STATEMENT OF ADDITIONAL INFORMATION DATED JULY 27, 2007 AS REVISED JULY 15, 2008
WISDOMTREE(R) TRUST
This Statement of Additional Information ("SAI") is not a Prospectus. It should
be read in conjunction with the current Prospectus ("Prospectus") for the
following separate investment portfolios (each, a "Fund") of WisdomTree Trust
(the "Trust"), as each such Prospectus may be revised from time to time:
WISDOMTREE DOMESTIC DIVIDEND FUNDS
WisdomTree Total Dividend Fund
WisdomTree High-Yielding Equity Fund
WisdomTree LargeCap Dividend Fund
WisdomTree Dividend Top 100(SM) Fund
WisdomTree MidCap Dividend Fund
WisdomTree SmallCap Dividend Fund
WISDOMTREE EARNINGS FUNDS
WisdomTree Total Earnings Fund
WisdomTree Earnings 500 Fund
WisdomTree MidCap Earnings Fund
WisdomTree SmallCap Earnings Fund
WisdomTree Earnings Top 100 Fund
WisdomTree Low P/E Fund
WisdomTree India Earnings Fund
WISDOMTREE INTERNATIONAL DIVIDEND FUNDS
WisdomTree DEFA Fund
WisdomTree DEFA High-Yielding Equity Fund
WisdomTree Europe Total Dividend Fund
WisdomTree Europe High-Yielding Equity Fund
WisdomTree Europe SmallCap Dividend Fund
WisdomTree Japan Total Dividend Fund
WisdomTree Japan High-Yielding Equity Fund
WisdomTree Japan SmallCap Dividend Fund
WisdomTree Pacific ex-Japan Total Dividend Fund
WisdomTree Pacific ex-Japan High-Yielding Equity Fund
WisdomTree International LargeCap Dividend Fund
WisdomTree International Dividend Top 100(SM) Fund
WisdomTree International MidCap Dividend Fund
WisdomTree International SmallCap Dividend Fund
WisdomTree Emerging Markets High-Yielding Equity Fund
WisdomTree Emerging Markets SmallCap Dividend Fund
WisdomTree Middle East Dividend Fund
WISDOMTREE INTERNATIONAL SECTOR FUNDS
WisdomTree International Basic Materials Sector Fund
WisdomTree International Communications Sector Fund
WisdomTree International Consumer Discretionary Sector Fund
WisdomTree International Consumer Staples Sector Fund
WisdomTree International Energy Sector Fund
WisdomTree International Financial Sector Fund
WisdomTree International Health Care Sector Fund
WisdomTree International Industrial Sector Fund
WisdomTree International Technology Sector Fund
WisdomTree International Utilities Sector Fund
WisdomTree International Real Estate Fund
The current Prospectus for the Domestic and International Dividend Funds is
dated July 27, 2007 as revised July 15, 2008. The current Prospectus for the
Earnings Funds is dated July 27, 2007 as revised March 14, 2008. The current
Prospectus for the International Sector Funds is dated July 27, 2007 as revised
June 6, 2008. The International Dividend Funds, International Sector Funds and
the India Earnings Fund are sometimes referred to collectively as the
"International Funds." Capitalized terms used herein that are not defined have
the same meaning as in the Prospectus, unless otherwise noted. The Funds'
audited financial statements for the period ended March 31, 2007 are
incorporated in this Statement of Additional Information by reference to the
Funds' 2007 Annual Reports to Shareholders (File No. 811-21864). You may obtain
a copy of the Funds' Annual Report at no charge by request to the Fund at the
address or phone number noted below. Since the Emerging Markets High-Yielding
Equity Fund, Emerging Markets Small Cap Dividend Fund, India Earnings Fund,
International Real Estate Fund and Middle East Dividend Fund did not commence
operations until after the close of the 2007 fiscal year, financial statements
for these Funds are not yet available.
A copy of the Prospectus for each Fund may be obtained, without charge, by
calling 1-866-909-9473 or visiting www.wisdomtree.com, or writing to WisdomTree
Trust, c/o ALPS Distributors, Inc., 1290 Broadway, Suite 1100, Denver, Colorado
80203.
Statement of Additional Information dated July 27, 2007 as revised
July 15, 2008
TABLE OF CONTENTS
General Description of the Trust and the Funds ............................ 1
WisdomTree Domestic Dividend Funds ..................................... 1
Wisdom Tree Earnings Funds ............................................. 1
WisdomTree International Dividend Funds ................................ 1
WisdomTree International Sector Funds .................................. 1
Investment Strategies and Risks ........................................... 2
Principal Investment Strategy .......................................... 2
General Risks .......................................................... 3
Lack of Diversification ................................................ 3
Specific Investment Strategies ......................................... 4
Securities Lending ..................................................... 4
Money Market Instruments ............................................... 4
Repurchase Agreements .................................................. 4
Reverse Repurchase Agreements .......................................... 4
Investment Company Securities .......................................... 5
Real Estate Investment Trusts .......................................... 5
Non-U.S. Securities .................................................... 5
Depositary Receipts .................................................... 10
Currency Transactions .................................................. 11
Illiquid Securities .................................................... 11
Futures, Options and Options on Futures Contracts ...................... 11
Risks of Futures and Options Transactions .............................. 12
Swap Agreements ........................................................ 12
Participation Certificates ............................................. 12
Tracking Stocks ........................................................ 13
Future Developments .................................................... 13
Proxy Voting Policy ....................................................... 13
Portfolio Holding Disclosure Policies and Procedures ...................... 14
Description of the WisdomTree Indexes ..................................... 15
WisdomTree Domestic Dividend Indexes ................................... 16
WisdomTree Dividend Index ........................................... 16
WisdomTree High-Yielding Equity Index ............................... 17
WisdomTree LargeCap Dividend Index .................................. 17
WisdomTree Dividend Top 100 Index ................................... 17
WisdomTree MidCap Dividend Index .................................... 17
WisdomTree SmallCap Dividend Index .................................. 17
WisdomTree Earnings Indexes ............................................ 17
WisdomTree Earnings Index ........................................... 17
WisdomTree Earnings 500 Index ....................................... 18
WisdomTree MidCap Earnings Index .................................... 18
WisdomTree SmallCap Earnings Index .................................. 18
WisdomTree Earnings Top 100 Index ................................... 18
WisdomTree Low P/E Index ............................................ 19
WisdomTree India Earnings Index ..................................... 19
WisdomTree International Dividend Indexes .............................. 19
WisdomTree DEFA Index ............................................... 19
WisdomTree DEFA High-Yielding Equity Index .......................... 19
WisdomTree Europe Dividend Index .................................... 20
WisdomTree Europe High-Yielding Equity Index ........................ 20
WisdomTree Europe SmallCap Dividend Index ........................... 20
WisdomTree Japan Dividend Index ..................................... 20
WisdomTree Japan High-Yielding Equity Index ......................... 21
WisdomTree Japan SmallCap Dividend Index ............................ 21
WisdomTree Pacific ex-Japan Dividend Index .......................... 21
WisdomTree Pacific ex-Japan High-Yielding Equity Index .............. 21
WisdomTree International LargeCap Dividend Index .................... 21
WisdomTree International Dividend Top 100 Index ..................... 21
WisdomTree International MidCap Dividend Index ...................... 22
WisdomTree International SmallCap Dividend Index .................... 22
WisdomTree Emerging Markets High-Yielding Equity Index .............. 22
WisdomTree Emerging Markets SmallCap Dividend Index ................. 22
WisdomTree Middle East Dividend Index ............................... 23
WisdomTree International Sector Indexes ................................ 23
WisdomTree International Basic Materials Sector Index ............... 23
WisdomTree International Communications Sector Index ................ 23
WisdomTree International Consumer Discretionary Sector Index ........ 23
WisdomTree International Consumer Staples Sector Index .............. 24
WisdomTree International Energy Sector Index ........................ 24
WisdomTree International Financial Sector Index ..................... 24
WisdomTree International Health Care Sector Index ................... 24
WisdomTree International Industrial Sector Index .................... 24
WisdomTree International Technology Sector Index .................... 25
WisdomTree International Utilities Sector Index ..................... 25
WisdomTree International Real Estate Index .......................... 25
Investment Limitations .................................................... 26
Fundamental Policies ...................................................... 26
Senior Securities ...................................................... 26
Borrowing .............................................................. 26
Underwriting ........................................................... 26
Concentration .......................................................... 26
Real Estate ............................................................ 26
Commodities ............................................................ 26
Loans .................................................................. 26
Continuous Offering ....................................................... 27
Management of the Trust ................................................... 28
Trustees and Officers ..................................................... 28
Interested Trustee and Officers ........................................... 28
Independent Trustees ...................................................... 29
Committees of the Board of Trustees .................................... 30
Audit Committee ........................................................ 30
Governance and Nominating Committee .................................... 30
Approval of Investment Advisory Agreement and Sub-Advisory Agreement ... 30
Approval of Investment Advisory Agreement .............................. 31
Remuneration of Trustees ............................................... 32
Control Persons and Principal Holders of Securities .................... 32
Investment Adviser ..................................................... 47
Sub-Adviser ............................................................ 50
Portfolio Managers ..................................................... 51
Portfolio Manager Fund Ownership ....................................... 52
Portfolio Manager Compensation ......................................... 52
Code of Ethics ......................................................... 53
Administrator, Custodian and Transfer Agent ............................ 53
Distributor ............................................................ 54
