-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
7RGD\LV7KXUVGD\$XJXVW
0DULD&DUROLQD3$UDXOORY%HQLJQR6LPHRQ&$TXLQR,,,*51R-XO\'HFLVLRQ%HUVDPLQ>-@6HSDUDWH2SLQLRQ&DUSLR>-@6HSDUDWH2SLQLRQ%ULRQ>-@&RQFXUULQJDQG'LVVHQWLQJ2SLQLRQ'HO&DVWLOOR>-@6HSDUDWH&RQFXUULQJ2SLQLRQ3HUODV%HUQDEH>-@&RQFXUULQJ2SLQLRQ/HRQHQ>-@
5HSXEOLFRIWKH3KLOLSSLQHV6835(0(&2857
0DQLOD
(1%$1&
*51R-XO\
0$5,$&$52/,1$3$5$8//2&+$,53(5621%$*21*$/
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
YV6(&5(7$5
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
2FW
'HF
-XQ
6HS
'HF
-XQ
6HS
727$/
8QGHU1%&WKHVRXUFHVRI'$3IXQGVDUHDVIROORZV
7KHVHJXLGHOLQHV VKDOO FRYHU WKHZLWKGUDZDORI
XQREOLJDWHGDOORWPHQWVDVRI -XQHRI DOO
QDWLRQDOJRYHUQPHQWDJHQFLHV1*$VFKDUJHGDJDLQVW)
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
,Q'HPHWULDY$OEDWKLV&RXUWFRQVWUXHGDQLGHQWLFDOSURYLVLRQLQWKH&RQVWLWXWLRQ7KHSURKLELWLRQWRWUDQVIHUDQDSSURSULDWLRQIRURQHLWHPWRDQRWKHUZDVH[SOLFLWDQGFDWHJRULFDOXQGHUWKH&RQVWLWXWLRQ+RZHYHUWRDIIRUGWKH
KHDGV RI WKH GLIIHUHQW EUDQFKHV RI WKH JRYHUQPHQW DQG WKRVH RI WKH
FRQVWLWXWLRQDO FRPPLVVLRQV FRQVLGHUDEOHIOH[LELOLW\ LQ WKH XVH RI
SXEOLF IXQGV DQG UHVRXUFHV WKH&RQVWLWXWLRQ DOORZHG WKH
HQDFWPHQW RI D ODZDXWKRUL]LQJ WKHWUDQVIHU RI IXQGV IRU WKH SXUSRVH
RI DXJPHQWLQJ DQ LWHP IURP VDYLQJV LQ DQRWKHU LWHP LQ WKH
DSSURSULDWLRQ RI WKHJRYHUQPHQW EUDQFK RU FRQVWLWXWLRQDO ERG\
FRQFHUQHG 7KH OHHZD\ JUDQWHG ZDV WKXV OLPLWHG 7KH SXUSRVH
DQGFRQGLWLRQV IRU ZKLFK IXQGV PD\ EH WUDQVIHUUHG ZHUH VSHFLILHG LH
WUDQVIHU PD\ EH DOORZHG IRU WKH SXUSRVH
RIDXJPHQWLQJDQLWHPDQGVXFKWUDQVIHUPD\EHPDGHRQO\LIWKHUHDUHVDYLQJVIURPDQRWKHULWHPLQWKHDSSURSULDWLRQRIWKHJRYHUQPHQWEUDQFKRUFRQVWLWXWLRQDOERG\%ROGIDFLQJDQGLWDOLFL]DWLRQVXSSOLHG
,Q 6DQFKH] Y &RPPLVVLRQ RQ $XGLW WKLV &RXUW VWUHVVHG WKH
WZLQ UHTXLVLWHV IRU D YDOLG WUDQVIHU RI
DSSURSULDWLRQQDPHO\WKHH[LVWHQFHRIVDYLQJVDQGWKHH[LVWHQFHLQWKHDSSURSULDWLRQVODZRIWKHLWHPSURMHFWRUDFWLYLW\WREHDXJPHQWHGIURPVDYLQJVWKXV
&OHDUO\ WKHUHDUHWZRHVVHQWLDO UHTXLVLWHV LQRUGHU WKDWD
WUDQVIHURIDSSURSULDWLRQZLWK
WKHFRUUHVSRQGLQJIXQGVPD\OHJDOO\EHHIIHFWHG)LUVWWKHUHPXVWEHVDYLQJVLQWKHSURJUDPPHGDSSURSULDWLRQRIWKHWUDQVIHUULQJDJHQF\6HFRQGWKHUHPXVWEHDQH[LVWLQJLWHPSURMHFWRUDFWLYLW\ZLWKDQDSSURSULDWLRQLQWKHUHFHLYLQJDJHQF\WRZKLFKWKHVDYLQJVZLOOEHWUDQVIHUUHG
$FWXDO VDYLQJV LV D VLQH TXD QRQ WR D YDOLG WUDQVIHU RI IXQGV
IURP RQH JRYHUQPHQW DJHQF\ WR DQRWKHU 7KH ZRUGDFWXDO GHQRWHV WKDW
VRPHWKLQJ LV UHDO RU VXEVWDQWLDO RU H[LVWV SUHVHQWO\ LQ IDFW DV
RSSRVHG WR VRPHWKLQJZKLFK
LVPHUHO\WKHRUHWLFDOSRVVLEOHSRWHQWLDORUK\SRWKHWLFDO%ROGIDFLQJVXSSOLHG
,Q1D]DUHWKY9LOODUWKLV&RXUWUHLWHUDWHGWKHUHTXLVLWHVIRUDYDOLGWUDQVIHURIDSSURSULDWLRQDVPDQGDWHGLQ6HFWLRQ$UWLFOH9,RIWKH&RQVWLWXWLRQWKXV
8QGHUWKHVHSURYLVLRQV WKHDXWKRULW\JUDQWHGWRWKH3UHVLGHQWZDVVXEMHFW
WR WZRHVVHQWLDOUHTXLVLWHV LQRUGHU WKDWDWUDQVIHU RI DSSURSULDWLRQ
IURP WKHDJHQF\V VDYLQJVZRXOG EH YDOLGO\ HIIHFWHG 7KH ILUVW UHTXLUHG
WKDW WKHUHPXVW
EHVDYLQJVIURPWKHDXWKRUL]HGDSSURSULDWLRQRIWKHDJHQF\7KHVHFRQGGHPDQGHGWKDWWKHUHPXVWEHDQH[LVWLQJLWHPSURMHFWDFWLYLW\SXUSRVHRUREMHFWRIH[SHQGLWXUHZLWKDQDSSURSULDWLRQWRZKLFKWKHVDYLQJVZRXOGEHWUDQVIHUUHGIRUDXJPHQWDWLRQSXUSRVHVRQO\%ROGIDFLQJVXSSOLHG
6HFWLRQ$UWLFOH9,RIWKH&RQVWLWXWLRQOLNHZLVHPDQGDWHVWKDWVDYLQJVIURPRQHEUDQFKOLNHWKH([HFXWLYHFDQQRWEHWUDQVIHUUHGWRDQRWKHUEUDQFKOLNHWKH/HJLVODWXUHRU-XGLFLDU\RUWRDFRQVWLWXWLRQDOERG\DQGYLFHYHUVD,QIDFWIXQGV
DSSURSULDWHG IRU WKH ([HFXWLYH EUDQFK ZKHWKHU VDYLQJV RU QRW FDQQRW
EH WUDQVIHUUHG WR WKH /HJLVODWXUH
RU-XGLFLDU\RUWRWKHFRQVWLWXWLRQDOERGLHVDQGYLFHYHUVD+HQFHIXQGVIURPWKH([HFXWLYHEUDQFKZKHWKHUVDYLQJVRUQRW
FDQQRW EH WUDQVIHUUHG WR WKH &RPPLVVLRQ RQ (OHFWLRQV WKH +RXVH
RI 5HSUHVHQWDWLYHV RU WKH &RPPLVVLRQ RQ$XGLW
,Q 3LFKD\ Y 2IILFH RI WKH 'HSXW\ ([HFXWLYH 6HFUHWDU\ WKLV
&RXUW GHFODUHG WKDW WKH 3UHVLGHQW LV
FRQVWLWXWLRQDOO\DXWKRUL]HGWRDXJPHQWDQ\LWHPLQWKH*$$DSSURSULDWHGIRUWKH([HFXWLYHEUDQFKXVLQJVDYLQJVIURPRWKHU
LWHPVRIDSSURSULDWLRQVIRUWKH([HFXWLYHEUDQFKWKXV
[[[>7R@[[[HQDEOHWKH3UHVLGHQWWRUXQWKHDIIDLUVRIWKHH[HFXWLYHGHSDUWPHQWKHLVOLNHZLVHJLYHQFRQVWLWXWLRQDODXWKRULW\WRDXJPHQWDQ\LWHPLQWKH*HQHUDO$SSURSULDWLRQV/DZXVLQJWKHVDYLQJVLQRWKHULWHPVRIWKHDSSURSULDWLRQIRUKLVRIILFH
,Q IDFW KH LVH[SOLFLWO\DOORZHGE\ ODZ WR WUDQVIHUDQ\
IXQGDSSURSULDWHG IRU
WKHGLIIHUHQWGHSDUWPHQWVEXUHDXVRIILFHVDQGDJHQFLHVRIWKH([HFXWLYH'HSDUWPHQWZKLFKLVLQFOXGHGLQWKH*HQHUDO$SSURSULDWLRQV$FWWRDQ\SURJUDPSURMHFWRUDFWLYLW\RIDQ\GHSDUWPHQWEXUHDXRURIILFHLQFOXGHGLQWKH*HQHUDO$SSURSULDWLRQV$FWRUDSSURYHGDIWHULWVHQDFWPHQW%ROGIDFLQJVXSSOLHG
,Q3+,/&216$Y(QULTXH]WKLV&RXUWHPSKDVL]HGWKDWRQO\WKH3UHVLGHQWLVDXWKRUL]HGWRXVHVDYLQJVWRDXJPHQWLWHPVIRUWKH([HFXWLYHEUDQFKWKXV
8QGHU6HFWLRQQR ODZVKDOOEHSDVVHGDXWKRUL]LQJDQ\
WUDQVIHURIDSSURSULDWLRQVDQGXQGHU6HFWLRQQRPRQH\VKDOOEHSDLGRXWRI
WKH7UHDVXU\H[FHSW LQSXUVXDQFHRIDQDSSURSULDWLRQPDGHE\
ODZ:KLOH6HFWLRQDOORZVDVDQH[FHSWLRQWKHUHDOLJQPHQWRIVDYLQJVWRDXJPHQWLWHPVLQWKHJHQHUDODSSURSULDWLRQVODZIRUWKHH[HFXWLYHEUDQFKVXFKULJKWPXVWDQGFDQEHH[HUFLVHGRQO\E\WKH3UHVLGHQWSXUVXDQWWRDVSHFLILFODZ%ROGIDFLQJVXSSOLHG
,,'HILQLWLRQDQG6RXUFHVRI6DYLQJV
2QHRI WKH UHTXLVLWHV IRUD YDOLG WUDQVIHURI
DSSURSULDWLRQVXQGHU6HFWLRQ$UWLFOH9,RI WKH&RQVWLWXWLRQ LV
WKDWWKHUHPXVWEHVDYLQJVIURPWKHDSSURSULDWLRQVRIWKHVDPHEUDQFKRUFRQVWLWXWLRQDOERG\)RUWKH3UHVLGHQWWRH[HUFLVHKLV
UHDOLJQPHQW SRZHU WKHUH PXVW ILUVW EH VDYLQJV IURP RWKHU LWHPV LQ
WKH *$$ DSSURSULDWHG WR WKH GHSDUWPHQWVEXUHDXV DQG RIILFHV RI WKH
([HFXWLYH EUDQFK DQG VXFK VDYLQJV FDQ EH UHDOLJQHG RQO\ WR H[LVWLQJ
LWHPV RIDSSURSULDWLRQVZLWKLQWKH([HFXWLYHEUDQFK
:KHQGRIXQGVIRUDQLWHPLQWKH*$$EHFRPHVDYLQJV"6HFWLRQ6HFWLRQDQG6HFWLRQRIWKHDQG*$$VUHVSHFWLYHO\XQLIRUPO\GHILQHWKHWHUPVDYLQJVDVIROORZV
6DYLQJV UHIHU WR SRUWLRQV RU EDODQFHV RI DQ\ SURJUDPPHG
DSSURSULDWLRQ LQ WKLV $FW IUHH IURP DQ\ REOLJDWLRQ
RUHQFXPEUDQFHZKLFKDUH
LVWLOODYDLODEOHDIWHUWKHFRPSOHWLRQRUILQDOGLVFRQWLQXDQFHRUDEDQGRQPHQWRIWKHZRUNDFWLYLW\RUSXUSRVHIRUZKLFKWKHDSSURSULDWLRQLVDXWKRUL]HG
LL IURP DSSURSULDWLRQV EDODQFHV DULVLQJ IURP XQSDLG FRPSHQVDWLRQ
DQG UHODWHG FRVWV SHUWDLQLQJ WR YDFDQW
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
SRVLWLRQVDQGOHDYHVRIDEVHQFHZLWKRXWSD\DQG
LLL
IURPDSSURSULDWLRQVEDODQFHVUHDOL]HGIURPWKHLPSOHPHQWDWLRQRIPHDVXUHVUHVXOWLQJLQ
LPSURYHGV\VWHPVDQGHIILFLHQFLHVDQGWKXVHQDEOHGDJHQFLHVWRPHHWDQGGHOLYHUWKHUHTXLUHGRUSODQQHGWDUJHWVSURJUDPVDQGVHUYLFHVDSSURYHGLQWKLV$FWDWDOHVVHUFRVW%ROGIDFLQJVXSSOLHG
7KHVDPHGHILQLWLRQRIVDYLQJVLVDOVRIRXQGLQWKH*$$VIURPWR3ULRUWRWKHGHILQLWLRQRIVDYLQJVLQWKH*$$VGLGQRWFRQWDLQLWHPLLLDERYH
$VFOHDUO\GHILQHG LQ WKHDQG*$$VVDYLQJVPXVWEHSRUWLRQVRUEDODQFHV
IURPDQ\SURJUDPPHGDSSURSULDWLRQIUHHIURPDQ\REOLJDWLRQRUHQFXPEUDQFHZKLFKPHDQVWKHUHLVQRFRQWUDFWREOLJDWLQJSD\PHQWRXWRIVXFKSRUWLRQVRUEDODQFHVRIWKHDSSURSULDWLRQ2WKHUZLVHLIWKHUHLVDOUHDG\DFRQWUDFWREOLJDWLQJSD\PHQWRXWRIVXFKSRUWLRQVRUEDODQFHVWKHIXQGVDUHQRWIUHHIURPDQ\REOLJDWLRQDQGWKXVFDQQRWFRQVWLWXWHVDYLQJV
6HFWLRQ 6HFWLRQ DQG6HFWLRQ RI WKH*HQHUDO3URYLVLRQV RI WKH
DQG*$$V
UHVSHFWLYHO\FRQWHPSODWHWKUHHVRXUFHVRIVDYLQJV)LUVWWKHUHFDQEHVDYLQJVZKHQWKHUHDUHIXQGVVWLOODYDLODEOHDIWHUFRPSOHWLRQRI
WKHZRUN DFWLYLW\ RU SURMHFWZKLFKPHDQV WKHUH DUH H[FHVV IXQGV
UHPDLQLQJ DIWHU WKHZRUN DFWLYLW\ RU SURMHFW
LVFRPSOHWHG7KHUHFDQDOVREHVDYLQJVZKHQWKHUHLVILQDOGLVFRQWLQXDQFHRIWKHZRUNDFWLYLW\RUSURMHFWZKLFKPHDQVWKHUHDUHIXQGVUHPDLQLQJDIWHUWKHZRUNDFWLYLW\RUSURMHFWZDVVWDUWHGEXWILQDOO\GLVFRQWLQXHGEHIRUHFRPSOHWLRQ7RLOOXVWUDWHDEULGJHKDOIZD\FRPSOHWHG
LVGHVWUR\HGE\ IORRGVRUHDUWKTXDNHDQG WKXV
ILQDOO\GLVFRQWLQXHGEHFDXVHWKH UHPDLQLQJ IXQGV DUH QRW VXIILFLHQW WR
UHEXLOG DQG FRPSOHWH WKH EULGJH +HUH WKH IXQGV DUH REOLJDWHG EXW
WKHUHPDLQLQJ IXQGVDUHGHREOLJDWHGXSRQ ILQDOGLVFRQWLQXDQFHRI
WKHSURMHFW2Q WKHRWKHUKDQGDEDQGRQPHQWPHDQVWKHZRUN DFWLYLW\ RU
SURMHFW FDQQR ORQJHU EH VWDUWHGEHFDXVHRI ODFNRI WLPH WRREOLJDWH WKH
IXQGV UHVXOWLQJ LQ
WKHSK\VLFDOLPSRVVLELOLW\WRREOLJDWHWKHIXQGV7KLVKDSSHQVZKHQDPRQWKRUWZREHIRUHWKHHQGRIWKHILVFDO\HDUWKHUHLV
QRPRUH WLPH WR FRQGXFW D SXEOLF ELGGLQJ WR REOLJDWH WKH IXQGV+HUH
WKH IXQGV DUH QRW DQG FDQ QR ORQJHU EHREOLJDWHGDQG WKXVZLOO
FRQVWLWXWH VDYLQJV)LQDO GLVFRQWLQXDQFHRU DEDQGRQPHQW H[FOXGHV
VXVSHQVLRQRU WHPSRUDU\VWRSSDJHRIWKHZRUNDFWLYLW\RUSURMHFW
6HFRQG WKHUHFDQEHVDYLQJVZKHQ WKHUH LVXQSDLGFRPSHQVDWLRQDQG
UHODWHGFRVWVSHUWDLQLQJ
WRYDFDQWSRVLWLRQV7KLUGWKHUHFDQEHVDYLQJVIURPFRVWFXWWLQJPHDVXUHVDGRSWHGE\JRYHUQPHQWDJHQFLHV
6HFWLRQ &KDSWHU %RRN 9, RI WKH $GPLQLVWUDWLYH &RGH RI
DXWKRUL]HV WKH 3UHVLGHQW ZKHQHYHU LQ
KLVMXGJPHQWSXEOLFLQWHUHVWUHTXLUHVWRVXVSHQGRURWKHUZLVHVWRSIXUWKHUH[SHQGLWXUHRIIXQGVDOORWWHGIRUDQ\DJHQF\RUDQ\RWKHUH[SHQGLWXUHDXWKRUL]HGLQWKH*$$)RUH[DPSOHLIWKHUHDUHUHSRUWHGDQRPDOLHVLQWKHFRQVWUXFWLRQRIDEULGJHWKH3UHVLGHQWFDQRUGHUWKHVXVSHQVLRQRIH[SHQGLWXUHVRIIXQGVXQWLODQLQYHVWLJDWLRQLVFRPSOHWHG7KLVLVRQO\D
WHPSRUDU\DQGQRWD ILQDO GLVFRQWLQXDQFHRI WKHZRUNDQG WKXV WKH IXQGV
UHPDLQREOLJDWHG6HFWLRQGRHVQRWVSHDNRIVDYLQJVRUUHDOLJQPHQW6HFWLRQGRHVQRWUHIHUWRZRUNDFWLYLW\RUSURMHFWWKDWLVILQDOO\GLVFRQWLQXHGZKLFKLV
UHTXLUHG IRU WKH H[LVWHQFH RI VDYLQJV 6HFWLRQ UHIHUV RQO\ WR
VXVSHQVLRQ RI H[SHQGLWXUH RI IXQGV QRW
ILQDOGLVFRQWLQXDQFHRIZRUNDFWLYLW\RUSURMHFW8QGHU6HFWLRQ WKH IXQGV
UHPDLQREOLJDWHGDQG WKXVFDQQRWFRQVWLWXWHVDYLQJV
)XQGVZKLFKDUHWHPSRUDULO\QRWVSHQWXQGHU6HFWLRQDUHQRWVDYLQJVWKDWFDQEHUHDOLJQHGE\WKH3UHVLGHQW2QO\IXQGV
WKDW TXDOLI\ DV VDYLQJV XQGHU 6HFWLRQ 6HFWLRQ DQG 6HFWLRQ RI WKH
DQG *$$VUHVSHFWLYHO\ FDQEH UHDOLJQHG ,I WKHZRUN DFWLYLW\RU SURJUDP
LVPHUHO\ VXVSHQGHG WKHUHDUHQRVDYLQJVEHFDXVHWKHUH LVQR
ILQDOGLVFRQWLQXDQFHRI WKHZRUNDFWLYLW\RUSURMHFW ,I
WKHZRUNDFWLYLW\RUSURMHFW LVRQO\VXVSHQGHG
WKHIXQGVUHPDLQREOLJDWHG,IWKH3UHVLGHQWVWRSVIXUWKHUH[SHQGLWXUHRIIXQGVLWPHDQVWKDWWKHZRUNDFWLYLW\RUSURMHFWKDVDOUHDG\VWDUWHGDQGWKHIXQGVKDYHDOUHDG\EHHQREOLJDWHG$Q\GLVFRQWLQXDQFHPXVWEHILQDOEHIRUHWKHXQXVHGIXQGVDUHGHREOLJDWHGWRFRQVWLWXWHVDYLQJVWKDWFDQEHUHDOLJQHG
7RUHSHDWIXQGVSHUWDLQLQJWRZRUNDFWLYLW\RUSURMHFWPHUHO\VXVSHQGHGRUWHPSRUDULO\GLVFRQWLQXHGE\WKH3UHVLGHQWDUHQRWVDYLQJV2QO\IXQGVUHPDLQLQJDIWHUWKHZRUNDFWLYLW\RUSURMHFWKDVEHHQILQDOO\GLVFRQWLQXHGRUDEDQGRQHGZLOOFRQVWLWXWH
VDYLQJV WKDW FDQ EH UHDOLJQHG E\ WKH 3UHVLGHQW WR DXJPHQW H[LVWLQJ
LWHPV LQ WKH DSSURSULDWLRQV IRU WKH([HFXWLYHEUDQFK
,,,7KH'$31%&DQG2WKHU([HFXWLYH,VVXDQFHV5HODWHGWR'$3
$8QREOLJDWHG$OORWPHQWVDUHQRW6DYLQJV
,Q WKHSUHVHQWFDVHV
WKH'$3DQG1%&GLUHFWHGWKHZLWKGUDZDORIXQREOLJDWHGDOORWPHQWVRIDJHQFLHVZLWK
ORZOHYHORIREOLJDWLRQVDVRI-XQH7KHIXQGVZLWKGUDZQDUHWKHQXVHGWRDXJPHQWRUIXQGSULRULW\DQGRUIDVWPRYLQJSURJUDPVSURMHFWVRIWKHQDWLRQDOJRYHUQPHQW
1%&VWDWHV
)RU WKH ILUVW ILYHPRQWKVRI WKH1DWLRQDO*RYHUQPHQWKDVQRWPHW
LWVVSHQGLQJ WDUJHWV ,QRUGHU
WRDFFHOHUDWHVSHQGLQJDQGVXVWDLQWKHILVFDOWDUJHWVGXULQJWKH\HDUH[SHQGLWXUHPHDVXUHVKDYHWREHLPSOHPHQWHGWRRSWLPL]HWKHXWLOL]DWLRQRIDYDLODEOHUHVRXUFHV
[[[[
,QOLQHZLWKWKLVWKH3UHVLGHQWSHUGLUHFWLYHGDWHG-XQHDXWKRUL]HGWKHZLWKGUDZDORIXQREOLJDWHGDOORWPHQWVRI
DJHQFLHV ZLWK ORZ OHYHOV RI REOLJDWLRQV DV RI -XQH ERWK IRU
FRQWLQXLQJ DQG FXUUHQW DOORWPHQWV
