While our global population increases to unprecedented levels, our supply of accessible fresh water remains unchanged. In fact, only 2.5% of the water on ourplanet is considered fresh with less than 1% being accessible surface water.1

In this white paper, we discuss the mounting global health and economic crises related to the scarcity of clean fresh water. We also briefly look at opportunitiescompanies have to bring forward viable solutions to meet these challenges.

We close by making the case for adding water investments to your retirementportfolio.

The Case for Investing in the Water Industry

Clear Waters

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KEY TAKEAWAYS

� Of all the water on theplanet, less than 1% is accessible fresh water.

� Population growth teamed with industrial and agricultural expansion is causing high demand for water in developing nations.

� The water industry couldplay a key role in investmentportfolios with a focus upon three sectors: infrastructure, treatmentand utility companies.

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Water is a finite resource with no substitute. Worldwide over 780 million people lack access to fresh water, with 99% of those individuals living in developing countries2. Due to inferior or absent infrastructure and sanitation,water related diseases account for 3–4 million deaths annually.3

Poor countries and their populations are hit hardest by a lack of access to clean fresh water. Nations with improved access and sanitation services enjoyan average annual per capita GDP growth of 3.7%, whereas countries withoutsimilar access, had growth of only 0.1%.4

Demand is risingTwo of the largest contributors to the surge in global water demand are populationgrowth and the continued expansion of industry and agriculture. Worldwide waterconsumption is doubling every 20 years — double the rate of population growth.

Population growth in developing regions far outpaces that in developed nations, creating scenarios in which local water suppliescannot be sustained. Some water scarcity issuesarise from a mismatch of population and wateravailability. For example,China contains 21% of theworld’s population, but only 7% of global freshwater supplies.5

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Health and economic implications

Population booms in developing countries suchas India and China are dramatically increasing demand for fresh water. Because access is so limited, these countries are experiencing commensurate spikes in water-related diseases.Furthermore, the United Nations (UN) reports that limited availability of water in developingcountries is constrainingeconomic growth.

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Supply is decliningSupply has been diminished because we are extracting more groundwater than can be naturally replenished. The primary culprit is irrigation for agricultural crops. In some cases as much as 60% of the water withdrawn from groundwater sources is lost to evaporation and runoff. At our current consumption rate, worldwide demand for fresh water within the next two decades is expected to exceed supply by 40%.

Environmental oversight is lacking Pollution only exacerbates the problem. In China, a growing industrial base combined with weak environmental oversight has created extreme water contamination problems. In 2006, the United Kingdom’s Chinese Embassy released a paper stating that almost 90% of underground water in cities and 70% of lakes andrivers in China were polluted.8

But this issue not only impacts China. The UN has reported that nearly 80% of the untreated sewage in developing countries flows into fresh water systems. This current reality will require substantial future investment in treatment facilities and technologies.

Access is limited, even in developed nationsWhere clean water is available, the problem becomes one of accessibility. Althoughdeveloped countries have greater access to fresh water, considerable investment isrequired to repair a deteriorating infrastructure and increase efficiency of transportand utilization. Additionally, with an increase in population growth and continued urbanization comes a need for construction of new systems.

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Companies that recognize these global issues and refine technologies andprocesses to use water more efficiently will be better positioned for profitability in a future in need of such advances.

Infrastructure Infrastructure companies provide support for current and new water systems. Pipes, pumps and valves have a wide range of applications from agricultural irrigationsystems to plumbing networks. An estimated $22 trillion will need to be invested ininfrastructure to sustain our world’s current demand for clean water.9

TreatmentWater treatment facilities are seeing a rise in demand of advanced water treatment and desalination technologies, especially in growing coastal regions.The need for cost-effective solutions to improve water efficiency, the demand to produce advanced metering and gauging tools and the need for advanced technologies such as semiconductors, are propelling these companies forward.

Utilities Water utility companies profit from the distribution, collection and treatment of water. New infrastructure projects and the repair and replacement of existingsystems drive the continued success of utility companies known for their attractive dividends and stable cash flows.

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Thinking ahead with water

An efficiently structured and well-managed portfolio incorporates diversification andevolves over time. Success depends on many variables — tax implications, the investmentlifecycle and long-term retirement goals. With over 300 public companies globally focused on the water sector, there are many options available to you to create a diversifiedand balanced portfolio that contains investments broadly in the water sector.

• Social and economic trends present investment opportunities. The factors discussedearlier highlight challenges ahead for many countries. Leaders in those countriesknow that water-related issues could promote social and political upheaval if ignored.

• Water treatment companies can provide growth potential in developing marketswhere population growth is expected to far exceed water supplies in the comingdecades.

• Water investment performance, when compared to other sectors on a risk-adjusted basis, is compelling. As the following chart shows, the FTSE EnvironmentalOpportunities (EO) Water Technology Index compares favorably with the MSCI AllCountry World Index (ACWI).10

How to invest in the water sector As a university employee, you can freely invest in water-related companies through your non-university-sponsored accounts. These would include post-tax and IRA brokerage accounts where mutual funds, exchange-traded funds (ETFs) and individualstocks can be purchased. In fact, there several ETFs and mutual funds that focus entirelyon the water sector.

Adding water to your university-sponsored account will be a bit more challenging; seldom do these accounts have water funds as an investment option. However, manyuniversities have added a brokerage trading platform to a number of these accounts, giving you more investment choices in water as well as energy, food, materials, health,and the environment sectors, all of which are driven in large part by sustainability issues.

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Water has a role in a diversified portfolio

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Outperformance of Global Equities — USD (Cumulative return on $100)

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FTSE EO Water Technology Index* MSCI AC World

*Includes companies that derive at least 20% of their revenues from water technologies.

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Who We AreCollegiate Capital Management provides investment advisory and financial planning services to university professionals. We strive to provide opportunities for higher returns, lower risk and tax savings in our clients’ portfolios. By simplifying this complex problem set for our clients, we give them more time and freedom to pursue their professional and personal endeavors. In business since 1994, we have offices in North Carolina, Georgia, Texas and Virginia.

www.CollegiateCapital.com | contact@collegiatecapital.com | 800-333-1701, x6

Collegiate Capital Management, Inc. is an SEC-registered investment adviser.

We simplify the complicated.

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The water crisis continues and forward-thinking companies see value in responding to thechallenge. As a university professional, you know global connections exist. As investmentadvisors, we appreciate that you may have a desire to make investments in companiesdedicating some or all of their resources to solving sustainability problems. If you wouldlike to talk further about your options in this arena, give us a call at 800.333.1701, or contact us at contact@CollegiateCaptial.com.

1 Food and Agriculture Organization of the United Nations (1995). Dimension of need—Water: a finite resource. 2 Estimated with data from WHO/UNICEF Joint Monitoring Programme for Water Supply and Sanitation (2012).

Progress on sanitation and drinking water. 3 World Health Organization (2008). Safer water, better health. Updated table 1: WSH deaths by region, 2004. 4 World Health Organization (2014). Making water part of economic development. 5 Goldman Sachs (2008). The Essentials of Investing In The Water Sector, v. 2. 6 Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat (2013). 7 United Nations (2012). World Population Prospects. 8 Miao Hong, Chinese Embassy - UK (2006). China battles pollution amid full-speed economic growth. 9 Nikko Citi (2009). Global infrastructure investment growing.10 Pax World (2014). Investing in water in a time of climate change.

Summary