Brokerage Transactions .................................................... 55
Additional Information Concerning the Trust ............................... 65
Shares ................................................................. 66
Termination of the Trust or a Fund ..................................... 65
Role of DTC ............................................................ 65
Creation & Redemption of Creation Unit Aggregations .................... 66
Creation ............................................................... 66
Fund Deposit ........................................................... 66
Procedures for Creation of Creation Unit Aggregations .................. 67
Placement of Creation Orders for Domestic Dividend and Earnings
Weighted Funds Using the Clearing Process ........................... 68
Placement of Creation Orders for Domestic Dividend and Earnings
Weighted Funds Outside the Clearing Process ......................... 68
Placement of Creation Orders for International Funds ................... 69
Acceptance of Orders for Creation Unit Aggregations .................... 70
Creation Transaction Fee ............................................... 71
Placement of Redemption Orders for Domestic Dividend and
Earnings Weighted Funds Using the Clearing Process .................. 72
Placement of Redemption Orders for Domestic Dividend and
Earnings Weighted Funds Outside the Clearing Process ................ 72
Placement of Redemption Orders for International Funds ................. 72
Regular Holidays .......................................................... 74
Taxes ..................................................................... 78
Determination of NAV ...................................................... 83
Dividends and Distributions ............................................... 83
Financial Statements ...................................................... 84
Miscellaneous Information ................................................. 84
GENERAL DESCRIPTION OF THE TRUST AND THE FUNDS
The Trust was organized as a Delaware statutory trust on December 15, 2005 and
is authorized to have multiple series or portfolios. The Trust is an open-end,
non-diversified management investment company, registered under the Investment
Company Act of 1940, as amended (the "1940 Act"). The offering of the Trust's
shares is registered under the Securities Act of 1933, as amended (the
"Securities Act"). This SAI relates to the following Funds:
WISDOMTREE DOMESTIC DIVIDEND FUNDS
WisdomTree Total Dividend Fund
WisdomTree High-Yielding Equity Fund
WisdomTree LargeCap Dividend Fund
WisdomTree Dividend Top 100 Fund
WisdomTree MidCap Dividend Fund
WisdomTree SmallCap Dividend Fund
WISDOMTREE EARNINGS FUNDS
WisdomTree Total Earnings Fund
WisdomTree Earnings 500 Fund
WisdomTree MidCap Earnings Fund
WisdomTree SmallCap Earnings Fund
WisdomTree Earnings Top 100 Fund
WisdomTree Low P/E Fund
WisdomTree India Earnings Fund
WISDOMTREE INTERNATIONAL DIVIDEND FUNDS
WisdomTree DEFA Fund
WisdomTree DEFA High-Yielding Equity Fund
WisdomTree Europe Total Dividend Fund
WisdomTree Europe High-Yielding Equity Fund
WisdomTree Europe SmallCap Dividend Fund
WisdomTree Japan Total Dividend Fund
WisdomTree Japan High-Yielding Equity Fund
WisdomTree Japan SmallCap Dividend Fund
WisdomTree Pacific ex-Japan Total Dividend Fund
WisdomTree Pacific ex-Japan High-Yielding Equity Fund
WisdomTree International LargeCap Dividend Fund
WisdomTree International Dividend Top 100 Fund
WisdomTree International MidCap Dividend Fund
WisdomTree International SmallCap Dividend Fund
WisdomTree Emerging Markets High-Yielding Equity Fund
WisdomTree Emerging Markets SmallCap Dividend Fund
WisdomTree Middle East Dividend Fund
WISDOMTREE INTERNATIONAL SECTOR FUNDS
WisdomTree International Basic Materials Sector Fund
WisdomTree International Communications Sector Fund
WisdomTree International Consumer Discretionary Sector Fund
WisdomTree International Consumer Staples Sector Fund
WisdomTree International Energy Sector Fund
WisdomTree International Financial Sector Fund
WisdomTree International Health Care Sector Fund
WisdomTree International Industrial Sector Fund
WisdomTree International Technology Sector Fund
WisdomTree International Utilities Sector Fund
WisdomTree International Real Estate Fund
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Each Fund described in this SAI seeks investment returns that closely correspond
to the price and yield performance, before fees and expenses, of a particular
index ("Index") that defines a specific segment of the U.S. or international
stock markets. The Indexes are created using proprietary methodology developed
by WisdomTree Investments, Inc. ("WisdomTree Investments"). WisdomTree Asset
Management, Inc. ("WisdomTree Asset Management") is the investment adviser to
each Fund. BNY Investment Advisors is the investment sub-adviser ("Sub-Adviser")
to each Fund. WisdomTree Investments is the parent company of WisdomTree Asset
Management.
Each Fund issues and redeems shares at net asset value per share ("NAV") only in
large blocks of shares, typically 50,000 shares or more ("Creation Units").
These transactions are usually in exchange for a basket of securities and an
amount of cash. As a practical matter, only institutions or large investors
purchase or redeem Creation Units. Except when aggregated in Creation Units,
shares of each Fund are not redeemable securities.
Shares of each Fund are listed on a national securities exchange, such as the
NYSE Arca or the Nasdaq Stock Market ("Nasdaq") (each, a "Listing Exchange"),
and trade throughout the day on the Listing Exchange and other secondary markets
at market prices that may differ from NAV. As in the case of other
publicly-traded securities, brokers' commissions on transactions will be based
on negotiated commission rates at customary levels.
The Trust reserves the right to adjust the share prices of shares in the future
to maintain convenient trading ranges for investors. Any adjustments would be
accomplished through stock splits or reverse stock splits, which would have no
effect on the net assets of the applicable Fund.
"WisdomTree", "Dividend Top 100", and "Dividend Stream" are service marks of
WisdomTree Investments and have been licensed for use by the Trust. WisdomTree
Investments has patent applications pending on the methodology and operation of
its Indexes and the Funds.
INVESTMENT STRATEGIES AND RISKS
PRINCIPAL INVESTMENT STRATEGY. Each Fund seeks investment returns that closely
correspond to the price and yield performance, before fees and expenses, of a
particular Index developed by WisdomTree Investments. The Funds do not try to
beat the Indexes that they track and do not seek temporary defensive positions
when equity markets decline or appear to be overvalued.
This investment strategy, known as indexing, may eliminate some of the risks of
active portfolio management, such as poor security selection. In addition,
indexing may also help increase after-tax investment performance by keeping
portfolio turnover low in comparison to actively managed investment companies.
Under normal circumstances, at least 95% of a Fund's total assets (exclusive of
collateral held from securities lending) will be invested in the component
securities of its Index. Each Fund generally may invest up to 5% of its total
assets in securities not included in its underlying Index but which the Fund
believes will help it track its Index. For example, a Fund may invest in
securities that are not components of the relevant Index in order to reflect
various corporate actions and other changes to its relevant Index (such as
reconstitutions, additions and deletions). Under normal circumstances, as long
as a Fund invests at least 95% of its total assets in the stocks of its Index,
it also may invest its other assets in cash and cash equivalents, as well as in
other investment companies, futures contracts, options on futures contracts,
options, and swaps. The International Funds, from time to time, may have less
than 95% of their assets invested in securities of their respective underlying
Indexes in order to comply with the requirements of the Internal Revenue Code,
to meet regulatory requirements in non-U.S. jurisdictions or to manage major
Index changes. In these situations, which are expected to be infrequent and of
limited duration, an International Fund may not have less than 90% of its total
assets invested in securities of its underlying Index. WisdomTree Asset
Management expects that, over time, the correlation between each Fund's
performance and that of its underlying Index, before fees and expenses, will be
95% or better.
As a matter of general policy, each Fund will invest at least 80% of its net
assets, plus the amount of any borrowings for investment purposes, in the types
of securities suggested by its name. If, subsequent to an investment, the 80%
requirement is no longer met, a Fund's future investments will be made in a
manner that will bring the Fund into compliance with this policy. The Trust will
provide shareholders with sixty (60) days prior notice of any change to this
policy for a Fund.
2
The WisdomTree India Earnings Fund attempts to achieve its investment objective
by investing in securities through the WisdomTree India Investment Portfolio,
Inc. (the "Portfolio"), a wholly-owned subsidiary of the WisdomTree India
Earnings Fund. References to the investment strategies and other policies of the
India Earnings Fund should be understood to also refer to the strategies and
polices of the Portfolio.
The Portfolio is advised by WisdomTree Asset Management and sub-advised by BNY
Investment Advisors.
GENERAL RISKS. An investment in a Fund should be made with an understanding that
the value of a Fund's portfolio securities may fluctuate in accordance with
changes in the financial condition of an issuer or counterparty, changes in
specific economic or political conditions that affect a particular security or
issuer and changes in general economic or political conditions.
An investment in a Fund should also be made with an understanding of the risks
inherent in an investment in equity securities, including the risk that the
financial condition of issuers may become impaired or that the general condition
of the stock market may deteriorate (either of which may cause a decrease in the
value of the portfolio securities and thus in the value of shares of the Trust).
Common stocks are susceptible to general stock market fluctuations and to
volatile increases and decreases in value as market confidence and perceptions
of their issuers change. These investor perceptions are based on various and
unpredictable factors, including expectations regarding government, economic,
monetary and fiscal policies, inflation and interest rates, economic expansion
or contraction, and global or regional political, economic or banking crises.
Holders of common stocks incur more risk than holders of preferred stocks and
debt obligations because common stockholders, as owners of the issuer generally
have inferior rights to receive payments from the issuer in comparison with the
rights of creditors, or holders of debt obligations or preferred stocks.
Further, unlike debt securities, which typically have a stated principal amount
payable at maturity (whose value, however, is subject to market fluctuations
prior thereto), or preferred stocks, which typically have a liquidation
preference and which may have stated optional or mandatory redemption
provisions, common stocks have neither a fixed principal amount nor a maturity.
