3ULFLQJ 6XSSOHP HQW
3ULFLQJ 6XSSOHP HQW
7R 3URVSHFWXVGDWHG’ HFHP EHU
3URVSHFWXV6XSSOHP HQWGDWHG’ HFHP EHU DQG
3URGXFW6XSSOHP HQW( 4 8 , 7 < GDWHG’ HFHP EHU ’ DWHG-XO\
) LOHG3XUVXDQWWR 5 XOH E
6HULHV$ 5 HJ LVWUDWLRQ6WDWHP HQW1 RV DQG
%RI$ ) LQDQFH/ / & &DSSHG* ( $ 5 6
/ LQNHG WR DQ 8 QHTXDOO\ : HLJ KWHG %DVNHWRI ) LYH, QGLFHV’ XH6HSWHP EHU
) XOO\ DQG 8 QFRQGLWLRQDOO\ * XDUDQWHHG E\ %DQN RI $ P HULFD&RUSRUDWLRQ
, QYHVWP HQW’ HVFULSWLRQ 7 KH&DSSHG* ( $ 5 6 WKH‡1 RWHV· OLQNHGWR DQXQHTXDOO\ Z HLJ KWHGEDVNHWRI ILYHLQGLFHVGXH6HSWHP EHU DUHVHQLRUXQVHFXUHGREOLJ DWLRQVLVVXHGE\ %RI$ ) LQDQFH/ / & ‡%RI$ ) LQDQFH· DFRQVROLGDWHGILQDQFHVXEVLGLDU\ RI %DQNRI $ P HULFD &RUSRUDWLRQ ‡%$ &· RUWKH‡* XDUDQWRU· Z KLFKDUHIXOO\ DQGXQFRQGLWLRQDOO\ J XDUDQWHHGE\ WKH* XDUDQWRU7 KHUHWXUQRQWKH1 RWHVLVOLQNHGWR WKHSHUIRUP DQFHRI DQXQHTXDOO\ Z HLJ KWHGEDVNHWRI ILYHLQGLFHV WKH‡%DVNHW· FRP SULVHGRI WKH( 8 5 2
672 ; ; , QGH[ WKH1 LNNHL , QGH[ WKH) 7 6( , QGH[ WKH6Z LVV0 DUNHW, QGH[ DQGWKH6 3 $ 6; , QGH[ HDFK D‡%DVNHW&RP SRQHQW· , I WKH%DVNHW5 HWXUQLVSRVLWLYH %RI$ ) LQDQFHZ LOOUHSD\ WKH6WDWHG3ULQFLSDO$ P RXQWRI WKH
1 RWHVDWP DWXULW\ SOXVDUHWXUQHTXDOWR WKH%DVNHW5 HWXUQP XOWLSOLHGE\ WKH8 SVLGH* HDULQJ RI EXWQR P RUHWKDQWKH0 D[ LP XP * DLQRI , I WKH%DVNHW5 HWXUQLV] HUR %RI$ ) LQDQFHZ LOOUHSD\ WKH6WDWHG3ULQFLSDO$ P RXQWRI WKH1 RWHVDW
P DWXULW\ + RZ HYHU LI WKH%DVNHW5 HWXUQLVQHJ DWLYH \ RXZ LOOEHIXOO\ H[ SRVHGWR WKHQHJ DWLYH%DVNHW5 HWXUQDQG\ RXZ LOOUHFHLYHOHVVWKDQWKH6WDWHG3ULQFLSDO$ P RXQWDWP DWXULW\ UHVXOWLQJ LQDORVVWKDWLVSURSRUWLRQDWHWR WKHGHFOLQHLQWKHYDOXHRI WKH
%DVNHW, QWKLVFDVH \ RXZ LOOKDYHIXOOGRZ QVLGHH[ SRVXUHWR WKH%DVNHWIURP WKH, QLWLDO%DVNHW9 DOXHWR WKH) LQDO%DVNHW9 DOXH DQG\ RXFRXOGORVHDOORI \ RXULQLWLDOLQYHVWP HQW
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
) HDWXUHV . H\ ’ DWHV
( QKDQFHG * URZ WK 3 RWHQWLDOVXEMHFWWR 0 D[ LP XP * DLQ† , I WKH%DVNHW5 HWXUQLVSRVLWLYH %RI$ ) LQDQFHZ LOOUHSD\ WKH6WDWHG3ULQFLSDO$ P RXQWRI WKH 1 RWHVDWP DWXULW\ SOXVDUHWXUQHTXDOWR WKH%DVNHW5 HWXUQP XOWLSOLHGE\ WKH8 SVLGH* HDULQJ EXWQR P RUHWKDQWKH0 D[ LP XP * DLQ 7 KH8 SVLGH* HDULQJ IHDWXUHZ LOOSURYLGHOHYHUDJ HGH[ SRVXUHWR DOLP LWHGUDQJ HRI SRVLWLYHSHUIRUP DQFHRI WKH%DVNHW
’ RZ QVLGH( [ SRVXUH† , I WKH%DVNHW5 HWXUQLV] HUR \ RXZ LOOUHFHLYHWKH6WDWHG3ULQFLSDO$ P RXQWRI WKH1 RWHVDWP DWXULW\ + RZ HYHU LI WKH%DVNHW5 HWXUQLV
