Global Water Equities Portfolio Series 16

The Trust consists of a portfolio of 42 securities of companies that the Sponsor believes have a focus in at least one of the many categories that comprise the global water business. These categories include, but are not limited to, procurement, treatment, purification, filtration and distribution of water and wastewater treatment. The Sponsor selects securities for the trust from within the global water business that it believes have the potential to achieve the Trust’s investment objective. At least 80% of the Trust’s assets have a significant connection to the global water business in that the companies represented devote a portion of their operations to, or derive a material portion of their revenues from, water utilities, water treatment, water testing, water infrastructure and water resource management.

The Sponsor selects global companies that it believes are core holdings of a well-diversified global water portfolio. To select the portfolio the Sponsor begins by identifying a universe of approximately 100 companies that it believes have a significant focus (based on revenues and/or earnings) in the global water business. The initial universe is defined through research of companies identified in various research reports, websites, company filings and financial databases as connected to the global water business. The Sponsor then identifies 42 companies that are diversified across the many categories and countries of origin that comprise the global water business for inclusion in the portfolio through a qualitative analysis, which may be primarily based on, but not limited to, the following factors:

• Revenue Concentration: The Sponsor favors companies that derive a significant portion of their revenues or profits from the global water businesses.
• Investable Characteristics: The Sponsor screens companies for characteristics including trading volume, share price, market capitalization and trading exchange in order to eliminate those companies that are not viable candidates for inclusion in the portfolio.

Under certain circumstances the Sponsor may limit the number of securities in the final portfolio based upon certain fundamental factors including but not limited to the following:

• Industry Leadership: The Sponsor favors companies that possess a strong competitive position among their domestic and global peers.
• Growth: The Sponsor favors companies with a history of (and prospects for) better than average growth of sales and earnings (where applicable).

The portfolio consists of securities of companies that may devote a portion of their operations to, or derive a material portion of their revenues from, one of the following categories of the global water business:

• Water Utilities: Water utilities are the regulated purveyors of water directly responsible for getting water supplies to residential, commercial and industrial users. Utilities may be public utilities or investor owned utilities.
• Water Treatment: Treatment refers to the application of technologies and/or processes that alter the composition of water to achieve a beneficial objective in its uses. The most critical treatment objective pertains to the global need for healthy drinking water. Water treatment specifically refers to the process of converting source water to drinking water of sufficient quality to comply with applicable regulations, thereby ensuring the protection of human health, or to treat water in the optimization of an industrial process.
• Water Testing: This category includes companies that provide services, manufacture instrumentation or develop techniques for the analysis, testing or monitoring of water and/or wastewater quality parameters.
• Water Infrastructure/Distribution: This category includes companies that supply products that are used as a component in the water infrastructure as it relates to the distribution of water. These companies include, among others, pipe manufacturers, pump, valve and flow control manufacturers, storage tanks and those companies that apply a specific technology or process to pipe rehabilitation, repair or replacement.
• Water Resource Management: This category includes companies that provide consulting, engineering and technical services in order to develop irrigation systems and other water resource management systems.
• Conglomerates: The conglomerates category comprises those companies that contribute significantly to the water industry, yet are extensively diversified into other industries or markets such that the contribution of water-related activities is relatively small. These companies may not be conglomerates in the traditional sense, but may have instead sought to apply a particular platform technology, product-line or service capability across several global markets, including water.

As with all investments, you may lose some or all of your investment in the Trust. No assurance can be given that the Trust’s investment objective will be achieved. The Trust also might not perform as well as you expect. This can happen for reasons such as these:

• Securities prices can be volatile. The value of your investment may fall over time. Market value fluctuates in response to various factors. These can include stock market movements, purchases or sales of securities by the Trust, government policies, litigation, and changes in interest rates, inflation, the financial condition of the securities’ issuer or even perceptions of the issuer. Units of the Trust are not deposits of any bank and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
• Due to the current state of the economy, the value of the securities held by the Trust may be subject to steep declines or increased volatility due to changes in performance or perception of the issuers. In the last year, economic activity has declined across all sectors of the economy, and the United States is experiencing increased unemployment. The current economic crisis has affected the global economy with European and Asian markets also suffering historic losses. Extraordinary steps have been taken by the governments of several leading economic countries to combat the economic crisis; however, the impact of these measures is not yet known and cannot be predicted.
• The Sponsor does not actively manage the portfolio. The Trust will generally hold, and may continue to buy, the same securities even though a security’s outlook, market value or yield may have changed.
• The Trust includes securities from companies in the water utilities business. Adverse developments in the water utilities business may significantly affect the value of your units. Companies involved in the water utilities business must contend with environmental considerations, taxes, government regulation, price and supply fluctuations, competition and water conservation.
• The Trust includes securities from companies in the industrials sector. Adverse developments in this sector may significantly affect the value of your units. Companies involved in the industrials sector must contend with the state of the economy, intense competitors, domestic and international politics, excess capacity and spending trends.
• The Trust includes securities issued by small-capitalization and mid-capitalization companies. These securities customarily involve more investment risk than large-capitalization or more seasoned securities. Small-capitalization and mid-capitalization companies may have limited product lines, markets or financial resources and may be vulnerable to adverse general market or economic developments.
• The Trust invests in foreign securities and American Depositary Receipts (“ADRs”). The Trust’s investment in foreign securities and ADRs presents additional risk. ADRs are issued by a bank or trust company to evidence ownership of underlying securities issued by foreign corporations. Securities of foreign issuers present risks beyond those of domestic securities. More specifically, foreign risk is the risk that foreign stocks will be more volatile than U.S. stocks due to such factors as adverse economic, currency, political, social or regulatory developments in a country, including government seizure of assets, excessive taxation, limitations on the use or transfer of assets, the lack of liquidity or regulatory controls with respect to certain industries or differing legal and/or accounting standards.
• The Trust may invest in companies that are considered to be passive foreign investment companies (“PFICs”). In general, PFICs are certain non-U.S. corporations that receive at least 75% of their annual gross income from passive sources (such as interest, dividends, certain rents and royalties or capital gains) or that hold at least 50% of their assets in investments producing such passive income. As a result of an investment in PFICs, the Trust could be subject to U.S. federal income tax and additional interest charges on gains and certain distributions with respect to those equity interests, even if all the income or gain is distributed to its unitholders in a timely manner. The Trust will not be able to pass through to its unitholders any credit or deduction for such taxes.
• The Trust includes securities issued by companies headquartered or incorporated in countries considered to be emerging markets. Emerging markets are generally defined as countries with low per capita income in the initial stages of their industrialization cycles. Risks of investing in developing or emerging countries include the possibility of investment and trading limitations, liquidity concerns, delays and disruptions in settlement transactions, political uncertainties and dependence on international trade and development assistance. Companies headquartered in emerging market countries may be exposed to greater volatility and market risk.
• The Trust includes securities whose value is dependent on currency exchange rates. The U.S. dollar value of these securities will vary with fluctuations in foreign exchange rates. Most foreign currencies have fluctuated widely in value against the U.S. dollar for various economic and political reasons such as the activity level of large international commercial banks, various central banks, speculators, hedge funds and other buyers and sellers of foreign currencies.
• Inflation may lead to a decrease in the value of assets or income from investments.
• Share prices or dividend rates on the securities in the Trust may decline during the life of the Trust. There is no guarantee that the issuers of the securities will declare dividends in the future and if declared, whether they will remain at current levels or increase over time.