Connected Hinterlands: Proceedings of Red Sea Project IV: Held at the University of Southampton September 2008 9781407306315, 9781407335827

This book includes papers from the conference Connected Hinterlands (Proceedings of Red Sea Project IV) held at the Univ

130 5 40MB

English Pages [247] Year 2009

Report DMCA / Copyright

DOWNLOAD PDF FILE

Table of contents :
Cover Page
Title Page
Copyright
List of Figures and Tables
Acknowledgements
Introduction
Part I
Chapter 1
Chapter 2
Chapter 3
Part II
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Part III
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Chapter 13
Part IV
Chapter 14
Chapter 15
Chapter 16
Chapter 17
Part V
Chapter 18
Chapter 19
Chapter 20
Chapter 21
Chapter 22
Select Index
Recommend Papers

Connected Hinterlands: Proceedings of Red Sea Project IV: Held at the University of Southampton September 2008
 9781407306315, 9781407335827

  • 0 0 0
  • Like this paper and download? You can publish your own PDF file online for free in a few minutes! Sign Up
File loading please wait...
Citation preview

Society for Arabian Studies Monographs No. 8 Series editors D. Kennet & St J. Simpson

Connected Hinterlands Proceedings of Red Sea Project IV Held at the University of Southampton September 2008

Edited by

Lucy Blue John Cooper Ross Thomas Julian Whitewright

BAR International Series 2052 2009

ISBN 9781407306315 paperback ISBN 9781407335827 e-format DOI https://doi.org/10.30861/9781407306315 A catalogue record for this book is available from the British Library

BAR

PUBLISHING

Society for Arabian Studies Monograph Series Series editors: D. Kennet & St J. Simpson

The Society for Arabian Studies Monograph Series was launched in 2004 with the intention of encouraging the publication of peer-reviewed monographs on the archaeology, early history, ethnography, epigraphy and numismatics of the Arabian Peninsula and related matters. Creating a specific monograph series within the British Archaeological Reports International Series is intended to allow libraries, institutions and individuals to keep abreast of work that is specifically related to their areas of research. Whilst research and conference volumes in the series will all be peerreviewed according to normal academic procedures, the decision was taken to allow the publication of doctoral theses, field reports, catalogues and other data-rich work without peer review where this will permit the publication of information that, for one reason or another, might not otherwise be made available. Already published: BAR –S1248, 2004 Sasanian and Islamic Pottery from Ras al-Khaimah Classification, chronology and analysis of trade in the Western Indian Ocean by Derek Kennet with a contribution by Regina Krahl. Society for Arabian Studies Monographs No. 1. ISBN 1 84171 608 1. BAR –S1269, 2004 Trade and Travel in the Red Sea Region Proceedings of Red Sea Project I held in the British Museum October 2002 edited by Paul Lunde and Alexandra Porter. Society for Arabian Studies Monographs No. 2. ISBN 1 84171 622 7. BAR –S1395, 2005 People of the Red Sea Proceedings of Red Sea Project II held in the British Museum October 2004 edited by Janet C.M. Starkey. Society for Arabian Studies Monographs No. 3. ISBN 1 84171 833 5. BAR –S1456, 2005 The Tihamah Coastal Plain of South-West Arabia in its Regional Context c. 6000 BC – AD 600 by Nadia Durrani. Society for Arabian Studies Monographs No. 4. ISBN 1 84171 894 7. BAR –S1661, 2007 Natural Resources and Cultural Connections of the Red Sea Proceedings of Red Sea Project III held in the British Museum October 2006 edited by Janet Starkey, Paul Starkey and Tony Wilkinson. Society for Arabian Studies Monographs No. 5. ISBN 9781407300979 BAR –S1776, 2008 La Péninsule d’Oman de la fin de l’Age du Fer au début de la période sassanide (250 av. – 350 ap. JC) by Michel Mouton. Society for Arabian Studies Monographs No. 6. ISBN 978 1 4073 0264 5 BAR –S1826, 2008 Intercultural Relations between South and Southwest Asia Studies in commemoration of E.C.L. During Caspers (1934-1996) edited by Eric Olijdam and Richard H. Spoor. Society for Arabian Studies Monograph No. 7. ISBN 978 1 4073 0312 3 Potential contributors Please contact the editors in the first instance: Dr Derek Kennet: Department of Archaeology, Durham University, South Road, Durham, England DH1 3LE [email protected] Dr St John Simpson: Department of the Middle East, The British Museum, London, England WC1B 3DG [email protected]

&RQWHQWV &217(176    /,672)),*85(6$1'7$%/(6 $&.12:/('*(0(176  ,1752'8&7,21   &2175,%87256  

















L

















LLL

















Y

















YL

















YLLLȱ

$1&,(1732/,7,(6$1',17(55(/$7,216$/21*7+(5('6($$1',76:(67(51  $1'($67(51+,17(5/$1'6.HQQHWK.LWFKHQ   





+,6725«@SULRUDWTXHQDWXUDOLVYLQGHPLD DQGDV 7KHRSKUDVWXVLVDPRQJWKH3OLQ\¶VVRXUFHVIRU%RRN;,, RIWKH1DWXUDO+LVWRU\LWLVWRDVVXPHWKDW3OLQ\FRQVLG HUHGWKHLQFLVLRQVEHLQJWKHEHJLQQLQJRIWKHYLQGHPLDWKDW WKH\ZHUHPDGHDURXQGWK-XO\DQGWKDWIUDQNLQFHQVHZDV FROOHFWHGIRUVHYHUDOZHHNVXSWRIDOO,Q2FWREHUDWWKH EHJLQQLQJRIWKHQRUWKHDVWPRQVRRQFDU¿DWKXPZDVWKHQ H[SRUWHG WR (J\SW E\ VKLSV ZKLFK KDG MXVW DUULYHG IURP WKHUH

,QP\RSLQLRQWKHWH[WVKRXOGEHUHVWRUHGDVΘΤȱΦΔϲȱΘΓІȱ ΔνΕ΅Αȱ ǀΎ΅Ϡǁȱ ӣΈΓΙΏ΍ȱ ΔΕΓΉ΍Ε΋ΐνΑ΅ȱ ΚΓΕΘϟ΅ȱ ΔΣΑΘ΅ ±RIFRXUVHWREHWUDQVODWHG³DOOWKHDIRUHPHQWLRQHGPHU FKDQGLVHIURPWKH)DUVLGHDQG$GXOLV´,IVXFKZDVWKH RULJLQDO WH[W WKH GLVWDQFH RI WKH GHVFULSWLRQV RI 0X]D¶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± KRPHSURGXFWVUHVSHFWLYHO\DW0X]DDQG&DQH±DUHKDU YHVWHGMXVWLQIDOODQGVSULQJHOHSKDQWVUKLQRFHURVDQG WRUWRLVHV FRXOG DOVR KDYH EHHQ KXQWHG GXULQJ WKH ZLQWHU 6RZKLOHLWFRXOGKDYHPDGHVHQVHWRVDLOWR$GXOLVRQ-DQ XDU\HYHQLIWKHZLQGZDVQRWIDYRXUDEOHRQWKHVRXWKHUQ OHJRIWKH5HGVHDLWZRXOGKDYHEHHQSRLQWOHVVWRUHDFK 0X]DRU&DQHZKHQP\UUKDQGIUDQNLQFHQVHZHUHKDUGO\ DYDLODEOH

$VIDUDVGDWKLDWKXP3OLQ\FODLPVWKDWLWZDVFROOHFWHGLQ VSULQJLQFLVLRQVEHLQJPDGHLQZLQWHUVHFXQGDYLQGHPLD HVWYHUHDGHDPKLHPHFRUWLFLEXVLQFLVLV*URRPLQWHU SUHWVWKDWLQFLVLRQVZHUHPDGHLQ1RYHPEHU'HFHPEHUDQG FROOHFWLRQWRRNSODFHLQDERXW)HEUXDU\ZKLFKLVLQQR FRQWUDGLFWLRQZLWK3OLQ\¶VGLYLVLRQRIWKH\HDU+RZHYHU LWVKRXOGEHQRWLFHGWKDWDFFRUGLQJWRWKH3HULSOXVVKLSV IURP(J\SWGLGQRWVDLOWR0X]DRU&DQDIURP-DQXDU\WR 6HSWHPEHUEXWMXVWDURXQG6HSWHPEHU RUDOLWWOHHDUOLHU  WKRXJKQRWKLQJSUHYHQWHGWKHPOHDYLQJHDUOLHU7KLVPHDQV WKDWGDWKLDWKXP¶VKDUYHVWFDPHWRRODWHWREHPDWFKHGE\ D VSHFLDO YR\DJH IURP (J\SW 7KHUHIRUH DV GDWKLDWXP EHFDPHDYDLODEOHDWDWLPHZKHQVDLOLQJEDFNIURPVRXWK $UDELDWR(J\SWZDVWRRGLI¿FXOWDQGULVN\(J\SWLDQYHV VHOVEDFNIURP,QGLDGLGQRWZDLWXQWLOWKDWWLPH

6DLOLQJ7LPHWDEOHVDQGWKH$URPDWLF+DUYHVW ,WLVZRUWKZKLOHWRHODERUDWHRQWKHFRQQHFWLRQVEHWZHHQ KDUYHVWLQJ WLPH RI IUDQNLQFHQVH DQG P\UUK DQG VDLOLQJ WLPH RI WKHLU PHUFKDQWV $FFRUGLQJ WR 3OLQ\ WKHUH ZHUH WZRNLQGVRIIUDQNLQFHQVHWKHFDU¿DWKXPWKHVXPPHUIDOO SURGXFW DQG WKH GDWKLDWKXP WKH ZLQWHUVSULQJ SURGXFW +DUYHVWVRIP\UUKFRLQFLGHZLWKWKRVHRIIUDQNLQFHQVH $V IDU DV FDU¿DWKXP¶V FROOHFWLRQ LV FRQFHUQHG IXQGD PHQWDOHYLGHQFHDUH3OLQ\¶VZRUGVSULRUDWTXHQDWXUDOLV YLQGHPLDFLUFDFDQLVRUWXPÀDJUDQWLVVLPRDHVWXLQFLGHQ WLEXVTXDPD[LPHYLGHDWXUHVVHSUDHJQDVWHQXLVVLPXVTXH WHQGLFRUWH[>«@DXWXPQROHJLWXUH[!DHVWLYRSDUWX1 *URRP¶VLQWHUSUHWDWLRQRIWKLVSDVVDJHLVWKDWLQFLVLRQVZHUH PDGH EHWZHHQ $SULO DQG -XQH DQG FROOHFWLRQ FHDVHG E\ -XO\RU$XJXVWWKHULVLQJRIWKH'RJVWDU DSSUR[LPDWHO\

&RQWLQL %DQWL³3UREDEO\DIHPLQLQHQLVEDKIURP DQFLHQWVRXWK$UDELF‫ه‬UI´7KHUHIRUHµIUDQNLQFHQVHSURGXFHGLQDXWXPQ¶ RUEHWWHUµGXULQJWKHVRXWKZHVWPRQVRRQ-XO\WR6HSWHPEHU¶ 3OLQ\1DWXUDO+LVWRU\,, 7KHRSKUKS,;ΘϲΑȱΈξȱΏ΍Ά΅ΑΝΘϲΑȱΎ΅ϠȱΘχΑȱΗΐϾΕΑ΅ΑȱЀΔϲȱ ̍ϾΑ΅ȱΚ΅ΗϠȱΎ΅ϠȱΘ΅ϧΖȱΌΉΕΐΓΘΣΘ΅΍ΖȱψΐνΕ΅΍ΖȱπΑΘνΐΑΉ΍Αǯ 3OLQ\1DWXUDO+LVWRU\;,, $VUDLQVSRLOVIUDQNLQFHQVH7KHRSKUDVWXV¶DQG3OLQ\¶VLQIRUPHUV DSSDUHQWO\UHIHUWRSODFHVZKLFKUHPDLQHGUHODWLYHO\XQDIIHFWHGE\WKH UDLQVEURXJKWE\WKHVRXWKZHVWPRQVRRQ7KHUHDUHVRPHUDLQIDOOGDWD IURPDO0XNDOODK 0RXWRQHWDO  3OLQ\1DWXUDO+LVWRU\;,, *URRP³)RUWKHVSULQJFURSLQFLVLRQVVHHPOLNHO\ WRKDYHEHHQPDGHLQWKHZLQWHUSHULRG1RYHPEHU'HFHPEHUZLWKWKH FROOHFWLRQRIWHDUVZKLFKDWWKLVVHDVRQWDNHYHU\PXFKORQJHUWRRR]H RXWDQGFRDJXODWHWDNLQJSODFHLQDERXW)HEUXDU\WKDWFURSZRXOGWKHQ EHVKLSSHGWR4DQDDVVRRQDVWKHQRUWKHDVWPRQVRRQKDGGLHGGRZQ VXI¿FLHQWO\WRDOORZDVDIHSDVVDJH´ 6SULQJEHJLQVZLWKWK)HEUXDU\3OLQ\1DWXUDO+LVWRU\,, ZLQWHUEHJLQVZLWKWK1RYHPEHU

3OLQ\1DWXUDO+LVWRU\;,, 3OLQ\1DWXUDO+LVWRU\;,,LQFLGXQWXUELVHWLSVDHL!VGHPTXH WHPSRULEXV 3OLQ\1DWXUDO+LVWRU\;,, *URRP³,QFLVLRQVZHUHPDGHLQWKHIUDQNLQFHQVHWUHHV EHWZHHQ$SULODQG-XQHRQFHWKHKRWZHDWKHUKDGFRPPHQFHG$IWHU DZHHNRUWHQGD\VWKHWUHHVZHUHUHYLVLWHGDQGWKHIUDQNLQFHQVHWHDUV FROOHFWHGIXUWKHULQFLVLRQVEHLQJPDGHRUQHZFURSVEHLQJJDWKHUHGDW LQWHUYDOVRIWHQGD\VWRDIRUWQLJKWRYHUWKHQH[WIHZZHHNV,Q-XO\DQG $XJXVWZLWKWKHDUULYDORIWKHPRQVRRQUDLQVFROOHFWLRQRIIWKHWUHHV FHDVHG´



'(520$1,63$77(5162)75$'( &RQFOXVLRQ ,Q FRQFOXVLRQ GLIIHUHQW ZRUGLQJV EHWZHHQ 3HULSOXV  S OODQG3HULSOXVSOOPDNHFOHDUWKDW FRPPHUFLDOHQWHUSULVHVWR$GXOLVDQG0X]DKDGGLIIHUHQW UHFXUUHQFHV WR 0X]D WKH\ VDLOHG RQFH D \HDU LQ FRLQFL GHQFHZLWKWKHFDU¿DWKXPKDUYHVWWR$GXOLVWKH\VDLOHG DWOHDVWWZLFHD\HDULQ-DQXDU\DQG6HSWHPEHUEHIRUHWKH FORVHDQGUHVSHFWLYHO\WKHEHJLQQLQJRIWKH1(PRQVRRQ :H PD\ SUHVXPH WKDW JUHDWHU SUR¿WV IURP DQ H[SDQGHG EXVLQHVVFRXOGKDYHVXJJHVWHGWRPDQ\5HG6HDWUDGHUVWR OHDYHDJDLQIRU$GXOLVLQ-DQXDU\DIWHUDYR\DJH HLWKHUWR $GXOLV RU WR 0X]D  LQ 6HSWHPEHU WR 1RYHPEHU :DV LW WKHUHIRUHWKHXVXDOSUDFWLFHWRDOWHUQDWHDYR\DJHWR0X]D EHWZHHQ6HSWHPEHUWR1RYHPEHUZLWKDYR\DJHWR$GXOLV LQ-DQXDU\WR0DUFK"'RHVWKLVH[SODLQWKHRFFXUUHQFHDW 0X]D±FHUWDLQO\LQ2FWREHU±RIPHUFKDQGLVHIURP$GXOLV"

)DEULFLXV %  'HU 3HULSOXV GHV (U\WKUlLVFKHQ  0HHUHVYRQHLQHP8QEHNDQQWHQ*ULHFKLVFKXQG'HXW  VFKPLWNULWLVFKHQXQGHUNOlUHQGHQ$QPHUNXQJHQQHEVW  YROOVWlQGLJHQ :|UWHUYHU]HLFKPLVVH YRQ % )DEULFLXV  /HLS]LJ9HLW &RPS )ULVN+/p3pULSOHGHODPHUeU\WKUpH*|WHEHUJ  (ODQGHUVERNWU\HULDNWLHERODJ *URRP1)UDQNLQFHQVHDQG0\UUK$6WXG\RIWKH  $UDELDQ,QFHQVH7UDGH/RQGRQ/RQJPDQ 0D]]DULQR66XOQRPHGHOYHQWRKLSDOXV µLS  SDOR¶ LQ3OLQLR+HOLNRQ9,,;,9 0D]]DULQR 6  2Q WKH QDPH RI WKH +LSDOXV  +LSSDOXV  ZLQG LQ 3OLQ\ ,Q &URVVLQJV (DUO\ 0HGL  WHUUDQHDQ &RQWDFV ZLWK ,QGLD 'H 5RPDQLV )   7FKHUQLD$ HGV SS1HZ'HOKL0DQRKDU 0RXWRQ 0 6DQODYLOOH 3  6XLUH -  /H SRUW  VXGDUDELTXHGH4kQL¶SDOpRJpRJUDSKLHHWRUJDQLVDWLRQ  XUEDLQH &RPSWHV 5HQGXV GH O¶$FDGpPLH GHV ,QVFULS  WLRQV %HOOHV/HWWUHV 3OLQ\ 1DWXUDO +LVWRU\ + 5DFNKDP WU   &DP  EULGJH/RHE&ODVVLFDO/LEUDU\ 6HODQG(7KH3HULSOXV¶5HSRUWRID5RPDQ$WWDFN  RQ$GHQ$Q8QLQWHQGHG5HVXOWRI6XFFHVVIXO3URSD  JDQGD"6\PERODH2VORHQVHV   7KHRSKUDVWXV(QTXLU\LQWR3ODQWV%RRNV7UHDWLVHRQ  2GRXUV&RQFHUQLQJ:HDWKHU$+RUW WU &DP  EULGJH/RHE&ODVVLFDO/LEUDU\ 