QHJ DWLYH \ RXZ LOOUHFHLYHOHVVWKDQWKH6WDWHG3ULQFLSDO$ P RXQWRI \ RXU1 RWHVDWP DWXULW\ UHVXOWLQJ LQDORVVWKDWLVSURSRUWLRQDWHWR WKHGHFOLQHLQWKHYDOXH RI WKH%DVNHWIURP WKH7 UDGH’ DWHWR WKH9 DOXDWLRQ’ DWH XS WR D ORVVRI \ RXULQYHVWP HQW
$ Q\ SD\ P HQWRQ WKH1 RWHVLVVXEMHFWWR WKHFUHGLWZ RUWKLQHVVRI %RI$ ) LQDQFHDQG WKH* XDUDQWRU
7 UDGH’ DWH
, VVXH’ DWH
9 DOXDWLRQ’ DWH
0 DWXULW\ ’ DWH
6HH‡6XSSOHP HQWWR WKH3ODQRI ’ LVWULEXWLRQ 5 ROHRI
%RI$ 6 DQG&RQIOLFWVRI , QWHUHVW· LQWKLVSULFLQJ VXSSOHP HQWIRUDGGLWLRQDOLQIRUP DWLRQ
6HHSDJ H36 IRUDGGLWLRQDOGHWDLOV
-XO\
-XO\
6HSWHP EHU
6HSWHP EHU
1 2 7 , &( 7 2 , 1 9 ( 67 2 5 6 7 + ( 1 2 7 ( 6 $ 5 ( 6, * 1 , ) , &$ 1 7 / < 5 , 6. , ( 5 7 + $ 1 &2 1 9 ( 1 7 , 2 1 $ / ’ ( %7 , 1 67 5 8 0 ( 1 7 6 %2 ) $ ) , 1 $ 1 &( , 6 1 2 7 1 ( &( 66$ 5 , / < 2 %/ , * $ 7 ( ’ 7 2 5 ( 3$ < 7 + (
67 $ 7 ( ’ 3 5 , 1 &, 3$ / $ 0 2 8 1 7 $ 7 0 $ 7 8 5 , 7 < $ 1 ’ 7 + ( 1 2 7 ( 6 &$ 1 + $ 9 ( ’ 2 : 1 6, ’ ( 0 $ 5 . ( 7 5 , 6. 6, 0 , / $ 5 7 2 7 + ( %$ 6. ( 7 7 + , 6 0 $ 5 . ( 7 5 , 6. , 6 , 1 $ ’ ’ , 7 , 2 1 7 2 7 + ( &5 ( ’ , 7
5 , 6. , 1 + ( 5 ( 1 7 , 1 3 8 5 &+ $ 6, 1 * $ ’ ( %7 2 %/ , * $ 7 , 2 1 2 ) %2 ) $ ) , 1 $ 1 &( 7 + $ 7 , 6 * 8 $ 5 $ 1 7 ( ( ’ %< %$ & < 2 8 6+ 2 8 / ’ 1 2 7 3 8 5 &+ $ 6( 7 + ( 1 2 7 ( 6 , ) < 2 8 ’ 2 1 2 7 8 1 ’ ( 5 67 $ 1 ’
2 5 $ 5 ( 1 2 7 &2 0 ) 2 5 7 $ %/ ( : , 7 + 7 + ( 6, * 1 , ) , &$ 1 7 5 , 6. 6 , 1 9 2 / 9 ( ’ , 1 , 1 9 ( 67 , 1 * , 1 7 + ( 1 2 7 ( 6
< 2 8 6+ 2 8 / ’ &$ 5 ( ) 8 / / < &2 1 6, ’ ( 5 7 + ( 5 , 6. 6 ’ ( 6&5 , %( ’ 8 1 ’ ( 5 ‡5 , 6. ) $ &7 2 5 6¶¶%( * , 1 1 , 1 * 2 1 3$ * ( 3 6 2 ) 7 + , 6 3 5 , &, 1 * 68 3 3 / ( 0 ( 1 7 3$ * ( 3 6 2 ) 7 + (
$ &&2 0 3$ 1 < , 1 * 3 5 2 ’ 8 &7 68 3 3 / ( 0 ( 1 7 3$ * ( 6 2 ) 7 + ( $ &&2 0 3$ 1 < , 1 * 3 5 2 63 ( &7 8 6 68 3 3 / ( 0 ( 1 7 $ 1 ’ 3$ * ( 2 ) 7 + ( $ &&2 0 3$ 1 < , 1 * 3 5 2 63 ( &7 8 6 %( ) 2 5 ( 3 8 5 &+ $ 6, 1 *
$ 1 < 1 2 7 ( 6 ( 9 ( 1 7 6 5 ( / $ 7 , 1 * 7 2 $ 1 < 2 ) 7 + 2 6( 5 , 6. 6 2 5 2 7 + ( 5 5 , 6. 6 $ 1 ’ 8 1 &( 5 7 $ , 1 7 , ( 6 &2 8 / ’ $ ’ 9 ( 5 6( / < $ ) ) ( &7 7 + ( 0 $ 5 . ( 7 9 $ / 8 ( 2 ) $ 1 ’ 7 + ( 5 ( 7 8 5 1 2 1
< 2 8 5 1 2 7 ( 6 < 2 8 0 $ < / 2 6( 62 0 ( 2 5 $ / / 2 ) < 2 8 5 , 1 , 7 , $ / , 1 9 ( 67 0 ( 1 7 , 1 7 + ( 1 2 7 ( 6 7 + ( 1 2 7 ( 6 : , / / 1 2 7 %( / , 67 ( ’ 2 1 $ 1 < 6( &8 5 , 7 , ( 6 ( ; &+ $ 1 * ( $ 1 ’ 0 $ < + $ 9 (