7KLVPHDVXUHZLOODOORZWKHPD[LPXPXWLOL]DWLRQRIDYDLODEOHDOORWPHQWVWRIXQGDQGXQGHUWDNHRWKHUSULRULW\H[SHQGLWXUHVRIWKHQDWLRQDOJRYHUQPHQW%ROGIDFLQJVXSSOLHG
([FHSW IRU 022( IRU SUHYLRXV PRQWKV XQREOLJDWHG DOORWPHQWV RI
DJHQFLHV ZLWK ORZ OHYHOV RI REOLJDWLRQV DUH QRW
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
VDYLQJVWKDWFDQEHUHDOLJQHGE\WKH3UHVLGHQWWRIXQGSULRULW\SURMHFWVRIWKHJRYHUQPHQW,QWKHPLGGOHRIWKHILVFDO\HDUXQREOLJDWHGDSSURSULDWLRQVRWKHUWKDQ022(IRUSUHYLRXVPRQWKVGRQRWDXWRPDWLFDOO\EHFRPHVDYLQJVIRUWKHUHDVRQDORQHWKDWWKHDJHQF\KDVDORZOHYHORIREOLJDWLRQV$VRI-XQHRIDILVFDO\HDUWKHUHDUHVWLOOVL[PRQWKVOHIWWRREOLJDWHWKHIXQGV6L[PRQWKVDUHPRUHWKDQHQRXJKWLPHWRFRQGXFWSXEOLFELGGLQJWRREOLJDWHWKHIXQGV$VRI-XQHWKHUHFRXOGKDYHEHHQQRILQDODEDQGRQPHQWRIDQ\ZRUNDFWLYLW\RUSURMHFWEHFDXVHWKHUHZDVVWLOODPSOHWLPHWRREOLJDWHWKHIXQGV
+RZHYHULIWKHIXQGVDUHQRW\HWREOLJDWHGE\WKHHQGRI1RYHPEHUDQGWKHLWHPLQYROYHVDFRQVWUXFWLRQSURMHFWWKHQLWPD\EHSK\VLFDOO\
LPSRVVLEOH WRREOLJDWH WKH IXQGVEHFDXVHDSXEOLFELGGLQJZLOO WDNHDW
OHDVWDPRQWK ,Q
VXFKDFDVHWKHUHFDQEHDILQDODEDQGRQPHQWRIWKHZRUNDFWLYLW\RUSURMHFW
,Q WKH FDVH RI DSSURSULDWLRQV IRU022( WKH VDPH DUH GHHPHG
GLYLGHG LQWR WZHOYHPRQWKO\ DOORFDWLRQV ([FHVV
RUXQXVHG022(DSSURSULDWLRQVIRUWKHPRQWKRWKHUWKDQ0DQGDWRU\([SHQGLWXUHVDQG([SHQGLWXUHVIRU%XVLQHVVW\SH$FWLYLWLHV
DUH GHHPHG VDYLQJV DIWHU WKH HQG RI WKHPRQWK EHFDXVH WKHUH LV D
SK\VLFDO LPSRVVLELOLW\ WR REOLJDWH
DQGVSHQGVXFKIXQGVDV022(IRUDSHULRGWKDWKDVDOUHDG\ODSVHG6XFKH[FHVVRUXQXVHG022(FDQEHUHDOLJQHGE\WKH3UHVLGHQWWRDXJPHQWDQ\H[LVWLQJLWHPRIDSSURSULDWLRQIRUWKH([HFXWLYHEUDQFK022(IRUIXWXUHPRQWKVDUHQRWVDYLQJVDQGFDQQRWEHUHDOLJQHG
7KH26*FODLPV WKDW WKH'$3ZKLFK LV XVHG WR IXQGSULRULW\ DQGRU
IDVWPRYLQJ SURJUDPVSURMHFWV RI WKH QDWLRQDOJRYHUQPHQW LV DQ
H[HUFLVH RI WKH 3UHVLGHQWV SRZHU WR UHDOLJQ VDYLQJV +RZHYHU H[FHSW
IRU 022( IRU SUHYLRXVPRQWKV WKH'$3IXQGVXVHG IRU
UHDOLJQPHQWXQGHU1%&GRQRWTXDOLI\DVVDYLQJVXQGHU6HFWLRQ6HFWLRQDQG6HFWLRQRIWKH*HQHUDO3URYLVLRQVRIWKHDQG*$$VUHVSHFWLYHO\8QREOLJDWHGDOORWPHQWVIRU&DSLWDO2XWOD\DVZHOODV022(IRU-XO\
WR'HFHPEHURIDJHQFLHVZLWK ORZOHYHORIREOLJDWLRQVDVRI-XQH DUH
GHILQLWHO\ QRW VDYLQJV 7KH ORZ OHYHO RI REOLJDWLRQV E\ DJHQFLHV DV
RI -XQH LV QRW RQH RI WKHFRQGLWLRQVIRU
WKHH[LVWHQFHRIVDYLQJVXQGHUWKH*HQHUDO3URYLVLRQVRI
WKHDQG*$$V7RUHSHDWXQREOLJDWHGDOORWPHQWVZLWKGUDZQXQGHU1%&H[FHSWIRUH[FHVVRUXQXVHG022(IURP-DQXDU\WR-XQHGRQRW
FRQVWLWXWH VDYLQJV DQG FDQQRW EH UHDOLJQHG E\ WKH3UHVLGHQW
7KHZLWKGUDZDO RI VXFK XQREOLJDWHG DOORWPHQWV
RIDJHQFLHVZLWKORZOHYHORIREOLJDWLRQVDVRI-XQHIRUSXUSRVHVRIUHDOLJQPHQWYLRODWHV6HFWLRQ$UWLFOH9,RIWKH&RQVWLWXWLRQ7KXVVXFKZLWKGUDZDODQGUHDOLJQPHQWRIIXQGVXQGHU1%&DUHXQFRQVWLWXWLRQDO
7KH26*VFRQWHQWLRQWKDWWKH3UHVLGHQWPD\GLVFRQWLQXHRUDEDQGRQDSURMHFWDVHDUO\DVWKHWKLUGPRQWKRIWKHILVFDO\HDUXQGHU6HFWLRQ&KDSWHU%RRN9,RI
WKH$GPLQLVWUDWLYH&RGHLVFOHDUO\PLVSODFHG6HFWLRQUHIHUVRQO\WRVXVSHQVLRQRUVWRSSDJHRIH[SHQGLWXUHRIREOLJDWHG
IXQGVDQGQRW WR
ILQDOGLVFRQWLQXDQFHRUDEDQGRQPHQWRIZRUNDFWLYLW\RUSURMHFW
8QGHU1%&DSSURSULDWLRQVIRU&DSLWDO2XWOD\VDUHVRXUFHVRI'$3IXQGV+RZHYHUWKHZLWKGUDZDORIXQREOLJDWHGDOORWPHQWVIRU&DSLWDO2XWOD\VDVRI-XQHYLRODWHVWKH*HQHUDO3URYLVLRQVRIWKHDQG*$$V
6HFWLRQRIWKH*HQHUDO3URYLVLRQVRIWKH*$$SURYLGHV
6HF $YDLODELOLW\ RI $SSURSULDWLRQV $SSURSULDWLRQV IRU022( DQG
FDSLWDO RXWOD\V DXWKRUL]HG LQ WKLV $FW VKDOO EHDYDLODEOH IRU
UHOHDVH DQG REOLJDWLRQ IRU WKH SXUSRVH VSHFLILHG DQG XQGHU WKH VDPH
VSHFLDO SURYLVLRQV DSSOLFDEOHWKHUHWR IRU D SHULRG H[WHQGLQJ WR RQH
ILVFDO \HDU DIWHU WKH HQGRI WKH \HDU LQZKLFK VXFK LWHPVZHUH
DSSURSULDWHG3529,'('7KDWDSSURSULDWLRQVIRU022(DQGFDSLWDORXWOD\VXQGHU5$1RVKDOOEHPDGHDYDLODEOHXSWRWKHHQGRI)
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
%8QODZIXOUHOHDVHRIWKH8QSURJUDPPHG)XQG
2QHRI WKHVRXUFHVRI WKH'$3 LV WKH8QSURJUDPPHG)XQGXQGHU
WKH*$$7KHSURYLVLRQVRQ WKH8QSURJUDPPHG)XQGXQGHUWKHDQG*$$VVWDWH
*$$$UWLFOH;/9
6SHFLDO3URYLVLRQV
5HOHDVHRI)XQG7KHDPRXQWVDXWKRUL]HGKHUHLQVKDOOEHUHOHDVHGRQO\ZKHQWKHUHYHQXHFROOHFWLRQVH[FHHGWKHRULJLQDOUHYHQXHWDUJHWVVXEPLWWHGE\WKH3UHVLGHQWRIWKH3KLOLSSLQHVWR&RQJUHVVSXUVXDQWWR6HFWLRQ$UWLFOH9,,RIWKH&RQVWLWXWLRQLQFOXGLQJVDYLQJVJHQHUDWHGIURPSURJUDPPHGDSSURSULDWLRQVIRUWKH\HDU[[[%ROGIDFLQJVXSSOLHG
*$$$UWLFOH;/9,
5HOHDVHRI)XQG7KHDPRXQWVDXWKRUL]HGKHUHLQVKDOOEHUHOHDVHGRQO\ZKHQWKHUHYHQXHFROOHFWLRQVH[FHHGWKHRULJLQDOUHYHQXHWDUJHWVVXEPLWWHGE\WKH3UHVLGHQWRIWKH3KLOLSSLQHVWR&RQJUHVVSXUVXDQWWR6HFWLRQ$UWLFOH9,,RIWKH&RQVWLWXWLRQ[[[%ROGIDFLQJVXSSOLHG
*$$$UWLFOH;/9
5HOHDVHRI)XQG7KHDPRXQWVDXWKRUL]HGKHUHLQVKDOOEHUHOHDVHGRQO\ZKHQWKHUHYHQXHFROOHFWLRQVH[FHHGWKHRULJLQDOUHYHQXHWDUJHWVVXEPLWWHGE\WKH3UHVLGHQWRIWKH3KLOLSSLQHVWR&RQJUHVVSXUVXDQWWR6HFWLRQ$UWLFOH9,,RIWKH&RQVWLWXWLRQLQFOXGLQJFROOHFWLRQVDULVLQJIURPVRXUFHVQRWFRQVLGHUHGLQWKHDIRUHVDLGRULJLQDOUHYHQXHWDUJHWVDVFHUWLILHGE\WKH%WU[[[%ROGIDFLQJVXSSOLHG
,W LV FOHDU IURP WKHVH SURYLVLRQV WKDW DV D FRQGLWLRQ IRU WKH
UHOHDVH RI WKH 8QSURJUDPPHG )XQG WKH
UHYHQXHFROOHFWLRQVDVFHUWLILHGE\WKH1DWLRQDO7UHDVXUHUPXVWH[FHHGWKHRULJLQDOUHYHQXHWDUJHWVVXEPLWWHGE\WKH3UHVLGHQWWR&RQJUHVV'XULQJWKH2UDO$UJXPHQWVRQ-DQXDU\WKH26*DVVXUHGWKH&RXUWWKDWWKHUHYHQXHFROOHFWLRQVH[FHHGHGWKHRULJLQDOUHYHQXHWDUJHWVIRUILVFDO\HDUVDQG,UHTXLUHGWKH6ROLFLWRU*HQHUDOWRVXEPLWWRWKH&RXUWDFHUWLILHGWUXHFRS\RIWKHFHUWLILFDWLRQVE\WKH%XUHDXRI7UHDVXU\WKDWWKHUHYHQXHFROOHFWLRQVH[FHHGHGWKH
RULJLQDO UHYHQXH WDUJHWV IRU DQG 7KH WUDQVFULSW RI WKH2UDO
$UJXPHQWV VKRZHG WKH IROORZLQJH[FKDQJH
-867,&(&$53,2
&RXQVHO\RXVWDWHGLQ\RXUFRPPHQWWKDWRQHRIWKHVRXUFHVRI'$3LVWKH8QSURJUDPPHG)XQGLVWKDWFRUUHFW"
62/*(1-$5'(/(=$
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
,Q D 5HVROXWLRQ GDWHG -DQXDU\ WKH &RXUW GLUHFWHG WKH 26* WR
VXEPLW WKH FHUWLILFDWLRQV E\ WKH %XUHDX
RI7UHDVXU\LQDFFRUGDQFHZLWKWKHXQGHUWDNLQJRIWKH6ROLFLWRU*HQHUDOGXULQJWKH2UDO$UJXPHQWV
2Q)HEUXDU\WKH26*VXEPLWWHGLWV&RPSOLDQFHDWWDFKLQJWKHIROORZLQJFHUWLILFDWLRQV
&HUWLILFDWLRQGDWHG)HEUXDU\VLJQHGE\5RVDOLD9'H/HRQ7UHDVXUHURIWKH3KLOLSSLQHV,WVWDWHV
7KLV LV WR FHUWLI\ WKDW EDVHG RQ WKH UHFRUGV RI WKH %XUHDX RI
7UHDVXU\ WKH DPRXQWV LQGLFDWHG LQ WKH
DWWDFKHG&HUWLILFDWLRQRIWKH'HSDUWPHQWRI)LQDQFHGDWHG0DUFKSHUWDLQLQJWRWKHSURJUDPPHGGLYLGHQGLQFRPHIURPVKDUHVRIVWRFNVLQJRYHUQPHQWRZQHGRUFRQWUROOHGFRUSRUDWLRQVIRUDQGWRWKHUHFRUGHGGLYLGHQGLQFRPHDVRI-DQXDU\DUHDFFXUDWH
7KLV&HUWLILFDWLRQLVLVVXHGWKLVWKGD\RI)HEUXDU\
7KLVLVWRFHUWLI\WKDWXQGHUWKH%XGJHWIRU([SHQGLWXUHVDQG6RXUFHVRI)LQDQFLQJIRUWKHSURJUDPPHGLQFRPHIURPGLYLGHQGVIURPVKDUHVRIVWRFNLQJRYHUQPHQWRZQHGDQGFRQWUROOHGFRUSRUDWLRQVLV3ELOOLRQ
7KLVLVWRFHUWLI\IXUWKHUWKDWEDVHGRQWKHUHFRUGVRIWKH%XUHDXRI7UHDVXU\WKH1DWLRQDO*RYHUQPHQWKDVUHFRUGHGGLYLGHQGLQFRPHDPRXQWLQJRI3ELOOLRQDVRI-DQXDU\
&HUWLILFDWLRQGDWHG$SULOVLJQHGE\5REHUWR%7DQ7UHDVXUHURIWKH3KLOLSSLQHV,WVWDWHV
7KLV LV WR FHUWLI\ WKDW WKH DFWXDO GLYLGHQG FROOHFWLRQV UHPLWWHG
WR WKH1DWLRQDO*RYHUQPHQW IRU WKH SHULRG -DQXDU\
WR0DUFKDPRXQWHGWR3ELOOLRQFRPSDUHGWRWKHIXOO\HDUSURJUDPRI3ELOOLRQIRU
&HUWLILFDWLRQGDWHG-XO\VLJQHGE\5RVDOLD9'H/HRQ7UHDVXUHURIWKH3KLOLSSLQHVZKLFKVWDWHV
7KLVLVWRFHUWLI\WKDWWKHDFWXDOGLYLGHQGFROOHFWLRQVUHPLWWHGWRWKH1DWLRQDO*RYHUQPHQWIRUWKHSHULRG-DQXDU\WR0D\DPRXQWHGWR3ELOOLRQFRPSDUHGWRWKHIXOO\HDUSURJUDPRI3ELOOLRQIRU
0RUHRYHU WKH 1DWLRQDO *RYHUQPHQW DFFRXQWHG IRU WKH VDOH RI ULJKW
WR EXLOG DQG RSHUDWH WKH 1$,$
H[SUHVVZD\DPRXQWLQJWR3ELOOLRQLQ-XQH
7KHFHUWLILFDWLRQVVXEPLWWHGE\WKH26*DUHQRWFRPSOLDQWZLWKWKH&RXUWVGLUHFWLYH7KHFHUWLILFDWLRQVGRQRWVWDWHWKDWWKHUHYHQXHFROOHFWLRQVH[FHHGHGWKHRULJLQDOUHYHQXHWDUJHWVDVVXEPLWWHGE\WKH3UHVLGHQWWR&RQJUHVV([FHSWIRUWKH
3 ELOOLRQ 1$,$ H[SUHVVZD\ UHYHQXH WKH FHUWLILFDWLRQV UHIHU VROHO\
WR GLYLGHQG FROOHFWLRQV DQG SURJUDPPHGWDUJHW GLYLGHQGV DQG QRW WR
H[FHVV UHYHQXH FROOHFWLRQV DV DJDLQVW UHYHQXH WDUJHWV 3URJUDPPHG
GLYLGHQGV
IURPJRYHUQPHQWRZQHGRUFRQWUROOHGFRUSRUDWLRQVFRQVWLWXWHRQO\DSRUWLRQRI
WKHRULJLQDO UHYHQXH
WDUJHWVDQGGLYLGHQGFROOHFWLRQVIURPJRYHUQPHQWRZQHGRUFRQWUROOHGFRUSRUDWLRQVFRQVWLWXWHRQO\DSRUWLRQRIWKHWRWDOUHYHQXHFROOHFWLRQV7KH
5HYHQXH 3URJUDP E\ VRXUFH RI WKH JRYHUQPHQW LV GLYLGHG LQWR 7D[
5HYHQXHV DQG 1RQ7D[ 5HYHQXHV'LYLGHQGV IURP JRYHUQPHQWRZQHG DQG
FRQWUROOHG FRUSRUDWLRQV FRQVWLWXWH RQO\ RQH RI WKH LWHPV LQ
1RQ7D[5HYHQXHV1RQ7D[5HYHQXHVFRQVLVWRIDOOLQFRPHFROOHFWHGE\WKH%XUHDXRI7UHDVXU\SULYDWL]DWLRQSURFHHGVDQGIRUHLJQJUDQWV7KHEXONRIWKHVHUHYHQXHVFRPHVIURPWKH%7UVLQFRPHZKLFKFRQVLVWVDPRQJRWKHUVRIGLYLGHQGVRQVWRFNV
DQG WKH LQWHUHVW RQ WKH QDWLRQDO JRYHUQPHQWV GHSRVLWV
1RQ7D[5HYHQXHV LQFOXGH DOO ZLQGIDOO LQFRPH $Q\LQFRPHQRW
IDOOLQJXQGHU7D[5HYHQXHVQHFHVVDULO\ IDOOVXQGHU1RQ7D[5HYHQXHV)RU
WKHWRWDOSURJUDPPHGWDUJHW 7D[ DQG 1RQ7D[ 5HYHQXHV RI WKH JRYHUQPHQW
ZDV 3 WULOOLRQ IRU 3 WULOOLRQ DQG IRU 3WULOOLRQ
&OHDUO\ WKH'%0KDVIDLOHGWRVKRZWKDW WKHH[SUHVVFRQGLWLRQ LQ
WKHDQG*$$VIRU WKHXVHRI
WKH8QSURJUDPPHG)XQGKDVEHHQPHW7KXVGLVEXUVHPHQWV IURP
WKH8QSURJUDPPHG)XQG
LQDQGXQGHUWKH'$3DQG1%&ZHUHLQYLRODWLRQRIWKHODZ
$W DQ\ UDWH GLYLGHQGV IURP JRYHUQPHQWRZQHG RU FRQWUROOHG
FRUSRUDWLRQV DUH QRW VDYLQJV EXW UHYHQXHV OLNH WD[FROOHFWLRQV WKDW
JR GLUHFWO\ WR WKH 1DWLRQDO 7UHDVXU\ LQ DFFRUGDQFH ZLWK 6HFWLRQ
&KDSWHU %RRN 9, RI WKH$GPLQLVWUDWLYH&RGHRIZKLFKVWDWHV
6(&$FFUXDORI,QFRPHWR8QDSSURSULDWHG6XUSOXVRIWKH*HQHUDO)XQG8QOHVVRWKHUZLVHVSHFLILFDOO\SURYLGHGE\ODZDOO
LQFRPHDFFUXLQJWRWKHGHSDUWPHQWVRIILFHVDQGDJHQFLHVE\YLUWXHRI
WKHSURYLVLRQVRIH[LVWLQJ ODZVRUGHUVDQG UHJXODWLRQVVKDOOEHGHSRVLWHG
LQ WKH1DWLRQDO7UHDVXU\RU LQ WKHGXO\DXWKRUL]HGGHSRVLWRU\RI
WKH*RYHUQPHQWDQG VKDOO DFFUXH WR WKH XQDSSURSULDWHG VXUSOXV RI WKH
*HQHUDO )XQG RI WKH *RYHUQPHQW 3URYLGHG 7KDW DPRXQWVUHFHLYHG LQ
WUXVW DQG IURP EXVLQHVV W\SH DFWLYLWLHV RI JRYHUQPHQW PD\ EH
VHSDUDWHO\ UHFRUGHG DQG GLVEXUVHG
LQDFFRUGDQFHZLWKVXFKUXOHVDQGUHJXODWLRQVDVPD\EHGHWHUPLQHGE\
WKH3HUPDQHQW&RPPLWWHHFUHDWHGXQGHU WKLV$FW
'LYLGHQGVIRUPSDUWRIWKHXQDSSURSULDWHGVXUSOXVRIWKH*HQHUDO)XQGRIWKH*RYHUQPHQWDQGWKH\FDQQRWEHVSHQWXQOHVVWKHUHLVDQDSSURSULDWLRQVODZ7KHVDPHUXOHDSSOLHVWRZLQGIDOOUHYHQXHFROOHFWLRQVZKLFKDOVRIRUPSDUWRIWKHXQDSSURSULDWHG*HQHUDO)XQG3URFHHGVIURPVDOHVRIJRYHUQPHQWDVVHWVDUHQRWVDYLQJVEXWUHYHQXHVWKDWDOVRJRGLUHFWO\
WR WKH1DWLRQDO 7UHDVXU\6DYLQJV FDQRQO\ FRPH IURP WKH WKUHH VRXUFHV
H[SUHVVO\ VSHFLILHG LQ6HFWLRQ
6HFWLRQDQG6HFWLRQRIWKH*HQHUDO3URYLVLRQVRIWKHDQG*$$VUHVSHFWLYHO\
%HVLGHV E\ GHILQLWLRQ VDYLQJV FDQ QHYHU FRPH IURP WKH
8QSURJUDPPHG )XQG VLQFH WKH WHUP VDYLQJV LV
GHILQHGXQGHUWKH*$$VDVSRUWLRQVRUEDODQFHVRIDQ\SURJUDPPHGDSSURSULDWLRQ7KH8QSURJUDPPHG)XQGFDQRQO\EHXVHGIRUWKHVSHFLILFSXUSRVHSUHVFULEHGLQWKH*$$VDQGRQO\LIWKHUHYHQXHFROOHFWLRQVH[FHHGWKHRULJLQDOUHYHQXHWDUJHWVIRUWKHILVFDO\HDU
6HFWLRQ RI WKH *HQHUDO 3URYLVLRQV RI WKH DQG *$$V XQLIRUPO\
SURYLGH WKDW DOO IHHV
FKDUJHVDVVHVVPHQWVDQGRWKHUUHFHLSWVRUUHYHQXHVFROOHFWHGE\GHSDUWPHQWVEXUHDXVRIILFHVRUDJHQFLHVLQWKHH[HUFLVHRI
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
WKHLU IXQFWLRQVVKDOOEHGHSRVLWHGZLWK WKH1DWLRQDO7UHDVXU\DV
LQFRPHRI WKH*HQHUDO)XQG LQDFFRUGDQFHZLWK
WKHSURYLVLRQVRIWKH$GPLQLVWUDWLYH&RGHDQG6HFWLRQRI3UHVLGHQWLDO'HFUHH1R6XFKLQFRPHDUHQRWVDYLQJVDVXQGHUVWRRGDQGGHILQHGLQWKH*$$V