5HIHUHQFHV &DVVRQ/7KH3HULSOXV0DULV(U\WKUDHL7H[WZLWK  ,QWURGXFWLRQ7UDQVODWLRQDQG&RPPHQWDU\3ULQFHWRQ  3ULQFHWRQ8QLYHUVLW\3UHVV &RQWLQL5 %DQWL*1DPHVRI$URPDWDLQ6H  PLWLF DQG &XVKLWLF /DQJXDJHV ,Q 3URIXPL G¶$UDELD  $WWL GHO &RQYHJQR $ $YDQ]LQL HG  SS   5RPH³/¶(UPD´GL%UHWVFKQHLGHU 'H5RPDQLV)+\SDORVGLVWDQ]HHYHQWLWUD$UDELD  H,QGLDQHOODVFLHQ]DHOOHQLVWLFD7RSRL

&IVXSUD 7DEOH



&211(&7('+,17(5/$1'6



-3+,//,36*/$66,1$.680

*ODVV*ODVVZRUNLQJDQG*ODVV 7UDQVSRUWDWLRQLQ$NVXP -DFNH3KLOOLSV

7KLVSDSHUKLJKOLJKWVDQRWKHUZLVHXQGLVFXVVHG\HWLPSRU WDQW DVSHFW RI WKH WKHPH RI WKLV 5HG 6HD ,9 FRQIHUHQFH ±FRQQHFWLQJDKLQWHUODQGLQWKLVFDVHDSDUWLFXODUO\UXJ JHG KLQWHUODQG DV D UHPLQGHU WKDW VRPH SUDFWLFDOLWLHV RI WKHWKHPHVWLOOQHHGWREHIXUWKHUFRQVLGHUHGDQGLQYHVWL JDWHG7KHVSHFL¿FKLQWHUODQGLQTXHVWLRQLVWKDWEHWZHHQ WKHDQFLHQWFRDVWDOSRUWRI$GXOLV QHDUPRGHUQ0DVVDZD LQ(ULWUHD DQGWKHDQFLHQWFDSLWDODQGPRGHUQWRZQRI$N VXP LQ7LJUD\SURYLQFHRI(WKLRSLD RYHUNPLQODQG $OWKRXJK PDWHULDO DQG JRRGV DOUHDG\ KDG EHHQ DFWLYHO\ WUDQVSRUWHGEHWZHHQWKH1LOH9DOOH\DQGWKH5HG6HDFRDVW WKURXJKWKHDUHDRI$NVXPLQERWKGLUHFWLRQVIRUPLOOHQ QLD WKH IRFXV KHUH RQ JODVV REMHFWV PRUH VSHFL¿FDOO\ JODVV YHVVHOV  OLPLWV GLVFXVVLRQ WR WKH ODVW IHZ FHQWXULHV %&DQGWKH¿UVWVHYHQFHQWXULHV$'6RPHWLPHLQWKHUG FHQWXU\$'WKH$NVXPLWHHPSLUHH[WHQGHGDFURVVWKH5HG 6HDWRLWVHDVWHUQVLGHRQWKHVRXWKHUQ$UDELDQ3HQLQVXOD FRQWUROOLQJ ERWK FRDVWV DQG WKHUHIRUH DOO PDULWLPH FRP PHUFH FRQGXFWHG WKURXJK LW (DUO\ LQ WKH WK FHQWXU\ WKH HPSLUHFROODSVHGDQG$NVXPGLVDSSHDUVIURPWKHUHFRUGV IRUVHYHUDOKXQGUHG\HDUV

)LJXUH2QHRIVL[JREOHWVDQGRQHRIIRXUEHDNHUV UHFRYHUHGLQ7RPE*7,,DW$NVXP IURP0RUULVRQ 3O 

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¿HOG )LJXUHULJKW ,WFOHDUO\

FRSLHGWKHLQGLJHQRXVFHUDPLFEHDNHUVXELTXLWRXVKHUHDQG DWRWKHU$NVXPLWHVLWHVKDYLQJDSDUWLFXODUµELDVEDODQFH¶ KDQGOHRQRQHVLGHRIWKHYHVVHORQO\0DQ\IUDJPHQWVRI VLPLODUJODVVEHDNHUVDOVRZHUHUHFRYHUHGLQWKLVDQGRWKHU WRPEV7KLVHYLGHQFHZDVXQGHUOLQHGLQZKHQIXUWKHU %,($H[FDYDWLRQVDWµ.6LWH¶XQFRYHUHGDWKWKFHQWXULHV $'µLQGXVWULDO¶RUFUDIWVZRUNLQJDUHDKDYLQJFRQVLGHUDEOH WHFKQRORJLFDOZDVWHIURPQHDUE\XQH[FDYDWHGSURGXFWLRQ DUHDV RU ZRUNVKRSV LQFOXGLQJ D VPDOO JODVV ZDVWHOXPS DQG WZR PRUH JODVV URGV 0DQ]R DOVR QRWHV VRPH IUDJ PHQWV RI UDZ JODVV µVWLFNV¶ DW 2QD 1HJDVW DQG RWKHUV DW $GGL.LOWHERWKVLWHVLQWKHLPPHGLDWHYLFLQLW\RI$NVXP LQWKWKFHQWXULHV$'FRQWH[WV 8QGRXEWHGO\JODVVZRUNLQJZDVRQHRIWKHLQGXVWULHVSUDF WLVHG KHUH DV +HOHQ 0RUULVRQ ZKR SXEOLVKHG WKH JODVV IURP WKH V %,($ H[FDYDWLRQV KDV DOUHDG\ REVHUYHG

$UWDQG$UFKDHRORJ\62$6/RQGRQ 6HH3KLOOLSVIRUGLVFXVVLRQDQGIXUWKHUUHIHUHQFHV 7KHVHLQFOXGHWKH%ULWLVK,QVWLWXWHLQ(DVWHUQ$IULFDH[FDYDWLRQVLQ DQGPRUHUHFHQWO\DQGWKH8QLYHUVLW\RI1DSOHV µO¶2ULHQWDOH¶%RVWRQ8QLYHUVLW\H[FDYDWLRQVLQ7KHVH SURMHFWVKDYHSXEOLVKHGWKHPRVWH[WHQVLYHUHSRUWVLQFOXGLQJLOOXVWUD WLRQVRIPDWHULDOUHPDLQVDW$NVXPLWVHOIVHH0XQUR+D\DQG 3KLOOLSVRQ7KH812%8¿QDOUHSRUWYROXPHLVFXUUHQWO\LQSUHVV DOWKRXJKH[SHFWHGWRDSSHDUVRRQ,QWKHPHDQZKLOHSUHOLPLQDU\DQQXDO 812%8UHSRUWVPD\EHIRXQGLQ1\DPH$NXPD >@>@ 5DVVHJQDGLVWXGLHWLRSLFL >@16,,>@ DQGHOVHZKHUH ZLWKIXUWKHUUHIHUHQFHV7KHPRVWUHOHYDQWIRUWKHSUHVHQWSDSHULV 0DQ]R =DKQ1R 0RUULVRQE)LJXUH)LJXUHDUHRWKHUEHDNHU IUDJPHQWVUHFRYHUHGPRVWO\LQWRPEV6HH3KLOOLSVRQ3OEIRUD FRORXULOOXVWUDWLRQ

:LOGLQJIRUEHDNHUVVHH)LJXUHSDV VLP7KLVµELDVEDODQFH¶KDQGOHW\SHLVDKDOOPDUNRI$NVXPLWHGHVLJQ DOWKRXJK0RUULVRQ E QRWHVKDQGOHVVEXWRWKHUZLVHVLPLODU EHDNHUVKDYHDZLGHGLVWULEXWLRQLQWKHHDVW0HGLWHUUDQHDQZRUOGDWWKDW WLPH +DUORZE¿JXUHG7KHµÀDWWHQHGGURSOHW¶ +DUORZ E)LJXUHL PLJKWEHD¿QLVKHGSLHFH7KLVH[FDYDWLRQDUHD LVGDWHGWRWKHODWHWKWKURXJKWKFHQWXULHV$' 0DQ]R



&211(&7('+,17(5/$1'6 RQRWKHUFULWHULD0RVWJODVVZRUNLQJWHFKQLTXHVDUHUHS UHVHQWHG DW $NVXP LQFOXGLQJ EORZQ GUDZQ FDPHR HQ JUDYHG FDVHG SDLQWHG PLOOH¿RUH PDUYHUHG LQODLG DQG µJROGLQJODVV¶LQWKHIRUPRIYHVVHOVEUDFHOHWVHDUVWXGV OLSSOXJVEHDGVDQGRWKHUPLVFHOODQHRXVREMHFWVDVZHOO DV REMHFWV LQ RWKHU PDWHULDOV KDYLQJ GHFRUDWLYH JODVV LQ OD\V7KHVKHHUYDULHW\RIJODVVFRORXUVUHFRYHUHGDW$N VXPLVVXEVWDQWLDOPRUHWKDQLVNQRZQHOVHZKHUHDWWKDW WLPH,WPXVWEHVWUHVVHGWKDWQRQHRIWKLVLVHYLGHQFHRI JODVVPDQXIDFWXUHDW$NVXPIRUZKLFKQRGH¿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³$UWLFOHV RI FORWKLQJ IRU WKH %DUEDURL XQXVHG WKH NLQG SURGXFHG LQ (J\SW ZUDSV IURP $UVLQRs >LQ (J\SW@ FRO RXUHGDEROODL>DW\SHRIKHDY\FORDN@RISULQWHGIDEULFOLQ HQVGRXEOHIULQJHGLWHPVQXPHURXVW\SHVRIJODVVVWRQHV DQGDOVRRIPLOOH¿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r>LQQRUWKZHVWHUQ ,QGLD@,QGLDQLURQDQGVWHHOFRWWRQFORWKRIWKHEURDGHU PDNH WKH VRFDOOHG PRQDFKp DQG VDJPDWRJrQr JLUGOHV NDXQDNDLJDUPHQWVRIPRORFKLQRQJDUPHQWVRIFRWWRQLQ OLPLWHGQXPEHUODFG\H´

0XFKRIWKLVLPSRUWHGJODVVPXVWKDYHFRPHE\VKLSYLD WKH5HG6HDWRWKHSRUWRI$GXOLVDQGWKHQFDUULHGLQODQG PRUHWKDQNPWR$NVXPWRJHWKHUZLWKFOD\DPSKRUDH RWKHULPSRUWHGFHUDPLFYHVVHOVDQGREMHFWVRIRWKHUPDWH ULDOVWKDWKDYHDOVREHHQUHFRYHUHG*ODVVDOVROLNHO\ZDV WUDQVSRUWHGIURPWKH1LOH9DOOH\DJDLQE\ODQGIRUVRPH FRORXUV DUH EHVW FRPSDUHG ZLWK JODVV IRXQG DW 0HURs :K\LWZDVLPSRUWHGLVXQGHUVWDQGDEOHIRU$NVXP¶VpOLWH HQMR\HGDZLGHYDULHW\RIOX[XU\JRRGVIRUZKLFK$NVXP H[SRUWHGLYRU\DQGRWKHUPDWHULDOVDQGJRRGVIURPIXUWKHU LQODQG3RVVLEO\WKH$VNXPLWHJODVVYHVVHOVWRRZHUHWUDQV SRUWHGDORQJWKLVVDPHODQGURXWHWR$GXOLVWREHVKLSSHG WRRWKHUSRUWVHOVHZKHUHLQRUEH\RQGWKH5HG6HD:H NQRZ YHU\ OLWWOH DERXW$NVXPLWH H[SRUWDWLRQ RI ¿QLVKHG JRRGV 6L[ YLUWXDOO\ LGHQWLFDO LPSRUWHG JREOHWV )LJXUH  OHIW  UDQJLQJ LQ KHLJKW EHWZHHQ F  DQG  FP ZHUH UHFRYHUHG WRJHWKHU ± FOHDUO\ DV D VHW RI VL[ ± LQ D FHUDPLFERZOLQDODWHUGHDUO\WKFHQWXU\$'WRPEDW$N VXP7KLVWRPEDOWKRXJKULFKLQ¿QGVZDVQRQUR\DODQG ORFDWHG LQ WKH *XGLW 6WHODH )LHOG D QRQpOLWH FHPHWHU\ 7KLV VDPH WRPE DOVR FRQWDLQHG IRXU RI WKH ORFDOO\ PDGH EHDNHUVZLWKµELDVEDODQFH¶KDQGOHVSUHVXPDEO\DOVRFRQ VWLWXWLQJDVHW

%DVLFDOO\WKHQLPSRUWVWR$GXOLVDWWKLVWLPHDUHYDULRXV FORWKV DQG FORWKHV YDULRXV PHWDOV DV UDZ RUH VFUDS DQG ¿QLVKHGREMHFWVUDZVWHHOJROGDQGVLOYHUREMHFWVODFWUHH UHVLQ FRORXUDQW DQG D OLWWOH ZLQH ROLYH RLO DQG FRLQDJH

2SLQLRQLVGLYLGHGDVWRZKHWKHUWKHVHJREOHWVZHUHLPSRUWHGRU ORFDOO\SURGXFHG0RUULVRQ E TXRWHV+D\HV¶RSLQLRQWKDW WKHVHDUHRI(J\SWLDQRULJLQEXWUHFHQWO\3KLOOLSVRQ  FRQVLG HUVWKHP³DOPRVWFHUWDLQ O\ ´ORFDOSURGXFWV,IWKHVHVL[DUHORFDOFRP SDUDQGDIURPHOVHZKHUHDUHFLWHGE\0RUULVRQDQGPRUHGHOLFDWHIUDJ PHQWVZHUHUHFRYHUHGLQWKH7RPERIWKH%ULFN$UFKHV$OVRDV3KLO OLSVRQ  QRWHV³VRPHJODVVLWHPVXQGRXEWHGO\DUHLPSRUWHG´ $PRVWXVHIXOGLVFXVVLRQRIWKHWUDGHLQJODVVWKURXJKWKH5HG6HD GXULQJWKH5RPDQHUDLQFRUSRUDWLQJHYLGHQFHIURPWKH3HULSOXVDQG QXPHURXVRWKHUUHIHUHQFHVLV0H\HU 7KHWUDQVODWLRQTXRWHGKHUHLVE\&DVVRQ †  ZKRDOVRSURYLGHVWKHRULJLQDO*UHHNWH[W7H[WLQ VTXDUHEUDFNHWVLVDGGHGE\WKHSUHVHQWDXWKRUWRLGHQWLI\WKHORFDWLRQV RIVRPHSODFHQDPHVRUW\SHVRIJRRGVDQGWKHJODVVLWHPVKDYHEHHQ XQGHUOLQHG$OWHUQDWLYHWUDQVODWLRQVDUHE\+XQWLQJIRUGDQG %XUVWHLQ

0RUULVRQE 7KHH[WHQVLYHUDQJHRIFRORXUVRIWHQIRXQGLQERWKWUDQVOXFHQWDQG RSDTXHYDULHWLHVPD\EHJDXJHGIURPWKRVHGHVFULEHGE\ERWK0RUULVRQ DEDQG+DUORZDEDVZHOODVRWKHUUHSRUWVE\+DUORZLQ 3KLOOLSVRQ (GZDUGV0DQ]R 3HUKDSVDOVRZHVWZDUGWR0HURsJLYHQWKHVLPLODULW\RIFRORXUV IRXQGKHUHWRWKRVHDW$NVXP 0RUULVRQE3O)LJXUHV6HH3KLOOLSVRQ 3ODIRUDFRORXULOOXVWUDWLRQ2QWKHWRPELWVHOIVHH0XQUR+D\ 



-3+,//,36*/$66,1$.680 7KHPLOOH¿RUHJODVVZRXOGDOPRVWFHUWDLQO\EHDVYHVVHOV DQGJODVVµVWRQHV¶ Ώ΍Ό΍΅ȱΙǀ΅ǁΏ΋Ζ FDQEHXQGHUVWRRGWR EHVRPHWKLQJRWKHUWKDQUDZJODVVIRUZKLFKDGLIIHUHQW ZRUG ΙΏΉΓΖȱ ΅Ε·΋  LV HPSOR\HG LQ WKH 3HULSOXV WH[W 6RPH JRRGV ZHUH IRU WKH %DUEDURL VRPH IRU WKH NLQJ VRPH IRU ZRPHQ VRPH IRU ZDUULRUV DQG VRPH IRU UHVL GHQWIRUHLJQHUV+RZPXFKRIWKLVZDVEURXJKWLQODQGWR $NVXPLWVHOIZDVQRWRILQWHUHVWWRWKHWDUJHWDXGLHQFHRI WKH3HULSOXVDQGWKXVLVQRWVWDWHGEXWDOOH[FHSWWKHODF UHVLQ KDV EHHQ H[FDYDWHG DW$NVXP LI WKH µJODVV VWRQHV¶ DUHVHHQDVEHDGV DOWKRXJKRQO\IUDJPHQWDU\HYLGHQFHIRU FORWKDQGFORWKLQJKDVEHHQUHFRYHUHGWKHUH%XWKRZGLG LWDOOJHWWKHUH"2YHUODQGWUDQVSRUWLVQRWGLVFXVVHGLQWKH 3HULSOXVRUDQ\RWKHUVHDEDVHGFRPPHUFLDOWH[WVH[FHSWLQ WKHPRVWODFRQLFRIWHUPVEXWREYLRXVO\LWFRXOGRQO\KDYH EHHQWKHZRUNRIVHSDUDWHRYHUODQGWUDGHUVRUFDUULHUVQRW WKRVHZKRKDGWUDQVSRUWHGLWE\VHD