Common stock values are subject to market fluctuations as long as the common
stock remains outstanding.
Although all of the securities in the Indexes are listed on major U.S. or
non-U.S. stock exchanges, there can be no guarantees that a liquid market for
such securities will be maintained. The existence of a liquid trading market for
certain securities may depend on whether dealers will make a market in such
securities. There can be no assurance that a market will be made or maintained
or that any such market will be or remain liquid. The price at which securities
may be sold and the value of a Fund's shares will be adversely affected if
trading markets for a Fund's portfolio securities are limited or absent, or if
bid/ask spreads are wide.
A discussion of some of the other risks associated with an investment in a Fund
is contained in each Fund's Prospectus.
LACK OF DIVERSIFICATION. Each Fund is considered to be "non-diversified." A
"non-diversified" classification means that a Fund is not limited by the 1940
Act with regard to the percentage of its assets that may be invested in the
securities of a single issuer. As a result, each of the Funds may invest more of
its assets in the securities of a single issuer or a smaller number of issuers
than if it were classified as a diversified fund. Therefore, each Fund may be
more exposed to the risks associated with and developments affecting an
individual issuer or a small number of issuers than a fund that invests more
widely, which may have a greater impact on the Fund's volatility and
performance.
Each Fund intends to maintain the required level of diversification and
otherwise conduct its operations so as to qualify as a "regulated investment
company" under Subchapter M of the Internal Revenue Code of 1986, as amended
("IRC"), and to relieve the Fund of any liability for federal income tax to the
extent that its earnings are distributed to shareholders. Subchapter M generally
requires the Fund to invest no more than 25% of its total assets in securities
of any one issuer and to invest at least 50% of its total assets so that (a) no
more than 5% of the Fund's total assets are invested in securities in any one
issuer, and (b) the Fund does not hold more than 10% of the outstanding voting
securities of that issuer. Subchapter M allows unlimited investments in cash,
cash items, government securities (as defined in Subchapter M) and securities of
other regulated investment companies. These tax requirements are generally
applied at the end of each quarter of the Fund's taxable year. Compliance with
the diversification requirements of the IRC may limit the investment flexibility
of the Funds and may make it less likely that the Funds will meet their
investment objectives.
3
SPECIFIC INVESTMENT STRATEGIES. A description of certain investment strategies
and types of investments used by some or all of the Funds is set forth below.
SECURITIES LENDING. Each Fund may lend portfolio securities to certain
creditworthy borrowers, including the Funds' securities lending agent. Loans of
portfolio securities provide the Funds with the opportunity to earn additional
income on the Fund's portfolio securities. All securities loans will be made
pursuant to agreements requiring the loans to be continuously secured by
collateral in cash or high grade debt obligations at least equal at all times to
the market value of the loaned securities. The borrower pays to the Funds an
amount equal to any dividends or interest received on loaned securities. The
Funds retain all or a portion of the interest received on investment of cash
collateral or receives a fee from the borrower. Lending portfolio securities
involves risks of delay in recovery of the loaned securities or in some cases
loss of rights in the collateral should the borrower fail financially.
Furthermore, because of the risks of delay in recovery, the Fund may lose the
opportunity to sell the securities at a desirable price. A Fund will generally
not have the right to vote securities while they are being loaned.
MONEY MARKET INSTRUMENTS. Each Fund may invest a portion of its assets in
high-quality money market instruments on an ongoing basis to provide liquidity
or for other reasons. The instruments in which a Fund may invest include: (i)
short-term obligations issued by the U.S. Government; (ii) negotiable
certificates of deposit ("CDs"), fixed time deposits and bankers' acceptances of
U.S. and foreign banks and similar institutions; (iii) commercial paper rated at
the date of purchase "Prime-1" by Moody's or "A-1+" or "A-1" by S&P or, if
unrated, of comparable quality as determined by the Fund; and (iv) repurchase
agreements. CDs are short-term negotiable obligations of commercial banks. Time
deposits are non-negotiable deposits maintained in banking institutions for
specified periods of time at stated interest rates. Banker's acceptances are
time drafts drawn on commercial banks by borrowers, usually in connection with
international transactions.
REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements with
counterparties that are deemed to present acceptable credit risks. A repurchase
agreement is a transaction in which a Fund purchases securities or other
obligations from a bank or securities dealer (or its affiliate) and
simultaneously commits to resell them to a counterparty at an agreed-upon date
or upon demand and at a price reflecting a market rate of interest unrelated to
the coupon rate or maturity of the purchased obligations. A Fund maintains
custody of the underlying obligations prior to their repurchase, either through
its regular custodian or through a special "triparty" custodian or sub-custodian
that maintains separate accounts for both the Fund and its counterparty. Thus,
the obligation of the counterparty to pay the repurchase price on the date
agreed to or upon demand is, in effect, secured by such obligations.
Repurchase agreements carry certain risks not associated with direct investments
in securities, including a possible decline in the market value of the
underlying obligations. If their value becomes less than the repurchase price,
plus any agreed upon additional amount, the counterparty must provide additional
collateral so that at all times the collateral is at least equal to the
repurchase price plus any agreed upon additional amount. The difference between
the total amount to be received upon repurchase of the obligations and the price
that was paid by a Fund upon acquisition is accrued as interest and included in
its net investment income. Repurchase agreements involving obligations other
than U.S. government securities (such as commercial paper and corporate bonds)
may be subject to special risks and may not have the benefit of certain
protections in the event of the counterparty's insolvency. If the seller or
guarantor becomes insolvent, the Fund may suffer delays, costs and possible
losses in connection with the disposition of collateral.
REVERSE REPURCHASE AGREEMENTS. Each Fund may enter into reverse repurchase
agreements, which involve the sale of securities held by a Fund subject to its
agreement to repurchase the securities at an agreed upon date or upon demand and
at a price reflecting a market rate of interest. Reverse repurchase agreements
are subject to each Fund's limitation on borrowings and may be entered into only
with banks or securities dealers or their affiliates. While a reverse repurchase
agreement is outstanding, a Fund will maintain the segregation, either on its
records or with the Trust's custodian, of cash or other liquid securities,
marked to market daily, in an amount at least equal to its obligations under the
reverse repurchase agreement.
Reverse repurchase agreements involve the risk that the buyer of the securities
sold by a Fund might be unable to deliver them when that Fund seeks to
repurchase. If the buyer of securities under a reverse repurchase agreement
files for bankruptcy or becomes insolvent, the buyer or trustee or receiver may
receive an extension of time to
4
determine whether to enforce a Fund's obligation to repurchase the securities,
and the Fund's use of the proceeds of the reverse repurchase agreement may
effectively be restricted pending such decision.
INVESTMENT COMPANY SECURITIES. Each Fund may invest in the securities of other
investment companies (including money market funds). The 1940 Act generally
prohibits a fund from acquiring more than 3% of the outstanding voting shares of
an investment company and limits such investments to no more than 5% of the
fund's total assets in any single investment company and no more than 10% in any
combination of two or more investment companies. All Funds may invest in the
securities of open-end funds (including money market funds) as permitted under
the 1940 Act. Each Fund may purchase shares of affiliated exchange traded funds
in secondary market transactions.
REAL ESTATE INVESTMENT TRUSTS. Each Fund may invest in the securities of real
estate investment trusts ("REITs") to the extent allowed by law. Risks
associated with investments in securities of REITs include: decline in the value
of real estate; risks related to general and local economic conditions;
overbuilding and increased competition; increases in property taxes and
operating expenses; changes in zoning laws; casualty or condemnation losses;
variations in rental income; changes in neighborhood values; the appeal of
properties to tenants; and increases in interest rates. In addition, equity
REITs may be affected by changes in the values of the underlying property owned
by the trusts, while mortgage REITs may be affected by the quality of credit
extended. REITs are dependent upon management skills, may not be diversified and
are subject to the risks of financing projects. REITs are also subject to heavy
cash flow dependency, defaults by borrowers, self liquidation and the
possibility of failing to qualify for tax-free pass-through of income and net
gains under the IRC, and to maintain exemption from the 1940 Act. If an issuer
of debt securities collateralized by real estate defaults, it is conceivable
that the REITs could end up holding the underlying real estate. Unlike the other
Funds, the International Real Estate Fund may invest in Passive Foreign
Investment Companies ("PFICs"). Investments in PFICs may decrease the tax
efficiency of this Fund.
NON-U.S. SECURITIES. The International Funds invest a significant portion of
their assets in non-U.S. equity securities. Investments in non-U.S. equity
securities involve certain risks that may not be present in investments in U.S.
securities. For example, non-U.S. securities may be subject to currency risks or
to foreign government taxes that reduce their attractiveness. There may be less
information publicly available about a non-U.S. issuer than about a U.S. issuer,
and a foreign issuer may or may not be subject to uniform accounting, auditing
and financial reporting standards and practices comparable to those in the U.S.
Other risks of investing in such securities include political or economic
instability in the country involved, the difficulty of predicting international
trade patterns and the possibility of imposition of exchange controls. The
prices of such securities may be more volatile than those of domestic
securities. With respect to certain foreign countries, there is a possibility of
expropriation of assets or nationalization, imposition of withholding taxes on
dividend or interest payments, difficulty in obtaining and enforcing judgments
against foreign entities or diplomatic developments which could affect
investment in these countries. Losses and other expenses may be incurred in
converting between various currencies in connection with purchases and sales of
foreign securities.