7RUHSHDWGLYLGHQGFROOHFWLRQVRIJRYHUQPHQWRZQHGDQGFRQWUROOHGFRUSRUDWLRQVGRQRWTXDOLI\DVVDYLQJVDVGHILQHGLQ6HFWLRQ6HFWLRQDQG6HFWLRQRIWKH*HQHUDO3URYLVLRQVRIWKHDQG*$$VUHVSHFWLYHO\'LYLGHQGFROOHFWLRQVDUHUHYHQXHVWKDWJRGLUHFWO\WRWKH1DWLRQDO7UHDVXU\7KH8QSURJUDPPHG)XQGXQGHUWKHDQG*$$VFDQRQO\EHUHOHDVHGZKHQUHYHQXHFROOHFWLRQVH[FHHGWKHRULJLQDOUHYHQXHWDUJHWV7KH'%0PLVHUDEO\
IDLOHG WRVKRZDQ\H[FHVV UHYHQXHFROOHFWLRQVGXULQJ WKHSHULRG WKH'$3ZDV
LPSOHPHQWHG7KHUHIRUH
LQYLRODWLRQRIWKH*$$VWKH([HFXWLYHXVHGWKH8QSURJUDPPHG)XQGZLWKRXWFRPSO\LQJZLWKWKHH[SUHVVFRQGLWLRQIRULWVXVH
WKDW UHYHQXH FROOHFWLRQV RI WKH JRYHUQPHQW H[FHHG WKH RULJLQDO
UHYHQXH WDUJHW DV FHUWLILHG E\
WKH%XUHDXRI7UHDVXU\,QRWKHUZRUGVWKHXVHRIWKH8QSURJUDPPHG)XQGXQGHUWKH'$3LVXQODZIXODQGKHQFHYRLG
&'$3YLRODWHVWKHFRQVWLWXWLRQDOSURKLELWLRQRQFURVVERUGHUWUDQVIHUV
6HFWLRQ$UWLFOH9,RIWKH&RQVWLWXWLRQPDQGDWHVWKDWVDYLQJVIURPRQHJRYHUQPHQWEUDQFKFDQQRWEHWUDQVIHUUHGWRDQRWKHUEUDQFKDQGYLFHYHUVD7KLVFRQVWLWXWLRQDOSURKLELWLRQRQFURVVERUGHUWUDQVIHUVLVFOHDUWKH3UHVLGHQWWKH6HQDWH3UHVLGHQW
WKH6SHDNHU RI WKH+RXVH RI5HSUHVHQWDWLYHV WKH&KLHI -XVWLFH DQG
WKH+HDGV RI FRQVWLWXWLRQDOERGLHV DUH RQO\ DXWKRUL]HG WR DXJPHQW DQ\
LWHP LQ WKH JHQHUDO DSSURSULDWLRQV ODZ IRU WKHLU UHVSHFWLYH RIILFHV
IURPVDYLQJVLQRWKHULWHPVRIWKHLUUHVSHFWLYHDSSURSULDWLRQV
&RQWUDU\WR6HFWLRQ$UWLFOH9,RIWKH&RQVWLWXWLRQWKHUHZHUHLQVWDQFHVRIFURVVERUGHUWUDQVIHUVXQGHUWKH'$3,Q
WKH LQWHUSHOODWLRQ E\ -XVWLFH %HUVDPLQ GXULQJ WKH 2UDO $UJXPHQWV
%XGJHW 6HFUHWDU\ )ORUHQFLR $EDG
H[SUHVVO\DGPLWWHGWKHH[LVWHQFHRIFURVVERUGHUWUDQVIHUVRIIXQGVWKXV
-867,&(%(56$0,1
$OULJKW WKHZKROH WLPH
WKDW\RXKDYHEHHQ6HFUHWDU\RI'HSDUWPHQWRI%XGJHWDQG0DQDJHPHQWGLG
WKH([HFXWLYH'HSDUWPHQWHYHUUHGLUHFWDQ\SDUWRIVDYLQJVRIWKH1DWLRQDO*RYHUQPHQWXQGHU\RXUFRQWUROFURVVERUGHUWRDQRWKHUGHSDUWPHQW"
6(&5(7$5
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
7KH6SHFLDO3URYLVLRQVRQWKH3'$)LQWKH*$$DOORZHGWKH,QGLYLGXDO+RXVHPHPEHUDQGLQGLYLGXDO6HQDWRUWRLGHQWLI\
WKH SURMHFW WR EH IXQGHG DQG LPSOHPHQWHGZKLFK LGHQWLILFDWLRQ LVPDGH
DIWHU WKH HQDFWPHQW LQWR ODZRI WKH*$$ ,Q DGGLWLRQ 6SHFLDO
3URYLVLRQ1R DOORZHG WKH UHDOLJQPHQW RI IXQGV DQG QRW VDYLQJV
FRQGLWLRQHG RQ WKHFRQFXUUHQFHRI WKH LQGLYLGXDO OHJLVODWRU WR WKH
UHTXHVW IRU UHDOLJQPHQW ,Q WKH
ODQGPDUNFDVHRI%HOJLFDY([HFXWLYH6HFUHWDU\ WKH &RXUW VWUXFN GRZQ
WKHVH 6SHFLDO 3URYLVLRQV RQ WKH 3'$) SULPDULO\ IRU YLRODWLQJ WKH
SULQFLSOH RIVHSDUDWLRQRISRZHUV
&OHDUO\ WKH WUDQVIHU RI '$3 IXQGV LQ WKH DPRXQW RI 3 ELOOLRQ
WR DXJPHQW WKH XQFRQVWLWXWLRQDO 3'$) LV
DOVRXQFRQVWLWXWLRQDOEHFDXVHLWLVDQDXJPHQWDWLRQRIDQXQFRQVWLWXWLRQDODSSURSULDWLRQ
7KH26*FRQWHQGVWKDW>W@KH&RQVWLWXWLRQGRHVQRWSUHYHQWWKH3UHVLGHQWIURPWUDQVIHUULQJVDYLQJVRIKLVGHSDUWPHQWWR
DQRWKHU GHSDUWPHQW XSRQ WKH ODWWHUV UHTXHVW SURYLGHG LW LV WKH
UHFLSLHQW GHSDUWPHQW WKDW XVHV VXFK IXQGV
WRDXJPHQWLWVRZQDSSURSULDWLRQ7KH26*IXUWKHUVXEPLWVWKDW>L@QUHODWLRQWRWKH'$3WKH3UHVLGHQWPDGHDYDLODEOHWR
WKH &RPPLVVLRQ RQ $XGLW +RXVH RI 5HSUHVHQWDWLYHV DQG WKH
&RPPLVVLRQ RQ (OHFWLRQV WKH VDYLQJV RI KLVGHSDUWPHQWXSRQ WKHLU
UHTXHVW IRU IXQGVEXW LWZDV WKRVH LQVWLWXWLRQV
WKDWDSSOLHGVXFKVDYLQJV WRDXJPHQW LWHPV LQWKHLU
UHVSHFWLYHDSSURSULDWLRQV 7KXV WKH26*H[SUHVVO\ DGPLWV WKDW
WKH([HFXWLYH WUDQVIHUUHGDSSURSULDWLRQV
IRUWKH([HFXWLYHEUDQFKWRWKH&2$WKH+RXVHRI5HSUHVHQWDWLYHVDQGWKH&20(/(&EXWMXVWLILHVVXFKWUDQVIHUVWRWKHUHFLSLHQWVUHTXHVWIRUIXQGVWRDXJPHQWLWHPVLQWKHUHFLSLHQWVUHVSHFWLYHDSSURSULDWLRQV
7KH 26*V DUJXPHQWV DUH REYLRXVO\ XQWHQDEOH 1RZKHUH LQ WKH
ODQJXDJH RI WKH &RQVWLWXWLRQ LV VXFK D PLVSODFHGLQWHUSUHWDWLRQ
DOORZHG 6HFWLRQ $UWLFOH 9, RI WKH&RQVWLWXWLRQ GRHV QRW
GLVWLQJXLVKZKHWKHU WKH UHFLSLHQW HQWLW\UHTXHVWHG RU GLG QRW UHTXHVW
DGGLWLRQDO IXQGV IURP WKH ([HFXWLYH EUDQFK WR DXJPHQW LWHPV LQ WKH
UHFLSLHQW HQWLW\VDSSURSULDWLRQV 7KH &RQVWLWXWLRQ FOHDUO\
SURKLELWV WKH 3UHVLGHQW IURP WUDQVIHUULQJ DSSURSULDWLRQV RI WKH
([HFXWLYHEUDQFKWRRWKHUEUDQFKHVRIJRYHUQPHQWRUWRFRQVWLWXWLRQDOERGLHVIRUZKDWHYHUUHDVRQ&RQJUHVVFDQQRWHYHQHQDFWDODZDOORZLQJVXFKWUDQVIHUV7KHIXQGDPHQWDOSROLF\RIWKH&RQVWLWXWLRQLVDJDLQVWWUDQVIHURIDSSURSULDWLRQVHYHQE\ODZVLQFHWKLV
MXJJOLQJRI
IXQGVLVRIWHQDULFKVRXUFHRIXQEULGOHGSDWURQDJHDEXVHDQGLQWHUPLQDEOHFRUUXSWLRQ0RUHRYHU
WKH FURVVERUGHU WUDQVIHU RI DSSURSULDWLRQV WR FRQVWLWXWLRQDO ERGLHV
LPSDLUV WKH LQGHSHQGHQFH RI WKHFRQVWLWXWLRQDOERGLHV
,91R3UHVLGHQWLDOSRZHURILPSRXQGPHQW
7KH*$$LVDODZDQGWKH3UHVLGHQWLVVZRUQWRXSKROGDQGIDLWKIXOO\LPSOHPHQWWKHODZ,I&RQJUHVVLQWKH*$$GLUHFWVWKHH[SHQGLWXUHRISXEOLFIXQGVIRUDVSHFLILFSXUSRVHWKH3UHVLGHQWKDVQRSRZHUWRFDQFHOSUHYHQWRUSHUPDQHQWO\VWRSVXFKH[SHQGLWXUHRQFH
WKH*$$EHFRPHVD ODZ:KDW WKH3UHVLGHQWFDQGR LV WRYHWR WKDWVSHFLILF
LWHP LQ WKH*$$%XW RQFH WKH3UHVLGHQW DSSURYHV WKH*$$RU DOORZV LW WR
ODSVH LQWR ODZ WKH3UHVLGHQW FDQ QR ORQJHU YHWR
RUFDQFHODQ\LWHPLQWKH*$$RULPSRXQGWKHGLVEXUVHPHQWRIIXQGVDXWKRUL]HGWREHVSHQWLQWKH*$$
6HFWLRQ&KDSWHU9%RRN9,RIWKH$GPLQLVWUDWLYH&RGHRIDOORZVWKH3UHVLGHQWWRVXVSHQGRURWKHUZLVHVWRSIXUWKHUH[SHQGLWXUHRIDSSURSULDWHGIXQGVEXWWKLVPXVWEHIRUDOHJLWLPDWHSXUSRVHOLNHZKHQWKHUHDUHDQRPDOLHVLQWKHLPSOHPHQWDWLRQRIDSURMHFWRULQWKHGLVEXUVHPHQWRIIXQGV6HFWLRQFDQQRWEHUHDGWRDXWKRUL]HWKH3UHVLGHQWWRSHUPDQHQWO\VWRSVRDVWRFDQFHOWKHLPSOHPHQWDWLRQRIDSURMHFWLQWKH*$$EHFDXVHWKH3UHVLGHQWKDVQRSRZHUWRDPHQG
WKH ODZ DQG WKH*$$ LV D ODZ 6HFWLRQ FDQQRW DOVR EH UHDG WR
DXWKRUL]H WKH 3UHVLGHQW WR LPSRXQG WKHGLVEXUVHPHQW RI IXQGV IRU
SURMHFWV DSSURYHG LQ WKH *$$ EHFDXVH WKH 3UHVLGHQW KDV QR SRZHU WR
LPSRXQG IXQGVDSSURYHGE\&RQJUHVV
7KH3UHVLGHQWFDQVXVSHQGRUVWRSIXUWKHUH[SHQGLWXUHRIDSSURSULDWHGIXQGVRQO\DIWHUWKHDSSURSULDWHGIXQGVKDYHEHFRPH
REOLJDWHG WKDW LV D FRQWUDFW KDV EHHQ VLJQHG IRU WKH LPSOHPHQWDWLRQ
RI WKH SURMHFW 7KH UHDVRQ IRU
WKHVXVSHQVLRQRUVWRSSDJHPXVWEHOHJLWLPDWHDVZKHQWKHUHDUHDQRPDOLHV7KH3UHVLGHQWKDVWKH([HFXWLYHSRZHUWRVHH
WR LW WKDW WKH*$$ LV IDLWKIXOO\ LPSOHPHQWHGZLWKRXW DQRPDOLHV+RZHYHU
GHVSLWH WKH RUGHU WR VXVSHQG RU VWRSIXUWKHUH[SHQGLWXUHRI IXQGV
WKHDSSURSULDWHG IXQGV UHPDLQREOLJDWHGXQWLO WKHFRQWUDFW LV
UHVFLQGHG$V ORQJDV WKHDSSURSULDWHG IXQGVDUHVWLOOREOLJDWHG WKH
IXQGVFDQQRWFRQVWLWXWHVDYLQJVEHFDXVHVDYLQJVDVGHILQHG LQ
WKH*$$PXVWFRPHIURPDSSURSULDWLRQVWKDWDUHIUHHIURPDQ\REOLJDWLRQRUHQFXPEUDQFH
6HFWLRQFDQQRWEHXVHGE\ WKH3UHVLGHQW WRVWRSSHUPDQHQWO\
WKHH[SHQGLWXUHRIXQREOLJDWHGDSSURSULDWHG
IXQGVEHFDXVHWKDWZRXOGDPRXQWWRD3UHVLGHQWLDOSRZHUWRLPSRXQGIXQGVDSSURSULDWHGLQWKH*$$7KH3UHVLGHQWKDVQRSRZHU
WR LPSRXQG XQREOLJDWHG IXQGV LQ WKH *$$ IRU WZR UHDVRQV ILUVW WKH
*$$ RQFH LW EHFRPHV ODZ FDQQRW
EHDPHQGHGE\WKH3UHVLGHQWDQGDQLPSRXQGPHQWRIXQREOLJDWHGIXQGVLVDQDPHQGPHQWRIWKH*$$VLQFHLWUHYHUVHVWKHZLOO
RI&RQJUHVV VHFRQG WKH&RQVWLWXWLRQ JLYHV WKH3UHVLGHQW WKH
SRZHU WR SUHYHQW XQVRXQG DSSURSULDWLRQV E\&RQJUHVV RQO\
WKURXJKKLV OLQH LWHP YHWR SRZHUZKLFK KH FDQH[HUFLVH RQO\ZKHQ WKH*$$
LV VXEPLWWHG WR KLPE\&RQJUHVVIRUDSSURYDO
2QFHWKH3UHVLGHQWDSSURYHVWKH*$$RUDOORZVLWWRODSVHLQWRODZKHKLPVHOILVERXQGE\LW7KHUHLVQRSUHVLGHQWLDOSRZHU
RI LPSRXQGPHQW LQ WKH &RQVWLWXWLRQ DQG WKLV &RXUW FDQQRW
FUHDWH RQH $Q\ RUGLQDU\ OHJLVODWLRQ JLYLQJ WKH3UHVLGHQW WKH SRZHU
WR LPSRXQG XQREOLJDWHG DSSURSULDWLRQV LV XQFRQVWLWXWLRQDO 7KH SRZHU
WR LPSRXQG
XQREOLJDWHGDSSURSULDWLRQVLQWKH*$$FRXSOHGZLWKWKHSRZHUWRUHDOLJQVXFKIXQGVWRDQ\SURMHFWZKHWKHUH[LVWLQJRUQRWLQWKH*$$LVQRWRQO\DXVXUSDWLRQRIWKHSRZHURIWKHSXUVHRI&RQJUHVVDQGDYLRODWLRQRIWKHFRQVWLWXWLRQDOVHSDUDWLRQRISRZHUVEXWDOVRDVXEVWDQWLDOUHZULWLQJRIWKH&RQVWLWXWLRQ
8QGHU WKHSUHVHQW&RQVWLWXWLRQ LI WKH3UHVLGHQWYHWRHVDQ
LWHPRIDSSURSULDWLRQ LQ WKH*$$&RQJUHVVPD\RYHUULGHVXFK YHWR E\ DQ
H[WUDRUGLQDU\ WZRWKLUGV YRWH RI HDFK FKDPEHU RI &RQJUHVV
+RZHYHU LI WKLV &RXUW DOORZV
WKH3UHVLGHQWWRLPSRXQGWKHIXQGVDSSURSULDWHGE\&RQJUHVVXQGHUDODZWKHQWKHFRQVWLWXWLRQDOSRZHURI&RQJUHVVWRRYHUULGH
WKH 3UHVLGHQWV YHWR EHFRPHV LQXWLOH DQG PHDQLQJOHVV 7KLV LV D
VXEVWDQWLDO DQG GUDVWLF UHYLVLRQ RI
WKHFRQVWLWXWLRQDOFKHFNDQGEDODQFHILQHO\FUDIWHGLQWKH&RQVWLWXWLRQ
3URIHVVRU /DXUHQFH + 7ULEH LQ KLV FODVVLF WH[WERRN $PHULFDQ
&RQVWLWXWLRQDO /DZ H[SODLQV ZK\ WKHUH LV QR
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
FRQVWLWXWLRQDOSRZHURILPSRXQGPHQWE\WKH3UHVLGHQWXQGHUWKH86)HGHUDO&RQVWLWXWLRQ
7KHIHGHUDOFRXUWVKDYHWUDGLWLRQDOO\UHMHFWHGWKHDUJXPHQWWKDW
WKH3UHVLGHQWSRVVHVVHV LQKHUHQWSRZHUWR
LPSRXQGIXQGVDQGWKXVKDOWFRQJUHVVLRQDOO\DXWKRUL]HGH[SHQGLWXUHV7KH6XSUHPH&RXUWLVVXHGLWVILUVWPDMRUSURQRXQFHPHQWRQ
WKH FRQVWLWXWLRQDO EDVLV RI H[HFXWLYH LPSRXQGPHQW LQ.HQGDOO
Y8QLWHG6WDWHV H[ UHO 6WRNHV 7KHUH LQ RUGHU
WRUHVROYHDFRQWUDFWGLVSXWH&RQJUHVVRUGHUHGWKH3RVWPDVWHU*HQHUDOWRSD\DFODLPDQWZKDWHYHUDPRXQWDQRXWVLGHDUELWUDWRUVKRXOGGHFLGHZDVWKHDSSURSULDWHVHWWOHPHQW3UHVHQWHGZLWKDGHFLVLRQE\WKHDUELWUDWRULQDFDVHDULVLQJRXWRIDFODLPIRUVHUYLFHVUHQGHUHGWRWKH8QLWHG6WDWHVLQFDUU\LQJWKHPDLOV3UHVLGHQW-DFNVRQV3RVWPDVWHU*HQHUDOLJQRUHGWKHFRQJUHVVLRQDOPDQGDWHDQGSDLG
LQVWHDGDVPDOOHUDPRXQWWKDWKHGHHPHGWKHSURSHUVHWWOHPHQW7KH6XSUHPH
&RXUW KHOG WKDW D ZULW RI PDQGDPXV FRXOG LVVXH GLUHFWLQJ WKH
3RVWPDVWHU *HQHUDO WR FRPSO\ ZLWK WKHFRQJUHVVLRQDO GLUHFWLYH ,Q
UHDFKLQJ WKLV FRQFOXVLRQ WKH &RXUW KHOG WKDW WKH 3UHVLGHQW DQG
WKXV WKRVH XQGHU KLVVXSHUYLVLRQ GLG QRW SRVVHVV LQKHUHQW DXWKRULW\
ZKHWKHU LPSOLHG E\ WKH )DLWKIXO ([HFXWLRQ &ODXVH RU RWKHUZLVH
WRLPSRXQGIXQGVWKDW&RQJUHVVKDGRUGHUHGWREHVSHQW7RFRQWHQGWKDW
WKHREOLJDWLRQ LPSRVHGRQWKH3UHVLGHQW WRVHH WKH ODZV
IDLWKIXOO\H[HFXWHG LPSOLHVDSRZHU WR IRUELG WKHLUH[HFXWLRQ
LVDQRYHOFRQVWUXFWLRQRI WKHFRQVWLWXWLRQDQGHQWLUHO\LQDGPLVVLEOH
$Q\RWKHUFRQFOXVLRQZRXOGKDYHEHHQKDUGWRVTXDUHZLWKWKHFDUHWKH)UDPHUVWRRNWROLPLWWKHVFRSHDQGRSHUDWLRQRI
WKHYHWRSRZHUDQGTXLWH LPSRVVLEOH WR UHFRQFLOHZLWK WKH IDFW WKDW
WKH)UDPHUVDVVXUHG&RQJUHVV WKHSRZHU WRRYHUULGH DQ\ YHWR E\ D
WZRWKLUGV YRWH LQ HDFK+RXVH )RU SUHVLGHQWLDO LPSRXQGPHQWV WR KDOW D
SURJUDPZRXOG RIFRXUVH EH WDQWDPRXQW WR D YHWR WKDW QR PDMRULW\ LQ
&RQJUHVV FRXOG RYHUULGH 7R TXRWH &KLHI -XVWLFH
5HKQTXLVWVSHDNLQJ LQ KLV IRUPHU FDSDFLW\ DV $VVLVWDQW $WWRUQH\
*HQHUDO LQ :LWK UHVSHFW WR WKH VXJJHVWLRQ WKDW
WKH3UHVLGHQWKDVDFRQVWLWXWLRQDOSRZHUWRGHFOLQHWRVSHQGDSSURSULDWHGIXQGVZHPXVWFRQFOXGHWKDWH[LVWHQFHRIVXFKD
EURDG SRZHU LV VXSSRUWHG E\ QHLWKHU UHDVRQ QRU SUHFHGHQW ,W LV LQ
RXU YLHZ H[WUHPHO\ GLIILFXOW WR IRUPXODWH
DFRQVWLWXWLRQDOWKHRU\WRMXVWLI\DUHIXVDOE\WKH3UHVLGHQWWRFRPSO\ZLWKD&RQJUHVVLRQDOGLUHFWLYHWRVSHQG,WPD\EHDJUHHGWKDWWKHVSHQGLQJRIPRQH\LVLQKHUHQWO\DQH[HFXWLYHIXQFWLRQEXWWKHH[HFXWLRQRIDQ\ODZLVE\GHILQLWLRQDQH[HFXWLYHIXQFWLRQDQGLWVHHPVDQDQRPDORXVSURSRVLWLRQWKDWEHFDXVHWKH([HFXWLYHEUDQFKLVERXQGWRH[HFXWHWKHODZVLWLVIUHHWRGHFOLQHWRH[HFXWHWKHP&LWDWLRQVRPLWWHGHPSKDVLVVXSSOLHG
,QWKH8QLWHG6WDWHVWKH)HGHUDO&RQVWLWXWLRQDOORZVWKH863UHVLGHQWWRRQO\YHWRDQHQWLUHDSSURSULDWLRQVELOOEXWQRWOLQH
LWHPDSSURSULDWLRQV LQ WKHELOO7KXV863UHVLGHQWV
VHOGRPYHWRDQDSSURSULDWLRQVELOO HYHQ LI WKHELOO
FRQWDLQVVSHFLILFDSSURSULDWLRQVWKH\GHHPXQVRXQG7RVWRSWKHGLVEXUVHPHQWRIDSSURSULDWHGIXQGVWKH\GHHPXQVRXQG863UHVLGHQWV
KDYH DWWHPSWHG WR DVVHUW DQ LPSOLHG RU LQKHUHQW 3UHVLGHQWLDO SRZHU
WR LPSRXQG IXQGV DSSURSULDWHG E\&RQJUHVV 7KH 86 6XSUHPH
&RXUW VWDUWLQJ IURP WKH FDVH RI .HQGDOO Y 8QLWHG 6WDWHV H[ UHO