7KH MRXUQH\ EHWZHHQ $GXOLV DQG $NVXP WRRN EHWZHHQ HLJKWDQGGD\VDFFRUGLQJWRGLIIHUHQW&ODVVLFDOVRXUFHV 7KH3HULSOXVVD\VHLJKWGD\VWKHWKFHQWXU\$'%\]DQ WLQHZULWHU3URFRSLXVRI&DHVDUHDUHFRUGVGD\VIRUDQ µXQHQFXPEHUHG¶WUDYHOOHUDQG1RQQDVRVWKH(PSHURU-XV WLQLDQ¶VDPEDVVDGRUDERXW$'WUDYHOOHGIRUGD\V 7KHMRXUQH\LWVHOILVSUREOHPDWLFDVWKHFOLPDWHUHYHUVHV PLGZD\EHWZHHQ$GXOLVDQG$NVXPDWDYLOODJHFDOOHG$XH ±IURPVXPPHUWRZLQWHUZHDWKHUDSKHQRPHQRQFRQVLVW HQWO\ UHPDUNHG XSRQ E\ 1RQQDVRV DQG RWKHU WUDYHOOHUV 1RQHWKHOHVVWKLVURXWH RURWKHUVVLPLODUWRLW DSSHDUV WRKDYHEHHQLQJHQHUDOXVHQRWMXVWIRUFHQWXULHVEXWIRU PLOOHQQLDDQGIRUWKH¿UVWPLOOHQQLXP%&DQG$'FDQ EHWUDFHGE\WKHPDMRUVLWHVDORQJWKHZD\ VHH)LJXUH  7KHODQGVFDSHLVYHU\UXJJHGLQLWLDOO\ORZODQGEXWVRRQ ULVLQJWRRYHUPDERYHVHDOHYHOPRVWO\DWWKH5LIW 9DOOH\HVFDUSPHQWDQGWKHUHDIWHUFRQVLVWLQJRIJHQHUDOO\ ÀDWWLVKSODLQVDQGYHU\VWHHSJRUJHVZLWKEDUHURFN\VLGHV 7KHZKROHWKURXJKRXWLVOLEHUDOO\VWUHZQ ZLWKURFNVDQG ERXOGHUVPRVWO\ZDVKHGRXWGXULQJWKHUDLQ\VHDVRQDQG ZLWKOLWWOHVKDGHLQWKHGU\VHDVRQ

7KUHHWHUPVIRUJODVVLWHPVDUHIRXQGLQWKH3HULSOXVΙΏΉΓΖȱ΅Ε·΋ Ώ΍Ό΍΅ΖȱΙ΅Ώ΋ΖȱDQGΙ΅Ώ΋ȱΗΎΉΙ΋̗ΏΉΓΖȱ΅Ε·΋ȱLVWUDQVODWHGDVµFUXGH JODVV¶ +XQWLQJIRUG DQGµUDZJODVV¶ &DVVRQ†  %RWKΏ΍Ό΍΅ΖȱΙ΅Ώ΋ΖDQGΙ΅Ώ΋ȱΗΎΉΙ΋DUHWUDQVODWHGE\+XQWLQJ IRUGDVµJODVVZDUH¶ZKHUHDVWKHIRUPHULVµJODVVVWRQHV¶DQG WKHODWWHUµJODVVZDUH¶DFFRUGLQJWR&DVVRQ† VHHDOVR DQG†%XUVWHLQDOVRWUDQVODWHVOLTLD9 XDOK9DVµJODVVVWRQHV¶̗ΏΉΓΖȱ΅Ε·΋LVLPSRUWHGRQO\WRWZRORFDWLRQV DORQJWKHHDVWHUQFRDVWRIPRGHUQ,QGLD 2]HQHDQG%DNDUH ZKHUHDV WKHRWKHUWZRLWHPVDUHLQWHQGHGIRUHOVHZKHUHΏ΍Ό΍΅ΖȱΙ΅Ώ΋ΖRQO\WR $GXOLV$YDOLWHV5KDSWDDQGRWKHUQHDUE\$]DQLDQSRUWVRQWKH$IULFDQ FRDVWDQGΙ΅Ώ΋ȱΗΎΉΙ΋RQO\WR%DUEDULNRQRQWKHPRGHUQ3DNLVWDQL FRDVW&OHDUO\WKHDXWKRURIWKH3HULSOXVUHIHUVWRWKUHHGLIIHUHQWIRUPV RIJODVVZLWKWKHΙΏΉΓΖȱ΅Ε·΋EHLQJXQIRUPHGJODVVRIVRPHGHVFULS WLRQGHVWLQHGRQO\IRU,QGLDWKDWKHGLVWLQJXLVKHVIURPWKHREMHFWVRI JODVVWREHVROGDWWKH$IULFDQDQG3DNLVWDQLSRUWV1RWHWKDWDQRWKHU WHUPPRUULQK9LVWUDQVODWHGµLPLWDWLRQPXUUKLQHZDUH¶E\+XQWLQJIRUG EXWPRUHVSHFL¿FDOO\DVµPLOOH¿RUHJODVV¶E\&DVVRQ †DQGSSDVZHOODV%XUVWHLQ µWUXH¶PXUUKLQH ZDVH[SRUWHGIURP,QGLDDFFRUGLQJWRWKH3HULSOXV† 7URZEULGJH LVDQH[WHQVLYHLQYHVWLJDWLRQRIWKHYDULRXV*UHHNZRUGVIRU µJODVV¶DQGWKHLUPHDQLQJVSSGLVFXVVHVΏ΍Ό΍΅ΖȱΙ΅Ώ΋ΖLQSDUWLF XODUDVSRVVLEOH³JHPVDQGRWKHUWULÀHVRIJODVV´DQGQRWHVWKDWWKHWHUP LVVKRUWHQHGVLPSO\WRΏ΍Ό΍΅ΖLQ†RIWKH3HULSOXV%RWK&DVVRQDQG +XQWLQJIRUG QHLWKHURIZKRPFLWH7URZEULGJHLQWKHLUELEOLRJUDSKLHV  WUDQVODWHWKLVODVWWHUPDVµSUHFLRXVVWRQHV¶ZKLFKDUHPDUNHWHGDWWKH µSRRUKDUERXU¶RI0RV\OORQRQWKHQRUWKHUQ6RPDOLFRDVW 6HHSDVVLPLQWKHUHIHUHQFHVRIQDERYH,IµJODVVVWRQHV¶DUH QRWEHDGVWKHDUFKDHRORJLFDOO\ZHOODWWHVWHGLPSRUWDWLRQRIEHDGVWR $NVXPVHHPVQRWWREHUHFRUGHGLQWKHDQFLHQWWH[WV0H\HU QQRWHVWKDWΏ΍Ό΍΅ΖȱΙ΅Ώ΋ΖLVRIWHQWUDQVODWHGDVµÀLQWJODVV¶EXW VWURQJO\TXHVWLRQVWKHVXLWDELOLW\RIWKDWWUDQVODWLRQDQGLQVWHDGVXJJHVWV WKDW³YDULRXVJODVVEHDGVLQOD\VJDPHSLHFHVDQGWKHOLNH«PLJKWEH FRQVLGHUHGIDNHVWRQHV´$PXOHWVWRRZRXOGIDOOLQWRWKLVJURXS7URZ EULGJHQRWHVWKDW³WKHZRUGIRUJODVVHVSHFLDOO\LQLWVDGMHF WLYDOIRUPVFRQWLQXHGWREHXVHGLQGHVFULELQJWKHQXPHURXVREMHFWV PDGHRILWDQGDVDVWDQGDUGRIFRPSDULVRQXQWLOPRGHUQWLPHV´+HQFH ȜȚșȚĮȢȣĮȜȘȢZRXOGEHDVXLWDEOHWHUPIRUEHDGV DQGRWKHUVPDOOREMHFWV DOVRFRPPRQO\PDGHRIYDULRXVVWRQHPDWHULDOV ,PSRUWHGJODVVEHDGV DQGSRVVLEO\DOVRYHVVHOVKDYHEHHQUHFRYHUHGDW$NVXPIURPFRQWH[WV DVHDUO\DVWKH3URWR$NVXPLWHSKDVH FLWHGDVF%& DV KDYHVRXWK$UDELDQFRLQVVHH0DQ]R¿JVDQG¿JV 5RPDQFRLQVKDYHQRW\HWEHHQIRXQG 7KH.HEUD1HJDVWGDWLQJSUREDEO\WRWKHHQGRIWKHWKFHQWXU\$' DQGWKHROGHVWVXUYLYLQJFROOHFWLRQRIWUDGLWLRQVLQ(WKLRSLDPHQWLRQV ³DFHUWDLQZLVHPDQWKHOHDGHURIDPHUFKDQW¶VFDUDYDQZKRVHQDPH ZDV7DPULQDQGKHXVHGWRORDGFDPHOVDQGKHSRVVHVVHGDERXW VKLSV´ †WUDQVO%URRNV ,WLVDQXQXVXDOFRPELQDWLRQDQG WKH¿JXUHVFLWHGOLNHO\KDYHEHHQH[DJJHUDWHGWRXQGHUOLQH

,Q(QQR/LWWPDQQDQGKLV'HXWVFKH$NVXP([SHGL WLRQ WHDP WUDYHOOHG E\ PXOH ZLWK PXFK RI WKHLU OXJJDJH VHQWDKHDGE\FDPHO+HRFFDVLRQDOO\UHIHUUHGWRWKHFRQ GLWLRQVRIWKLVMRXUQH\ 7UDYHOOLQJWR$VPDUD'HFHPEHU ³'XHWRWKHGHHSPXGRQWKHFRXQWU\URDGVWKHSRRUPXOHV KDGDKDUGMRESXOOLQJXVIRUZDUGHVSHFLDOO\FRQVLGHULQJ WKHH[WUHPHJUDGLHQW:HJRWRQYHU\VORZO\(LWKHURQHRU VHYHUDORIXVJRWRXWDQGZDONHG$URXQGOXQFKWLPHLWZDV VWLOOTXLWHKRWEXWLWJUHZPRUHDQGPRUHFKLOO\%XWZKDW D FRQWUDVW WR P\ MRXUQH\ WKUHH GD\V EHIRUH RQ 7KXUVGD\ ZUDSSHGXSLQWKLFNIRJVRWKDWPDQ\DWLPH,FRXOGQRW VHHDVIDUDVWKUHHRUIRXUVWHSVDKHDGRIPHDQGQRZSHU IHFWO\FOHDUZHDWKHU«,WKDGQHDUO\JURZQGDUNZKHQZH SDVVHGWKHODVWPXOHH[FKDQJHVWDWLRQ7KHQWKHPRRQURVH DQGWKUHZLWVIDQWDVWLFOLJKWRQWKHUXJJHGPRXQWDLQODQG VFDSHZHSDVVHGWKURXJKVRPHWLPHVDORQJVWHHSVORSHV´

7UDYHOOLQJIURP$VPDUD-DQXDU\ ³5LJKW LQ IURQW RI XV WKHUH ZDV D GHHS YDOOH\ ZLWK PDQ\ HXSKRUELDHRQVWHHSYDOOH\VORSHVWRERWKVLGHV7KHSDWK ZRXQGGRZQLQWRWKHYDOOH\LQVRPHVHFWLRQVMXVWQHDUWKH URFNV « 2Q WKH QRUWKHUQ VLGH WKH 0DUHE >ULYHU@ ZLQGV WKURXJKDQLFHYDOOH\LWVULYHUEHGZDVVWLOO¿OOHGZLWKTXLWH DORWRIZDWHUQRWÀRZLQJWKRXJKEXWIRUPLQJODUJHSXG GOHVMXVWDVLQWKHZDGLVRIWKH6\ULDQGHVHUW«ZLOGDQL PDOV«DSSURDFKWKHFDPSDWQLJKW«&HUWDLQO\WKHUHDUH PDQ\PRVTXLWRHVQHDUWKHZDWHUDQGPDQ\FDUDYDQVZLWK PDQ\DQLPDOVKDGDOUHDG\XVHGWKLVQDWXUDOFDPSVLWH´

7DPULQ¶VZLVGRPZHDOWKDQGFRQQHFWLRQVEXWQRQHWKHOHVVWKH\PD\ VHUYHWRLOOXVWUDWHDQH[FHSWLRQDOO\ODUJHFDUDYDQLQWKLVUHJLRQ $VUHFRUGHGE\3KRWLXVVHH'HZLQJ ,[L[  &DVVRQ:LOVRQ E  :LOVRQ D (VVHQWLDOO\WKLVGHVFULEHVWKHGLIIHUHQFH EHWZHHQWKHµUDLQ\¶DQGµGU\¶VHDVRQV 3KLOOLSV /LWWPDQQ7DJHEXFKWUDQVODWLRQE\'RURWKHH/RW]6HH QRZ9RLJW



&211(&7('+,17(5/$1'6 )LJXUH0DSRIPRG HUQQRUWKHUQ(WKLRSLD DQG(ULWUHDLQGLFDWLQJ WKHJHQHUDOURXWHWKURXJK XVHGIURPWKH5HG6HD LQODQGWR$NVXPDQGRQH SUREDEOHURXWHEH\RQG WRWKH1LOH9DOOH\ IURP 3KLOOLSVRQ )LJXUHZLWKDGGLWLRQV E\WKHSUHVHQWDXWKRU 

$OWKRXJK/LWWPDQQGRHVQRWPHQWLRQWKHPDQRWKHUFKURQ LF SUREOHP ZDV WKH VKLIWD HVVHQWLDOO\ EDQGLWV 1RQQDVRV UHFRUGHGWKDWKH³ZLWKVWRRGPDQ\DPEXVKHVE\WKHWULEHV PHQDQGPDQ\GDQJHUVIURPZLOGEHDVWV7KRXJKKHHQ FRXQWHUHGPXFKURXJKWHUUDLQDQGZDVRIWHQLQGLI¿FXOWLHV KH VWLOO DFFRPSOLVKHG KLV DLPV DQG FDPH KRPH VDIHO\´ +HGRHVQRWHODERUDWHIXUWKHUEH\RQGFRPPHQWLQJRQWKH ZHDWKHU³«IURP$XHWR$[XPDQGWKHUHVWRI(WKLRSLD WKHUH DUH VHYHUH VWRUPV QRW DOO GD\ ORQJ EXW EHJLQQLQJ UHJXODUO\DWPLGGD\PDNLQJWKHVN\FORXG\DQGVRDNLQJ WKHFRXQWU\ZLWKKHDY\UDLQV´

JRYHUQPHQWVLQ/LWWPDQQ¶VGD\±PXVWKDYHEHHQVXEMHFW WRVLPLODUFRQGLWLRQVDQGHYHQKD]DUGVHQURXWH +RZZHUHWKHVHJRRGVSDFNHGIRUVXFKDMRXUQH\ZLWKDOO LWV FRQVWDQW DQG LUUHJXODU PRYHPHQW IURP ERWK WKH SDFN DQLPDOVDQGWKHUXJJHGODQGVFDSHWKH\WUDYHOOHGWKURXJK" /LWWPDQQ¶VRQO\FRPPHQWVRQWKHSDFNLQJRIKLVFRQVLGHU DEOHHTXLSPHQWZHUHPDGHDW$VPDUD 2QDUULYDO-DQXDU\ ³)LUVWZHVHOHFWHGWKHWKLQJVWREHFDUULHGRQE\WKHPXOH FDUDYDQDFFRPSDQ\LQJXVRQRXUZD\DQGWKHQWKHWKLQJV WREHVHQWDKHDGRQFDPHOV´

7KH SK\VLFDO MRXUQH\ LV GHVFULEHG KHUH EHFDXVH WUDGH JRRGVZRXOGKDYHKDGWREHWUDQVSRUWHGWKURXJKWKLVVDPH ODQGVFDSHLIQRWYLUWXDOO\WKLVVDPHURXWHRYHUWKHPLOOHQ QLD$OWKRXJKQHLWKHU1RQQDVRVDQGKLVHQWRXUDJHQRU/LWW PDQQDQGKLVWHDPZHUHWUDQVSRUWLQJJRRGVIRUVDOHWKH WUDGHUVDQGWKHLUFDUDYDQV±OLNHO\DZHOORUJDQLVHGV\VWHP SURWHFWHGE\WKHDXWKRULW\RIWKH$NVXPLWHNLQJLQ1RQQD VRV¶WLPHDVLWZDVE\WKH&RORQLDO,WDOLDQDQG(WKLRSLDQ

2QGHSDUWXUH-DQXDU\ ³3XWWLQJRXUORDGVRQWKHPXOHVVHOHFWLQJDQGFRPSDULQJ WKH EXUGHQV RI ZHLJKW DQG VHWWOLQJ D WKRXVDQG GHWDLOV LQ GLVFXVVLRQVRIFRXUVHWRRNXSPXFKWLPH´

2QH PLJKW ZHOO LPDJLQH DPRQJVW KLV HTXLSPHQW ZHUH WKUHH FDPHUDV DQ XQVWDWHG QXPEHU RI  [  FP JODVV SODWHV DQG D SRUWDEOH GDUNURRP IRU 7KHRGRU YRQ /SNH ZKRDPRQJVWRWKHUUROHVZDVWKHWHDP¶VSKRWRJUDSKHU 3DFNLQJIRUVXFKMRXUQH\VLVDQDUWEDVHGRQERWKNQRZO HGJHDQGH[SHULHQFH

:LOVRQ E  :KHWKHUWKLVV\VWHPZDVDFRPPHUFLDOO\RUJDQLVHGQHWZRUNRU XQGHUGLUHFWUR\DOFRQWUROLVXQNQRZQEXWWKHNLQJZRXOGKDYHKDG VRPHSHUVRQDOLQWHUHVWLQLWVSURWHFWLRQ(]DQD³PDGHZDURQWKH6DUDQH ZKRVHNLQJGRPLV$IDQDIWHUWKH\KDGIRXJKWDJDLQVWXVDQGNLOOHGD PHUFKDQWFDUDYDQ´DQGKH³FDUULHGRII«EDJJDJHDQLPDOV´ '$( VHH%XUVWHLQ 2WKHUWH[WVDOVRLQGLFDWHWKHFDSWXUHRI YDULRXVQXPEHUVRIEDJJDJHDQLPDOVE\(]DQDDQGRWKHUNLQJV