/ , 0 , 7 ( ’ 2 5 1 2 / , 4 8 , ’ , 7 <
1 RWHV2 IIHULQJ
: HDUHRIIHULQJ &DSSHG* ( $ 5 6 OLQNHGWR DQXQHTXDOO\ Z HLJ KWHGEDVNHWRI ILYHLQGLFHVGXH6HSWHP EHU 7 KH%DVNHW&RP SRQHQWVDUHOLVWHGEHORZ DQGGHVFULEHGLQP RUHGHWDLOEHJ LQQLQJ RQSDJ H36 RI WKLVSULFLQJ VXSSOHP HQW$ Q\ SD\ P HQW RQWKH1 RWHVZ LOOEHEDVHGRQWKHSHUIRUP DQFHRI WKH%DVNHW7 KH1 RWHVDUHRXUVHQLRUXQVHFXUHGREOLJ DWLRQV J XDUDQWHHGE\ %$ & DQGDUHRIIHUHGIRUDP LQLP XP LQYHVWP HQWRI 1 RWHV HDFK1 RWHFRUUHVSRQGLQJ WR LQ6WDWHG3ULQFLSDO$ P RXQ DWWKH3XEOLF 2 IIHULQJ 3ULFHGHVFULEHGEHORZ
%DVNHW&RP SRQHQWV | %DVNHW: HLJ KWLQJ , QLWLDO, QGH[ 9 DOXH | , QLWLDO%DVNHW9 DOXH | 8 SVLGH* HDULQJ | 0 D[ LP XP * DLQ | &8 6, 3 , 6, 1 | ||
( 8 5 2 672 ; ; , QGH[ %ORRP EHUJ WLFNHU 6; | ( | ||||||
1 LNNHL , QGH[ %ORRP EHUJ WLFNHU 1 . < ) 7 6( , QGH[ %ORRP EHUJ WLFNHU 8 . ; | 5 | 8 6 5 |
6Z LVV0 DUNHW, QGH[ %ORRP EHUJ WLFNHU 60 ,
6 3 $ 6; , QGH[ %ORRP EHUJ WLFNHU $ 6
6HH‡6XP P DU\ · LQ WKLVSULFLQJ VXSSOHP HQW7 KH1 RWHVZ LOOKDYHWKHWHUP VVSHFLILHG LQ WKHDFFRP SDQ\ LQJ SURGXFWVXSSOHP HQWSURVSHFWXVVXSSOHP HQWDQG SURVSHFWXV DVVXSSOHP HQWHG E\ WKLVSULFLQJ VXSSOHP HQW
1 RQHRI WKH6HFXULWLHVDQG ( [ FKDQJ H&RP P LVVLRQ WKH‡6( &·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’ HSRVLW, QVXUDQFH&RUSRUDWLRQRUDQ\ RWKHUJ RYHUQP HQWDODJ HQF\ DQG LQYROYHLQYHVWP HQWULVNV
3HU1 RWH
7RWDO
3 XEOLF 2 IIHULQJ 3 ULFH 8 QGHUZ ULWLQJ ’ LVFRXQW 3 URFHHGV EHIRUHH[ SHQVHV WR %RI$ ) LQDQFH
7 K H X Q G H U Z U L W 6L HQ FJ X UG LL WV LF DRH FXV WQ LW Q , J QL FVD V S ‡U )%L LRQQI F D$ L 6QSS )·FHDLHUOQ D 1Q DRFK WQHD GHV K %DD RV%J IUR $ HID $HJ UG H HW GR
WS RX U FV KH DO VO H
W IR U R %
6 H U Y L F H V , Q F ‡ 8 % 6 · D F W L Q J D V D V H O O L Q J D J H Q W I R U V D O H V R I W KI H U L1 QR
S U R S I ▇▇ ▇▇ H VW K WH R
1 RR IW H V
) RW UR
DWG KG HL W SL XR EQ OD L O F
L D Q WI R UD P ▇▇ ▇▇ L RF QH
R IQ W K H G L V W S UH L U E X 1W ▇ ▇ WR HQ R I W K
7 KHLQLWLDOHVWLP DWHG YDOXHRI WKH1 RWHVLVOHVVWKDQ WKHSXEOLF RIIHULQJ SULFH 7 KHLQLWLDOHVWLP DWHGYDOXHRI WKH1 RWHVDVRI WKH7 UDGH’ DWHLV SHU LQ6WDWHG3ULQFLSDO$ P RXQW6HH‡6XP P DU\ · RQSDJ H36 RI WKLVSULFLQJ VXSSOHP HQW