Non-U.S. stock markets may not be as developed or efficient as, and may be more
volatile than, those in the U.S. While the volume of shares traded on non-U.S.
stock markets generally has been growing, such markets usually have
substantially less volume than U.S. markets. Therefore, a Fund's investment in
non-U.S. equity securities may be less liquid and subject to more rapid and
erratic price movements than comparable securities listed for trading on U.S.
exchanges. Non-U.S. equity securities may trade at price/earnings multiples
higher than comparable U.S. securities and such levels may not be sustainable.
There may be less government supervision and regulation of foreign stock
exchanges, brokers, banks and listed companies abroad than in the U.S. Moreover,
settlement practices for transactions in foreign markets may differ from those
in U.S. markets. Such differences may include delays beyond periods customary in
the U.S. and practices, such as delivery of securities prior to receipt of
payment, which increase the likelihood of a failed settlement, which can result
in losses to a Fund.
The value of non-U.S. investments and the investment income derived from them
may also be affected unfavorably by changes in currency exchange control
regulations. Although the Funds will invest only in securities denominated in
foreign currencies that are fully exchangeable into U.S. dollars without legal
restriction at the time of investment, there can be no assurance that currency
controls will not be imposed subsequently.
5
Foreign brokerage commissions, custodial expenses and other fees are also
generally higher than for securities traded in the U.S. This may cause the
International Funds to incur higher portfolio transaction costs than domestic
equity funds.
Fluctuations in exchange rates may also affect the earning power and asset value
of the foreign entity issuing a security, even one denominated in U.S. dollars.
Dividend and interest payments may be repatriated based on the exchange rate at
the time of disbursement, and restrictions on capital flows may be imposed.
Set forth below for certain markets in which the Funds may invest are brief
descriptions of some of the conditions and risks in each such market.
INVESTMENTS IN EMERGING MARKETS. The Emerging Markets SmallCap Dividend,
Emerging Markets High-Yielding Equity, India Earnings and Middle East Dividend
Funds invest substantially all of their assets in markets that are considered to
be "emerging." Investing in securities listed and traded in emerging markets may
be subject to additional risks associated with emerging market economies. Such
risks may include: (i) greater market volatility, (ii) lower trading volume,
(iii) greater social, political and economic uncertainty, (iv) governmental
controls on foreign investments and limitations on repatriation of invested
capital, (v) the risk that companies may be held to lower disclosure, corporate
governance, auditing and financial reporting standards than companies in more
developed markets, and (vi) the risk that there may be less protection of
property rights than in other countries. Emerging markets are generally less
liquid and less efficient than developed securities markets.
INVESTMENTS IN FRONTIER MARKETS. The Middle East Dividend Fund invests in
countries that are generally considered to be "frontier markets." The economies
of frontier markets included in the WisdomTree Middle East Dividend Index (i.e.,
Bahrain, Egypt, Jordan, Kuwait, Morocco, Oman, Qatar and the United Arab
Emirates) generally have lower trading volumes and greater potential for
illiquidity and price volatility than more developed markets. These markets also
have a smaller number of issuers and participants and therefore may also be
affected to a greater extent by the actions of a small number of issuers and
investors. A significant change in cash flows investing in these markets could
have a substantial effect on local stock prices and, therefore, prices of Fund
shares. Investments in certain frontier market countries is restricted or
controlled to varying extents. At times, these restrictions or controls may
limit or prevent foreign investment and/or increase the investment costs and
expenses of the Fund. Frontier markets may be subject to greater political
instability, threat of war or terrorism and government intervention than more
developed markets, included many emerging market economies. Frontier markets
generally are not as correlated to global economic cycles as those of more
developed countries. These and other factors make investing in the frontier
market countries significantly riskier than investing in developed market and
emerging market countries.
Certain frontier countries impose additional restrictions, such as: requiring
governmental approval prior to investments by foreign persons, limiting the
amount of investment by foreign persons in a particular issuer, limiting
investment by foreign persons to a particular class of securities of an issuer
that may have less advantageous rights than other classes, and imposing
additional taxes. For countries that require prior government approval, delays
in obtaining such approval would delay investments, and consequently the Fund
may be unable to invest in all of the securities included in the index until
such approval is final. This could increase index tracking error. Some frontier
countries may also limit investment opportunities in issuers in industries
considered essential to national interests and may require governmental approval
for the repatriation of investment income, capital or the proceeds of security
sales by foreign investors, including the Fund. Some frontier country
governments may levy certain taxes on dividend and interest income. Although in
some countries a portion of these taxes are recoverable, the non-recovered
portion of foreign withholding taxes will decrease the income generated from
investments in such countries.
Some banks that are eligible foreign sub-custodians in frontier markets may have
been organized only recently, or otherwise not have extensive operating
experience. There may also be legal restrictions or limitations on the ability
of the Fund to recover assets held in custody by a foreign sub-custodian, such
as in cases where the sub-custodian becomes bankrupt. Settlement systems may not
be as established as in developed markets or even emerging markets. As a result,
settlements may be delayed and cash or Fund securities may be jeopardized
because of system defects. In addition, the laws of certain countries in which
the Fund invests may require the Fund to
6
release local shares before receiving cash payment, or to make cash payment
before receiving local shares. This increases the risk of loss to the Fund.
The Fund invests in some frontier countries that use share blocking. "Share
blocking" refers to the practice of predicating voting rights related to an
issuer's securities on these securities being blocked from trading at the
custodian or sub-custodian level, for a period of time near the date of a
shareholder meeting. Such restrictions have the potential to effectively prevent
securities from being voted and from trading within a specified number of days
before, and in some cases after the shareholder meeting. Share blocking may
preclude the Fund from purchasing or selling securities for a period of time.
During the time that shares are blocked, trades in such securities will not
settle. Although practices may vary by market, a blocking period may last from
one day to several weeks. Once blocked, the block may be removed only by
withdrawing a previously cast vote or abstaining from voting completely, a
process that may be burdensome. In certain countries, the block cannot be
removed. Share blocking may impose operational difficulties on the Fund,
including the potential effect that a block would have on pending trades. Share
blocking may cause pending trades to fail or remain unsettled for an extended
period of time. Fails may also expose the transfer agent and the Fund to
situations in which a counterparty may have the right to go to market, buy a
security at the current market price and have any additional expense borne by
the Fund or transfer agent if the counterparty is unable to deliver shares after
a certain period of time. The Adviser, on behalf of the Fund, reserves the right
to abstain from voting proxies in share blocking proxy markets. These and other
factors could have a negative impact on Fund performance.
INVESTMENTS IN AUSTRALIA. The Pacific ex-Japan Total Dividend Fund and the
Pacific ex-Japan High-Yielding Equity Fund generally invest a relatively large
percentage of their assets in companies organized in Australia. The economy of
Australia is heavily dependent on the demand for natural resources and
agricultural products. Conditions that weaken demand for such products worldwide
could have a negative impact on the Australian economy as a whole. These and
other factors could have a negative impact on a Fund's performance.
INVESTMENTS IN BRAZIL. Certain of the International Funds may invest a portion
of their assets in companies organized and listed in Brazil. Investing in
securities of Brazilian companies involves certain considerations not typically
associated with investing in securities of United States companies or the United
States government, including (i) investment and repatriation controls, which
could affect the Fund's ability to operate, and to qualify for the favorable tax
treatment afforded to regulated investment companies for U.S. Federal income tax
purposes, (ii) fluctuations in the rate of exchange between the Brazilian Real
and the U.S. Dollar, (iii) the generally greater price volatility and lesser
liquidity that characterize Brazilian securities markets, as compared with U.S.
markets, (iv) the effect that a trade deficit could have on economic stability
and the Brazilian government's economic policy, (v) high rates of inflation,
(vi) governmental involvement in and influence on the private sector, (vii)
Brazilian accounting, auditing and financial standards and requirements, which
differ from those in the United States, and (viii) political and other
considerations, including changes in applicable Brazilian tax laws. These and
other factors could have a negative impact on a Fund's performance.
INVESTMENTS IN CANADA. Certain of the International Funds may invest in Canada.
The U.S. is Canada's largest trading partner and foreign investor. As a result,
changes to the U.S. economy may significantly affect the Canadian economy. The
economy of Canada is also heavily dependent on the demand for natural resources
and agricultural products. Conditions that weaken demand for such products
worldwide could have a negative impact on the Canadian economy as a whole. These
and other factors could have a negative impact on a Fund's performance.
INVESTMENTS IN CHINA AND HONG KONG. Certain of the International Funds invest a
portion of their assets in securities listed and traded on the Hong Kong Stock
Exchange. In addition to the aforementioned risks of investing in non-U.S.
securities, investing in securities listed and traded in Hong Kong involves
special considerations not typically associated with investing in countries with
more democratic governments or more established economies or securities markets.
Such risks may include:
(i) the risk of nationalization or expropriation of assets or confiscatory
taxation; (ii) greater social, economic and political uncertainty (including the
risk of war); (iii) dependency on exports and the corresponding importance of
international trade; (iv) the increasing competition from Asia's other low-cost
emerging economies; (v) currency exchange rate fluctuations and the lack of
available currency hedging instruments; (vi) higher rates of inflation; (vii)
controls on foreign investment and limitations on repatriation of invested
capital and on the Fund's ability to
7
exchange local currencies for U.S. dollars; (viii) greater governmental
involvement in and control over the economy; (ix) the risk that the Chinese
government may decide not to continue to support the economic reform programs
implemented since 1978 and could return to the prior, completely centrally
planned, economy; (x) the fact that China companies, particularly those located
in China, may be smaller, less seasoned and newly-organized companies; (xi) the
difference in, or lack of, auditing and financial reporting standards which may
result in unavailability of material information about issuers, particularly in
China; (xii) the fact that statistical information regarding the economy of
China may be inaccurate or not comparable to statistical information regarding
the U.S. or other economies; (xiii) the less extensive, and still developing,
regulation of the securities markets, business entities and commercial
transactions; (xiv) the fact that the settlement period of securities
transactions in foreign markets may be longer; (xv) the willingness and ability
of the Chinese government to support the Chinese and Hong Kong economies and
markets is uncertain; (xvi) the risk that it may be more difficult, or
impossible, to obtain and/or enforce a judgment than in other countries; (xvii)
the rapidity and erratic nature of growth, particularly in China, resulting in
inefficiencies and dislocations; (xviii) the risk that, because of the degree of
interconnectivity between the economies and financial markets of China and Hong
Kong, any sizable reduction in the demand for goods from China, or an economic
downturn in China, could negatively affect the economy and financial market of
Hong Kong, as well; and (ixx) the risk that certain companies in the Fund's
Index may have dealings with countries subject to sanctions or embargoes imposed
by the U.S. government or identified as state sponsors of terrorism.