/LWWPDQQ7DJHEXFKWUDQVODWLRQE\'RURWKHH/RW]6HH QRZ9RLJW /LWWPDQQDQG.UHQFNHU.RSSH)LJXUHV 



-3+,//,36*/$66,1$.680 7KHUH LV VXUSULVLQJO\ OLWWOH LQIRUPDWLRQ LQ WKH DYDLODEOH OLWHUDWXUH DERXW WKH PLQXWLDH RI HDUO\ ORQJ GLVWDQFH ODQG WUDQVSRUWRIH[RWLFRUOX[XU\WUDGHJRRGV7KHLUVHDWUDQV SRUW LV IDLUO\ ZHOO UHFRUGHG EXW UHIHUHQFHV WR ODQG WUDQV SRUW DUH GRPLQDWHG E\ WKH PRYHPHQW RI IRRGVWXIIV VXFK DVJUDLQVDQGRWKHUEXONJRRGVWKDWZRXOGKDYHEHHQWKH PDMRULW\ RI WKH PDWHULDO WUDQVSRUWHG 7KH FDUU\LQJ FD SDFLWLHVRIWKHYDULRXVPHDQVXVHGKDYHRFFDVLRQDOO\EHHQ UHFRUGHG)URPDQFLHQWWH[WVFKLHÀ\VXUYLYLQJLQ5RPDQ (J\SW ZH NQRZ WKDW WKH WZR DQLPDOV HPSOR\HG WKHUH ZRXOGEHWKHGRQNH\DQGWKHFDPHO7KHLUFDUU\LQJFDSDFL WLHVZHUHGHSHQGHQWRQPDQ\LQWHUUHODWHGLQGLYLGXDOIDF WRUV LQFOXGLQJ WKH OHQJWK DQG FRQGLWLRQV RI WKH MRXUQH\ WKHVL]HDQGDJHRIWKHDQLPDODQGHYHQWKHQDWXUHRILWV VDGGOLQJDQGKDUQHVVLQJ,QPRGHUQWLPHVQRPDGVZRXOG ORDGFDPHOVXSWRNJIRUVKRUWGLVWDQFHVEXWIRUORQJ GLVWDQFHVXVXDOO\RQO\KDOIWKDWZHLJKWZDVDOORFDWHG7KH %ULWLVK&DPHO&RUSVDOORZHGXSWRNJSHUFDPHO VHH )LJXUH )RUGRQNH\VLQ5RPDQ(J\SWWKHµXVXDO¶ORDG ZDVDERXWNJEXWRQVWHHSJURXQGLQ*UHHFHGRQNH\V QRUPDOO\FDUULHGDERXWNJ7KHFDUU\ORDGRIPXOHV WKHDQLPDOVHPSOR\HGE\/LWWPDQQLVDOPRVWDVPXFKDV WKDWRIWKHFDPHO:KLOVWDQLQGLYLGXDODQLPDO¶VORDGLV PLQLVFXOH FRPSDUHG WR D VKLS¶V FDSDFLW\ LW ZDV WKH RQO\ RSWLRQIRURYHUODQGWUDQVSRUWRQURXJKWHUUDLQ+HQFHWKH FDUDYDQRIPDQ\DQLPDOVHDFKQRUPDOO\KLUHGDWYDULDEOH EXWSUREDEO\VHWUDWHVDQGZKRKDGWREHIHGDQGZDWHUHG WKURXJKRXWWKHMRXUQH\6RWRWKHDFFRPSDQ\LQJSHUVRQ QHO WKH WUDGHUV DQG WUDQVSRUWHUV WKHPVHOYHV DV ZHOO DV WKH DQLPDOKDQGOHUV DQG WKH JXDUGV QHFHVVDU\ WR SURWHFW WKHJRRGVDJDLQVWWKHIWDQGDWWDFNHQURXWHDQGWKHLUSD\ DQGRWKHUUHTXLUHPHQWVWRRZRXOGEHLQFOXGHGLQWKHWUDQV SRUWFRVWV

)LJXUHµ&DPHOVORDGHGZLWKVWRUHVDQGDPPXQLWLRQ ZHUHWDNHQWKURXJKPLOHVRIMXQJOH>-DQXDU\@¶ IURP0RRUKHDGXSSHU 

7KHUHVHHPWREHIHZLIDQ\UHIHUHQFHVWRPDQXDOµSRUWHU¶ WUDQVSRUW DPRQJVW WKH DYDLODEOH WH[WV UHIHUULQJ WR WUDYHO EHWZHHQ$GXOLVDQG$NVXPDQGWKH\PD\QRWKDYHEHHQ HPSOR\HG RQ VXFK ORQJ GLVWDQFHV LQ WKLV UHJLRQ$ VFHQH IURP'H&RVVRQ¶VPLGWKFHQWXU\WUDYHORJXHLVWKHRQO\ RQH,KDYHIRXQG )LJXUH LWDOVRVKRZVDSDUWLFXODUO\ WUHDFKHURXVSDUWRIKLVMRXUQH\HDVWRI$NVXPDQG$GXD

6HH0H\HU$GDPVSDVVLPIRUWKHOLWWOH GLVFXVVLRQRIWKHWUDQVSRUWDWLRQRIOX[XU\JRRGVEHWZHHQWKH1LOHDQG WKH5HG6HDFRDVWLQ5RPDQWLPHVWKHODQGVFDSHKHUHLVTXLWHGLIIHUHQW IURPWKDWEHWZHHQ$GXOLVDQG$NVXP0H\HUIIDOVRGLVFXVVHV WKH5HG6HDDQG,QGLDQ2FHDQVHDWUDGHZLWKIXUWKHUUHIHUHQFHV $OOZHLJKWORDGVDUHTXRWHGIURP$GDPVQQ $GDPV 7KHDYHUDJHUDWHIRUWKHKLUHRIFDPHOVLQHDUO\QGFHQWXU\$' 5RPDQ(J\SWZDVDERXWWZRGUDFKPDHSHUGD\DFFRUGLQJWR$GDPV  FLWLQJ'UH[KDJH DOWKRXJKWKDWDW$NVXPDQG$GXOLVLV XQUHFRUGHG $GDPVQRWHVWKDWWKHGDLO\UDWLRQRIKD\IRUERWKFDPHOV DQGPXOHVVHHPVWRKDYHEHHQEXQGOHVDJDLQLQ5RPDQ(J\SW $OWKRXJKEXQGOHVL]HLVQRWVWDWHGDGD\MRXUQH\ZRXOGUHTXLUH EXQGOHVRIKD\SHUDQLPDO$FFRUGLQJWR+REEVZKRVH FRPPHQWVUHODWHWRWKH(J\SWLDQGHVHUWFDPHOVFRXOGODVW¿YHGD\VDQG ORQJHUZLWKRXWGULQNLQJEXWGRQNH\VQHHGHGZDWHUHYHU\VHFRQGGD\ 8QUHODWHGWUDYHOOHUVWRRPLJKWSD\WRDFFRPSDQ\WKHFDUDYDQIRU FRPSDQLRQVKLSDQGSURWHFWLRQ

)LJXUHµ$GLI¿FXOWSRLQWRQWKHPRXQWDLQWUDFNHDVW RI$GZDZKHUHWKH%ULWLVKWUDYHOOHU'H&RVVRQ¶VPXOH VOLSSHGEXWUHJDLQHGLWVVWHS¶ IURP3DQNKXUVW  ,QJUDPV¿JRULJLQDOO\IURP'H&RVVRQ ,  

&211(&7('+,17(5/$1'6

)LJXUH*ODVVµVSKHUH¶IURPWKHµ7RPERIWKH%ULFN$UFKHV¶ IURP3KLOOLSVRQ,)LJXUHGDQG)LJXUH ORZHU  MRXUQH\ WKH PRUH H[SHQVLYH WKH JRRGV FDUULHG ZRXOG EH RQDUULYDODWWKH¿QDOGHVWLQDWLRQ,QWUDQVSRUWLQJJODVVWKH SUREOHPLVQRWZHLJKWEXWWKHEXONRILWVSDFNLQJ*LYHQ DOO WKHVH IDFWRUV WKH FRVW RI WUDQVSRUWLQJ ¿QLVKHG JODVV YHVVHOV RYHUODQG ZRXOG EH YHU\ KLJK FRPSDUHG WR RWKHU JRRGVOLVWHGLQWKH3HULSOXVHYHQEHIRUHWKHMRXUQH\DFURVV DIDLUO\GLI¿FXOWODQGVFDSHZKHUHVRPHEUHDNDJHZRXOGEH LQHYLWDEOH

WKDWFDUDYDQVDOVRZRXOGKDYHXVHG7KH(WKLRSLDQODQG VFDSHLQWKHWKFHQWXU\HQJUDYLQJLVOLWWOHH[DJJHUDWHGLQ SODFHVDORQJWKHURXWH 8VHRIFDUWVGUDZQE\R[HQKRUVHVPXOHVRURWKHUDQLPDOV OLNHO\ZRXOGKDYHEHHQSRVVLEOHRYHUSDUWVRIWKHMRXUQH\ DOWKRXJKWKLVPHWKRGLVFRPSDUDWLYHO\VORZFXPEHUVRPH DQGOLWWOHDWWHVWHGHOVHZKHUHIRUORQJGLVWDQFHFRPPHUFLDO WUDQVSRUWDWLRQ DQG RXU NQRZOHGJH RI$NVXPLWH URDGV LV VFDQW\7KH0RQXPHQWXP$GXOLWDQXPUHFRUGHGE\.RVPDV ,QGLNRSOHXVWHV RQ D WKURQH VHHQ DW$GXOLV LQ WKH PLGWK FHQWXU\$'DWWULEXWHGWRDQXQLGHQWL¿HGHDUOLHU$NVXPLWH NLQJVWDWHVWKLVNLQJ³KDGDURDGFRQVWUXFWHGJRLQJIURP WKHODQGVRIP\HPSLUHWR(J\SW´,WLVPRUHOLNHO\WKH URDGLQYROYHGZDVUHVWRUHGRUUHRSHQHGWKDQµFRQVWUXFWHG¶ 1RQHWKHOHVVKRZHYHUWKHWH[WLVLQWHUSUHWHGLWLVVWURQJ LQGLFDWLRQ WKDW URDGV H[LVWHG DQG ZHUH PDLQWDLQHG XQGHU UR\DODXWKRULW\LQ$NVXPLWHWLPHV8QGRXEWHGO\DOVRFDU DYDQVZRXOGKDYHEHHQWD[HGDORQJWKHURXWH

$W$NVXPWZRLPSRUWHGYHVVHOVRIGLIIHUHQWVKDSHVHDFK ODUJHUWKDQWKRVHLQWKHVHWRIVL[JREOHWVFOHDUO\DOVRPXVW KDYH DUULYHG LQWDFW DV WKH\ ZHUH UHFRYHUHG LQ WKH µ7RPE RI WKH %ULFN$UFKHV¶ D ULFK WK FHQWXU\$' pOLWH RU SHU KDSVHYHQUR\DOWRPELQZKDWLVQRZNQRZQDVWKH³6WHODH 3DUN´2QHDIRRWHGJREOHWPHDVXUHVFPLQKHLJKW DQG WKH RWKHU LV D  FP WDOO ÀXWHG WDQNDUG ZLWK D ODUJH MXWWLQJKDQGOHERWKDUHUHVWRUHGEXWPXVWKDYHEHHQLQWDFW ZKHQLQWHUUHG(DFKVRIDUDVOHDVWLVXQLTXHDW$NVXP 7KLVVDPHWRPEDOVRUHYHDOHGDODUJHDQGDWRQO\PP H[WUHPHO\WKLQZDOOHGJODVVVSKHULFDOµJOREH¶RIVRPH FP GLDPHWHU )LJXUH   VLPLODU LQ FRORXU WR WKH ODUJH JREOHWPHQWLRQHGDERYHDOVRIRXQGLQWKLVWRPE:DVWKLV ODVWREMHFWDFWXDOO\WUDQVSRUWHGVSHFLDOO\SDFNHGE\FDUD YDQ IURP WKH FRDVW" ,I VR LW WRR PXVW KDYH VXUYLYHG WKH MRXUQH\LQWDFW±DQLQFUHGLEOHIHDW,IQRWLWPXVWKDYHEHHQ FUHDWHGDW$NVXPOLNHO\IURPWKHIUDJPHQWVRILPSRUWHG YHVVHOVWKDWGLGQRWVXUYLYHWKHMRXUQH\ZKLFKWKHQPXVW KDYHEHHQPHOWHGGRZQLQDSURGXFWLRQDUHDRUZRUNVKRS

,Q(WKLRSLDZDWHUZDVQRUPDOO\DYDLODEOHWKURXJKRXWWKH MRXUQH\DWPDMRUVWUHDPVDQGULYHUVLQDGGLWLRQWRZHOOV HYHQ GXULQJ WKH GU\ VHDVRQ 7UDQVSRUWDWLRQ GXULQJ PXFK RIWKHUDLQ\VHDVRQZRXOGQRWKDYHEHHQIHDVLEOH)RGGHU HLWKHUZRXOGKDYHWREHFDUULHGLQDGGLWLRQWRWKHFRPPHU FLDO JRRGV RU SXUFKDVHG DW HDFK RYHUQLJKW UHVW VWRS WKH ODWWHUEHLQJWKHPRUHIHDVLEOHRSWLRQ3UHVXPDEO\DUHJX ODUURXWHVXFKDVEHWZHHQ$GXOLVDQG$NVXPZRXOGKDYH KDGVWRSVDWUHJXODULQWHUYDOVZKHUHIRGGHUZRXOGEHDYDLO DEOHIRUSXUFKDVHDVZHOODVµIUHVK¶DQLPDOVIRUSXUFKDVH RUH[FKDQJH7KHPRUHDQLPDOVDQGPHQUHTXLUHGIRUWKH

WKHODQGVFDSHWUDYHUVHGEXWDJHQHUDOLQGLFDWLRQPD\EHJLYHQE\+REEV ZKRQRWHVDFDPHOZRXOGWUDYHOQRPRUHWKDQNPSHUKRXU RUFNPSHUGD\+HDOVRQRWHGSWKDWWKHGRQNH\LVVXSHULRURQ VWHHSDQGURFN\WHUUDLQ 6HH0RUULVRQE¿JXUHDQGQRZ+DUORZD )LJXUHVEDQGDIRUWKHJREOHWDQG+DUORZD)LJXUH DIRUWKHWDQNDUG3KLOOLSVRQSOFLOOXVWUDWHVWKHJREOHWLQ FRORXU +DUORZD)LJXUHVEE0DQ\PRUHIUDJPHQWVWKDQ VHHQLQWKHSXEOLVKHGGUDZLQJRUSKRWRJUDSKZHUHUHFRYHUHGDQGLWLV RQO\SDUWO\UHFRQVWUXFWHGVHH7LSSHU)LJXUH

'H&RVVRQ, 0XQUR+D\ZKRVHHPV S WRSURSRVH(]DQD>PLGWK FHQWXU\$'@DVWKHUR\DODXWKRU 6HH/LWWPDQQ¶VFRPPHQWRQSDVVLQJWKHµODVWPXOHH[FKDQJHVWDWLRQ¶ EHIRUHUHDFKLQJ$VPDUDTXRWHGDERYH6XFKFDUDYDQVHUDLZRXOGEH VLWHGDWORFDWLRQVDGD\¶VMRXUQH\DSDUW7KHGLVWDQFHWUDYHOOHGLQDVLQJOH GD\ZRXOGEHGHSHQGHQWRQPXOWLSOHIDFWRUVQRWOHDVWWKHWRSRJUDSK\RI



-3+,//,36*/$66,1$.680 DW$NVXPOLNHWKDWQHDUµ.6LWH¶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

WXU\$'2[\UK\QFKXVOHWWHULQVWUXFWVWKHUHFHLYHUZLWKD OLVWRIJRRGVLQFOXGLQJRQH³JODVVÀDJRQZLWKFDVHIDLUO\ QHZ´

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pD]LQ6ZLW]HUODQGGHSLFWLQJDFDUW ODGHQZLWKEDOHVRI\DUQEHLQJSXOOHGE\WZRR[HQ1RQH WKHOHVVWKHQXPEHURIDQLPDOVXVHGZRXOGEHPRUHWKDQ ZDVXVXDOIRURWKHUOHVVEUHDNDEOHJRRGVKDYLQJDVLPL ODUEXONVLPSO\GXHWRSDFNLQJUHTXLUHPHQWV(DFKJODVV YHVVHOZRXOGEHSDFNHGZHOODZD\IURPDOOWKHRWKHUV$O WKRXJK WKH (J\SWLDQ ODQGVFDSH LV HQWLUHO\ GLIIHUHQW IURP WKDWRIQRUWKHUQ(WKLRSLDWKUHHSDS\ULIURP2[\UK\QFKXV DQGDQRWKHUIURP.DUDQLVSURYLGHVRPHJOLPSVHVRIJODVV YHVVHOSDFNDJLQJIRUODQGWUDQVSRUW$QGFHQWXU\$'2[\ UK\QFKXV ³DFFRXQW RI DUWLFOHV DW RUGHU RI (XJHQHWRU LQ D GRXEOH VDFN´ LQFOXGHG DPRQJVW WKHP ³ KROGDOOV FRQ WDLQLQJ  KDOIVHWV RI JODVV >YHVVHOV@´$QRWKHU QG FHQ

7KHHDUO\QGFHQWXU\$'OHWWHUIRXQGDW.DUDQLVUHFRUGV WKDW&ODXGLXV7HUHQWLDQXVVHQWKLVIDWKHU&ODXGLXV7LEHUL DQXVDOLVWRIJRRGVSXUFKDVHGE\KLPWKDWDFFRPSDQLHG WKHOHWWHU

