Copyright is owned by the Author of the thesis.

Permission is given for

a copy to be downloaded by an individual for the purpose of research and
private study only. The thesis may not be reproduced elsewhere without
the permission of the Author.

3DW 0HWKHQ\ &RPSRVLQJ WR ([SORLW WKH 6RXQG RI WKH *XLWDU

$QG\ 6PLWK

3HUIRUPDQFH 7KHVLV 1=60 
00XVLF
0DVVH\ $OEDQ\
'XH 'DWH 

$EVWUDFW
7KH VWXG\V REMHFWLYH LV WR UHODWH WKH GHYHORSPHQW RI 3DW 0HWKHQ\V VW\OLVWLF
FKDUDFWHULVWLFV IURP KLV LQWHUSUHWDWLRQ RI MD]] VWDQGDUGV WR WKHLU LQFRUSRUDWLRQ LQWR KLV RZQ
FRPSRVLWLRQV 6W\OLVWLF HOHPHQWV DUH HVWDEOLVKHG DQG D VDPSOH RI KLV FRPSRVLWLRQV DUH
DQDO\VHG WR FRPSDUH KLV VROR VW\OH LQ VWDQGDUGV ZLWK KLV FRPSRVLWLRQDO VW\OH

0HWKHQ\ LV D UHFRJQLVHG LQQRYDWRU LQ WHFKQLTXH DQG XVHV D ZLGH UDQJH RI LQVWUXPHQWV LQ

WKH JXLWDU IDPLO\ ERWK WUDGLWLRQDO DQG UDGLFDOO\ QHZ 7KH XVH RI VXFK LQVWUXPHQWV IUHHV
0HWKHQ\ IURP VRPH UHVWULFWLRQV DQG WKH SRVVLELOLW\ WKDW WKLV IUHHGRP LV D PDMRU LQIOXHQFH
LQ KLV LPSURYLVDWLRQ DQG FRPSRVLWLRQ LV UHPDUNHG RQ

7KHUH LV VFRSH IRU IXUWKHU ZRUN EDVHG RQ D ZLGHU VDPSOLQJ DQG WKH PHWKRGRORJ\ XVHG LQ
WKLV VWXG\ FRXOG SUREDEO\ EH PRGLILHG WR IRFXV RQ WKLV REMHFWLYH

$FNQRZOHGJHPHQWV
0\ WKDQNV JR WR 3KLO %URDGKXUVW IRU KLV KHOS DQG HQFRXUDJHPHQW WKURXJKRXW P\ MD]]
VWXGLHV <RXU JXLGDQFH RYHU PDQ\ \HDUV KDV EHHQ WUXO\ DSSUHFLDWHG

'L[RQ 1DFH\ KDV EHHQ P\ WHDFKHU WKURXJK P\ 0DVWHUV VWXGLHV +LV HQHUJ\ DQG ZLVGRP
UHQHZHG P\ HQWKXVLDVP IRU WKH GHHSHU DSSUHFLDWLRQ RI PXVLF 7KDQN \RX 'L[RQ

0\ WLPH DW 0DVVH\ &ROOHJH RI &UHDWLYH $UWV DQG 1HZ =HDODQG 6FKRRO RI 0XVLF KDV EHHQ
YHU\ UHZDUGLQJ , KDYH EHHQ HGXFDWHG FKDOOHQJHG HQWHUWDLQHG DQG KDYH PDGH PDQ\
IULHQGV 0\ WKDQNV WR DOO WKH VWDII RI WKH -D]] 'HSDUWPHQW IRU WKHLU GHGLFDWLRQ DQG
LQVSLUDWLRQ

/DVWO\ WKDQNV WR P\ IDWKHU IRU KLV DVVLVWDQFH LQ KHOSLQJ PH FODULI\ P\ LGHDV +H DOVR KDV
OHDUQW PXFK DERXW WKH GLVFLSOLQH RI MD]]

&RQWHQWV
$EVWUDFW  
,QWURGXFWLRQ 
/LWHUDWXUH 5HYLHZ 
0HWKRGRORJ\  
,QVWUXPHQWV DQG VRXQG SURGXFWLRQ  
([SODQDWLRQ RI *XLWDU 1RWDWLRQ 
3DUW 2QH 6RORLQJ 6W\OH &KDUDFWHULVWLFV 
0HWKHQ\ 6LJQDWXUH /LFNV  
0HWKHQ\ 6FDOHV  
+DUPRQLF *HQHUDOLVDWLRQ  
'LJLWDO 3DWWHUQV DQG 6FDODU 3DWWHUQV 
6HTXHQFH  
 5HVROXWLRQV DQG E  
(QFORVXUHV  
&KRUG 0HORG\ 6RORLQJ 
)UHH ,PSURYLVDWLRQ  
)LQJHULQJ /LFNV  
3DUDOOHO 6WUXFWXUHV  
0HWKHQ\ 6FDOHV  
'LJLWDO 3DWWHUQV DQG 6FDODU 3DWWHUQV 
,QWHUYDOOLF /LFNV  
&KRUG 0HORG\  
3DUW 7ZR 7KH &RPSRVLWLRQV RI 3DW 0HWKHQ\ 
%ULJKW 6L]H /LIH 
8QLW\ 9LOODJH 
-DPHV 
1HYHU 7RR )DU $ZD\  
4XHVWLRQ DQG $QVZHU 
$OZD\V DQG )RUHYHU  
6RXO &RZER\ 
/RQH -DFN  
*R *HW ,W  
:KDW 'R <RX :DQW" 
3DUW 7KUHH &RPSDULVRQV %HWZHHQ ,PSURYLVDWLRQDO 6W\OH DQG &RPSRVLWLRQ 6W\OH  
%ULJKW 6L]H /LIH 
8QLW\ 9LOODJH 
-DPHV 
1HYHU 7RR )DU $ZD\  
4XHVWLRQ DQG $QVZHU 
$OZD\V DQG )RUHYHU  
6RXO &RZER\ 
/RQH -DFN  
*R *HW ,W  
:KDW 'R <RX :DQW" 
&RQFOXVLRQV 
$SSHQGL[  ,QVWUXPHQW DQG VRXQG SURGXFWLRQ WLPHOLQH  

$SSHQGL[  7UHQGV DQG ,QFLGHQFH RI 6W\OLVWLF (OHPHQWV  

%LEOLRJUDSK\  

,QWURGXFWLRQ
3DW 0HWKHQ\V FRQWULEXWLRQ WR WKH MD]] JXLWDU KDV EHHQ HQRUPRXV %XUVWLQJ RQWR WKH
LQWHUQDWLRQDO MD]] VFHQH LQ  ZLWK YLEUDSKRQH JUHDW *DU\ %XUWRQ 0HWKHQ\ KDV
UHLQYHQWHG WKH VRXQG RI WKH MD]] JXLWDU PDQ\ WLPHV RYHU H[WHQGLQJ DQG LQQRYDWLQJ LQ WKH
MD]] JHQUH 8VLQJ QHZ WHFKQRORJ\ DQG ZRUNLQJ ZLWK \RXQJ PXVLFLDQV 0HWKHQ\ KDV
SURJUHVVLYHO\ LPSURYHG WKH WHFKQLFDO DQG VRQLF SRWHQWLDO RI WKH JXLWDU
0HWKHQ\ KDV D ODUJH ERG\ RI FRPSRVLWLRQV 7KLV LQFOXGHV FRPSRVLWLRQV IRU VROR JXLWDU
VPDOO HQVHPEOHV HOHFWULF DQG DFRXVWLF LQVWUXPHQWV DQG ODUJH RUFKHVWUDV LQ VW\OHV UDQJLQJ
IURP PRGHUQ MD]] WR URFN WR FODVVLFDO +H KDV VWDWHG WKDW KLV PDLQ UHDVRQ IRU FRPSRVLQJ
ZDV WR GHYHORS D VRXUFH RI PDWHULDO WKDW VXLWHG KLV FRQFHSWLRQ RI SOD\LQJ *ROGVWHLQ
 S 7KH LPSDFW RI KLV GHEXW DOEXP %ULJKW 6L]H /LIH  ZDV LPPHGLDWH
+H KDV FRQWLQXHG WR FRPSRVH LQ D ZD\ WKDW HPSKDVLVHV KLV FRQFHSW RI SOD\LQJ

7KH REMHFW RI WKLV VWXG\ LV WR UHODWH WKH GHYHORSPHQW RI 0HWKHQ\V VW\OLVWLF FKDUDFWHULVWLFV
IURP KLV LQWHUSUHWDWLRQ RI MD]] VWDQGDUGV WR WKHLU LQFRUSRUDWLRQ LQWR KLV RZQ FRPSRVLWLRQV
$ IXUWKHU DLP LV WR LQYHVWLJDWH LQIOXHQFHV RQ KLV FRPSRVLWLRQV FRPLQJ IURP WKH QRYHO
FDSDELOLWLHV RI WKH XQXVXDO LQVWUXPHQWV KH XVHV WR VXSSOHPHQW WKH VWDQGDUG MD]] JXLWDU
2QFH WKHVH FKDUDFWHULVWLFV DUH HVWDEOLVKHG WKHQ KLV FRPSRVLWLRQV DUH DQDO\VHG WR
GHWHUPLQH WKH H[WHQW WR ZKLFK KLV FRPSRVLWLRQV IROORZ KLV SOD\LQJ VW\OH 7UHQGV LQ WKH
HPSOR\PHQW RI WKHVH VW\OLVWLF GHYLFHV DUH WKHQ HVWDEOLVKHG

7KH LQWHQWLRQ RI WKLV UHVHDUFK LV WR SURYLGH LQWHUHVWLQJ LQVLJKWV LQWR 0HWKHQ\V SOD\LQJ
DQG FRPSRVLQJ VW\OH WR KHOS MD]] JXLWDULVWV ZLWK GHYHORSLQJ WKHLU RZQ VW\OH WKURXJK WKH
VWXG\ RI FRPSRVLWLRQ DQG IRU WKH LQIRUPDWLRQ RI MD]] PXVLFLDQV LQ JHQHUDO

%DFNJURXQG
3DW 0HWKHQ\ ZDV ERUQ RQ $XJXVW   LQ /HHV 6XPPLW .DQVDV &LW\ 0LVVRXUL
%HJLQQLQJ RQ WUXPSHW DW DJH  0HWKHQ\ VZLWFKHG WR SOD\LQJ JXLWDU ZKHQ KH ZDV  %\
WKH WLPH KH UHDFKHG  KH ZDV DOUHDG\ SOD\LQJ ZLWK WKH EHVW MD]] PXVLFLDQV LQ .DQVDV
&LW\ ,Q  0HWKHQ\ HQWHUHG WKH LQWHUQDWLRQDO MD]] VFHQH SOD\LQJ ZLWK 9LEUDSKRQLVW
*DU\ %XUWRQ 'XULQJ WKH  \HDUV KH VSHQW ZLWK %XUWRQ 0HWKHQ\ EHJDQ WR GLVSOD\ KLV
WUDGHPDUN VW\OH PL[LQJ ORRVH DUWLFXODWLRQ ZLWK DGYDQFHG UK\WKPLF DQG KDUPRQLF
FRQFHSWV

0HWKHQ\ UHLQYHQWHG WKH MD]] JXLWDU VRXQG RQ KLV GHEXW DOEXP %ULJKW 6L]H /LIH  ZLWK
KLV WUDGHPDUN FOHDQ FKRUXVHG JXLWDU YRLFH 7KH FRPSRVLWLRQV RQ WKH DOEXP ZHUH
VSHFLILFDOO\ ZULWWHQ WR H[SORLW 0HWKHQ\V SOD\LQJ VW\OH

0HWKHQ\V FRPSRVLQJ VW\OH LV KHDYLO\ LQIOXHQFHG E\ %UD]LOLDQ PXVLF ERWK E\ WKH

(XURSHDQ WUDGLWLRQ DQG WKH SRO\UK\WKPLF $IUR%UD]LOLDQ VRXQGV 0HWKHQ\ OLYHG LQ %UD]LO
DQG SOD\HG ZLWK VHYHUDO ORFDO PXVLFLDQV LQFOXGLQJ 0LOWRQ 1DVFLPHQWR DQG 7RQLQKR
+RUWD 2UQHWWH &ROHPDQ LV DOVR D PDMRU LQIOXHQFH RQ 0HWKHQ\ +H KDV UHFRUGHG &ROHPDQ
FRPSRVLWLRQV RQ PDQ\ RI KLV RZQ UHFRUGV DQG KDV IHDWXUHG RQ &ROHPDQV DOEXP 6RQJ ;


7KH 3DW 0HWKHQ\ *URXS ZDV IRXQGHG LQ  DIWHU WKH UHOHDVH RI WKH DOEXP :DWHUFRORXUV
 IHDWXULQJ /\OH 0D\V RQ .H\ERDUG 7KH JURXS ZDV KHDYLO\ LQIOXHQFHG E\ /DWLQ
PXVLF ZKLFK FRQWLQXHG WR GRPLQDWH LWV FROOHFWLYH FRPSRVLWLRQV 7KH /DWLQ VW\OH LV
SDUWLFXODUO\ SUHYDOHQW RQ 6WLOO /LIH 7DONLQJ  DQG /HWWHU )URP +RPH  LQ LWV
ERVVD DQG VDPED SLHFHV 'XULQJ WKH V WKH /DWLQ LQIOXHQFH GLPLQLVKHG ZLWK WKH
FRPSRVLWLRQV KDYLQJ D OHVV FRPPHUFLDO DQG ZLGHU VFRSH LQFRUSRUDWLQJ +LS+RS VW\OHV
DQG IUHH IRUP LPSURYLVDWLRQV

0HWKHQ\ KDV FRQWLQXHG WR LQQRYDWH XVLQJ WKH JXLWDU LQ D MD]] JHQUH )RU LQVWDQFH KH XVHG
DQ HOHFWULF VWULQJ LQ DOWHUQDWH WXQLQJ RQ 6LUDEKRUQ RQ %ULJKW 6L]H /LIH DQG ,FH)LUH
RQ :DWHUFRORXUV +H ZDV DOVR RQH RI WKH ILUVW MD]] JXLWDULVWV WR XVH WKH 5RODQG *5

*XLWDU6\QWKHVL]HU 8QOLNH PDQ\ JXLWDULVWV KH OLPLWV KLPVHOI WR D YHU\ VPDOO QXPEHU RI

VRXQGV DQG WUHDWV HDFK VRXQG DV D GLIIHUHQW LQVWUXPHQW FKDQJLQJ KLV DSSURDFKHV RQ WKH
JXLWDU 7KH PRVW XQXVXDO JXLWDU WKDW 0HWKHQ\ SOD\V LV D VWULQJ 3LNDVVR JXLWDU ZKLFK
FDQ EH KHDUG RQ ,PDJLQDU\ 'D\ DQG 7ULR!/LYH +H DOVR XVHV D PLQL JXLWDU DQ DFRXVWLF
VLWDU JXLWDU DQG D EDULWRQH JXLWDU

0HWKHQ\ KDV DOVR OHG D UHPDUNDEOH GRXEOH OLIH EHFRPLQJ RQH RI DQ HOLWH JURXS RI
PXVLFLDQV ZKR KDYH DFKLHYHG ZRUOGZLGH FRPPHUFLDO VXFFHVV ZKLOH UHFHLYLQJ UHVSHFW DQG
DGPLUDWLRQ IURP WKHLU SHHUV :LQQLQJ FRXQWOHVV SROOV DV %HVW -D]] *XLWDULVW 0HWKHQ\
KDV DV DOVR UHFHLYHG WKUHH JROG UHFRUGV IRU 6WLOO /LIH 7DONLQJ  /HWWHU )URP +RPH
 DQG 6HFUHW 6WRU\  +H KDV DOVR ZRQ VL[WHHQ *UDPP\ $ZDUGV LQFOXGLQJ %HVW
5RFN ,QVWUXPHQWDO %HVW &RQWHPSRUDU\ -D]] 5HFRUGLQJ %HVW -D]] ,QVWUXPHQWDO 6ROR DQG
%HVW ,QVWUXPHQWDO &RPSRVLWLRQ

0HWKHQ\ FRQWLQXHV WR EH RQH RI WKH PRVW VXFFHVVIXO DUWLVWV LQ MD]] GHYRWLQJ KLV WLPH WR
KLV RZQ SURMHFWV DV ZHOO DV FROODERUDWLQJ ZLWK HPHUJLQJ MD]] DUWLVWV DQG HVWDEOLVKHG
SHUIRUPHUV WKH OLVW RI PXVLFLDQV KH KDV SOD\HG ZLWK UHDGV OLNH DQ $ WR = RI FRQWHPSRUDU\
-D]] 'HQ\HU  S 

/LWHUDWXUH 5HYLHZ
7KHUH LV QR VKRUWDJH RI PDWHULDO RQ 0HWKHQ\V VW\OH WKDW QRW RQO\ GLVFXVVHV KLV OHIW DQG
ULJKW KDQG WHFKQLTXH EXW DOVR WKH VRXQG KH JHQHUDWHV WKURXJK HIIHFWV DQG HTXLSPHQW
$OVR WKHUH LV D FRPSOHWH VHW RI OHDG VKHHWV IRU 0HWKHQ\V FRPSRVLWLRQV WR EH IRXQG LQ WKH
3DW 0HWKHQ\ 6RQJERRN  7KLV ERRN DOVR FRQWDLQV TXRWDWLRQV IURP 0HWKHQ\ RQ KLV
SOD\LQJ VW\OH DQG FRPSRVLQJ VW\OH &RPSRVLWLRQDO GHYLFHV DQG UHIHUHQFH WR KLV LQIOXHQFHV
HJ 2UQHWWH &ROHPDQ FDQ EH IRXQG LQ WKH -D]] &RPSRVHUV &RPSDQLRQ 

7UDQVFULSWLRQV WKDW FDQ EH XVHG LQ FRQMXQFWLRQ ZLWK WKLV VWXG\ FDQ EH IRXQG LQ 3DW
0HWKHQ\V ERRNV 4XHVWLRQ DQG $QVZHU  DQG 5HMRLFLQJ  7KHVH WUDQVFULSWLRQV
DUH RI KLJK TXDOLW\ DQG DUH D JUHDW DLG WR OHDUQLQJ 0HWKHQ\V VRORV 7KHVH WUDQVFULSWLRQV
DUH LQFOXGHG ZLWK P\ RZQ VROR WUDQVFULSWLRQV

:LWK H[FHSWLRQ WR 7KH -D]] &RPSRVHUV &RPSDQLRQ  DQG WKH 3DW 0HWKHQ\
6RQJERRN  WKHUH LV QRW PXFK PDWHULDO RQ WKH GHYLFHV WKDW 0HWKHQ\ XVHV ZLWKLQ KLV
DSSURDFK WR FRPSRVLWLRQ DQG KRZ WKLV LV UHODWHG WR KLV DSSURDFK RQ WKH JXLWDU

0\ UHVHDUFK ZLOO DWWHPSW WR GLVFHUQ WKHVH GHYLFHV LQ 0HWKHQ\V SOD\LQJ DQG LVRODWH WKHP
ZLWKLQ KLV FRPSRVLWLRQV



0HWKRGRORJ\
7KLV VWXG\ VHHNV WR HVWDEOLVK WKDW 0HWKHQ\ LQFRUSRUDWHV VW\OLVWLF GHYLFHV HPSOR\HG GXULQJ
KLV LPSURYLVDWLRQV RQ VWDQGDUGV LQWR KLV RZQ FRPSRVLQJ VW\OH DQG WKDW KH KDV FRQWLQXDOO\
EXLOW RQ WKDW H[SDQGLQJ EDVH RI VWDQGDUGV DQG RULJLQDO FRPSRVLWLRQV WKURXJKRXW KLV FDUHHU
7KH PHWKRGRORJ\ IRU WKH FRPSDULVRQ RI 0HWKHQ\V WUHDWPHQW RI D VWDQGDUG GXULQJ WKH
VROR LQ FRPSDULVRQ WR RWKHU JXLWDULVWV ZDV WUDQVFULSWLRQ DQDO\VLV 8VLQJ WKLV PHWKRG WKH
UHVHDUFK ZLOO HVWDEOLVK WKH VW\OLVWLF FKDUDFWHULVWLFV RI 0HWKHQ\V SOD\LQJ E\ WUDQVFULELQJ
QRWH IRU QRWH WKH PDWHULDO KH XVHV LQ KLV LPSURYLVDWLRQ GXULQJ WKH VROR RI D SDUWLFXODU
VWDQGDUG
,W LV LPSRUWDQW WR QRWH WKDWV VRPH RI WKH WXQHV DUH QRW VWDQGDUGV EXW DUH RI D VWDQGDUG
IRUP VXFK DV 5HMRLFLQJ ZKLFK KDV UK\WKP FKDQJHV LQ &
2QFH WKHVH FKDUDFWHULVWLFV DUH HVWDEOLVKHG WKH FRPSRVLWLRQV RI 0HWKHQ\ ZLOO EH WKHQ
OLVWHQHG WR DQG VWXGLHG WKURXJK OHDG VKHHWV WR HVWDEOLVK KRZ KH XVHV WKHVH FKDUDFWHULVWLFV
LQ KLV RZQ FRPSRVLWLRQV
7KH OHDG VKHHWV RI 0HWKHQ\V FRPSRVLWLRQV WDNHQ IURP WKH 3DW 0HWKHQ\ 6RQJERRN 
ZLOO EH SXW LQWR WDEODWXUH WR SURYLGH D FRQVLVWHQW EDVH IRU FRPSDULVRQ
%DU QXPEHUV ZHUH DQQRWDWHG WR WKH WUDQVFULSWLRQV WDNHQ IURP 4XHVWLRQ DQG $QVZHU
 DQG 5HMRLFLQJ  WR DOORZ WKH UHDGHU WR UHIHUHQFH SDVVDJHV

7R IDFLOLWDWH WKH WUDQVFULSWLRQ SURFHVV WKH SURJUDP 7UDQVFULEH ZDV XVHG 7UDQVFULEH VORZV
GRZQ PXVLF SOD\EDFN ZKLOH UHWDLQLQJ WKH RULJLQDO SLWFK DQG LV SDUWLFXODUO\ XVHIXO LQ IDVW
RU PXOWLSOHQRWH SDVVDJHV ZKHUH LW LV GLIILFXOW WR KHDU ZKDW LV EHLQJ SOD\HG GXULQJ WKH
VROR 7KH PXVLF QRWDWLRQ SURJUDP 6LEHOLXV ZDV XVHG WR QRWDWH WKH WUDQVFULSWLRQV IURP WKH
RULJLQDO KDQGZULWWHQ VFRUH 6LEHOLXV SOD\ EDFN IHDWXUH DOORZV FRPSDULVRQ EHWZHHQ WKH
RULJLQDO VROR DQG WKH WUDQVFULEHG YHUVLRQ WR EH PDGH WR YHULI\ WKH DFFXUDF\ RI WKH ODWWHU



7KH IROORZLQJ VRORV ZHUH WDNHQ DV D UHSUHVHQWDWLYH VDPSOH RI 0HWKHQ\V DOEXPV IURP
 WR 

5HMRLFLQJ 5HMRLFLQJ 

6RODU 4XHVWLRQ $QG $QVZHU 
$OO 7KH 7KLQJV <RX $UH 4XHVWLRQ $QG $QVZHU 
/DZ <HDUV 4XHVWLRQ $QG $QVZHU 
2OG )RONV 4XHVWLRQ $QG $QVZHU 
7XUQDURXQG :LVK 
:LQGRZV /LNH 0LQGV 
*LDQW 6WHSV 7ULR ! 

7KH IROORZLQJ FRPSRVLWLRQV ZHUH WDNHQ DV D UHSUHVHQWDWLYH VDPSOH RI 0HWKHQ\V DOEXPV

IURP  WR 

%ULJKW 6L]H /LIH %ULJKW 6L]H /LIH 

8QLW\ 9LOODJH %ULJKW 6L]H /LIH 
-DPHV 2IIUDPS 
1HYHU 7RR )DU $ZD\ 4XHVWLRQ $QG $QVZHU 
4XHVWLRQ $QG $QVZHU 4XHVWLRQ $QG $QVZHU 
$OZD\V DQG )RUHYHU 6HFUHW 6WRU\ 
6RXO &RZER\ 7ULR ! 
/RQH -DFN 7ULR ! 
*R *HW ,W 7ULR ! 
:KDW 'R <RX :DQW" 7ULR ! 