‡5 LVN) DFWRUV· EHJ LQQLQJ RQSDJ H36 RI WKLVSULFLQJ VXSSOHP HQWDQG‡6WUXFWXULQJ WKH1 RWHV· RQSDJ H36 RI WKLVSULFLQJ VXSSOHP HQWIRUDGGLWLRQDOLQIRUP DWLRQ 7 KHDFWXDOYDOXHRI \ RXU1 RWHVDWDQ\ WLP HZ LOOUHIOHFWP DQ\ IDFWRUVDQGFDQQRWEH SUHGLFWHGZ LWKDFFXUDF\
8 % 6 ) L Q D Q F L D O 6 H U Y L F H V , Q F % R I 6 $ H F X U L
$ G G ,L QW I LR RU QP%DDROWI ) L$ L RQ QD Q D$F EPH ▇▇ ▇▇/ WL/ &F D
&% RD UQ SN R U R D I W L R Q
D Q G
W K H
1 R W
<R X V K R X O G U H D G F D U H I X O O \ W K L V H Q W L U H S U L F L Q J
W K H W D [ D Q G R W K H U F R Q V L G H U D W L R \ QR VX L V P KS ▇▇ ▇▇ OW GD Q UW H Y WL R
‡ 5 L V N ) D F W R U V · Z K L F K K L J K O L J K W V D Q X P E H U R I U
L V L Q F R Q V L V W H Q W Z L W K W K H S U R G X F W <R VX XJ HSD SGU OH HW P RXH UQ F WR Q V
E X V L Q H V V D Q G W D [ D G Y L V R U V E H I R U H P D N L Q J D G H F L
7 K H L Q I R U P D W L R Q L Q W K H ‡ 6 X P P D U \ · V H F W L R Q L V T X
S U R V S H F W X V<R XV X VS KS
RO XH OP
▇▇ ▇ ▇▇ H OD
\Q G R QS OU \ R V RS QH F
W KX HV
L Q I R U P D W L
S U R
:VH S H KF DW YX HV
Q R W D X W IK HR UU HL Q]
WH G
L QD
IQ R\
U PIR HDW UWK HLH QRU WQ
S RH U,U I V
LR DQQ QF \ RWR Q QR V
R I X V
%W RK I H$ 6
* IXRHDUUU D8WQ% RW6
R VUL HV O O P D WIN HKL UHQ VJ
RH UD Q1<RVR XWDR
OIH
VHV
K RLL XVQ O GQD
RQ DW\
V VMS XXH
V X S S O H P H Q W D Q G W K H D F F R P S D Q \ L Q J S U R G X F W V X S S O H
& H U W D L Q W H U P V X V H G E X W Q R W G H I L Q H G L Q W K L V S
L Q G L F D W H G R U X Q O H V V W K H F R Q·
% R I ) $ L Q D Q F H
W HR
[U W
V UL
HP LT)
OXL
DLQ
UD HQ
VFU HH
RI HW IUKDLHHQ
7 K H D E R Y H U H I H U H Q F H G D F F R P S D Q \ L Q J G R F X P H Q W V P D \
3 U R G X F W V X SG S D O WH HP GH Q
’W H F ( H 4 P8 E,
H7 <U
K W W S VV H F J ZR ZY Z $ U F K L Y H V H G J D U G D W D G G E
6 H $U L0 H7 V1 S U R V S H F W X V V X S S O H P H Q W G D W H G ’ H F H P E H U
K W W S VV H F J ZR ZY Z $ U F K L Y H V H G J D U G D W D G G E
7 K1
WHR DH RUV VXH HU GHQ VEL HWR
FU$ XQSU\DL W\ WRPVWQLH1KHQRHVDWIUHXHDVO XQ O QG \ F R
JQ XG DL EUW%\DL$Q7R&KW1Q HRHDDWHOWQGHOUGKV\ HH JO XD D WDU QHUDLRGHQQWWEV WH\X ) KHUH HHG’ GHH
, Q V &X SRU RUDURQVDUFHWHEFL F\XRRUQOH7 OGK1 DRH WZ LHU OUVDH ODQT ONLX UQD LROSJ IOKD \ W\ Z P LDH WROQRIKOWRX WUX KQ HV DUH XQ F QGX VU XHREGER OU HLG J[ L RDF QEHWDOSLWWLWR HDJKQ VDGUDV XWH
