
352&((',1*6RIWKH 
UG,QWHUQDWLRQDO&RQJUHVVRQ$FRXVWLFV WR6HSWHPEHULQ$DFKHQ*HUPDQ\

$FRXVWLFUHTXLUHPHQWVYVH[SHULHQFHGVRXQGLQZRRGVWUXFWXUHV.ODV*|UDQ+$*%(5*$FRXZRRG$%6ZHGHQ

$%675$&7
:RRG LQ SDUWLFXODU &/7 LV LQFUHDVLQJ DV VWUXFWXUDO PDWHULDO LQ EXLOGLQJV LPSURYLQJ WKH FRQGLWLRQV IRUFLUFXODUHFRQRP\ZLWKLQWKHFRQVWUXFWLRQVHFWRU+RZHYHUVWUXFWXUDOZRRGLVVWLOOFUHDWLQJGRXEWVDPRQJVWPDQ\GHYHORSHUVDQGRQHLVVXHLVWKHGLIILFXOW\WRHDVLO\IXOILOHTXDOVRXQGLQVXODWLRQUHTXLUHPHQWVDVZHDUH
XVHGWRIURPWKHKLVWRU\ZLWKFRQFUHWH7KHGLIILFXOW\LQFUHDVHVZKHQWKHEXLOGLQJVDUHKLJK7RVHFXUHWKH
6ZHGLVKVRXQGLQVXODWLRQFODVV%HLWKHUWKHZDOOVKDYHWREHYHU\WKLFNRUHODVWRPHUVKDYHWREHLQVWDOOHG
EHWZHHQWKHGLIIHUHQWVWRUH\V2IWHQKLJKGHVLJQPDUJLQVDUHQHHGHGVLQFHWKHUHDOHIILFLHQF\RIWKHOD\HUVLV
XQNQRZQ ZKHQ WKH ZDOO HOHPHQWV DUH WLJKWO\ FRQQHFWHG GXH WR VWDWLF UHDVRQV7KHUHIRUH LW LV WKH GXW\ RIDFRXVWLFLDQVWRHQVXUHWKDWWKHUHTXLUHPHQWVZHDUHVWDWLQJLQWKHGHVLJQSURFHVVUHDOO\FRUUHVSRQGWRWKHDQQR\DQFH RI WKH KDELWDQWV IRU GLIIHUHQW EXLOGLQJ FDWHJRULHV:H VKRXOG QRW ORZHU WKH RYHUDOO TXDOLW\ EXWLQVWHDGUHILQHWKHUHTXLUHPHQWVWREHPRUHVSRWRQLQHDFKVLQJOHVLWXDWLRQ7KHUHIRUHLQFUHDVHGNQRZOHGJH
LVQHFHVVDU\LQSDUWLFXODUUHJDUGLQJDQQR\DQFHLQGLIIHUHQWKRXVLQJFDWHJRULHV7KLVSDSHUJLYHVH[DPSOHVRI
WKHFKDOOHQJHVWKDWZHQHHGWRWDNHLQWRDFFRXQWIRUWKHIXWXUHGHYHORSPHQWRIZRRGWHFKQRORJ\
.H\ZRUGV6RXQG,QVXODWLRQ7UDQVPLVVLRQ ,1752'8&7,21
:RRGEXLOGLQJVDUHEHFRPLQJPRUHDQGPRUHFRPPRQDQGWKHQXPEHURIVWRUH\VLQEXLOGLQJVZLWKZRRG DV VWUXFWXUDO PDWHULDO DUH DOVR LQFUHDVLQJ ,W LV LPSRUWDQW WR IXUWKHU GHYHORS WKLV LQGXVWU\ QRWOHDVW GXH WR HQYLURQPHQWDO LVVXHV 6LPXOWDQHRXVO\ WKH FRQFUHWH LQGXVWU\ LV FKDQJLQJ DQG WKHGHYHORSPHQWWRILQGQHZPRGHUQVROXWLRQVWRUHGXFHWKHHQYLURQPHQWDOLPSDFWLVRIWHQFRQQHFWHGWRORZHU VWUXFWXUDO GHQVLW\$FRXVWLFV LQ EXLOGLQJV KDYH VHYHUH GHVLJQ LPSDFW ZKLFK LPSOLHV WKDW WKHEXLOGLQJ UHJXODWLRQV KDYH WR EH FRUUHFW DQG DOVR SUHGLFWDEOH 7KHUHIRUH EXLOGLQJ UHJXODWLRQV PXVWEHFRPHPRUHDGDSWHGWRDQQR\DQFHLQWKHEXLOGLQJVIRUZKRPZHSURGXFH  