7KH VRORV WUDQVFULEHG E\ WKH UHVHDUFKHU ZHUH 7XUQDURXQG :LQGRZV DQG *LDQW
6WHSV 7XUQDURXQG ZDV FKRVHQ EHFDXVH LW LV D JRRG H[DPSOH RI 0HWKHQ\V
LPSURYLVDWLRQ GXULQJ D VWDQGDUG EOXHV :LQGRZV ZDV FKRVHQ EHFDXVH LW LV ODWHU
0HWKHQ\ LPSURYLVDWLRQ RYHU D  WXQH DQG *LDQW 6WHSV ZDV FKRVHQ EHFDXVH LW LV D JRRG
H[DPSOH RI 0HWKHQ\ SOD\LQJ KLV RZQ /DWLQ DUUDQJHPHQW RI D FRPPRQ VWDQGDUG



7KH FRPSRVLWLRQV ZHUH FKRVHQ DV D UHSUHVHQWDWLYH VDPSOH RI 0HWKHQ\V ERG\ RI

FRPSRVLWLRQ RYHU D VXIILFLHQWO\ ORQJ SHULRG WR HVWDEOLVK SRVVLEOH WUHQGV ,QFOXGHG DUH
EOXHV WXQHV OLNH 6RXO &RZER\  WXQHV VXFK DV 4XHVWLRQ DQG $QVZHU 5K\WKP
FKDQJHV VXFK DV :KDW 'R <RX :DQW" DQG EDOODGV VXFK DV $OZD\V DQG )RUHYHU



,QVWUXPHQWV DQG VRXQG SURGXFWLRQ

0HWKHQ\ LV UHFRJQLVHG DV DQ LQQRYDWRU LQ KLV XVH RI GLIIHUHQW LQVWUXPHQWV DQG HOHFWURQLF
VRXQG SURGXFWLRQ WHFKQLTXHV :KLOH KH FRQWLQXHV WR XVH VWDQGDUG MD]] JXLWDU HTXLSPHQW
KH KDV HPSOR\HG D ZLGH UDQJH RI WRROV WR SURGXFH QHZ VRXQGV DQG WR VXSSRUW KLV PXVLFDO
REMHFWLYHV ,QFUHDVLQJO\ KH KDV XVHG D QXPEHU RI LQVWUXPHQWV ZKLOH SHUIRUPLQJ D VLQJOH
QXPEHU WR PDNH HDFK SDVVDJH YHU\ GLVWLQFW

7KHUH DUH VHYHUDO PDLQ FRPSRQHQWV LQ WKH 0HWKHQ\ WRRO NLW

(OHFWULF LQVWUXPHQWV
7KH FRUH LQVWUXPHQWV DUH VWDQGDUG HOHFWULF MD]] JXLWDUV WKH *LEVRQ (6 ZLWK ZKLFK
0HWKHQ\ SHUVHYHUHG LQ VSLWH RI DJH DQG FRQGLWLRQ LQ WKH FRQYLFWLRQ WKDW LW ZDV HVVHQWLDO WR
KLV VRXQG :KHQ WKH *LEVRQ DQG WKH $FRXVWLF DPSOLILHU KDG WR EH UHWLUHG WKH ,EDQH]
30 ZKLFK 0HWKHQ\ KHOSHG WR GHYHORS EHFDPH WKH PDLQVWD\ DORQJ ZLWK QHZ VRXQG
SURFHVVLQJ DQG DPSOLILFDWLRQ

$OWKRXJK WKH VRXQG RI WKHVH JXLWDUV LV DPSOLILHG DQG SURFHVVHG LQ D SDUWLFXODU ZD\ LW LV
VLPLODU WR WKH JXLWDU VRXQG RI PDQ\ RWKHU MD]] PXVLFLDQV ,W LV DQ HYROXWLRQ DQG KDV EHHQ
HPXODWHG E\ PDQ\ RWKHUV WR WKH H[WHQW WKDW LW KDV EHFRPH D QRUP

7KH  VWULQJ HOHFWULF JXLWDU DQG HOHFWULF VLWDU DUH 0HWKHQ\ LQQRYDWLRQV SURGXFLQJ
KDUPRQLFV UHVRQDQFHV DQG PRUH VXVWDLQHG QRWHV ZKLOH WKH VRSUDQR JXLWDU ZDV VSHFLILFDOO\
GHYHORSHG WR DOORZ KLP WR JR KLJKHU XS WKH UHJLVWHU WKDQ D VWDQGDUG JXLWDU LV DEOH WR

$PSOLILFDWLRQ DQG VRXQG SURFHVVLQJ

$PSOLILFDWLRQ KDV DOZD\V EHHQ VROLG VWDWH ZLWK TXDOLWLHV EHLQJ LQWURGXFHG IURP WKH
LQVWUXPHQW DQG VRXQG SURFHVVLQJ HTXLSPHQW DQG UHSURGXFHG ZLWKRXW IXUWKHU PRGLILFDWLRQ



:LWK WKH UHWLUHPHQW RI WKH $FRXVWLF  0HWKHQ\ WUDQVIHUUHG WR D FRPELQDWLRQ RI

DPSOLILHUV DQG GHOD\ OLQHV ZLWK WRQH DQG YROXPH SUHVHW XVLQJ WKH 'LJLWHFK  +H
DLPHG WR DFKLHYH D VLPLODU VRXQG WR WKH ROG HTXLSPHQW EXW DOVR WR VLPSOLI\ WKH
DFKLHYHPHQW RI SUHFLVLRQ RI KLV VHWWLQJV

(DFK LQVWUXPHQW RU V\QWKHVLVHU LV GHSHQGHG XSRQ WR SURGXFH LWV RZQ VRXQG 7KH
SURFHVVLQJ DQG DPSOLILFDWLRQ VWDJH LV QRW XVHG WR UDGLFDOO\ FKDQJH WKH VRXQG FKDUDFWHU RI
WKH LQVWUXPHQW LQ XVH

$FRXVWLF LQVWUXPHQWV
$V ZRXOG EH H[SHFWHG WKH DFRXVWLF LQVWUXPHQWV VLJQDOV DUH FDSWXUHG E\ PLFURSKRQH
HLWKHU EXLOWLQ RU IUHHVWDQGLQJ

7KH ZLGH YDULHW\ RI DFRXVWLF LQVWUXPHQWV XVHG VHHPV WR UHIOHFW D GHVLUH WR H[SHULPHQW LQ
FROODERUDWLRQ ZLWK OXWKLHUV KH LV DVVRFLDWHG ZLWK WKH PRVW SURPLQHQW RI ZKRP LV /LQGD
0DQ]HU

7KHUH DUH WZR PDLQ JURXSLQJV LQVWUXPHQWV ZKLFK KDYH D VRXQG TXDOLW\ OLNH UHVRQDQFHV
DQG KDUPRQLFV  VWULQJV VLWDUV DQG WKH 3LNDVVR DQG LQVWUXPHQWV ZKLFK ZLGHQ WKH UDQJH
RXWVLGH WKH QRUPDO JXLWDU VFDOH EDULWRQH DQG VRSUDQR JXLWDUV

6\QWKHVLVHUV

*XLWDU V\QWKHVLVHUV KDYH EHHQ SURGXFHG IRU D ORQJ WLPH EXW PRVW HDUO\ PRGHOV ZHUH QRW
UHDOO\ FDSDEOH RI IROORZLQJ WKH JDPXW RI D JXLWDULVWV WHFKQLTXHV VXFK DV EHQGLQJ
KDPPHULQJ HWF 7KH 5RODQG  V\VWHP RYHUFDPH PDQ\ RI WKH WHFKQLFDO GLIILFXOWLHV DQG
ZDV DEOH WR RYHUOD\ JXLWDU WHFKQLTXHV RQWR D V\QWKHVLVHG QRWH



$ ODUJH QXPEHU RI 0HWKHQ\ WUDFNV IHDWXUH V\QWKHVLVHU SDVVDJHV ZKHUH WKH VRXQG WH[WXUH
KDV QR GLVFHUQLEOH JXLWDU IHDWXUHV EHLQJ SHUKDSV EUDVV RU ZRRGZLQG EXW WKH VW\OH LV
UHFRJQLVDEO\ JXLWDU LQ RULJLQ 6\QWKHVLVHUV DOVR UHPRYH DOO OLPLWDWLRQV RQ SLWFK VLQFH WKH
VRXQG JHQHUDWHG LV QRW EDVHG RQ WKH WXQLQJ RI WKH VRXUFH LQVWUXPHQW

5HIHU $SSHQGL[  S IRU WLPHOLQH FKDUW



([SODQDWLRQ RI *XLWDU 1RWDWLRQ

7KH IROORZLQJ LV DQ H[FHUSW IURP 7KH *XLWDU +DQGERRN 
7DEODWXUH LV D V\VWHP RI ZULWLQJ GRZQ PXVLF IRU WKH JXLWDU DV ZHOO DV IRU RWKHU IUHWWHG
LQVWUXPHQWV ,W KDV H[LVWHG LQ YDULRXV IRUPV WKURXJK WKH FHQWXULHV DQG KDV EHHQ XVHG IRU
IODPHQFR IRON DQG OXWH PXVLF ,W VLPSO\ VHWV RXW WKH ILQJHULQJV IRU D SLHFH RI PXVLF LQ D
VRUW RI VKRUWKDQG 7KH V\VWHP UHOLHV RQ \RX EHLQJ DEOH WR KHDU D SLHFH RI PXVLF VR WKDW
\RX DUH IDPLOLDU ZLWK WKH UK\WKPLF VWUXFWXUH RI WKH SLHFH DQG WKH WLPLQJ RI WKH LQGLYLGXDO
QRWHV ,Q RWKHU ZRUGV LW LV XVHG LQ FRQMXQFWLRQ ZLWK PHPRU\ &RPSDUHG ZLWK PXVLF
QRWDWLRQ LW LV HDV\ WR XQGHUVWDQG
+RZHYHU WDEODWXUH FDQQRW FRQYH\ SUHFLVH LQIRUPDWLRQ DERXW WLPLQJ DQG WKH GXUDWLRQ RI
QRWHV 1RU GRHV LW KHOS \RX WR XQGHUVWDQG WKH KDUPRQLF VWUXFWXUH RI D SLHFH LQ WKH ZD\ WKDW
QRWDWLRQ FDQ 'RQW IDOO LQWR WKH WUDS RI WKLQNLQJ \RX FDQ GR HYHU\WKLQJ ZLWK WDEODWXUH WKDW
\RX FDQ ZLWK QRWDWLRQ 7UHDW LW IRU ZKDW LW LV D IRUP RI VKRUWKDQG
7DEODWXUH LV EDVHG RQ D VL[OLQH JULG DV RSSRVHG WR WKH ILYHOLQH JULG RI PXVLF QRWDWLRQ
EXW WKH PDMRU GLIIHUHQFH LV WKDW HDFK OLQH UHSUHVHQWV RQH RI WKH JXLWDU VWULQJV 7KH WRS OLQH
LV WKH VW WRS ( VWULQJ DQG WKH ERWWRP OLQH LV WKH WK ERWWRP ( VWULQJ 7KH QXPEHUV WKDW
DSSHDU RQ WKH OLQHV DUH WKH IUHW QXPEHUV 6R D QXPEHU  RQ WKH QG OLQH IURP WKH WRS IRU
H[DPSOH WHOOV \RX WR SOD\ ' RQ WKH UG IUHW RI WKH QG VWULQJ $Q 2 RQ WKH VDPH OLQH
LQGLFDWHV WKDW \RX SOD\ WKH RSHQ QG VWULQJ

'HQ\HU  S 



3DUW 2QH 6RORLQJ 6W\OH &KDUDFWHULVWLFV

0HWKHQ\V SOD\LQJ VW\OH LV LQVWDQWO\ UHFRJQLVDEOH 7KH DFFHVVLELOLW\ WR KLV SOD\LQJ FRPHV
IURP KLV H[WUHPHO\ PHORGLF DQG IOXLG LPSURYLVHG VW\OH IXUWKHU HQKDQFHG E\ KLV WUDGHPDUN
FKRUXVHG JXLWDU VRXQG $OWKRXJK 0HWKHQ\ LV YHU\ HDV\ WR OLVWHQ WR LW LV SRVVLEOH WR
RYHUORRN KRZ KDUPRQLFDOO\ DQG UK\WKPLFDOO\ DGYDQFHG KH FDQ EH SOD\LQJ H[WUHPHO\
FKURPDWLF DQG RXWVLGH SKUDVHV ZKLOH VWLOO KROGLQJ WKH DWWHQWLRQ RI WKH OLVWHQHU
$GGLQJ WR WKLV LV 0HWKHQ\V DGYDQFHG SKUDVLQJ ZLWK KLV DELOLW\ WR IORDW RYHU WKH WLPH
0RYLQJ EDFNZDUG DQG IRUZDUG KLV SOD\LQJ VHHPV WR EH VHSDUDWHG \HW VWLOO SHUIHFWO\ LQ
WLPH
$QRWKHU SURPLQHQW IHDWXUH RI KLV SOD\LQJ LV LWV H[WUHPHO\ O\ULFDO DQG YRFDO TXDOLW\
IUHTXHQWO\ XVLQJ JUDFH QRWHV 0HWKHQ\ DOVR XVHV VOLGHV KDPPHURQV SXOORIIV DQG EHQGV
DV PXFK DV SRVVLEOH ZKLFK HQKDQFHV WKH ODLG EDFN IHHO RI KLV SKUDVLQJ

7KLV VHFWLRQ ZLOO GLVFXVV WKH FKDUDFWHULVWLFV RI 0HWKHQ\V LPSURYLVLQJ VW\OH GXULQJ KLV
VRORV LQ VHOHFWHG VWDQGDUGV DQG RWKHU MD]] WXQHV
0HWKHQ\ 6LJQDWXUH /LFNV
0HWKHQ\V SOD\LQJ VW\OH LV YHU\ JXLWDU EDVHG PHDQLQJ WKDW D ORW RI ZKDW KH SOD\V ZLWKLQ
KLV VROR LPSURYLVDWLRQV LV GHULYHG IURP FRPPRQ SDWWHUQV EDVHG DURXQG FKRUG DQG VFDODU
VKDSHV RQ WKH JXLWDU %HFDXVH RI WKH OD\RXW RI WKH JXLWDU LW LV RIWHQ SRVVLEOH WR SOD\
PXVLFDO SDVVDJHV RQ GLIIHUHQW SODFHV RQ WKH JXLWDU 'XH WR WKLV WKH ZD\ LQ ZKLFK KH
ILQJHUV WKH OLQH LV YHU\ LPSRUWDQW EHFDXVH RIWHQ WKH ILQJHULQJ GLFWDWHV WKH PHORG\ EHLQJ
SOD\HG ZLWK KLP RIWHQ LJQRULQJ OLPLWDWLRQV LPSRVHG E\ WKH KDUPRQ\ %HFDXVH RI WKLV D ORW
RI 0HWKHQ\V LPSURYLVDWLRQV VHHP IUHH WKRXJK WKHVH OLQHV DUH RIWHQ UHVROYHG RQ FKRUG
WRQHV ZLWKLQ WKH SURJUHVVLRQ +H SXWV WKHVH OLPLWDWLRQV WR JRRG XVH KRZHYHU ZLWK WKH
PHORGLF FRQWRXU WDNLQJ SUHFHGHQFH ZRUNLQJ ZLWKLQ KLV SDOHWWH RI OLFNV DQG SDWWHUQV LQ
FRQMXQFWLRQ ZLWK KLV HDU WR SOD\ H[WUHPHO\ PHORGLF VRORV

+HUH ZH ORRN DW WKH GLIIHUHQW SDWWHUQ EDVHG OLFNV WKDW DUH H[FOXVLYH WR 0HWKHQ\V VRORLQJ
VW\OH DV ZHOO DV ILQJHULQJ OLFNV IURP ZKLFK KH GHULYHV VRPH RI KLV PHORGLHV



$ ODUJH SDUW RI 0HWKHQ\V LPSURYLVDWLRQ LV EDVHG RQ LQWHUYDOV DQG MXPSV 7KH ILUVW SDWWHUQ
EHLQJ LQYHVWLJDWHG LV D 0HWKHQ\ WUDGHPDUN LQWHUYDOOLF OLFN GHULYHG IURP PDMRUWK
PLQRUWK DQG GRPLQDQW WK FKRUG VWUXFWXUHV XVLQJ WKH VW UG DQG WK LQWHUYDOV RI HDFK
FRUUHVSRQGLQJ WK FKRUG 8VLQJ WKHVH VWUXFWXUHV ZKLFK DUH XVXDOO\ SOD\HG RQ WKH WK WK
DQG WK VWULQJV EXW DOVR RQ WKH WK WK DQG UG VWULQJV KH DOWHUQDWHV EHWZHHQ WKUHH VWULQJV LQ
UDSLG VXFFHVVLRQ SUHGRPLQDQWO\ XVLQJ D VL[WHHQWKQRWH UK\WKP %HFDXVH WKLV SDWWHUQ XVHV
WKH UG DQG WK LQWHUYDOV WKLV OLFN DXWRPDWLFDOO\ RXWOLQHV WKH KDUPRQ\ EHFDXVH RI LW XVH RI
JXLGH WRQHV
$ JRRG H[DPSOH RI 0HWKHQ\ XVLQJ WK FKRUG VWUXFWXUHV FDQ EH IRXQG GXULQJ KLV VROR LQ
7XUQDURXQG ([  XVLQJ PLQRU WK FKRUG VKDSHV DVFHQGLQJ LQ WRQHV DQG VHPLWRQHV

([  7XUQDURXQG EDU 

8VLQJ WKLV OLFN RQH RU WZR QRWHV DUH NHSW FRQVWDQW ZKHQ FKDQJLQJ EHWZHHQ WKH WK FKRUGV
VKDSHV $ JRRG H[DPSOH RI WKLV FDQ EH IRXQG LQ *LDQW 6WHSV EDUV  DQG 6RODU
([  ZLWK 0HWKHQ\ RXWOLQLQJ FKURPDWLFDOO\ GHVFHQGLQJ JXLGH WRQHV GXULQJ WKH
PRGXODWLQJ NH\ FHQWUHV GHVFHQGLQJ LQ WRQHV ((PDM((PLQ$('(PDM'PLQ(
*(



([  6RODU EDUV 

&KURPDWLF OLFNV
$QRWKHU LPSRUWDQW IHDWXUH RI 0HWKHQ\V VW\OH LV KLV KHDY\ XVH RI FKURPDWLFLVP ZLWKLQ KLV
LPSURYLVDWLRQV 2QH RI KLV WUDGHPDUNV LV D FKURPDWLFDOO\ DVFHQGLQJ DQG GHVFHQGLQJ PDMRU
DQG PLQRU WKLUGV LQWHUYDOOLF OLFN 7KH ILUVW ILQJHU SOD\V WKH XSSHU LQWHUYDO ZKLOH WKH VHFRQG
RU WKLUG ILQJHU SOD\V WKH ORZHU QRWH RI WKH LQWHUYDO GHSHQGLQJ RQ ZKHWKHU WKH WKLUG LQWHUYDO
LV PDMRU RU PLQRU $ JRRG H[DPSOH RI VXFK D OLFN FDQ EH IRXQG LQ *LDQW 6WHSV ([ 

([  *LDQW 6WHSV EDU 

,Q WKLV H[DPSOH 0HWKHQ\ EHJLQV WKH GHVFHQGLQJ WKLUGV OLFN IURP * PHORG\ QRWH (WK RYHU
& PLQ VKLIWLQJ GRZQ FKURPDWLFDOO\ ZLWK WKH ILUVW ILQJHU FRQFOXGLQJ WKH OLFN RQ &
PHORG\ QRWH WKH WK RI %PDM 7KH ORZHU LQWHUYDO RI WKH WKLUGV OLFN LV WKH OHVV LPSRUWDQW
RI WKH WZR XVHG WR HPEHOOLVK WKH XSSHU LQWHUYDO 2WKHU H[DPSOHV RI WKLV FKURPDWLF OLFN
FDQ EH IRXQG LQ *LDQW 6WHSV EDUV  



$QRWKHU JRRG H[DPSOH RI KRZ 0HWKHQ\ UHVROYHV WKLV FKURPDWLF OLFN WR D FKRUG WRQH FDQ
EH IRXQG GXULQJ 6RODU ([ 

([ 6RODU EDU 

,Q WKLV H[DPSOH KH EHJLQV WKH WKLUGV OLFN IURP WKH PLQRU WKLUG RI *PLQ %( PRYLQJ
FKURPDWLFDOO\ GRZQ WR WKH WK RI & DXJPHQWHG WULDG *  PRYLQJ LQWR D ' DXJPHQWHG
WULDG RYHU &
7ULDGV
0HWKHQ\ XVHV WULDGV IUHTXHQWO\ ZLWKLQ KLV VRORV XVLQJ D PL[WXUH RI PDMRU PLQRU
DXJPHQWHG DQG GLPLQLVKHG WULDGV 7KH PRVW IUHTXHQW EHLQJ PDMRU WULDGV DQG KH XVHV WKHVH
LQ D PXOWLWXGH RI DSSOLFDWLRQV 7KHVH WULDGV DUH XVXDOO\ SOD\HG LQ URRW SRVLWLRQ DQG VWDUW
IURP WKH WK VWULQJ RI WKH JXLWDU 2IWHQ WKHVH WULDGEDVHG OLQHV DUH SOD\HG RXWVLGH
LJQRULQJ WKH KDUPRQLF LPSOLFDWLRQV IURP WKH FKRUGV SURJUHVVLRQ EXW DJDLQ DUH UHVROYHG
ORJLFDOO\ XVLQJ LQVLGH H[WHQVLRQV $Q H[DPSOH RI WKLV LV SOD\HG GXULQJ 6RODU ([ 

([  6RODU EDUV 

,Q WKLV H[DPSOH KH VWDUWV WKH SKUDVH RQ DQ ) PDMRU WULDG GXULQJ )PDM DVFHQGLQJ WR D *
PDMRU WULDG JLYLQJ /\GLDQ H[WHQVLRQ   RYHU )PDM +H WKHQ DVFHQGV WR DQ $(
PDMRU WULDG RYHU )PLQ PRYLQJ RXWVLGH XS D VHPLWRQH WR DQ $ WULDG DQG KH FRQFOXGHV



WKH DVFHQGLQJ WULDG PRYHPHQW UHVROYLQJ ZLWK D %( PDMRU WULDG RYHU %( 6LPLODU H[DPSOHV
RI DVFHQGLQJ PDMRU WULDG PRYHPHQW FDQ EH IRXQG LQ 5HMRLFLQJ EDUV   DQG
$OO 7KH 7KLQJV <RX $UH EDUV  LQ ZKLFK 0HWKHQ\ SOD\V PDMRU WULDGV VWDUWLQJ RQ
WKH WK VWULQJ RI WKH JXLWDU

0HWKHQ\ XVHV $XJPHQWHG WULDGV VLPLODUO\ 7KH\ DUH XVHG PRVW FRPPRQO\ VWDUWLQJ LQ URRW
SRVLWLRQ DQG DUH RIWHQ SOD\HG RQ WKH WK VWULQJ RI WKH JXLWDU 6LPLODU WR :HV 0RQWJRPHU\
KH XVHV DVFHQGLQJ DQG GHVFHQGLQJ DXJPHQWHG WULDGV DVFHQGLQJ LQ WRQDO PRYHPHQW )RU
H[DPSOH GXULQJ 2OG )RONV ([  RQ WKH WKLUG EHDW RI WKH EDU 0HWKHQ\ SOD\V D
GHVFHQGLQJ ' DXJPHQWHG WULDG WR DQ DVFHQGLQJ ( DXJPHQWHG WULDG RYHU '(

([  2OG )RONV EDU 

8VLQJ WKHVH WZR DXJPHQWHG WULDGV DOO  QRWHV RI WKH ' ZKROHWRQH VFDOH DUH SOD\HG JLYLQJ
WKH HIIHFW RI WKH ' ZKROHWRQH VFDOH EHLQJ SOD\HG GXULQJ D GRPLQDQW FKRUG 6LPLODU
H[DPSOHV RI WKLV DSSOLFDWLRQ RI WKH ZKROHWRQH VFDOH FDQ EH IRXQG LQ 6RODU EDUV 

0LQRU WULDGV DUH OHVV SUHYDOHQW GXULQJ 0HWKHQ\V VRORV $Q H[DPSOH RI KLV XVLQJ D PLQRU
WULDG LV FDQ EH IRXQG LQ $OO 7KH 7KLQJV <RX $UH ([  ZKHUH KH SOD\V DQ DVFHQGLQJ
PLQRU WULDG VHTXHQFH GXULQJ WKH EULGJH VHTXHQFH



([  $OO 7KH 7KLQJV <RX $UH EDUV 

0HWKHQ\ EHJLQV ZLWK D % PLQRU WULDG RYHU *PDM EDU  PRYLQJ WR D & PLQRU WULDG
RYHU ) PLQ( EDU  +H ILQLVKHV WKH VHTXHQFH RQ DQ ( PLQRU WULDG RYHU (PDM EDUV


'LPLQLVKHG WULDGV DUH DOVR FRPPRQ LQ 0HWKHQ\V LPSURYLVDWLRQV DQG DJDLQ DUH PRVWO\
SOD\HG IURP WKH IRXUWK VWULQJ RI WKH JXLWDU $Q H[DPSOH RI KLV XVH RI GLPLQLVKHG WULDGV FDQ
EH IRXQG LQ 5HMRLFLQJ EDU  ZKHUH KH VXEVWLWXWHV DQ DVFHQGLQJ % GLPLQLVKHG WULDG
RYHU D * PRYLQJ XS D PLQRU WKLUG WR D GHVFHQGLQJ ' GLPLQLVKHG WULDG +H XVHV D VLPLODU
DSSOLFDWLRQ GXULQJ $OO 7KH 7KLQJV <RX $UH EDU  ZLWK DQ DVFHQGLQJ ( GLPLQLVKHG
WULDG SOD\HG RYHU &(
)LQJHULQJ OLFNV
7KHVH DUH OLFNV ZKHUH WKH LPSURYLVHG PHORG\ LV GHULYHG IURP WKH ILQJHULQJ SDWWHUQ EHLQJ
SOD\HG DW WKH WLPH 7KH\ DUH RIWHQ YHU\ FKURPDWLF DQG VHTXHQFH EDVHG IROORZLQJ D ORJLFDO
SDWWHUQ
$ JRRG H[DPSOH RI VXFK D OLFN LV D FKURPDWLF VHTXHQFH SOD\HG GXULQJ 0HWKHQ\V VROR LQ
6RODU ([ 



([  6RODU EDUV 

'XULQJ WKLV H[DPSOH KH XVHV WKH ILUVW VHFRQG DQG WKLUG ILQJHUV 7KH ILUVW ILQJHU LV XVHG RQ
WKH VHFRQG IUHW WKH VHFRQG ILQJHU RQ WKH WKLUG IUHW DQG WKH WKLUG ILQJHU RQ IRXUWK IUHW 7KH
SDWWHUQ DVFHQGV RQH IUHW RQH VHPLWRQH DW D WLPH 7KLV OLQH UHVROYHV WR D IXOO\ FKURPDWLF
SDVVDJH EDU  +H IROORZV WKLV ZLWK D OLQH EDVHG RQ WKLUGV DQG FKURPDWLF DVFHQVLRQV
RYHU )PDM EDU  LQWR D FKURPDWLFDOO\ GHVFHQGLQJ WKLUGV OLFN LQWR )PLQ EDUV 

 )LQJHULQJ SDWWHUQ
2QH RI WKH PRVW FRPPRQ SDWWHUQV XVHG LV D  ILQJHULQJ SDWWHUQ 7KLV LV XVXDOO\ XVHG
DV D FKURPDWLF SDVVLQJ ILJXUH ZKHUH WKH ILUVW ILQJHU WKLUG QRWH RI WKH SDWWHUQ LV RQH
VHPLWRQH DERYH WKH WDUJHW UHVROYH WRQH ZLWK 0HWKHQ\ DOORFDWLQJ D ILQJHU WR HDFK LQWHUYDO
ZLWKLQ WKH SDWWHUQ
7KH VHFRQG ILQJHU SOD\V WKH ODVW QRWH LQ WKH SDWWHUQ ORFDWHG RQ WKH VWULQJ DERYH WKDW RI
ZKLFK WKH SDWWHUQ EHJDQ RQ 7KLV LV XVHG DV D SDVVLQJ WRQH IRU WKH ILUVW ILQJHU WR UHVROYH
HDVLO\ GRZQ D VHPLWRQH IURP LWV RULJLQDO SRVLWLRQ DQG LV VLPLODU WR WKH GHVFHQGLQJ WKLUGV
OLFN LQ WKDW WKH ORZHU LQWHUYDO VHFRQG ILQJHU LV DQ HPEHOOLVKLQJ WRQH IRU WKH XSSHU
LQWHUYDO ILUVW ILQJHU



([  $OO WKH 7KLQJV <RX $UH EDU 

)LQJHULQJ 3DWWHUQ

,QWHUYDO ((






(

7KLV LV GHPRQVWUDWHG LQ $OO WKH 7KLQJV <RX $UH ([  ZKHUH 0HWKHQ\ EHJLQV WKH OLQH
RQ WKH IRXUWK VWULQJ 'VWULQJ IURP WKH WK RI (( %E ZLWK WKH WKLUG ILQJHU +H WKHQ
PRYHV GRZQ FKURPDWLFDOO\ WR WKH WK $( XVLQJ WKH VHFRQG DQG ILUVW ILQJHUV XVLQJ WKH
VHFRQG ILQJHU DJDLQ WR SOD\ WKH (WK RQ WKH VWULQJ DERYH WKH ILIWK VWULQJ 7KH SDWWHUQ LV
UHVROYHG E\ VKLIWLQJ WKH ILUVW ILQJHU GRZQ RQH VHPLWRQH WR WKH UG RI (( *
0HWKHQ\ XVHV WKH VDPH SDWWHUQ RYHU *PDM EDU  EHJLQQLQJ RQ WKH WK ' DQG
UHVROYLQJ WKH ILQJHULQJ SDWWHUQ WR WKH UG % RI *PDM $ YHU\ VLPLODU SDWWHUQ WR ([  LV
SOD\HG GXULQJ (( DJDLQ EDU  +RZHYHU LQ WKLV H[DPSOH KH RPLWV WKH VHFRQG ILQJHU
OHDYLQJ RXW WKH WK FKURPDWLF SDVVLQJ WRQH $
$QRWKHU IRUP RI WKLV OLFN LV ZKHUH KH EHJLQV IURP WKH URRW RI WKH FKRUG LQ TXHVWLRQ ,Q
2OG )RONV ([  0HWKHQ\ XVHV PXOWLSOH ILQJHULQJV WKH ILUVW RI ZKLFK KH EHJLQV IURP
WKH UG RI ) $ GXULQJ EHDW RQH 7KLV LV UHVROYHG ZLWK WKH ILUVW ILQJHU VKLIWLQJ WR WKH (WK
PRYLQJ LQWR D & GLPLQLVKHG DUSHJJLR 'XULQJ WKH ODVW EHDW RI WKH EDU KH XVHV WKH VDPH
ILQJHULQJ SDWWHUQ EXW WKLV WLPH VWDUWLQJ IURP WKH URRW ) UHVROYLQJ WR WKH UG RI %( ' LQ
WKH IROORZLQJ EDU EDU 



