURVRIW3UHVV ,6%1 6XQGHULF'DQG7:RRGKHDG64/6HUYHU6WRUHG3URFHGXUH3URJUDPPLQJ2VERUQH ,6%1 6]\SHUVNL&&RPSRQHQW6RIWZDUH%H\RQG2EMHFW2ULHQWHG3URJUDPPLQJ$GGLVRQ:HVOH\ ,6%1