6WRNHV
KDVFRQVLVWHQWO\UHMHFWHGDQ\DWWHPSWE\863UHVLGHQWVWRDVVHUWDQLPSOLHGSUHVLGHQWLDOSRZHUWRLPSRXQGDSSURSULDWHGIXQGV,QWKHFDVHRI7UDLQY&LW\RI1HZ
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
6RWKHUHLVQRLPSRXQGPHQW
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
WKH1DWLRQDO%XGJHW&LUFXODU1RGDWHG-XO\81&2167,787,21$/IRUYLRODWLQJ6HFWLRQ$UWLFOH9,RIWKH&RQVWLWXWLRQ
7UDQVIHUV RI DSSURSULDWLRQV IURP WKH ([HFXWLYH WR WKH
/HJLVODWXUH WKH &RPPLVVLRQ RQ (OHFWLRQV DQG
WKH&RPPLVVLRQRQ$XGLW
'LVEXUVHPHQWVRI XQREOLJDWHGDOORWPHQWV IRU022(DVVDYLQJVDQG WKHLU
UHDOLJQPHQW WRRWKHU LWHPV LQ
WKH*$$VZKHUHWKH022(WKDWDUHWKHVRXUFHVRIVDYLQJVDUHDSSURSULDWLRQVIRUPRQWKVVWLOOWRODSVH
'LVEXUVHPHQWVRIXQREOLJDWHGDOORWPHQWVIRU&DSLWDO2XWOD\DVVDYLQJVDQGWKHLUUHDOLJQPHQWWRRWKHULWHPVLQWKH*$$SULRUWRWKHODVWWZRPRQWKVRIWKHILVFDO\HDULIWKHSHULRGWRREOLJDWHLVRQH\HDURUSULRUWRWKHODVWWZRPRQWKVRIWKHVHFRQG\HDULIWKHSHULRGWRREOLJDWHLVWZR\HDUVDQG
'LVEXUVHPHQWVRIXQREOLJDWHGDOORWPHQWVDVVDYLQJVDQG WKHLU
UHDOLJQPHQW WR LWHPVRUSURMHFWVQRW IRXQG LQWKH*$$
,QDGGLWLRQ WKHXVHRI WKH8QSURJUDPPHG)XQGZLWKRXW
WKHFHUWLILFDWLRQE\ WKH1DWLRQDO7UHDVXUHU WKDW WKH UHYHQXHFROOHFWLRQV
IRU WKH ILVFDO \HDU H[FHHGHG WKH UHYHQXH WDUJHW IRU WKDW \HDU LV
GHFODUHG92,' IRU EHLQJ FRQWUDU\ WR
WKHH[SUHVVFRQGLWLRQIRUWKHXVHRIWKH8QSURJUDPPHG)XQGXQGHUWKH*$$V
$1721,27&$53,2$VVRFLDWH-XVWLFH
)RRWQRWHV *5 1R LV D SHWLWLRQ IRU SURKLELWLRQ PDQGDPXV DQG
FHUWLRUDUL XQGHU 5XOH ZLWK D SHWLWLRQ
IRUGHFODUDWRU\UHOLHIXQGHU5XOHZKLOHWKHUHVWDUHSHWLWLRQVIRUFHUWLRUDULDQGRUSURKLELWLRQ3DVFXDOY6HFUHWDU\RI3XEOLF:RUNV3KLO,QIRUPDWLRQ7HFKQRORJ\)RXQGDWLRQRIWKH3KLOVY&20(/(&
3KLO 6HH DOVR .LORVED\DQ ,QF Y 0RUDWR 3KLO - 9LFHQWH
90HQGR]DSRQHQWH&KDYH]Y3&**3KLO&KDYH]Y3XEOLF(VWDWHV$XWKRULW\3KLO3URYLQFHRI1RUWK&RWDEDWRY*RYHUQPHQWRI
WKH5HSXEOLFRI
WKH3KLOLSSLQHV3HDFH3DQHORQ$QFHVWUDO'RPDLQ3KLO5ROOR*51RS&RQVROLGDWHG&RPPHQWS,GDW&RQVROLGDWHG&RPPHQWS5ROOR*51RS$QQH[%RIWKH3HWLWLRQLQ*51RFLWLQJWKH'%0ZHEVLWHZKLFKFRQWDLQHGWKH&RQVWLWXWLRQDODQG/HJDO%DVHVRIWKH'$3KWWSZZZGEPJRYSK"SDJHBLG
0HPRUDQGXP IRU WKH5HVSRQGHQWVS761-DQXDU\S6ROLFLWRU*HQHUDO
-DUGHOH]DVWDWHGGXULQJWKH2UDO$UJXPHQWV
62/,&,725*(1(5$/-$5'(/(=$
[[[[
3UHVLGHQWLDO DSSURYDO DJDLQ GLG WKH3UHVLGHQW DXWKRUL]H
WKHGLVEXUVHPHQWV XQGHU WKH'$3"
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
*$$
6HF 0HDQLQJ RI 6DYLQJV DQG $XJPHQWDWLRQ 6DYLQJV UHIHU WR
SRUWLRQV RU EDODQFHV RI DQ\SURJUDPPHGDSSURSULDWLRQ LQ WKLV$FW IUHH
IURPDQ\REOLJDWLRQRUHQFXPEUDQFHZKLFKDUH L VWLOODYDLODEOH DIWHU WKH
FRPSOHWLRQ RU ILQDO GLVFRQWLQXDQFH RU DEDQGRQPHQW RI WKH ZRUN
DFWLYLW\ RUSXUSRVH IRU ZKLFK WKH DSSURSULDWLRQ LV DXWKRUL]HG LL
IURP DSSURSULDWLRQV EDODQFHV DULVLQJ IURPXQSDLG FRPSHQVDWLRQ DQG
UHODWHG FRVWV SHUWDLQLQJ WR YDFDQW SRVLWLRQV DQG OHDYHV RI
DEVHQFHZLWKRXWSD\DQG LLL IURPDSSURSULDWLRQVEDODQFHV UHDOL]HG IURP
WKH
LPSOHPHQWDWLRQRIPHDVXUHVUHVXOWLQJLQLPSURYHGV\VWHPVDQGHIILFLHQFLHVDQGWKXVHQDEOHGDJHQFLHVWRPHHWDQGGHOLYHUWKHUHTXLUHGRUSODQQHGWDUJHWVSURJUDPVDQGVHUYLFHVDSSURYHGLQWKLV$FWDWDOHVVHUFRVW
[[[[
*$$
6HF 0HDQLQJ RI 6DYLQJV DQG $XJPHQWDWLRQ 6DYLQJV UHIHU WR
SRUWLRQV RU EDODQFHV RI DQ\SURJUDPPHGDSSURSULDWLRQ LQ WKLV$FW IUHH
IURPDQ\REOLJDWLRQRUHQFXPEUDQFHZKLFKDUH L VWLOODYDLODEOH DIWHU WKH
FRPSOHWLRQ RU ILQDO GLVFRQWLQXDQFH RU DEDQGRQPHQW RI WKH ZRUN
DFWLYLW\ RUSXUSRVH IRU ZKLFK WKH DSSURSULDWLRQ LV DXWKRUL]HG LL
IURP DSSURSULDWLRQV EDODQFHV DULVLQJ IURPXQSDLG FRPSHQVDWLRQ DQG
UHODWHG FRVWV SHUWDLQLQJ WR YDFDQW SRVLWLRQV DQG OHDYHV RI
DEVHQFHZLWKRXWSD\DQG LLL IURPDSSURSULDWLRQVEDODQFHV UHDOL]HG IURP
WKH
LPSOHPHQWDWLRQRIPHDVXUHVUHVXOWLQJLQLPSURYHGV\VWHPVDQGHIILFLHQFLHVDQGWKXVHQDEOHGDJHQFLHVWRPHHWDQGGHOLYHUWKHUHTXLUHGRUSODQQHGWDUJHWVSURJUDPVDQGVHUYLFHVDSSURYHGLQWKLV$FWDWDOHVVHUFRVW
[[[[ 6(&7,216XVSHQVLRQ RI ([SHQGLWXUH RI
$SSURSULDWLRQV([FHSW DV RWKHUZLVH SURYLGHG LQ
WKH*HQHUDO$SSURSULDWLRQV$FWDQGZKHQHYHU LQKLV MXGJPHQWWKHSXEOLF
LQWHUHVWVRUHTXLUHV
WKH3UHVLGHQWXSRQQRWLFHWRWKHKHDGRIRIILFHFRQFHUQHGLVDXWKRUL]HGWRVXVSHQGRURWKHUZLVHVWRSIXUWKHUH[SHQGLWXUHRIIXQGVDOORWWHGIRUDQ\DJHQF\RUDQ\RWKHUH[SHQGLWXUHDXWKRUL]HGLQWKH*HQHUDO$SSURSULDWLRQV$FWH[FHSWIRUSHUVRQDOVHUYLFHVDSSURSULDWLRQVXVHGIRUSHUPDQHQWRIILFLDOVDQGHPSOR\HHV6HFWLRQRIWKH*$$SURYLGHV
6HF0DQGDWRU\([SHQGLWXUHV7KHDPRXQWVSURJUDPPHGIRUSHWUROHXPRLODQGOXEULFDQWVDVZHOODVIRU
ZDWHU LOOXPLQDWLRQ DQG SRZHU VHUYLFHV WHOHSKRQH DQG RWKHU
FRPPXQLFDWLRQ VHUYLFHV DQG UHQWUHTXLUHPHQWV VKDOO EH GLVEXUVHG
VROHO\ IRU VXFK LWHPV RI H[SHQGLWXUHV 3529,'(' 7KDW DQ\
VDYLQJVJHQHUDWHG IURP WKHVH LWHPVDIWHU WDNLQJ LQWR FRQVLGHUDWLRQ
WKH DJHQF\V IXOO \HDU UHTXLUHPHQWVPD\ EHUHDOLJQHG RQO\ LQ WKH ODVW
TXDUWHU DQG VXEMHFW WR WKH UXOHV RQ WKH UHDOLJQPHQW RI VDYLQJV
SURYLGHG LQ6HFWLRQKHUHRI
8VHRIIXQGVLQYLRODWLRQRIWKLVVHFWLRQVKDOOEHYRLGDQGVKDOOVXEMHFWWKHHUULQJRIILFLDOVDQGHPSOR\HHVWRGLVFLSOLQDU\DFWLRQV
LQDFFRUGDQFHZLWK6HFWLRQ&KDSWHUDQG6HFWLRQ&KDSWHU%RRN9,RI(21RDQGWRDSSURSULDWHFULPLQDODFWLRQXQGHUH[LVWLQJSHQDO
ODZV6HFWLRQRI WKH*$$SURYLGHV
6HF ([SHQGLWXUHV IRU%XVLQHVV7\SH$FWLYLWLHV$SSURSULDWLRQV IRU WKH
SURFXUHPHQW RI VXSSOLHV DQGPDWHULDOV LQWHQGHG WR EH XWLOL]HG LQ WKH
FRQGXFW RI EXVLQHVVW\SH DFWLYLWLHV VKDOO EH GLVEXUVHG VROHO\
IRUVXFKEXVLQHVVW\SHDFWLYLW\DQGVKDOOQRWEHUHDOLJQHGWRDQ\RWKHUH[SHQGLWXUHLWHP
8VHRIIXQGVLQYLRODWLRQRIWKLVVHFWLRQVKDOOEHYRLGDQGVKDOOVXEMHFWWKHHUULQJRIILFLDOVDQGHPSOR\HHVWRGLVFLSOLQDU\DFWLRQV
LQDFFRUGDQFHZLWK6HFWLRQ&KDSWHUDQG6HFWLRQ&KDSWHU%RRN9,RI(21RDQGWRDSSURSULDWHFULPLQDODFWLRQXQGHUH[LVWLQJSHQDOODZV
761-DQXDU\S6HH7DEOH&5HYHQXH3URJUDP%\6RXUFHRI%XGJHWRI([SHQGLWXUHVDQG6RXUFHVRI)LQDQFLQJKWWSZZZGEPJRYSKZSFRQWHQWXSORDGV%(6)%(6)&SGI,G6HFWLRQ3'1RVWDWHV
6(&7,21$FFUXDORI,QFRPHWR8QDSSURSULDWHG6XUSOXVRIWKH*HQHUDO)XQG8QOHVVRWKHUZLVHVSHFLILFDOO\SURYLGHGE\ODZDOO
LQFRPHDFFUXLQJWRWKHDJHQFLHVE\YLUWXHRIWKHSURYLVLRQVRIODZRUGHUVDQG
UHJXODWLRQV VKDOO EH GHSRVLWHG LQ WKH 1DWLRQDO 7UHDVXU\ RU LQ DQ\
GXO\ DXWKRUL]HG
JRYHUQPHQWGHSRVLWRU\DQGVKDOODFFUXHWRWKHXQDSSURSULDWHGVXUSOXVRIWKH*HQHUDO)XQGRIWKH*RYHUQPHQW
$UWLFOHRIWKH&LYLO&RGHVWDWHV
$FWVH[HFXWHGDJDLQVWWKHSURYLVLRQVRIPDQGDWRU\RUSURKLELWRU\ODZVVKDOOEHYRLGH[FHSWZKHQWKHODZLWVHOIDXWKRUL]HVWKHLUYDOLGLW\
761-DQXDU\SS5ROOR*51RS 5ROOR *5 1R S 7KH UHOHYDQW SRUWLRQV RI
WKH 0HPRUDQGXP IRU WKH 3UHVLGHQW GDWHG
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
'HFHPEHUVWDWH
[[[[
%$&.*5281'
7KH '%0 GXULQJ WKH FRXUVH RI SHUIRUPDQFH UHYLHZV FRQGXFWHG RQ
WKH DJHQFLHV RSHUDWLRQVSDUWLFXODUO\RQ WKH LPSOHPHQWDWLRQRI
WKHLUSURMHFWVDFWLYLWLHV LQFOXGLQJH[SHQVHV LQFXUUHG LQXQGHUWDNLQJWKH
VDPH KDYH VLF LGHQWLILHG VDYLQJV RXW RI WKH *HQHUDO $SSURSULDWLRQV
$FW 6DLG VDYLQJVFRUUHVSRQG WR FRPSOHWHG RU GLVFRQWLQXHG SURMHFWV
XQGHU FHUWDLQ GHSDUWPHQWVDJHQFLHV ZKLFK PD\
EHSRROHGIRUWKHIROORZLQJ
[[[[
WRSURYLGHIRUGHILFLHQFLHVXQGHUWKH6SHFLDO3XUSRVH)XQGVHJ3'$)&DODPLW\)XQG&RQWLQJHQW)XQG
[[[[5ROOR*51RS&DUSLR
-&RQFXUULQJ2SLQLRQ%HOJLFDY([HFXWLYH6HFUHWDU\*51RVDQG1RYHPEHU*51RVDQG1RYHPEHU5ROOR*51RS0HPRUDQGXPIRUWKH5HVSRQGHQWVS3DGLOOD
-'LVVHQWLQJ2SLQLRQ*RQ]DOHVY0DFDUDLJ -U*51R1RYHPEHU6&5$
$PHULFDQ&RQVWLWXWLRQDO /DZ UG (GLWLRQ 9ROXPH SS .HQGDOO Y
8QLWHG 6WDWHV
H[5HO6WRNHV86866XSUDQRWH1RWHV3UHVLGHQWLDO,PSRXQGPHQW&RQVWLWXWLRQDO7KHRULHVDQG3ROLWLFDO5HDOLWLHV*HRUJHWRZQ/DZ-RXUQDO1RWHV3URWHFWLQJ)LVF([HFXWLYH,PSRXQGPHQWDQG&RQJUHVVLRQDO3RZHU
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
H[SUHVVLQJWKHLUYLHZVWKURXJKWKHLUVHSDUDWHRSLQLRQV7ZRUHDVRQVKRZHYHUFRPSHOOHGPHWRDFWDV,GLG
)LUVWWKH&RXUWIDLOHGWRPHDQLQJIXOO\FRQVLGHUWKHSHWLWLRQHUVSUD\HUIRUDWHPSRUDU\UHVWUDLQLQJRUGHU752GHOD\LQWHUYHQHGXQWLO
LWZDVWRR ODWHWRFRQVLGHUZKHWKHUZHZRXOGRUZRXOGQRW
LVVXHD752%DVHGRQWKLVH[SHULHQFH
,ZDQWHGWRDYRLGDQ\IXUWKHUGHIHUPHQWLQUHVROYLQJWKLVFDVHRQWKHPHULWVDVWKH&RXUWXQGHUWKHFLUFXPVWDQFHVKDGDOUHDG\EHHQLQGHOD\,VXUPLVHWKDW-&DUSLRZDVLQDVLPLODUIUDPHRIPLQGZKHQKHLVVXHGKLVRZQRULJLQDO2SLQLRQ
6HFRQG,IHOWWKDWZHVKRXOGQRORQJHUGLOO\GDOO\DVWRJHWKHUZLWKWKHFORVHO\UHODWHG3ULRULW\'HYHORSPHQW$VVLVWDQFH)XQG3'$)FDVHWKHSUHVHQW'$3FDVHLVDSDUWRIWKHFRXQWU\VELJJHVWVFDQGDODQGRQLWVRZQLVDSUHFHGHQWVHWWLQJFDVHZLWKSURIRXQGLPSDFWRQWKHQDWLRQ
%HFDXVHRIZKDWWKH3'$)LQYROYHGQDPHO\WKHDPRXQWDSSUR[LPDWHO\3%LOOLRQWKHSHUVRQDOLWLHVWKHPHPEHUVRI&RQJUHVV
DW WKH KLJKHVW OHYHOV DQG WKH FLUFXPVWDQFHVSHUFHLYHG EHWUD\DO RI
SXEOLF WUXVW LQ D QDWLRQDO VLWXDWLRQ
RIXQFKHFNHGSRYHUW\DQGQDWXUDOFDODPLW\LWFDXVHGSXEOLFRXWUDJHDQGHPHUJHQWSXEOLFGLVWUXVWWRXVHWKHZRUGVRI-0DULDQRGHO&DVWLOORLQKLV6HSDUDWH2SLQLRQ
7KHSUHVHQW'$3FDVH IRU LWVSDUW LQYROYHVFLUFXPVWDQFHV
WKDWDUHVLPLODU WR WKH3'$)DQGPXFKPRUH LW LQYROYHVIXQGVDPRXQWLQJ
WRDOPRVW3%LOOLRQRUDOPRVW WLPHV WKH3'$)FDVH HQWDQJOHPHQWZLWK
WKHXQFRQVWLWXWLRQDO3'$)SHUVRQDOLWLHVDW WKHYHU\KLJKHVW OHYHO LQERWK
WKH([HFXWLYHDQG WKH/HJLVODWLYH'HSDUWPHQWVRIJRYHUQPHQWDQG
GHPRQVWUDWHG ODFN RI UHVSHFW IRU SXEOLF IXQGV LQVWLWXWLRQV DQG WKH
&RQVWLWXWLRQ 7KLV FDVH LQP\ YLHZ LV
WKHELJJHVWVLQFH,FDPHWRWKH&RXUWLQWHUPVRIWKHVHIDFWRUVDORQH
6HSDUDWHIURPWKHVHFLUFXPVWDQFHVPDQ\RWKHUSULQFLSOHVXQGHUO\LQJRXU5HSXEOLFDUHDWVWDNHDQGZHDVDQDWLRQFDQQRWDQGVKRXOGQRWEHSHUFHLYHGWREHZHDNRUKHVLWDQWLQVXSSRUWLQJWKHVHSULQFLSOHV$PRQJWKHPDUHWKHUHJLPHRI
WKH UXOH RI ODZ ZKHUH ZH FDQQRW DIIRUG WR IDLO RXU FRQVWLWXWLRQDO
V\VWHP RI FKHFNV DQG EDODQFHV DQG RI WKHVHSDUDWLRQRI SRZHUV WKDW
LQGLFDWH WKHKHDOWK RI FRQVWLWXWLRQDOLVPDQGGHPRFUDF\ LQ RXU FRXQWU\
WKH VWDELOLW\ RI
RXUJRYHUQPHQWLQOLJKWRIWKHSRVVLEOHHIIHFWWKDWRXUUXOLQJHLWKHUZD\ZLOOKDYHRQWKHLQVWLWXWLRQVDQGRIILFLDOVLQYROYHGDQGWKHPRUDOYDOXHVDQGWKHSHRSOHVOHYHORIWUXVWWKDWZHFDQQRWDOORZWRGLVLQWHJUDWH
8QGHUWKHVHFLUFXPVWDQFHV,IHOWWKDWEHIRUHDQ\PDVVLYHGLVVDWLVIDFWLRQDQGXQUHVWDPRQJWKHSRSXODFHFRXOGVHWLQWKH&RXUWVKRXOGDFWOHVWLWVQDPHDOVREHGUDJJHGLQWRWKHVFDQGDO7RVWDWHWKHREYLRXVWKH-XGLFLDU\VFRPSOLFLW\ZKHWKHUE\GHOD\RUSHUFHSWLRQVRIPLVKDQGOLQJFRYHUXSZKLWHZDVKRUXQDFFHSWDEOHUXOLQJFRXOGDOUHDG\HQWDLODSHUFHSWLRQRI
IDLOXUHRIJRYHUQPHQWFRQVWLWXWLRQDOLVPDQGGHPRFUDF\EHFDXVHRI WKH
LQYROYHPHQWRI WKH
WKUHHJUHDWEUDQFKHVRIJRYHUQPHQW7KHSHRSOHVLQHYLWDEOHTXHVWLRQFRXOGWKHQEHZKRHOVHLVWKHUHWRWUXVW"
7KXV WKLV&RXUWVKRXOGEHDV WKRURXJKDVSRVVLEOH LQ WKHKDQGOLQJRI
WKLVFDVHPDNLQJVXUH WKDWDW WKHYHU\ OHDVWERWK WKH UHDOLW\
DQGSHUFHSWLRQRI LWV LQWHJULW\ZRXOGEH LQWDFW7RZDUGV WKLVHQGZHVKRXOG
WKRURXJKO\H[KDXVW WKHGLVFXVVLRQRIDOO WKH
LVVXHVEHIRUHXVERWKH[SUHVVDQG LPSOLHG WRHQVXUHWKHPD[LPXPLQ
WUDQVSDUHQF\ OXFLGLW\DQGORJLF
7KLVVSLULWZDVDSSDUHQWO\WKHUHDVRQZK\WKHPHPEHULQFKDUJH-/XFDV%HUVDPLQVXIIHUHGGHOD\LQWKHLVVXDQFHRIKLVSRQHQFLD7RKLVFUHGLWKLV2SLQLRQZKHQLWZDVLVVXHGWXUQHGRXWWREHWKRURXJKDQGFRPSUHKHQVLYHDOWKRXJK,GLVDJUHHZLWKVRPHRIWKHSRLQWVKHPDGH
$VGHILQHGE\-%HUVDPLQEDVHGRQWKHSOHDGLQJVDQGZLWKRXWREMHFWLRQIURPWKHSDUWLHVWKHLVVXHVEHIRUHWKH&RXUWDUHTXRWHGEHORZ
,VVXHV
8QGHUWKH$GYLVRU\LVVXHGRQ1RYHPEHUWKHSUHVHQWDWLRQVRIWKHSDUWLHVGXULQJWKHRUDODUJXPHQWVZHUHWREHOLPLWHGWRWKHIROORZLQJLVVXHVWRZLW
3URFHGXUDO,VVXH