([  2OG )RONV EDU 

)LQJHULQJ 3DWWHUQ

,QWHUYDO )

(

DQG







(

(

3DUDOOHO )LQJHULQJ OLFNV

7KHVH DUH OLFNV WKDW XVH D VLPLODU ILQJHULQJ RU IUHW VHTXHQFH ZKHQ PRYLQJ XS RU GRZQ
IURP VWULQJ WR VWULQJ 7KH\ DUH RIWHQ XVHG GXULQJ IDVW SDVVDJHV DQG DOORZ 0HWKHQ\ PRUH
KDUPRQLF DQG PHORGLF IUHHGRP FRQQHFWLQJ PHORGLF SKUDVHV $Q H[DPSOH RI SDUDOOHO
ILQJHULQJ FDQ EH IRXQG LQ 2OG )RONV ([ 

([  2OG )RONV EDU 

7KLV OLFN RFFXUV GXULQJ WKH ILUVW EHDW RI WKH H[FHUSW XVLQJ D VL[WHHQWKQRWH UK\WKP 7KH
VHTXHQFH EHJLQV RQ WKH ILIWK IUHW & RI WKH WKLUG VWULQJ * VWULQJ WKHQ PRYHV XS WR WKH
HLJKWK IUHW (( +H WKHQ PRYHV GRZQ WR WKH VHFRQG VWULQJ % VWULQJ VWDUWLQJ RQ WKH HLJKWK
IUHW * PRYLQJ EDFN GRZQ WR WKH ILIWK IUHW ( IRUPLQJ D SDUDOOHO VKDSH 7KLV SDWWHUQ
EDVHG RQ SDUDOOHO VWULQJ VKDSHV JHQHUDWHV XQXVXDO H[WHQVLRQV (( RYHU D '(
FKRUG $V LOOXVWUDWHG LQ WKH ODVW H[DPSOH WKLV GHYLFH LV XVHG PRUH IRU SOD\LQJ IDVW UXQV
DQG SDWWHUQ EDVHG OLFNV DQG DV D VHJXH LQWR PRUH YHUWLFDO DQG PHORGLF SDVVDJHV )RU



LQVWDQFH DIWHU WKLV 0HWKHQ\ RXWOLQHV '( E\ SOD\LQJ WKH UG DQG WK RI ) $ UHVROYLQJ
WR WKH (WK (( XVLQJ DQRWKHU ILQJHU EDVHG OLFN WR PRYH LQWR WKH QH[W EDU )XUWKHU
H[DPSOHV RI WKLV FDQ EH IRXQG LQ EDU  DQG DOVR 5HMRLFLQJ EDUV  DQG WKH WZR
SLFN EDUV LQWR WKH VROR RI $OO WKH 7KLQJV <RX $UH ([ 

([  $OO WKH 7KLQJV <RX $UH VW SLFNXS EDU

,Q WKLV H[DPSOH WKH OLQH KDV YHU\ OLWWOH UHOHYDQFH WR WKH KDUPRQ\ +RZHYHU ZKDW LV
LQWHUHVWLQJ DERXW WKLV H[DPSOH LV WKH LQWHUYDO LQ ZKLFK HDFK SDWWHUQ VWDUWV %HJLQQLQJ RQ
WK RI $(PDM %( 0HWKHQ\ UHVROYHV GRZQ FKURPDWLFDOO\ WR WKH URRW $( ZLWK DQ )
SDVVLQJ QRWH RQ WKH VWULQJ DERYH 7KHQ GXULQJ *PLQ( KH EHJLQV RQ WKH PDMRU WKLUG %
PRYLQJ XS FKURPDWLFDOO\ WR WKH (WK '( ZLWK D WK ( RQ WKH VHFRQG VWULQJ PRYLQJ
FKURPDWLFDOO\ EDFN GRZQ WR WKH WKLUG ILQLVKLQJ RQ D * QRWH



0HWKHQ\ 6FDOHV
:LWKLQ KLV LPSURYLVDWLRQDO VW\OH 0HWKHQ\ KDV GHYHORSHG VFDOHV ZKLFK KDYH EHFRPH D
LPSRUWDQW SDUW RI KLV SOD\LQJ YRFDEXODU\
7KH ILUVW VFDOH WKDW KH XVHV FRPPRQO\ LV WKH PLQRU SHQWDWRQLF EOXHV VFDOH ZLWK D WK
DGGLWLRQ WRQH 7KLV DOORZV 0HWKHQ\ WR RXWOLQH WKH WK LQWHUYDO RI D PLQRU VHYHQWK FKRUG
ZKLOH XVLQJ D PLQRU SHQWDWRQLF %OXHV SDWWHU $Q H[DPSOH RI VXFK D VFDOH FDQ EH IRXQG LQ
2OG )RONV ([  ,Q WKLV H[DPSOH KH HPEHOOLVKHV WKH & PLQRU SHQWDWRQLF OLQH ZLWK D
WK SDVVLQJ WRQH RYHU D &PLQ FKRUG

([  2OG )RONV EDU 

7KH VDPH VFDOH FDQ EH IRXQG DJDLQ EDU  RYHU &PLQ $OWKRXJK WKLV VFDOH FRXOG EH
FRQVLGHUHG DV D 'RULDQ RU $HROLDQ GHULYDWLYH WKH UHDVRQ LW KDV EHHQ QDPHG DV VXFK LV
EHFDXVH LW XVHV D JXLWDU EDVHG 5RRW EHJLQQLQJ IURP WKH ILIWK VWULQJ & PLQRU
SHQWDWRQLFEDVHG VFDOH VKDSH
$QRWKHU H[DPSOH RI WKLV FDQ EH IRXQG LQ 2OG )RONV EDU  XVLQJ D ' %OXHV VFDOH RYHU
D 'PLQ FKRUG ZLWK WKH WK DGGLWLRQ WRQHV ( RFFXUULQJ RQ WKH VHFRQG DQG ILUVW VWULQJV

$QRWKHU VFDOH IUHTXHQWO\ XVHG LQ 0HWKHQ\V LPSURYLVDWLRQV LV D 6SDQLVK 3KU\JLDQ VFDOH

ZLWK D  DGGLWLRQ WRQH ZLWK DQ WK LQWHUYDO RPLWWHG 7KLV JLYHV WKH VWDQGDUG 6SDQLVK
3KU\JLDQ VFDOH D PRUH DOWHUHG VRXQG DQG LV XVHG PRVW FRPPRQO\ RYHU GRPLQDQW FKRUG
VWUXFWXUHV $Q H[DPSOH RI WKLV VFDOH LV SOD\HG GXULQJ 6RODU ([ 



([  6RODU EDU 

'XULQJ WKLV HLJKWK QRWH SKUDVH KH EHJLQV RQ WKH WK RI WKH * 6SDQLVK 3KU\JLDQ   VFDOH
) RYHU D PLQRU ,,9 LQ & +H WKHQ DVFHQGV XS WKH VFDOH RPLWWLQJ WKH WK & ILQLVKLQJ
RQ WKH WK %(
)XUWKHU H[DPSOHV RI 0HWKHQ\V XVH RI WKLV VFDOH LQ 6RODU DUH SOD\HG EDUV  LQ ZKLFK
GXULQJ WKLV SDUWLFXODU H[DPSOH 0HWKHQ\ XVHV D WK SDVVLQJ WRQH '( LQWHJUDWLQJ D
SDUDOOHO ILQJHULQJ OLFN LQWR WKH VFDOH XVLQJ WKH ILUVW DQ WKLUG ILQJHUV ([DPSOHV IURP RWKHU
VRORV FDQ EH IRXQG LQ $OO WKH 7KLQJV <RX $UH EDUV  LQ WKH IRUP RI D ILQJHULQJ OLFN
XVLQJ WKH ILUVW DQG VHFRQG ILQJHUV
([DPSOHV RI WKLV VFDOH LQFOXGLQJ WKH WK LQWHUYDO DUH SOD\HG GXULQJ 5HMRLFLQJ EDU 
RYHU DQ $ FKRUG DQG DOVR LQ $OO WKH 7KLQJV <RX $UH EDU  XVLQJ & 6SDQLVK
3KU\JLDQ WK RYHU )PLQ ZLWK D WK SDVVLQJ WRQH % 7KLV EULQJV WKH UHVHDUFK WR DQRWKHU
DSSOLFDWLRQ RI WKLV VFDOH
8VLQJ WKH 6SDQLVK 3KU\JLDQ WK VFDOH 0HWKHQ\ DOVR XVHV D WK DGGLWLRQ SDVVLQJ WRQH
7KLV JLYHV WKH VFDOH D FKURPDWLF GRPLQDQW EHERS VFDOH EDVHG VRXQG ZKLFK VXLWV KLV
FKURPDWLF OHJDWR VW\OH
([DPSOHV RI 0HWKHQ\ XVLQJ WKLV VFDOH FDQ EH IRXQG LQ 6RODU EDU  XVLQJ D * 6SDQLVK
3KU\JLDQ WK ZLWK DQ WK DGGLWLRQ WRQH RYHU 'PLQ(* +H DOVR XVHV WKLV VFDOH
RPLWWLQJ WKH WK GXULQJ $OO 7KH 7KLQJV <RX $UH EDU  RYHU 'PLQ WR *
$OVR ZKHQ KH RPLWV WKH WK RI WKH 6SDQLVK 3KU\JLDQ WK WKH VFDOH UHVHPEOHV D PLQRU
SHQWDWRQLF VFDOH LQ URRW WK SRVLWLRQ )RU ([DPSOH LQ 6RODU ([  KH SOD\V DQ
DVFHQGLQJ * 6SDQLVK 3KU\JLDQ WK VFDOH EHJLQQLQJ IURP WKHWK 7KH QRWHV JHQHUDWHG DUH
)*$(%(%')* ,I WKLV LV FRPSDUHG WR WKH QRWHV JHQHUDWHG IURP D * PLQRU
SHQWDWRQLF VFDOH VWDUWLQJ IURP WKH WK DOVR )*%(&')* ZH ILQG WKDW WKH WZR VFDOHV
KDYH  QRWHV LQ FRPPRQ LJQRULQJ WKH QRWHV UHSHDWHG XS DQ RFWDYH



([  6RODU EDU 

%HFDXVH WKH PLQRU SHQWDWRQLF LV D VLPSOH ILYHQRWH VFDOH XVLQJ WKLV VFDOH DV D WHPSODWH
DGGLQJ DGGLWLRQ WRQHV DOORZV WKH LPSURYLVHU WR XVH WKH EDVLF SHQWDWRQLF SDWWHUQ ZKLOH
DGGLQJ PRUH FRORXUIXO H[WHQVLRQV



+DUPRQLF *HQHUDOLVDWLRQ
7KLV WDNHV SODFH ZKHQ WKH LPSURYLVHU XVHV D VLQJOH VFDOH RYHU WZR RU PRUH FKRUGV GXULQJ
D SURJUHVVLRQ 2QH RI WKH VLPSOHVW IRUPV RI KDUPRQLF JHQHUDOLVDWLRQ RFFXUV ZKHQ WKH
PDMRU RU PLQRU SHQWDWRQLF VFDOH LV XVHG 0HWKHQ\ IDYRXUV WKH PLQRU SHQWDWRQLF VFDOH DV
ZHOO DV WKH EOXHV VFDOH XVLQJ WKHVH VFDOHV IUHTXHQWO\ ZKLFK DUH WKH EDVLV IRU PDQ\ RI KLV
LPSURYLVDWLRQV )RU H[DPSOH GXULQJ 6RODU ([  KH EHJLQV WKH ILUVW FKRUXV XVLQJ D &
PLQRU SHQWDWRQLF VFDOH RYHU &PLQ*PLQ

([  6RODU EDUV 

7KLV LV UHSHDWHG ODWHU ZKHQ 0HWKHQ\ SOD\V WKH & EOXHV VFDOH RYHU *PLQ& EDUV 
+H DOVR XVHV D EOXHV\ $E PLQRU SHQWDWRQLF SDVVDJH GXULQJ WKH EULGJH VHFWLRQ RI
:LQGRZV EDU  RYHU $($ UHSHDWLQJ WKLV WKHPH GXULQJ WKH EULGJH VHFWLRQ LQ
WKH IROORZLQJ FKRUXV XVLQJ $E EOXHV VFDOH RYHU $$( EDUV 
,Q 5HMRLFLQJ KH XVHV D ' PLQRU SHQWDWRQLF VFDOH LQ WKH IRUP RI D SDUDOOHO ILQJHULQJ OLFN
RYHU WKH FKRUGV 'P*&&( EDUV  $OVR LQ WKH ILQDO  EDUV RI KLV VROR
GXULQJ WKH $ VHFWLRQ KH XVHV D FRPPRQ FOLFKp ILQLVKLQJ WKH 5K\WKP &KDQJHV ZLWK D &
EOXHV VFDOH SKUDVH RYHU )) GLP& EDUV  6LPLODU WR WKLV RQ 7XUQDURXQG KH
DOVR XVHV D EOXHV\ SKUDVH EDVHG DURXQG WKH & EOXHV VFDOH WR ILQLVK KLV VROR LQ WKH ILQDO
WXUQDURXQG &$'P*& EDUV 
2OG )RONV DOVR IHDWXUHV PLQRU SHQWDWRQLFV DQG EOXHV VFDOH OLQHV IUHTXHQWO\ 'XULQJ WKH
ILUVW $ VHFWLRQ 0HWKHQ\ XVHV WKH ' PLQRU SHQWDWRQLF VFDOH ZLWK JXLGH WRQH FRPSV WR ILOO
LQ WKH KDUPRQ\ RYHU &P)%EPDM(( EDUV  7KHQ KH XVHV DQRWKHU ' PLQRU
SHQWDWRQLF VHTXHQFH ZLWK 'RXEOH VWRS LQWHUVSHUVLRQV RYHU WKH FKRUG VHTXHQFH '(
*P& EDUV 



0HWKHQ\V *LDQW 6WHSV VROR IHDWXUHV KDUPRQLF JHQHUDOLVDWLRQ KHDYLO\ ZLWK KLP XVLQJ
WKH ,RQLDQ PRGH IUHTXHQWO\ RYHU ,,9,V DQG 9V ([  )RU H[DPSOH LQ WKH SLFNXS
EDU RI KLV VROR 0HWKHQ\ VWDUWV KLV VROR XVLQJ D OLQH EDVHG DURXQG % ,RQLDQ RYHU ) 
&RQWLQXLQJ ZLWK WKLV VFDOH RYHU WKH FRUUHVSRQGLQJ , FKRUG %PDM EDU  KH WKHQ
PRGXODWHV LQWR * PDMRU XVLQJ WKH * ,RQLDQ PRGH RYHU ' FRQWLQXLQJ ZLWK WKLV PRGH
RYHU *PDM%( EDU 

([  *LDQW 6WHSV EDUV 

7KLV XVH RI ,RQLDQ PRGHV LV UHSHDWHG DJDLQ RYHU ) %PDM)PLQ%(((PDM ZLWK
0HWKHQ\ XVLQJ % ,RQLDQ RYHU ) %PDM EDUV  WKHQ XVLQJ (E ,RQLDQ RYHU )PLQ
%((EPDM EDUV  7KHVH DUH MXVW D IHZ H[DPSOHV IURP *LDQW 6WHSV RI KDUPRQLF
JHQHUDOLVDWLRQ
$ VLPLODU H[DPSOH RI KLP XVLQJ ,RQLDQ PRGHV FDQ EH IRXQG LQ $OO 7KH 7KLQJV <RX $UH
LQ ZKLFK 0HWKHQ\ SOD\V D * ,RQLDQ VFDOH RYHU $P'*PDM EDUV  +H UHSHDWV
WKLV LGHD SOD\LQJ D SKUDVH XVLQJ VLQJOHOLQHV RFWDYHV DQG FKRUG PHORG\ IURP WKH ( ,RQLDQ
PRGH RYHU ) PLQ(%(PDM EDUV 
$QRWKHU H[DPSOH RI KDUPRQLF JHQHUDOLVDWLRQ FDQ EH IRXQG LQ :LQGRZV ([  ZKHUH
KH XVHV WKH ( /\GLDQ VFDOH RYHU WKH FKRUG SURJUHVVLRQ (PDM' PLQ& PLQ
& PLQ%%(PLQE $E((* ([ 



([  :LQGRZV EDUV 

7KLV DSSOLFDWLRQ RI WKH ( /\GLDQ PRGH LV UHSHDWHG DJDLQ RYHU WKH VDPH SURJUHVVLRQ RI
FKRUGV LQ WKH IROORZLQJ FKRUXV EDUV  IROORZLQJ D VLPLODU DVFHQGLQJ PRWLI



'LJLWDO 3DWWHUQV DQG 6FDODU 3DWWHUQV

0HWKHQ\ XVHV GLJLWDO SDWWHUQV DQG VFDODU SDWWHUQV IUHTXHQWO\ DPRQJVW KLV LPSURYLVDWLRQV
DQG WKH\ DUH IRXQG LQ HLJKWK DQG VL[WHHQWKQRWH SDVVDJHV +H SOD\V PDQ\ OLQHV EDVHG RQ
WKH GLJLWDO SDWWHUQ  DQG  /LNH -RKQ &ROWUDQH KH XVHV WKHVH SDWWHUQV
FRPPRQO\ LQ *LDQW 6WHSV DPRQJVW RWKHUV )RU H[DPSOH LQ *LDQW 6WHSV ([ 
0HWKHQ\ SOD\V WKLV SDWWHUQ XVLQJ WKH (( ,RQLDQ PRGH RYHU ((PDM RQ WKH WKLUG EHDW RI WKH
EDU

([  *LDQW 6WHSV EDU 

)XUWKHU H[DPSOHV RI WKLV GLJLWDO SDWWHUQ FDQ EH IRXQG GXULQJ *LDQW 6WHSV EDUV  
 DQG DOVR GXULQJ :LQGRZV XVLQJ WKH GLJLWDO SDWWHUQ  EDVHG RQ WKH ( /\GLDQ
PRGH RYHU (PDM' PLQ EDUV 
$QRWKHU XVH RI WKLV GLJLWDO SDWWHUQ LV WR DFW DV D EDVH SRLQW IRU 0HWKHQ\ WR PRYH LQWR RWKHU
OLFNV $Q H[DPSOH RI WKLV FDQ EH IRXQG LQ 7XUQDURXQG EDUV  ZKHUH KH SOD\V D '
PDMRU  GLJLWDO SDWWHUQ RYHU & (& ')  7KLV WKHQ PRYHV LQWR D 0HWKHQ\
GHVFHQGLQJ WKLUGV OLFN ZKLFK WKHQ PRYHV LQWR D 0HWKHQ\ DVFHQGLQJ WK FKRUG OLFN 7KH
VDPH XVDJH RI WKLV SDWWHUQ FDQ EH IRXQG LQ $OO 7KH 7KLQJV <RX $UH EDUV  ZLWK
0HWKHQ\ DJDLQ SOD\LQJ D  GLJLWDO SDWWHUQ RYHU $EPDM EDVHG RQ WKH (E ,RQLDQ
PRGH $( /\GLDQ )'((* ZKLFK WKHQ PRYHV LQWR D 0HWKHQ\ GHVFHQGLQJ WKLUGV OLFN
$QRWKHU FRPPRQ GLJLWDO SDWWHUQ 0HWKHQ\ XVHV IUHTXHQWO\ ZLWKLQ KLV LPSURYLVDWLRQV LV D
 SDWWHUQ $Q H[DPSOH RI WKLV SDWWHUQ FDQ EH IRXQG LQ 7XUQDURXQG ([ 



([  7XUQDURXQG EDUV 

,Q WKLV H[DPSOH 0HWKHQ\ DQWLFLSDWHV WKH 'PLQ FKRUG E\ VXSHU LPSRVLQJ D 
GLJLWDO SDWWHUQ RYHU $ RQ WKH IRXUWK EHDW RI EDU  XVLQJ D VL[WHHQWKQRWH UK\WKP
6LPLODU WR WKLV LQ *LDQW 6WHSV EDU  0HWKHQ\ VXSHU LPSRVHV D (E 0HORGLF PLQRU
VFDOH RYHU %( 2Q WKH IRXUWK EHDW RI WKH EDU KH XVHV WKH ((PLQ  GLJLWDO SDWWHUQ
%(*()(( GXULQJ WKH %( FKRUG
0HWKHQ\ DOVR XVHV WKLV GLJLWDO SDWWHUQ DV D ILQJHULQJ EDVHG SDWWHUQ PRYLQJ LW XS DQG GRZQ
LQ VHPLWRQHV IUHWV $Q H[DPSOH RI WKLV GHYLFH FDQ EH IRXQG LQ 6RODU ([ 

([  6RODU EDUV 

,Q WKLV H[DPSOH KH EHJLQV XVLQJ D  SDWWHUQ RYHU ((PDM DQWLFLSDWLQJ ((PLQ XVLQJ
WKH FRUUHVSRQGLQJ SDWWHUQ DQG UHSHDWV LW DJDLQ RYHU $( 2YHU 'EPDM KH VLGHVOLSV XS D
VHPLWRQH XVLQJ D ' PDMRU  SDWWHUQ 7KH OLQH LV UHVROYHG E\ PRYLQJ EDFN GRZQ WR
'( PDMRU UHSHDWLQJ WKH GLJLWDO SDWWHUQ RYHU 'PLQ(
/LNH WKH ODVW H[DPSOH VRPHWLPHV 0HWKHQ\ SOD\V OLQHV WKDW DUH EDVHG RQ WKH IRXU QRWH 
 GLJLWDO SDWWHUQ EXW WKH GLJLWV GR QRW UHSUHVHQW WKH LQWHUYDOV ZLWKLQ WKH SDWWHUQ 'XULQJ
$OO 7KH 7KLQJV <RX $UH ([  KH XVHV D '( PDMRU  SDWWHUQ DW WKH EHJLQQLQJ
RI WKH H[FHUSW RYHU *( *LYLQJ WKH LQWHUYDOV $()(('(



([  $OO 7KH 7KLQJV <RX $UH EDUV 

0HWKHQ\ UHSHDWV WKLV SDWWHUQ GXULQJ WKH H[FHUSW XVLQJ VXEWOH YDULDWLRQV RQ WKH RULJLQDO
VXFK DV ORZHULQJ WKH ) WR )( *PLQ( & DQG ORZHULQJ WKH '( WR & $(PDM 1RWH 7KH
WRS QRWH $( VWD\V FRQVWDQW WKURXJKRXW PRVW RI WKH H[FHUSW ZLWK H[FHSWLRQ WR WKH FKRUG
&PLQ ZKHUH KH XVHV D  *(('&
2WKHU H[DPSOHV RI KLV XVLQJ WKLV SDWWHUQ FDQ EH IRXQG LQ :LQGRZV EDU  RYHU
$(PLQ DQG $OO 7KH 7KLQJV <RX $UH EDU  RYHU $EPDM



6HTXHQFH
6HTXHQFHV PDNH XS D ODUJH SDUW RI 0HWKHQ\V LPSURYLVLQJ VW\OH DQG DUH SUHVHQW LQ PRVW
RI KLV LPSURYLVDWLRQV +LV VHTXHQFHV DUH RIWHQ TXLWH ORQJ LQ GXUDWLRQ WDNLQJ XS D ODUJH
QXPEHU RI EDUV
7KH VROR LQ :LQGRZV LV D JRRG H[DPSOH RI VHTXHQFH DQG LV XVHG RQ D QXPEHU RI
RFFDVLRQV GXULQJ WKH VROR 0DQ\ RI WKH VHTXHQFHV WKURXJKRXW :LQGRZV XVH D IRXU RYHU
WKUHH SRO\UK\WKP +H DOVR XVHV WKH ( /\GLDQ PRGH KHDYLO\ ZLWKLQ ERWK WKH VHTXHQFHV DQG
WKH VROR LWVHOI )RU H[DPSOH GXULQJ :LQGRZV ([  0HWKHQ\ SOD\V D VHTXHQFH XVLQJ
WKH ( /\GLDQ VFDOH RYHU (PDM 

([  :LQGRZV EDUV 

$ VLPLODU GHVFHQGLQJ VHTXHQFH LV SOD\HG LQ WKH ODVW IRXU EDUV RI WKH ILUVW FKRUXV EDUV 
 EDVHG DURXQG WKH WK UG WK DQG UG LQWHUYDOV RI HDFK FKRUG ZLWK H[FHSWLRQ WR & 
6LPLODU WR WKH ILUVW 0HWKHQ\ XVHV DQ DVFHQGLQJ VHTXHQFH RYHU (PDM  DJDLQ XVLQJ WKH
( /\GLDQ VFDOH EDUV  7KLV VFDOH LV XVHG DJDLQ GXULQJ D VHTXHQFH RYHU WKH ODVW
VHFWLRQ RI WKH KHDG GXULQJ WKH GHVFHQGLQJ FKRUG SURJUHVVLRQ EDUV  +H FRQFOXGHV
WKH VROR ZLWK D GHVFHQGLQJ /\GLDQ VHTXHQFH ZLWKLQ WKH ILQDO IRXU EDUV RI WKH KHDG XVLQJ
WKH  LQWHUYDOV RI HDFK FKRUG EDUV 
0HWKHQ\ DOVR XVHV VHTXHQFH GXULQJ KLV VROR LQ *LDQW 6WHSV 7KHVH VHTXHQFHV DUH YHU\
JXLWDULVWLF DQG DUH EDVHG RQ SDWWHUQV ZKLFK DUH VKLIWHG XS DQG GRZQ LQ WRQHV DQG
VHPLWRQHV WKURXJK WKH GLIIHUHQW NH\ FHQWUHV )RU H[DPSOH GXULQJ *LDQW 6WHSV ([ 
KH SOD\V DQ DVFHQGLQJ VHTXHQFH VWDUWLQJ ZLWK WKH WK WK DQG WK LQWHUYDOV RYHU ((PDM
ZKLFK DUH SOD\HG LQ WXUQ ZLWK WKH ILUVW WKLUG DQG ILUVW ILQJHUV



([  *LDQW 6WHSV EDUV 

0HWKHQ\ DQWLFLSDWHV WKH $PLQ FKRUG SOD\LQJ WKH SUHYLRXV SDWWHUQ XS D WRQH GXULQJ
(EPDM 7KLV SDWWHUQ WKHQ PRYHV XS DQRWKHU WRQH RYHU WKH FKRUGV '*PDM $W WKLV
SRLQW KH PRGXODWHV WKH UK\WKP IURP VL[WHHQWKQRWHV WR WULSOHWV )LQDOO\ KH VKLIWV WKH
SDWWHUQ XS RQH PRUH WRQH DQWLFLSDWLQJ WKH & PLQ FKRUG GXULQJ *PDM ZLWK WKH VHTXHQFH
ILQLVKLQJ RQ *  'XULQJ WKH HQWLUH VHTXHQFH 0HWKHQ\ XVHV WKH VDPH ILUVWWKLUGILUVW ILQJHU
SDWWHUQ 0HWKHQ\ SOD\V D VLPLODU VHTXHQFH DW WKH HQG RI WKH WK FKRUXV ([  LQ ZKLFK
KH XVHV DQ DVFHQGLQJ GRXEOHV VWRSV VHTXHQFH EDVHG RQ GLDWRQLF PDMRU DQG PLQRU WKLUGV RI
HDFK NH\ FHQWUH