7KH IRXQGDWLRQ IRU UHJXODWRU\ IUDPHZRUN RQ DFRXVWLFV VKRXOG KDYH LWV EDVLV RQ KRZ KXPDQVSHUFHLYH VRXQG EXW LQ D EURDG FRQWH[W &XUUHQW UHJXODWLRQV DW D JOREDO VFDOH  DUH DSSOLFDEOH DQGDGDSWHGWREXLOGLQJGHVLJQLQWKHFDVHRIKHDY\FRQVWUXFWLRQV+RZHYHULQRUGHUWRVHFXUHDSURSHUUHVLGHQWLDODFRXVWLFVWDQGDUGLQJHQHUDOFRYHULQJDZLGHUDQJHRIKRXVLQJIRUPDWLRQDQRSWLRQLVWR
XVH FRUUHFW OHYHOV LQ WKH H[WHQGHG IUHTXHQF\ UDQJH UHIHUULQJ WR ,62    7KDW ZDV DOVRDJUHHGXSRQZLWKLQWKH&267QHWZRUN&26778   
7KHWKRXJKWVSUHVHQWHGLQWKLVSDSHUKDYHLWVRULJLQLQ  LQZKLFKYDULRXVVXUYH\VZHUHDQDO\VHG
WRILQGRXWWKHH[WHQWRILQKDELWDQWVDQQR\HGRIVRXQGLQVXODWLRQLQWKHLUKRPHV7KHVHVXUYH\VDUH
XVHIXOIRUIXWXUHGHYHORSPHQWRIUHJXODWLRQVEXWDOVRWRHVWLPDWHWKHQHHGIRUH[WHQVLRQRIIUHTXHQF\
UDQJH WRZDUGVORZDQGYHU\ORZIUHTXHQFLHV LQYDULRXVW\SHVRIIXWXUHKRPHV'XH WR WKH UDLVHG DFWLYLW\ ZLWKLQ WKH ZRRG LQGXVWU\ RYHU WKH SDVW ILYH \HDUV VSHFLILFDOO\ &/7VWUXFWXUHVDQLQFUHDVHGQHHGIRUGHYHORSPHQWRIUHJXODWLRQVKDVEHHQXSGDWHG3DUDOOHOWRWKHOLIWLQJ
RIWKH\HDUROGEDQRIZRRGEXLOGLQJVLQDQXPEHURIUHVHDUFKSURMHFWVKDYHEHHQFDUULHG
RXWLQ6ZHGHQVLQFHWKHQ7KHUHVHDUFKKDVFRYHUHGVHYHUDOILHOGVZLWKLQDFRXVWLFVKRZHYHUVXEMHFWLYHUHVSRQVH WR LPSDFWVWUXFWXUH ERUQH VRXQG LQ ZRRG EXLOGLQJV EHLQJ VSHFLILFDOO\ LQYHVWLJDWHG 7KHFRQFOXVLRQV ZHUH WKDW WKH ORZ IUHTXHQF\ HYDOXDWLRQ IRU LPSDFW VRXQG DFFRUGLQJ WR ,62   
XQGHUHVWLPDWHGWKHDQQR\DQFHHYHQLIWKHH[WHQGHGIUHTXHQF\UDQJHDUHLQFOXGHGLQWKHOLPLWYDOXHV%\NHHSLQJWKHIUHTXHQF\UDQJHEXWE\IRFXVLQJHYHQPRUHWRORZIUHTXHQFLHVLWZDVVKRZQWREHSRVVLEOHWRUHFHLYHHYHQEHWWHUFRUUHODWLRQEHWZHHQREMHFWLYHLPSDFWVRXQGLQVXODWLRQPHDVXUH
DQG SHUFHLYHG VRXQG LQVXODWLRQ 7KH IRFXV RQ LPSDFW VRXQG LQVXODWLRQ EXW DOVR WKH GLIILFXOW\ WR
LQYHVWLJDWHDQQR\DQFHRIDLUERUQHVRXQGUHVXOWLQWKHIDFWWKDWLWLVOHVVFOHDUZKLFKDLUERUQHVRXQG