$:KHWKHURUQRWFHUWLRUDULSURKLELWLRQDQGPDQGDPXVDUHSURSHUUHPHGLHVWRDVVDLOWKHFRQVWLWXWLRQDOLW\DQGYDOLGLW\RIWKH'LVEXUVHPHQW$FFHOHUDWLRQ3URJUDP'$31DWLRQDO%XGJHW&LUFXODU1%&1RDQGDOORWKHUH[HFXWLYHLVVXDQFHVDOOHJHGO\LPSOHPHQWLQJWKH'$36XEVXPHGLQWKLVLVVXHDUHZKHWKHUWKHUHLVDFRQWURYHUV\ULSHIRUMXGLFLDOGHWHUPLQDWLRQDQGWKHVWDQGLQJRISHWLWLRQHUV
6XEVWDQWLYH,VVXHV
%:KHWKHURUQRWWKH'$3YLRODWHV6HF$UW9,RIWKH&RQVWLWXWLRQZKLFKSURYLGHV1RPRQH\VKDOOEHSDLGRXWRIWKH7UHDVXU\H[FHSWLQSXUVXDQFHRIDQDSSURSULDWLRQPDGHE\ODZ
&:KHWKHURUQRW WKH'$31%&1RDQGDOORWKHUH[HFXWLYH
LVVXDQFHVDOOHJHGO\ LPSOHPHQWLQJ
WKH'$3YLRODWH6HF$UW9,RIWKH&RQVWLWXWLRQLQVRIDUDV
D 7KH\ WUHDW WKH XQUHOHDVHG DSSURSULDWLRQV DQG XQREOLJDWHG
DOORWPHQWV ZLWKGUDZQ IURP JRYHUQPHQWDJHQFLHV DV VDYLQJV DV WKH WHUP
LV LVVXHG LQ6HF LQ UHODWLRQ WR WKH SURYLVLRQV RI WKH*$$V RIDQG
E7KH\DXWKRUL]HWKHGLVEXUVHPHQWRI
IXQGVIRUSURMHFWVRUSURJUDPVQRWSURYLGHGLQWKH*$$VIRUWKH([HFXWLYH'HSDUWPHQWDQG
F7KH\DXJPHQWGLVFUHWLRQDU\OXPSVXPDSSURSULDWLRQVLQWKH*$$V
':KHWKHURUQRWWKH'$3YLRODWHVWKH(TXDO3URWHFWLRQ&ODXVHWKHV\VWHPRIFKHFNVDQGEDODQFHVDQG
WKH SULQFLSOH RI SXEOLF DFFRXQWDELOLW\ HQVKULQHG LQ WKH
&RQVWLWXWLRQ FRQVLGHULQJ WKDW LW DXWKRUL]HV WKH
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
UHOHDVHRIIXQGVXSRQWKHUHTXHVWRIOHJLVODWRUV
(:KHWKHU RU QRW IDFWXDO DQG OHJDO MXVWLILFDWLRQ H[LVWV WR LVVXH
D WHPSRUDU\ UHVWUDLQLQJ RUGHU WR UHVWUDLQ
WKHLPSOHPHQWDWLRQRIWKH'$31%&1RDQGDOORWKHUH[HFXWLYHLVVXDQFHVDOOHJHGO\LPSOHPHQWLQJWKH'$3
,Q LWV &RQVROLGDWHG &RPPHQW WKH 26* UDLVHG WKH PDWWHU RI
XQSURJUDPPHG IXQGV LQ RUGHU WR VXSSRUW LWVDUJXPHQW UHJDUGLQJ WKH
3UHVLGHQWV SRZHU WR VSHQG 'XULQJ WKH RUDO DUJXPHQWV WKH SURSULHW\
RI UHOHDVLQJXQSURJUDPPHG IXQGV WRVXSSRUWSURMHFWVXQGHU
WKH'$3ZDVFRQVLGHUDEO\GLVFXVVHG7KHSHWLWLRQHUV LQ*51R %HOJLFD GZHOOHG
RQ XQSURJUDPPHG IXQGV LQ WKHLU UHVSHFWLYHPHPRUDQGD +HQFH DQ
DGGLWLRQDOLVVXHIRUWKHRUDODUJXPHQWVLVVWDWHGDVIROORZV
):KHWKHURUQRWWKHUHOHDVHRIXQSURJUDPPHGIXQGVXQGHUWKH'$3ZDVLQDFFRUGZLWKWKH&RQVWLWXWLRQ
6HSDUDWHO\IURPWKHVH-%HUVDPLQGZHOWRQDQGGLVFXVVHGLQKLVSRQHQFLDWKHDSSOLFDELOLW\RIWKHGRFWULQHRIRSHUDWLYHIDFWDIWHUUHFRJQL]LQJWKDWWKHSDUWLHVKDGEHHQIXOO\KHDUGRQWKLVSRLQW7KHLQFOXVLRQRIWKLVLVVXHLQP\YLHZZDVDYHU\JRRGFDOO
RQ -%HUVDPLQVSDUW DVDGLVFXVVLRQRI WKHSRWHQWLDO FRQVHTXHQFHVRI RXU
UXOLQJ FDQQRWEH OHIW
RXWZLWKRXWULVNLQJWKHFKDUJHWKDWZHKDYHEHHQOHVVWKDQWKRURXJKDQGKDYHPDGHDQLQFRPSOHWHGHFLVLRQ
0\3RVLWLRQV
,Q WKLV&RQFXUULQJ DQG'LVVHQWLQJ2SLQLRQ ,&21&85ZLWK
WKH FRQFOXVLRQV RI - %HUVDPLQ WR WKH H[WHQW
GLVFXVVHGEHORZDQGDGGP\YRLFHWRWKH6HSDUDWH&RQFXUULQJ2SLQLRQRI-&DUSLRWKDWWKH'$3LVXQFRQVWLWXWLRQDO
6SHFLILFDOO\,KROGWKDW
D WKH&RXUW KDV MXULVGLFWLRQ WRKHDUDQGGHFLGH
WKHSHWLWLRQVXQGHU LWV H[SDQGHGSRZHURI MXGLFLDO
UHYLHZDVSURYLGHGXQGHU6HFWLRQ$UWLFOH9,,,RIWKH&RQVWLWXWLRQDQGDVH[SODLQHGEHORZ
E WKH '$3 YLRODWHV WKH SULQFLSOHV RI FKHFNV DQG EDODQFHV DQG WKH
VHSDUDWLRQ RI SRZHUV WKDW WKH
&RQVWLWXWLRQLQWHJUDWHVLQWRWKHEXGJHWDU\SURFHVV
FWKH'$3YLRODWHVWKHFRQVWLWXWLRQDOSURKLELWLRQVDJDLQVWWKHWUDQVIHURIDSSURSULDWLRQVDQGDJDLQVWWKHWUDQVIHURI
IXQGV IURP RQH EUDQFK RI WKH JRYHUQPHQW WR DQRWKHU ERWK XQGHU
6HFWLRQ RI $UWLFOH 9, RI WKH&RQVWLWXWLRQDQG
GWKH'$3YLRODWHVWKHVSHFLDOFRQGLWLRQVIRUWKHUHOHDVHRIWKH8QSURJUDPPHG)XQG
7KXVWRPHWKH'$3LVXQFRQVWLWXWLRQDOLQPRUHZD\VWKDQRQH
)XUWKHU , JHQHUDOO\ DJUHH ZLWK WKH SRQHQWHV FRQFOXVLRQ UHJDUGLQJ
WKH DSSOLFDELOLW\ RI WKH RSHUDWLYH IDFW
GRFWULQHVXEMHFWWRWKHGHWDLOVGLVFXVVHGEHORZLQWKLV2SLQLRQ
$%ULHI%DFNJURXQG
7KH &RXUW DV KDV EHHQ PHQWLRQHG UXOHG RQ WKH
FRQVWLWXWLRQDOLW\ RI WKH 3'$) DQG IRXQG WKH V\VWHP WR
EHXQFRQVWLWXWLRQDO IRU LWVGLVUHJDUGDQGYLRODWLRQRI
WKHFRQVWLWXWLRQDOVHSDUDWLRQRISRZHUVDQG
WKHFKHFNDQGEDODQFHSULQFLSOHV7KHVHFRQVWLWXWLRQDOWUDQVJUHVVLRQVUHVXOWHGIURPWKHLUUHJXODULWLHVDQGDQRPDOLHVWKDWDWWHQGHGWKH3'$)LPSOHPHQWDWLRQ
%XWHYHQEHIRUHWKH&RXUWFRXOGUXOHRQWKHFRQVWLWXWLRQDOLW\RIWKH3'$)WKHFRQWURYHUV\WKDWLWJHQHUDWHGKDGVSLOOHGLQWR
DQGKDG FUHDWHG UHQHZHGGHPDQGV IRU DFFRXQWDELOLW\ LQ \HW DQRWKHU
JRYHUQPHQWDO DFWLRQ WKH'$3 WKDW
XQWLOWKHQKDGEHHQXQNQRZQ7KH'$3VH[LVWHQFHZDVXQZLWWLQJO\GLVFORVHGWRWKHSXEOLFZKHQDVHQDWRUFKDUJHGZLWKDQRPDOLHVUHJDUGLQJKLV3'$)DWWHPSWHGWRFOHDUKLVQDPHWKURXJKDSULYLOHJHVSHHFK
,Q UHVSRQVH WKH JRYHUQPHQW WKURXJK WKH 'HSDUWPHQW RI %XGJHW
DQG0DQDJHPHQW >'%0@ UHVSRQGHG E\
LVVXLQJSUHVVUHOHDVHVDQGRWKHUSXEOLFFRPPXQLFDWLRQVH[SODLQLQJKRZWKH'$3ZRUNHGDQGKRZLWKDGEHHQEHQHILFLDOWRWKH)LOLSLQRQDWLRQ1R
OHVV WKDQ3UHVLGHQW$TXLQR-UKLPVHOIZHQWRQ WHOHYLVLRQ WRGHIHQG WKH'$3
7KHVH HIIRUWVKRZHYHU SURYHG LQVXIILFLHQW DQG GLG QRW SUHYHQW WKH
SXEOLFV GLVWUXVW KHUHWRIRUH GLUHFWHG DJDLQVW WKH 3'$)
IURPFUHHSLQJLQWRWKH'$3
7KH'$3OLNHWKH3'$)LQYROYHGWKHLPSOHPHQWDWLRQRIWKHQDWLRQDOEXGJHWEXWIRFXVHGODUJHO\RQKRZWKH([HFXWLYHLPSOHPHQWHG
WKH *HQHUDO $SSURSULDWLRQV $FW *$$ $V LQ WKH 3'$) WKH FKDUJHV
LQYROYHG WKH
XQFRQVWLWXWLRQDOLQWUXVLRQE\RQHEUDQFKRIJRYHUQPHQWWKH([HFXWLYH LQWR
WKHH[FOXVLYHSUHURJDWLYHVRIDQRWKHUWKH/HJLVODWLYH
LQWKHEXGJHWDU\SURFHVV
7KH SUHVHQW SHWLWLRQHUV FKDUJH WKDW WKH '$3 ZDV XVHG DV WKH
PHDQV WR DOORZ WKH ([HFXWLYH WR LQWUXGH LQWR
WKHOHJLVODWLYHEXGJHWDU\SURFHVVWKHUHE\VXEYHUWLQJDQGUHQGHULQJXVHOHVVWKHDSSURSULDWLRQV&RQJUHVVPDGHXQGHUWKH*$$,QVKRUWWKURXJKWKH'$3WKH([HFXWLYHHIIHFWLYHO\H[HUFLVHGWKHSRZHURIDSSURSULDWLRQH[FOXVLYHO\UHVHUYHGE\WKH&RQVWLWXWLRQWR&RQJUHVV
, UHFDOO DW WKLV SRLQW WKDW ZH UXOHG LQ %HOJLFD Y ([HFXWLYH
6HFUHWDU\ WKDW WKH 3'$) V\VWHP ZDV XQFRQVWLWXWLRQDOEHFDXVHRI WKH
OHJLVODWLYH LQWUXVLRQ LQWR WKH([HFXWLYHV LPSOHPHQWDWLRQRI
WKH3'$)DYLRODWLRQRI
WKHSULQFLSOHVRIVHSDUDWLRQRISRZHUVDQGFKHFNVDQGEDODQFHV
7KH'$3LQSDUDOOHOZLWKWKH3'$)EXWJRLQJWKHRWKHUZD\DOOHJHGO\DOORZHGWKH([HFXWLYHWRGLVUHJDUGWKH*$$VRWKDWWKHODWWHUFRXOGGHWHUPLQHWKHSURMHFWVDFWLYLWLHVDQGSODQV3$3VZKHUHQDWLRQDOIXQGVZRXOGEHGHSOR\HGDQGVSHQW
FUHDWLQJ WKHUHE\ D EXGJHW LQGHSHQGHQWO\ GHWHUPLQHG E\
WKH([HFXWLYHZLWKLQ WKH FRQJUHVVLRQDOO\ GHWHUPLQHGEXGJHW
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
,I WUXH WKH WZR V\VWHPV WKH 3'$) DQG WKH '$3 HIIHFWLYHO\ DOORZHG
WKH WZR EUDQFKHV RI JRYHUQPHQW
WRXQFRQVWLWXWLRQDOO\VKDUHLQWKHLUUHVSHFWLYHH[FOXVLYHSUHURJDWLYHVLQWKHIRUPXODWLRQDQGLPSOHPHQWDWLRQRIWKHQDWLRQDOEXGJHW
FRQWUDU\ WR WKH FKHFNV DQG EDODQFHV DQG DFFRXQWDELOLW\ V\VWHP
HQYLVLRQHG E\ WKH &RQVWLWXWLRQ 7KLVRYHUDUFKLQJ VKDULQJ V\VWHP
IDFLOLWDWHG LI SUHOLPLQDU\ FRQJUHVVLRQDO DQG QHZV UHSRUWV DUH WR EH
EHOLHYHG WKHIXQQHOLQJRI IXQGV LQWR
WKHSRFNHWVRISROLWLFLDQVDQGXQVFUXSXORXVSULYDWH LQGLYLGXDOV
LQDZLGHVSUHDGDQGV\VWHPLFFRUUXSWLRQRIWKHFRXQWU\VEXGJHWDU\SURFHVV
1RWDEO\ WKLV FRPELQHG DSSOLFDWLRQ RI WKH 3'$) DQG '$3 V\VWHPV
DFFRUGLQJ WR QHZV UHSRUWV DQG WKH
SULYLOHJHVSHHFKRIRQH6HQDWRUHQDEOHGWKH([HFXWLYHWRVHFXUHWKHYRWHVIRUWKHFRQYLFWLRQRIIRUPHU&KLHI-XVWLFH5HQDWR&RURQD
DQG WKH ILOLQJ RI LPSHDFKPHQW FKDUJHV DJDLQVW
IRUPHU2PEXGVPDQ0HUFHGLWDV*XWLHUUH] $QRWKHU VHQDWRUDOVR VSRNH LQ KLV
RZQ SULYLOHJH VSHHFK RQ ZKDW WUDQVSLUHG ZKLOH WKH LPSHDFKPHQW FDVH
DJDLQVW WKH IRUPHU
&KLHI-XVWLFHZDVEHIRUHWKH6HQDWH,QWHUHVWLQJO\ERWKVHQDWRUVZHUHUHFLSLHQWVRI3'$)IXQGVRYHUDQGDERYHWKHXVXDO3'$)DOORFDWLRQDQGERWKQRZVWDQGFULPLQDOO\FKDUJHG
LQUHODWLRQZLWK WKH LPSOHPHQWDWLRQRI3'$)IXQGV$
WKLUGVHQDWRUZKRKDGQRWVSRNHQDWDOODERXWWKHLPSHDFKPHQWOLNHZLVHUHFHLYHGDGGLWLRQDO3'$)IXQGVDQGDOVRVWDQGVVLPLODUO\FKDUJHG
:KDW LV WUXO\ IULJKWHQLQJ LQDOO WKHVHVHULHVRIHYHQWV LV WKDW WKH
LOOHJDOLWLHVEDVHGRQFRQJUHVVLRQDO LQYHVWLJDWLRQVDQG WKH
LQLWLDOFKDUJHV UHFHQWO\EURXJKWE\ WKH2PEXGVPDQDSSHDUHG
WRKDYHEHHQSHUYDVLYHO\SUDFWLFHG WKXVWKH\ FDXJKW LQ WKHLU ZHEV D
VLJQLILFDQW QXPEHU RI VHQDWRUV DQG FRQJUHVVPHQ $OO WKHVH DSSHDUHG
EDVHG RQ WKHHYLGHQFH SUHVHQWHG EHIRUH WKLV&RXUW WR KDYH
EHHQPDGH SRVVLEOH WKURXJK WKH DFWLRQ RI QR OHVV WKDQ WKH
KLJKHVWOHYHOVRIWKH([HFXWLYH
7KXV ZKDW DSSHDUV WR EH LQYROYHG LV QRW D RQHWLPH DQG RQHVKRW
DFW RI FRUUXSWLRQ E\ RQH RU D IHZ
JRYHUQPHQWRIILFLDOVEXWE\DKRVWRISXEOLFRIILFLDOVZKRVHIXQFWLRQVDQGLQWHUGHSHQGHQWPRYHVVXSSRUWHGWKHLUUHVSHFWLYHSULYDWHDQGLQGLYLGXDOQHIDULRXVREMHFWLYHV
,QWKHVHOLJKWVDQGLIRQO\WRFOHDUWKHDLUDQGHQVXUHWKDWWKHJRYHUQPHQWPDLQWDLQVWKHSHRSOHVWUXVWWKH&RXUWPXVWQRZGHFLVLYHO\H[HUFLVHLWVGXW\WRSURWHFWDQGGHIHQGWKH&RQVWLWXWLRQLIQHHGEHWRGHFODUHWKHXQFRQVWLWXWLRQDOLW\RIWKH'$3LQWKHVDPHGHFLVLYHPDQQHUZHGHFODUHGWKH3'$)V\VWHPXQFRQVWLWXWLRQDO7RVKLUNIURPWKLVUHVSRQVLELOLW\LVWRFRQVHQWWRWKHSHUYHUVLRQRIRXUUHSXEOLFDQZD\RIOLIH
$WLWVZRUVWWKHFRQWLQXDWLRQRIWKHSUHVHQWV\VWHPVLIWUXHFDQOHDGWRWKHFRQFHQWUDWLRQRISRZHULQWKH([HFXWLYHDVWKHQDWLRQDOEXGJHWZRXOGLQHIIHFWEHLWVVROHSUHURJDWLYH7KLVVXUUHQGHURIWKH/HJLVODWLYHVSRZHURIWKHSXUVHWRWKH([HFXWLYH
DIIHFWV QRW RQO\ WKH EXGJHWDU\ SURFHVV DQG DFFRXQWDELOLW\ EXW
LQMXUHV WKH OHJLVODWLYH SRZHU LWVHOI DV
WKHIXQGVWRILQDQFHOHJLVODWLRQFUDIWHGE\&RQJUHVVZRXOGEHVXEMHFWWRWKHVROHZLOORIWKH([HFXWLYH%UDQFK,QQRWLPHLQWUXVLRQ
LQWR WKH -XGLFLDU\ FDQQRW EXW IROORZ WKURXJK LQWLPLGDWLRQ DQG
SHUYHUVLRQ RI YDOXHV:H KDYH KDG D VLPLODULQFLGHQW RI WKLV W\SH LQ
RXU KLVWRU\ DQG ZH RXJKW E\ WKLV WLPH WR KDYH OHDUQHG RXU OHVVRQV
$V RQH
SKLORVRSKHUFDXWLRQHGWKRVHZKRGRQRWUHPHPEHUWKHSDVWDUHFRQGHPQHGWRUHSHDWLW
:KLOHZHKDYH WKHGXW\ WR SDVVXSRQ WKH YDOLGLW\ RI WKH'$3ZHPXVW DW
WKH VDPH WLPH GR VR IXOO\ DZDUHRI
WKHFRQVHTXHQFHVRIRXUGHFLVLRQ$V,KDYHVDLGWKHKLJKHVWVWDNHVDUHLQYROYHGIRUWKHFRXQWU\
,ILQGHHGWKH'$3LVFRQVWLWXWLRQDODVWKHJRYHUQPHQWFODLPVZHPXVWLPPHGLDWHO\DQGGHFLVLYHO\VD\VRWRFOHDUWKHSUHVHQWO\PXGGOHGFRQVWLWXWLRQDODLUWRIRVWHUWKHVWDELOLW\RIRXUJRYHUQPHQWDQGWRVLJQLILFDQWO\FRQWULEXWHWRVKRULQJXS
RXU SHRSOHV WUXVW DQG WKH QDWLRQVPRUDO YDOXHV2XU UXOLQJ LI LW LV
IDLU DQG DUULYHG DW ZLWK LQWHJULW\ ZRXOG
KHOSDFKLHYHWKHVHREMHFWLYHV
2QWKHRWKHUKDQGLIWKH'$3LVXQFRQVWLWXWLRQDOWKHQZHVKRXOGXQHTXLYRFDOO\VRGHFODUHDVZHGLGLQWKH3'$)FDVHEXWZHVKRXOGGRWKLVZLWKDQH\HRQFRQVFLRXVO\SURWHFWLQJRXULQVWLWXWLRQVZKHWKHUWKH\EHH[HFXWLYH
OHJLVODWLYHRUMXGLFLDOZHFDQQRWDLPWRGHVWUR\RUZHDNHQRULPSRVHWKHVXSHULRULW\WKDWWKH&RQVWLWXWLRQGLGQRWJUDQWXV2XUDLPVKRXOG
EH WRPDLQWDLQ WKH EDODQFH LQWHQGHGE\ RXU&RQVWLWXWLRQ WKH
JXLGLQJ LQVWUXPHQW WKDWPXVW DW DOO WLPHV UHLJQVXSUHPH
7KHVHEDODQFLQJDQGVWUHQJWKHQLQJDFWVRIFRXUVHFDQQRWFRPHDWWKHVDFULILFHRIWKHSXEOLFDFFRXQWDELOLW\WKDWRXU&RQVWLWXWLRQ
KDV HQVKULQHG LQVWLWXWLRQV DUH LUUHSODFHDEOH EXW SXEOLF RIILFLDOV
DUH QRW DQG VKRXOG JR DQG IDOO LI WKH\PXVW7KLV LV
WKHW\SHRIDFWLRQWKDWZLOOHQKDQFHWUDQVSDUHQF\DQGSXEOLFDFFRXQWDELOLW\7KDW
WKRVHZKRHUUHGPXVWVXIIHU LV D FRQVHTXHQFH WKDW HYLOGRHUV VKRXOG KDYH
IRUHVHHQ HYHQ EHIRUH WKH\ XQGHUWRRN WKHLU LOOHJDO
DQGXQFRQVWLWXWLRQDODFW
)RUHDVHRISUHVHQWDWLRQWKLV&RQFXUULQJDQG'LVVHQWLQJ2SLQLRQVKDOOSURFHHGXQGHUWKHIROORZLQJVWUXFWXUH
$)DFWXDO$QWHFHGHQWV
7KH'$3DQGLWVRULJLQV
D7KH0HPRUDQGDIURP'%06HFUHWDU\)ORUHQFLR$EDGWRWKH3UHVLGHQW
%3UHOLPLQDU\0DWWHUV
7KH&RXUWVH[SDQGHGSRZHURIMXGLFLDOUHYLHZ
3ULPDIDFLHVKRZLQJRIJUDYHDEXVHRIGLVFUHWLRQ
D7KHODFNRIDXGLWILQGLQJVGRHVQRWQHJDWHJUDYHDEXVHRIGLVFUHWLRQ
7UDQVFHQGHQWDOLPSRUWDQFHRIWKHLVVXHVSUHVHQWHGE\WKHSHWLWLRQV
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
-XVWLFLDELOLW\DQG3ROLWLFDO4XHVWLRQV
7KH&RXUWVERXQGDU\NHHSLQJUROHLQWLPHVRISROLWLFDOXSKHDYDO
&6XEVWDQWLYH0DWWHUV
7KH'$3YLRODWHV WKHSULQFLSOHVRIFKHFNVDQGEDODQFHVDQG
WKHVHSDUDWLRQRISRZHUV WKDW
WKH&RQVWLWXWLRQLQWHJUDWHGLQWKHEXGJHWDU\SURFHVV