([  *LDQW 6WHSV EDUV 

7KLV H[DPSOH LOOXVWUDWHV ZHOO KRZ 0HWKHQ\ XVHV SDWWHUQV SDUDOOHO WR HDFK RWKHU WR FUHDWH D
VHTXHQFH 7KH SDWWHUQ WKDW LV SOD\HG GXULQJ & PLQ)  EDU  LV H[DFWO\ RQH WRQH XS
IURP WKH SDWWHUQ WKDW KH SOD\V GXULQJ )PLQ%( EDU  XVLQJ WKH VDPH ILQJHULQJ DOVR
'XULQJ WKH ILIWK FKRUXV ([  KH XVHV DQ DVFHQGLQJ MXPSLQJ RFWDYHV VHTXHQFH ZKLFK
DVFHQGV LQ WRQHV DQG VHPLWRQHV WKURXJK WKH GLIIHUHQW NH\ FHQWUHV

([  *LDQW 6WHSV EDUV 



7KLV VHTXHQFH VWDUWV E\ XVLQJ D UHSHDWLQJ ' RFWDYHV OLQH RYHU WKH FKRUGV *PDM%(
((PDM 0HWKHQ\ WKHQ PRYHV WKH SDWWHUQ XS D VHPLWRQH WR (( RYHU )  LQWURGXFLQJ D ORZ
SDVVLQJ QRWH & SOD\HG ZLWK WKH WKLUG ILQJHU 7KLV SDWWHUQ LV UHSHDWHG RYHU ) %PDM
)P +H WKHQ DVFHQGV WKH SDWWHUQ XS D WRQH WR ) RYHU WKH FKRUGV %(((PDM FRQFOXGLQJ
PRYLQJ XS DQRWKHU WRQH WR * RYHU ((PDM$P



 5HVROXWLRQV DQG E

$OWKRXJK 0HWKHQ\V LPSURYLVDWLRQ VW\OH LV YHU\ PRGHUQ DQG XQLTXH EHERS GHYLFHV VXFK
DV  UHVROXWLRQV DQG ( PRYHPHQW DUH VWLOO FRPPRQ ZLWKLQ KLV LPSURYLVDWLRQV $ 
UHVROXWLRQ LV GHILQHG E\ WKH PRYHPHQW IURP WKH VHYHQWK (WK RI WKH ,,P FKRUG WR WKH
WKLUG RI WKH 9 FKRUG GXULQJ D ,,9 SURJUHVVLRQ PDMRU RU PLQRU $OVR D  UHVROXWLRQ FDQ
EH XVHG RQ D SHUIHFW FDGHQFH 9, XVLQJ WKH (WK RI WKH 9 FKRUG WR WKH WKLUG RI WKH ,
FKRUG 6LPLODU WR WKLV D ( LV GHILQHG E\ WKH PRYHPHQW RI WKH UG RI D GRPLQDQW FKRUG WR
WKH (WK RU WKH (WK WR WKH UG RI WKH VDPH FKRUG
+H XVHV WKH  UHVROXWLRQ PRVW FRPPRQO\ GXULQJ WKH 9 $Q H[DPSOH RI KLV
DSSOLFDWLRQ RI WKLV UHVROXWLRQ FDQ EH IRXQG GXULQJ 6RODU ([  0HWKHQ\ XVLQJ D 
UHVROXWLRQ RYHU D 9 LQ (( PDMRU

([  6RODU EDUV 

,Q WKLV H[DPSOH 0HWKHQ\ VWDUWV RQ WKH WK RI %( $E XVLQJ FKURPDWLF DSSURDFK WRQHV WR
PRYH XS WR WKH UG RI ((PDM * +RZHYHU VRPHWLPHV KLV XVH RI WKH  UHVROXWLRQ GRHV
QRW ILW WKH VWDQGDUG GHILQLWLRQ ,Q DQ H[DPSOH GXULQJ $OO 7KH 7KLQJV <RX $UH ([ 
+H XVHV WKLV UHVROXWLRQ EXW RQO\ RYHU WKH 9 FKRUG (E DV SDUW RI D GHVFHQGLQJ WKLUGV
LQWHUYDOOLF OLFN

([  $OO 7KH 7KLQJV <RX $UH %DUV 



'XULQJ WKLV H[FHUSW WKH WK RI %(PLQ $( LV GHOD\HG DQG XVHG LQVWHDG RYHU (( EHFRPLQJ
WKH WK RI WKH FKRUG 0HWKHQ\ WKHQ XVHV D (WK HPEHOOLVKLQJ WRQH UHVROYLQJ WR WKH WKLUG RI
WKH VDPH FKRUG * 7KLV OLFN LV XVHG DJDLQ ODWHU LQ WKH VROR RYHU %( EDU 
/LNH WKH  UHVROXWLRQV KH XVHV WKH ( GHYLFH LQ WKH XSWHPSR WXQHV 'XULQJ 6RODU
([  0HWKHQ\ XVHV RQH RI WKH PRVW FRPPRQ DSSOLFDWLRQV RI WKH GHYLFH VNLSSLQJ IURP
WKH UG RI * WR WKH (WK UHVROYLQJ GRZQ D VHPLWRQH WR WKH WK RI &PLQ

([  6RODU EDU 

0HWKHQ\ SOD\V D VLPLODU OLQH GXULQJ $OO 7KH 7KLQJV <RX $UH ([  RYHU DQ
$PLQ(

([  $OO 7KH 7KLQJV <RX $UH EDUV 

,Q WKLV H[FHUSW 0HWKHQ\ XVHV D  UHVROXWLRQ DQG D ( VLPXOWDQHRXVO\ LQ WKH VDPH
SKUDVH 7KH  RFFXUV ZKHQ KH UHVROYHV IURP WKH WK * WR WKH WKLUG RI ' )  1RWH
WKDW RQFH ) LV SOD\HG WKDW D ' FKRUG LV EHLQJ UHIHUUHG DV SDUW RI D PLQRU ,,9 LQWR
*PDM DOWKRXJK WKLV KDV QRW EHHQ QRWDWHG LQ WKH WUDQVFULSWLRQ 7KH WKLUG )  LV
SURFHHGHG E\ WKH (WK (( ZLWK ) PHORG\ QRWH XVHG QRW RQO\ DV UHVROXWLRQ WRQH IRU WKH 
 EXW WKH EHJLQQLQJ RI WKH (



+H XVHV WKHVH GHYLFHV VLPXOWDQHRXVO\ DJDLQ ODWHU LQ WKH VROR EDU  RYHU D PLQRU
,,9 ZLWK 0HWKHQ\ GLVSODFLQJ WKH OLQH DQ HLJKWK QRWH HDUO\
'XULQJ 5HMRLFLQJ ([  KH XVHV ( LQ WKH IRUP RI GLPLQLVKHG WULDGV




([  5HMRLFLQJ EDU 

'XULQJ WKLV H[DPSOH 0HWKHQ\ EHJLQV RQ WKH UG RI * DVFHQGLQJ XS D % GLPLQLVKHG WULDG
7KH KLJKHVW QRWH RI WKH SDVVDJH KH SOD\V WKH (WK $( RI * ZKLFK LV WKH (WK RI '
GLPLQLVKHG WULDG ILQLVKLQJ WKLV RQ ' PHORG\ QRWH 7KH GHYLFH LV ODWHU UHSHDWHG EDU 
DJDLQ XVLQJ GLPLQLVKHG WULDGV RYHU D * FKRUG



(QFORVXUHV
'XH WR 0HWKHQ\V KHDYLO\ FKURPDWLF VW\OH HQFORVXUHV DUH TXLWH FRPPRQ ZLWKLQ KLV
LPSURYLVDWLRQV ZLWK 0HWKHQ\ UHVROYLQJ WKHVH OLQHV RQ DQ REMHFW WRQH
$Q H[DPSOH RI 0HWKHQ\ XVLQJ D HQFORVXUH LQ LWV VLPSOHVW IURP FDQ EH IRXQG LQ 6RODU
([  ZKHUH KH DSSURDFKHV WKH REMHFW WRQH '( ZLWK DQ XSSHU OHDGLQJ WRQH )( DQG WKH
ORZHU OHDGLQJ WRQH ' RYHU '(PDM

([  6RODU EDUV 

7KLV GHYLFH LV XVHG DJDLQ RYHU '(PDM ZLWK KLV SOD\LQJ D & REMHFW WRQH EDU  )XUWKHU
H[DPSOHV RI 0HWKHQ\ FDQ EH IRXQG LQ 7XUQDURXQG EDU  DV SDUW RI D FKURPDWLF OLFN
RYHU & DQG DOVR GXULQJ 2OG )RONV EDUV  RYHU (PLQ



&KRUG 0HORG\ 6RORLQJ

&KRUG PHORG\ LV D VW\OH RI JXLWDU ZKHUH WKH PHORG\ DQG FKRUG DUH SOD\HG VLPXOWDQHRXVO\
ZLWK WKH FKRUG KDUPRQLVLQJ WKH PHORG\ QRWH 0HWKHQ\V XVH RI &KRUG PHORG\ LV YHU\
VLPLODU WR KLV VLQJOHOLQH VW\OH RI SOD\LQJ XVLQJ VWRFN YRLFLQJV DQG FKRUG VKDSHV DV ZHOO DV
XVLQJ VHTXHQFH KHDYLO\
2QH RI KLV WUDGHPDUNV GXULQJ WKH SOD\LQJ RI FKRUG PHORG\ LV KLV XVH RI WK YRLFLQJV
0DQ\ RI WKHVH IRXUWK FKRUGV 0HWKHQ\ XVHV DUH EXLOW IURP LQYHUVLRQV RI WKH 6R :KDW
FKRUG YRLFLQJV )RU ([DPSOH LQ WKH NH\ RI ' PLQRU VWDUWLQJ IURP WKH OHDGLQJ QRWH WKH
6R :KDW YRLFLQJ LV EXLOW RQ WKH LQWHUYDOV  JLYLQJ WKH QRWHV $) & * '
'XULQJ 6RODU ([  KH XVHV WKUHH YRLFLQJV GXULQJ )PDM KDUPRQLVLQJ GRZQ LQ
IRXUWKV IURP & WKH ( DQG & PHORG\ QRWH

([  6RODU EDUV 

:KHQ KDUPRQLVLQJ WKH & 0HORG\ QRWHV 0HWKHQ\ XVHV WKH ILUVW LQYHUVLRQ RI WKH 6R :KDW
YRLFLQJ  EXW WKH ERWWRP WZR QRWHV RI WKH FKRUG DUH RPLWWHG 'XULQJ WKH WK FKRUG
PHORG\ QRWH KH XVHV D WK LQWHUYDO EHWZHHQ WKH % DQG ) PHORG\ QRWHV FUHDWLQJ DQ
)PDM  YRLFLQJ
$QRWKHU YRLFLQJ XVHG IUHTXHQWO\ WKDW LV EXLOW XS RI IRXUWKV LV ZKHQ 0HWKHQ\ KDUPRQLVHV D
PDMRU VHYHQWK PHORG\ QRWH GXULQJ D PDMRU VHYHQWK FKRUG )URP WKH PHORG\ QRWH GRZQ
WKLV FKRUG YRLFLQJ LV EXLOW RQ WKH LQWHUYDOV  DQG LV QRW FRPSOHWHO\ EXLOW RQ IRXUWKV
OLNH WKH SULRU FKRUGV $Q H[DPSOH RI WKLV YRLFLQJ FDQ EH IRXQG LQ *LDQW 6WHSV ([ 
GXULQJ %PDM



([  *LDQW 6WHSV EDU 

6WDUWLQJ IURP WKH PHORG\ QRWH WKLV YRLFLQJ JLYHV WKH PDM WK WK DQG WK LQWHUYDOV RI WKH
FKRUG EHLQJ SOD\HG %PDM 0HWKHQ\ XVHV WKH VDPH YRLFLQJ GXULQJ 6RODU GXULQJ
((PDM EDU  DQG 'EPDM EDU  +RZHYHU WKLV FKRUG VKDSH LV QRW RQO\ FRQILQHG
WR EHLQJ XVHG GXULQJ WKH KDUPRQLVDWLRQ RI D PDMRU WK PHORG\ QRWH )RU H[DPSOH GXULQJ
*LDQW 6WHSV([  KH DOVR XVHV WKH VDPH FKRUG VKDSH EXW KDUPRQLVHV LW GRZQ IURP WKH
WK PHORG\ QRWH $ XVLQJ WKH VDPH LQWHUYDOV  GXULQJ ((PDM

([  *LDQW 6WHSV EDU 

)URP WKH PHORG\ QRWH GRZQ WKLV YRLFLQJ JLYHV WKH WK WK WK DQG UG LQWHUYDOV RI WKH
LQWHQGHG FKRUG ((PDM FUHDWLQJ DQRWKHU WK YRLFLQJ $QRWKHU ZD\ WKLV YRLFLQJ LV XVHG LV
ZKHQ 0HWKHQ\ SOD\V D YRLFLQJ EHJLQQLQJ IURP D UG 0HORG\ QRWH )RU H[DPSOH LQ *LDQW
6WHSV EDU  EHDW  KH KDUPRQLVHV GRZQ IURP D % PHORG\ QRWH UG RI *PDM 7KLV
YRLFLQJ JLYHV WKH FKRUG LQWHUYDOV UG VW WK WK GXULQJ WKH *PDM FKRUG
6HTXHQFH
/LNH KLV VLQJOHOLQH SOD\LQJ 0HWKHQ\ XVHV VHTXHQFH UHJXODUO\ LQ KLV FKRUG 0HORG\
VRORLQJ $Q H[DPSOH RI VHTXHQFH GXULQJ FKRUGPHORG\ VRORLQJ FDQ EH IRXQG LQ *LDQW
6WHSV ([  ZKHUH 0HWKHQ\ XVHV DQ DVFHQGLQJ HLJKWKQRWH SDWWHUQ



([  *LDQW 6WHSV EDUV 

:LWKLQ WKLV H[DPSOH ERWK WKH FKRUG YRLFLQJV DQG WKH PHORG\ QRWHV RI HDFK RI WKH FKRUGV
XVH VXEWOH UHVROXWLRQV ZKLOH PRYLQJ EHWZHHQ WKH FKRUG FKDQJHV 7KLV LV HYLGHQW GXULQJ
WKH PRYHPHQW RI WKH PHORG\ QRWHV RI DVFHQGLQJ IURP WKH PDMRU WK RI %PDM WR WKH WK
RI ' ILQDOO\ DVFHQGLQJ WR WKH WK RI *PDM
$QRWKHU H[DPSOH RI 0HWKHQ\ XVLQJ VHTXHQFH FDQ EH IRXQG LQ 6RODU ([  XVLQJ DQ
DVFHQGLQJ VHTXHQFH ZLWK WKH OHDGLQJ QRWHV EDVHG DURXQG WKH & PLQRU SHQWDWRQLF VFDOH
ZLWK D WK DGGLWLRQ WRQH '

([  6RODU EDUV 

'XULQJ WKLV H[DPSOH KH VWDUWV XVLQJ D VLQJOHOLQH PRWLI ZKLFK LV GHYHORSHG GXULQJ &PLQ
WR *PLQ EDUV  XVLQJ LQYHUVLRQV RI WULDGV GHULYHG IURP * $HROLDQ VFDOH %(
PDMRU VFDOH 7KLV LV IXUWKHU GHYHORSHG GXULQJ & ZKHUH KH XVHV ILUVW LQYHUVLRQV RI * DQG
%( GLPLQLVKHG WULDGV
3DUDOOHO 0RYHPHQW RI &KRUG 6KDSHV 9RLFLQJV
6LPLODU WR KLV XVH RI SDUDOOHO ILQJHULQJ OLFNV GXULQJ VLQJOHOLQH VRORLQJ 0HWKHQ\ XVHV WKLV
GHYLFH GXULQJ FKRUGPHORG\ DV D PHWKRG RI PRYLQJ IOXLGO\ EHWZHHQ FKRUG FKDQJHV 7KLV
LV DFKLHYHG E\ XVLQJ D SDUWLFXODU FKRUG VKDSH DQG PRYLQJ LW LQ SDUDOOHO DORQJ WKH QHFN RI
WKH JXLWDU RQ WKH VDPH VWULQJV FUHDWLQJ GLIIHUHQW YRLFLQJV ZKHQ FKDQJLQJ EHWZHHQ FKRUGV



DQG WKH FKRUG YRLFLQJV WKHPVHOYHV 'XULQJ WKH ODVW H[DPSOH GXULQJ 6RODU ([  KH
XVHV WZR VHSDUDWH H[DPSOHV RI SDUDOOHO FKRUG PRYHPHQW GXULQJ WKH VHTXHQFH 7KH ILUVW
H[DPSOH LV XVHG GXULQJ *PLQ EDU  ZKHUH KH XVHV DQ LQYHUVLRQ RI D PDMRU WULDG
VKDSH RQ WKH VHFRQG WKLUG DQG IRXUWK VWULQJV XVLQJ WKH EWK (( RI *PLQ DV D OHDGLQJ
QRWH 7KLV WULDG VKDSH LV WKHQ SOD\HG XS D WRQH VKLIWLQJ WKH FKRUG VKDSH XS WZR IUHWV
FUHDWLQJ D QHZ YRLFLQJ IRU *PLQ XVLQJ WKH WK ) DV WKH OHDGLQJ QRWH DQG WKH WK $ DV
WKH ORZHVW QRWH RI WKH YRLFLQJ RI *PLQ 7KH VHFRQG H[DPSOH LV XVHG GXULQJ & EDU 
ZKHUH 0HWKHQ\ XVHV LQYHUVLRQV RI GLPLQLVKHG WULDGV 7KH ILUVW GLPLQLVKHG WULDG XVHV WKH
WK * RI & DV D OHDGLQJ QRWH 7KH GLPLQLVKHG FKRUG VKDSH LV WKHQ VKLIWHG XS D PLQRU
WKLUG WKUHH IUHWV FUHDWLQJ DQRWKHU LQYHUVLRQ RI WKH RULJLQDO WULDG ZLWK WKH WK %( RI & DV
WKH OHDGLQJ QRWH 'XULQJ 6RODU ([  0HWKHQ\ XVHV SDUDOOHO PRYHPHQW DJDLQ ZKLOH
FKDQJLQJ IURP WKH FKRUGV )PDM WR )PLQ

([  6RODU EDUV 

,Q WKLV H[DPSOH 0HWKHQ\ XVHV DQ )PDM FKRUG YRLFLQJ XVLQJ WKH PDMRU WK DV WKH OHDGLQJ
QRWH RQ EHDW WKUHH RI EDU  7KLV FKRUG VKDSH LV WKHQ SOD\HG XS RQH VHPLWRQH
DQWLFLSDWLQJ WKH FKDQJH WR )PLQ FUHDWLQJ D GLVVRQDQW YRLFLQJ ZLWK WKH URRW DV WKH OHDGLQJ
QRWH 7KLV WHQVLRQ LV UHOHDVHG ZKHQ KH UHVROYHV WKH FKRUG XS D WRQH XVLQJ WKH WK * DV WKH
OHDGLQJ QRWH FUHDWLQJ D PLQRU WK YRLFLQJ GXULQJ )PLQ 0HWKHQ\ DOVR XVHV WKLV WHFKQLTXH
IUHTXHQWO\ GXULQJ WKH FKRUGPHORG\ VROR LQ *LDQW 6WHSV



)UHH ,PSURYLVDWLRQ
+HDYLO\ LQIOXHQFHG E\ WKH FRPSRVLWLRQV RI 2UQHWWH &ROHPDQ 0HWKHQ\ SOD\V IUHH
LPSURYLVDWLRQV IUHTXHQWO\ ZLWKLQ WKH JXLWDU WULR VHWWLQJ 7KLV LV SDUWLFXODU HYLGHQW RQ KLV
 DOEXP 5HMRLFLQJ LQ ZKLFK KH UHFRUGHG WKUHH &ROHPDQ 7XQHV 7HDUV ,QVLGH
+XPSW\ 'XPSW\ DQG 5HMRLFLQJ :KLOH KDYLQJ KDG UHFRUGHG FRPSOHWHO\ IUHH
LPSURYLVDWLRQV ZKHQ SOD\LQJ IUHH LPSURYLVDWLRQV LQ D JXLWDU WULR 0HWKHQ\ RIWHQ XVHV
IUHH KDUPRQ\ XVLQJ RQH FKRUG DV D UHIHUHQFH WR WKH KDUPRQ\ ZKLOH PDLQWDLQLQJ WKH
PHWUH WKURXJKRXW WKH LPSURYLVDWLRQ 7KLV LV WKH FDVH GXULQJ /DZ <HDUV DQRWKHU 2UQHWWH
&ROHPDQ WXQH LQ ZKLFK WKH LPSURYLVDWLRQ LV EDVHG DURXQG &PLQ EXW LV XOWLPDWHO\ IUHH
IURP DQ\ KDUPRQLF UHVWULFWLRQV
$OWKRXJK WKH PDMRULW\ RI WKH VROR VW\OH FKDUDFWHULVWLFV DUH WKH VDPH GXH WR WKH LPSRUWDQFH
RI IUHH LPSURYLVDWLRQ WR 0HWKHQ\V VRORLQJ VW\OH GXULQJ WKLV VHFWLRQ VW\OLVWLF
FKDUDFWHULVWLFV KDYH EHHQ VHSDUDWHG IURP WKH 6ROR 6W\OH &KDUDFWHULVWLFV FKDSWHU LQ RUGHU WR
KLJKOLJKW VSHFLILF GHYLFHV XVHG GXULQJ WKH IUHH LPSURYLVDWLRQ
&KURPDWLF /LFNV
$V ZLWK WKH VRORV LQ WKH RWKHU WKH VWDQGDUGV &KURPDWLF OLFNV IHDWXUH KHDYLO\ LQ 0HWKHQ\V
IUHH LPSURYLVDWLRQ 7KHVH OLFNV DUH RIWHQ UHVROYHG RQ LQVLGH WRQHV UHODWHG WR WKH UHIHUHQFH
FKRUG &PLQ +LV VLJQDWXUH FKURPDWLFDOO\ GHVFHQGLQJ WKLUGV LQWHUYDOOLF OLFN LV XVHG
IUHTXHQWO\ DQG FDQ EH IRXQG LQ /DZ <HDUV ([  FRQFOXGLQJ D FKURPDWLF SKUDVH LQ
WKH RSHQLQJ WZR EDUV RI KLV VROR

([  /DZ <HDUV EDUV 

'HYHORSLQJ WKH WKHPH RI FKURPDWLVP KH XVHV DQ H[WHQGHG IRXU EDU IXOO\ FKURPDWLF OLFN
([  6WDUWLQJ IURP ) KH DVFHQGV FKURPDWLFDOO\ XS WR $ DQG WKHQ GHVFHQGV EDFN GRZQ



WR *( ZKHUH DJDLQ WKH OLFN LV FRQFOXGHG XVLQJ D 0HWKHQ\ GHVFHQGLQJ WKLUGV OLFN HQGLQJ
RQ WKH URRW QRWH & RI WKH UHIHUHQFH FKRUG &PLQ

([  /DZ <HDUV EDUV 

7ULDGV
$JDLQ WULDGV DSSHDU IUHTXHQWO\ LQ 0HWKHQ\V IUHH LPSURYLVDWLRQ DQG DUH XVHG W\SLFDOO\ RQ
WKH VHFRQG WKLUG DQG IRXUWK VWULQJV 'XULQJ /DZ <HDUV ([  KH XVHV D * PDMRU WULDG
ZKLFK WKHQ PRYHV LQWR D  UHVROXWLRQ PRYLQJ IURP ) WR ( LPSO\LQJ D SHUIHFW FDGHQFH
*& RYHU &PLQ

([  /DZ <HDUV EDU 

0HWKHQ\ XVHV DQRWKHU RQH RI KLV WUDGHPDUN WULDG OLFNV GXULQJ /DZ <HDUV ([  LQ
ZKLFK KH XVHV $XJPHQWHG WULDGV DVFHQGLQJ LQ WRQHV ,Q WKLV FDVH KH DVFHQGV IURP D '



DXJPHQWHG WULDG WR DQ ( DXJPHQWHG WULDG SOD\LQJ ERWK WULDGV SDWWHUQV RYHU WKH WKLUG IRXUWK
DQG ILIWK VWULQJV

([  /DZ <HDUV EDU 

6RPH RI WKHVH WULDG SDWWHUQV VHHP WR OHQG WKHPVHOYHV PRUH WR IUHH LPSURYLVDWLRQ
0HWKHQ\ XVHV D FKURPDWLFDOO\ DVFHQGLQJ PDMRU WULDG VHTXHQFH GXULQJ /DZ <HDUV ([
 XVLQJ D  SDWWHUQ IRU HDFK WULDG

([  /DZ <HDUV EDU 

,Q WKLV H[DPSOH KH VWDUWV XVLQJ D  SDWWHUQ GHULYHG IURP $( WULDG JHQHUDWLQJ WKH
QRWHV $(&((& 7KLV VHTXHQFH WKHQ DVFHQGV IURP $( WR '( D IRXUWK RQ WKH ILIWK DQG
VL[WK VWULQJV



)LQJHULQJ /LFNV
'XULQJ IUHH LPSURYLVDWLRQ 0HWKHQ\ XVHV ILQJHULQJ OLFNV IUHTXHQWO\ 2QH RI WKH PRVW
FRPPRQ ILQJHULQJ OLFNV KH XVHV LV KLV  ILQJHULQJ OLFN /LNH KLV SOD\LQJ GXULQJ WKH
RWKHU VWDQGDUGV XQGHU LQYHVWLJDWLRQ KH XVHV WKHVH OLFNV DV D PHDQV RI RXWOLQLQJ KDUPRQ\
ZLWKLQ WKH LPSURYLVDWLRQV )RU H[DPSOH GXULQJ /DZ <HDUV ([  0HWKHQ\ XVHV D 
 ILQJHULQJ OLFN RQ WKH VHFRQG DQG WKLUG VWULQJV PHUJHG ZLWK D FKURPDWLFDOO\
GHVFHQGLQJ WKLUGV OLFN WR FUHDWH D & KDUPRQLF PLQRU OLFN ZLWK D (WK SDVVLQJ QRWH *(

([  /DZ <HDUV EDU 

0HWKHQ\ EHJLQV WKH ILQJHULQJ OLFN XVLQJ WKH WKLUG ILQJHU WR SOD\ * PHORG\ QRWH WKH WK RI
& PLQRU +H IROORZV WKLV XVLQJ WKH VHFRQG ILQJHU SOD\LQJ *( PHORG\ QRWH (WK DQG WKHQ
WKH VW ILQJHU SOD\LQJ ) PHORG\ QRWH WK 7KH ILQDO QRWH LQ WKH SDWWHUQ ' WK SOD\HG RQ
WKH WKLUG VWULQJ LV XVHG WR PHUJH WKH ILQJHULQJ OLFN LQWR WKH GHVFHQGLQJ WKLUGV OLFN
+H DOVR XVHV WKH LQYHUVH RI WKH  OLFN D  ILQJHULQJ OLFN ZKHUH WKH ODVW QRWH LQ
WKH SDWWHUQ  LV SOD\HG RQ WKH VWULQJ EHORZ WKH RQH RQ ZKLFK LW EHJDQ )RU H[DPSOH LQ
/DZ \HDUV EDU  KH SOD\V D GLVVRQDQW ILQJHULQJ OLFN ZKHUH WKH ODVW QRWH RI WKH SDWWHUQ
& LV XVHG DV WKH WDUJHW QRWH DQG LV WKH EDVH LQ ZKLFK WKH OLFN LV IRUPHG 8VLQJ WKH ILUVW
ILQJHU 0HWKHQ\ EHJLQV WKH SDWWHUQ RQ ) SOD\HG RQ WKH ILIWK VWULQJ +H WKHQ PRYHV
FKURPDWLFDOO\ XS IURP * WR WKH * XVLQJ WKH VHFRQG DQG WKLUG ILQJHUV 7KH ODVW QRWH RI WKH
SDWWHUQ & LV SOD\HG XVLQJ WKH VHFRQG ILQJHU RQ WKH IRXUWK VWULQJ
7KLV OLFN LV UHSHDWHG DJDLQ LQ EDU 
3DUDOOHO )LQJHULQJ /LFNV
7KHVH OLFNV DUH XVHG IUHTXHQWO\ GXULQJ /DZ <HDUV DQG DUH D PHDQV IRU 0HWKHQ\ WR
FUHDWH SKUDVHV EDVHG RQ V\PPHWULFDO VKDSHV RQ WKH JXLWDU ZKLFK DUH LGHQWLILDEOH WR
0HWKHQ\ VRORLQJ VW\OH ZLWKLQ IUHH LPSURYLVDWLRQ