$ODWHQGHDUO\UGFHQWXU\$'2[\UK\QFKXVOHWWHUVHQGV VHYHUDO FRQWDLQHUV RI GLIIHUHQW JRRGV ³WR P\ VLVWHU 'L G\PH´ZLWKVHYHUDOGLIIHUHQWSHRSOHLQFOXGLQJ ³IURP 'LG\PXV WKH VDLORU D EUHDGEDVNHW FRQWDLQLQJ  JODVVÀDVNVLQVRXQGFRQGLWLRQDQGDJRRGVWUDSWLHGWRWKH EDVNHW«$QGIURP&DUSXVVRQRI&OHLRQUHFHLYHWKHNH\RI WKHEUHDGEDVNHW,I\RXFDQQRWRSHQWKHEDVNHW\RXUVHOI IRULWRSHQVZLWKGLI¿FXOW\JLYHLWWRWKHNH\PDNHUDQGKH ZLOORSHQLWIRU\RX´

³,KDYHVHQW\RXIDWKHUE\0DUWLDOLVDEDJVHZQWRJHWKHU LQZKLFK\RXKDYHWZRPDQWOHV DPLFOD WZRFDSHV DPLF WRULD WZROLQHQWRZHOVWZRVDFNVDZRRGHQEHG«@RIWKHDIRUHPHQWLRQHGSHUVRQLQWD[DUUHDUV ORLSDGDULRV ,QFRQVH TXHQFHRIWKLV\RXPD\QRWLPSHGHWKH>@IURPWKHEHJLQQLQJRIWKUHH GD\V'RQHLQWKHPRQWKRI>@/LVW JQǀVLV  )RUWKHH[SHQVHRIVDLORUVLQDVKLSDW.O\VPD>@VROLGL>@ )RUWKHSULFHRIEXWWHU ERXW\URQ IRUWKHWURRSVZKRFRQGXFWVHDUDLGV SURNRXUVDULRL >@VROLGL>@ ([SHQGLWXUH SURFKUHLD IRUWKHHLJKWKLQGLFWLRQ>@ )RUWKHH[SHQVHRIDVNLOOHGZRUNPDQ WHFKQLWƝV IRUWKHPRVTXHRI 'DPDVFXV>@VROLGL>@

$O%DOƗGKXUƭ+LWWLI*URKPDQQ.HQQHG\ $SDUWIURPWKHPHQWLRQRI$\GKƗEDVHDSRUWRQWKH5HG6HDFRDVW RI(J\SWRSSRVLWH-XGGDDQGDO-ƗU,KDYHEHHQXQDEOHWRUHVROYHDOOWKH SUREOHPVRIWRSRQ\P\LQWKLVSDVVDJH $O0XTDGGDVƯ $O0XTDGGDVƯI



&211(&7('+,17(5/$1'6 RSHQDQGVRLWPXVWKDYHEHHQWKURXJKRXWWKHDXWXPQRI $',WLVNQRZQIURPDQRWKHUSDS\UXVWKDWEUHDGZDV UHJXODUO\ SURGXFHG LQ$SKURGLWR 4XUUD¶V OHWWHU UHIHUV WR LWDVµJRRGEUHDG¶ DONKXE]DOWD\\LE ,WPD\EHWKDWWKH µORDYHV¶ PHQWLRQHG LQ WKH *UHHN SDS\UL ZHUH SHUFHLYHG DVµJRRGEUHDG¶,IVRWKHUDWLRQDOHIRUWKLVZD\RIWKLQN LQJLVQRWFOHDU 5DJKLEQR 7KLVVKLSPHQWDOVR LQFOXGHG TXDQWLWLHV RI ROLYH RLO HODLRQ  OLVWHG DW YDULRXV YROXPHVWRWDOLQJ[HVWDLDQGPHDVXUHV PHWUD $W RWKHUWLPHVRIWKH\HDUPDLQO\PDQXIDFWXUHGJRRGVZHUH VKLSSHG VXFK DV WKH FRQVLJQPHQW RI PDWWUHVVHV W\ODULD  VHQWRQ0HVRUH $XJXVW$' 7KHVHDQGRWKHU PLVFHOODQHRXV LWHPV DUH QRUPDOO\ GHVFULEHG DV µYDULRXV JRRGV¶ HLGƝGLDSKRUD RUZRUGVWRWKDWHIIHFW 7KHQDPHVRIWKHVKLSPDVWHUVDUHVRPHWLPHVJLYHQ7KHVH PHQDUHGHVLJQDWHGDVSLVWLNRLDQGQRWQDXNOHURLLQGLFDW LQJWKDWWKH\ZHUHKLUHGSHUVRQQHOHLWKHULQWKHSD\RIWKH JRYHUQPHQWRUSULYDWHRZQHUV0RVWRIWKHPZHUH&KULV WLDQ*UHHNVRU&RSWVWRMXGJHIURPWKHRQRPDVWLFV,H]LNLHO VRQRI3VHPSQRWK VSHOOLQJYDULHV DQG(QRFKVRQRI9LF WRUZKRZDVDORFDOVKLSSHUDQGUHVLGHQWRIWKHKDPOHWRI 3DNDXQLVO\LQJLQWKHWHUULWRU\RIWKHYLOODJHRI$SKURGLWR 7KHVKLSPHQWRI3DFKǀQ $SULOWR0D\$'  ZDVKDQGOHGE\DSDLURIRSHUDWRUV3HWHU SLVWLNRVRQFH GHVLJQDWHG DV SUHVE\WHU SHUKDSV HUURQHRXVO\ EXW LI VR D PHPEHU RI WKH FOHUJ\  DQG$EnjRUGHU@GLVSDWFKHGRQWKHWK RI WKH PRQWK RI $WK\U LQ WKH WK LQGLFWLRQ >DQG@ ZULWWHQ RQ WKH QG RI WKH PRQWK RI (SLSKL LQ WKH VDPH LQGLFWLRQ IRU WKH FRQVWUXFWLRQ DQG UHSDLU SKLNRQHLNLD  DQG HTXLS SLQJ H[DUWLD IRUDVKLSRI.O\VPDE\0XKDPPDGE$EL +DELEDVXSHULQWHQGHQWDFRPPDQG " RIWKHSUHVHQWWK LQGLFWLRQ>DQG@\HDU²EHDPVRIDFDFLDZRRG DNDQ

&RQFOXVLRQV 7KHGHFLVLRQRIµ$PUEDOµƖVWRUHRSHQ7UDMDQ¶VFDQDO UHYLYHG VDLOLQJ FRQWDFWV EHWZHHQ WKH 1LOH DQG 5HG 6HD IRU DSSUR[LPDWHO\ D FHQWXU\ XQWLO DW OHDVW WKH HQG RI WKH 8PD\\DGSHULRG7KHUHVWRUHGFDQDOVHUYHGDZLGHUDQJH RISXUSRVHV)LUVWDQGIRUHPRVWLWDOORZHGZKHDWDQGRO

,DVVXPHWKDWIRXUOLWUH[HVWDLZHUHXVHGIRUROLYHRLODVLQ5pPRQ GRQQR &KULVWLDQFOHUJ\DUHNQRZQWRKDYHSUDFWLVHGVHFXODUSURIHVVLRQV $SUHVE\WHUZKRZDVDOVRD¿VKHUPDQLVNQRZQWRKDYHOLYHGLQWKH SURYLQFHRI,VQƗFD3V6DZƯUXV+LVWRU\RIWKH3DWULDUFKV >@ $OVRPHQWLRQHGDWHDUOLHUGDWHLQ3/RQG,9QR &I3/RQG,9QROLQHQRWH

3(5,QY$U3DSLQ*URKPDQQI



)57520%/(@ WR .O\VPD LQ WKH SUHVHQW HLJKWKLQGLFWLRQ ZH DUHGHSRVLWLQJKLVZDJHVDQGH[SHQVHVE\ WKHPRQWKEHLQJWZRWKLUGVRIDVROLGXV QRPLVPDWRVGLPRLURQ  ZLWKRXW>LWVEHLQJSDLG@IURPWKHFHQWUDO!WUHDVXU\ VDNHOOD  DQG DIWHU PDNLQJ WKH UHTXLVLWLRQ HQWDJLRQ  ZH VKDOO VHQG LW WR \RX6RVHQGWKLVPDQZLWKKLVWRROV WDHUJDOHLD LQDFFRUGDQFH ZLWKWKHPHDQLQJRIWKHUHTXLVLWLRQDWRQFHDQGKDQGLWRYHUWR 0XKDPPDG 0DDPHG E$EƯ+DEƯEDWKHVXSHUYLVRURIWKHZRUN HSLNHLPHQRVWHVHUJDVLDV 'RQHRQWKHVL[WKGD\RIWKHPRQWK RI7KRWKLQWKHHLJKWKLQGLFWLRQ>(QGRUVHPHQW@.XUUD E 6KD ULNJRYHUQRUWR%DVLODGPLQLVWUDWRURIWKHYLOODJHRI$SKURGLWR &URVV ,QWKHPRQWKRI7KRWKLQWKHHLJKWKLQGLFWLRQLWZDVGHOLY HUHGWKURXJK$EnjµƖPLUEHUHGDULRV  $' $SKURGLWR&RQFHUQLQJDUWLFOHV HLGƝ DQGH[SHQGLWXUH GDSDQƝ  IRU.O\VPD7RWKHDGPLQLVWUDWRURI$VKTnjKFRQFHUQLQJWKHGLV SDWFK WDµMƯO RIWKHJRRGVSURYLVLRQV PDWƗµ IRUDO.LODVLP,Q

+DOO $VKWRUI+DOO &URQH .UDHPHUQR $VPDOOYHVVHODSSDUHQWO\IRUXVHLQWKHFDQDOEHWZHHQ%DE\ORQDQG .O\VPD %HOO &UXP  6DPHSHUVRQPHQWLRQHGLQWKLVSRVWDVODWHDV3/RQG,9  

&211(&7('+,17(5/$1'6 WKHQDPHRI*RG4XUUDE6KDULNJRYHUQRU>ZULWHV@WR%DVLODG PLQLVWUDWRURIWKHYLOODJHRI$SKURGLWR:HDUHH[SUHVVO\RUGHULQJ GLIIHUHQW JRRGV GLDSKRUD HLGƝ  WKURXJK \RXU PDQDJHPHQW IRU DWWHQGLQJ WR DQG HTXLSSLQJ RI WKH VKLSV SORLD  DW .O\VPD$O WKRXJK>ZHKDYH@VHQWWR\RXWKHH[SHQVH GDSDQƝ IRUWKHVDLORUV RIWKHVKLSVLQWKHVDPH.O\VPDDQGKDYHZULWWHQWKHUHTXLVLWLRQV HQWDJLD  IRU WKHP PDQ\ GD\V DJR \RX PXVW VHQG WKHVH JRRGV TXLFNO\>RUµEHFDXVHRIWKHVKRUWQHVVRIWLPH¶@EHIRUHWKHUHFHG LQJ DSREDVLV RIWKHZDWHUVRIWKHFDQDORI7UDMDQ WDK\GDWDWRX 7UDLDQRX 8QWLOWKHSUHVHQW\RXKDYHVHQWQRWKLQJDWDOOZRUWK PHQWLRQLQJRIWKHVHJRRGV!$IWHUUHFHLYLQJWKHSUHVHQWOHWWHU WDSDURQWDJUDPPDWD \RXPXVWDWWKHVDPHWLPHVHQG>WKHP@,I WKHUHLVVRPH>TXDQWLW\@RIWKHVH>JRRGV@DWDOOOHIWRYHULQWKHDUHD RI \RXU MXULVGLFWLRQ GLRNƝVLV  \RX VKRXOG QRW UHTXLUH DQRWKHU OHWWHUIURPXVDERXWWKLVLI\RXDUHVHQVLEOHDQGKDYH\RXUZLWV DERXW\RXIRU\RXXQGHUVWDQGSHUIHFWO\ZHOOWKDWLI!\RXOHDYH RXWDQ\RIWKHVDPHJRRGVDQGVXSSOLHV GDSDQDL DQGWKHQWKH VXEVLGHQFHRIWKHZDWHUVVKRXOGRFFXU\RXZLOOKDYHWRFRQYH\ WKHVH>JRRGV@RQWKHPLOLWDU\KLJKZD\ VWUDWD DVIDUDVWKHVDPH .O\VPD SURYLGLQJ WKH FRVW RI WUDQVSRUW WR SKRUHWURQ  DW \RXU RZQH[SHQVH>OLWµZHDOWK $UDELFPƗO@$FWLRQZDVWDNHQRQ WKHHLJKWKGD\RIWKHPRQWKRI7\ELLQWKHHLJKWKLQGLFWLRQ>(Q GRUVHPHQW@4XUUDE6KDULNWR%DVLODGPLQLVWUDWRURIWKHYLOODJH RI$SKURGLWR ,WZDVGHOLYHUHGWKURXJK6DµƯGRQWKH¿IWHHQWKGD\RIWKHPRQWK RI0HFKHLULQWKHHLJKWKLQGLFWLRQFRQFHUQLQJWKHGLVSDWFKRIWKH WKLQJVWREHGLVWULEXWHG DLGLDQRPDL DW.O\VPD 3/RQG,9QR FD$' >@JRRGV HLGƝ IRUWKHFDUHDQG¿WWLQJRXW SKLORNDOLDNDLH[DU WLD >RIWKHVKLSV@DW.O\VPDEXWDOVRWKDWRIWKHVDLORUV QDXWDL  DQGRWKHUWKLQJVRIQHHGWRWKH¿VF WRGƝPRVLRQ IRUWKHVHYHQWK LQGLFWLRQ DQG ZH KDYH FRPPDQGHG WKURXJK \RXU ¿QDQFLDO DG PLQLVWUDWLRQ GLRLNƝVLV >@$IWHU,PDGHWKHFDOFXODWHGQXPEHU RIVROLGL DULWKPLDQRPLVPDWD DQGUHTXLVLWLRQVIRUWKHP,VHQW WKHPWR\RX6RDIWHU\RXKDYHUHFHLYHGWKHSUHVHQWOHWWHU\RX PXVWREWDLQWKLVPRQH\ FKU\VLRQ LQDFFRUGDQFHZLWKWKHPHDQ LQJRIWKHUHTXLVLWLRQVDQGVHQGLWRQFH\RXKDYHSDLGWKLVWRRXU VRQ6DµƯG KƝPHWHURVSDLV6DHLG WRWDNH,WLVQRWSHUPLWWHGIRU \RXWRWDNHDQ\RILWZKDWVRHYHUIRUIUHLJKW>H[SHQVHV@ QDXORV  H[FHSW>IRUWKHZKHDW VLWRQ RIWKHHPEROƝZKLFKLV@WREHKDQGHG RYHU WR WKH JUDQDULHV WD KRU U LD  RI %DE\ORQ IRU , LQWHQG >WR LQYHVWLJDWH@ DQG OHDUQ DERXW WKLV PDWWHU ,I , ¿QG WKDW\RX KDYH SDLGDQ\WKLQJDWDOOIRUIUHLJKW>H[SHQVHV@ QDXORV RXWVLGHRIWKH DIRUHPHQWLRQHGHPEROƝ,ZLOOUHLPEXUVH\RXIRUWKHH[SHQGLWXUH "  SDUH[HOHXVLV WRWKHH[WHQWWKDWLWKDVLPSRVHGVWUDLQRQ\RXU OLIHDQGSURSHUW\ 3/RQG,9QR $' &RQFHUQLQJ WKH FRVW RI KDXODJH QDXORV SORLǀL  E\ VKLS ,Q WKH QDPH RI *RG 4XUUD E 6KDULN JRYHUQRU WR %DVLO D ¿QDQFLDO DGPLQLVWUDWRURIWKHYLOODJHRI$SKURGLWR,JLYHWKDQNVWR*RG DQG DIWHU WKLV , UHTXLUH >WKH IROORZLQJ@ WKURXJK \RXU ¿QDQFLDO DGPLQLVWUDWLRQ IRU WKH IUHLJKW FRVWV QDXORV  RI VKLSV SORLD 

9L]WKHDGGLWLRQDOH[SHQVHZRXOGQRWEHFKDUJHGWRWKHYLOODJHDV DZKROHEXWRQO\WRWKHDGPLQLVWUDWRUZKRZRXOGSUHVXPDEO\KDYHWR VSHQGKLVRZQPRQH\RUOLTXLGDWHUHDODVVHWV%HOO %HOOHWDO  YLHZVWKLVDVFRQFHUQIRUWKHDJULFXOWXULVWVRIWKHYLOODJH &KULVWLDQDGPLQLVWUDWRUVZHUHWKXVH[SHFWHGWROHQGWKHJRYHUQPHQW PRQH\RQDVKRUWWHUPEDVLVIRUVKLSSLQJFRVWV7KLVFDQQRWEHWKH¿UVW WLPHLWKDSSHQHG7KLVDOVRVXJJHVWVWKDW%DVLOZDVUHODWLYHO\ZHOORII DQGSUREDEO\DODQGHGPDJQDWHRIWKH$SKMURGLWR7KHVHVKRUWWHUP ORDQVWRWKHJRYHUQPHQWFDQKDUGO\KDYHEHHQDZHOFRPH