Investments in Hong Kong are also subject to certain political risks. Following
the establishment of the People's Republic of China by the Communist Party in
1949, the Chinese government renounced various debt obligations incurred by
China's predecessor governments, which obligations remain in default, and
expropriated assets without compensation. There can be no assurance that the
Chinese government will not take similar action in the future. An investment in
the Fund involves risk of a total loss. China has committed by treaty to
preserve Hong Kong's autonomy and its economic, political and social freedoms
for fifty years from the July 1, 1997 transfer of sovereignty from Great Britain
to China. However, if China would exert its authority so as to alter the
economic, political or legal structures or the existing social policy of Hong
Kong, investor and business confidence in Hong Kong could be negatively
affected, which in turn could negatively affect markets and business
performance. These and other factors could have a negative impact on a Fund's
performance.
INVESTMENTS IN INDIA. The India Earnings Fund, Emerging Markets High-Yielding
Equity Fund and Emerging Markets SmallCap Dividend Fund invest in securities
listed and traded in India. Investments in India may be more volatile and less
liquid and may offer higher potential for gains and losses than investments in
more developed markets. Economic and political structures in India may lack the
stability of more developed nations. Unanticipated political or social
developments in India and surrounding regions may affect the value of a Fund's
investments and the value of Fund shares. Although the government has recently
begun to institute economic reform policies, there can be no assurance that they
will continue to pursue such policies or, if they do, that such policies will
succeed. Monsoons and other natural disasters in India and surrounding regions
also can affect the value of Fund investments.
The laws relating to limited liability of corporate shareholders, fiduciary
duties of officers and directors, and the bankruptcy of state enterprises are
generally less well developed than or different from such laws in the United
States. It may be more difficult to obtain a judgment in Indian courts than it
is in the United States.
The Market for securities in India may be less liquid and transparent than the
markets in more developed countries. In addition, strict restrictions on foreign
investment may decrease the liquidity of a Fund's portfolio or inhibit the
Fund's ability to achieve its investment objective. A Fund may be unable to buy
or sell securities or receive full value for such securities. Settlement of
securities transactions in the Indian subcontinent are subject to risk of loss,
may be delayed and are generally less efficient than in the United States. In
addition, disruptions due to work stoppages and trading improprieties in these
securities markets have caused such markets to close. If extended closings were
to occur in stock markets where the Fund was heavily invested, a Fund's ability
to redeem Fund shares could become correspondingly impaired. Each of these
events could have a negative impact on the liquidity and value of the Fund's
investments. To mitigate these risks, a Fund may maintain a higher cash position
than it otherwise would, or a Fund may have to sell more liquid securities which
it would not otherwise choose to sell, possibly diluting its return and
inhibiting its ability to track its Index.
8
In recent years, exchange-listed companies in the technology sector and related
sectors (such as software) have grown so as to represent a significant portion
of the total capitalization of the Indian market. The value of these companies
will generally fluctuate in response to technological and regulatory
developments. The stock markets in the region are undergoing a period of growth
and change, which may result in trading or price volatility and difficulties in
the settlement and recording of transactions, and in interpreting and applying
the relevant laws and regulations. The securities industries in these countries
are comparatively underdeveloped, and stockbrokers and other intermediaries may
not perform as well as their counterparts in the United States and other more
developed securities markets. In some cases, physical delivery of securities in
small lots has been required in India and a shortage of vault capacity and
trained personnel has existed among qualified custodial Indian banks. These and
other factors could have a negative impact on a Fund's performance.
INVESTMENTS IN FRANCE. Certain of the International Funds may invest in France.
France is a member of the European Economic and Monetary Union ("EMU"). EMU
member countries share coordinated economic policies and a common currency. As a
result, the economy of France may be significantly affected by changes in the
economies of the EMU members or other European countries. These and other
factors could have a negative impact on a Fund's performance.
INVESTMENTS IN GERMANY. Certain of the International Funds may invest in
Germany. Germany is a member of the European Economic and Monetary Union
("EMU"). EMU member countries share coordinated economic policies and a common
currency. As a result, the economy of Germany may be significantly affected by
changes in the economies of the EMU members or other European countries.
Challenges related to the rebuilding of infrastructure and unemployment in the
former area of East Germany may also impact the economy of Germany. These and
other factors could have a negative impact on a Fund's performance.
INVESTMENTS IN JAPAN. The Japan Total Dividend Fund, Japan SmallCap Dividend
Fund, Japan High-Yielding Equity Fund, International Consumer Discretionary
Sector Fund, International Health Care Sector Fund, International Industrial
Sector Fund, and International Technology Sector Fund generally invest a
relatively large percentage of their assets in companies organized in Japan. The
Japanese economy is characterized by government intervention and protectionism,
an unstable financial services sector, and relatively high unemployment.
Economic growth is heavily dependent on international trade, government support
and consistent government policy. Slowdowns in the economies of key trading
partners such as the United States, China and countries in Southeast Asia could
have a negative impact on the Japanese economy as a whole. These and other
factors could have a negative impact on a Fund's performance.
INVESTMENTS IN THE MIDDLE EAST. The Middle East Dividend Fund invests in
companies organized and listed in Bahrain, Egypt, Jordan, Kuwait, Morocco, Oman,
Qatar and the United Arab Emirates. Countries in the Middle East may be affected
by political instability, war or the threat of war, regional instability,
terrorist activities and religious, ethnic and/or socioeconomic unrest. Markets
in the Middle East generally have lower trading volumes and greater potential
for illiquidity and price volatility than more developed markets. These markets
also have a smaller number of issuers and participants and therefore may also be
affected to a greater extent by the actions of a small number of issuers and
investors. A significant change in cash flows investing in these markets could
have a substantial effect on local stock prices. Some Middle Eastern countries
prohibit or impose substantial restrictions on investments in their capital
markets, particularly their equity markets, by foreign entities such as the
Fund. For example, certain countries may require governmental approval prior to
investment by foreign persons or limit the amount of investment by foreign
persons in a particular issuer. They may also limit the investment by foreign
persons to only a specific class of securities of an issuer that may have less
advantageous terms (including price) than securities of the issuer available for
purchase by nationals. The manner in which foreign investors may invest in
companies in certain Middle Eastern, as well as limitations on those
investments, may have an adverse impact on the operations of the Fund. For
example, the Fund may be required in certain of these countries to invest
initially through a local broker or other entity and then have the shares that
were purchased re-registered in the name of the Fund. Re-registration in some
instances may not be possible on a timely basis. This may result in a delay
during which the Fund may be denied certain of its rights as in investor,
including rights as to dividends or to be made aware of certain corporate
actions. The legal systems in certain Middle Eastern countries may have an
adverse impact on the Fund. For example, the potential liability of a
shareholder in a U.S. corporation with respect to acts of the corporation
generally is limited to the amount of the shareholder's investment. However, the
notion of limited
9
liability is less clear in certain Middle Eastern countries. The Fund therefore
may be liable in certain Middle Eastern countries for the acts of a corporation
in which it invests for an amount greater than the Fund's actual investment in
that corporation. Similarly, the rights of investors in Middle Eastern issuers
may be more limited than those of shareholders of a U.S. corporation. It may be
difficult or impossible to obtain and/or enforce a judgment in a Middle Eastern
country. These and other factors could have a negative impact on Fund
performance.
INVESTMENTS IN SINGAPORE. Certain of the International Funds may invest in
Singapore. The economy of Singapore is heavily dependent on international trade
and export. Conditions that weaken demand for such products worldwide or in the
Asian region could have a negative and significant impact on the Singaporean
economy as a whole. In addition, the economy of Singapore may be particularly
vulnerable to external market changes because of its smaller size. These and
other factors could have a negative impact on a Fund's performance.
INVESTMENTS IN SOUTH AFRICA. The Emerging Markets High-Yielding Equity and
SmallCap Dividend Funds may invest a portion of their assets in companies
organized and listed in South Africa. Although South Africa is a developing
country with a solid economic infrastructure (in some regards rivaling other
developed countries) certain issues, such as unemployment, access to healthcare,
limited economic opportunity, and other financial constraints, continue to
present obstacles towards full economic development. There can be no assurance
that initiatives by the government to address these issues will achieve the
desired results. South Africa's currency may be vulnerable to devaluation. These
and other factors could have a negative impact on the Fund's performance.
INVESTMENTS IN SOUTH KOREA. The Emerging Markets High-Yielding Equity and
SmallCap Dividend Funds may invest a portion of their assets in companies
organized and listed in South Korea. The economy of South Korea is heavily
dependent on exports and the demand for certain finished goods. South Korea's
main industries include electronics, automobile production, chemicals,
shipbuilding, steel, textiles, clothing, footwear, and food processing.