W D R QS U\
HLRVRSU U
▇▇ ▇▇▇
OH\L DU7 KZHU HQH JFO XHD DVWZU LHUD OGDHQ OQTW NLXHUQDHLRO SJ IOKD \ W\ Z P LDHOWRQO%IKW$VR& W¶X KQ HV DUH QX F GQX VU XHREGER OU HLG J[ L RDF Q EHWDOSLWWWLR HDJK
V X WE D MR QS HU\
FLRWRSU U
▇▇ ▇▇▇
OH\L DUDH ZHQVVQ QGH LWFLRRHVWU VXV E RR UE GO
L$L
QJS D\D W\ GPXLH RHHRGWQQQ1KWVRHVLW QH F VD O QU X \H G S LRDWQI \ SKJP UHH LDQQPWFRZ LXLES VQOHD XWOOWE W
F U H G L W ) L UQ
LD VQ
NF DH QR GI
D %V $R
&I L$ V V DX VH U
* X D U D Q W R U
36
, Q Y H 6 VX WL RW UD E L O L W \
7 KH1 RWHVP D\ EHVXLWDEOHIRU\ RX LI DP RQJ RWKHUFRQVLGHUDWLRQV
<RXIXOO\ XQGHUVWDQGWKHULVNVLQKHUHQWLQDQLQYHVWP HQWLQWKH1 RWHV LQFOXGLQJ WKHULVNRI ORVVRI
\ RXUHQWLUHLQYHVWP HQW
<RXGR QRWVHHNFXUUHQWLQFRP HIURP \ RXULQYHVWP HQWDQGDUHZ LOOLQJ WR IRUJ R GLYLGHQGVRUDQ\ RWKHUGLVWULEXWLRQVSDLGRQWKHVWRFNVLQFOXGHGLQWKH%DVNHW&RP SRQHQWV
<RXFDQWROHUDWHDORVVRI DOORUDVXEVWDQWLDOSRUWLRQRI \ RXULQYHVWP HQWDQGDUHZ LOOLQJ WR P DNHDQ LQYHVWP HQWWKDWZ LOOKDYHWKHIXOOGRZ QVLGHP DUNHWULVNRI DQLQYHVWP HQWLQWKH%DVNHW
<RXXQGHUVWDQGDQGDFFHSWWKHULVNVDVVRFLDWHGZ LWKWKH%DVNHW&RP SRQHQWV
<RXEHOLHYHWKDWWKHYDOXHRI WKH%DVNHWZ LOOLQFUHDVHRYHUWKHWHUP RI WKH1 RWHVDQGWKDWWKH) LQDO
%DVNHW9 DOXHLVOLNHO\ WR FORVHDERYHWKH, QLWLDO%DVNHW9 DOXH DQG\ RXDUHZ LOOLQJ WR J LYHXS DQ\ DSSUHFLDWLRQLQH[ FHVVRI WKH0 D[ LP XP * DLQ
<RXXQGHUVWDQGDQGDFFHSWWKDW\ RXUSRWHQWLDOUHWXUQLVOLP LWHGE\ WKH0 D[ LP XP
<RXFDQWROHUDWHIOXFWXDWLRQVLQWKHYDOXHRI WKH1 RWHVSULRUWR P DWXULW\ WKDWP D\ EHVLP LODUWR RU H[ FHHGWKHGRZ QVLGHIOXFWXDWLRQVLQWKHYDOXHRI WKH%DVNHW
<RXDUHZ LOOLQJ DQGDEOHWR KROGWKH1 RWHVWR P DWXULW\ DQGDFFHSWWKDWWKHUHP D\ EHOLWWOHRUQR VHFRQGDU\ P DUNHWIRUWKH1 RWHV
<RXDUHZ LOOLQJ WR DVVXP HWKHFUHGLWULVNRI %RI$ ) LQDQFHDQG%$ & IRUDOOSD\ P HQWVXQGHUWKH
1 RWHV DQGXQGHUVWDQGWKDWLI %RI$ ) LQDQFHDQG%$ & GHIDXOWRQWKHLUREOLJ DWLRQV \ RXP LJ KWQRW UHFHLYHDQ\ DP RXQWVGXHWR \ RX LQFOXGLQJ DQ\ UHSD\ P HQWRI WKH6WDWHG3ULQFLSDO$ P RXQW
7 KH1 RWHVP D\ QRWEHVXLWDEOHIRU\ RX LI DP RQJ RWKHUFRQVLGHUDWLRQV
<RXGR QRWIXOO\ XQGHUVWDQGWKHULVNVLQKHUHQWLQDQLQYHVWP HQWLQWKH1 RWHV LQFOXGLQJ WKHULVNRI ORVVRI \ RXUHQWLUHLQYHVWP HQW
<RXVHHNFXUUHQWLQFRP HIURP WKLVLQYHVWP HQWRUSUHIHUWR UHFHLYHWKHGLYLGHQGVDQGDQ\ RWKHU GLVWULEXWLRQVSDLGRQWKHVWRFNVLQFOXGHGLQWKH%DVNHW&RP SRQHQWV