)RU H[DPSOH LQ /DZ <HDUV ([  KH XVHV D  ILQJHULQJ OLFN WKDW PRYHV LQWR D
SDUDOOHO ILQJHULQJ OLFN

([  /DZ <HDUV EDU 

,Q WKLV H[DPSOH WKH SDUDOOHO ILQJHULQJ OLFN EHJLQV IURP EHDW WKUHH RI WKH EDU 7KLV OLFN
SLYRWV EHWZHHQ WKH WKLUG DQG ILIWK IUHWV XVLQJ WKH ILUVW DQG WKLUG ILQJHUV RYHU WKH VHFRQG
WKLUG DQG IRXUWK VWULQJV JHQHUDWLQJ DQG LQ WKH FRQWH[W ZLWK WKH ILQJHULQJ OLFN D OLQH EDVHG
DURXQG & PLQRU EHERS VFDOH $QRWKHU H[DPSOH FDQ EH IRXQG LQ EDU  ZKHUH 0HWKHQ\
SOD\V D VLPLODU SDUDOOHO ILQJHULQJ OLFN EDVHG DURXQG WKH IRXUWK DQG VL[WK IUHWV RYHU WKH
VHFRQG DQG WKLUG VWULQJV 7KLV OLFN JHQHUDWHV D ZKROH WRQH VFDOH SDWWHUQ DVFHQGLQJ IURP %
PHORG\ QRWH



3DUDOOHO 6WUXFWXUHV
3DUDOOHO VWUXFWXUHV DUH VLPLODU WR SDUDOOHO ILQJHULQJ OLFNV LQ WKDW WKH PHORG\ FUHDWHG LV
GHILQHG E\ WKH VKDSH RI WKH VWUXFWXUH SOD\HG RQ WKH JXLWDU %XW LQVWHDG RI WKH VWUXFWXUH
EHLQJ SDUDOOHO XS DQG GRZQ VWULQJV 3DUDOOHO VWUXFWXUHV PRYH DFURVV WKH VWULQJV SDUDOOHO WR
WKH IUHWV
8VHG IUHTXHQWO\ LQ /DZ <HDUV WKHVH VWUXFWXUHV ZRUN ZHOO ZLWKLQ WKH IUHH LPSURYLVHG
IRUPDW DQG KDYH EHFRPH VWURQJO\ DVVRFLDWHG ZLWK WKH 0HWKHQ\ VRORLQJ VW\OH ZKLFK LV DOVR
UHIOHFWHG LQ KLV VRORV GXULQJ PRUH FRQYHQWLRQDO KDUPRQ\
$Q H[DPSOH RI D SDUDOOHO VWUXFWXUH LV GHPRQVWUDWHG GXULQJ /DZ <HDUV ([  LQ ZKLFK
0HWKHQ\ EHJLQV ZLWK DQ LQWHUYDOOLF VWUXFWXUH EDVHG RQ D SDUDOOHO ILQJHULQJ OLFN 7KH ILUVW
VWUXFWXUH LV EDVHG RQ D IRXUWK WR VL[WK IUHW SDWWHUQ XVLQJ WKH ILUVW DQG WKLUG ILQJHUV
EHJLQQLQJ RQ WKH ILUVW VWULQJ RI WKH JXLWDU

([  /DZ <HDUV EDUV 

,Q WKH VHFRQG EDU RI WKH H[FHUSW EDU  0HWKHQ\ PRYHV WKH ILUVW VWUXFWXUH GRZQ D WRQH
WZR IUHWV EHJLQQLQJ WKH QHZ VWUXFWXUH RQ WKH IRXUWK IUHW RI WKH VHFRQG VWULQJ 7KLV QHZ
SDUDOOHO VWUXFWXUH LV SOD\HG RYHU WKH VHFRQG DQG IRXUWK IUHWV RYHU WKH JXLWDU +H VWDUWV D
QHZ SDUDOOHO VWUXFWXUH GRZQ D VHPLWRQH RQH IUHW RQ WKH ILUVW IUHW RQ WKH WKLUG VWULQJ RQ WKH
VHFRQG EHDW LQ EDU  ZLWK WKH QHZ VWUXFWXUH SOD\HG RQ WKH ILUVW DQG WKLUG IUHWV 7KH
IROORZLQJ VWUXFWXUH PRYHV XS D PLQRU WKLUG WKUHH IUHWV EHJLQQLQJ RQ WKH ILUVW VWULQJ RQ
WKH IRXUWK IUHW 7KLV VWUXFWXUH LV SOD\HG RYHU WKH IRXUWK DQG VL[WK IUHWV RQ WKH JXLWDU
$QRWKHU H[DPSOH FDQ EH IRXQG LQ /DZ <HDUV ([  LQ ZKLFK 0HWKHQ\ EHJLQV XVLQJ
RQH SDUDOOHO VWUXFWXUH DQG WKHQ GHYHORSV WKLV LQWR DQRWKHU SDUDOOHO VWUXFWXUH



([  /DZ <HDUV EDUV 

,Q WKLV H[FHUSW 0HWKHQ\ SOD\V D PHORGLF VWUXFWXUH EDVHG DURXQG D  GLJLWDO SDWWHUQ
RYHU EHDWV RQH DQG WZR LQ EDU  7KLV VWUXFWXUH LV UHSHDWHG XS D WRQH WZR IUHWV LQ EDU
 DJDLQ RYHU EHDWV RQH DQG WZR 7KH RULJLQDO VWUXFWXUH LV GHYHORSHG LQ EDUV 
XVLQJ D VWUXFWXUH EDVHG DURXQG D  GLJLWDO SDWWHUQ EHJLQQLQJ IURP WKH ILIWK IUHW & RI
WKH WKLUG VWULQJ 7KLV VWUXFWXUH PRYHV XS RQH VHPLWRQH RQH IUHW EHJLQQLQJ IURP WKH WKLUG
GLJLW  IURP WKH VL[WK IUHW ) RI WKH QG VWULQJ 7KH ILQDO VWUXFWXUH LV SOD\HG XS D
VHPLWRQH EHJLQQLQJ IURP WKH VHYHQWK IUHW )  RQ WKH VHFRQG VWULQJ LQ EDU 



0HWKHQ\ 6FDOHV
$OWKRXJK OHVV FRPPRQ LQ KLV IUHH LPSURYLVDWLRQ 0HWKHQ\ VWLOO XVHV WKHVH VFDOHV
FRPPRQO\ ZLWKLQ KLV IUHH LPSURYLVDWLRQDO VW\OH
'XULQJ WKH ILUVW H[DPSOH GXULQJ /DZ <HDUV ([  KH XVHV D & EOXHV VFDOH ZLWK D WK
DGGLWLRQ WRQH EHJLQQLQJ IURP WKH WK LQWHUYDO '

([  /DZ <HDUV EDUV 

7KLV WKHPH LV GHYHORSHG LQWR FOXVWHUV EDVHG DURXQG WKH & PLQRU SHQWDWRQLF 0HWKHQ\
UHSHDWV WKLV WKHPH DJDLQ ODWHU EDUV  ZKHUH 0HWKHQ\ EHJLQV ZLWK D & PLQRU
SHQWDWRQLF VFDOH XVLQJ D SDUDOOHO ILQJHULQJ OLFN EDVHG DURXQG WKH VL[WK DQG HLJKW IUHWV 7KLV
WKHPH LV GHYHORSHG LQ EDUV  ZKHUH 0HWKHQ\ SOD\V FOXVWHUV EDVHG DURXQG WKH &
PLQRU SHQWDWRQLF VFDOH ZLWK D WK DGGLWLRQ WRQH
$QRWKHU 0HWKHQ\ VFDOH WKDW DSSHDUV LQ /DZ <HDUV ([  LV WKH 6SDQLVK 3KU\JLDQ
VFDOH ZLWK D WK DGGLWLRQ WRQH DQG WKH WK LQWHUYDO KDV EHHQ RPLWWHG

([  /DZ <HDUV EDU 

,Q WKLV H[DPSOH 0HWKHQ\ XVHV D * 0HWKHQ\ 6SDQLVK 3KU\JLDQ VFDOH EHJLQQLQJ IURP WKH
URRW QRWH * GHVFHQGLQJ WKURXJK WKH RFWDYH WR WKH WK LQWHUYDO ) RPLWWLQJ WKH WK
LQWHUYDO & 7KLV VFDOH RQO\ DSSHDUV RQFH LQ 0HWKHQ\V VROR GXULQJ /DZ <HDUV



'LJLWDO 3DWWHUQV DQG 6FDODU 3DWWHUQV

7KRXJK QRW DV FRPPRQ DV LQ KLV RWKHU VRORV ERWK WKHVH W\SHV RI SDWWHUQV DUH SUHVHQW
GXULQJ /DZ <HDUV LQ IUHH LPSURYLVDWLRQ $OWKRXJK LW LV KDUG WR LGHQWLI\ GLJLWDO SDWWHUQV
EHFDXVH RI WKH ODFN RI KDUPRQ\ 0HWKHQ\ VXSHU LPSRVHV WKHVH SDWWHUQV RYHU WKH IUHH
KDUPRQ\ PRVWO\ LQ F\FOLFDO SDWWHUQV
$Q H[DPSOH RI D GLJLWDO SDWWHUQ GXULQJ IUHH KDUPRQ\ FDQ EH IRXQG LQ /DZ <HDUV ([
 LQ ZKLFK 0HWKHQ\ VXSHU LPSRVHV D GLJLWDO SDWWHUQ PRYLQJ LQ D IRXUWKV GRPLQDQW F\FOH
IURP %((($(

([  /DZ <HDUV EDUV 

%DVHG DURXQG D  UHVROXWLRQ WKLV SDWWHUQ EHJLQV XVLQJ D  GLJLWDO SDWWHUQ RYHU
WKH LPSRVHG %( FKRUG 7KH GLJLWDO SDWWHUQ FKDQJHV RYHU WKH LPSRVHG (( FKRUG XVLQJ D 
 GLJLWDO SDWWHUQ 7KH F\FOH LV ILQLVKHG XVLQJ D  GLJLWDO SDWWHUQ RYHU WKH LPSRVHG
$E FKRUG

6FDODU SDWWHUQV DUH XVHG GXULQJ /DZ <HDUV ([  DOVR LQ ZKLFK 0HWKHQ\ XVHV DQ
DVFHQGLQJ WKLUGV SDWWHUQ GXULQJ D GHVFHQGLQJ & 0HORGLF PLQRU VFDOH SDWWHUQ

([  /DZ <HDUV EDUV 



,QWHUYDOOLF /LFNV
0XFK RI 0HWKHQ\V SOD\LQJ VW\OH LV GHILQHG E\ ZLGH LQWHUYDOOLF SDWWHUQV XVHG GXULQJ
LPSURYLVDWLRQV 0HWKHQ\V VRORLQJ VW\OH GXULQJ IUHH LPSURYLVDWLRQ LV QR GLIIHUHQW ZLWK
WKHVH LQWHUYDOOLF OLQHV XVHG IUHTXHQWO\ RIWHQ RYHU D QXPEHU RI VWULQJV FUHDWLQJ ZLGH
LQWHUYDOV
([DPSOHV RI VXFK LQWHUYDOOLF SDWWHUQV DUH XVHG GXULQJ /DZ <HDUV ([  LQ ZKLFK
0HWKHQ\ XVHV DQ LQWHUYDOOLF OLFN VLPLODU LQ FRQVWUXFWLRQ WR D SDUDOOHO ILQJHULQJ OLFN

([  /DZ <HDUV EDUV 

'XULQJ WKLV H[DPSOH 0HWKHQ\ EHJLQV WKH LQWHUYDOOLF OLFN VWDUWLQJ IURP ) PHORG\ QRWH
$VFHQGLQJ D PLQRU WK WR ' PHORG\ QRWH DQG WKHQ XS D WK WR $ PHORG\ QRWH 0HWKHQ\
FUHDWHV D ' PDMRU WULDG 7KLV LQWHUYDOOLF VHTXHQFH LV UHSHDWHG DJDLQ IURP * ZLWK 0HWKHQ\
SOD\LQJ WKH QRWHV IURP * PDMRU WULDG ZLWK WKH LQWHUYDOV LQYHUWHG *' D WK '% D WK
7KLV OLFN FRQFOXGHG ZLWK 0HWKHQ\ PRYLQJ GRZQ D VHPLWRQH WR D *E PDMRU WULDG
'HYHORSLQJ WKH LQWHUYDOOLF WKHPH 0HWKHQ\ XVHV DQRWKHU LQWHUYDOOLF VHTXHQFH EDUV 
LQ ZKLFK KH XVHV UHSHWLWLRQ WUDQVSRVLQJ WKH VHTXHQFH RI LQWHUYDOV SOD\HG LQ EDU  XS RQH
WRQH LQ EDU 
%DVHG RQ D SDUDOOHO ILQJHULQJ OLFN 0HWKHQ\ XVHV DQRWKHU LQWHUYDOOLF GXULQJ /DZ <HDUV
EDUV  LQ ZKLFK WKLV OLFN LV EDVHG DURXQG WKH * +DOI :KROH 'LPLQLVKHG VFDOH
LQIHUULQJ *E KDUPRQ\ 7KH ILUVW OLFN XVHV WKH EUG UG DQG WK LQWHUYDOV %( &( DQG %(
7KHVH VHWV RI LQWHUYDOV DUH UHSHDWHG XS D PLQRU WKLUG EDU  FUHDWLQJ D GLPLQLVKHG
VXEVWLWXWH JLYLQJ WKH WK WK DQG WK LQWHUYDOV &  ' DQG & 



&KRUG 0HORG\
$OWKRXJK WKHUH LV FKRUG PHORG\ SUHVHQW GXULQJ /DZ <HDUV WKH PHORGLF DVSHFW RI WKH
FKRUG PHORG\ LV YHU\ VLPSOH ZLWK RQO\ D IHZ GLIIHUHQW OHDGLQJ QRWHV DQG D VPDOO QXPEHU
RI FKRUG YRLFLQJV
7KH PDLQ GHYLFH EHLQJ XVHG GXULQJ WKH FKRUG PHORG\ VROR LV SDUDOOHO FKRUG YRLFLQJV
0HWKHQ\ EHJLQV XVLQJ DQ RSHQ VHFRQG VWULQJ GURQH PHORG\ QRWH % ZLWK DQ $ DQG D %
GRXEOHG QRWH WKLUG DQG IRXUWK IUHWV RQ WKH WKLUG VWLQJ EDU  7KLV LV IXUWKHU
GHYHORSHG ZLWK 0HWKHQ\ DGGLQJ ( DQG DQ ) QRWHV UHVSHFWLYHO\ WR WKRVH FKRUGV WKLUG
DQG IRXUWK IUHWV RQ WKH IRXUWK VWULQJ EDUV  7KLV LV WKHQ GHYHORSHG DGGLQJ (
DQG ) PHORG\ QRWHV UHVSHFWLYHO\ ILUVW DQG VHFRQG IUHWV RQ WKH ILUVW VWULQJ EDUV 

7KLV FKRUG PHORG\ VROR LV PRVWO\ EDVHG RQ SDUDOOHO PRWLIV DQG DYRLGV FRQYHQWLRQDO
KDUPRQ\



3DUW 7ZR 7KH &RPSRVLWLRQV RI 3DW 0HWKHQ\

7KH PDLQ UHDVRQ , EHJDQ FRPSRVLQJ ZDV WR GHYHORS D VRXUFH RI PDWHULDO ZKLFK
VXLWHG P\ FRQFHSWLRQ RI SOD\LQJ  6RPH RI WKH HDUO\ PXVLF , ZURWH ZDV D OLWWOH
PRUH JXLWDU OLNH  0DQ\ RI WKH WXQHV , ZURWH LQ WKDW SHULRG ZHUH GHVLJQHG WR
HPSKDVL]H WKH XQLTXH IHDWXUHV RI P\ JXLWDU SOD\LQJ VW\OH
3DW 0HWKHQ\ *ROGVWHLQ  S
7KH SULPDU\ GHYLFH LQ 0HWKHQ\V FRPSRVLQJ LV PHORG\ JHQHUDOO\ VWDUWLQJ ZLWK WKH
WKHPH WKHQ KDUPRQLVHG ZLWK FKRUGV 2UQHWWH &ROHPDQ ZDV PDMRU LQIOXHQFH RQ 0HWKHQ\
LQ WKLV ZD\ ZKDW GUHZ PH WR KLV WXQHV DQG KLV SOD\LQJ LV WKH IDFW WKDW WKH PHORG\
LPSOLHV WKH KDUPRQ\ $QG LQ VRPH FDVHV LWV QRW KDUPRQ\ LQ WHUPV RI FKRUGDO KDUPRQ\
*ROGVWHLQ  S 7KLV KDV EHHQ D PDMRU IDFWRU WR WKH FRPSRVLWLRQV IRXQG RQ KLV
WULR DOEXPV LQFOXGLQJ %ULJKW 6L]H /LIH  4XHVWLRQ DQG $QVZHU  DQG 7ULR
!  ZLWK WKH PHORG\ DQG EDVV PRYHPHQW LPSO\LQJ KDUPRQ\
'XULQJ WKLV VHFWLRQ D UHSUHVHQWDWLYH VDPSOH RI 0HWKHQ\V FRPSRVLWLRQV ZLOO EH DQDO\VHG
WR HVWDEOLVK WKH FRPPRQ GHYLFHV LQ 0HWKHQ\V FRPSRVLWLRQV
%ULJKW 6L]H /LIH
$ 0HWKHQ\ &ODVVLF WKLV LV WKH WLWOH WUDFN IURP 0HWKHQ\V GHEXW DOEXP %ULJKW 6L]H /LIH
 7KLV WXQH LV LGLRPDWLF RI WKH WXQHV EHLQJ ZULWWHQ E\ KLP DW WKH WLPH EHLQJ YHU\
JXLWDULVWLF DQG EDVHG DURXQG FRPPRQ 0HWKHQ\ OLFNV DQG FKRUGDO KDUPRQLHV 7KLV SLHFH
KDV D VWUDLJKW HLJKWKV IHHO ERUGHULQJ EHWZHHQ )XQN DQG /DWLQ
'XULQJ WKH UHFRUGLQJ RI WKLV DOEXP 0HWKHQ\ XVHG KLV VWDQGDUG VHWXS RI WKDW WLPH XVLQJ D
*LEVRQ JXLWDU LQWR DQ $FRXVWLF  DPSOLILHU 7KLV FRPELQDWLRQ FUHDWHG KLV
GLVWLQFWLYH PHOORZ FOHDQ WRQH ZLWK ORWV RI PLGUDQJH
$$%$ LQ VWUXFWXUH WKH )LUVW $ 6HFWLRQ LV EDVHG DURXQG ' PDMRU 7KH PHORGLF PRWLI RI
WKH WXQH LV LQWURGXFHG XVLQJ D 0HWKHQ\HVTXH DVFHQGLQJ WK LQWHUYDOOLF OLFN GXULQJ WKH
SLFN XS EDU 7KH KDUPRQ\ RI WKH SLHFH LV LQWURGXFHG EHJLQQLQJ RQ D *PDM ZLWK 0HWKHQ\
PRYLQJ LQWR D OHJDWR GRXEOH VWRS WKV OLFN EDVHG DURXQG ' PDMRU SHQWDWRQLF EDU  7KH
QH[W ILJXUH LV D FRPPRQ 0HWKHQ\ OHJDWR WULSOHW OLQH EDVHG DURXQG ' ,RQLDQ EDU  7KLV



XVHV WKH ILUVW VHFRQG DQG IRXUWK ILQJHUV SOD\LQJ D WKUHHQRWHSHUVWULQJ SDWWHUQ SLFNLQJ
WKH ILUVW WULSOHW RQO\ 7KH WXQH WKHQ VKLIWV IURP PDMRU WR PLQRU KDUPRQ\ ZLWK WKH FKRUG
DVFHQGLQJ IURP *PDM WR %(PDM($ EDU  ZLWK 0HWKHQ\ XVLQJ DQ RSHQ ( VWULQJ
PHORG\ QRWH 7KH PHORG\ WKHQ PRGXODWHV EDFN WR ' PDMRU XVLQJ D PHORG\ EDVHG DURXQG
DQ RSHQ ' FKRUG KHOG RYHU '& 0HWKHQ\ WKHQ XVHV D ' PLQRU GLJLWDO SDWWHUQ (
RYHU %(PDM EDU  EHIRUH WKH UHWXUQLQJ WR WKH RSHQLQJ OLFN RQ WKH ILUVW WLPH HQGLQJ RYHU
*$ 7KH VHFRQG WLPH HQGLQJ XVHV D PHORG\ WKDW LV YHU\ VLPLODU WR WKH ILUVW EDU RI WKH ILUVW
WLPH HQGLQJ
7KH % VHFWLRQ RSHQV ZLWK D GHVFHQGLQJ LQWHUYDOOLF OLFN RYHU *$ EXLOW DURXQG D
*PDM  'PDM JXLWDU EORFN FKRUG VKDSH 0RYLQJ LQWR D GHVFHQGLQJ ' ,RQLDQ OLQH WKH
VHTXHQFH LV UHSHDWHG D WRQH ORZHU RYHU )* XVLQJ ' 0L[RO\GLDQ EDU  $Q
LQWHUYDOOLF OLFN LV XVHG DJDLQ RYHU *$ WKLV WLPH XVLQJ DQ $  FKRUG VKDSH EDU 
PRYLQJ LQWR D GHVFHQGLQJ ' ,RQLDQ OLQH 0HWKHQ\ XVHV D OLQH EXLOW DURXQG ' PDMRU WULDG
ZLWK DQ DGGHG WK LQWHUYDO EDU  FRQFOXGLQJ SOD\LQJ WKH RSHQLQJ WKHPH LQ XQLVRQ ZLWK
WKH EDVV PRYLQJ LQWR WKH ILQDO $ VHFWLRQ
7KH ODVW $ VHFWLRQ LV VLPLODU WR WKH ILUVW WZR GLIIHULQJ RQO\ LQ WKH ODVW  EDUV RI WKH KHDG
ZLWK 0HWKHQ\ XVLQJ D FRXQWU\LVK JXLWDU OLFN EDVHG DURXQG $ PRYLQJ LQWR D FOXVWHU
YRLFLQJ RYHU 'PDM EDUV 
8QLW\ 9LOODJH
2ULJLQDOO\ SOD\HG DV D PXOWLWUDFNHG GXR ZLWK WKH DFFRPSDQLPHQW RQ 6WULQJ JXLWDU
WKLV %DOODG KDV D VWUDLJKWHLJKWKV IHHO ZLWK DQ $% VWUXFWXUH ZLWK D  EDU $ VHFWLRQ DQG DQ
 EDU % VHFWLRQ $ORQJ ZLWK WKH VWULQJ 0HWKHQ\ SOD\V WKH PDLQ PHORG\ RI WKH SLHFH RQ
KLV *LEVRQ JXLWDU WKURXJK DQ $FRXVWLF  DPSOLILHU
7KH $ VHFWLRQ XVHV DQ DVFHQGLQJ LQWHUYDOOLF OLQH EDVHG RQ DQ $PLQ JXLWDU FKRUG VKDSH
WKHQ PRYLQJ WR D )PDM  FKRUG VKDSH RYHU $PLQ EDU  $Q $ KDUPRQLF PLQRU VFDOH LV
WKHQ XVHG RYHU ( DVFHQGLQJ WR WKH WK * UHVROYLQJ GRZQ WR ( RYHU )PDM EDU  7KLV
LV UHSHDWHG RYHU WKH QH[W IRXU EDUV ZLWK D %(PDM  SDVVLQJ FKRUG EHLQJ XVHG WR
PRGXODWH LQWR $PDM EDU 
$QRWKHU LQWHUYDOOLF OLQH LV SOD\HG RYHU $PDM EDVHG DURXQG & PLQ FKRUG VKDSH EDU 
ZKLFK WKHQ PRYHV LQWR D GLJLWDO SDWWHUQ  RYHU $PDM WR D E GLJLWDO SDWWHUQ RYHU