 NODVKDJEHUJ#DFRXZRRGFRP 

6983



LQVXODWLRQUHTXLUHPHQWVWKDWDUHVXIILFLHQWLQPRGHUQUHVLGHQWLDOXQLWV
7KHGHPRJUDSKLFFKDQJHRIWKHSRSXODWLRQDQGUHTXHVWRIVPDOOHUDSDUWPHQWVIRUGLIIHUHQWJURXSVRI SHRSOH PDNHV LW QHFHVVDU\ WR LQYHVWLJDWH YDULRXV KRXVLQJ IRUPDWLRQV DQG WKHLU QHHG IRU KLJKUHTXLUHPHQWV$QGLWLVKRQHVWO\ZRUU\LQJZKDWZLOOEHWKHFRQVHTXHQFHVRIWRRVWULFWUHTXLUHPHQWVIRUQHZEXLOGLQJVLQJHQHUDODQGPLVXVHRIKLJKVRXQGFODVVHVIRUYDULRXVDSSOLFDWLRQV2QHLPSRUWDQWWKLQJLVWKHFRVWIRUWKHHQGXVHU

 29(59,(:&855(175(6($5&+
 ,PSDFWVRXQG
%HORZLQWDEOHLVDQRYHUYLHZRIWKHVLQJOHQXPEHUTXDQWLWLHV 614V DQGWKHLUFRUUHODWLRQWRZDONLQJQRLVHDVHYDOXDWHGIURPOLVWHQLQJWHVWLQODERUDWRU\GXULQJWKH$FX:RRGSURMHFWSUHVHQWHGLQ 7KHFRUUHODWLRQUHSUHVHQWVDFRPSDULVRQEHWZHHQUHFRUGHGVLJQDOVUHSUHVHQWLQJGLIIHUHQW614V
DQGDQQR\DQFHGXHWRKXPDQZDONLQJQRLVH

7DEOH±7KHFRHIILFLHQWRIGHWHUPLQDWLRQREHWZHHQGLIIHUHQW614V WDSSLQJPDFKLQHDVDVRXUFH DQG
SHUFHLYHGDQQR\DQFHRIZDONLQJQRLVH
614

R

)UHTXHQF\UDQJH>+]@

L´Q7Z

LQ7ZC,



LQ7ZC,



L´Q7%RGOXQG

L´Q7+DJEHUJ

L´Q7)DVROGL´QZC,$NX/LWH



L´Q7ZC,$NX/LWH



&RQFOXGLQJ WKH ILQGLQJV IURP   UHVXOWV LQ WKH VWDWHPHQW WKDW LI ZDONLQJ QRLVH LV WKH PDLQH[FLWDWLRQVRXUFHWKHIUHTXHQF\UDQJHIURP+]LVVXIILFLHQW7KHUHDUHQRGRXEWVWKDWLWLVQHFHVVDU\WR LQFOXGH IUHTXHQFLHV EHWZHHQ  ±  +] DW OHDVW IRU WKH KRXVLQJ XQLWV LQFOXGHG LQ WKH DFWXDOVXUYH\V$QRWKHU UHFHQWO\ ILQDOLVHG UHVHDUFK SURMHFW $NX PDQDJHG IURP WKH WHFKQLFDO 8QLYHUVLW\ RI
/XOHn 6ZHGHQ LVRILQWHUHVWLQWKHSUHVHQWFRQWH[W  7KHDLPRIWKDWSURMHFWZDVWRJDWKHUDGGLWLRQDODFRXVWLF GDWD WRJHWKHU ZLWK VXEMHFWLYH GDWD XVLQJ WKH VDPH SULQFLSOH ZLWK TXHVWLRQQDLUHV DQGPHDVXUHPHQWVRQVLWHDVZDVFDUULHGRXWLQSUHYLRXVSURMHFW $NX/LWH %\DGGLQJDVXEVWDQWLDOQXPEHU
RIQHZUHVLGHQWLDOEORFNVDQGLQFOXGLQJWKHPLQWKHPDWHULDOWKHVWDWLVWLFDOVLJQLILFDQFHFRXOGEHPDGHVWURQJHU,QWRWDOWKLUWHHQQHZUHVLGHQWLDOEORFNVZHUHLQFOXGHGILYHRIWKRVHZHUHKHDY\VWUXFWXUHVFRQFUHWH DQGHLJKWRIWKHPZHUHGLIIHUHQWW\SHVRIZRRGVWUXFWXUHV7KHGHWHUPLQDWLRQFRHIILFLHQWRI
GLIIHUHQWREMHFWLYHHYDOXDWLRQVDVUHODWHGWRSHUFHSWLRQRIQRLVHIURPIRRWVWHSVLVJLYHQLQWDEOH  













6984




7DEOH±7KHFRHIILFLHQWRIGHWHUPLQDWLRQREHWZHHQGLIIHUHQW614V WDSSLQJPDFKLQHDVDVRXUFH DQG
SHUFHLYHGDQQR\DQFHRIZDONLQJQRLVH  
614

R

)UHTXHQF\UDQJH>+]@

:HLJKW+]D 

L´Q7Z



L´Q7Z



L´Q7Z



L´Q7Z



L´Q7Z

E 



LQ7Z



LQ7Z



LQ7Z



LQ7Z



LQ7Z



LQ7Z



LQ7Z

D  7KHZHLJKWLQJFRQFHUQVLQFUHDVHGG%SHUWKLUGRFWDYHEDQGUHODWLYHWRG%
E  ,IRQHRXWOLHULVUHPRYHGGXHWRWKHIDFWWKDWLWH[KLELWHGVWUDQJHUHVXOWVGXHWRWKHKLJKDJHRIWKHUHVSRQGHQWVWKH
GHWHUPLQDWLRQFRHIILFLHQWLQFUHDVHVXSWRH[KLELWLQJDOPRVWVLPLODUGHWHUPLQDWLRQFRHIILFLHQWDVWKHAkuLiteSURSRVDO   