FDUU\LQJ WKH DVVHVVHG PDWHULHO " GLDVWDOPRL  IRU VKLSV DQG IRU.O\VPDDQGIRUWKHN>RXUVRV«VROLGL@IRUWKHSUHVHQW>«@ LQGLFWLRQ$IWHU PDNLQJ WKH UHTXLVLWLRQV HQWDJLD  IRU WKHP , KDYHVHQWWKHPWR\RXIRUWKHSHRSOHRIWKHYLOODJHV FKǀULD 6R DIWHUUHFHLYLQJWKHSUHVHQWOHWWHUVHQGWKHDIRUHPHQWLRQHGPRQH\ FKU\VLRQ  >LQ DFFRUGDQFH ZLWK WKH PHDQLQJ RI WKH@ UHTXLVL WLRQV WKURXJK \RXU PDQ ZKR LV VXSSRVHG WR UHFHLYH WKHP DQG >LWLVQRWSURSHUIRU\RXWRSD\DQ\WKLQJ@DWDOODQ\SODFHRQIUHLJKW KDXODJH H[FHSW WKH KDXODJH RI WKH PL[HG EDUOH\ DQG ZKHDW WR VLWRNULWKRQ IRUWKHJUDQDULHV WDKRUULD RI%DE\ORQ'RQHLQWKH PRQWK RI 7\EL >(QGRUVHPHQW@ 7KURXJK $EX 7KRXPD EHUH GDULRVFRQFHUQLQJIUHLJKWKDXODJHE\VKLS4XUUDE6KDULNJRYHU QRUWR%DVLO¿QDQFLDODGPLQLVWUDWRURIWKHYLOODJHRI$SKURGLWR 3/RQG,9QR XQFHUWDLQGDWH )UDJPHQW>@WR.O\VPD>@DQGH[SHQVHVIRUDQGVXVWHQDQFH RIVDLORUV>@UHTXLVLWLRQVJLYHWRHDFK>@ 3/RQG,9QR FD$'" >@RIWKHDIRUHPHQWLRQHGSHUVRQLQWD[DUUHDUV ORLSDGDULRV ,Q FRQVHTXHQFHRIWKLV\RXPD\QRWLPSHGHWKH>@IURPWKHEHJLQ QLQJRIWKUHHGD\V'RQHLQWKHPRQWKRI>@/LVW JQǀVLV  )RUWKHH[SHQVHRIVDLORUVLQDVKLSDW.O\VPD>@VROLGL>@ )RUWKHSULFHRIEXWWHU ERXW\URQ IRUWKHWURRSVZKRFRQGXFWVHD UDLGV SURNRXUVDULRL >@VROLGL>@ ([SHQGLWXUH SURFKUHLD IRUWKHHLJKWKLQGLFWLRQ>@ )RUWKHH[SHQVHRIDVNLOOHGZRUNPDQ WHFKQLWƝV IRUWKHPRVTXH RI'DPDVFXV>@VROLGL>@ 3/RQG,9QR GDWHXQFHUWDLQ  &URVV +RXVHKROG>WD[@ RLNLVWLNRQ SDLGLQFDVK FKU\VLNǀL E\ WKHYLOODJHWRWKHWUHDVXU\ GƝPRVLRQ DQGRWKHU>WD[@OLQHVRIWKH YLOODJHRI$SKURGLWR )RUWKHSULFHRIROLYHRLO HODLRQ DQGVDOW DO\NƝ IRUH[SHQGL WXUHRQVNLOOHGZRUNPHQ WHFKQLWDL ZRUNLQJRQVKLSV SORLD LQ .O\VPDRQHHDFK " DWRWDORIVL[QRPLVPDWD >@.O\VPD )RUWKHSULFHRIJRRGVFRQYH\HGWRƜOEDEµ$EG$OOƗKNHO ODULRV )RUWKHSULFHRIJRRGVFRQYH\HGWR$EGDO5DKPƗQE$OL\D VXSHUYLVRU HSLNHLPHQRV RI.O\VPD>QRPLVPDWD@NHUDWLD )RUWKHSULFHRIJRRGV HLGƝ FRQYH\HGWRµ$EGDO5DKPƗQ E$OL\DVXSHULQWHQGHQW HSLNHLPHQRV RI.O\VPDQRPLVPD NHUDWLDWHWDUWLDQRPLVPD 3/RQG,9QR GDWHXQFHUWDLQ 5HJLVWHU HNVWLJLQ RIWD[PRQLHVDQGOLDELOLWLHVIRUQRPLVPDWD SDLG DV ZDJHV IURP PRVW WD[ PRQLHV LQ WKH ¿IWHHQWK LQGLFWLRQ 9LOODJHRI$SKURGLWRLQWKH¿UVWLQGLFWLRQ ( &URVV 'LVSDWFKRIJRRGV HLGƝ IRUWKHVKLSV NDUDELD DOVRLQ .O\VPDKLGHVRIJRDW¶VOHDWKHUKLGHVRIUDZPDV]HUW >9LOODJHV@$SKURGLWRJRDWVNLQV GHUPDWDWUDJHLD KLGHVRI UDZJRDW¶VOHDWKHUKLGHVRIPDV]HUW>SHUKDSVPXVDUUDGµVHZQ OHDWKHU¶@ )LHOG)LYH¿YHKLGHVRIJRDW¶VOHDWKHUKLGHRIUDZJRDW¶VOHDWK HUKLGHVRIPDV]HUW )LHOG 7KUHH ¿YH KLGHV RI JRDW¶V OHDWKHU  KLGH RI UDZ JRDW¶V OHDWKHUKLGHVRIPDV]HUW

5HFRQVWUXFWLRQRIWH[WEDVHGRQ%HOO¶V %HOOHWDO VXSSRVLWLRQ WKDWDUHTXLVLWLRQIRUWKHDQQXDOUDLGZRXOGKDYHVWLSXODWHGSDUWLFXODU DPRXQWVRIPRQH\ 3DS\UXVSRLQWVWRGLVWULEXWLRQRIVXSSOLHVIRUVXEVLVWHQFHRIVDLORUV



)57520%/(@ VHWWOHPHQW HSRLNLRQ RI6D NRRSH  0HVRUH  QDPHO\ FRPPRGLWLHV RI .O\VPD WKURXJK (Q RFK VRQ RI9LFWRU VKLSPDVWHU ó QRPLVPD 0RQDVWHU\ RI$EED (UPDǀWRV 0HVRUHQDPHO\UHTXLVLWLRQVRI.O\VPDWKURXJK(QRFK VRQ9LFWRUVKLSPDVWHUóQRPLVPD 0RQDVWHU\RI+DJLD0DULD 0HVRUHQDPHO\FRPPRGLWLHVE\UHTXLVLWLRQRI.O\VPD WKURXJK(QRFKVRQRI9LFWRU\VKLSPDVWHUQRPLVPD 0RQDV WHU\RI%DUEDURV 9,(SLSKL -XQHWR-XO\$'  (SLSK  E\ QDPH UHTXLVLWLRQ RI .O\VPD WKURXJK (QRFK VRQRI9LFWRUVKLSPDVWHU SLVWLNRV IURP3DNDXQLVQRPLVPDWD 3HGLDV)LYH  (SLSK  QDPHO\ E\ UHDVRQ RI UHTXLVLWLRQ RI .O\VPD WKURXJK(QRFKVRQRI9LFWRUIURP3DNDXQLVóQRPLVPDWD 3H GLDV7KUHH

&I3/RQG,9OLQH (SRLNLRQ VHWWOHPHQW  (SRLNLRQ VHWWOHPHQW 



 (SLSK  QDPHO\ JRRGV RI WKH UHTXLVLWLRQV IRU .O\VPD WKURXJK(QRFKIURP3DNDXQLVóQRPLVPDWD 3HGLDV7ZR (SLSKQDPHO\FRPPRGLWLHVRIUHTXLVLWLRQVWKURXJK(Q RFKVRQRI9LFWRUIURP3DNDXQLVòQRPLVPD 3HRSOHRI+DJLD 0DULD $SSHQGL[,,, 3$SROOǀQRV$QǀQR FD  &URVV $FFRXQW RI  DUWDEDL RI ORDYHV SVǀPLD  DQG   ò IRXUOLWUH [HVWDL RI ROLYH RLO HODLRQ  DQG   WZROLWUH [HVWDL RI SRRU ZLQH R[RV  >DQG@ ¿YH NROODWKD RI VPDOO VDOW¿VK WD WDULFKLD DQGNQLGLD>RIWKHP@DOORIZKLFKVKRXOGEHXVHG LQWKLVZD\ 7KH FDXONHUV NDODSKDWDL  QDPHG VKDOO KDYH  DUWDEDL RI ORDYHV 7KURXJKWKHFRPPDQGRIWKHDPƯUWKHVXERUGLQDWHRI¿FLDOV>RI WKH DPƯU@ V\PPDFKRL  VKDOO KDYH  IRXUOLWUH [HVWDL RI ROLYH RLO 7KURXJKKLVFRPPDQG3HWHUIURP.O\VPDVKDOOKDYHWZROLWUH [HVWDLRISRRUZLQH 7KH /RUG &RXQW VKDOO KDYH  NROODWKLD DQG  NQLGLD RI VPDOO VDOW¿VK ,WFRPHVWRDUWDEDLRIORDYHV>DQG@VL[[HVWDLRIROLYHRLO>DQG@ [HVWDLRISRRUZLQHDQGòNROODWKD /HIWRYHUDUHPRUHWKDQDUWDEDLRIORDYHVò[HVWDLRIROLYH RLODQG[HVWDLRIFKHDSZLQHDQGNROODWKLDDQGNQLGLDRI VPDOOVDOW¿VK

5HIHUHQFHV $EERWW17KH.XUUDK3DS\ULIURP$SKURGLWRLQWKH  2ULHQWDO,QVWLWXWH&KLFDJR7KH8QLYHUVLW\RI&KLFDJR  3UHVV $VKWRU (  $ 6RFLDO DQG (FRQRPLF +LVWRU\ RI WKH  1HDU(DVWLQWKH0LGGOH$JHV/RQGRQ&ROOLQV $O%DOƗGKXUƭ $KPDG E LH ZDOUXV WXVNV@FDVWRUHXPRLODPEHUSUHSDUHGKRUVHKLGHVKRQ H\ KD]HOQXWV IDOFRQV VZRUGV DUPRXU NKDODQM >ELUFK@ ZRRG6ODYRQLFVODYHVVKHHSDQGFDWWOH$OOWKHVHFDPH IURP%XOJKDU.KRUH]PLDDOVRH[SRUWHGMXMXEHVUDLVLQV DOPRQG SDVWU\ VHVDPH IDEULF RI VWULSHG FORWKFDUSHWV EODQNHWFORWKVDWLQIRUUR\DOJLIWVYHLOVRIPDOKDPIDE ULFORFNV$UDQMDUURZVIRUERZVWKDWRQO\WKHVWURQJHVW FRXOGEHQGUDNKELQ DNLQGRIFKHHVH \HDVW¿VKERDWV KHZQ DQG VPRRWKHG WKH ODWWHU DOVR H[SRUWHG IURP 7LU PLGK  )URP 6DPDUTDQG LV H[SRUWHG VLOYHUFRORXUHG IDEULFV >VLPJXQ@ DQG 6DPDUTDQGL VWXIIV ODUJH FRSSHU YHVVHOV DUWLVWLFJREOHWVWHQWVVWLUUXSVEULGOHKHDGVDQGVWUDSV )URP'L]DN¿QHNLQGVRIZRRODQGZRROHQFORWKHV )URP%DQDNDWK7XUNLVWDQIDEULFV )URP6KDVKKLJKVDGGOHVRIKRUVHKLGHH[FHOOHQWTXDO LW\ TXLYHUV WHQWV KLGHV LPSRUWHG IURP WKH 7XUNV DQG WDQQHG  FORDNV SUD\HU FDUSHWV OHDWKHU FDSHV OLQVHHG ¿QHERZVQHHGOHVRISRRUTXDOLW\FRWWRQIRUH[SRUWWRWKH 7XUNVDQGVFLVVRUV )URP6DPDUNDQGDJDLQVDWLQZKLFKLVH[SRUWHGWRWKH 7XUNVDQGUHGIDEULFVNQRZQE\WKHQDPHRIPXPDUMDO VLQL]LFORWKPDQ\VLONVDQGVLONHQIDEULFVKD]HODQGRWK HUQXWV )URP )DUJKDQD DQG ,V¿MDE 7XUNLVK VODYHV ZKLWH IDE ULFVDUPVVZRUGVFRSSHUDQGLURQ )URP7DUD]>7DODV@JRDWVNLQV )URP6KDOMLVLOYHU )URP 7XUNLVWDQ KRUVHV DQG PXOHV DUH GULYHQ WR WKRVH SODFHVDQGDOVRIURP.KXWWDO 7KHUHLVQRWKLQJWRHTXDOWKHPHDWVRI%XNKDUDDQGD NLQG RI PHORQ WKH\ KDYH FDOOHG DVKVKDT >RU DVKVKDI@ QRUWKHERZVRI.KRUH]PLDWKHSRUFHODLQRI6KDVKDQG WKHSDSHURI6DPDUTDQG´

,QP\VWXG\RIODERXURUJDQLVDWLRQ,UHOLHGRQDPHWKRGR ORJ\XVHGIRUWKHVWXG\RIGLYLVLRQRIODERXUNQRZQDV2F FXSDWLRQDO&ODVVL¿FDWLRQLQ(FRQRPLF6HFWRUVZKLFKXVHV TXDQWL¿FDWLRQRIWUDGHQDPHVDVLQGLFDWRUV'LYLVLRQRIOD ERXULVDPHFKDQLVPIRULQFUHDVLQJPDUNHWYROXPHZLWKRXW UHTXLULQJDPDMRUWHFKQRORJLFDOFKDQJHHYHQWKRXJK,VOD PLFUXUDODQGXUEDQPDQXIDFWXULQJZHUHQRWGHYRLGRIQHZ DQG LPSURYHG WHFKQRORJLHV DV ZHUH FRPPHUFLDO WHFKQL TXHV 7KH SUHPLVH RI WKH VWXG\ ZDV WKDW WKH QXPHULFDO UHODWLRQVKLSVEHWZHHQVHFWRUVDQGWUDGHQDPHVUHSUHVHQWD UHOLDEOHLQGLFDWRURIWKHGHJUHHRIGLYLVLRQRIODERXUDQG ZLOODOORZDPHDVXULQJRIWKHVL]HRIWKHODERXUIRUFHHQJD JHGLQHDFK7KHVH¿QGLQJVDOORZHGPHWRHVWDEOLVKWKDW DKLJKGHJUHHRIGLYLVLRQRIODERXUZDVSUHYDOHQWLQPDQ\ VHFWRUV ZKLFK ZRXOG H[SODLQ WKH H[LVWHQFH RI PDQXIDF WXULQJVXUSOXVHVIRUWKHSXUSRVHRIH[SRUWDQGWUDGH)XU WKHUPRUHWKHDUULYDORI,VODPLQWKH0LGGOH(DVWHTXDOO\ FRLQFLGHGZLWKRUFDXVHGWKHHOLPLQDWLRQRIVODYHODERXU LQWKHDJULFXOWXUDOVHFWRUDQGEURXJKWPRUHHI¿FLHQF\DQG UDWLRQDOLVDWLRQWRWKLVVHFWRUVRPHWKLQJWKDWDOVRFRQWULEX WHGWRKLJKHURXWSXW7UDQVSRUWOLQHVDUHWKHEORRGOLQHVRI FLWLHV DQG PDLQWDLQLQJ UHJXODU FRPPXQLFDWLRQV EHWZHHQ WKHP ZDV FUXFLDO WR WUDGH DFWLYLWLHV GHPRQVWUDWHG LQ WKH GHYHORSPHQWRIERWKWKHPHUFDQWLOHDQGWUDQVSRUWVHFWRUV DQGUHÀHFWHGLQWKHRUVRFRPPHUFHUHODWHGRFFXSD WLRQV ZKLFK ZHUH UHFRUGHG VKRZLQJ WKDW DERXW  RI WKH FLW\¶V ODERXU IRUFH ZDV HQJDJHG LQ VHUYLFHV$ORQJ ZLWKWKHLQFUHDVHLQPDQSRZHUDQGLQFUHDVHGDJULFXOWXUDO RXWSXW LQ UHVSRQVH WR WKH GHPDQG IRU UDZ PDWHULDO FDPH WKH LQFUHDVH LQ GLYLVLRQ RI ODERXU LQ WUDGHUHODWHG DFWLYL WLHV %HVLGHV WKH WUDGH QDPHV UHIHUULQJ WR PHUFKDQWV WKH FRPPHUFLDO RFFXSDWLRQV LQFOXGH WKRVH VHOOLQJ UDZ PDWH ULDOVJURZQH[WUDFWHGRUJDWKHUHGLQWKHFRXQWU\VLGHDQG EURXJKWXQSURFHVVHGLQWRWKHFLW\EUHHGHUVDQGVHOOHUVRI SDFNDQLPDOVPDNHUVRIVDGGOHVDQGEULGOHVPLGGOHPHQ GLIIHUHQWLDWHG DFFRUGLQJ WR WKHLU ORFDWLRQ LQ WKH PDUNHWV VSHFLDOLVHGFRPPRGLWLHVDQGNHHSHUVRILQQVDQGIXQGXTV (I¿FLHQW WUDGH RUJDQL]DWLRQ VWLPXODWHG DQG H[SDQGHG WKH LQGXVWULHVWKURXJKWKHFUHDWLRQRIQHZPDUNHWVRUWKHHQ ODUJHPHQWRIH[LVWLQJRQHV

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

,QDGGLWLRQWRWKHVXSSO\RIUDZPDWHULDOVWUDGHFOHDUO\SUR YLGHG¿QLVKHGJRRGVDQGOX[XU\LWHPVLQUHVSRQVHWRORFDO

6KDW]PLOOHU%DVHGRQ$UDELFOLWHUDU\VRXUFHVWKLVLVDTXDQWL WDWLYHDQGTXDOLWDWLYHVWXG\RIODERXURUJDQL]DWLRQDQGGLYLVLRQRIODERXU LQFRPSDUDWLYHFRQWH[W $O+DVVDQ +LOO 6KDW]PLOOHU 'LVFXVVLRQRIVHYHUDOLQQRYDWLRQVLQWKHLUULJDWLRQV\VWHPLQ:DWVRQ  6KDW]PLOOHUDQGFKDUWRQS