D7KHSULQFLSOHRIVHSDUDWLRQRISRZHUVDQGFKHFNVDQGEDODQFHVLQWKHEXGJHWDU\SURFHVV
E+RZWKH'$3YLRODWHVWKHVHSULQFLSOHV
7KH'$3YLRODWHVWKHSURKLELWLRQDJDLQVWWKHWUDQVIHURIDSSURSULDWLRQV
DWKHSRZHUWRDXJPHQWLVDYHU\QDUURZH[FHSWLRQWRWKHJHQHUDOSURKLELWLRQDJDLQVWWKHWUDQVIHURIDSSURSULDWLRQV
EWKHQHHGIRUDFWXDOVDYLQJVEHIRUHWKHSRZHUWRDXJPHQWPD\EHH[HUFLVHG
FVDYLQJVFDQQRWEHXVHGWRIXQGSURJUDPVDQGSURMHFWVQRWDSSURSULDWHGE\&RQJUHVV
GDGGLWLRQDOOLPLWDWLRQVLPSRVHGE\&RQJUHVVXQGHUWKH*$$
LGHILQLWLRQRIVDYLQJV
LLWZR\HDUSHULRGZLWKLQZKLFKDSSURSULDWLRQVIRU&DSLWDO2XWOD\DQG0DLQWHQDQFHDQGRWKHU2SHUDWLQJ([SHQVH022(PD\EHVSHQW
LLLJHQHUDOSURKLELWLRQDJDLQVWLPSRXQGPHQWRIUHOHDVHV
HWKHVRXUFHVRI'$3IXQGVFDQQRWTXDOLI\DVVDYLQJV
LXQREOLJDWHGDOORWPHQWV
LILQDOGLVFRQWLQXDQFHRUDEDQGRQPHQW
LXVHRIVHFWLRQDVMXVWLILFDWLRQ
IWKH'$3YLRODWHVWKHSURKLELWLRQDJDLQVWLPSRXQGPHQW
JTXDOLILFDWLRQVWRWKH3UHVLGHQWVIOH[LELOLWLHVLQEXGJHWH[HFXWLRQ
KWKH'$3LQIXQGLQJLWHPVQRWIRXQGLQWKH*$$YLRODWHGWKH&RQVWLWXWLRQ
7KH'$3YLRODWHVWKHVSHFLDOFRQGLWLRQVIRUWKHUHOHDVHRIWKH8QSURJUDPPHG)XQGLQWKHDQG*$$V
7KHRSHUDWLYHIDFWGRFWULQHFRQFHSWOLPLWVDQGDSSOLFDWLRQWRWKH'$3VXQFRQVWLWXWLRQDOLW\
$)DFWXDO$QWHFHGHQWV
7KH'$3DQGLWVRULJLQV
2Q6HSWHPEHU6HFUHWDU\$EDGUHOHDVHGDQRIILFLDOVWDWHPHQWWKURXJKWKH'%0ZHEVLWHH[SODLQLQJWKDWWKHDPRXQWVUHOHDVHGWR6HQDWRUVRQWRSRIWKHLUUHJXODU3'$)DOORFDWLRQVWRZDUGVWKHHQGRIZHUHSDUWRIDIXQGKHFDOOHGWKH'$3+HFODLPHGWKDWWKHVHUHOHDVHVZHUHLQIDFWQRWWKHILUVWWLPHWKDWUHOHDVHVIURP'$3ZHUHPDGHWRIXQGSURMHFWUHTXHVWVIURPOHJLVODWRUVEHFDXVHWKH'$3KDGEHHQLQH[LVWHQFHVLQFHWKHODWWHUSDUWRI
,QWKHFRXUVHRIKHDULQJWKHVHSHWLWLRQVWKHUHVSRQGHQWVVXEPLWWHGHYLGHQFHSDFNHWVH[SODLQLQJKRZWKH'$3FDPHLQWRH[LVWHQFHDQGKRZLWRSHUDWHG:HFDQWKXVDXWKRULWDWLYHO\DQGZLWKVXIILFLHQWIDFWXDOEDVHVGLVFXVVWKHVHSRLQWV
D7KH0HPRUDQGDIURP6HFUHWDU\$EDGWRWKH3UHVLGHQW
,Q D 0HPRUDQGXP GDWHG 2FWREHU 6HFUHWDU\ $EDG VRXJKW DQG VHFXUHG
D IRUPDO FRQILUPDWLRQ RI WKH3UHVLGHQWV DSSURYDO RI WKH '$3 IRU D
WRWDO RI 3 %LOOLRQ +H LGHQWLILHG WKH '$3V IXQG VRXUFHV DQG
WKHLUGHVFULSWLRQDV
)36@DSSURSULDWLRQVZKLFKZLOOODSVHDWWKHHQGRI)
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
)
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
$GRSWLRQRI2SHUDWLRQDO(IILFLHQF\0HDVXUH:LWKGUDZDORI$JHQFLHV8QREOLJDWHG$OORWPHQWVDVRI-XQH
3HU WKH 3UHVLGHQWV GLUHFWLYH GDWHG -XQH 1%& 1R DXWKRUL]HG
6HFUHWDU\ $EDG WR ZLWKGUDZ
WKHXQREOLJDWHGDOORWPHQWVRIDJHQFLHVWKDWKDGORZOHYHORIREOLJDWLRQVDVRI-XQH7KHVHXQREOLJDWHGDOORWPHQWVXQGHU1%&1RUHIHUUHGWRWZRNLQGVRIDOORWPHQWVRQHLVWKHFRQWLQXLQJDOORWPHQWWKDWLVFKDUJHGDJDLQVWWKH*$$IRU)
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
,QFRQWUDVWZLWKSUHYLRXVFRQVWLWXWLRQVWKH&RQVWLWXWLRQVXEVWDQWLDOO\IOHVKHGRXWWKHPHDQLQJRIMXGLFLDOSRZHUQRWRQO\E\FRQILUPLQJWKHPHDQLQJRIWKHWHUPDVXQGHUVWRRGE\MXULVSUXGHQFHXSWRWKDWWLPHEXWE\JRLQJEH\RQGWKHDFFHSWHGMXULVSUXGHQWLDOPHDQLQJRIWKHWHUP
6HFWLRQ$UWLFOH9,,,RIWKH&RQVWLWXWLRQUHDGV
6HFWLRQ7KHMXGLFLDOSRZHUVKDOOEHYHVWHGLQRQH6XSUHPH&RXUWDQGLQVXFKORZHUFRXUWVDVPD\EHHVWDEOLVKHGE\ODZ
-XGLFLDOSRZHULQFOXGHVWKHGXW\RIWKHFRXUWVRIMXVWLFHWRVHWWOHDFWXDOFRQWURYHUVLHVLQYROYLQJULJKWVZKLFKDUHOHJDOO\GHPDQGDEOHDQGHQIRUFHDEOH$1'WRGHWHUPLQHZKHWKHURUQRWWKHUHKDVEHHQDJUDYHDEXVHRIGLVFUHWLRQDPRXQWLQJWRODFNRUH[FHVVRIMXULVGLFWLRQRQWKHSDUWRIDQ\EUDQFKRULQVWUXPHQWDOLW\RIWKH*RYHUQPHQWLWDOLFVHPSKDVHVDQGXQGHUVFRUHVXSSOLHG
8QGHU WKHVH WHUPV WKH SUHVHQW &RQVWLWXWLRQ QRW RQO\
LQWHJUDWHV WKH WUDGLWLRQDO GHILQLWLRQ RI MXGLFLDO SRZHU
EXWLQWURGXFHVDVZHOODFRPSOHWHO\QHZSRZHUDQGGXW\WRWKH-XGLFLDU\XQGHUWKHODVWSKUDVHWRGHWHUPLQHZKHWKHURUQRWWKHUHKDVEHHQDJUDYHDEXVHRIGLVFUHWLRQDPRXQWLQJWRODFNRUH[FHVVRIMXULVGLFWLRQRQWKHSDUWRIDQ\EUDQFKRULQVWUXPHQWDOLW\RIWKH*RYHUQPHQW
7KLVDGGLWLRQZDVDSSDUHQWO\LQUHVSRQVHWRWKH-XGLFLDU\VSDVWH[SHULHQFHRILQYRNLQJWKHSROLWLFDOTXHVWLRQGRFWULQHWRDYRLGFDVHVWKDWKDGSROLWLFDOGLPHQVLRQVEXWZHUHRWKHUZLVHMXVWLFLDEOH7KHDGGLWLRQUHVSRQGHGDVZHOOWRWKHVRFLHWDOGLVTXLHWWKDWUHVXOWHGIURPWKHVHSDVWMXGLFLDOUXOLQJV
8QGHUWKHH[SDQGHGMXGLFLDOSRZHUMXVWLFLDELOLW\H[SUHVVO\DQGWH[WXDOO\GHSHQGVRQO\RQWKHSUHVHQFHRUDEVHQFHRIJUDYHDEXVHRIGLVFUHWLRQDVGLVWLQJXLVKHGIURPDVLWXDWLRQZKHUHWKHLVVXHRIFRQVWLWXWLRQDOYDOLGLW\LVUDLVHGZLWKLQDWUDGLWLRQDOO\MXVWLFLDEOHFDVHZKLFKGHPDQGVWKDWWKHUHTXLUHPHQWRIDFWXDOFRQWURYHUV\EDVHGRQVSHFLILFOHJDOULJKWVPXVW
H[LVW 1RWDEO\ HYHQ LI WKH UHTXLUHPHQWV XQGHU WKH WUDGLWLRQDO
GHILQLWLRQ RI MXGLFLDO SRZHU DUH DSSOLHG
WKHVHUHTXLVLWHVDUHFRPSOLHGZLWKRQFHJUDYHDEXVHRIGLVFUHWLRQLVSULPDIDFLHVKRZQWRKDYHWDNHQSODFH7KHSUHVHQFHRUDEVHQFHRIJUDYHDEXVHRIGLVFUHWLRQLVWKHMXVWLFLDEOHLVVXHWREHUHVROYHG
1HFHVVDULO\DPDWWHULVULSHIRUDGMXGLFDWLRQXQGHUWKHH[SDQGHGMXGLFLDOSRZHULIWKHDVVDLOHGODZRUUXOHLVDOUHDG\LQHIIHFW
,I VRPHWKLQJ KDG DOUHDG\ EHHQ DFFRPSOLVKHG RU SHUIRUPHG E\ WKH
/HJLVODWLYH DQGRU WKH([HFXWLYH DQG
WKHSHWLWLRQHUVXIILFLHQWO\DOOHJHVWKHH[LVWHQFHRIDQLPPHGLDWHRUWKUHDWHQHGLQMXU\WRLWVHOIDVDUHVXOWRIWKHFKDOOHQJHGDFWLRQWKHQWKHFRQWURYHUV\FDQQRWEXWDOUHDG\EHULSHIRUDGMXGLFDWLRQ
,Q WKH H[SDQGHG MXGLFLDO SRZHU DQ\ FLWL]HQ RI WKH 3KLOLSSLQHV WR
ZKRP WKH DVVDLOHG ODZ RU UXOH LV VKRZQ WR
DSSO\QHFHVVDULO\KDVORFXVVWDQGLVLQFHDFRQVWLWXWLRQDOYLRODWLRQFRQVWLWXWHVDQDIIURQWRULQMXU\WRWKHDIIHFWHGFLWL]HQVRIWKHFRXQWU\,IDWDOODOHVVVWULQJHQWUHTXLUHPHQWRIORFXVVWDQGLRQO\QHHGVWREHVKRZQWRGLIIHUHQWLDWHDMXVWLFLDEOHFDVHRIWKLVW\SHIURPWKHSXUHRUPHUHRSLQLRQWKDWFRXUWVFDQQRWUHQGHU
7KHWUDGLWLRQDOUXOHVRQKLHUDUFK\RIFRXUWVDQGWUDQVFHQGHQWDOLPSRUWDQFHIDUIURPEHLQJJURXQGVIRUWKHGLVPLVVDORIWKHSHWLWLRQUDLVLQJWKHTXHVWLRQRIXQFRQVWLWXWLRQDOLW\DUHQHFHVVDULO\UHGXFHGWRUXOHVUHODWLQJWRWKHOHYHORIFRXUWWKDWVKRXOGKDQGOHWKHFRQWURYHUV\DVGLUHFWHGE\WKH6XSUHPH&RXUW
7KXV DOO FRXUWV KDYH WKH SRZHU RI H[SDQGHG MXGLFLDO UHYLHZ EXW
RQO\ ZKHQ D SHWLWLRQ LQYROYHV D PDWWHU RIWUDQVFHQGHQWDO LPSRUWDQFH
VKRXOG LW EH GLUHFWO\ ILOHG EHIRUH WKLV&RXUW2WKHUZLVH
WKH&RXUWPD\HLWKHU GLVPLVV WKHSHWLWLRQ RU UHPDQG LW WR WKH
DSSURSULDWH ORZHU FRXUW EDVHG RQ LWV FRQVLGHUDWLRQ RI WKH XUJHQF\
LPSRUWDQFH RU WKHHYLGHQWLDU\UHTXLUHPHQWVRIWKHFDVH
,QRWKHUZRUGVSHWLWLRQVLQRUGHUWRVXFFHVVIXOO\LQYRNHWKH&RXUWVSRZHURIH[SDQGHGMXGLFLDOUHYLHZPXVWVDWLVI\WZRHVVHQWLDOUHTXLVLWHVILUVWWKH\PXVWGHPRQVWUDWHDSULPDIDFLHVKRZLQJRIJUDYHDEXVHRIGLVFUHWLRQRQWKHSDUWRIWKH
JRYHUQPHQWDO ERG\V DFWLRQV DQG VHFRQG WKH\ PXVW SURYH WKDW WKH\
UHODWH WR PDWWHUV RI WUDQVFHQGHQWDOLPSRUWDQFHWRWKHQDWLRQ
7KH ILUVW UHTXLUHPHQWHVWDEOLVKHV WKHQHHG IRU
WKH&RXUWVH[HUFLVHRI H[SDQGHG MXGLFLDO UHYLHZSRZHUV WKH
VHFRQGUHTXLUHPHQWMXVWLILHVGLUHFWUHFRXUVHWRWKH&RXUWDQGDUHOD[DWLRQRIVWDQGLQJUHTXLUHPHQWV
7KHSUHVHQWSHWLWLRQVFOHDUO\VDWLVI\WKHVHUHTXLVLWHVDVH[SODLQHGEHORZ
3ULPDIDFLHVKRZLQJRIJUDYHDEXVHRIGLVFUHWLRQ
7KH UHVSRQGHQWVSRVLW WKDW WKHSHWLWLRQHUVDOOHJDWLRQVPLVHUDEO\
IDLOHG
WRPDNHDFDVHRIJUDYHDEXVHRIGLVFUHWLRQFRQVLGHULQJWKHLQVXIILFLHQF\DQGXQFHUWDLQW\RI
WKHIDFWVDOOHJHGDVWKH\DUHPRVWO\EDVHGRQQHZVSDSHUFOLSSLQJVDQG PHGLD
UHSRUWV *LYHQ WKH LQQXPHUDEOH DOORWPHQWV DQG GLVEXUVHPHQWV WKH\
DUJXH WKDW WKH SHWLWLRQHUV
DUHUHTXLUHGWRHVWDEOLVKZLWKVXIILFLHQWFODULW\WKHNLQGVRIDOORWPHQWVDQGGLVEXUVHPHQWVFRPSODLQHGRILQWKHSHWLWLRQV2QWKLVEDVLVWKHUHVSRQGHQWVTXHVWLRQWKHSUHVHQFHRIDQDFWXDOFDVHRUFRQWURYHUV\LQWKHSHWLWLRQV
,FDQQRWDJUHHZLWKWKHUHVSRQGHQWVSRVLWLRQV
,QRWHWKDWDVLGHIURPQHZVSDSHUFOLSSLQJVVKRZLQJWKHDQWHFHGHQWVVXUURXQGLQJWKH'$3WKHSHWLWLRQVDUHILOOHGZLWKTXRWDWLRQV
IURP WKH UHVSRQGHQWV WKHPVHOYHVHLWKHU WKURXJKSUHVV UHOHDVHV WR
WKHJHQHUDOSXEOLFRUDVSXEOLVKHG LQJRYHUQPHQWZHEVLWHV ,Q IDFW WKH
SHWLWLRQV TXRWLQJ WKH SUHVV UHOHDVH SXEOLVKHG LQ WKH UHVSRQGHQWV
ZHEVLWH
HQXPHUDWHGGLVEXUVHPHQWVUHOHDVHGWKURXJKWKH'$3LWDOVRLQFOXGHGDGPLVVLRQVIURPQROHVVWKDQ6HFUHWDU\$EDGUHJDUGLQJ
WKH XVH RI IXQGV IURP WKH '$3 WR IXQG SURMHFWV LGHQWLILHG E\
OHJLVODWRUV RQ WRS RI WKHLU UHJXODU 3'$)DOORFDWLRQV
$GGLWLRQDOO\ WKH UHVSRQGHQWV LQ WKHFRXUVHRI
WKHRUDODUJXPHQWVVXEPLWWHGGHWDLOVRI WKHSURJUDPV IXQGHGE\ WKH
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
'$3DQGDGPLWWHG LQ&RXUW WKDW WKH
IXQGLQJRI&RQJUHVVHOLEUDU\DQGFHUWDLQSURMHFWV LQ
WKH&2$FDPHIURPWKH'$37KH\OLNHZLVHVWDWHGLQWKHLUVXEPLWWHGPHPRUDQGXPWKDWWKH3UHVLGHQWPDGHDYDLODEOHWRWKH&RPPLVVLRQRQ(OHFWLRQV&20(/(&WKHVDYLQJVRIKLVGHSDUWPHQWXSRQUHTXHVWIRUIXQGV
7KHPHFKDQLFVE\ZKLFKIXQGVZHUHSRROHGWRJHWKHUWRFUHDWHDQGIXQGWKH'$3DUHDOVRHYLGHQWIURPWKHVWDWHPHQWVSXEOLVKHG
LQ WKH'%0ZHEVLWHDVZHOODV
LQQDWLRQDOEXGJHWFLUFXODUVDQGDSSURYHGPHPRUDQGD LPSOHPHQWLQJ
WKH'$37KHUHVSRQGHQWVDOVRVXEPLWWHGDPHPRVKRZLQJWKH3UHVLGHQWVDSSURYDORIWKH'$3VFUHDWLRQ
$OORIWKHVHFXPXODWLYHO\DQGVXIILFLHQWO\OHDGWRDSULPDIDFLHFDVHRIJUDYHDEXVHRIGLVFUHWLRQE\WKH([HFXWLYHLQWKHKDQGOLQJRISXEOLF
IXQGV ,QRWKHUZRUGV WKHVHDGPLWWHGSLHFHVRIHYLGHQFH WDNHQ
WRJHWKHUVXSSRUW
WKHSHWLWLRQHUVDOOHJDWLRQVDQGHVWDEOLVKVXIILFLHQWEDVLFSUHPLVHVIRUWKH&RXUWVDFWLRQRQWKHPHULWV:KLOHWKH&RXUWXQOLNHWKHWULDOFRXUWV
GRHV QRW FRQGXFW SURFHHGLQJV WR UHFHLYH HYLGHQFH LW PXVW UHFRJQL]H
DV HVWDEOLVKHG WKH IDFWV DGPLWWHG
RUXQGLVSXWHGO\UHSUHVHQWHGE\WKHSDUWLHVWKHPVHOYHV
)LUVW WKH H[LVWHQFH RI WKH'$3 LWVHOI WKH MXVWLILFDWLRQ IRU LWV
FUHDWLRQ WKH UHVSRQGHQWV OHJDO FKDUDFWHUL]DWLRQ RI WKHVRXUFH RI'$3
IXQGV LH XQREOLJDWHG DOORWPHQWV DQG XQUHOHDVHG DSSURSULDWLRQV IRU
VORZPRYLQJ SURMHFWV DQG
WKHYDULRXVSXUSRVHVIRUZKLFKWKH'$3IXQGVZRXOGEHXVHGLHIRU3'$)DXJPHQWDWLRQDQGIRUDLGLQJRWKHUEUDQFKHVRIJRYHUQPHQWDQGRWKHUFRQVWLWXWLRQDOERGLHVDUHFOHDUO\DQGLQGLVSXWDEO\VKRZQ
6HFRQGWKHUHVSRQGHQWVXQGLVSXWHGUHDOLJQPHQWRIIXQGVIURPRQHSRLQWWRDQRWKHULQHYLWDEO\UDLVHGTXHVWLRQVWKDWDVGLVFXVVHGDERYHDUHULSHIRUFRQVWLWXWLRQDOVFUXWLQ\
7KH HVWDEOLVKHG SULPD IDFLH FDVH PHDQV WKDW ZLWKRXW FRQVLGHULQJ
DQ\ FRQWUDGLFWLQJ HYLGHQFH WKH
DOOHJDWLRQVDGPLVVLRQVRIILFLDOVWDWHPHQWVDQGGRFXPHQWDU\HYLGHQFHEHIRUH
WKH&RXUWVXIILFLHQWO\VKRZ WKHH[LVWHQFHRIJUDYHDEXVH RI GLVFUHWLRQ
7KLV VLWXDWLRQ WR P\ PLQG LV SDWHQW IURP WKH DOOHJDWLRQV LQ WKH
SHWLWLRQV UHDG ZLWK WKH
FLWHGDGPLVVLRQVDQGWKRVHREWDLQHGWKURXJKWKHRUDODUJXPHQWVSDUWLFXODUO\RQKRZVDYLQJVKDGEHHQJHQHUDWHGDQGWKHLUXVHVDQGRQWKHWUDQVIHURIIXQGVEXGJHWHGIRUWKH([HFXWLYHWRWKH/HJLVODWLYHWKH&2$DQGWKH&20(/(&
D7KHODFNRIDXGLWILQGLQJVGRHVQRWQHJDWHJUDYHDEXVHRIGLVFUHWLRQ
7KH UHVSRQGHQWV DGGLWLRQDOO\ GHQ\ WKH H[LVWHQFH RI DQ DFWXDO
FDVH EHFDXVH WKH &2$ KDV \HW WR UHQGHU LWV
DXGLWILQGLQJVWRGHWHUPLQHZKHWKHU WKH'$3IXQGHGSURMHFWV LGHQWLILHG LQ
WKHSHWLWLRQVDUH ODZIXORUQRW
WKXVVKRZLQJWKDWWKHSHWLWLRQVPD\EHSUHPDWXUH
,GRQRWILQGWKLVFRQWHQWLRQSHUVXDVLYH
7KH LVVXHRI FULPLQDO FLYLO RU DGPLQLVWUDWLYH OLDELOLW\
GHWHUPLQHGRQ WKHEDVLV DPRQJRWKHUV RI WKH&2$V
ILQGLQJVGRHVQRWDQGFDQQRWSUHHPSWWKH LVVXHRIFRQVWLWXWLRQDOLW\ ,QIDFW
WKH&RXUWV ILQGLQJRIXQFRQVWLWXWLRQDOLW\
LQHYLWDEO\OHDGVWRWKHGHWHUPLQDWLRQRIWKHSRVVLELOLW\RIWKHFRPPLVVLRQRILQIUDFWLRQVWKDWFDQJLYHULVHWRGLIIHUHQWOLDELOLWLHV7KH&RXUWV
ILQGLQJV WRR VKRXOG EH PDWHULDO LQ WKH DSSURSULDWH SURFHHGLQJV
ZKHUH WKH OLDELOLWLHV DULVLQJ IURP
JUDYHFRQVWLWXWLRQDOYLRODWLRQVDUHSURSHUO\GHWHUPLQHG
7KHSULPDIDFLHFDVHDVHVWDEOLVKHGDQGVKRZQLQWKHVHSURFHHGLQJVLVVXIILFLHQWWRUHVROYHWKHLVVXHRIZKHWKHUWKH([HFXWLYHFRPPLWWHGJUDYHDEXVHRIGLVFUHWLRQLQFUHDWLQJDQGLPSOHPHQWLQJWKH'$3,QRWKHUZRUGVWKHDEVHQFHRIDQ\&2$ILQGLQJRQWKHYDOLGLW\RIWKHGLVEXUVHPHQWVXQGHUWKH'$3FDQQRWUHQGHUWKHSUHVHQWSHWLWLRQVSUHPDWXUH