7R FRQFOXGH WKH UHVXOWV IURP$NX WKH DGDSWDWLRQ WHUP DV SURSRVHG LQ WKH SUHYLRXV 6ZHGLVKSURMHFW$NX/LWHC ,$NX/LWHZKLFKZDVPXFKPRUHVWURQJO\³SXQLVKLQJ´ORZIUHTXHQFLHVVHHPVWRRYHUHVWLPDWHWKHORZIUHTXHQF\LPSDFWJHQHUDOO\VSHDNLQJ$VPRUHUHVLGHQWLDOEORFNVZHUHDGGHG
WRWKHRULJLQDOEXLOGLQJVDPSOHVWKHORZIUHTXHQFLHVDUHVWLOOLPSRUWDQWKRZHYHUOHVVVWULQJHQWWKDQZKDW FDQ EH VHHQ IURP WKH RULJLQDOO\ OLPLWHG QXPEHU RI UHVLGHQWLDO EORFNV FRPSULVLQJ DOPRVW RQO\OLJKWZHLJKWVWUXFWXUHV  )XUWKHUPRUHLQ  WKHDXWKRUFRQFOXGHGWKDWLWPLJKWEHDSSURSULDWHWRQRWQHFHVVDULO\SXVKWKH
IUHTXHQF\ OLPLW EHORZ  +] DW SUHVHQW VLQFH D KROLVWLF RYHUYLHZ RI ZRRG DV EXLOGLQJ PDWHULDO LV
LPSRUWDQWHJLPSDFWVRXQGLQVXODWLRQLVRQHFKDUDFWHULVWLFDPRQJVWRWKHUWHFKQLFDODVSHFW7KDWZDVFRQFOXGHGHYHQWKRXJKDIODWVSHFWUXPDGDSWDWLRQWHUPC ,FUHDWLQJWKH614LQ7Z H[KLELWHG
WKHEHVWFRUUHODWLRQIRUWKHDFWXDOVDPSOHRIEXLOGLQJV&RQVHTXHQWO\LILQ7Z LVXVHGDQGLIFXUUHQWUHVHDUFK LV XVHG WR FRQYLQFH WKH JOREDO FRPPXQLW\ WKDW LW LV D VXLWDEOH DQG VWLOO D UDWKHU FDUHIXO JHQHUDOUHTXLUHPHQWRQDJOREDOPDUNHWIRULPSDFWVRXQGLQVXODWLRQIRUDQ\VWUXFWXUDOPDWHULDOLWZLOOEULQJ D JUHDW EHQHILW WR IXWXUH GHYHORSPHQW 7KH LQGXVWU\ ZLOO JDLQ PXFK PRUH WKDQ LI RQH VPDOOFRXQWU\ OLNH 6ZHGHQ LQWURGXFHV HYHQ PRUH VWULFW UHJXODWLRQV 3URPRWLQJ WKH ,62 GHVFULSWRU
LQ7ZC , KDVVHYHUDODGYDQWDJHV ,WLVJOREDOO\VWDQGDUGLVHG
 $ORWRIGDWDDQGH[SHULHQFHDUHFROOHFWHGDQGDUHDOUHDG\DYDLODEOHUHJDUGLQJWKLVGHVFULSWRU 7KHLQGXVWU\ZLOOXQLI\WKHLUHIIRUWVLQWKHVDPHGLUHFWLRQ 7KRXJKQRWSHUIHFWLQWHUPVRIORZIUHTXHQFLHVLWLVSURYHQWREHIDUEHWWHUWKDQLQ7ZRULQZ
DQG VLPXOWDQHRXVO\ D PRGHUDWH VWHS WKDW SHUKDSV FDQ EH DFFHSWHG JOREDOO\ ZLWKLQ D OLPLWHG
DPRXQWRI\HDUVLVWDNHQ
LQ7ZVKRXOGEHXVHGLQDGGLWLRQWRDYRLGELJQHJDWLYHYDOXHVRIC ,
 $LUERUQHVRXQG
)RUDLUERUQHVRXQGLQVXODWLRQVHYHUDOVWXGLHVKDYHEHHQFDUULHGRXWODWHO\VXPPDULVHGE\5LQGHOLQ  5LQGHOFRQFOXGHVFRQWUDGLFWRU\WRWKHSDSHUKHUHYLHZHGWKDWWKH\SURYHWKDWWKHORZIUHTXHQF\