<RXFDQQRWWROHUDWHWKHORVVRI DOORUDVXEVWDQWLDOSRUWLRQRI \ RXULQLWLDOLQYHVWP HQWRU\ RXDUHQRW Z LOOLQJ WR P DNHDQLQYHVWP HQWWKDWZ LOOKDYHWKHIXOOGRZ QVLGHP DUNHWULVNRI DQLQYHVWP HQWLQ WKH%DVNHW
<RXUHTXLUHDQLQYHVWP HQWGHVLJ QHGWR J XDUDQWHHDIXOOUHWXUQRI WKH6WDWHG3ULQFLSDO$ P RXQWDW P DWXULW\
<RXGR QRWXQGHUVWDQGRUDUHQRWZ LOOLQJ WR DFFHSWWKHULVNVDVVRFLDWHGZ LWKWKH%DVNHW&RP SRQHQW
<RXEHOLHYHWKDWWKHYDOXHRI WKH%DVNHWZ LOOGHFOLQHGXULQJ WKHWHUP RI WKH1 RWHVDQGWKH) LQDO
%DVNHW9 DOXHLVOLNHO\ WR FORVHEHORZ WKH, QLWLDO%DVNHW9 DOXHRQWKH9 DOXDWLRQ’ DWH H[ SRVLQJ \ RX WR IXOOGRZ QVLGHSHUIRUP DQFHRI WKH%DVNHWRU\ RXEHOLHYHWKH%DVNHWZ LOODSSUHFLDWHRYHUWKHWHUP RI WKH1 RWHVE\ P RUHWKDQWKH0 D[ LP XP * DLQ
<RXVHHNDQLQYHVWP HQWWKDWSDUWLFLSDWHVLQWKHIXOODSSUHFLDWLRQLQWKHYDOXHRI WKH%DVNHWRUWKDW KDVXQOLP LWHGUHWXUQSRWHQWLDO
<RXFDQQRWWROHUDWHIOXFWXDWLRQVLQWKHYDOXHRI WKH1 RWHVSULRUWR P DWXULW\ WKDWP D\ EHVLP LODUWR R H[ FHHGWKHGRZ QVLGHIOXFWXDWLRQVLQWKHYDOXHRI WKH%DVNHW
<RXVHHNDQLQYHVWP HQWIRUZ KLFKWKHUHZ LOOEHDQDFWLYHVHFRQGDU\ P DUNHW
<RXSUHIHUWKHORZ HUULVNRI FRQYHQWLRQDOIL[ HGLQFRP HLQYHVWP HQWVZ LWKFRP SDUDEOHP DWXULWLHVDQ FUHGLWUDWLQJ V
<RXDUHQRWZ LOOLQJ WR DVVXP HWKHFUHGLWULVNRI %RI$ ) LQDQFHDQG%$ & IRUDOOSD\ P HQWVXQGHUWKH 1 RWHV LQFOXGLQJ DQ\ UHSD\ P HQWRI WKH6WDWHG3ULQFLSDO$ P RXQW
7 KHVXLWDELOLW\ FRQVLGHUDWLRQVLGHQWLILHG DERYHDUHQRWH[ KDXVWLYH : KHWKHURUQRWWKH1 RWHVDUHDVXLWDEOHLQYHVWP HQWIRU\ RX Z LOOGHSHQG RQ \ RXULQGLYLGXDOFLUFXP VWDQFHVDQG \ RX VKRXOG UHDFK DQ LQYHVWP HQWGHFLVLRQ RQO\ DIWHU\ RX DQG \ RXULQYHVWP HQWOHJ ▇▇▇▇[ DFFRXQWLQJ DQG RWKHUDGYLVRUVKDYHFDUHIXOO\ FRQVLGHUHG WKHVXLWDELOLW\ RI DQ LQYHVWP HQWLQ WKH1 RWHVLQ OLJ KWRI \ RXU SDUWLFXODUFLUFXP VWDQFHV <RX VKRXOG UHYLHZ ‡7 KH%DVNHWDQG WKH%DVNHW&RP SRQHQWV· KHUHLQ IRUP RUHLQIRUP DWLRQ RQ WKH%DVNHW&RP SRQHQWV <RX VKRXOG DOVR UHYLHZ FDUHIXOO\ WKH‡5 LVN
) DFWRUV· VHFWLRQ KHUHLQ IRUULVNVUHODWHG WR DQ LQYHVWP HQWLQ WKH1 RWHV
36
6 X P P D U \
) L Q D9 DO O X% H D V N H W : H L J K W H G % WD KV HN
, V V X H U % R I ) $ L Q D Q F H
: H L J K W H G ) R %U D VH ND HF WK
&% RD PV SN RH QWH Q &W R P
* X D U D Q W R% U$ &
5 H W X U Q
5 H W X U Q
3 X EI OH LU FL Q 2J I
3 U L F HR I$ P RW XK QH W
6 W D W H G 3 U% LD QV FN L H S WD O ) &R RU P S HR DQ FH KQ W % D5 VH NW HX WU Q
& R P