7RDYRLGDQ\FRQIXVLRQOHWPHUHVWDWHDQGFODULI\P\YLHZWKDWZKLOHWKH&2$FDQUXOHRQWKHOHJDOLW\RUUHJXODULW\RIDQ
LWHPRI H[SHQVH LW FDQQRW UXOHRQ WKH FRQVWLWXWLRQDOLW\ RI WKHPHDVXUH
WKDWPDGH
WKHH[SHQGLWXUHSRVVLEOH7KLVLVVXHUHPDLQVIRUWKHFRXUWVQRWIRUWKH&2$WRGHFLGHXSRQ
2Q WKH VDPH UHDVRQLQJ WKH LQYRFDWLRQ RI WKH SUHVXPSWLRQ RI
FRQVWLWXWLRQDOLW\ RI OHJLVODWLYH DQG H[HFXWLYH
DFWVLPPHGLDWHO\ORVHVLWVDSSHDOZKHQLWLVFRQVLGHUHGWKDWWKHSUHVXPSWLRQLVQHYHUPHDQWWRVKLHOGJRYHUQPHQWRIILFLDOVIURPFKDOOHQJHVDJDLQVWWKHLURIILFLDODFWLRQVRUIURPOLDELOLW\ZKHUHWKHYLRODWLRQRIWKH&RQVWLWXWLRQLVRWKHUZLVHFOHDUDQGXQHTXLYRFDO
7UDQVFHQGHQWDOLPSRUWDQFHRIWKHLVVXHVSUHVHQWHGE\WKHSHWLWLRQV
7KHSHWLWLRQVOLNHZLVHHVWDEOLVKWKHVHFRQGUHTXLUHPHQWRIWUDQVFHQGHQWDOLPSRUWDQFH
:KLOHWKHFRQFHSWRIWUDQVFHQGHQWDO
LPSRUWDQFHKDVQRGRFWULQDOGHILQLWLRQIRUPHU6XSUHPH&RXUW-XVWLFH)ORUHQWLQR3)HOLFLDQRFDPHXSZLWKWKHIROORZLQJGHWHUPLQDQWVZKRVHGHJUHHRISUHVHQFHRUDEVHQFHFDQJXLGHWKHFRXUWV
LQGHWHUPLQLQJ ZKHWKHU D FDVH LV RQH RI WUDQVFHQGHQWDO LPSRUWDQFH
WKH FKDUDFWHU RI WKH IXQGV RU RWKHU DVVHWVLQYROYHG LQ WKH FDVH
WKHSUHVHQFHRI D FOHDU FDVHRI GLVUHJDUGRI D FRQVWLWXWLRQDO RU
VWDWXWRU\ SURKLELWLRQE\
WKHSXEOLFUHVSRQGHQWDJHQF\RULQVWUXPHQWDOLW\RIWKHJRYHUQPHQWDQGWKHODFNRIDQ\RWKHUSDUW\ZLWKDPRUHGLUHFWDQGVSHFLILFLQWHUHVWLQUDLVLQJWKHTXHVWLRQVEHLQJUDLVHG
,VXEPLWWKDWWKHVHGHWHUPLQDQWVDUHDOOSUHVHQWLQWKHFDVHVEHIRUHXV
)RU RQH WKH ([HFXWLYHV XQGLVSXWHG FUHDWLRQ DQG LPSOHPHQWDWLRQ RI
WKH '$3 ZKLFK LQYROYHV ELOOLRQV RI
WD[SD\HUVPRQH\DQGZKLFKSRWHQWLDOO\LQYROYHVELOOLRQVPRUHXQOHVVKDOWHGVDWLVI\WKHILUVWGHWHUPLQDQW7RSRLQWRXWDSUHVHQWREYLRXVUHDOLW\WKH([HFXWLYHLVHYHQQRZHQJDJHGLQDVKDPHFDPSDLJQWRSURGSHRSOHWRSD\WKHLUWD[HV,IWD[HVZLOOFRQWLQXHWREHIDLWKIXOO\SDLGQRZDQGLQWKHIXWXUHLWLVRIWUDQVFHQGHQWDOLPSRUWDQFHIRUWKHSHRSOHWRNQRZKRZWKHLUWD[PRQH\LVVSHQWRUPLVVSHQWDQGWREHLQIRUPHGDVZHOOWKDWWKH\KDYHWKLVULJKW
)RU DQRWKHU WKH SHWLWLRQHUV VHULRXV DOOHJDWLRQV RI
FRQVWLWXWLRQDO YLRODWLRQ E\ WKH ([HFXWLYH LQ
WUDQVIHUULQJDSSURSULDWLRQVGHVSLWHWKHQRQH[LVWHQFHRIVDYLQJVDQGWKHUHVSRQGHQWVFRPPLVVLRQRIJUDYHDEXVHRIGLVFUHWLRQLQGLVUHJDUGLQJWKHOLPLWDWLRQVRIDOORZDEOHWUDQVIHURIDSSURSULDWLRQVXQGHU6HFWLRQ$UWLFOH9,RIWKH&RQVWLWXWLRQDV
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
DGPLWWHGE\WKHUHVSRQGHQWVWKHPVHOYHVVDWLVI\WKHVHFRQGGHWHUPLQDQW%DVHGRQWKHDGPLVVLRQVPDGHDORQHWKHLQFLGHQWV
RI FRQVWLWXWLRQDO YLRODWLRQV DUH FOHDU SDWHQW DQG RI XWPRVW JUDYLW\
WKH\ DIIHFW WKH YHU\ QDWXUH RI RXUUHSXEOLFDQV\VWHPRIJRYHUQPHQW
/DVWO\JLYHQWKHLQWULQVLFQDWXUHRIWKHSHWLWLRQVDVWD[SD\HUVVXLWVWRSUHYHQWZDVWDJHDQGPLVDSSOLFDWLRQRIIXQGVE\DQXQFRQVWLWXWLRQDOH[HFXWLYHDFWWKHUHFDQUHDOO\EHQRRWKHUSDUW\ZLWKDPRUHGLUHFWDQGVSHFLILFLQWHUHVWLQUDLVLQJWKHLVVXHRIFRQVWLWXWLRQDOLW\WKDQWKHSHWLWLRQHUVVXLQJDVWD[SD\HUVDQGLQYRNLQJDSXEOLFULJKW
2YHUDQGDERYHWKHVHGHWHUPLQDQWVWKHWUDQVFHQGHQWDOLPSRUWDQFHRIWKHVHSUHVHQWFDVHVOLHVLQWKHFRPSOHPHQWDU\UHODWLRQRIWKHLUSUHVHQWHGLVVXHVZLWKWKRVHUDLVHGLQWKH3'$)ZKLFKWKH&RXUWVTXDUHO\UXOHGXSRQLQWKHUHFHQWFDVHRI%HOJLFDY([HFXWLYH6HFUHWDU\
,Q%HOJLFD WKH&RXUWGHFODUHG WKHVWDWXWRULO\FUHDWHGSRUNEDUUHO
V\VWHP WREHXQFRQVWLWXWLRQDO IRUYLRODWLQJ WKHFRUHGRFWULQH RI
VHSDUDWLRQ RI SRZHUV 7KH&RXUW UXOHG WKDW WKH OHJLVODWRUV
SRVWHQDFWPHQW SDUWLFLSDWLRQ LQ WKH DUHDV
RISURMHFWLGHQWLILFDWLRQIXQGUHOHDVHDQGIXQGUHDOLJQPHQWRUUROHLQWKHLPSOHPHQWDWLRQRUHQIRUFHPHQWRIWKH*$$VDUHEH\RQG&RQJUHVVRYHUVLJKWIXQFWLRQDQGDUHWKHUHIRUHXQFRQVWLWXWLRQDO7KH&RXUWSHUWLQHQWO\UXOHG
7KXVIRUDOOWKHIRUHJRLQJUHDVRQVWKH&RXUWKHUHE\GHFODUHVWKH3'$)$UWLFOHDVZHOODVDOORWKHUSURYLVLRQVRIODZ
ZKLFK VLPLODUO\ DOORZ OHJLVODWRUV WR ZLHOG DQ\ IRUP RI
SRVWHQDFWPHQW DXWKRULW\ LQ WKH LPSOHPHQWDWLRQ
RUHQIRUFHPHQWRIWKHEXGJHWXQUHODWHGWRFRQJUHVVLRQDORYHUVLJKWDVYLRODWLYHRIWKHVHSDUDWLRQRISRZHUVSULQFLSOHDQGWKXVXQFRQVWLWXWLRQDO&RUROODU\WKHUHWRLQIRUPDOSUDFWLFHVWKURXJKZKLFKOHJLVODWRUVKDYHHIIHFWLYHO\LQWUXGHGLQWRWKHSURSHUSKDVHVRIEXGJHWH[HFXWLRQPXVWEHGHHPHGDVDFWVRIJUDYHDEXVHRIGLVFUHWLRQDPRXQWLQJWRODFNRUH[FHVVRIMXULVGLFWLRQDQGKHQFHDFFRUGHGWKHVDPHXQFRQVWLWXWLRQDOWUHDWPHQW
,QWKLVOLJKWWKHVWDWHPHQWRIWKH&2$&KDLUSHUVRQGXULQJWKHRUDODUJXPHQWVLVSDUWLFXODUO\LOOXPLQDWLQJ
-XVWLFH%HUVDPLQ$OULJKW WKHQH[WTXHVWLRQ&KDLUSHUVRQ LV
WKLVGR\RX UHPHPEHU LI\RXURIILFHKDV LQ
>VLF@SDVVDQDXGLWDQ\DFWLYLW\RUDQ\WUDQVIHURIIXQGVXQGHUWKH'$3"&KDLUSHUVRQ3XOLGR7DQ8QGHUWKLVSDUWLFXODUDGPLQLVWUDWLRQLI,PD\VD\6LU
-XVWLFH%HUVDPLQ'$3RQO\LWVH[LVWHQFHFDPHRQO\LQWKHODVWTXDUWHURIZDVUHOHDVHGRQO\LQWKHPLGGOHRIVRLWLVDVUHFHQWDVWKDW,GRQRWWDONDERXWWKHSUHYLRXVDGPLQLVWUDWLRQ&KDLUSHUVRQ3XOLGR7DQ
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
-XVWLFLDELOLW\DQG3ROLWLFDO4XHVWLRQV
-XVWLFLDELOLW\ UHIHUV WR WKH ILWQHVV RU SURSULHW\ RI XQGHUWDNLQJ
WKH MXGLFLDO UHYLHZ RI SDUWLFXODU PDWWHUV RU FDVHV
LWGHVFULEHVWKHFKDUDFWHURILVVXHVWKDWDUHLQKHUHQWO\VXVFHSWLEOHRIEHLQJGHFLGHGRQJURXQGVUHFRJQL]HGE\ODZ
,QFRQWUDGLVWLQFWLRQSROLWLFDOTXHVWLRQVUHIHU WR
WKRVHWKDWXQGHUWKH&RQVWLWXWLRQDUHWREHGHFLGHGE\WKHSHRSOH LQWKHLU
VRYHUHLJQ FDSDFLW\ RU LQ UHJDUG WR ZKLFK IXOO GLVFUHWLRQDU\
DXWKRULW\ KDV EHHQ GHOHJDWHG WR WKH OHJLVODWLYH
RUH[HFXWLYHEUDQFKRIWKHJRYHUQPHQWLWLVFRQFHUQHGZLWKLVVXHVGHSHQGHQWXSRQWKHZLVGRPDQGQRWWKHOHJDOLW\RIDSDUWLFXODUPHDVXUH:KHUHWKHLVVXHVVRSRVHGDUHSROLWLFDOWKH&RXUWQRUPDOO\FDQQRWDVVXPHMXULVGLFWLRQXQGHUWKHGRFWULQH
RI VHSDUDWLRQ RI SRZHUV H[FHSW ZKHUH WKH FRXUW ILQGV WKDW WKHUH DUH
FRQVWLWXWLRQDOO\LPSRVHG OLPLWV RQ
WKHH[HUFLVHRIWKHSRZHUVFRQIHUUHGRQDSROLWLFDOEUDQFKRIWKHJRYHUQPHQW
,QWKHVHFDVHVWKHSHWLWLRQHUVKDYHVWURQJO\VKRZQWKHWH[WXDOOLPLWVWRWKH([HFXWLYHVSRZHURYHUWKHLPSOHPHQWDWLRQRI
WKH *$$ SDUWLFXODUO\ LQ WKH KDQGOLQJ DQG PDQDJHPHQW RI IXQGV )DU
IURP ERUGHULQJ RQ SROLWLFDO TXHVWLRQV WKHFKDOOHQJHV UDLVHG LQ WKH
SUHVHQW SHWLWLRQV DJDLQVW WKH FRQVWLWXWLRQDOLW\ RI WKH'$3DUH
DFWXDOO\ DQFKRUHG RQ
VSHFLILFFRQVWLWXWLRQDODQGVWDWXWRU\SURYLVLRQVJRYHUQLQJWKHUHDOLJQPHQWRUWUDQVIHURIIXQGV
7KH LQFUHDVH RI JRYHUQPHQW H[SHQGLWXUHV LV D PDFURHFRQRPLF WRRO
WKDW LV DW WKH GLVSRVDO RI WKH FRXQWU\V SROLF\PDNHUV WR VWLPXODWH
WKH FRXQWU\V HFRQRP\ DQG LPSURYH HFRQRPLF JURZWK )URP WKLV
SHUVSHFWLYH
FRQVWLWXWLRQDOSURYLVLRQVWRXFKLQJRQHFRQRPLFPDWWHUVDUHXQGHUVWDQGDEO\EURDGO\ZRUGHGWRDFFRPPRGDWHFRPSHWLQJQHHGVDQGWRJLYHSROLF\PDNHUVDQGHYHQWKH&RXUWWKHQHFHVVDU\IOH[LELOLW\WRGHFLGHSROLF\TXHVWLRQVRUGLVSXWHVRQDFDVHWRFDVHEDVLV
$EURDG IRUPXODWLRQDQG LQWHUSUHWDWLRQRI
WKLVJXLGLQJSULQFLSOHKRZHYHUFDQQRWEHXVHG
WRRYHUULGHSODLQDQGFOHDUSURYLVLRQVRIWKH&RQVWLWXWLRQDQGUHOHYDQWODZVWKDWDUHLQSODFHXQGHUWKHZLGHXPEUHOODRIWKHUXOHRIODZ:KLOHWKHWKUHH
JRDOV RI WKH HFRQRP\ XQGHU 6HFWLRQ $UWLFOH ;,,, RI WKH
&RQVWLWXWLRQ DV D OHJDO WUDQVODWLRQ RI WKH([HFXWLYHV HFRQRPLF
MXVWLILFDWLRQ IRU WKH '$3 DUH DGGUHVVHG WR WKH SROLWLFDO EUDQFKHV
RI WKH JRYHUQPHQW VROHUHOLDQFH RQ WKHVH REMHFWLYHVZRXOG LJQRUH WKH
FRQVWLWXWLRQDO OLPLWDWLRQV DSSOLFDEOH WR WKHPHDQV IRU DFKLHYLQJ
WKHP7KHVH OHJDO OLPLWDWLRQV DUH SUHFLVHO\ DW WKH FRUH RI WKH LVVXHV
SUHVHQWHG WR XV LQ WKHVH FKDOOHQJHV WR WKHFRQVWLWXWLRQDOLW\ RI WKH
'$3V FUHDWLRQ DQG LPSOHPHQWDWLRQ WKH LVVXHV EHIRUH XV DUH OHJDO
RQHV QRW HFRQRPLF RUSROLWLFDO
)RUWKLVUHDVRQ,KDYHEUXVKHGDVLGHDVEH\RQGRXUDXWKRULW\WRFRQVLGHUDQGUXOHXSRQWKHYLHZVLQRWKHU2SLQLRQVMXVWLI\LQJWKHLVVXDQFHRIWKH'$3IRUODUJHO\HFRQRPLFSUDFWLFDOLW\UHDVRQV
7KH&RXUWVERXQGDU\NHHSLQJUROHLQWLPHVRISROLWLFDOXSKHDYDO
$VDILQDOQRWHRQWKHSURFHGXUDODVSHFWV,EHOLHYHWKDWWKHSUHVHQWFDVHSURYLGHVXVZLWKDQH[FHOOHQWRSSRUWXQLW\WRUHYLVLWRXUUROHDVERXQGDU\NHHSHUDUROHDVVLJQHGWRXVWRHQVXUHWKDWWKHOLPLWVVHWE\WKH&RQVWLWXWLRQEHWZHHQDQGDPRQJWKHGLIIHUHQWEUDQFKHVRIJRYHUQPHQWDUHREVHUYHG
$V HDUO\ DV $QJDUD Y (OHFWRUDO &RPPLVVLRQ WKLV &RXUW KDV
LGHQWLILHG LWVHOI DV WKH PHGLDWRU LQ GHPDUFDWLQJ
WKHFRQVWLWXWLRQDOOLPLWVLQWKHH[HUFLVHRISRZHUE\HDFKEUDQFKRIJRYHUQPHQW:HWKHQREVHUYHGWKDWWKHVHFRQVWLWXWLRQDOERXQGDULHVWHQGWREHIRUJRWWHQRUPDUUHGLQWLPHVRIVRFLHWDOGLVTXLHWRUSROLWLFDOH[FLWHPHQWDQGLWLVWKH&RXUWVUROHWR
FODULI\ DQG UHLQIRUFH WKH SURSHU DOORFDWLRQ RI SRZHUV VR WKDW WKH
GLIIHUHQW EUDQFKHV RI JRYHUQPHQWZRXOG QRW
DFWRXWVLGHWKHLUUHVSHFWLYHVSKHUHVRILQIOXHQFH
:H FODULILHG WKDW DOWKRXJK ZHPD\ LQ HIIHFW QXOOLI\ JRYHUQPHQWDO
DFWLRQV DEKRUUHQW WR WKH &RQVWLWXWLRQ ZH GR
QRWXQGHUWDNHWKLVUROHEHFDXVHRIMXGLFLDOVXSUHPDF\EXWEHFDXVHWKLVGXW\KDVEHHQDVVLJQHGWRXVE\WKH&RQVWLWXWLRQ
7LPHDQGDJDLQZHKDYHORRNHGEDFNWRRXU$QJDUDUXOLQJZKHQFDVHVRIQDWLRQDOLQWHUHVWUHDFKWKH&RXUWDQGKDYHXVHGLWVJXLGLQJSULQFLSOHVWRGHWHUPLQHZKHWKHURUQRWWRDFWRQWKHFDVHVEHIRUHXV
6LQFH$QJDUDWKLQJVKDYHFKDQJHGEHFDXVHRIGHYHORSPHQWVLQRXUSROLWLFDOKLVWRU\6LQFHWKHQWKH&RXUWKDVEHHQJUDQWHGH[SDQGHGMXULVGLFWLRQWRGHWHUPLQHQRWRQO\WKHWUDGLWLRQDOMXVWLFLDEOHFRQWURYHUVLHVWKDWOHGWR$QJDUDEXWDOVRWKHH[LVWHQFHRIJUDYHDEXVHRIGLVFUHWLRQE\DQ\DJHQF\RULQVWUXPHQWDOLW\RIWKHJRYHUQPHQW7KXVRXUMXULVGLFWLRQKDVEHHQH[SDQGHG
WR WKHH[WHQWRI WKHQHZJUDQW LQ WKHSURFHVVDIIHFWLQJ WKH WUDGLWLRQDO
MXVWLFLDELOLW\ UHTXLUHPHQWVGHYHORSHGVLQFH$QJDUD
7KH SULQFLSOHV LQ $QJDUD WR EH VXUH VWLOO FDUU\ D ORW RI WUXWK
DQG UHOHYDQFH EXW WKHVH SULQFLSOHV QRZ KDYH WR
EHDGMXVWHGWRPDNHZD\IRUWKHH[SDQGHGMXULVGLFWLRQWKDWWKLVODQGPDUNUXOLQJGLGQRWFRQWHPSODWH
:H VWLOO DUH WKHPHGLDWRUV EHWZHHQ FRPSHWLQJ FODLPV IRU DXWKRULW\
EXW WKH &RQVWLWXWLRQ KDV WDNHQ LW RQH
VWHSIXUWKHUZHQRZDOVRGHWHUPLQHWKHSUHVHQFHRUDEVHQFHRIJUDYHDEXVHRIGLVFUHWLRQRQWKHSDUWRIDQ\JRYHUQPHQWDJHQF\RULQVWUXPHQWDOLW\UHJDUGOHVVRIWKHSUHVHQFHRISROLWLFDOTXHVWLRQVWKDWPD\KDYHFRPHZLWKWKHFRQWURYHUV\7KLVH[SDQVLRQQHFHVVDULO\JLYHVULVHWRDKRVWRITXHVWLRQVGRHVRXUFRQVWLWXWLRQDOGXW\HQGZLWKWKHGHWHUPLQDWLRQRIWKHSUHVHQFHRUDEVHQFHRIJUDYHDEXVHRIGLVFUHWLRQDQG
WKHGHFLVLRQRQ WKHFRQVWLWXWLRQDO
VWDWXVRIDFKDOOHQJHGJRYHUQPHQWDODFWLRQ"7RZKDWH[WHQWFDQZHDFWLQJZLWKLQRXUMXGLFLDOSRZHUDQGWKHSRZHURIMXGLFLDOUHYLHZFODULI\WKHFRQVHTXHQFHVRIRXUGHFLVLRQ"
5HFHQWMXULVSUXGHQFHVKRZVWKDWZHKDYHEHHQSURYLGLQJJXLGDQFHWRWKHEHQFKDQGWKHEDUWRFODULI\WKHDSSOLFDWLRQRIWKHODZDQGRIRXUGHFLVLRQVWRIXWXUHVLWXDWLRQVQRWVTXDUHO\FRYHUHGE\WKHSUHVHQWHGIDFWVDQGLVVXHVEXWZKLFKPD\SRVVLEO\DULVHDJDLQEHFDXVHRIWKHFRPSOH[LW\DQGFKDUDFWHURIWKHLVVXHVLQYROYHG:HKDYHVHWJXLGHOLQHVIRULQVWDQFHRQKRZWRDSSO\RXUUXOLQJLQ$WRQJ3DJODXPY&RPHOHFRQWKHUHTXLUHPHQWVWRTXDOLI\DVDSDUW\OLVWXQGHUWKH
SDUW\OLVW V\VWHP$VZHOOZH SURYLGHG JXLGHOLQHV LQ5HSXEOLF Y&$
DQG0ROLQD RQ KRZ WR LQWHUSUHW DQG
DSSO\$UWLFOHRIWKH)DPLO\&RGH
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
,WLVLQWKHVHOLJKWVWKDW,IDYRUDEO\YLHZWKH&RXUWVUHVROYHWRFODULI\WKHDSSOLFDWLRQRIWKHRSHUDWLYHIDFWGRFWULQHWRWKHLVVXHRI
WKH'$3V FRQVWLWXWLRQDOLW\ DQG WKH SRWHQWLDO FRQVHTXHQFHVXQGHU D
UXOLQJ RI XQFRQVWLWXWLRQDOLW\ ,W LV LQ
WKLVVSLULWWKDW,GLVFXVVWKHVHWRSLFVEHORZ
&6XEVWDQWLYH0DWWHUV
7KH'$3YLRODWHVWKHSULQFLSOHVRIFKHFNVDQGEDODQFHVDQGWKHVHSDUDWLRQRISRZHUVWKDWWKH&RQVWLWXWLRQLQWHJUDWHGLQWKHEXGJHWDU\SURFHVV
D7KHSULQFLSOHVRIVHSDUDWLRQRISRZHUVDQGFKHFNVDQGEDODQFHVLQWKHEXGJHWDU\SURFHVV
7KH UHFHQW%HOJLFD UXOLQJJDYH WKLV&RXUW WKHRSSRUWXQLW\
WRGLVFXVVDQGGHOLEHUDWHRQ WKHSULQFLSOHRIVHSDUDWLRQRISRZHUVDVDSSOLHG
LQ WKHEXGJHWDU\SURFHVV:HWKHUHKHOG WKDW WKHSRVWHQDFWPHQWPHDVXUHV LQ