6985



FRPSRQHQWVDUHRIJUHDWLPSRUWDQFHDQGWKDWLWZRXOGEHRIEHQHILWWRSURYLGH614VDGDSWHGWRWKH
VRXUFHRIVRXQGLHRQH614WRSURWHFWIURP PXVLFFRPSULVLQJEDVVWRQHVDQGRQH614IRURWKHUVRXUFHVFRPSULVLQJOHVVVRXQGLQORZIUHTXHQFLHV,QGZHOOLQJVLIWKHPDLQSXUSRVHRIWKH614IRUDLUERUQHVRXQGLQVXODWLRQLVWRGH¿QHDPLQLPXPOHYHORIVRXQGLQVXODWLRQWKDWFDQHQVXUHDUHDVRQDEOH
SURWHFWLRQDJDLQVWDQQR\LQJVRXQGVIURPWKHQHLJKERXUVWKHQLWLVVX൶FLHQWWRKDYHWKHVWURQJHURI
WKHWZRUHTXLUHPHQWVLHVSHFWUXPDGDSWDWLRQWHUPLQFOXGHG,Q  5LQGHOSURSRVHGRZG%DVDQ
³DFFHSWDEOH´OHYHOWKRXJKQRWVDWLVIDFWRU\7KHFRUUHVSRQGLQJOHYHOLILQWURGXFLQJDGDSWDWLRQWHUPVFDQEHZLWKGUDZQIURPILJXUHHPDQDWLQJIURP  

)LJXUH±&RUUHODWLRQEHWZHHQHDFKRIWKH614VRZCRZCRZDQGRZ$VVXPLQJUHTXLUHPHQWEDVHGRQWKHZHLJKWHGVRXQGUHGXFWLRQLQGH[DFFRUGLQJWR   G% KRUL]RQWDOD[LVFRUUHVSRQGVWRRZC G%ZKLFKHTXDOVRZC G% 
:LWKQRUPDOVL]HGVTXDUHURRPVDQGZLWKDFRPPRQQRUPDOVL]HSDUWLWLRQWKHYDOXHRZDUHFORVH
WRWKHYDOXHRIDQ7ZZKLFKPHDQVWKDWG%FRXOGEHXVHGDOVRIRUDQ7ZC  EHLQJDZDUHWKDWLWLVQRWDOZD\VWKHFDVH   $1$/<6,6
7KH TXHVWLRQQDLUH VXUYH\V UHIHUUHG WR DERYH VXIIHU IURP OLPLWDWLRQV DOVR QRWHG LQ   7KH\ DOOUHIHU WR PRUH RU OHVV ³QRUPDO IODWV´ RI FRXUVH ZLWK D GLYHUVLW\ RI LQKDELWDQWV LQ WHUPV RI DJH DQGJHQGHUDQGFXOWXUDOKDELWVEXWVWLOOOLPLWHG/LVWHQLQJWHVWVWKDWKDYHEHHQFDUULHGEXWLVRIWHQPDGHZLWKRXWFRQQHFWLRQWRWKHULVNIRUDQQR\DQFHLQVSHFLILFGZHOOLQJV,QIXWXUHWKHUHZLOOEHPRUHQHHG
IRUGZHOOLQJVIRUWKHHOGHUO\DQGWKHSHUFHQWDJHRIVLQJOHSHUVRQKRXVHKROGVPLJKWLQFUHDVH6WXGHQWGZHOOLQJVLVDQRWKHUW\SHRIKRXVHKROGZKHUHWKHFRVWVDUHYHU\LPSRUWDQWDQGPXVWEHGHHSO\LQFOXGHG
LQWKHHYDOXDWLRQ$QGZKDWLVUHDOO\QHHGHGIRUKRWHOVDQGWHPSRUDU\UHVLGHQWLDOXQLWV"6XUYH\VPXVWDOVRLQFOXGHFXOWXUDOGLIIHUHQFHV PDQ\FRXQWULHV 7KLVLQWXUQLPSOLHVWKDWRWKHUFRQVLGHUDWLRQVWKDQWKRVHDFFRXQWHGIRULQWKHSUHYLRXVO\PHQWLRQHGVWXGLHVDUHRILQWHUHVWZKLFKSUREDEO\ZLOODIIHFWWKH
UHTXLUHPHQWVQHHGHG$GDSWLQJUHTXLUHPHQWVIRURQHW\SHRIGZHOOLQJVDQGWKHQWUDQVPLWWKRVHWRRWKHUW\SHVRIGZHOOLQJVZLWKRWKHUSUHFRQGLWLRQVDQGXVHWKHPDVPLQLPXPUHTXLUHPHQWVPLJKWLPSO\KLJKFRVWVZLWKRXWDQ\YHULILHGEHQHILWV
7KH EXLOGLQJ LQGXVWU\ LV DOVR IDFLQJ FKDOOHQJHV LQ WHUPV RI HQYLURQPHQWDO LVVXHV )ROORZLQJRQJRLQJHQYLURQPHQWDOGLVFXVVLRQVWKURXJKRXWWKHZRUOGUHJDUGLQJEXLOGLQJLQGXVWU\DQGWKHLULPSDFW
RQ &2  HPLVVLRQ WKHVH KDYH WR EH VROYHG XUJHQWO\ :RRG LV RQH PDWHULDO WKDW ZLOO UHGXFH WKHHQYLURQPHQWDOLPSDFWIURPWKHEXLOGLQJLQGXVWU\%XWLWLVDOVRREYLRXVWKDWWKHWUDGLWLRQDOFRQFUHWHLQGXVWU\ZLOOIDFHWKHVDPHFKDOOHQJHV1HZOLJKWZHLJKWFRQFUHWHVROXWLRQVZLOOHQWHUWKHPDUNHW LW
KDVDOUHDG\VWDUWHG +LVWRULFDOO\ORZIUHTXHQFLHVKDYHQRWEHHQSDUWRIWKHHYDOXDWLRQLQEXLOGLQJDFRXVWLFV7KHORZHU