6 W D W $H P GR X 3Q UW L Q F L S D OS H U 1 R W H
) L Q D9 D OO X , HQ G9 D–HO [ X,
HQ ▇ ▇
0 L Q L P X P , Q Y H V W P H Q W 1 R W H V
, Q L W9 DL OD XO H
, Q G H
7H U P $ S S U R [ L P D W H O \ I R X U W H H Q
7 U D G H ’ D -WX HO \
, QP LR WQ9 DLWODKXOVH ) R, QU G HH [ D F K % D V N H W & R P 7 U D G H ’ D W H D V V S H F L
) L Q D9 D OO X , HQ) ▇▇ ▇▇ [ H D F K % D V N H W & ▇ ▇
, V V X H ’ D- WX
HO \
W 9KD
HO X D W L R Q ’ D W H
9 D O X D W L R 6Q H S ’ WD HW P HE H U
&V DX OE $FM J XHH OFQ DWWW%
LRW RI R$QI 6L SO RL VDD W)WQ LSH QR DDQ RI QH I FP HH %Q RWI $ D V
1 R W H 7VH †U &P HV U WR DI L QW K H 1 R W H V † ( Y H Q W V 5 H O D W L Q J W R & D O F X O
E H J L Q Q L Q J R Q S D J H 3 6
6 H $O RJO HI L QQ WJ
VK% H R I
D$ 6F F RD PQ SG D Q 8 \ %L 6Q J S U R G
0 D W X U L W 6\
H S’ DW WH
HP E H U
( Y H Q W V
,R I I
D’ QH I D( XY OH WQ W
D QR GI ’ H I D X
( 8 5 2 672 ; ; , QGH[ %ORRP EHUJ WLFNHU 6; ( | |
1 LNNHL , QGH[ %ORRP EHUJ WLFNHU 1 . < | |
) 7 6( , QGH[ %ORRP EHUJ WLFNHU 8 . ; | |
6Z LVV0 DUNHW, QGH[ %ORRP EHUJ WLFNHU 60 , | |
6 3 $ 6; , QGH[ %ORRP EHUJ WLFNHU $ 6 |
% D V N H W 7 KH1 RWHVDUHOLQNHGWR DQXQHTXDOO\ Z HLJ KWHGEDVNHWFRQVLVWLQJ RI WKHIROORZ LQJ LQGLFHVDQGWKHLUUHVSHFWLYHZ HLJ KWLQJ V
$ F F H O H U DL WQ L RWQ K H V H F W L R Q H) LQ QW DL ( Y H Q W V R$ I F F ’H HO I HD UX DO WW L R DQ W K H D F F R P S D Q \ L Q J S U R W K H D P R X Q W S D \ D E O H
X Q G H U W K H V H Q L R U L Q
‡ † 3 D \ P H Q W D W 0 D W X U L
Z H U H W K H 0 D W X9 DU OL XW D\ W L’
3 D \ $ P WH Q 0W D ,W I X% UDWLVKWNH \ H LW V Z S 5HHS H RUWZV XLL UOW QOL Y $UH PH RS XD Q\ W
W K L U G W U D G L Q J G D \ S S D \ P H Q W R I W K H 1 R W H Z L O O Q R W E H D U D G H I
W RK IH 6 W D W H G 3 U L Q F L S D O
W 6K WH
D W1 RH WG
H V3 U LD QW F L PS DD WO X U L W \ S O X V D U H W X U Q H T X D O W R W
$ P R X Q W
8 S V L G H * H D U L Q J E X W Q R P R U H W K D Q W K H 0 D [ L P X P * D L
O H V ▇▇ ▇ ▇
% RD I V N H W
K H5 H W X U Q [ 8 S V L G H * H D U L Q J D Q G L
* D L Q
, I % DW VK NH H LRWZV H 5 ] HHZ WUL XO UO Q
$U PH RS XD Q\ W
W RK IH
W6 KW HD W H G 3 U L Q F L S D O
1 R W H V D W P D W X U L W \
, I % DW VK NH H LW V Z 5HQH HWZJ XLD UOW QOL Y HU H S D \ O H V V W K D Q W K H 6 W D W H G 3 U L Q