& PLQ EDUV  0HWKHQ\ WKHQ XVHV D GHVFHQGLQJ PHORG\ EDVHG RQ * PHORGLF PLQRU
VFDOH RYHU * PLQ ((  PLQRU ,,9 LQWR D VLPSOH ( PDMRU SHQWDWRQLF OLQH RYHU
) PLQ %VXV 7KLV WKHPH LV NHSW XVLQJ KDUPRQLF JHQHUDOLVDWLRQ RYHU WKH QH[W
VHTXHQFH RI FKRUGV (PDM (& EDUV 
7KH ILUVW IRXU EDUV RI WKH % VHFWLRQ XVH D FRPPRQ 0HWKHQ\ FRPSRVLWLRQ GHYLFH .H\
FHQWUHV DVFHQGLQJ LQ PLQRU WKLUGV 7KLV VHFWLRQ DOVR XVHV D ' SHGDO WR EXLOG WHQVLRQ 7KH
PHORG\ EHJLQV ZLWK D * PDMRU SHQWDWRQLF RYHU &' PRYLQJ LQWR D * ,RQLDQ ILJXUH RYHU
*' EDUV  7KLV VHTXHQFH LV UHSHDWHG RYHU WKH QH[W NH\ FHQWUH %E PDMRU XVLQJ %E
PDMRU SHQWDWRQLF VFDOH RYHU ((' %(' WKH PHORG\ GLIIHULQJ VOLJKWO\ RYHU %(' EXW
UHWDLQLQJ %( PDMRU SHQWDWRQLF VFDOH 7KH NH\ WKHQ PRGXODWHV DJDLQ XS D IRXUWK WR ) ZLWK
0HWKHQ\ PDNLQJ XVH RI VODVK FKRUGV IRU FKURPDWLF EDVV PRYHPHQW %( &%( )$ EDUV
 XVLQJ D PHORG\ OLQH EDVHG DURXQG ) ,RQLDQ 7KH WXQH WKHQ PRGXODWHV GRZQ D
VHPLWRQH WR ( XVLQJ %)  ( ZLWK WKH PHORG\ IROORZLQJ VXLW 0HWKHQ\ ILQDOO\ XVHV DQ
(VXV FKRUG WR UHWXUQ EDFN WR $ PLQRU
7KLV WXQH LV D JRRG H[DPSOH RI KRZ 0HWKHQ\ XVHV PHORGLF VHTXHQFHV ZLWK VKLIWLQJ NH\
FHQWUHV WR FUHDWH LQWHUHVW ZKLOH VWLOO UHWDLQLQJ WKH OLVWHQHUV DWWHQWLRQ E\ NHHSLQJ WKH
PHORG\ VLPSOH DQG H[SUHVVLYH
-DPHV
$ MRLQW FRPSRVLWLRQ ZULWWHQ ZLWK /\OH 0D\V -DPHV ILUVW DSSHDUHG RQ WKH  3DW
0HWKHQ\ *URXS UHOHDVH 2IIUDPS 7KLV WXQH ZDV LQVSLUHG E\ WKH VLQJHUVRQJZULWHU -DPHV
7D\ORU RI ZKRP 0HWKHQ\ VD\V +LV PXVLFLDQVKLS LV SUHWW\ DPD]LQJ (YHU\ WLPH , KDYH
HYHU EHHQ WR DQ\ RI KLV FRQFHUWV , KDYH ZDONHG DZD\ MXVW NQRFNHG RXW ZLWK WKH ZD\ KH LV
DEOH WR PDNH HDFK QRWH GR LWV WKLQJ SHUIHFWO\ LQ WXQH DQG LQ WLPH +H LV D UHDOO\ JUHDW
PXVLFLDQ &DOODUG  S 
$JDLQ EHLQJ YHU\ JXLWDU EDVHG WKLV WXQH LV D JRRG H[DPSOH RI KRZ 0HWKHQ\ XVHV LQWULFDWH
FKRUG PHORGLHV KDUPRQLVLQJ ILUVW DQG VHFRQG VWULQJ JXLWDU PHORG\ OLQHV ZLWK EORFN
FKRUGV XQGHUQHDWK
)RU WKH UHFRUGLQJ RI WKLV SLHFH 0HWKHQ\ XVHG KLV *LEVRQ WKURXJK  /H[LFRQ 3ULPH
7LPH GLJLWDO GHOD\ OLQHV ZLWK D YHU\ VOLJKW SLWFK EHQG WR FUHDWH KLV XQLTXH FKRUXVHG
JXLWDU VRXQG



$$%$ LQ VWUXFWXUH WKH WXQH VWDUWV RII ZLWK DQ EDU LQWURGXFWLRQ ZLWK WKH PHORG\
HVVHQWLDOO\ LQ * PDMRU $ FRPPRQ 0HWKHQ\ GHYLFH WKH PHORG\ LV KDUPRQLVHG XVLQJ
VHFRQGDU\ GRPLQDQW FKRUGV %'  $&  EDUV  DQG  DQG LQYHUVLRQV WR SURYLGH
FKURPDWLF EDVV PRYHPHQW IURP %'  *PDM' EDUV  7KH ODVW IRXU EDUV RI WKH
PHORG\ VKLIW IURP ' PDMRU WR ' PLQRU KDUPRQLVHG ZLWK WKLUGV RYHU DQ $ SHGDO '$
$PLQ EHIRUH LQWURGXFLQJ WKH $ VHFWLRQ XVLQJ PDMRU WULDGV * $ EDU  ,W LV LPSRUWDQW
WR QRWH WKDW WKLV WUDQVFULSWLRQ RI -DPHV LQFOXGHV D FKRUG PHORG\ DUUDQJHPHQW GXULQJ WKLV
LQWURGXFWLRQ VHFWLRQ ZKLFK ZDV QRW RQ WKH RULJLQDO UHFRUGLQJ
7KH 0HORG\ GXULQJ WKH $ VHFWLRQ LV EDVHG FRPSOHWHO\ RQ ' PDMRU SHQWDWRQLF DQG LV
KDUPRQLVHG XVLQJ EORFN FKRUGV DQG WK YRLFLQJV *PDM ) P $OWKRXJK WKH FKRUGV DUH
GHULYHG IURP ' PDMRU D PLQRU ,,9 LV XVHG WR PRYH WR % PLQRU WKH UHODWLYH PLQRU RI '
PDMRU EDUV  ,QWR WKH ODVW IRU EDUV RI WKH $ VHFWLRQ LQWR WKH ILUVW WLPH HQGLQJ
0HWKHQ\ XVHV D ' PDMRU SHQWDWRQLF VHTXHQFHV KDUPRQLVLQJ WKHVH ZLWK *PDM DQG 'PDM
EORFN FKRUGV EDUV  EHIRUH FRQFOXGLQJ WKH ILUVW $ VHFWLRQ ZLWK PDMRU WULDGV *$
$ 2Q VHFRQG WLPH HQGLQJ 0HWKHQ\ XVHV D WK VXVSHQVLRQ WR D UG UHVROXWLRQ *' '
7KH % VHFWLRQ FRQWLQXHV WKH PRWLI RI WKH WXQH XVLQJ VHFRQGDU\ GRPLQDQW FKRUGV DQG NH\
PRGXODWLRQV ZLWK FKRUG PHORG\ ZLWK 0HWKHQ\ DJDLQ XWLOLVLQJ LQYHUVLRQV IRU VPRRWKHU
EDVV PRYHPHQW 7KH NH\V PRGXODWH IURP ' PDMRU % PLQRU ' PDMRU ) PLQRU $ PDMRU
DQG ILQDOO\ EDFN WR ' PDMRU 7KH PHORG\ IROORZV DQ DVFHQGLQJ VHTXHQFH EDVHG DURXQG D
GLJLWDO SDWWHUQ ( 0HWKHQ\ KDUPRQLVHV WKLV VHFWLRQ XVLQJ WULDGV DQG PDM EORFN
FKRUG VKDSHV 7KH % VHFWLRQ LV FRQFOXGHG XVLQJ D PHORG\ EDVHG DURXQG ' PDMRU
SHQWDWRQLF DQG ' ,RQLDQ EDUV 
7KH ILQDO $ VHFWLRQ LV WKH VDPH DV WKH ILUVW EXW ZLWK WKH H[FHSWLRQ RI D VHFRQGDU\
GRPLQDQW VXEVWLWXWLRQ ' * EDU  2Q WKH ILQDO WLPH WKURXJK WKH KHDG WKH FRGD LV
WDNHQ RQ WKH ODVW $ ZKLFK UHSHDWV WKH ODVW  EDUV RI WKH PHORG\ ZLWK WKH FKRUGV UHVROYHG WR
% PLQRU UHODWLYH PLQRU UDWKHU WKDQ ' PDMRU FRQFOXGLQJ RQ ' PDMRU



1HYHU 7RR )DU $ZD\

'XULQJ WKH UHFRUGLQJ RI 4XHVWLRQ DQG $QVZHU  0HWKHQ\ XVHG DQ ,EDQH] 3DW
0HWKHQ\ PRGHO SURWRW\SH JXLWDU SOXJJHG VWUDLJKW LQWR WKH UHFRUGLQJ GHVN ZLWK D VOLJKW
 06 GHOD\ WR OHQJWKHQ KLV QRWHV
$QRWKHU HYHQ HLJKWKV IHHO EDOODG WKLV WXQH DJDLQ LV D JRRG H[DPSOH RI KRZ 0HWKHQ\
KDUPRQLVHV WKH PHORG\ XVLQJ FKRUG PHORG\ 7KLV WXQH DOVR FRQWDLQV PDQ\ 0HWKHQ\
WUDGHPDUN GHYLFHV LQFOXGLQJ VODVK FKRUGV SHGDO SRLQWV DQG NH\ PRGXODWLRQV 7KH PHORG\
HVSHFLDOO\ LQ WKLV WXQH VHHPV WR EH GHULYHG IURP WKH KDUPRQ\ DQG FKRUGDO JXLWDU VKDSHV LQ
WKLV SLHFH ZLWK WKH PHORG\ QRWHV EHLQJ GRPLQDQWO\ RQ WKH ILUVW DQG VHFRQG VWULQJV $OVR
DOWKRXJK WKLV WXQH KDV D VWUDLJKW HLJKWV IHHO 0HWKHQ\ UHJXODUO\ YLVLWV D  UK\WKP JLYLQJ
WKH SLHFH D PRUH IORDW\ IHHO
7KH $ VHFWLRQ EHJLQV LQ % PLQRU * PDMRU ZLWK D GHVFHQGLQJ EDVV OLQH ZLWK XVHV RI VODVK
FKRUGV WKH PHORG\ EHLQJ GHULYHG IURP WKH FKRUG 0HWKHQ\ XVHV D ,,9 LQ * PDMRU EXW
WKHQ FKDQJHV NH\ LQWR ) PDMRU XVLQJ D ,,9 * P &  EDU  0HWKHQ\ WKHQ XVHV DQ
DVFHQGLQJ PHORG\ ZLWK WKH KDUPRQ\ GHULYHG IURP ) PDMRU 7KLV PHORG\ VHWWOHV ODQGLQJ
RQ DQ (PDM FKRUG ZKLFK LV XVHG DV D (PDM SDVVLQJ FKRUG WR ' PLQ EDUV  7KH
ILQDO IRXU EDUV RI $ DUH EDVHG DURXQG ' PLQRU ZLWK 0HWKHQ\ XVLQJ D '( FKRUG XVHG DV
D 9VXV WR FKDQJH NH\ LQWR $ PDMRU IRU WKH QH[W VHFWLRQ EDUV 
7KH % VHFWLRQ XVHV D 0HWKHQ\ WUDGHPDUN $VFHQGLQJ NH\ FHQWUHV LQ PLQRU WKLUGV PRYLQJ
IURP $ PDMRU WR & PDMRU WR (E PDMRU ILQDOO\ VHWWOLQJ RQ D &PLQ FKRUG EDUV 
7KH PHORG\ GXULQJ WKH & VHFWLRQ IROORZV D UHSHWLWLYH DVFHQGLQJ PRWLI ZLWK 0HWKHQ\ XVLQJ
D )* VXEVWLWXWH 9 FKRUG WR &PLQ DQG ,,9V &PLQ )& HPEHOOLVKLQJ WKH PHORG\ ,Q
WKH ODVW WZR EDUV RI WKH & 6HFWLRQ KH XVHV D GHVFHQGLQJ VHTXHQFH RI ,,9 LQWR ' PDMRU
) PLQ % (PLQ $ EDUV 
7KH ' VHFWLRQ IRU WKH PRVW SDUW LV LQ ' PDMRU EXW EULHIO\ PRGXODWHV LQWR % PLQRU XVLQJ D
*PDM) VODVK FKRUG EDUV  ZLWK WKH PHORG\ EDVHG DURXQG ' PDMRU SHQWDWRQLF '
,RQLDQ GXULQJ WKDW FKRUG 0HWKHQ\ XVHV D ,,9 EDU  WR PRYH WR WKH ,9 FKRUG *PDM
ILQDOO\ XVLQJ D '$ VODVK FKRUG WR PRYH LQWR % PLQRU IRU WKH IROORZLQJ VHFWLRQ
7KH ( VHFWLRQ VHHV D UHWXUQ RI WKH RSHQLQJ $ VHFWLRQ EXW LQVWHDG RI XVLQJ D GHVFHQGLQJ
EDVV OLQH KH XVHV DQ DVFHQGLQJ PLQRU WKLUG NH\ VHTXHQFH ZLWK WKH PHORG\ IROORZLQJ EDUV
 ,Q WKH ILIWK EDU RI WKH ( VHFWLRQ KH XVHV D GHVFHQGLQJ FKRUG VHTXHQFH XVLQJ FKRUG
LQYHUVLRQV ZLWK WKH PHORG\ XVLQJ D VLPLODU GHVFHQGLQJ VHTXHQFH EDUV  'XULQJ WKH



ODVW IRXU EDUV RI ( 0HWKHQ\ WKHQ XVHV DQRWKHU WUDGHPDUN D SHGDO ZLWK VKLIWLQJ KDUPRQLHV
RQ WRS FRQFOXGLQJ WKH ( VHFWLRQ
7KH )LQDO VHFWLRQ XVHV D YHU\ FRPPRQ 0HWKHQ\ YDPS ,,  $* * ZKLFK DFWV DV D
UHVWLQJ SRLQW DIWHU WKH KHDG DQG VRORV FRQFOXGLQJ WKH IRUP
4XHVWLRQ DQG $QVZHU
$ PRGHUQ VWDQGDUG WKLV WXQH LV D JRRG H[DPSOH RI KRZ 0HWKHQ\ XVHV D VLPSOH PHORG\
ZLWK RSHQ GXUDWLRQ RI FKRUG FKDQJHV WR FUHDWH D PHPRUDEOH WXQH
7KH LQVWUXPHQWDWLRQ LV WKH VDPH DV IRU 1HYHU 7RR )DU $ZD\
$$%$ LQ IRUP WKH SLHFH RSHQV ZLWK D 'PLQ (PLQ$ YDPS XVLQJ SDUDOOHO FKRUG
VWUXFWXUHV DQG RSHQ VWULQJ SXOORIIV EDUV
7KH $ VHFWLRQ LV  EDUV LQ OHQJWK XVLQJ DQ DOWHUHG PLQRU EOXHV FKRUG SURJUHVVLRQ 7KH
RSHQLQJ IRXU EDUV RI WKH PHORG\ EDUV  XVH DQ DVFHQGLQJ PLQRU &(6+
&RQWUDSXQWDO (ODERUDWLRQ RI 6WDWLF +DUPRQ\ VHTXHQFH 7KHQ PRYLQJ WR WKH ,9 FKRUG
*PLQ WKH FKRUGV DVFHQG GLDWRQLFDOO\ WKURXJK ' $HROLDQ EDUV  0RYLQJ EDFN
LQWR WKH &(6+ VHTXHQFH 0HWKHQ\ WKHQ XVHV D ,,9 LQ WKH NH\ RI %E PDMRU EDU  EXW
LQVWHDG RI JRLQJ WR %EPDM KH XVHV D % DOWHUHG SDVVLQJ FKRUG LQWR D FKURPDWLFDOO\
GHVFHQGLQJ GRPLQDQW FKRUG VHTXHQFH %DOW %(  $DOW UHVROYLQJ EDFN WR 'PLQ
EDUV  7KH PHORG\ GXULQJ WKH $ VHFWLRQ LV VLPSOH DQG YHU\ O\ULFDO EDVHG RQ '
PLQRU SHQWDWRQLF EOXHV VFDOH ZLWK D WK DGGLWLRQ WRQH ( JLYLQJ WKH VHTXHQFH RI QRWHV
' ( ) ** $&' +H DOVR XVHV DQRWKHU RQH RI KLV WUDGHPDUNV D IRXU RYHU WKUHH
UK\WKP $JDLQ WKLV PHORG\ VRXQGV OLNH D 0HWKHQ\ VROR GXH WR WKH KHDY\ XVH RI
SHQWDWRQLFV
'XULQJ WKH % VHFWLRQ 0HWKHQ\ XVHV D ' SHGDO ZLWK D *P 'E SURJUHVVLRQ DERYH LW
EDUV  7KLV SHGDO SRLQW LV IROORZHG E\ DQ DVFHQGLQJ &ROWUDQH 0DWUL[ ZLWK WKH
PHORG\ ZRUNLQJ LQ FRXQWHU SRLQW XVLQJ D GHVFHQGLQJ VHTXHQFH EDVHG RQ PDMRU WULDGV ZLWK
PDMRU EHERS FKURPDWLFLVPV E LQWHUYDOV $JDLQ GXULQJ WKLV VHFWLRQ WKH PHORG\
XVHV D IRXU RYHU WKUHH UK\WKP
7KH ODVW $ VHFWLRQ LV WKH VDPH DV WKH ILUVW ZLWK 0HWKHQ\ XVLQJ RSHQ VWULQJ KDUPRQLFV
EHIRUH KLV VROR EDU 



/LNH PDQ\ 0HWKHQ\ WXQHV GXH WR WKH RSHQ QDWXUH RI WKH FKRUG SURJUHVVLRQ GXULQJ WKH
VROR WKLV WXQH LV D JRRG YHKLFOH WR EORZ RYHU DOORZLQJ WKH LPSURYLVHU PRUH IUHHGRP WR
EH PHORGLF DQG O\ULFDO ZKLFK VXLWV 0HWKHQ\V VW\OH
$OZD\V DQG )RUHYHU
5HFRUGHG RQ 6HFUHW 6WRU\  0HWKHQ\ HQKDQFHV WKH PRRG RI WKH SLHFH E\ XVLQJ D
Q\ORQVWULQJ DFRXVWLF JXLWDU GXH WR LWV VRIWHU DWWDFN DQG WRQH
%HJLQQLQJ ZLWK D VLPSOH LQWURGXFWLRQ EDVHG DURXQG $P 'P EDUV  WKLV WXQH KDV
DQ $%$ VWUXFWXUH WKH ODVW $ EHLQJ H[WHQGHG IRU VRORV
7KH PHORG\ RI IRU WKH $ VHFWLRQ EHJLQV ZLWK D VLPSOH LQWHUYDOOLF PRWLI EDVHG DURXQG WKH
WK DQG WK RI $PLQ DQG 'PLQ UHVROYLQJ WR * RYHU (PLQ )PDM EDUV  0RYLQJ WR
D WKLUG LQWHUYDO MXPS WKH PHORG\ WKHQ PRYHV LQWR D GHVFHQGLQJ OLQH EDVHG RQ $ $HROLDQ
VFDOH EDU  7KLV DFWV DW FRXQWHUSRLQW WR WKH DVFHQGLQJ FKRUG SURJUHVVLRQ * (* 
7KH FKRUG SURJUHVVLRQ WKHQ GHVFHQGV FKURPDWLFDOO\ IURP $PLQ )PDM EDUV  XVLQJ
DQ $(PDM SDVVLQJ FKRUG DQG LQYHUVLRQV &PDM* 7KH PHORG\ LV VSDULQJ XQWLO &PDM
) PLQ( ZKHUH 0HWKHQ\ XVHV D WK LQWHUYDOOLF MXPS LQWR DQ DVFHQGLQJ $ PHORGLF PLQRU
OLQH RYHU ) PLQE ) ORFULDQ EDU  7KLV FDQ DOVR EH LQWHUSUHWHG DV D '  E 
IRXU FKRUG RI $ 0HORGLF PLQRU ZLWK DQ DVFHQGLQJ ' /\GLDQ 'RPLQDQW VFDOH )RXUWK
PRGH RI $ PHORGLF PLQRU )URP )PDM 0HWKHQ\ UHSULVHV WKH PHORG\ IURP WKH WKLUG EDU
RI $ $PLQ $(PDM XVLQJ DQ ((PDM SDVVLQJ FKRUG UHVROYLQJ WR ' XVHG DV D
VHFRQGDU\ GRPLQDQW SDVVLQJ FKRUG WR *VXV EDUV  0HWKHQ\ DJDLQ XVLQJ D WK
LQWHUYDOOLF MXPS GXULQJ WKH PHORG\ EDU  ILQLVKLQJ WKH SKUDVH XVLQJ D & 0L[RO\GLDQ
EOXHV\ OHJDWR OLQH FRQFOXGLQJ WKH SURJUHVVLRQ RQ &PDM 0HWKHQ\ XVHV DQ (* VODVK
FKRUG WR UHVROYH XS WR $PLQ IRU WKH % VHFWLRQ EDU 
8VLQJ WKH EHJLQQLQJ RI WKH PHORG\ IURP $ 0HWKHQ\ VXEVWLWXWHV D ,,9 , LQ (( PDMRU EDU
 ZLWK WKH PHORG\ IROORZLQJ WKH VDPH SDWWHUQ IRXQG LQ EDU  RI $ ,QVWHDG WKLV WLPH
0HWKHQ\ XVHV DQ (( ,RQLDQ VFDOH XVLQJ D  UHVROXWLRQ EDU  UHVROYLQJ RQ WKH WK RI
((PDM %( 7KH PHORG\ IROORZV D VLPSOH VHTXHQFH EDVHG DURXQG (( ,RQLDQ GXULQJ WKH
GHVFHQGLQJ FKRUG SURJUHVVLRQ ((PDM %(' '(PDM KDUPRQLF JHQHUDOLVDWLRQ EDUV 
 7KH SLHFH WKHQ PRGXODWHV WR &PLQ ZLWK 0HWKHQ\ XVLQJ LQWHUYDOOLF MXPSV DJDLQ
GXULQJ WKH PHORG\ *&(( D VHFRQG LQYHUVLRQ RI & PLQRU WULDG EDU  8VLQJ DQ



DVFHQGLQJ PLQRU WK DUSHJJLR RYHU )P EDU  WKH PHORG\ WKHQ XVHV D VHTXHQFH EDVHG
DURXQG * $HROLDQ PLQRU VFDOH RYHU *P$PLQ( '( EDU  7KLV LV UHVROYHG WR '
ZLWK 0HWKHQ\ VXEVWLWXWLQJ D PDMRU , FKRUG *PDM EDU  EHIRUH ILQLVKLQJ WKH
VHFWLRQ XVLQJ D PLQRU ,,9 LQWR $ PLQRU %PLQ( ( EDU 
7KH & VHFWLRQ LV D UHSHDW RI $ EXW KDV D EDU H[WHQVLRQ DW WKH HQG XVLQJ &PDM )P*
IRU WKH SXUSRVH RI WKH EXLOGLQJ WKH SLHFH LQWR WKH VROR

6RXO &RZER\
$ &ROHPDQHVTXH & EOXHV RII 7ULR !  WKLV WXQH IHDWXUHV D VLPSOH UHSHWLWLYH
PHORG\ ZLWK D TXLUN\ EDU WXUQDURXQG .HHSLQJ LW VLPSOH 0HWKHQ\ UHFRUGHG WKLV DOEXP
XVLQJ KLV ZRUNKRUVH ,EDQH] 30 SOD\HG GLUHFWO\ LQWR WKH UHFRUGLQJ FRQVROH ZLWK VRPH
DGGHG UHYHUE
7KH PHORG\ RI WKLV SLHFH LV EDVHG DURXQG D & PDMRU  PLQRU K\EULG SHQWDWRQLF VFDOH 7KLV
PRWLI FRQWLQXHV XQWLO EDU  RI WKH PHORG\ ZKHUH 0HWKHQ\ XVHV D E UHVROXWLRQ RYHU $
LQWR DQ HQFORVXUH DURXQG DQ $ PHORG\ QRWH EDU  'XULQJ ' WKH PHORG\ GHVFHQGV
GRZQ ' PDMRU WULDG ZLWK DQ DVFHQGLQJ %E GLPLQLVKHG WULDG SDWWHUQ UHVROYLQJ RQ ' EDU 
7KH GLPLQLVKHG WULDG WKHPH LV UHSHDWHG ZLWK 0HWKHQ\ XVLQJ DQ DVFHQGLQJ ) GLPLQLVKHG
DUSHJJLR RYHU ' '( 7KH GLPLQLVKHG OLQH LV UHVROYHG XVLQJ D GHVFHQGLQJ WK LQWHUYDO
MXPS IURP ') WK DQG WK RI * EDU  &RQWLQXLQJ WKH WKHPH KH XVHV DVFHQGLQJ
GLPLQLVKHG WULDGV EXW GHYHORSV WKLV ZLWK D FURWFKHW WULSOHW UK\WKP XVLQJ * GLPLQLVKHG
WULDG LQWR & GLPLQLVKHG WULDG RYHU & EDU  8VLQJ D WULWRQH LQWHUYDOOLF MXPS IURP *&
RYHU * KH FRQFOXGHV WKH WXQH ZLWK D & RFWDYH VWDE RYHU $( EDU 
/RQH -DFN
)LUVW DSSHDULQJ RQ WKH DOEXP 3DW 0HWKHQ\ *URXS  0HWKHQ\ UHFRUGHG WKLV WXQH
DJDLQ RQ 7ULR !  LQ % PLQRU XS RQH VHPLWRQH IURP WKH RULJLQDO NH\ %E PLQRU
8VLQJ DQ $$%$ IRUP WKLV WXQH LV FODVVLF 0HWKHQ\ EDUV LQ OHQJWK WKLV SLHFH XVHV D
VWUDLJKW HLJKWKV VDPED IHHO ZLWK DQ H[WUD  EDUV DW WKH HQG RI WKH ILQDO $ VHFWLRQ DQG D 
EDU VHSDUDWH LQWHUOXGH
7KH KDUPRQ\ GXULQJ WKH $ VHFWLRQ LV EDVHG DURXQG % PLQRU ZLWK WKUHH GLIIHUHQW FKRUGV
%PLQ*PDM)   8VLQJ D FDOO DQG UHVSRQVH PRWLI WKH PHORG\ GXULQJ WKH $ VHFWLRQ



XVHV % PLQRU SHQWDWRQLF VFDOH ZLWK D WK DGGLWLRQ QRWH 0HWKHQ\ HVSHFLDOO\ DFFHQWXDWHV
WKH WK DQG (WK RI WKH VFDOH GXULQJ *PDM EDU  0HWKHQ\ PDNHV XVH RI D WK LQWHUYDO
MXPS IURP ) WR ' EHIRUH UHVROYLQJ WR WKH  RI *PDM &  EDUV  0HWKHQ\ XVHV
DQRWKHU WUDGHPDUN D GHVFHQGLQJ % PLQRU SHQWDWRQLF OLQH XVLQJ D WULSOHW UK\WKP EDU 
7KLV UHVROYHV WR DQ ( PHORG\ QRWH RYHU DQ )   FKRUG EDUV  SULRU WR KLV XVH RI
WULDGV XQGHUQHDWK WKH UHVSHFWLYH $ WR % PHORG\ QRWHV $%PLQ GXULQJ WKH ILUVW DQG
VHFRQG WLPH HQGLQJV EDUV 
7KH % VHFWLRQ XVHV PRUH V\QFRSDWLRQ LQ WKH PHORG\ ZLWK ODUJH LQWHUYDO MXPSV HVSHFLDOO\
GXULQJ WKH ILUVW  EDUV ,Q FRQWUDVW WR WKH PHORG\ WKH EDVV DQG GUXPV SOD\ D  UK\WKPLF
SDWWHUQ JLYLQJ WKH % VHFWLRQ D IORDW\ IHHO
%DVHG DURXQG WKH % $HROLDQ PRGH WKHVH LQWHUYDO MXPSV DUH EDVHG RQ JXLWDU DUSHJJLR
VKDSHV DQG GLJLWDO SDWWHUQV FRUUHVSRQGLQJ WR WKH FKRUG EHLQJ SOD\HG DW WKH WLPH )RU
LQVWDQFH LQ WKH ILUVW EDU RI % GXULQJ (PLQ EDU  0HWKHQ\ XVHV D E GLJLWDO
SDWWHUQ ZKLFK PRYH LQWR D  SDWWHUQ RYHU 'PDM EDU  WKH VHYHQWK EHLQJ
DQWLFLSDWHG GXULQJ (PLQ 0HWKHQ\ VXVWDLQV D WK LQWHUYDO RYHU &PDM EHIRUH DJDLQ XVLQJ
D GHVFHQGLQJ WULSOHW OLQH EDVHG DURXQG % PLQRU SHQWDWRQLF EDU  UHVROYLQJ WKLV OLQH
WR WKH WK RI %P EDUV  7KH UK\WKP RI WKH PHORG\ VLPSOLILHV IRU WKH ILQDO  EDUV RI
% ZLWK 0HWKHQ\ XVLQJ D VLPSOH  SDWWHUQ RYHU 'PDM EDUV  EHIRUH XVLQJ D
VHTXHQFH GXULQJ *PDM  )   EDUV  8VLQJ D ' PDMRU WULDG RYHU *PDM 
KH XVHV WKH EOXH QRWH RI % EOXHV VFDOH ) RYHU ) ( UHVROYLQJ IURP ) WR ( UHVROYLQJ
XVLQJ WKH OHDGLQJ QRWHV RI $ PDMRU WR % PLQRU WULDG EDUV 
7KH KDUPRQ\ GXULQJ WKH % VHFWLRQ DJDLQ LV PRVWO\ GHULYHG IURP % PLQRU ZLWK 0HWKHQ\
XVLQJ D (WK PDM SDVVLQJ FKRUG &PDM EDU  EHWZHHQ 'PDM DQG %PLQ 7KH FKRUG
SURJUHVVLRQ IROORZV D VLPSOH VHTXHQFH GHVFHQGLQJ LQ WRQHV ZLWK H[FHSWLRQ WR &PDM
%PLQ EDUV  DQG *PDM)   EDUV 
7KH ILQDO $ VHFWLRQ LV WKH VDPH DV WKH ILUVW ZLWK WKH H[FHSWLRQ WKDW KH DGGV DQ H[WUD  EDUV
DV D WUDQVLWLRQ EHIRUH PRYLQJ LQWR WKH LQWHUOXGH
7KH LQWHUOXGH XVHV DQRWKHU FRPPRQ 0HWKHQ\ GHYLFH VXVSHQGHG VODVK FKRUGV (
PRYLQJ LQ WRQHV DQG VHPLWRQHV 7KH PHORG\ GXULQJ WKH ILUVW  EDUV RI WKH LQWHUOXGH XVHV
WKH % PHORGLF PLQRU VFDOH 7KH VODVK FKRUGV DUH GHULYHG XVLQJ WKH PHORG\ QRWHV DV WKV RI
HDFK VODVK FKRUG PRYLQJ LQ SDUDOOHO ZLWK WKH PHORG\