WKH3'$)DOORZHGVHQDWRUV DQG PHPEHUV RI WKH +RXVH RI 5HSUHVHQWDWLYHV
WR ZLHOG DQG HQFURDFK RQ WKH LWHP YHWR SRZHU RI WKH3UHVLGHQW
,QVRGRLQJZHOLNHZLVHGLVFXVVHGWKHEXGJHWDU\SURFHVVHPERGLHGLQWKH&RQVWLWXWLRQDVZHOODVWKHGHOLQHDWLRQRIWKHUROHVHDFKEUDQFKRIJRYHUQPHQWSOD\VLQWKHIRUPXODWLRQHQDFWPHQWDQGLPSOHPHQWDWLRQRIWKHQDWLRQDOEXGJHWDQGLQWKHDFFRXQWDELOLW\IRULWVSURSHUKDQGOLQJ
$V,H[SODLQHGLQP\&RQFXUULQJDQG'LVVHQWLQJ2SLQLRQLQ%HOJLFDWKHEXGJHWDU\SURFHVVSDLQVWDNLQJO\GHWDLOHGLQWKH&RQVWLWXWLRQHPERGLHVWKHJHQHUDOSULQFLSOHRIVHSDUDWLRQRISRZHUVDQGFKHFNVDQGEDODQFHVXQGHUZKLFKWKH/HJLVODWLYHWKH([HFXWLYHDQGWKH-XGLFLDU\RSHUDWH,WDOVRSURYLGHVWKHVSHFLILFOLPLWDWLRQVRQZKDWWKH([HFXWLYHDQG/HJLVODWXUHFDQDQGFDQQRWGRWRHQVXUHWKDWQHLWKHUEUDQFKRIJRYHUQPHQWVWHSVEH\RQGLWVRZQDUHDDQGLQWRDQRWKHUV
FRQVWLWXWLRQDOO\DVVLJQHG UROH DQ\ LQWUXVLYH VWHS YLRODWHV WKH
VHSDUDWLRQ RI SRZHUV DQG WKH FKHFNV
DQGEDODQFHVRQZKLFKRXUUHSXEOLFDQV\VWHPRIJRYHUQPHQWLVIRXQGHG
,Q WKH FRQWH[W RI WKH HQDFWPHQW DQG LPSOHPHQWDWLRQ RI WKH
QDWLRQDO EXGJHW WKH OHJLVODWXUH KDV EHHQ DVVLJQHG
WKHSRZHURIWKHSXUVHLWGHWHUPLQHVWKHWD[HVQHFHVVDU\WRIXQGJRYHUQPHQWDFWLYLWLHVWKHSURJUDPVZKHUHWKHVHSXEOLFIXQGVVKDOOEHVSHQWDVZHOODVWKHDPRXQWRIIXQGLQJXQGHUZKLFKHDFKSURJUDPVKDOORSHUDWH2QWKHRWKHUKDQGWKH([HFXWLYH
LVJLYHQ WKHGXW\ WRHQVXUH WKDW WKH ODZV WKDW&RQJUHVVHQDFWHGDUH
IROORZHGDQG
IXOO\HQIRUFHG7KHUROHVRIWKHVHWZREUDQFKHVRIJRYHUQPHQWDUHUHIOHFWHGLQWKHSURYLVLRQVJRYHUQLQJWKHLURSHUDWLRQV7KHVHUROHVDOVRVHUYHDVWKHOLPLWRIWKHLULQKHUHQWSOHQDU\SRZHUV
7KH&RQVWLWXWLRQUHFRJQL]LQJWKHLPSRUWDQFHRIWKHQDWLRQDOEXGJHWSURYLGHGQRWRQO\WKHJHQHUDOIUDPHZRUNIRULWV
HQDFWPHQW LPSOHPHQWDWLRQ DQG DFFRXQWDELOLW\ LW DOVR VHW IRUWK
VSHFLILF OLPLWV LQ WKH H[HUFLVH RI WKH
UHVSHFWLYHSRZHUVE\WKH([HFXWLYHDQGWKH/HJLVODWLYHDOOWKHWLPHFOHDUO\VHSDUDWLQJWKHPVRWKDWWKH\ZRXOGQRWRYHUVWHSLQWRHDFKRWKHUVSUHDVVLJQHGGRPDLQ
7KXV&RQJUHVV LVJUDQWHG WKHSRZHURIDSSURSULDWLRQVXQGHU WKH
IUDPHZRUNSURYLGHG LQ WKH&RQVWLWXWLRQZKLOH
WKH([HFXWLYHLVJUDQWHGWKHSRZHUWR
LPSOHPHQWWKHSURJUDPVIXQGHGE\WKHVHDSSURSULDWLRQVDOVREDVHGRQWKHVDPHFRQVWLWXWLRQDOIUDPHZRUN,WLVLQWKLVPDQQHUWKDWWKHVHSDUDWLRQRISRZHUVSULQFLSOHRSHUDWHVLQWKHEXGJHWDU\SURFHVV
8QGHUWKHFRPSOHPHQWDU\SULQFLSOHRIFKHFNVDQGEDODQFHVDVDSSOLHGWRWKHEXGJHWSURFHVVERWKWKH([HFXWLYHDQGWKH/HJLVODWLYHSOD\FRQVWLWXWLRQDOO\GHILQHGUROHV
$WWKHEXGJHWSUHSDUDWLRQDQGSURSRVDOVWDJHWKH([HFXWLYHLVJLYHQWKHLQLWLDWLYH
LWVWDUWVWKHEXGJHWDU\SURFHVVE\VXEPLWWLQJ WR&RQJUHVVZLWKLQ GD\V
IURP WKH RSHQLQJ RI HYHU\ UHJXODU VHVVLRQ D EXGJHW RI H[SHQGLWXUHV
DQGVRXUFHVRIILQDQFLQJWKDWEHFRPHVWKHEDVLVIRUWKHJHQHUDODSSURSULDWLRQVELOO7KLVEXGJHWFRQWDLQVWKHDSSURSULDWLRQVUHFRPPHQGHGE\WKH3UHVLGHQWIRUWKHRSHUDWLRQRIWKHJRYHUQPHQW
:KLOH WKH3UHVLGHQWXQGHUWDNHV WKHSODQQLQJDQG UHFRPPHQGDWLRQ
WKH&RQVWLWXWLRQ UHTXLUHVKLP WRFRPSO\ZLWK WKHIRUP FRQWHQW DQG
PDQQHU RI LWV SUHSDUDWLRQ DV SUHVFULEHG E\ ODZ 7KH &RQVWLWXWLRQ
UHOHQWV WR WKH
3UHVLGHQWVMXGJPHQWLQSUHSDULQJWKHEXGJHWE\SURKLELWLQJ&RQJUHVVIURPLQFUHDVLQJWKHEXGJHWUHFRPPHQGHGE\WKH([HFXWLYHIRUWKHQH[WILVFDO\HDU
%XWZKLOH&RQJUHVVLVVROLPLWHGWRLWLVJLYHQDVWKHERG\GLUHFWO\UHSUHVHQWLQJWKHSHRSOHWKHDXWKRULW\WRXOWLPDWHO\GHWHUPLQHWKHFRXQWU\VSROLF\DQGVSHQGLQJSULRULWLHVERWKLQWHUPVRIWKHSXEOLFSXUSRVHWKDWDQLWHPRIH[SHQGLWXUHVHHNV
WR DFKLHYH DQG WKH H[WHQW RI WKH DPRXQW LW VHHV ILW WR DFKLHYH WKDW
SXUSRVH 7R FDUU\ RXW WKLV LQWHQW
WKH&RQVWLWXWLRQPDQGDWHVWKDWQRPRQH\VKDOOEHSDLGRXWRIWKHWUHDVXU\H[FHSWLQSXUVXDQFHRIDQDSSURSULDWLRQPDGHE\ODZ$OVR
WKH&RQVWLWXWLRQSURKLELWV WKH
WUDQVIHURIDSSURSULDWLRQVZLWKVSHFLILHGH[FHSWLRQV LQRUGHU
WRHQVXUHWKDWWKHSRZHURIDSSURSULDWLRQUHPDLQVH[FOXVLYHO\ZLWK&RQJUHVV
$VLGH IURP WKH SURKLELWLRQ RQ WKH WUDQVIHU RI DSSURSULDWLRQV WKH
&RQVWLWXWLRQ DOVR UHTXLUHV WKDW WKH SURFHGXUH LQDSSURYLQJ
DSSURSULDWLRQV IRU &RQJUHVV VKDOO VWULFWO\ IROORZ WKH SURFHGXUH
IRU DSSURYLQJ DSSURSULDWLRQV IRU
RWKHUGHSDUWPHQWVDQGDJHQFLHV6HFWLRQ$UWLFOH9,,RIWKH&RQVWLWXWLRQVHHNVWRHQVXUHWKDWZKLOH&RQJUHVVLVJLYHQWKHSRZHURIDSSURSULDWLRQLWPXVWXQGHUJRWKHVDPHSURFHVVEHIRUHLWVEXGJHWLVDSSURYHG
2QFH&RQJUHVVKDVVSRNHQWKURXJKWKHSDVVDJHRIWKHJHQHUDODSSURSULDWLRQVELOOEDVHGRQWKHEXGJHWVXEPLWWHGE\WKH
3UHVLGHQW WKH &RQVWLWXWLRQ DXWKRUL]HV WKH 3UHVLGHQW WR H[HUFLVH
VRPH GHJUHH RI FRQWURO RYHU DQ DSSURSULDWLRQOHJLVODWLRQ E\ DOORZLQJ
KLP WR H[HUFLVH DQ LWHPYHWR SRZHU $V D FRXQWHUEDODQFH &RQJUHVV
PD\ RYHUULGH WKH3UHVLGHQWVYHWRE\DYRWHRIRIDOOLWVPHPEHUV
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
8SRQSDVVDJHRIWKHJHQHUDODSSURSULDWLRQVELOOLQWRODZHLWKHUE\SUHVLGHQWLDODSSURYDORULQDFWLRQDOORZLQJWKHELOOWRODSVH
LQWRD ODZQRQHRI WKH WKUHHEUDQFKHVRIJRYHUQPHQWDQG
WKHFRQVWLWXWLRQDOERGLHVFDQ WKZDUWFRQJUHVVLRQDOEXGJHWDU\ ZLOO E\
FURVVLQJ FRQVWLWXWLRQDO ERXQGDULHV WKURXJK WKH WUDQVIHU RI
DSSURSULDWLRQV RU IXQGV
DFURVVGHSDUWPHQWDOERUGHUV7KLVLVWKHDGGHGSUHFDXWLRQDU\PHDVXUHWKURZQLQWRVHFXUHWKHSDLQVWDNLQJO\GHVLJQHGFKHFNDQGEDODQFHPHFKDQLVPV
,QWKHHQGZKDWDSSHDUVFOHDUIURPDOOWKHFDUHIXOO\GHVLJQHGSODQLVWKDWWKH/HJLVODWLYHDQGWKH([HFXWLYHFKHFNDQGFRXQWHUFKHFNRQHDQRWKHUVRWKDWQRRQHEUDQFKDFKLHYHVSUHGRPLQDQFHLQWKHRSHUDWLRQVRIWKHJRYHUQPHQW7KH&RQVWLWXWLRQLQHIIHFWKROGVWKHYLVLRQWKDWDOOWKHVHPHDVXUHVVKDOOUHVXOWLQEDODQFHGJRYHUQDQFHWRWKHEHQHILWRIWKHJRYHUQHGZLWK
HQRXJK IOH[LELOLW\ WR UHVSRQGDQGDGMXVW WR WKHP\ULDG VLWXDWLRQV
WKDWPD\ WUDQVSLUH LQ WKH FRXUVH RIJRYHUQDQFH VXFKDV
WKHSURYLVLRQDOORZLQJ WKH
WUDQVIHURIDSSURSULDWLRQVZLWKLQYHU\QDUURZFRQVWLWXWLRQDOO\GHILQHGOLPLWV
%H\RQG WKH LQWHUQDO IOH[LELOLW\ PHDVXUHV WKH &RQVWLWXWLRQ
DOVR SURYLGHV IRU DQ H[WHUQDO PHDVXUH VSHFLILFDOO\
WKHDXWKRULW\RIWKH3UHVLGHQWWRFDOO&RQJUHVVWRVSHFLDOVHVVLRQDWDQ\WLPHDQGKLVDXWKRULW\WRFHUWLI\DELOOLQFOXGLQJDVSHFLDOEXGJHWELOOIRULPPHGLDWHHQDFWPHQWWRPHHWDSXEOLFFDODPLW\RUHPHUJHQF\
%\WKHVHPHDVXUHVWKH&RQVWLWXWLRQHQYLVLRQVJRYHUQDQFHWREHHIIHFWLYHDQGUHVSRQVLYHHYHQLQWLPHVRIFDODPLWLHVDQG
HPHUJHQFLHV ZKLOH PDLQWDLQLQJ WKH FDUHIXOO\GHVLJQHG VHSDUDWLRQ DQG
FKHFNLQJ SULQFLSOHV LQWHJUDWHG LQ
WKHEXGJHWDU\SURFHVV7KHVHPHDVXUHVRIFRXUVHFDQQRWZKROO\DGGUHVVVWUHVVHVEURXJKWDERXWE\KXPDQIUDLOWLHVVXFKDVLQHIILFLHQFLHVDQGPDOLFLRXVGHVLJQVZKLFKDUHPDQDJHPHQWIXQFWLRQVIRUWKH([HFXWLYHWRKDQGOHZLWKLQWKHGHILQHGSDUDPHWHUVRIWKHFRQVWLWXWLRQDOVWUXFWXUH
E+RZWKH'$3YLRODWHVWKHVHSULQFLSOHV
8QGHUWKLVFDUHIXOO\ODLGRXWFRQVWLWXWLRQDOV\VWHPWKH'$3YLRODWHVWKHSULQFLSOHVRIVHSDUDWLRQRISRZHUVDQGFKHFNVDQGEDODQFHVRQWZRFRXQWVILUVWE\SRROLQJIXQGVWKDWFDQQRWDWDOOEHFODVVLILHGDVVDYLQJVDQGVHFRQGE\XVLQJWKHVH
IXQGV WR ILQDQFHSURMHFWVRXWVLGH WKH([HFXWLYHRU
IRUSURMHFWVZLWKQRDSSURSULDWLRQFRYHU7KHGHWDLOVEHKLQGWKHVHWUDQVJUHVVLRQVDQGWKHLUFRQVWLWXWLRQDOVWDWXVDUHIXUWKHUGLVFXVVHGEHORZ
7KHVHYLRODWLRQVLQGLUHFWYLRODWLRQRIWKHQRWUDQVIHUSURYLVRRI6HFWLRQRI$UWLFOH9,RIWKH&RQVWLWXWLRQKDGWKHHIIHFWRIDOORZLQJWKH([HFXWLYHWRHQFURDFKRQWKHGRPDLQRI&RQJUHVVLQWKHEXGJHWDU\SURFHVV%\IDFLOLWDWLQJWKHXVHRIIXQGVQRWFODVVLILHGDVVDYLQJVWRILQDQFHLWHPVRWKHUWKDQIRUZKLFKWKH\KDYHEHHQDSSURSULDWHGWKH'$3LQHIIHFWDOORZHGWKH3UHVLGHQWWRFLUFXPYHQWWKHFRQVWLWXWLRQDOEXGJHWDU\SURFHVVDQGWRYHWRLWHPVRIWKH*$$ZLWKRXWVXEMHFWLQJWKHPWRWKHRYHUULGLQJYHWRWKDW&RQJUHVVLVHPSRZHUHGWRH[HUFLVH
$GGLWLRQDOO\WKLVSUDFWLFHDOORZVWKHFUHDWLRQRIDEXGJHWZLWKLQDEXGJHWWKHXVHRIIXQGVQRWRWKHUZLVHFODVVLILDEOHDVVDYLQJVGLVUHJDUGV
WKH LWHPV IRUZKLFK WKHVH IXQGVKDGEHHQDSSURSULDWHGDQGDOORZV WKHLUXVH
IRU LWHPV IRUZKLFKWKH\KDGQRWEHHQDSSURSULDWHG
:RUVH WKH YLRODWLRQ EHFRPHV HYHQ JUDYHU ZKHQ DV WKH RUDO
DUJXPHQWV DQG DGPLVVLRQV ODWHU VKRZHG WKH IXQGVSURYLGHG WR ILQDQFH
DSSURSULDWLRQV LQ WKH ([HFXWLYH 'HSDUWPHQW KDG EHHQ XVHG IRU
SURMHFWV LQ WKH /HJLVODWXUH DQGRWKHU FRQVWLWXWLRQDO ERGLHV ,Q VKRUW
WKH YLRODWLRQ DOORZHG WKH FRQVWLWXWLRQDOO\SURKLELWHG WUDQVIHU RI
IXQGV DFURVVFRQVWLWXWLRQDOERXQGDULHV
7KURXJK WKHVHYLRODWLRQVRI WKHH[SUHVV WHUPVRI6HFWLRQ$UWLFOH9,RI
WKH&RQVWLWXWLRQ WKH'$3GLUHFWO\FRQWUDYHQHG WKH SULQFLSOHV RI
VHSDUDWLRQ RI SRZHUV DQG FKHFNV DQG EDODQFHV WKDW WKH
&RQVWLWXWLRQ EXLOW LQWR WKHEXGJHWDU\SURFHVV
7KH'$3YLRODWHVWKHSURKLELWLRQDJDLQVWWKHWUDQVIHURIDSSURSULDWLRQVDWKHSRZHUWRDXJPHQWLVDYHU\QDUURZH[FHSWLRQWRWKHJHQHUDOSURKLELWLRQDJDLQVWWKHWUDQVIHURIDSSURSULDWLRQV
6HFWLRQ $UWLFOH 9, RI WKH &RQVWLWXWLRQ SURKLELWV WKH
HQDFWPHQW RI DQ\ ODZ DXWKRUL]LQJ WKH WUDQVIHU RIDSSURSULDWLRQV
1R ODZ VKDOO EH SDVVHG DXWKRUL]LQJ DQ\ WUDQVIHU RI
DSSURSULDWLRQV KRZHYHU WKH 3UHVLGHQW WKH 3UHVLGHQW RI WKH6HQDWH WKH
6SHDNHU RI WKH +RXVH RI 5HSUHVHQWDWLYHV WKH &KLHI -XVWLFH RI
WKH 6XSUHPH &RXUW DQG WKH KHDGV
RI&RQVWLWXWLRQDO&RPPLVVLRQVPD\E\ODZEHDXWKRUL]HGWRDXJPHQWDQ\LWHPLQWKHJHQHUDODSSURSULDWLRQVODZIRUWKHLUUHVSHFWLYH
RIILFHV IURP VDYLQJV LQ RWKHU LWHPV RI WKHLU UHVSHFWLYH
DSSURSULDWLRQV >LWDOLFV HPSKDVLV DQG XQGHUVFRUHRXUV@
7KLVJHQHUDOSURKLELWLRQDJDLQVWWKHWUDQVIHURIIXQGVLVUHODWHGWRDQGVXSSRUWVWKHFRQVWLWXWLRQDOUXOHWKDW1RPRQH\VKDOOEHSDLGRXWRIWKH7UHDVXU\H[FHSWLQSXUVXDQFHRIDQDSSURSULDWLRQPDGHE\ODZ3XEOLFIXQGVFDQQRWEHXVHGIRUSURMHFWVDQGSURJUDPVRWKHUWKDQZKDWWKH\KDYHEHHQLQWHQGHGIRUDVH[SUHVVHGLQDSSURSULDWLRQVPDGHE\ODZ/LNHZLVHDSSURSULDWHGIXQGVFDQQRWWKURXJKWUDQVIHUVEHZLWKKHOGIURPWKHXVHIRUZKLFKWKH\KDYHEHHQLQWHQGHG
7KHVHWZRSURYLVLRQVLQWDQGHPVHHNWRHQVXUHWKDWWKHSRZHURIDSSURSULDWLRQUHPDLQVZLWKWKH/HJLVODWXUH8QGHUWKHGRFWULQHRI
VHSDUDWLRQRI SRZHUV WKHSRZHU RI DSSURSULDWLRQ IDOOVZLWKLQ
WKHGRPDLQRI WKH
OHJLVODWLYHEUDQFKRIJRYHUQPHQWZKDWLWHPVRIH[SHQGLWXUHZLOOEHJLYHQSULRULW\LQDOLPLWHGEXGJHWDQGIRUZKDWDPRXQWVDQGWKHSXEOLFSXUSRVHVWKH\VHHNWRVHUYHDUHPDWWHUVZLWKLQWKHGLVFUHWLRQRIWKHUHSUHVHQWDWLYHVRIWKHSHRSOHWRGHWHUPLQH
%XWUHFRJQL]LQJWKDWXQIRUHVHHDEOHHYHQWVPD\WUDQVSLUHLQWKHDFWXDOLPSOHPHQWDWLRQRIWKHEXGJHWWKH&RQVWLWXWLRQDOORZHGDQDUURZH[FHSWLRQWR$UWLFOH9,6HFWLRQVJHQHUDOSURKLELWLRQLWDOORZHGDWUDQVIHURIIXQGVDOORFDWHGIRU
-
*51R6HSDUDWH2SLQLRQV
KWWSZZZODZSKLOQHWMXGMXULVMXULMXOJUBBVRBKWPOSHUODVEHUQDEH
DSDUWLFXODUDSSURSULDWLRQRQFHWKHVHKDYHEHFRPHVDYLQJVWRDXJPHQWLWHPVLQRWKHUDSSURSULDWLRQVZLWKLQWKHVDPHEUDQFKRIJRYHUQPHQW
7RHQVXUHWKDWWKLVH[FHSWLRQGRHVQRWEHFRPHWKHUXOHWKH&RQVWLWXWLRQSURYLGHGDFDWFKDWUDQVIHURIDSSURSULDWLRQVPD\
RQO\ EH H[HUFLVHG LI &RQJUHVV DXWKRUL]HV LW E\ ODZ 7KH
DXWKRULW\ WR OHJLVODWH DQ H[FHSWLRQ KRZHYHU LV QRW
DSOHQDU\LWPXVWEHH[HUFLVHGZLWKLQWKHSDUDPHWHUVDQGFRQGLWLRQVVHWE\WKH&RQVWLWXWLRQLWVHOIDVIROORZV
)LUVWWKHWUDQVIHUPD\EHDOORZHGRQO\ZKHQDSSURSULDWLRQVKDYHEHFRPHVDYLQJV
6HFRQG WKH WUDQVIHUPD\ EH H[HUFLVHG RQO\ E\ VSHFLILF SXEOLF
RIILFLDOV LH E\ WKH 3UHVLGHQW WKH 3UHVLGHQW RI WKH6HQDWH WKH
6SHDNHU RI WKH +RXVH RI 5HSUHVHQWDWLYHV WKH &KLHI -XVWLFH RI
WKH 6XSUHPH &RXUW DQG WKH KHDGV
RI&RQVWLWXWLRQDO&RPPLVVLRQV
7KLUGWKHVHVDYLQJVPD\RQO\EHXVHGWRDXJPHQWDQGRQO\H[LVWLQJLWHPVLQWKH*$$FDQEHDXJPHQWHGDQG
)RXUWKWKHVHLWHPVPXVWEHIRXQGZLWKLQHDFKEUDQFKRIJRYHUQPHQWVUHVSHFWLYHDSSURSULDWLRQV
9LHZHGLQWKLVPDQQHULWDWRQFHEHFRPHVFOHDUWKDWWKHDXWKRULW\WRWUDQVIHUIXQGVWKDW&RQJUHVVPD\JUDQWE\ODZFDQRQO\EHDYHU\QDUURZH[FHSWLRQWRWKHJHQHUDOSURKLELWLRQDJDLQVWWKHWUDQVIHURIIXQGVDOOWKHUHTXLVLWHVPXVWIDOOLQSODFHEHIRUHDQ\WUDQVIHURIIXQGVDOORWWHGLQWKH*$$PD\EHPDGH
6LJQLILFDQWO\WKLVUHDGLQJRIKRZWKHUHTXLVLWHVIRUWKHDSSOLFDWLRQRI6HFWLRQDQGWKHWUHDWPHQWRILWVH[FHSWLRQLVQRWDWDO