6986



OLPLWKDVDOZD\VEHHQ+]EXWQRZDGD\VPDQ\FRXQWULHVDWOHDVWPHDVXUHDQGHYDOXDWHGRZQWR
+]HYHQLIWKHUHDUHQRUHTXLUHPHQWVLQEXLOGLQJUHJXODWLRQV7KHUHDUHXQFHUWDLQWLHVDQGGLIILFXOWLHVWR SUHGLFW DQG PHDVXUH LQ WKH ORZ IUHTXHQFLHV WKDW KDYH WR EH WDNHQ LQWR DFFRXQW ZKHQ VWDWLQJUHTXLUHPHQWV DQG GHYHORSLQJ SUHGLFWLRQ WRROV +RZHYHU DV D JHQHUDO EDVLV IROORZLQJ WKH RXWFRPH
IURPFXUUHQWUHVHDUFKRYHUWKHSDVW\HDUVWKHPLQLPXPUHTXLUHPHQWIRUQRUPDOUHVLGHQWLDOXQLWVGZHOOLQJVVKRXOGEH DWOHDVWLQ1RUGLFFRXQWULHV  
x DQ7Z C  G%
x LQ7ZDQGLQ7ZC , G% " 

7KH DGDSWDWLRQ WHUP IRU DLUERUQH VRXQG LQVXODWLRQ LV SXW ZLWKLQ EUDFNHWV VLQFH PRUH UHVHDUFK LV
QHHGHG WR SURYH WKDW LW LV UHDOO\ QHHGHG LQ DOO UHVLGHQWLDO XQLWV 2Q WKH RWKHU KDQG ZLWK H[SHULHQFH
IURPUHDOEXLOGLQJVWKHDGDSWDWLRQWHUPIRUDLUERUQHVRXQGGRHVQRWFDXVHDQ\ELJWURXEOHLQDWOHDVWLIWKHUHTXLUHPHQWOHYHOLVQRWUDLVHGDERYHG%&RPSDUHGWRLPSDFWVRXQGDLUERUQHVRXQGLVHDVLHUWRSUHGLFWHYHQIRUOLJKWZHLJKWVWUXFWXUHVDQGSULRUWRUHGXFHUHTXLUHPHQWVZLWKRXWPRUHUHVHDUFKLW
LVEHWWHUWRNHHSDJRRGVWDQGDUGIRULQVWDQFHWRUHGXFHULVNIRUORZIUHTXHQF\+,),HTXLSPHQW)RULPSDFWVRXQGZHVKRXOGVWULYHWRDWOHDVWIXOILOOWKHUHTXLUHPHQWDERYH +RZHYHUIRUVSHFLILFUHVLGHQWLDOXQLWVDQGVRPHVSHFLILFEXLOGLQJV IRUH[DPSOHKRWHOVWHPSRUDU\UHVLGHQWLDOXQLWV WKHUHTXLUHPHQWVVKRXOGEHIXUWKHUHODERUDWHGDQGH[SORUHGWRRSWLPLVHWKHOHYHOVWRWKHEXLOGLQJVDQGWKHLQKDELWDQWVWKH\DUHDLPHGIRU   $33/,&$%,/,7<7260$//':(//,1*652206"
,QPDQ\SURMHFWVWKHVSHFLILFDWLRQVDUHVLPSO\VWDWHGLQDPDQQHUWKDWVRXQGFODVV%DFFRUGLQJWR
6ZHGLVK6WDQGDUG66VKRXOGEHIXOILOOHG6RPHWLPHVWKHPLQLPXPUHTXLUHPHQWVDUHDFFHSWHG
 G% OHVV VWULQJHQW 7KDW LV YDOLG QR PDWWHU ZKLFK W\SH RI KRXVLQJ XQLW WR EH SURGXFHG7KDW FDQFUHDWHVROXWLRQVZLWKYHU\WKLFNZDOOVDQGIORRUVLIFKRRVLQJOLJKWVWUXFWXUDOPDWHULDOFRPSDUHGWRWKH
VL]HRIWKHGZHOOLQJVURRPVZKLFKDOVRPHDQVWKDWWKHFKRLFHZLOOEHDQRWKHUVWUXFWXUDO PDWHULDO%HORZDQH[DPSOHIRUVWXGHQWGZHOOLQJVLQILJXUHZLWKIHZVTXDUHPHWHUVWRXVHIRUZDONLQJ )LJXUH±6WXGHQWURRPVRIHDFKP EXWWKHIORRUDUHDLVHYHQVPDOOHU ,VLWQHFHVVDU\WRDLPIRUWKH
VLPLODUUHTXLUHPHQWVDVIRUELJGZHOOLQJV" 