$ P R X Q W R I \ U R HX VU X O 1 WR LW Q H J V
L DQ W
D P DO WR XV UV L WW \ K D W L V S U R S R U W L R
G H F O L Q H L Q
7 U WD KG HH 9 D Y’O DDX WOD XHW HL WR
RQR I
W WK KH H % D V N H W I U R P W K H
’ D W H F D O F X O D W H G D V I R O O R Z V
% D V N H W 5 H W X U Q
$ F F R U G \ LR QX J O DP\ D \V X OE
RV VW HD Q
DW OL OD O
R US R U W L R Q R I \ R X U 6 W D W H G 3
$ P R X Q W DG WH S
PH DQ WG
XL %QU DJL VWGNR\ HHQ FW O KL RQ ZH V V L J Q L I L F D Q W O \ W K H
% D V N H W 5 H W X U ) QL Q D9 DO O , X–Q% HLD WV9 DLN ODH XOW H
% D V N H W
8 S V L G H * H D U L Q J
, Q L W9 DL OD XO H
% D V N H W
0 D [ L P X P * D Z KLLFKQFRUUHVSRQGVWR DP D[ LP XP 3D\ P HQWDW0 DWXULW\ RI SHU1 RWH
, Q L W9 DL OD XO H % D V N H W
6HH‡6XSSOHP HQWWR WKH3ODQRI ’ LVWULEXWLRQ 5 ROHRI %RI$ 6 DQG&RQIOLFWVRI , QWHUHVW· LQWKLVSULFLQJ VXSSOHP HQWIRUDGGLWLRQDOLQIRUP DWLRQ
36
, QYHVWP HQW7 LP HOLQH
7 UDGH’ DWH
7 KHFORVLQJ OHYHORI HDFK%DVNHW&RP SRQHQWLWV, QLWLDO, QGH[ 9 DOXH LVREVHUYHGDQGWKH0 D[ LP XP * DLQLVVHW
0 DWXULW\ ’ DWH
7 KH) LQDO%DVNHW9 DOXHLVGHWHUP LQHGRQWKH9 DOXDWLRQ’ DWHDQGWKH
%DVNHW5 HWXUQLVFDOFXODWHG
, I WKH%DVNHW5 HWXUQ LVSRVLWLYH Z HZ LOOUHSD\ WKH6WDWHG3ULQFLSDO
$ P RXQWRI WKH1 RWHVDWP DWXULW\ SOXVDUHWXUQHTXDOWR WKH%DVNHW5 HWXUQ P XOWLSOLHGE\ WKH8 SVLGH* HDULQJ EXWQR P RUHWKDQWKH0 D[ LP XP * DLQ FDOFXODWHGDVIROORZ V
WKHOHVVHURI L %DVNHW5 HWXUQ[ 8 SVLGH* HDULQJ DQG LL 0 D[ LP XP * DLQ
, I WKH%DVNHW5 HWXUQ LV] HUR Z HZ LOOUHSD\ WKH6WDWHG3ULQFLSDO$ P RXQW RI WKH1 RWHVDWP DWXULW\
, I WKH%DVNHW5 HWXUQ LVQHJ DWLYH Z HZ LOOUHSD\ OHVVWKDQWKH6WDWHG 3ULQFLSDO$ P RXQWRI \ RXU1 RWHVDWP DWXULW\ UHVXOWLQJ LQDORVVWKDWLV SURSRUWLRQDWHWR WKHGHFOLQHLQWKHYDOXHRI WKH%DVNHWIURP WKH7 UDGH ’ DWHWR WKH9 DOXDWLRQ’ DWH FDOFXODWHGDVIROORZ V
%DVNHW5 HWXUQ
$ FFRUGLQJ O\ \ RX P D\ ORVHDOORUDVXEVWDQWLDOSRUWLRQ RI \ RXU6WDWHG 3 ULQFLSDO$ P RXQWDWP DWXULW\ GHSHQGLQJ RQ KRZ VLJ QLILFDQWO\ WKH
%DVNHWGHFOLQHV
, 1 9 ( 6
7 ,+ 1( *
1 ,2 19/7 (( 66
6, 1, *9 15 ,,< )62, . 8&6< $
01/
$2$7
6 6( $8
1% 76 , 7 $ /
3 27 5 , 2 1$ / / 2<2 5 2)
8 5 , ,1 1, 97 (, <6$ 27/ : 80, (/ 1/ %7 (
7(2 7; 3+ 2(
6 ( ’
0 $5 . ( 7 5 , 76 +. (
2 %)
$& 62 . 0 ( 3 7$2 11 $<(<3 10 7( 61 727 +1
( 1 2 7 ( 6 , 6 6 8 % - ( & 7
7 2 7 + ( & 57 ( + ’ , , 17 ( : 62%$65 2 ) ) 2, 1)$ $1 71’ +& ((
* 28 5$ 5 $ 1 7
36