Conditions that weaken demand for such products worldwide or in other Asian
countries could have a negative impact on the South Korean economy as a whole.
Relations with North Korea could also have a significant impact on the economy
of South Korea. These and other factors could have a negative impact on the
Fund's performance.
INVESTMENTS IN TAIWAN. The Emerging Markets High-Yielding Equity and SmallCap
Dividend Funds may invest a portion of their assets in companies organized and
listed in Taiwan. The economy of Taiwan is heavily dependent on exports.
Currency fluctuations, increasing competition from Asia's other emerging
economies, and conditions that weaken demand for Taiwan's export products
worldwide could have a negative impact on the Taiwanese economy as a whole.
Concerns over Taiwan's history of political contention and its current
relationship with China may also have a significant impact on the economy of
Taiwan. These and other factors could have a negative impact on the Fund's
performance.
INVESTMENTS IN THE UNITED KINGDOM. Certain of the International Funds invest a
portion of their assets in companies organized in the United Kingdom. The United
Kingdom has one of the largest economies in Europe and trades heavily with other
European countries. The economy of the United Kingdom may be impacted by changes
to the economic health of other European countries. These and other factors
could have a negative impact on a Fund's performance.
DEPOSITARY RECEIPTS. To the extent a Fund invests in stocks of foreign
corporations, a Fund's investment in such stocks may also be in the form of
Depositary Receipts or other securities convertible into securities of foreign
issuers. Depositary Receipts may not necessarily be denominated in the same
currency as the underlying securities into which they may be converted. American
Depositary Receipts ("ADRs") are receipts typically issued by an American bank
or trust company that evidence ownership of underlying securities issued by a
foreign corporation. European Depositary Receipts ("EDRs") are receipts issued
in Europe that evidence a similar ownership arrangement. Global Depositary
Receipts ("GDRs") are receipts issued throughout the world that evidence a
similar arrangement. Generally, ADRs, in registered form, are designed for use
in the U.S. securities markets, and EDRs, in bearer form, are designed for use
in European securities markets. GDRs are tradable both in the United States and
in Europe and are designed for use throughout the world. Depositary Receipts
will not necessarily be denominated in the same currency as their underlying
securities.
A Fund will not invest in any unlisted Depositary Receipts or any Depositary
Receipt that WisdomTree Asset Management or the Sub-Adviser deems to be illiquid
or for which pricing information is not readily available. In
10
addition, all Depositary Receipts generally must be sponsored. However, a Fund
may invest in unsponsored Depositary Receipts under certain limited
circumstances. The issuers of unsponsored Depositary Receipts are not obligated
to disclose material information in the United States, and, therefore, there may
be less information available regarding such issuers and there may not be a
correlation between such information and the market value of the Depositary
Receipts. The use of Depositary Receipts may increase tracking error relative to
an underlying index.
CURRENCY TRANSACTIONS. The Funds may enter into foreign currency forward and
foreign currency futures contracts to facilitate local securities settlements or
to protect against currency exposure in connection with distributions to
shareholders. The Funds do not expect to engage in currency transactions for the
purpose of hedging against declines in the value of a Fund's assets that are
denominated in one or more foreign currencies. The Funds may not enter into such
contracts for speculative purposes.
FORWARD FOREIGN CURRENCY TRANSACTIONS. A forward foreign currency exchange
contract ("forward contract") involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time
of the contract. These contracts are principally traded in the interbank market
conducted directly between currency traders (usually large, commercial banks)
and their customers. A forward contract generally has no margin deposit
requirement, and no commissions are charged at any stage for trades.
FOREIGN CURRENCY FUTURES CONTRACTS. A foreign currency futures contract is a
contract involving an obligation to deliver or acquire the specified amount of a
specific currency, at a specified price and at a specified future time. Futures
contracts may be settled on a net cash payment basis rather than by the sale and
delivery of the underlying currency.
Foreign exchange transactions involve a significant degree of risk and the
markets in which foreign exchange transactions are effected are highly volatile,
highly specialized and highly technical. Significant changes, including changes
in liquidity and prices, can occur in such markets within very short periods of
time, often within minutes. Foreign exchange trading risks include, but are not
limited to, exchange rate risk, maturity gap, interest rate risk, and potential
interference by foreign governments through regulation of local exchange
markets, foreign investment or particular transactions in foreign currency. If a
Fund utilizes foreign exchange transactions at an inappropriate time, such
transactions may not serve their intended purpose of improving the correlation
of a Fund's return with the performance of its underlying Index and may lower
the Fund's return. A Fund could experience losses if the value of any currency
forwards, options and futures positions is poorly correlated with its other
investments or if it could not close out its positions because of an illiquid
market. In addition, each Fund will incur transaction costs, including trading
commissions, in connection with certain foreign currency transactions.
ILLIQUID SECURITIES. Each Fund may invest up to an aggregate amount of 15% of
its net assets in illiquid securities. Illiquid securities include securities
subject to contractual or other restrictions on resale and other instruments
that lack readily available markets. The inability of a Fund to dispose of
illiquid or not readily marketable investments readily or at a reasonable price
could impair a Fund's ability to raise cash for redemptions or other purposes.
The liquidity of securities purchased by a Fund which are eligible for resale
pursuant to Rule 144A will be monitored by each Fund on an ongoing basis. In the
event that such a security is deemed to be no longer liquid, a Fund's holdings
will be reviewed to determine what action, if any, is required to ensure that
the retention of such security does not result in a Fund having more than 15% of
its assets invested in illiquid or not readily marketable securities.
FUTURES, OPTIONS AND OPTIONS ON FUTURES CONTRACTS. Each Fund may enter into U.S.
or foreign futures contracts and options and options on futures contracts. When
a Fund purchases a futures contract, it agrees to purchase a specified
underlying instrument at a specified future date. When a Fund sells a futures
contract, it agrees to sell the underlying instrument at a specified future
date. The price at which the purchase and sale will take place is fixed when the
Fund enters into the contract. Futures can be held until their delivery dates,
or can be closed out before then if a liquid secondary market is available. To
the extent a Fund uses futures and options, it will do so only in accordance
with Rule 4.5 of the Commodity Exchange Act ("CEA"). The Trust, on behalf of
each Fund, has filed a notice of eligibility for exclusion from the definition
of the term "commodity pool operator" in accordance with Rule 4.5 so that each
Fund is not subject to registration or regulation as a commodity pool operator
under the CEA.
11
RISKS OF FUTURES AND OPTIONS TRANSACTIONS. The risk of loss in trading futures
contracts or uncovered call options in some strategies (e.g., selling uncovered
stock index futures contracts) is potentially unlimited. The Funds do not plan
to use futures and options contracts in this way. The risk of a futures position
may still be large as traditionally measured due to the low margin deposits
required. In many cases, a relatively small price movement in a futures contract
may result in immediate and substantial loss or gain to the investor relative to
the size of a required margin deposit. The Funds, however, intend to utilize
futures and options contracts in a manner designed to limit their risk exposure
to levels comparable to direct investment in stocks.
Utilization of futures and options on futures by a Fund involves the risk of
imperfect or even negative correlation to the underlying Index if the index
underlying the futures contract differs from the underlying Index. There is also
the risk of loss by a Fund of margin deposits in the event of bankruptcy of a
broker with whom a Fund has an open position in the futures contract or option.
The purchase of put or call options will be based upon predictions by the Fund
as to anticipated trends, which predictions could prove to be incorrect.
The potential for loss related to the purchase of an option on a futures
contract is limited to the premium paid for the option plus transaction costs.
Because the value of the option is fixed at the point of sale, there are no
daily cash payments by the purchaser to reflect changes in the value of the
underlying contract; however, the value of the option changes daily and that
change would be reflected in the NAV of each Fund. The potential for loss
related to writing options is unlimited.
Although each Fund intends to enter into futures contracts only if there is an
active market for such contracts, there is no assurance that an active market
will exist for the contracts at any particular time.
SWAP AGREEMENTS. Swap agreements can be individually negotiated and structured
to include exposure to a variety of different types of investments or market
factors. Depending on their structure, swap agreements may increase or decrease
a Fund's exposure to long or short-term interest rates (in the United States or
abroad), foreign currency values, mortgage securities, corporate borrowing
rates, or other factors such as security prices or inflation rates. Swap
agreements can take many different forms and are known by a variety of names.
Swap agreements will tend to shift a Fund's investment exposure from one type of
investment to another. For example, if the Fund agreed to exchange payments in
dollars for payments in foreign currency, the swap agreement would tend to
decrease the Fund's exposure to U.S. interest rates and increase its exposure to
foreign currency and interest rates. Caps and floors have an effect similar to
buying or writing options. Depending on how they are used, swap agreements may
increase or decrease the overall volatility of a Fund's investments and its
share price.
Swap agreements also may allow a Fund to acquire or reduce credit exposure to a
particular issuer. The most significant factor in the performance of swap
agreements is the change in the factors that determine the amounts of payments
due to and from a Fund. If a swap agreement calls for payments by the Fund, the
Fund must be prepared to make such payments when due. If a swap counterparty's
creditworthiness declines, the risk that they may not perform may increase,
potentially resulting in a loss to the Fund. Although there can be no assurance
that the Fund will be able to do so, the Fund may be able to reduce or eliminate
its exposure under a swap agreement either by assignment or other disposition,
or by entering into an offsetting swap agreement with the same party or a
similarly creditworthy party.
PARTICIPATION CERTIFICATES. The Middle East Dividend Fund may invest in
participation certificates ("Participation Certificates") as a substitute for
investing directly in securities included in the Middle East Dividend Index.