6PDOOURRPVPHDQOHVVGLVWDQFHWRVRXQGVRXUFHV 79UDGLR+,),HTXLSPHQW PD\EHUHGXFLQJULVN IRU UDLVHG QRLVH OHYHOV LQVLGH WKH URRP +RWHOV DQG WHPSRUDU\ UHVLGHQWLDO XQLWV DUH QRW HYHQHTXLSSHGZLWK+,),HTXLSPHQW,WDOVRPHDQVOHVVRSSRUWXQLW\WRFUHDWHLPSDFWVRXQGVLQFHWKHIORRU


6987



VSDFHLVOLPLWHG $ QXPEHU RI GLIIHUHQW EXLOGLQJ V\VWHPV DUH HQWHULQJ WKH PDUNHW YHU\ IDVW FXUUHQWO\ VSHFLILFDOO\YDULRXV PRGXODU SUHIDEULFDWHG RSWLRQV 6RPH PRGXOHV  YROXPH HOHPHQWV SURGXFHG LQ IDFWRULHV ILWYHU\ ZHOO IRU VSHFLILF UHVLGHQWLDO XQLWV KRWHOV DQG VLPLODU +RZHYHU WKH UHTXLUHPHQWV LQ DFRXVWLFVRIWHQ OLPLWV WKHLU SRVVLELOLW\ WR FRPSHWH WR RWKHU VWUXFWXUDO PDWHULDO EHLQJ QHJDWLYH QRW OHDVW GXH WR
HQYLURQPHQWDO DVSHFWV $GGLWLRQDOO\ WKH SURFHVV WR FKDQJH UHTXLUHPHQW OHYHOV LQ UHJXODWRU\IUDPHZRUN DUH YHU\ ORQJ FRPSDUHG WR WKH VSHHG RI QHZ KRXVLQJ IDFWRULHV VWDUWLQJ 7KHUHIRUH WR
SURPRWHGHYHORSPHQWZLWKLQWKHEXLOGLQJLQGXVWU\DQGWRUHGXFHWKHULVNH[SRVXUHIRUWKHGHYHORSHU
DQGWKHWHDPLQYROYHGLWVKRXOGEHSRVVLEOHWRFUHDWHDFFHSWDQFHIRUODUJHUGHYLDWLRQIURPWKHPLQLPXPUHTXLUHPHQWV IRU VSHFLILFKRXVLQJXQLWV$Q RSWLRQFRXOGEHWRHVWDEOLVK D ULVN DQDO\VLV IRUVSHFLILF
EXLOGLQJ FDWHJRULHV LPSO\LQJ DFFHSWDQFH IRU PLQRU IDLOXUH 7KDW PHDQV NHHSLQJ VLPLODU EDVLF
UHTXLUHPHQWOHYHOVEXWLIDULVNDQDO\VLVLVFDUULHGRXWDODUJHUGHYLDWLRQFRXOGEHDFFHSWHG7KHUHWXUQVKRXOGEHWKDWPHDVXUHPHQWVKDYHWREHFDUULHGRXWDQGVKDUHGZLWKDXWKRULWLHVDQGPD\EHDVLPSOH
TXHVWLRQQDLUHDIWHUPRQWKVRIXVDJHWRUHFHLYHLQIRUPDWLRQIURPWKHSHRSOHOLYLQJLQWKHIODWV   
7KHUHDUHWZRPDLQUHDVRQVIRUHVWDEOLVKLQJVRPHV\VWHPSURPRWLQJQHZWHFKQLTXH
x 7KH XQFHUWDLQW\ LQ SUHGLFWLRQ RI LPSDFW VRXQG LQVXODWLRQ RI OLJKW VWUXFWXUHV ERWK GXH WR
FRPSOLFDWHGEXLOGXSVRIWKHIORRUVWUXFWXUHDQGMXQFWLRQVEXWDOVRGXHWRHUURUVWKDWFDQ
DSSHDU EHWZHHQ WKH GHVLJQ SKDVH DQG WKH FRPSOHWLRQ RI WKH EXLOGLQJ 7KH SUHGLFWLRQ RI
EXLOGLQJVPXVWEHIXUWKHUGHYHORSHGDQGWKHOHDUQLQJSURFHVVUHTXLUHVSUDFWLFDOH[SHULHQFH
LWZLOOUHVXOWLQLPSURYHGSUHGLFWLRQDFFXUDF\RYHUWLPH
x (QFRXUDJHPRUHGHYHORSHUWRWU\QHZEXLOGLQJV\VWHPVDQGGHYHORSQHZIXWXUHWHFKQRORJ\IRUPRUHHQYLURQPHQWDODQGVXVWDLQDEOHEXLOGLQJV &21&/86,216
$FRXVWLF UHTXLUHPHQWV DUH VWDWLQJ WKH GHVLJQ RI D EXLOGLQJ 7KH\ KDYH WR EH EDVHG RQ ULVN IRUDQQR\DQFH %XW ZH QHHG YDULRXV UHVLGHQWLDO EXLOGLQJV DQG VRPHWLPHV WKH UHTXLUHPHQWV PXVW EH
TXHVWLRQHG VLQFH WKH\ PLJKW QRW FRUUHVSRQG WR WKH H[SHFWHG ULVN IRU DQQR\DQFH DW OHDVW WKHUH DUHUHDVRQVWRVXVSHFWWKDW  $&.12:/('*(0(176
7KHDXWKRUDFNQRZOHGJHVWKHG\QDPLFFRRSHUDWLRQZLWKWKHZRRGEXLOGLQJLQGXVWU\RYHUWKHSDVW\HDUV 