06+$7=0,//(575$16&217,1(17$/75$'($1'(&2120,&*52:7+ GHPDQG$JRRGH[DPSOHLVZKDWKDSSHQHGLQWKH6DPD QLGFDSLWDO%XNKDUDZKHUHPDQXIDFWXUHLQODUJHQXPEHUV RIµOX[XU\¶LWHPVIRUHYHU\GD\XVHKDVEHHQGRFXPHQWHG ,Q WKLV PDQQHU WUDGH ZDV LQVWUXPHQWDO LQ WKH LQWHJUDWLRQ RIWKHUXUDODQGXUEDQHFRQRPLHV:LWKDUHJXODUDQGLQ FUHDVHGVXSSO\RIPRQH\RYHUODQGWUDGHDQGLWVPDUNHWV EHFDPH HI¿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±WKHVLOYHUGLUKDPV±ZLWKRXWH[SRUWLQJDQ\PDQX IDFWXUHGJRRGVRUUDZPDWHULDOVRIWKHLURZQ+RZHYHUWKH IDFW WKDW WKH 1RUWKHDVWHUQ WUDGH FRQWLQXHG XQLQWHUUXSWHG IRUWKUHHKXQGUHG\HDUVLQGLFDWHVWKDWWKHPDUNHWVRQERWK VLGHVVDZLWDVEHQH¿FLDO 0DULWLPHRU7HUUHVWULDO 0RGHOVRI7UDGHDQG(FRQRPLF*URZWK ³7KH ULVH RI :HVWHUQ (XURSH DIWHU  LV GXH ODUJHO\ WRJURZWKLQFRXQWULHVZLWKDFFHVVWRWKH$WODQWLF2FHDQ DQGZLWKVXEVWDQWLDOWUDGHZLWKWKH1HZ:RUOG´

7KLVVWDWHPHQWZKLFKLQWURGXFHVDUHFHQWDUWLFOHVXPVXSD FRQVHQVXVRIPDQ\SXEOLFDWLRQVGHDOLQJZLWKWKHHFRQRPLF UHFRUGVRIQDWLRQVZLWKDFFHVVWRPDULWLPHWUDQVSRUW7KH $WODQWLF 2FHDQ VWDWHV %ULWDLQ )UDQFH WKH 1HWKHUODQGV

6HHWKHPDJQL¿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

3RUWXJDODQG6SDLQWUDGLQJLQWKHWKFHQWXU\DQGRWK HUVLQWKHWKFHQWXU\0HGLWHUUDQHDQEHQH¿WHGIURPWKDW PDULWLPHWUDGHIRUHFRQRPLFJURZWK1RQHWKHOHVVDFORVHU ORRNUHYHDOVWKDWQRWDOOSDUWLFLSDQWVLQWKH(XURSHDQ$WODQ WLFWUDGHGLVSOD\HGWKHVDPHUDWHRIHFRQRPLFJURZWKDQG WKDW WKH$WODQWLF WUDGH RQ LWV RZQ GLG QRW KDYH VXI¿FLHQW LPSDFWRQWKHHFRQRP\WRH[SODLQWKHHFRQRPLFJURZWK 7KHDXWKRUVRIWKHDUWLFOHTXRWHGDERYHVHHNWRHQODUJHWKH IUDPH RI LQTXLU\ E\ LQFOXGLQJ D QHZ TXDOL¿HU ± FKDQJHV LQ SROLWLFDO LQVWLWXWLRQV WKDW OHG WR PRUH HI¿FLHQF\ DQG D PRUHEHQHYROHQWDWWLWXGHDWKRPHWRWUDGHDQGWUDGHUV,Q RWKHU ZRUGV HFRQRPLF JURZWK RFFXUUHG LQ$WODQWLF SRUW FLWLHV EHFDXVH RI DOWHUHG LQVWLWXWLRQDO DUUDQJHPHQWV VXFK DVWKHLQWURGXFWLRQRIFKHFNVRQWKHPRQDUFK\DQGVHFX ULW\IRUPHUFKDQWVDQGWKHLUSURSHUW\ULJKWV:KLOHWKHUROH RILQVWLWXWLRQVLQHFRQRPLFJURZWKKDVEHHQDJUHHGXSRQ ±LWIRXQGDQRWKHUDSSOLFDWLRQIRULWVHOIGHPRQVWUDWHGDQG DUJXHGLQWKLVDUWLFOH±LWLVFOHDUKRZHYHUWKDWDFFHVVWR WKH$WODQWLF2FHDQDORQHZRXOGEHDVLPSOLVWLFDQVZHUWRD FRPSOH[SURFHVV7KLVLVSHUIHFWO\REYLRXVWRDQ\,VODPLF KLVWRULDQZKRSRQGHUVWKHIDWHRI0RURFFRDQDWLRQZKLFK FHUWDLQO\KDGDFFHVVWRWKH$WODQWLFFRDVWEXWODFNHGPDQ\ RIWKHRWKHUFRPSRQHQWVIRXQGLQ(XURSH $ GLIIHUHQW PRGHO KLJKOLJKWLQJ PDULWLPH WUDGH LV VXJ JHVWHGE\&KDXGKXUL¶VDGDSWDWLRQRIWKH%UDXGHOLDQPRGHO RI 0HGLWHUUDQHDQ WUDGH IRU WKH ,QGLDQ 2FHDQ7KLV VWXG\ GLUHFWO\ LQYROYHV DQ ,VODPLF FRPSRQHQW &KDXGKXUL H[ SODLQVWKHULVHRIWKH,QGLDQ2FHDQV\VWHPWKURXJKSROLWL FDOHYHQWVDQGFXOWXUDOWUDQVIRUPDWLRQV+HFRPSDUHVWKH G\QDPLFVRIWKHDFFHVVLRQRIWKH7DQJ'\QDVW\LQ&KLQDLQ $'ZLWKWKHULVHRI0XKDPPDGLQWKH+LMD]IURP$' 7KHWZRFXOWXUDOSURFHVVHVWKDWIROORZHG±µ6LQLFLVD WLRQ¶DQG,VODPL]DWLRQ±DIIHFWHGWKHIRRGUHOLJLRXVEHOLHIV DQGSROLWLFDOEHKDYLRXURIWKHWUDGLQJSDUWQHUVLQFOXGLQJ WKH GLVUXSWLRQ RI H[LVWLQJ $UDELDQ0LGGOH (DVWHUQ RYHU ODQGWUDGHURXWHVDQGWKHUHFRQVWLWXWLRQRIQHZRQHVDURXQG PDULWLPHSDUDPHWHUV7KHLPSRUWDQFHJLYHQWRWKHFXOWXUDO LGHQWLW\RIWKHWUDGLQJSDUWQHUVLQWKLVPRGHOSUHVHQWVVRPH SUREOHPVRIKLVWRULFDODFFXUDF\VLQFHWKHµ,VODPLF¶SDUWQHUV LQ,QGLDQ2FHDQWUDGH±LQSDUWLFXODUWKRVHWUDGLQJZLWKWKH ZHVWFRDVWRI,QGLD±ZHUHQRW$UDEVRU0XVOLPVEXWDFWX DOO\3HUVLDQVZLWKD3HUVLDQFXOWXUDOLGHQWLW\&RQYHUVLRQ WR,VODPLQ3HUVLDGLGQRWSHDNEHIRUHWKHPLGGOHRIWKHWK

$PRQJWKHPDQ\ZRUNVRQWKHVXEMHFWVHH7UDF\(OOLRW /RSH] 2QWKLVTXHVWLRQVHHP\NH\QRWHDGGUHVVWRWKHFRQIHUHQFHFHOHEUDW LQJ\HDUVRIWKHIRXQGDWLRQRI)H]KHOGDW$O$NKDZD\QH 8QLYHULW\0RURFFR2FWREHU(QWLWOHGµ0DULQLG0RURFFR *OREDO2UGHUDQGWKH4XHVWIRU(PSLUH¶IRUWKFRPLQJLQWKHFRQIHUHQFH SURFHHGLQJV %UDXGHO&KDXGKXUL[L[LLL,QVSLWHRIFULWLFLVP RI%UDXGHO¶VFRQFHSWKLVWRULDQVKDYHDGRSWHGLWIRUWKH$WODQWLF 2FHDQDVZHOODVIRUWKH,QGLDQ VHH%DLO\Q 2QWKH,QGLDQ 2FHDQDQG,VODPVHHDOVR+RXUDQL5LVVR2QWKH RUJDQLVDWLRQRIVKLSEXLOGLQJDQGWUDGHLQWKH*XOIVHH$JLXV  &KDXGKXUL



&211(&7('+,17(5/$1'6 FHQWXU\ DQG ZDV QRW FRPSOHWHG EHIRUH WKH WK FHQWXU\ 2QWKHRWKHUKDQGDQ,VODPLFFXOWXUDOLGHQWLW\FRPSRQHQW WRWKHWUDGHPRGHOLVYLVLEOHLQDQRWKHUDUHD±WKDWRIRYHU ODQGRULQWHUFRQWLQHQWDOURXWHV5HFHQWSXEOLFDWLRQRIOHJDO GRFXPHQWVGLVFRYHUHGLQ&HQWUDODQG,QQHU$VLDQVRFLHWLHV VKRZDQHDUO\DGDSWDWLRQRI,VODPLFQRUPV +RZHYHU WKH ,VODPLF PRGHO RI LQWHUFRQWLQHQWDO WUDGH DQG HFRQRPLF JURZWK SURSRVHG KHUH PD\ EHQH¿W IURP D FRPSDUDWLYHSHUVSHFWLYH$PRGHOIRU(XURSH¶VHFRQRPLF JURZWKKLJKOLJKWLQJWKHUROHRIWKHRYHUODQGWUDGHURXWHVLQ LWLVRIIHUHGE\9DQGHU:HHDQG3HHWHUVLQDQDUWLFOHSXE OLVKHGLQ$QQDOHVLQ7KHVHWZRDXWKRUVREVHUYHWKDW ZKLOHWKHWKWKDQGWKFHQWXULHVZHUHLQGHHGSHULRGV RIJOREDOHFRQRPLFH[SDQVLRQWKH\DFWXDOO\FRUUHVSRQGHG WR SURVSHURXV WUDQVFRQWLQHQWDO (XURSHDQ FRPPHUFH 7KH WK DQG WK DV ZHOO DV ODUJHO\  WKH WK FHQWXULHV ZHUH SHULRGVRIHFRQRPLFUHJUHVVLRQFKDUDFWHULVHGE\DUHWUHDW UHFHVVLRQ RU GHFOLQH LQ WHUUHVWULDO (XURSHDQ WUDGH EXW DQ LQWHQVL¿FDWLRQ RI PDULWLPH H[SDQVLRQ 7KH\ FRQFOXGHG WKDWWKHWUDQVFRQWLQHQWDOWUDGHSURYLGHGHFRQRPLFJURZWK E\ VWLPXODWLQJ WKH JURZWK RI PDUNHWV SURGXFWLYLW\ DQG WKHVXSSO\RIUDZPDWHULDOVLQWKHWRZQVWKURXJKZKLFKLW SDVVHG7KHVLPLODULWLHVZLWKWKH,VODPLFFDVHDUHQXPHU RXV7KH ,VODPLF WRZQV DORQJ WKH WUDQVFRQWLQHQWDOURXWHV EHQH¿WHGIURPWKHVWLPXOXVRIWUDGHLQDZD\WKDWFHUWDLQO\ LQFUHDVHGWKHLUSURVSHULW\%XWPRUHLPSRUWDQWO\WKHWUDGH EHQH¿WHGWKH,VODPLFHFRQRP\DVDZKROH7KH,VODPLFSRUW FLWLHVZLWKWKHH[FHSWLRQRI%DVUDFRXOGQRWUHVSRQGWR WKHVWLPXOXVRIWKHORQJGLVWDQFHWUDGHLQWKHVDPHZD\DQG GLGQRWEHFRPHPDQXIDFWXULQJFHQWUHVRUFRQVXPHUPDU NHWV 5DWKHU WKH\ ZHUH VKLSSLQJ WHUPLQDOV RU SURFHVVLQJ ZDUHKRXVHV IRU GDWHV ¿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

%XOOLHW .KDQ7KHGRFXPHQWVZULWWHQRQSDUFKPHQWDQGIROORZLQJ ,VODPLFODZGDWHIURPWKHPLGWKFHQWXU\7KHUHKDVEHHQDJUHDWGHDORI LQWHUHVWUHFHQWO\LQWKHSURFHVVRI,VODPLVDWLRQDQGFXOWXUDOFRORQL]DWLRQ LQ&HQWUDO$VLDIROORZLQJWKH,VODPLFFRQTXHVW6HH9DLVVLqUH7RU  9DQGHU:HH 3HHWHUV 1DML $OL $JLXV 'LIIHUHQWYLHZLQ$JLXV $JLXV



LW DFWHG DV D ODUJH ZDUHKRXVH UDWKHU WKDQ D IXOO\ÀHGJHG PDQXIDFWXULQJ DQG DGPLQLVWUDWLYH FHQWUH /RFDO SRWWHU\ IRXQG WKHUH WHVWL¿HV WR WKH H[LVWHQFH RI D VHWWOHPHQW WKDW LPSRUWHG SRWWHU\ RU PDQXIDFWXUHG LW ORFDOO\ IRU SHUVRQDO XVHEXWQRWIRUFRPPHUFLDOH[SRUW,QFRQFOXVLRQSRUWFLW LHVKDGRQO\OLPLWHGSRWHQWLDOIRUHLWKHUPDQSRZHURULQ GXVWULDOUHVRXUFHVWRKDYHDQHIIHFWRQWKHGHYHORSPHQWRI H[SRUWLQGXVWULHV±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¶ LQQRYDWLYH DSSURDFK WR WKH 5RPDQ HFRQRP\ ± ³VSHFXODWLYH´ DV KH KLPVHOIDGPLWV±DUJXHVWKDWORQJGLVWDQFHWUDGHHYROYHGDV DUHVXOWRIWKHVKLIWLQPRQHWDU\FLUFXODWLRQLQWKHHPSLUH QDPHO\WKHFRQYHUVLRQRIWD[SD\PHQWVE\WKHSURYLQFHV IURPNLQGWRFDVK$VLPLODUHYROXWLRQZDVDSSDUHQWLQWKH ,VODPLFHFRQRP\DQGVHYHUDOFHQWXULHVODWHULQWKH(XUR SHDQEXWLWLVGLI¿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¶VQRU+RSNLQV¶PRGHOVDGGUHVV WKHTXHVWLRQRIDQ\VXUSOXVPDQXIDFWXULQJFDSDFLW\DNH\ IDFWRULQWKH,VODPLFVLWXDWLRQ0RUHRYHUDVVHHQHDUOLHU WKHOLPLWHGRUJDQLVDWLRQGLYLVLRQRIODERXUDQGSURGXFWLY LW\RIWKH5RPDQWH[WLOHVHFWRUEHDUVQRUHVHPEODQFHWRWKH LQWHQVLYHPDQXIDFWXULQJDFWLYLWLHVRIWKH,VODPLFRQH,Q WHUPV RI PDULWLPH WUDGH WKH QDWXUH RI WKH JRRGV FDUULHG WKURXJKWKH5HG6HDFRUULGRUGLGQRWYDU\PXFKIURPWKRVH LPSRUWHGGXULQJWKH,VODPLFHUD,WLQFOXGHG&KLQHVHOLYH

5RXJHXOOH$JLXV %DQJ +RSNLQV 2QWH[WLOHPDQXIDFWXULQJLQWKH,VODPLFFLW\VHH6KDW]PLOOHU DQGRQZRPHQ¶VVKDUHRIWKHWH[WLOHLQGXVWU\

06+$7=0,//(575$16&217,1(17$/75$'($1'(&2120,&*52:7+ DQLPDOVIXUVDQGKLGHVLYRU\SHDUOVPRWKHURISHDUOSUH FLRXVDQGVHPLSUHFLRXVVWRQHVODFTXHUHGG\HVLONSHSSHU FLQQDPRQFDUGDPRPFORYHVVSLNHQDUGQXWPHJVLQGLJR FRWWRQDQGSUHFLRXVZRRGV7KH5RPDQ(PSLUHIDYRXUHG RYHUODQGFRPPXQLFDWLRQVIRUWKHVDNHRIWKHLUDUPLHVDQG WKHLUWUDQVSRUWDQGRXUDELOLW\WRJDXJHDULVHLQSHUFDSLWD LQFRPH LV OLPLWHG ,I WKH 5HG 6HD WUDGH KDG D EHQH¿FLDO HIIHFW RQ WKH HFRQRP\ LW ZDV LQ D UHJLRQDO FRQWH[W ,Q GHHG«@ « $IWHU WKHVH WKLQJV +LV 0DMHVW\ ZHQW WR .HPHXU KH IRXQGHGWKHUHDODUJHFLW\WRKLVVLVWHUZLWKWKHLOOXVWULRXV QDPHRIWKHGDXJKWHURI.LQJ3WROHP\>LH$UVLQRs@>«@ $WWKH¿UVWPRQWK+LV0DMHVW\FDOOHGIRUWUDQVSRUWVVKLSV «ODGHQZLWKDOOWKHJRRGWKLQJVRI(J\SW«WRWKH¿UVW JHQHUDORI+LV0DMHVW\«WKH\VDLOHGIURP.HPHXU«WKH VWRUP +H QDYLJDWHG WRZDUGV WKH FRDVW RI WKH 5HG 6HD KHDUULYHGDW.KHPWLWWKHHQGRIWKHODQGRIWKHQHJURHV >VLF@«KHEURXJKWSURYLVLRQVWRWKHNLQJRQKLVUHWXUQ KH VDLOHG WR WKH LVODQG LQ WKH /DNH RI WKH 6FRUSLRQ +H EURXJKWDOOWKHWKLQJVWKDWDUHDJUHHDEOHWRWKHNLQJDQG WR KLV VLVWHU KLV UR\DO ZLIH +H EXLOW D JUHDW FLW\ WR WKH NLQJZLWKWKHQDPHRIWKHNLQJWKHORUGRI(J\SW3WROHP\ $QGKHWRRNSRVVHVVLRQRILWZLWKWKHVROGLHUVRI+LV0DM HVW\DQGDOOWKHRI¿FLDOVRI(J\SWDQGWKHODQGRI« " 