Participation Certificates are notes issued by banks or broker-dealers and are
designed to provide returns corresponding with the performance of an underlying
equity security or market. Participation Certificates are subject to the risk
that the issuer of the note will default on its obligation, in which case the
Fund could lose the entire value of its investment. The use of Participation
Certificates can increase tracking error relative to the Index. A holder of a
Participation Certificates that is linked to an underlying security may receive
any dividends paid in connection with the underlying security. However, a holder
of a Participation Certificates does not have voting rights, as the holder would
if it owned the underlying security directly. Investing in Participation
Certificates may subject the Funds to counterparty risk. In addition, there can
be no assurance that the trading price of a Participation Certificates will be
equal to the underlying value of the company or market that it seeks to
replicate. The Fund will be relying on the creditworthiness of the counterparty
issuing the Participation Certificates and would lose its investment if such
counterparty became insolvent. The Fund will have no rights against the issuer
of the underlying security. A
12
Participation Certificates may also include transaction costs in addition to
those applicable to a direct investment in securities. The markets on which the
Participation Certificates are traded may be less liquid than the markets for
other securities due to liquidity and transfer restrictions. The markets for
Participation Certificates typically are "over the counter" and may be less
transparent than the markets for listed securities. This may limit the
availability of pricing information and may make it more difficult for the Fund
to accurately value its investments in Participation Certificates. This may
increase tracking error relative to the Index.
TRACKING STOCKS. A tracking stock is a separate class of common stock whose
value is linked to a specific business unit or operating division within a
larger company and which is designed to "track" the performance of such business
unit or division. The tracking stock may pay dividends to shareholders
independent of the parent company. The parent company, rather than the business
unit or division, generally is the issuer of tracking stock. However, holders of
the tracking stock may not have the same rights as holders of the company's
common stock.
FUTURE DEVELOPMENTS. The Board may, in the future, authorize each Fund to invest
in securities contracts and investments other than those listed in this SAI and
in each Fund's Prospectus, provided they are consistent with the Fund's
investment objective and do not violate any investment restrictions or policies.
PROXY VOTING POLICY
The Trust has adopted as its proxy voting policies for each Fund the proxy
voting guidelines of the The Bank of New York Mellon Corporation. The Trust has
delegated to the Sub-Adviser the authority and responsibility for voting proxies
on the portfolio securities held by each Fund. The remainder of this section
discusses each Fund's proxy voting guidelines and the Sub-Adviser's role in
implementing such guidelines.
The Sub-Adviser understands that proxy voting is an integral aspect of
investment management. Accordingly, proxy voting must be conducted with the same
degree of prudence and loyalty accorded any fiduciary or other obligation of an
investment manager. The Sub-Adviser has designated a Proxy Committee with the
responsibility for administering and overseeing the proxy voting process and
procedures.
The Sub-Adviser or its designated Agent is currently performing certain
proxy-related services pursuant to these procedures, including providing
research and making voting determinations in accordance with the proxy voting
guidelines, voting and submitting proxies and related administrative and
recordkeeping functions. If the guidelines do not address how a proxy should be
voted, the proxy will be voted in accordance with an independent third party's
recommendations. The Sub-Adviser believes that this process is reasonably
designed to address material conflicts of interest that may arise between the
Sub-Adviser and a Fund as to how proxies are voted. If an investment
professional (a portfolio manager, the Sub-Adviser's Chief Investment Officer or
other investment professional) believes that it may be in the best interest of a
Fund to vote in a manner inconsistent with the independent third party's
recommendations, such investment professional must contact the Proxy Committee
and complete a questionnaire to allow the Proxy Committee to review the
recommendation and consider such other matters as it deems appropriate to
determine that there is no material conflict of interest between the Sub-Adviser
and the Fund with respect to the voting of the proxy in that manner. If the
proxy guidelines do not address how a proxy should be voted and the independent
third party refrains from making a recommendation as to how such proxy should be
voted, the Proxy Committee will make a determination as to how the proxy should
be voted. After making such a determination, the Proxy Committee will consider
such matters as it deems appropriate to determine that there is no material
conflict of interest between the Sub-Adviser and the Fund with respect to the
voting of the proxy in that manner.
Although the proxy guidelines detail numerous specific instances and possible
proposals, the guidelines provide that the Fund's will generally vote "for"
management proposals on routine business; case by case on management proposals
related to directors (though "for" routine matters and "against" classification
of the Board); case by case on management proposals related to a company's
capitalization, reorganizations or merger proposals, and non-salary compensation
issues; "against" management proposals on anti-takeover related proposals; and
"against" or case by case on most shareholder proposals, including social
issues. A complete copy of the Proxy Policy may be obtained by calling
1-866-909-9473.
13
The Trust is required to disclose annually the Funds' complete proxy voting
record on Form N-PX covering the period from July 1 of one year through June 30
of the next and to file N-PX with the SEC no later than August 31 of each year.
The current Form N-PX for the Funds is available at no charge upon request by
calling 866-909-9473 or through the Trust's website at www.wisdomtree.com. The
Funds' Form N-PX is also available on the SEC's website at www.sec.gov.
PORTFOLIO HOLDING DISCLOSURE POLICIES AND PROCEDURES
The Trust has adopted a Portfolio Holdings Policy (the "Policy") designed to
govern the disclosure of Fund portfolio holdings and the use of material
non-public information about Fund holdings. The Policy applies to all officers,
employees, and agents of the Funds, including the Adviser and any Sub-Adviser
(together, the "Advisers"). The Policy is designed to ensure that the disclosure
of information about each Fund's portfolio holdings is consistent with
applicable legal requirements and otherwise in the best interest of each Fund.
As exchange traded funds, information about each Fund's portfolio holdings is
made available on a daily basis in accordance with the provisions of any Order
of the Securities and Exchange Commission ("SEC") applicable to the Funds,
regulations of the Funds' Listing Exchange and other applicable SEC regulations,
orders and no-action relief. Such information typically reflects all or a
portion of a Fund's anticipated portfolio holdings as of the next Business Day.
This information is used in connection with the Creation and Redemption process
and is disseminated on a daily basis through the facilities of the Listing
Exchange, the National Securities Clearing Corporation ("NSCC") and/or third
party service providers.
Each Fund may disclose on the Funds' website at the start of each Business Day
the identities and quantities of the securities and other assets held by each
Fund that will form the basis of the Fund's calculation of its net asset value
("NAV") on that Business Day. The portfolio holdings so disclosed will be based
on information as of the close of business on the prior Business Day and/or
trades that have been completed prior to the opening of business on that
Business Day and that are expected to settle on that Business Day.
Daily access to each Fund's portfolio holdings is permitted to personnel of the
Advisers, the Distributor and the Funds' administrator, custodian and accountant
and other agents or service providers of the Trust who have need of such
information in connection with the ordinary course of their respective duties to
the Funds. The Funds Chief Compliance Officer may authorize disclosure of
portfolio holdings.
Each Fund may disclose its complete portfolio holdings or a portion of its
portfolio holdings online at www.wisdomtree.com. Online disclosure of such
holdings is publicly available at no charge.
Each Fund will disclose its complete portfolio holdings schedule in public
filings with the SEC on a quarterly basis, based on the Fund's fiscal year,
within sixty (60) days of the end of the quarter, and will provide that
information to shareholders, as required by federal securities laws and
regulations thereunder.
No person is authorized to disclose a Fund's portfolio holdings or other
investment positions except in accordance with the Policy. The Trust's Board
reviews the implementation of the Policy on a periodic basis.
14
DESCRIPTION OF THE WISDOMTREE INDEXES
Brief descriptions of the Indexes on which the Funds are based and the equity
markets in which the Funds invest are provided below. Additional information
about each Index, including the components and weightings of the Indexes, as
well as the rules that govern inclusion and weighting in each of the Indexes is
available at www.wisdomtree.com.
Component Selection Criteria. In order to be included in one of the WisdomTree
Dividend Indexes, a company must pay regular cash dividends on shares of its
common stock. Companies must also meet certain liquidity requirements. For
example, a company generally must have a minimum market capitalization of $100
million as of the Index measurement date (defined below) and have an average
daily dollar volume traded of at least $100,000 for the three months prior to
the Index measurement date. Some Indexes have higher minimum capitalization and
liquidity requirements. To be included in one of the U.S. Dividend Indexes, a
company must be incorporated in the United States (including Puerto Rico), and
must list its shares on the New York Stock Exchange ("NYSE"), American Stock
Exchange ("AMEX") or the NASDAQ. To be included in one of the non-U.S. Indexes,
a company must list its shares on a major non-U.S. stock exchange and be
organized outside of the United States. Common stocks, real estate investment
trusts, tracking stocks, and holding companies are eligible for inclusion in
each Index. Limited partnerships, limited liability companies, mortgage REITS,
royalty trusts, preferred stocks, closed-end funds, exchange-traded funds, PFICs
and derivative securities, such as warrants and rights, are not eligible (though
PFICs are eligible to be included in the International Real Estate Fund).
In order to be included in one of the WisdomTree Domestic Earnings Indexes, a
company must: (i) be incorporated in the United States (including Puerto Rico),
(ii) be listed on the NYSE, AMEX or NASDAQ, (iii) have generated positive
earnings on a cumulative basis in their most recent four fiscal quarters
preceding the Index measurement date, (iv) have a market capitalization of at
least $100 million on the Index measurement date, (v) have an average daily
dollar volume of at least $200,000 for each of the six months prior to the Index
measurement date, and (vi) have a price to earnings ratio ("P/E ratio") of at
least 2 as of the Index measurement date. Companies are weighted in the Index
based on their earnings over their most recent four fiscal quarters preceding
the Index measurement date. For these purposes, "earnings" are determined using
a company's "Core Earnings." Core Earnings is a standardized calculation of
earnings developed by S&P that is designed to include expenses, incomes and
activities that reflect the actual profitability of a company's ongoing
operations. Common stocks, tracking stocks, and holding companies are eligible
for inclusion. REITs, ADRs, GDRs and EDRs are excluded, as are limited
partnerships, limited liability companies, royalty trusts, preferred stocks,
closed-end funds, exchange-traded funds, and derivative securities, such as
warrants and rights, are not eligible. The WisdomTree India Earnings Index uses
a slightly differently approach from the Domestic Earnings Indexes and is
described below.