5()(5(1&(6 ,62  $FRXVWLFV5DWLQJRIVRXQGLQVXODWLRQLQEXLOGLQJVDQGRIEXLOGLQJHOHPHQWVSDUW$LUERUQHVRXQGLQVXODWLRQ ,62  $FRXVWLFV5DWLQJRIVRXQGLQVXODWLRQLQEXLOGLQJVDQGRIEXLOGLQJHOHPHQWVSDUW
,PSDFWVRXQGLQVXODWLRQ 5DVPXVVHQ % HWDO &267 $FWLRQ 78  7RZDUGV D FRPPRQ IUDPHZRUN LQ EXLOGLQJ DFRXVWLFVWKURXJKRXW(XURSH,6%1  
 +DJEHUJ.0DQDJHPHQWRI$FRXVWLFVLQ/LJKWZHLJKWVWUXFWXUHV3K'WKHVLV0D\/XQG6ZHGHQ
,6%1
 6SDHK 0 /LHEO$ /HLVWQHU 3$FRXVWLFV LQ ZRRGHQ EXLOGLQJV  FRUUHODWLRQ DQDO\VLV RI VXEMHFWLYH DQGREMHFWLYHSDUDPHWHUV$FX:RG5HSRUWQR635HSRUW,6%1
 gTYLVW50HDVXUHPHQWDQG3HUFHSWLRQRI6RXQG,QVXODWLRQIURP+]EHWZHHQ'ZHOOLQJV'RFWRUDOWKHVLV (QJLQHHULQJ $FRXVWLFV /XOHn 7HFKQLFDO 8QLYHUVLW\ ,6%1  /XOHn 6ZHGHQ 
 5LQGHO-+$FRPPHQWRQWKHLPSRUWDQFHRIORZIUHTXHQF\DLUERUQHVRXQGLQVXODWLRQLQGZHOOLQJV$&7$
$FXVWLFDXQLWHGZLWK$FXVWLFD9ROS  
 5LQGHO-+7KH5HODWLRQVKLSEHWZHHQVRXQGLQVXODWLRQDQGDFRXVWLFTXDOLW\LQGZHOOLQJV3URFHHGLQJVIURP,QWHUQRLVH&KULVWFKXUFK1HZ=HDODQG   +DJEHUJ./MXGNUDYPHGVW|GDY,62',6 HQJ$FRXVWLFUHTXLUHPHQWVDFFRUGLQJWR,62',6 
1RUGLFFRPPLWWHHRQEXLOGLQJUHJXODWLRQV1.%UHSRUW   RQO\LQ6ZHGLVK  




6988