0RYLQJ XS D VHPLWRQH WKH IROORZLQJ IRXU EDUV XVLQJ DQ DVFHQGLQJ PHORG\ XVLQJ WKH &
PDMRU SHQWDWRQLF DQG & 0L[RO\GLDQ VFDOHV XVLQJ SDUDOOHO VODVK FKRUGV DJDLQ 7KH LQWHUOXGH
DQG SLHFH FRQFOXGH RQ D % PHORG\ QRWH XVLQJ D *$ VODVK FKRUG WDNLQJ WKH WXQH EDFN WR %
PLQRU IRU VRORV DQG UHWXUQLQJ EDFN WR WKH ILQDO KHDG
*R *HW ,W
$ EOXHV LQ $ ZLWK D EDU WDJ WKLV WXQH LV FKDUDFWHULVWLF RI 0HWKHQ\V SOD\LQJ VW\OH ZLWK
WKH PHORG\ SUHGRPLQDQWO\ XVLQJ GLJLWDO SDWWHUQV DQG 0HWKHQ\ OLFNV
7KH PHORG\ EHJLQV ZLWK D VLPSOH DVFHQGLQJ SDWWHUQ XS $ 0L[RO\GLDQ VFDOH ZKLFK LV WKHQ
UHVROYHG WR DQ $ PLQRU SHQWDWRQLF VFDOH OLQH EDUV  0HWKHQ\ WKHQ XVHV DQ DVFHQGLQJ
GLJLWDO SDWWHUQ EDVHG DURXQG * ,RQLDQ VFDOH RYHU ' $ EDUV  WKLV  SDWWHUQ
LV UHVROYHG WR WKH VW DQG WK LQWHUYDOV RYHU $ $( EDU  0HWKHQ\ XVHV D VLPLODU
GLJLWDO SDWWHUQ RYHU (E EXW WKLV WLPH KH EHJLQV IURP WKH URRW RI (( 0L[RO\GLDQ 
 EDU  +H XVHV WKH VDPH SDWWHUQ EXW WKLV WLPH VWDUWV IURP WKH WK RI ' 
 EDU  ZKLFK KH FRQWLQXHV XS D IRXUWK RYHU * EDU  2YHU $ 0HWKHQ\ XVHV WKH
VDPH SDWWHUQ EXW EHJLQV IURP WKH WK RI $   VXEVWLWXWLQJ DQ $ ,RQLDQ VFDOH
RYHU DQ $ FKRUG EDU  7KHQ KH XVHV D  UHVROXWLRQ RYHU )  IURP % WR $ ZLWK D
SDVVLQJ WK LQWHUYDO *  EDU  $OWKRXJK WKHUH LV QR ,, FKRUG & PLQ SUHFHGLQJ )  D
 UHVROXWLRQ LV LQIHUUHG E\ WKH UHVROXWLRQ WR WKH UG RI )  0HWKHQ\ WKHQ XVHV RQH RI KLV
VLJQDWXUH OLFNV GHVFHQGLQJ DQG DVFHQGLQJ PLQRU WKLUG LQWHUYDOV PRYLQJ LQ VHPLWRQHV
ZKLFK DUH XVHG RYHU % DQG ( EDUV  'XULQJ ( KH XVHV WKLV DV D FKURPDWLF OLQH
ZLWKLQ WKH $ PLQRU SHQWDWRQLF VFDOH PRYLQJ FKURPDWLFDOO\ IURP ' PHORG\ QRWH WK WR &
PHORG\ QRWH EUG ZLWK D SDVVLQJ PDMRU WKLUG LQWHUYDO &  EHWZHHQ 7KLV SKUDVH
FRQFOXGHV ZLWK WKH XVHV RI D WK LQWHUYDOOLF MXPS XS WR * PHORG\ QRWH EDU 
)RU WKH ILUVW DQG VHFRQG WLPH HQGLQJV EDUV   DQG WKH WDJ EDUV  0HWKHQ\
XVHV WZR VXVSHQGHG GRPLQDQW FKRUGV XVLQJ SDUDOOHO FKRUG YRLFLQJV * VXV$VXV ZLWK
D  RYHU  GLVSODFHG UK\WKP



:KDW 'R <RX :DQW"

%DVHG RQ UK\WKP FKDQJHV LQ %( :KDW 'R <RX :DQW" LV DQRWKHU 0HWKHQ\ FRPSRVLWLRQ
ZKHUH KLV SOD\LQJ VW\OH LV UHIOHFWHG LQ WKH KHDG E\ XVLQJ FRPPRQ GHYLFHV ZLWKLQ KLV VW\OH
7KH FRPPRQ PRWLI RI WKLV SLHFH LV WKH XVH RI VHFRQGDU\ GRPLQDQW VXEVWLWXWH FKRUGV DQG
PHORGLF VHTXHQFH
7KH PHORG\ RI WKH $ VHFWLRQ EHJLQV ZLWK 0HWKHQ\ SLFNLQJ XS RQ WKH WK LQWHUYDO RI %(
PRYLQJ LQWR D GHVFHQGLQJ %E PDMRU WULDG RYHU EDU  8VLQJ D VHTXHQFH 0HWKHQ\ UHSHDWV
WKLV WKHPH XS D IRXUWK SOD\LQJ WKH WK LQWHUYDO RI (( PRYLQJ LQWR D GHVFHQGLQJ (( PDMRU
WULDG EDU  +H WKHQ XVHV DQ ( GLPLQLVKHG DUSHJJLR ZLWK DQ $E SDVVLQJ QRWH WR UHVROYH WR
* PHORG\ QRWH RYHU %() DQG WKHQ LQWURGXFHV DQRWKHU FRPPRQ GHYLFH D GHVFHQGLQJ
LQWHUYDOOLF VHTXHQFH XVLQJ WK LQWHUYDOV ZKLFK LV SOD\HG RYHU DQ H[WHQGHG GRPLQDQW F\FOH
*&) 8VLQJ WKLV VHTXHQFH 0HWKHQ\ PRYHV WKH ORZHU RI WKH WZR QRWHV GRZQ D
VHPLWRQH SLYRWLQJ EHWZHHQ WKH ORZHU QRWH DQG WKH WRS QRWH EDUV  :KLOH SOD\LQJ WKLV
VHTXHQFH KH LQFRUSRUDWHV D  RYHU  GLVSODFHG UK\WKP DFWLQJ LQ FRXQWHUSRLQW WR WKH EDVV
SOD\LQJ LQ IRXU 'XULQJ WKH ILUVW WLPH HQGLQJ EDU  0HWKHQ\ SOD\V DQ RXWVLGH SKUDVH
PRYLQJ XS D VHPLWRQH XVLQJ D % PDMRU SHQWDWRQLF OLQH $ PLQRU SHQWDWRQLF OLQH XVLQJ D
FKDUDFWHULVWLF IRXUWK LQWHUYDO MXPS IURP * WR &  +H HQGV WKLV SKUDVH PRYLQJ LQVLGH WR
%( PDMRU XVLQJ D WK SLFNXS QRWH * WDNLQJ WKH WXQH EDFN LQWR %E IRU WKH VHFRQG WLPH
WKURXJK $ 'XULQJ WKH VHFRQG WLPH HQGLQJ EDU  0HWKHQ\ SOD\V D * PLQRU SHQWDWRQLF
VHTXHQFH RYHU %( %( PDMRU SHQWDWRQLF
'XULQJ WKH EULGJH VHFWLRQ 0HWKHQ\ XVHV ,,PLQ VXEVWLWXWH FKRUGV FRUUHVSRQGLQJ WR HDFK
GRPLQDQW FKRUG HJ $P ' 7KH * PHORG\ QRWH IURP WKH SUHYLRXV PLQRU SHQWDWRQLF
VHTXHQFH QRWH LV VXVWDLQHG RYHU $PLQ' EDUV  8VHG DV D JXLGHWRQH RYHU
$PLQ KH UHSHDWV WKH VHTXHQFH XVLQJ D VLPLODU * PLQRU SHQWDWRQLF SDWWHUQ RYHU '
EDU KROGLQJ WKH ' PHORG\ QRWH RYHU 'PLQ* 7KH EUHDN LQ WKH PHORG\ GXULQJ
*PLQ& EDU  LV XVHG IRU D EULHI LPSURYLVDWLRQ EHIRUH PRYLQJ LQWR D
0HWKHQ\HVTXH IDVW DVFHQGLQJ WULSOHW OLQH EDVHG RQ & 'RULDQ RYHU ) EDU 
7KLV OLQH LV UHVROYHG WR WKH WK RI ) (( ZLWK KLV XVH RI D  EDU WR EUHDN XS WKH VHFWLRQ
EHIRUH PRYLQJ EDFN WR WKH ODVW $ 6HFWLRQ EDU 



7KH ODVW $ VHFWLRQ LV WKH VDPH DV WKH ILUVW H[FHSW GXULQJ WKH ILQDO WLPH WKURXJK WKH KHDG
0HWKHQ\ XVHV WKH PHORG\ LQ WKH ILUVW WLPH HQGLQJ RI WKH $ VHFWLRQ LQ WKH ILQDO EDU RU WKH
ODVW $ WR SLFN XS LQWR WKH FRGD EDU 
7KH FRGD PRGXODWHV LQWR  DQG XVHV D FRPPRQ 0HWKHQ\ GHYLFH D GRPLQDQW FKRUG
F\FOH PRYLQJ LQ IRXUWKV PXFK OLNH WKH EULGJH VHFWLRQ EDUV  7KH PHORG\ XVHV D
VHTXHQFH EDVHG RQ WKH RSHQLQJ OLQH RI WKH $ VHFWLRQ VWDUWLQJ RQ WKH WK LQWHUYDO DQG
GHVFHQGLQJ RQ D PDMRU WULDG UHSHDWLQJ RYHU HDFK GRPLQDQW FKRUG 7KH WXQH ILQLVKHV
DEUXSWO\ RQ D %(  FKRUG ZLWK WKH ODVW IRXU EDUV RI WKH FRGD EHLQJ GRPLQDQW WULWRQH VXEV
RI D ,,,9,,,9 SURJUHVVLRQ 'PLQ*&PLQ)



3DUW 7KUHH &RPSDULVRQV %HWZHHQ ,PSURYLVDWLRQDO 6W\OH DQG

&RPSRVLWLRQ 6W\OH
7KLV VHFWLRQ ZLOO GLVFXVV VW\OLVWLF VLPLODULWLHV EHWZHHQ 0HWKHQ\V LPSURYLVDWLRQDO VW\OH
ZKHQ SOD\LQJ VWDQGDUGV DQG KLV FRPSRVLWLRQV FRQVLGHULQJ QRW RQO\ PHORG\ EXW DOVR
KDUPRQ\ 7UHQGV LQ WKH LQFLGHQFH RI VW\OLVWLF HOHPHQWV SUHVHQW LQ KLV FRPSRVLWLRQV IURP
 DUH GLVSOD\HG JUDSKLFDOO\ LQ $SSHQGL[  S
%ULJKW 6L]H /LIH
7KH PHORG\ GXULQJ WKLV SLHFH VKDUHV PDQ\ FKDUDFWHULVWLFV ZLWK 0HWKHQ\V VRORLQJ VW\OH
7KH RSHQLQJ LQWHUYDOOLF OLQH RI %ULJKW 6L]H /LIH XVHV ILIWK LQWHUYDO MXPSV LQ D IRXUWKV
F\FOH WKURXJK WKH ' PDMRU VFDOH 7KLV LQWHUYDOOLF SDWWHUQ LV VLPLODU WR 0HWKHQ\V
LQWHUYDOOLF OLFN GHULYHG IURP PDMRU PLQRU DQG GRPLQDQW WK FKRUG VKDSHV LQ WKDW XVLQJ
WKH JXLGH WRQHV WKH LQWHUYDOOLF OLFN GXULQJ WKLV SLHFH VWDUWV IURP WKH UG DQG WK LQWHUYDOV
RI 'PDM ) &  ,W LV LPSRUWDQW WR QRWH KRZHYHU WKDW 0HWKHQ\ KDG QRW GHYHORSHG KLV
WUDGHPDUN WK FKRUG OLFN DW WKH WLPH WKDW WKLV SLHFH ZDV ZULWWHQ
$OVR VLPLODU WR KLV SOD\LQJ VW\OH 0HWKHQ\ XVHV GRXEOH VWRSV LQ WKH ILUVW EDU RI WKH $
VHFWLRQ ZKLFK DUH VHSDUDWHG E\ IRXUWK LQWHUYDOV 7KLV LV VLPLODU WR KLV FKRUG PHORG\ VW\OH
LQ ZKLFK 0HWKHQ\ XVHV IRXUWK YRLFLQJV IUHTXHQWO\ +H DOVR XVHV GRXEOH VWRSV VLPLODUO\
GXULQJ *LDQW 6WHSV ([  HPSOR\LQJ WK LQWHUYDOV

([  *LDQW 6WHSV EDUV 

7KH LQWHUYDOOLF OLFNV IRXQG GXULQJ WKH % VHFWLRQ RI WKLV SLHFH DUH DOVR YHU\ FKDUDFWHULVWLF
RI 0HWKHQ\V VW\OH 7KH ILUVW LQWHUYDOOLF OLFN IRXQG GXULQJ WKH *$ FKRUG EDU  LV EDVHG
RQ D *PDM  FKRUG VKDSH RQ WKH JXLWDU SOD\HG RYHU WKH ILUVW VHFRQG WKLUG DQG IRXUWK



VWULQJV 7KLV SDWWHUQ LV YHU\ VLPLODU WR WKH VROR SDWWHUQV IRXQG GXULQJ /DZ <HDUV ([
 LQ ZKLFK 0HWKHQ\ FUHDWHV DQ LQWHUYDOOLF SDWWHUQ EDVHG RQ FKRUG VKDSHV
$QRWKHU VLPLODULW\ FDQ EH IRXQG DW WKH YHU\ HQG RI WKH SLHFH ZKHUH 0HWKHQ\ XVHV D FOXVWHU
RYHU 'PDM XVLQJ WKH URRW DQG PDMRU VHYHQWK WRJHWKHU ' DQG &  EDU  7KLV XVH RI
FOXVWHUV LV YHU\ VLPLODU DJDLQ WR /DZ <HDUV ([  LQ ZKLFK 0HWKHQ\ SOD\V FOXVWHUV
ZLWKLQ WKH & PLQRU SHQWDWRQLF VFDOH ZLWK D WK DGGLWLRQ WRQH SOD\LQJ WKH PLQRU WKLUG DQG
WK LQWHUYDOV (( DQG '

([  /DZ <HDUV EDU 

7KLV SLHFH LV VLPLODU WR 0HWKHQ\V VW\OH XVLQJ LQWHUYDOOLF OLFNV DV ZHOO DV GRXEOH VWRSV
YRLFHG LQ IRXUWKV DQG FOXVWHUV RQ WKH VHFRQG DQG WKLUG VWULQJV
8QLW\ 9LOODJH
$JDLQ OLNH %ULJKW 6L]H /LIH WKLV SLHFH XVHV LQWHUYDOOLF OLFNV EDVHG RQ FKRUG VKDSHV
7KH RSHQLQJ LQWHUYDOOLF OLFN RYHU EHDWV RQH DQG WZR RI WKH ILUVW EDU XVHV WKH QG EUG DQG
WK LQWHUYDOV RYHU $PLQ 7KLV OLFN LV YHU\ VLPLODU WR 0HWKHQ\V VROR GXULQJ /DZ <HDUV
EDU  LQ ZKLFK KH XVHV WKH VDPH LQWHUYDOOLF SDWWHUQ EXW LQVWHDG KH SOD\V WKLV SDWWHUQ LQ
UHIHUHQFH WR D *( FKRUG XVLQJ WKH (UG UG DQG WK LQWHUYDOV % & DQG %( 7KH VHFRQG
LQWHUYDOOLF SDWWHUQ SOD\HG GXULQJ WKH WKLUG DQG IRXUWK EHDWV RI WKH ILUVW EDU LV EDVHG RQ DQ
)PDM  FKRUG VKDSH 7KLV DJDLQ LV YHU\ VLPLODU WR /DZ <HDUV ([  FUHDWLQJ DQ
LQWHUYDOOLF OLFN EDVHG RQ D FKRUG VKDSH RQ WKH JXLWDU
6LPLODU WR WKH RSHQLQJ OLFN 0HWKHQ\ XVHV DQRWKHU LQWHUYDOOLF OLFN RYHU $PDM EDU 
7KLV LV IROORZHG E\ DQRWKHU FRPPRQ 0HWKHQ\ VRORLQJ FKDUDFWHULVWLF D  GLJLWDO
SDWWHUQ DV XVHG LQ PDQ\ RI KLV LPSURYLVDWLRQV

$V ZLWK KLV LPSURYLVDWLRQDO VW\OH 0HWKHQ\ XVHV KDUPRQLF JHQHUDOLVDWLRQ GXULQJ WKH
FKRUGV (PDM(& EDUV  7KLV LV VLPLODU WR KLV XVH RI PLQRU SHQWDWRQLF VFDOH



JHQHUDOLVDWLRQ EXW LQ D PDMRU SHQWDWRQLF FRQWH[W 0RYLQJ XS D PLQRU WKLUG WKLV WKHPH LV
FRQWLQXHG GXULQJ &' ZKHUH 0HWKHQ\ XVHV * PDMRU SHQWDWRQLF VFDOH EDU 
8VLQJ VHTXHQFH 0HWKHQ\ XVHV WKH VDPH SHQWDWRQLF SDWWHUQ DV XVHG GXULQJ &' EXW XS D
PLQRU WKLUG RYHU ((' EDU 
%HWZHHQ WKHVH VHTXHQFHV 0HWKHQ\ XVHV D SDUDOOHO VWUXFWXUH GXULQJ *' EDU  RYHU
EHDWV WKUHH DQG IRXU XVLQJ D WKUHHILQJHU SHU VWULQJ SDWWHUQ RQ WKH ILUVW DQG VHFRQG VWULQJV
RQ WKH ILIWK VHYHQWK DQG HLJKWK IUHWV
,Q VXPPDU\ VLPLODU WR 0HWKHQ\V SOD\LQJ VW\OH WKLV WXQH XVHV LQWHUYDOOLF OLFNV LQ WKH $
VHFWLRQ DQG KDUPRQLF JHQHUDOLVDWLRQ LQ WKH % VHFWLRQ DV ZHOO DV VHTXHQFH DQG SDUDOOHO
ILQJHULQJ OLFNV

-DPHV
7KLV SLHFH LV YHU\ W\SLFDO RI 0HWKHQ\V VRORLQJ VW\OH XVLQJ RQO\ WKH ' PDMRU SHQWDWRQLF
VFDOH GXULQJ WKH $ VHFWLRQ KDUPRQLF JHQHUDOLVDWLRQ 0HWKHQ\ DOVR XVHV SDUDOOHO
VWUXFWXUHV GXULQJ WKH $ VHFWLRQ EDUV 
7KH ILUVW VWUXFWXUH EHJLQV IURP WKH RIIEHDW RI EHDW WKUHH EDU  GXULQJ WKH $ VHFWLRQ RYHU
*PDM 6OLGLQJ IURP WKH WK IUHW $ XS WR WKH WK IUHW % RQ WKH VHFRQG VWULQJ
0HWKHQ\ XVHV WKH ILUVW ILQJHU WR SOD\ WKH WHQWK IUHW RQ WKH ILUVW VWULQJ KDUPRQLVLQJ WKH %
PHORG\ QRWH RQ WKH VHFRQG VWULQJ ZLWK D *PDM EORFN FKRUG 7KLV VWUXFWXUH LV UHSHDWHG
DJDLQ LQ WKH QH[W EDU EDU  RQ WKH RIIEHDW RI EHDW RQH RYHU ) PLQ ZKHUH KH SOD\V WKH
VDPH VWUXFWXUH EXW GRZQ ILYH IUHWV D WK LQWHUYDO IURP WKH ILIWK IUHW RQ WKH VHFRQG VWULQJ
%DVHG RQ D  UHVROXWLRQ WKH PHORG\ XVHG GXULQJ WKH % VHFWLRQ XVHV D  GLJLWDO
SDWWHUQ WKURXJK WKH ' PDMRU VFDOH ZKHUH WKH WK GLJLW RI WKH SDWWHUQ UHVROYHV WR WKH WKLUG
GLJLW RI WKH IROORZLQJ SDWWHUQ 7KH PHORG\ LV DJDLQ KDUPRQLVHG ZLWK EORFN FKRUG YRLFLQJV
7KLV GLJLWDO SDWWHUQ LV YHU\ VLPLODU WR WKH GLJLWDO SDWWHUQ GXULQJ /DZ <HDUV ([ 
ZKHUH 0HWKHQ\ XVHV D SDWWHUQ EDVHG DURXQG D  UHVROXWLRQ %XW LQVWHDG WKLV SDWWHUQ
PRYHV LQ D IRXUWK F\FOH RI GRPLQDQW WK FKRUGV RYHU IUHH KDUPRQ\
7KLV WXQH LV VLPLODU WR 0HWKHQ\V VRORLQJ VW\OH XVLQJ SDUDOOHO VWUXFWXUHV GXULQJ WKH $
VHFWLRQ  UHVROXWLRQV DQG GLJLWDO SDWWHUQV GXULQJ WKH % VHFWLRQ



1HYHU 7RR )DU $ZD\

0HWKHQ\ DOPRVW HQWLUHO\ XVHV FKRUG PHORG\ GXULQJ WKH PHORG\ RI WKLV SLHFH DQG FHUWDLQ
VW\OLVWLF HOHPHQWV FDQ EH IRXQG ZLWKLQ WKLV VW\OH
$W WKH EHJLQQLQJ RI WKH % VHFWLRQ EDUV  0HWKHQ\ XVHV SDUDOOHO FKRUG VKDSHV GXULQJ
WKH DVFHQGLQJ NH\ FHQWUH PRYHPHQW LQ PLQRU WKLUGV 7KH ILUVW SDUDOOHO VKDSH EHJLQV IURP
$PDM EDU  RYHU WKH ILUVW VHFRQG WKLUG DQG ILIWK VWULQJV XVLQJ WKH QRWHV *  &  % (
IURP WKH KLJKHVW WR ORZHVW 7KLV FKRUG VKDSH LV PRYHG XS D VHPLWRQH FUHDWLQJ D )*
YRLFLQJ 7KLV FKRUG VKDSH LQ WXUQ LV PRYHG XS D WRQH FUHDWLQJ D &PDM YRLFLQJ EDU 
ZKLFK LV WKH VDPH YRLFLQJ DV WKDW XVHG GXULQJ $PDM 7KLV VKDSH LV PRYHG XS DQRWKHU
VHPLWRQH WR FUHDWH DQ $(%( YRLFLQJ ZKHUH WKH SDUDOOHO FKRUG VKDSHV ILQLVK
'XULQJ WKH ' VHFWLRQ 0HWKHQ\ XVHV D VKRUW H[DPSOH RI SDUDOOHO ILQJHULQJ LQ ZKLFK KH
SOD\V WKH ' PDMRU SHQWDWRQLF VFDOH RQ WKH ILIWK DQG VHYHQWK IUHWV RQ WKH ILUVW DQG VHFRQG
VWULQJV GXULQJ 'PDM EDU  7KLV XVH RI V\PPHWULFDO ILQJHULQJV LV YHU\ VLPLODU WR WKH
RSHQLQJ PHORGLF PRWLI RI -DPHV ZKLFK DOVR XVHV WKH ' PDMRU SHQWDWRQLF VFDOH
3DUDOOHO FKRUG VKDSHV DUH XVHG DJDLQ GXULQJ WKH ( VHFWLRQ ZKHUH KH UHSHDWV WKH *PDM%
) $ FKRUG EDUV  XS D PLQRU WKLUG 8VLQJ WKH QRWHV )  ' * DQG % IURP KLJKHVW
WR ORZHVW GXULQJ *PDM% DQG ( '( % DQG *( GXULQJ %(GLP 0HWKHQ\ SOD\V ERWK RI WKH
FKRUG VKDSHV XS WKUHH IUHWV D PLQRU WKLUG RYHU %(PDM' DQG '(GLP EDUV  7KLV
XVH RI SDUDOOHO YRLFLQJV DOVR FUHDWHV DQ DVFHQGLQJ VHTXHQFH

'XULQJ WKLV SLHFH 0HWKHQ\ XVHV SDUDOOHO FKRUG YRLFLQJV FUHDWLQJ VHTXHQFH DQG SDUDOOHO
ILQJHULQJ OLFNV
4XHVWLRQ DQG $QVZHU
7KLV WXQH DJDLQ HFKRHV 0HWKHQ\V JXLWDU VW\OH
7KH ILUVW VLPLODULW\ LV ZLWK 0HWKHQ\ XVLQJ WKH ' EOXHV VFDOH ZLWK D WK DGGLWLRQ WRQH
GXULQJ WKH 0HORG\ RI WKH $ VHFWLRQ 7KLV VFDOH SOD\HG ZLWK KLV ORRVH OHJDWR VW\OH LV D
0HWKHQ\ WUDGHPDUN
7KH VHFRQG VLPLODULW\ FRPHV LQ WKH % VHFWLRQ RI WKH SLHFH ZKHUH 0HWKHQ\ XVHV SDUDOOHO
VWUXFWXUHV EDVHG RQ PDMRU WULDGV ZLWK EHERS FKURPDWLFLVPV 7KH ILUVW SDUDOOHO VWUXFWXUH
EHJLQV IURP '(PDM GXULQJ WKH &ROWUDQH 0DWUL[ SURJUHVVLRQ ZKHUH 0HWKHQ\ SOD\V DQ $E



PDMRU WULDG RQ WKH ILUVW DQG VHFRQG VWULQJV EDU  +H WKHQ XVHV FKURPDWLFLVP IURP WKH
WK RI WKH SURFHHGLQJ WULDG '( GRZQ WR WKH EWK & RQ WKH ILUVW VWULQJ 7KLV EHFRPHV
SDUW RI WKH QH[W SDUDOOHO VWUXFWXUH ZKHUH WKH WULDG VWUXFWXUH LV UHSHDWHG GRZQ IRXU IUHWV D
PDMRU WKLUG ZLWK 0HWKHQ\ SOD\LQJ DQ ( PDMRU WULDG RYHU $PDM RYHU WKH ILUVW VHFRQG DQG
WKLUG VWULQJV EDU  7KH ILQDO SDUDOOHO VWUXFWXUH LV SOD\HG IURP WKH WK RI & ZKLFK
OHDGV FKURPDWLFDOO\ LQWR & PDMRU WULDG RYHU )PDM EDU 