KH PDGH WKHUH ¿HOGV DQG FXOWLYDWHG WKHP ZLWK SORXJKV DQG FDWWOH >«@ +H FDXJKW HOHSKDQWV LQ JUHDW QXPEHU IRUWKHNLQJDQGKHEURXJKWWKHPDVPDUYHOVWRWKHNLQJ RQ KLV WUDQVSRUWV RQ WKH VHD +H EURXJKW WKHP DOVR RQ WKH (DVWHUQ &DQDO >«@ 7KHUH FDPH VKLSV DQG VKLSV WR .HPXHUPD « WKHUH ZDV DEXQGDQFH DIWHU VFDUFLW\ IRU PDQNLQGWKHUHZDVPXVLFGULQNRLQWPHQWDQG¿QHFORWK LQJ´

,QVXPWKHLQVFULSWLRQDSSHDUVWRGHVFULEHWKHFRPSOHWLRQ RIWKHFDQDODWOHDVWDVIDUDVµWKH/DNHRIWKH6FRUSLRQ¶ WKH IRXQGDWLRQ RI WKH FLW\ RI$UVLQRs LQ µ.HPHXU¶ ± DS SDUHQWO\RQWKH5HG6HD±DQGWKHHVWDEOLVKPHQWRYHUVHDV RIDQ(J\SWLDQFRORQ\QDPHGDIWHU3WROHP\IURPZKHUH HOHSKDQWVZHUHKXQWHGDQGUHWXUQHGWR(J\SWSUREDEO\IRU XVHDVZDUDQLPDOV  ([DFWO\ ZKHQ WKH 3WROHPDLF FDQDO IHOO RXW RI XVH LV QRW NQRZQ EXW LW DSSHDUV QRW WR KDYH VXUYLYHG LQWR WKH HDU O\ GHFDGHV RI 5RPDQ UXOH ,W DQG WKH SRUW DW LWV PRXWK DUH DEVHQW IURP WKH VW FHQWXU\ $' 3HULSOXV 0DULV (U\WKUDHL HYHQ WKRXJK WKH WH[W GRHV DGGUHVV QRUWKHUQ 5HG6HDSRUWVDQGFODLPVWRHQFRPSDVV³WKHGHVLJQDWHG KDUERXUV RI WKH (U\WKUDHDQ 6HD DQG WKH SRUWV RI WUDGH RQ LW´ 7KH VXEVHTXHQW 5RPDQ H[FDYDWLRQ RI WKH FDQDO LV DWWULEXWHG LQ ERWK KLVWRULFDO DQG SDS\URORJLFDO VRXUFHV WR7UDMDQ $' $JDLQWKHGXUDWLRQRIWKH5RPDQ FDQDO LV QRW NQRZQ 3DS\UL UHIHU WR PDLQWHQDQFH ZRUN FDUULHGRXWRQLWDVODWHDVWKHWKFHQWXU\$'EXWWKHVHDUH QRW H[SOLFLW WKDW WKH FDQDO VWLOO UDQ DOO WKH ZD\ WR WKH VHDLQWKHLUUHVSHFWLYHWLPHV+RZHYHUJLYHQWKHDSSDUHQW LQFUHDVH LQ DFWLYLW\ DW WKH SRUW DW WKH FDQDO¶V 5HG 6HD PRXWK ZKLFK ZDV E\ QRZ FDOOHG &O\VPD  LQ WKH /DWH 5RPDQ SHULRG LW LV DW OHDVW ZRUWK VSHFXODWLQJ WKDW WKH FDQDO GLG LQGHHG FRQWLQXH WR IXQFWLRQ DW WKLV WLPH VLQFH LWPLJKWKDYHVXSSOLHGSRWDEOHZDWHUWRDQRWKHUZLVHSRRU O\VXSSOLHGORFDWLRQLQDGGLWLRQWRIXO¿OOLQJLWVWUDQVSRUW IXQFWLRQ 7KH(J\SWLDQDXWKRU,EQµ$EGDO+ҏDNDP GLHG$'  JDWKHUHG VHYHUDO HDUOLHU DQHFGRWHV UHODWLQJ WR WKH FDQDO¶V $UDEUHH[FDYDWLRQLQWKHWKFHQWXU\$'RQHRIZKLFK VXJJHVWVDUHFHQWPHPRU\RIWKH5RPDQFDQDOLQWKHHDUO\ \HDUV RI WKH ,VODPLF FRQTXHVW 7KLV SDUWLFXODU WUDGLWLRQ VWDWHVWKDWµ$PU,EQDOµ$VWKHFRQTXHURURI(J\SWZURWH WR WKH &DOLSK µ8PDU LQ DO0DGƯQDK SURSRVLQJ WKH UHH[ FDYDWLRQRIWKHFDQDODVDVROXWLRQWRD+ҏLMƗ]ƯIRRGFULVLV µ$PUZURWH

$ULVWRWOH0HWHRURORJ\,;,96WUDER*HRJUDSK\;9,,, 'LRGRUXV6LFXOXV+LVWRULFDO/LEUDU\,3OLQ\1DWXUDO+LVWRU\ 9,;;;,,, +LVWRULHV,, +DOOEHUJ3RVHQHU5HGPRXQW  .HQW6FKHLO 6WUDER*HRJUDSK\;9,,,'LRGRUXV6LFXOXV+LVWRULFDO/LEUDU\ ,3OLQ\1DWXUDO+LVWRU\9,;;;,,,3OLQ\VD\VWKDW3WROHP\ 3KLODGHOSKXVIDLOHGWRFRPSOHWHWKHFDQDOIRUWKHVDPHUHDVRQDV'DULXV ±IRUIHDURILQXQGDWLRQ±EXWIROORZVWKLVE\VD\LQJWKDWWKH5HG6HD SRUWRI$UVLQRsZDV³IRXQGHGE\3WROHP\3KLODGHOSKXVZKR« JDYHKLVRZQQDPHWRWKHULYHURQZKLFK$UVLQRsVWDQGV´+HWKXV FRQWUDGLFWVKLPVHOI

1DYLOOH &DVVRQ 3HULSOXV 3WROHP\*HRJUDSK\/XFLDQ$OH[DQGHUWKH)DOVH3URSKHW -RKQRI1LNLRX&KURQLFOH3DS\UL32[\OO $'  6% $' ,YLOO $' 32[\ $'  36, $' 36, $'  36, $' 36, $'  1DYLOOH :DUG ,EQµ$EGDO+ҏDNDP)XWnjK̔



&211(&7('+,17(5/$1'6 ³&DLUR@´$Oµ$EEƗVDK VWLOO H[LVWV WRGD\ DW WKH ZHVWHUQ HQWUDQFHWRWKH:ƗGƯ7ҞXPD\OƗW )LJXUH 0DUVD%DOD@ 3ODQRI;DUPHDOFRHPDW;DUPHDOTLPDP>6KHUP 6KHLNK@ 3DQRUDPDRI7RUR>DO7DZU@ 3DQRUDPDRI6XH]

EHORYHG4XLQWD9HUGH6LU)UDQFLVZDVPDGHYLVFRQGHGH0RQVHUUDWHLQ IRUKLVFKDULWDEOHZRUNVDQGUHVWRUDWLRQVDW&LQWUD+HZDVPDUULHG HQGHX[LqPHQRFHVWRWKHZULWHUVXIIUDJHWWHVWRFNEURNHUDQGSURVWLWXWH 7HQQHVVHH&ODÀLQZKRVHVLVWHU9LFWRULDZDVWKH¿UVWZRPDQWRUXQIRU 3UHVLGHQWRIWKH8QLWHG6WDWHV   )RQWRXUDGD&RVWD 6H]JLQDEDT

3/81'(&$6752¶6527(,52'20$552;2 5HIHUHQFHV GH $OEXTXHUTXH /  5RWHLUR GR 0DU 5R[R GH  '-RmRGH&DVWUR2FHDQRV>$SULO@ $PEUDVH\V110HOYLOOH&3 $GDPV5'  7KH6HLVPLFLW\RI(J\SW$UDELDDQGWKH5HG6HD&DP  EULGJH&DPEULGJH8QLYHUVLW\3UHVV G¶$QYLOOH-%%0pPRLUHVVXUO¶eJ\SWH$QFLHQQH  HW 0RGHUQH VXLYLV G¶XQH 'HVFULSWLRQ GX *ROIH  $UDELTXHRXGHOD0HU5RXJH3DULV,PSULPHULH5R  \DOH $TXDURQH-%'-RmRGH&DVWURJRXYHUQHXUHW  YLFHURLGHV,QGHV2ULHQWDOHV  3DULV3UHV  VHV8QLYHUVLWDLUHVGH)UDQFHYROV9ROXPH %HFNLQJKDP  & )  $ QRWH RQ WKH WRSRJUDSK\ RI  $KPHG*UDQ¶VFDPSDLJQVLQ-RXUQDORI6HPLWLF  6WXGLHV %R[HU &  3RUWXJXHVH 5RWHLURV  7KH  0DULQHU¶V0LUURU &RUWHVmR $  GH $OEXTXHUTXH / HGV   2EUDV  &RPSOHWD GH -RmR GH &DVWUR 9ROXPH 2QH &RLPEUD  $FDGHPLD,QWHUQDFLRQDOGH&XOWXUD3RUWXJXHVD &RUWHVmR $  GH $OEXTXHUTXH / HGV   2EUDV  &RPSOHWDVGH-RmRGH&DVWUR9ROXPH7ZR&RLPEUD  $FDGHPLD,QWHUQDFLRQDOGH&XOWXUD3RUWXJXHVD &RDWHV 7 - '  -RmR GH &DVWUR¶V  5HG 6HD  9R\DJHLQWKHJUHDWHUFRQWH[WRIWKHVL[WHHHQWKFHQWXU\  3RUWXJXHVH2WWRPDQ 5HG 6HD ULYDOU\ ,Q 'HFLVLRQ   0DNLQJ DQG &KDQJH LQ WKH 2WWRPDQ (PSLUH & (  )DUDK HG  .LUNVYLOOH 7KRPDV -HIIHUVRQ 8QLYHUVLW\  3UHVVDW1RUWKHDVW0LVVRXUL6WDWH8QLYHUVLW\ &RRNH % .  7KH 5HG 6HD &RDVW LQ  6XGDQ  1RWHVDQG5HFRUGV &RUUrD *  /HQGDV GD ,QGLD 9ROXPH  1HQGHOQ  /LFKWHQVWHLQ )DFVLPLOH UHSULQW RI &RUUrD *DVSDU  /HQGDVGD,QGLD  GH/LPD5- HG 9ROXPH  )HOQHU/LVERD$FDGHPLD5HDOGDV6FLHQFLDV &RXWR 'LRJR GR  'pFDGD 4XLQWD GD ÈVLD!!  7H[WHLQpGLWSXEOLpG¶DSUHVXQPDQXVFULSWGHOD%LEOLR  WKqTXHGHO¶8QLYHUVLWpGH/H\GH&RLPEUD%LEOLRWHFD  GH8QLYHUVLGDGH 'DOJDGR6 5  *ORVViULR /XVR$VLiWLFR &RLPEUD  ,PSUHQVDGD8QLYHUVLGDGH (DUOH 7 )  9LOOLHUV - WU  HG   $OEXTXHUTXH  &DHVDU RI WKH (DVW 6HOHFWHG WH[WV E\ $IRQVR GH  $OEXTXHUTXH DQG KLV VRQ :DUPLQVWHU $ULV  3KLO  OLSV )RQWRXUDGD&RVWD$5RWHLURVGH'-RmRGH&DVWUR  ,,, 5RWHLUR GH *RD D 6XH] RX GR 0DU UR[R    $OEXP GH WDYRDV /LVERQ $JrQFLD *HUDO GDV &RO  yQLDV DO-D]ƯUƯµ$EGDO4ƗGLULEQ0XKDPPDGDO$QVƗUƯ  'XUDU DO)DZƗ¶LG DO0XQD]]DPDK IƯ $NKEƗU DO+DMM  ZD7DUƯT0DNNDKDO0XµD]]DPDK&DLURDO0DWEDµDK  DO6DODIƯ\D .DPPHUHU$/HVURXWLHUVGH'RP-RDPGH&DVWUR  O¶H[SORUDWLRQ GH OD PHU 5RXJH SDU OHV SRUWXJDLV HQ  3DULV3DXO*XHXWKQHU



.DPPHUHU$  /¶,WLQpUDLUH GH OD 0HU 5RXJH HW GX  *ROIH$UDELTXHGH'RP-RDPGH&DVWURRXOH%RPEDU  GHPHQWGH6XH]SDUOHV3RUWXJDLVHQ%XOOHWLQGH  OD6RFLpWpGH*pRJUDSKLHG¶(J\SWH .URQN*:&RPHWRJUDSK\$&DWDORJRI&RPHWV  9ROXPH$QFLHQW&DPEULGJH&DPEULGJH8QL  YHUVLW\3UHVV 1XQHVGH&DUYDOKR$ HG -RmRGH&DVWUR5RWHL  URHPTXHVHFRQWHPDYLDJHPTXH¿]HUDPRV3RUWX  JXHVHVQRDQQRGHSDUWLQGRGDQREUHFLGDGHGH  *RD DWHH 6RH] TXH KH QR ¿P H VWUHPLGDGH GR PDU  5R[R&RPRVLWLRHSLQWXUDGHWRGRRV\QRDUDELFR  3DULV%DXGU\ 1XQHV3HGUR7UDWDGRGDVSKHUHFRPDWKHRULDGRVROHGD  OXDHKRSULPHLUROLYURGD*HRJUDSKLDGH&ODXGLR3WRO  HPHR +LVWRLUH GH OD VFLHQFH QDXWLTXH SRUWXJDLVH j  O¶pSRTXH GHV JUDQGHV GpFRXYHUWHV  9ROXPH    0XQLFK-%2EHUQHWOHU g]EDUDQ 6  ([SDQVLRQ LQ WKH 6RXWKHUQ 6HDV ,Q  6OH\PkQ WKH 6HFRQG DQG +LV 7LPH + øQDOFÕN   &.DIDGDU HGV SS,VWDQEXO7KH,VLV3UHVV 3HUHLUDGD6LOYD/$$UWHGH1DYHJDUGRV 3RUWX  JXHVHVGHVGHRLQIDQWHD'-RmRGH&DVWUR,Q+LVWyULD  GD &RORQL]DomR 3RUWXJXHVD GR %UDVLO 0 & 'LDV  HG SS3RUWR/LWRJUD¿D1DFLRQDO 3XUFKDV 6  +DNOX\WXV 3RVWXPXV RU 3XUFKDV KLV  3LOJULPHV*ODVJRZ-0DFOHKRVHDQG6RQV9ROXPH 6DQFHDX (  .QLJKW RI WKH 5HQDLVVDQFH ' -RmR  GH &DVWUR 6ROGLHU 6DLORU 6FLHQWLVW DQG 9LFHUR\ RI  ,QGLD/RQGRQ+XWFKLQVRQ 6DQFHDX( HG &DUWDVGH'-RmRGH&DVWUR/LV  ERD$JrQFLD*HUDOGR8OWUDPDU 6DQFHDX(8PDQDUUDWLYHGHH[SHGLomR3RUWXJXHVD  GHDR0DU5R[R6WXGLD 6HUMHDQW 5 %  0DWHULDOV IRU 6RXWK $UDELDQ +LV  WRU\1RWHVRQQHZ066IURP+DGUDPDZW%XOOHWLQRI  WKH 6FKRRO RI 2ULHQWDO DQG $IULFDQ 6WXGLHV     6HUMHDQW5%7KH3RUWXJXHVHRIIWKH6RXWK$UDELDQ  &RDVW+DGUDPƯ&KURQLFOHV2[IRUG&ODUHQGRQ3UHVV 6H]JLQ)D*HVFKLFKWHGHV$UDELVFKHQ6FKULIWXPV  %DQG ;, 0DWKHPDWLVFKH *HRJUDSKLH XQG .DUWR  JUDSKLH LP ,VODP XQG LKU )RUWOHEHQ LP $EHQGODQG  +LVWRULVFKH'DUVWHOOXQJ7HLO,QVWLWXWIU*HVFKLFKW  H GHU $UDELVFK,VODPLVFKHQ :LVVHQVFKDIWHQ DQ GHU  -RKDQQ :ROIJDQJ *RHWKH8QLYHUVLWlW )UDQNIXUW DP  0DLQ 6H]JLQ)E*HVFKLFKWHGHV$UDELVFKHQ6FKULIWXPV  %DQG;,,0DWKHPDWLVFKH*HRJUDSKLHXQG.DUWRJUD  SKLH LP ,VODP XQG LKU )RUWOHEHQ LP $EHQGODQG +LV  WRULVFKH 'DUVWHOOXQJ .DUWHQEDQG ,QVWLWXW IU *H  VFKLFKWH GHU$UDELVFK,VODPLVFKHQ:LVVHQVFKDIWHQ DQ  GHU -RKDQQ :ROIJDQJ *RHWKH8QLYHUVLWlW )UDQNIXUW  DP0DLQ 7LEEHWV*5$UDE1DYLJDWLRQLQWKH,QGLDQ2FHDQ  EHIRUH WKH FRPLQJ RI WKH 3RUWXJXHVH /RQGRQ 5R\DO  $VLDWLF6RFLHW\RI*UHDW%ULWDLQDQG,UHODQG

&211(&7('+,17(5/$1'6 :KLWHZD\567KH5LVHRI3RUWXJXHVH3RZHULQ  ,QGLD:HVWPLQVWHU$&RQVWDEOH &R :KLWHZD\56 WU HG 7KH3RUWXJXHVH([SHGL  WLRQWR$E\VVLQLDLQDVQDUUDWHGE\&DVWDQ  KRVR/RQGRQ+DNOX\W6RFLHW\