7KLV WXQH LV VLPLODU WR 0HWKHQ\V VW\OH XVLQJ WKH 0HWKHQ\ %OXHV VFDOH ZLWK D WK DGGLWLRQ
WRQH GXULQJ WKH $ VHFWLRQ DQG SDUDOOHO VWUXFWXUHV FUHDWLQJ D VHTXHQFH XVHG LQ WKH LQ WKH %
VHFWLRQ
$OZD\V DQG )RUHYHU
7KLV WXQH LV IROORZV 0HWKHQ\V SOD\LQJ VW\OH XVLQJ ODUJH LQWHUYDO MXPSV DV SDUW RI WKH
PDLQ WKHPH GXULQJ WKH PHORG\
'XULQJ WKH EHJLQQLQJ RI WKH PHORG\ 0HWKHQ\ XVHV DQ LQWHUYDOOLF SDWWHUQ EDVHG DURXQG WKH
WK DQG WK LQWHUYDOV RI ERWK $PLQ DQG 'P EDU  7KHVH LQWHUYDOOLF MXPSV DUH DOVR XVHG
RYHU &PDM* EDU  XVLQJ D WK LQWHUYDO MXPS IURP WKH UG ( WR WKH WK % XVLQJ WKH
JXLGHWRQHV RI &PDM 0HWKHQ\ UHSHDWV WKLV WK LQWHUYDO MXPS WKHPH RYHU ' EDU 
XVLQJ WKH WK $ DQG WK ( LQWHUYDOV
7KH EHJLQQLQJ RI WKH PHORG\ GXULQJ WKH % VHFWLRQ LV WKH VDPH DV WKH $ VHFWLRQ EXW WKLV
WLPH 0HWKHQ\ PRGXODWHV LQWR (( PDMRU ,Q WKH VHFRQG EDU RI % EDU  0HWKHQ\ DJDLQ
XVHV D WK LQWHUYDO MXPS IURP WKH UG DQG WK LQWHUYDOV RI )PLQ $( DQG ((
$V ZLWK KLV LPSURYLVDWLRQDO VW\OH GXULQJ WKH ,,9 )PLQ%E EDU  0HWKHQ\ XVHV D 
 UHVROXWLRQ IURP (( WR ' +H WKHQ XVHV DQRWKHU  UHVROXWLRQ IURP ' WR $( GXULQJ WKH
%( FKRUG
$V ZLWK KLV LPSURYLVDWLRQDO VW\OH 0HWKHQ\ XVHV WK LQWHUYDO MXPSV DV ZHOO DV LQWHUYDOV
EDVHG DURXQG WKH WK DQG UG LQWHUYDOV JXLGHWRQHV DV ZHOO DV  UHVROXWLRQV GXULQJ WKLV
SLHFH



6RXO &RZER\
8VLQJ D UHSHWLWLYH WKHPH GXULQJ WKH PHORG\ 0HWKHQ\ XVHV D QXPEHU RI SDUDOOHO
ILQJHULQJV ZLWKLQ WKH PLQRUPDMRU SHQWDWRQLF K\EULG VFDOHEDVHG WXQH
'XULQJ 6RXO &RZER\ EDU  0HWKHQ\ XVHV D GRXEOH VWRS EHQGLQJ WHFKQLTXH LQ ZKLFK
ZKHQ KH SOD\V FOXVWHUV EHWZHHQ WKH WZR PHORG\ QRWHV ' DQG (( RQ WKH VHFRQG DQG WKLUG
VWULQJV 7KH ORZHU RI WKH WZR QRWHV ' LV EHQW XS D KDOIVWHS WR (( PHORG\ QRWH EULQJLQJ WKH
FOXVWHU QRWHV LQWR XQLVRQ 0HWKHQ\ XVHV D YHU\ VLPLODU WHFKQLTXH WR WKLV GXULQJ /DZ
<HDUV ([  LQ ZKLFK KH SOD\V D FOXVWHU XVLQJ ( DQG ) PHORG\ QRWHV RQ WKH ILUVW DQG
VHFRQG VWULQJV 7KH ORZHU RI WKH WZR PHORG\ QRWHV ( LV EHQW XS D KDOI VWHS WR ) EULQJLQJ
WKH WZR QRWHV LQWR XQLVRQ

([  /DZ <HDUV EDUV 

7KH ILUVW SDUDOOHO ILQJHULQJ SDWWHUQ RFFXUV GXULQJ ) EDU  ZKHUH 0HWKHQ\ XVHV D PHORG\
EDVHG DURXQG & PLQRU SHQWDWRQLF RQ WKH HLJKWK DQG ILIWK IUHWV RQ WKH VHFRQG DQG WKLUG
VWULQJV $QRWKHU SDUDOOHO ILQJHULQJ VWUXFWXUH LV XVHG LQ WKH IROORZLQJ EDU EDU  ZKHUH KH
XVHV D & PDMRU SHQWDWRQLF VFDOH OLQH RQ WKH ILIWK DQG VHYHQWK IUHWV GXULQJ )) GLP RYHU
WKH ILUVW VHFRQG WKLUG DQG IRXUWK VWLQJV
$OVR IROORZLQJ KLV LPSURYLVDWLRQDO VW\OH JXLGHWRQH UHVROXWLRQV DUH XVHG GXULQJ '*
EDU  7KLV RFFXUV ZKHQ DQ ) UG RI ' GLPLQLVKHG WULDG LV XVHG RYHU '( WR WKH
WK ' DQG ILQDOO\ WKH WK ) RI *
0HWKHQ\ WKHQ XVHV D VHTXHQFH RI GLPLQLVKHG WULDGV EDU  )LUVW D * GLPLQLVKHG WULDG
LV XVHG RYHU * *( DQG WKHQ & GLPLQLVKHG WULDG RYHU &
7KHVH GLPLQLVKHG WULDGV WKHQ PRYH LQWR DQRWKHU 0HWKHQ\ VRORLQJ FKDUDFWHULVWLF ZKHUH KH
XVHV DQ LQWHUYDOOLF OLFN EDVHG DURXQG FURWFKHW WULSOHWV



7KLV SLHFH SDUDOOHOV 0HWKHQ\V VW\OH XVLQJ SDUDOOHO ILQJHULQJ OLFNV GLPLQLVKHG WULDGV 
JXLGHWRQH UHVROXWLRQV VHTXHQFHV DQG LQWHUYDOOLF SDWWHUQV
/RQH -DFN
$JDLQ WKLV WXQH FRQWDLQV PDQ\ GHYLFHV ZLWKLQ WKH PHORG\ FRPPRQ WR 0HWKHQ\V VW\OH
7KH ILUVW GHYLFH KH XVHV GXULQJ WKH $ VHFWLRQ LV D 0HWKHQ\ % PLQRU SHQWDWRQLF ZLWK D WK
DGGLWLRQ QRWH ' +H DOVR XVHV ODUJH LQWHUYDO MXPSV ZLWKLQ WKLV VFDOH $Q H[DPSOH RI WKLV
FDQ EH IRXQG GXULQJ $(PDM EDU  ZKHUH 0HWKHQ\ XVHV DQ RFWDYH LQWHUYDO MXPS IURP
WKH WKLUG WR WKH ILUVW VWULQJ $OVR KH XVHV DQ DVFHQGLQJ WK LQWHUYDO MXPS GXULQJ %PLQ
EDUV  IURP WKH VHFRQG WR WKH ILUVW VWULQJ
0HWKHQ\ XVHV D VLPLODU OLQH WR WKH GHVFHQGLQJ PLQRU SHQWDWRQLF VFDOH UXQ IURP WKH WK
LQWHUYDO ' GXULQJ $(PDM EDU  GXULQJ 2OG )RONV ([  LQ ZKLFK KH XVHV D
GHVFHQGLQJ EOXHV VFDOH OLQH VWDUWLQJ IURP WKH WK LQWHUYDO ( RYHU 'PLQ EHDW 
0HWKHQ\ XVHV D QXPEHU RI ODUJH LQWHUYDOOLF MXPSV GXULQJ WKH % VHFWLRQ 7KH ILUVW LV XVHG
RYHU (PLQ EDU  ZKHUH KH MXPSV IURP WKH UG WR WKH WK *)  DJDLQ RQ WKH WKLUG WR
WKH ILUVW VWULQJ
$OVR 0HWKHQ\ XVHV KDUPRQLF JHQHUDOLVDWLRQ GXULQJ WKH % VHFWLRQ XVLQJ WKH 0HWKHQ\ &
EOXHV VFDOH ZLWK D WK DGGLWLRQ WRQH EDUV  :LWKLQ WKLV VFDOH KH XVHV DVFHQGLQJ WK
LQWHUYDOV 7KH ILUVW LV XVHG RYHU &PDM IURP ( WR ' EDU  DQG WKH VHFRQG WK LQWHUYDO
MXPS LV XVHG RYHU %PLQ IURP '& EDU 
'XULQJ WKH % VHFWLRQ 0HWKHQ\ XVHV D VHTXHQFH EDVHG RQ WKH WK DQG WK LQWHUYDOV RI
*PDM  )   EDU 

7KLV WXQH IROORZV 0HWKHQ\V LPSURYLVDWLRQDO VW\OH XVLQJ D 0HWKHQ\ PLQRU SHQWDWRQLF
VFDOH ZLWK D WK DGGLWLRQ WRQH DV ZHOO DV LQWHUYDOOLF SDWWHUQV DQG VHTXHQFHV
*R *HW ,W
7KLV WXQH LV ZULWWHQ LQ D ZD\ UHIOHFWLYH RI 0HWKHQ\V VROLQJ VW\OH WR WKH SRLQW WKDW LW
VRXQGV OLNH D 0HWKHQ\ LPSURYLVDWLRQ 7KLV LV GXH WR WKH IDFW WKDW LW FRQWDLQV PDQ\
0HWKHQ\ VROR SKUDVHV DQG SDWWHUQV



,W EHJLQV ZLWK D VHTXHQFH RI GLJLWDO SDWWHUQV XVLQJ D * ,RQLDQ GLJLWDO 

SDWWHUQ RYHU '$ EDUV  7KLV SDWWHUQ LV YHU\ VLPLODU WR WKH GLJLWDO SDWWHUQ XVHG LQ
*LDQW 6WHSV ([  LQ ZKLFK 0HWKHQ\ XVHV D  SDWWHUQ RYHU EHDWV WZR
DQG WKUHH RYHU ((PDM

([  *LDQW 6WHSV EDU 

7KH VHFRQG SDWWHUQ XVHG RYHU ((   LV YHU\ VLPLODU WR D GLJLWDO SDWWHUQ XVHG
LQ *LDQW 6WHSV EDU  RYHU *PDM XVLQJ WKH VDPH LQWHUYDOV IURP WKH WK GLJLW 7KLV
SDWWHUQ SOD\HG GXULQJ *LDQW VWHSV EHJLQV IURP WKH WK ' RI *PDM FUHDWLQJ WKH GLJLWDO
SDWWHUQ  7KLV SDWWHUQ LV UHSHDWHG LQ D VHTXHQFH IURP WKH WK RI ' EDU 
DQG WKH WK RI * EDU  0HWKHQ\ FRQWLQXHV WKLV SDWWHUQ RYHU $ EDU  LQ ZKLFK D 
E  SDWWHUQ LV XVHG $JDLQ WKLV LV YHU\ VLPLODU WR WKH GLJLWDO SDWWHUQ XVHG GXULQJ
*LDQW 6WHSV ([ 

([  *LDQW 6WHSV EDU 

0HWKHQ\ XVHV D FKURPDWLF SKUDVH EDVHG RQ WKH 0HWKHQ\ GHVFHQGLQJ WKLUGV OLFN RYHU WKH
FKRUGV % ( EDUV  7KH ILUVW OLFN SOD\HG RYHU % LV D YDULDWLRQ RI WKH WKLUGV OLFN
7KLV SKUDVH EHJLQV XVLQJ D GHVFHQGLQJ PLQRU WKLUG LQWHUYDO IURP ) WR ' PHORG\ QRWHV LQWR
DQ DVFHQGLQJ WKLUG LQWHUYDO IURP ' WR ) PHORG\ QRWHV GHVFHQGLQJ D WRQH IURP ) WR ' 



+H WKHQ PRYHV LQWR KLV FKDUDFWHULVWLF GHVFHQGLQJ WKLUGV OLFN IURP ' PHORG\ QRWH
PRYLQJ FKURPDWLFDOO\ GRZQ WR & RYHU ( EDU 
0HWKHQ\ SOD\V DQ DOPRVW LGHQWLFDO SKUDVH WR WKLV GXULQJ *LDQW 6WHSV ([  7KLV
EHJLQV RQ WKH RIIEHDW RI EHDW  LQ EDU  8VLQJ D VL[WHHQWK QRWH UK\WKP LQVWHDG RI
TXDYHUV KH WKHQ PRYHV LQWR D GHVFHQGLQJ WKLUGV OLFN LQ EDU  FRQFOXGLQJ WKH SKUDVH ZLWK
D WK LQWHUYDO MXPS IURP $( WR * RQ EHDW 

([  *LDQW 6WHSV EDU 

0HWKHQ\ XVHV SDUDOOHO FKRUG VKDSHV GXULQJ WKH ILUVW DQG VHFRQG WLPH HQGLQJ DQG GXULQJ
WKH WDJ 8VLQJ D * FRPPRQ WRQH ZLWKLQ ERWK WKH *  DQG $ FKRUGV 0HWKHQ\ XVHV KLV
ILUVW ILQJHU WR SOD\ ERWK WKH * DQG & FKRUG WRQHV VW DQG WK LQWHUYDOV GXULQJ *  KH
PRYHV WKLV VKDSH XS RQH IUHW RQH VHPLWRQH ZLWK WKH ILUVW ILQJHU SOD\LQJ WKH $ DQG '
FKRUG WRQH RI $ VW DQG WK LQWHUYDOV
'XULQJ WKH WDJ KH GHYHORSV WKH SDUDOOHO FKRUG VKDSHV ZLWK * FRPPRQ WRQH XVLQJ D WK
LQWHUYDOOLF MXPS IURP & WR * DJDLQ XVLQJ WKH * DV D FRPPRQ WRQH ZLWKLQ WKH LQWHUYDOOLF
VWUXFWXUH
7KLV WXQH IROORZV 0HWKHQ\V LPSURYLVDWLRQDO VW\OH XVLQJ GLJLWDO SDWWHUQV PRYLQJ LQ
VHTXHQFH D 0HWKHQ\ FKURPDWLFDOO\ GHVFHQGLQJ WKLUGV OLFN DQG SDUDOOHO FKRUG YRLFLQJV



:KDW 'R <RX :DQW"

7KLV WXQH DJDLQ LV YHU\ FKDUDFWHULVWLF RI 0HWKHQ\V SOD\LQJ VW\OH DQG XVHV FRPPRQ
VW\OLVWLF GHYLFHV ZLWKLQ WKH PHORG\
7KH SLHFH EHJLQV RQ WKH WK * RI %E PDMRU FKRUG PRYLQJ LQWR D %E PDMRU WULDG LQ WKH
ILUVW EDU 7KLV LV UHSHDWHG RYHU (( PDMRU ZKHUH 0HWKHQ\ EHJLQV RQ WKH WK & PRYLQJ
LQWR SDUW RI DQ (E PDMRU WULDG %( DQG * FUHDWLQJ D VHTXHQFH EDU 
0HWKHQ\ WKHQ PRYHV LQWR D GHVFHQGLQJ GLPLQLVKHG DUSHJJLR IURP %E PHORG\ QRWH EHDW
WZR EDU  ZLWK D PDMRU WKLUG $( SDVVLQJ QRWH RYHU (GLP +H XVHV D YHU\ VLPLODU
GLPLQLVKHG SKUDVH WR WKLV GXULQJ $OO 7KH 7KLQJV <RX $UH ([  LQ ZKLFK D
GHVFHQGLQJ (( GLPLQLVKHG DUSHJJLR ZLWK D WK * SDVVLQJ QRWH LV XVHG RYHU $PLQ(

([  $OO 7KH 7KLQJV <RX $UH EDUV 

0HWKHQ\ XVHV DQ DVFHQGLQJ WK LQWHUYDOOLF SDWWHUQ RYHU WKH GRPLQDQW FKRUG F\FOH *&
) EDUV  7KH ORZHU LQWHUYDOV RI WKH LQWHUYDOOLF SDWWHUQ RXWOLQH  UHVROXWLRQV )RU
H[DPSOH GXULQJ & EDU  0HWKHQ\ XVHV D  UHVROXWLRQ IURP ) PHORG\ QRWH WK RI *
WR ( PHORG\ QRWH UG RI &
'XULQJ WKH ILUVW WLPH HQGLQJ EDU  0HWKHQ\ XVHV DQRWKHU LQWHUYDOOLF OLFN EDVHG DURXQG
* PLQRU SHQWDWRQLF VFDOH 7KLV SDWWHUQ LV UHSHDWHG LQ WKH VHFRQG WLPH HQGLQJ EDU 
ZKHUH 0HWKHQ\ XVHV D * PLQRU SHQWDWRQLF RYHU %( DQG DJDLQ RYHU ' EDU  XVLQJ &
PLQRU SHQWDWRQLF VFDOH FUHDWLQJ D VHTXHQFH
)ROORZLQJ D YHU\ JXLWDULVWLF WHFKQLTXH GXULQJ EDU  0HWKHQ\ XVHV D SDUDOOHO ILQJHULQJ
OLFN DV SDUW RI DQ DVFHQGLQJ WKUHHQRWH SHU VWULQJ SDWWHUQ RYHU )
7KH FRGD XVHV D UHSHDWLQJ VHTXHQFH EDVHG RQ WKH RSHQLQJ WKHPH RI WKH SLHFH RYHU D
GRPLQDQW F\FOH DJDLQ XVLQJ PDMRU WULDGV ZLWK WK DGGLWLRQV 7KLV SDWWHUQ EHJLQV RQ WKH



WK RI %( * LQWR D GHVFHQGLQJ PDMRU WULDG 7KLV SDWWHUQ LV UHSHDWHG RYHU HDFK
FRUUHVSRQGLQJ GRPLQDQW FKRUG
7KLV WXQH LV YHU\ VLPLODU WR 0HWKHQ\V VW\OH XVLQJ PDMRU WULDGV ZLWK WK DGGLWLRQV
LQWHUYDOOLF SDWWHUQV ZLWK  UHVROXWLRQV VHTXHQFHV DQG SDUDOOHO ILQJHULQJ OLFNV



&RQFOXVLRQV
7KH FKDUWV LQ $SSHQGL[  S SURYLGH D WLPHOLQH RI 0HWKHQ\V XVH RI GLIIHUHQW
LQVWUXPHQWV $SSHQGL[  S VKRZV D SRVVLEOH WUHQG LQ VW\OLVWLF HOHPHQWV REVHUYHG LQ
WKH DQDO\VLV RI WKH WHQ FRPSRVLWLRQV LQ WKH VDPSOH

7KH PHORGLHV LQ 0HWKHQ\V FRPSRVLWLRQV OHQG WKHPVHOYHV WR JXLWDULVWLF WHFKQLTXHV VXFK

DV SDUDOOHO VWUXFWXUHV SDUDOOHO ILQJHULQJV SDUDOOHO FKRUG YRLFLQJV DQG LQWHUYDOOLF OLFNV DQG
WKH FRPELQDWLRQ LV SDUW RI KLV FKDUDFWHULVWLF VRXQG 7KHUH LV VRPH HYLGHQFH WKDW
FRPSRVLWLRQV DUH FUHDWHG VSHFLILFDOO\ IRU SDUWLFXODU LQVWUXPHQWV DQG VRXQG SURGXFWLRQ
WHFKQLTXHV DOWKRXJK HVWDEOLVKLQJ WKLV LV QRW D NH\ REMHFWLYH RI WKLV VWXG\

7KH DQDO\VLV RI WUHQGV DQG LQFLGHQFH RI VW\OLVWLF HOHPHQWV UHYHDOV WKRVH PRVW FRPPRQO\
HQFRXQWHUHG DUH VHTXHQFHV LQWHUYDOOLF SDWWHUQV DQG SDUDOOHO ILQJHULQJ OLFNV 7KHVH
WHFKQLTXHV OHQG WKHPVHOYHV WR WKH JXLWDU DQG 0HWKHQ\V XVH RI WKHP PDNHV D ODUJH
FRQWULEXWLRQ WR KLV VRXQG ,Q SDUWLFXODU VHTXHQFHV EDVHG RQ ILQJHULQJ SDWWHUQV RFFXU
YHU\ FRPPRQO\ DQG REYLRXVO\ LQ KLV SOD\LQJ ,QWHUYDOOLF SDWWHUQV DQG SDUDOOHO SDWWHUQV DUH
XQLYHUVDO JXLWDU WHFKQLTXHV DQG KH KDV EURXJKW WKHP IRUFHIXOO\ LQWR KLV VW\OH

,W FDQ EH LQIHUUHG WKDW WKH FRPPRQO\ HQFRXQWHUHG VW\OLVWLF HOHPHQWV LQ KLV FRPSRVLWLRQV
KDYH GHULYHG IURP VROR LPSURYLVDWLRQV GXULQJ VWDQGDUGV LQ WKH HDUO\ SDUW RI 0HWKHQ\V
FDUHHU EXW WKHUH LV D SDXFLW\ RI UHFRUGHG PDWHULDO DYDLODEOH WR ORRN IRU WKH RULJLQV RI PXFK
RI 0HWKHQ\V DUUD\ RI WHFKQLTXHV 1HZ WHFKQLTXHV KDYH HPHUJHG DV KH KDV FRPH WR
SHUIRUP PRUH RI KLV RZQ PDWHULDO

7KH DQDO\VLV LQGLFDWHV WKDW 0HWKHQ\V ODWHU FRPSRVLWLRQV KDYH EHFRPH LQWULQVLFDOO\ KLV
DQG VKRZ D SROLVKHG DQG SUDFWLVHG PDVWHU\ RI KLV VW\OH 7KH WUHQGV LOOXVWUDWHG LQ WKH FKDUWV
GR QRW UHDOO\ PDNH DQ LQGLVSXWDEOH FDVH IRU D WUXH FKURQRORJ\ LQ WKH DSSHDUDQFH RI WKH
YDULRXV WHFKQLTXHV LQ 0HWKHQ\V FRPSRVLWLRQV 7KLV PHDQV WKDW LW FDQ RQO\ EH LQIHUUHG
WKDW KLV VRORLQJ VW\OH RQ VWDQGDUGV LQIOXHQFHG KLV FRPSRVLWLRQ %XW WKH HYLGHQFH RI WUHQGV
FRXOG EH H[WUDSRODWHG EDFN LQ WLPH SULRU WR  WR VXSSRUW WKH HYLGHQFH $QDO\VLV RI D



PXFK ZLGHU VDPSOH ZRXOG \LHOG D PXFK PRUH UHOLDEOH FRQFOXVLRQ ,Q IXWXUH RWKHU VWXGLHV
VXSSOHPHQWLQJ WKH VDPSOH LQ WKLV VWXG\ FRXOG SURYLGH PRUH HYLGHQFH






































$SSHQGL[  ,QVWUXPHQW DQG VRXQG SURGXFWLRQ WLPHOLQH

(OHFWULF ,QVWUXPHQWV
*LEVRQ (6
,EDQH] 6RSUDQR
,EDQH] 30
(OHFWULF  6WULQJ
(OHFWULF 6LWDU
$PSV  6RXQG 0RGLILFDWLRQ
$FRXVWLF  $PS
&KRUXVHG 6RXQG
$VKOH\ 0RVIHW  $PS
&UHVW  6WHUHR $PS
'LJLWHFK 
3ULPH 7LPH 'HOD\V
$FRXVWLF ,QVWUXPHQWV
6SHFLDO $FRXVWLF *XLWDUV
0DQ]HU 6LWDU *XLWDU
0DQ]HU %DULWRQH *XLWDU
0DQ]HU 3LNDVVR
)UHWOHVV &ODVVLFDO
6\QWKHVLVHUV
5RODQG   
6\QFODYLHU *XLWDU
5RODQG *5
.XU]ZHLO



0DMRU 7ULDGV

&KURPDWLF /LFN

'LPLQLVKHG 7ULDGV

3DUDOOHO &KRUG
9RLFLQJV
0HWKHQ\ %OXHV 6FDOH
 0LQ 3HQW  WK

'LJLWDO 3DWWHUQV

6HTXHQFH

 5HVROXWLRQV

,QWHUYDOOLF 3DWWHUQ

3DUDOOHO 6WUXFWXUHV

&OXVWHUV

%ULJKW 6L]H /LIH

8QLW\ 9LOODJH
-DPHV
1HYHU 7RR )DU $ZD\
4XHVWLRQ $QG $QVZHU
$OZD\V DQG )RUHYHU
6RXO &RZER\
*R *HW ,W
/RQH -DFN
:KDW 'R <RX :DQW"

+DUPRQLF
*HQHUDOLVDWLRQ
3DUDOOHO )LQJHULQJ
/LFNV

'RXEOH 6WRSV

$SSHQGL[  7UHQGV DQG ,QFLGHQFH RI 6W\OLVWLF (OHPHQWV















%LEOLRJUDSK\
%RRNV DQG 3HULRGLFDOV
0HWKHQ\ 3DW  3DW 0HWKHQ\ 6RQJERRN 0LOZDXNHH :, + /HRQDUG &RUS
*ROGVWHLQ *LO  -D]] &RPSRVHUV &RPSDQLRQ $GYDQFH 0XVLF
0HWKHQ\ 3DW  4XHVWLRQ DQG $QVZHU +DO /HRQDUG
0HWKHQ\ 3DW  5HMRLFLQJ +DO /HRQDUG
0HWKHQ\ 3DW )HE  ,Q 6HDUFK RI 6RXQG 'RZQ %HDW  
'HQ\HU 5DOSK  7KH *XLWDU +DQGERRN $OIUHG $ .QRSI ,QF
&DOODUG 3HWH  2GH WR 0U 7D\ORU *XLWDU 7HFKQLTXHV 
&RNHU -HUU\  (OHPHQWV RI WKH -D]] /DQJXDJH )RU 7KH 'HYHORSLQJ ,PSURYLVHU
:DUQHU %URV 3XEOLFDWLRQV
5HFRUGLQJV
0HWKHQ\ 3DW  %ULJKW 6L]H /LIH (&0 5HFRUGV
0HWKHQ\ 3DW  2IIUDPS (&0 5HFRUGV
0HWKHQ\ 3DW  5HMRLFLQJ (&0 5HFRUGV
0HWKHQ\ 3DW  4XHVWLRQ $QG $QVZHU *HIIHQ 5HFRUGV
0HWKHQ\ 3DW  6HFUHW 6WRU\ *HIIHQ 5HFRUGV
5HGPDQ -RVKXD  :LVK :DUQHU %URV  :HD
%XUWRQ *DU\  /LNH 0LQGV &RQFRUG 5HFRUGV
0HWKHQ\ 3DW  7ULR ! 0HWKHQ\ *URXS 3URGXFWLRQV
:HEVLWHV
3DW 0HWKHQ\ QG 5HWULHYHG 0DUFK   $YDLODEOH
KWWSHQZLNLSHGLDRUJZLNL3DWB0HWKHQ\



'LJLWDO ,QWHUYLHZV -XQH  5HWULHYHG -XQH   3DW 0HWKHQ\ $YDLODEOH
KWWSZZZGLJLWDOLQWHUYLHZVFRPGLJLWDOLQWHUYLHZVYLHZV0HWKHQ\VKWPO