Annual Index Reconstitution. The WisdomTree Indexes are "reconstituted" on an
annual basis. New securities are added to the Indexes only during the "annual
reconstitution." The annual reconstitution of the Domestic Dividend and Earnings
Indexes takes place at the end of November and the beginning of December each
year. The annual reconstitution of the International Indexes takes place at the
end of June and the beginning of July each year, except that the annual
reconstitution of the WisdomTree India Earnings Index takes place at the end of
August and the beginning of September each year.
During the annual reconstitution, securities are screened to determine whether
they comply with WisdomTree's proprietary Index methodology and are eligible to
be included in an Index. This date is sometimes referred to as the "Index
measurement date" or the "Screening Point." Based on this screening, securities
that meet Index requirements are added to the applicable Index and securities
that do not meet such requirements are dropped from the applicable Index. A
"preliminary Index" is made publicly available based on this information. The
"Weighting Date" is the date when the final weights of each component security
of each Index are established. This is determined after the close of trading on
the third Wednesday of December for the Domestic Dividend and Earnings Indexes
and after the close of trading on the third Wednesday of June for the
International Indexes. The final index constituents and their respective
weightings are made publicly available at this time. The final Index
constituents and final constituent weightings go into effect immediately before
the opening of trading on the Monday following the Weighting Date. This is
sometimes referred to as the "Reconstitution Date."
15
Index Maintenance. Index maintenance occurs throughout the year and includes
monitoring and implementing the adjustments for company additions and deletions,
stock splits, corporate restructurings and other corporate actions. Corporate
actions are generally implemented after the close of trading on the day prior to
the ex-date of such corporate actions. To the extent reasonably practicable,
such changes will be announced at least two days prior to their implementation.
Should any company achieve a weighting equal or greater than 24% of an Index,
its weighting will be reduced at the close of the current calendar quarter and
other components in the Index will be rebalanced. Moreover, should the
collective weight of Index component securities whose individual current weights
equal or exceed 5% of an Index, when added together, exceed 50% of such Index,
the weightings in those component securities will be reduced so that their
collective weight equals 40% of the Index as of the close of the current
calendar quarter, and other components in the Index will be rebalanced.
Index Availability. Each WisdomTree Index is calculated and disseminated
throughout each day the New York Stock Exchange is open for trading.
Changes to the Index Methodology. The WisdomTree Indexes are governed by a
published, rules-based methodology. Changes to the methodology will be publicly
disclosed at www.wisdomtreeindexes.com prior to implementation. Sixty (60) days
prior notice will be given prior to the implementation of any such change.
Index Calculation Agent. In order to minimize any potential for conflicts caused
by the fact that WisdomTree Investments and its affiliates act as Index provider
and investment adviser to the Funds, WisdomTree Investments has retained an
unaffiliated third party to calculate each Index (the "Calculation Agent"). The
Calculation Agent, using the rules-based methodology, will calculate, maintain
and disseminate the Indexes on a daily basis. WisdomTree Investments will
monitor the results produced by the Calculation Agent to help ensure that the
Indexes are being calculated in accordance with the rules-based methodology. In
addition, WisdomTree Investments and WisdomTree Asset Management have
established policies and procedures designed to prevent non-public information
about pending changes to the Indexes from being used or disseminated in an
improper manner. Furthermore, WisdomTree Investments and WisdomTree Asset
Management have established policies and procedures designed to prevent improper
use and dissemination of non-public information about the Funds' portfolio
strategies and to prevent the Funds' portfolio managers from having any
influence on the construction of the Index methodology.
WISDOMTREE DOMESTIC DIVIDEND INDEXES
WisdomTree Dividend Index
Number of Components: approximately 1450
Index Description. The WisdomTree Dividend Index measures the performance of
U.S. companies that pay regular cash dividends on shares of their common stock.
Each Domestic Dividend Index is derived from the WisdomTree Dividend Index.
WisdomTree High-Yielding Equity Index
Number of Components: approximately 400
Index Description. The WisdomTree High-Yielding Equity Index measures the
performance of the highest yielding stocks within the WisdomTree Dividend Index
that meet specified requirements as of the Index measurement date. The Index is
created by selecting from the WisdomTree Dividend Index those companies with
market capitalizations of at least $200 million and average daily trading
volumes of at least $200,000 for the three months prior to the Index measurement
date. The top 30% of these companies ranked by dividend yield are included in
the Index. Companies are weighted in the Index based on their projected cash
dividends as of the Index measurement date. The Index includes
large-capitalization, mid-capitalization and small-capitalization securities.
16
WisdomTree LargeCap Dividend Index
Number of Components: approximately 300
Index Description. The WisdomTree LargeCap Dividend Index measures performance
of companies that pay regular cash dividends from the large-capitalization
segment of the WisdomTree Dividend Index. The Index consists of the 300
companies in the WisdomTree Dividend Index with the highest market
capitalizations as of the Index measurement date. Companies in the Index are
weighted based on their projected cash dividends as of the Index measurement
date. The Index consists of large-capitalization securities.
WisdomTree Dividend Top 100 Index
Number of Components: approximately 100
Index Description. The WisdomTree Dividend Top 100 Index measures the
performance of the 100 highest dividend-yielding companies in the WisdomTree
LargeCap Dividend Index. Unlike other WisdomTree Domestic Indexes, which weight
index components based on projected cash dividends, a component's weight in the
Index is based on its indicated annual dividend yield as of the Index
measurement date. Indicated annual dividend yield is calculated by annualizing
the most recently declared regular cash dividend per share and dividing the
amount by the stock price. A component company's weight in the Index is
determined by dividing its indicated annual dividend yield by the sum of all the
indicated annual dividend yields for all the component companies in the Index.
The Index consists of approximately 100 large-capitalization securities.
WisdomTree MidCap Dividend Index
Number of Components: approximately 425
Index Description. The WisdomTree MidCap Dividend Index measures the performance
of companies that pay regular cash dividends from the mid-capitalization segment
of the WisdomTree Dividend Index. The Index is created by first removing the 300
companies with the highest market capitalizations as of the Index measurement
date from the WisdomTree Dividend Index. Those companies that comprise the top
75% of the remaining market capitalization of the WisdomTree Dividend Index as
of the Index measurement date are included in the WisdomTree MidCap Index.
Companies are weighted in the Index based on their projected cash dividends as
of the Index measurement date. The Index includes primarily mid-capitalization
securities.
WisdomTree SmallCap Dividend Index
Number of Components: approximately 725
Index Description. The WisdomTree SmallCap Dividend Index measures the
performance of companies that pay regular cash dividends from the
small-capitalization segment of the WisdomTree Dividend Index. The Index is
created by first removing the 300 companies with the highest market
capitalizations as of the Index measurement date from the WisdomTree Dividend
Index. Those companies that comprise the bottom 25% of the remaining market
capitalization of the Dividend Index as of the Index measurement date are
included in the WisdomTree SmallCap Index. Companies are weighted in the Index
based on their projected cash dividends as of the Index measurement date. The
Index includes primarily small-capitalization securities.
WISDOMTREE EARNINGS INDEXES
WisdomTree Earnings Index
Number of Components: approximately 2350
Index Description. The WisdomTree Earnings Index is a fundamentally weighted
index that measures the performance of earnings-generating companies within the
broad U.S. stock market. The Index consists of companies that: (i) are
incorporated in the United States (including Puerto Rico), (ii) are listed on
the New York Stock Exchange, American Stock Exchange, NASDAQ Global Select, or
NASDAQ Global Market (the "NASDAQ Market"), (iii) have generated positive
earnings on a cumulative basis in their most recent four fiscal quarters
preceding the Index measurement date, (iv) have a market capitalization of at
least $100 million on the Index measurement date, (v) have an average daily
dollar volume of at least $200,000 for each of the six months prior to the Index
measurement date, and (vi) have a price to earnings ratio ("P/E ratio") of at
least 2 as of the Index measurement date. Companies are weighted in the Index
based on their earnings over their most recent four fiscal quarters preceding
the Index measurement date. For these purposes, "earnings" are determined using
a company's
17
"Core Earnings." Core Earnings is a standardized calculation of earnings
developed by S&P that is designed to include expenses, incomes and activities
that reflect the actual profitability of a company's ongoing operations.
Companies are weighted in the Index based on their earnings over the four
quarters preceding the Index measurement date. The Index includes
large-capitalization, mid-capitalization and small-capitalization securities and
is, in this sense, an earnings-weighted index for the broad U.S. market.
WisdomTree Earnings 500 Index
Number of Components: approximately 500
Index Description. The WisdomTree Earnings 500 Index is a fundamentally weighted
index that measures the performance of earnings-generating companies within the
large-capitalization segment of the U.S. stock market. The Index consists of the
500 largest companies ranked by market capitalization in the WisdomTree Earnings
Index as of the Index measurement date. Companies are weighted in the Index
based on their earnings over their most recent four fiscal quarters preceding
the Index measurement date. For these purposes, "earnings" are determined using
a company's "Core Earnings." Core Earnings is a standardized calculation of
earnings developed by Standard & Poor's that is designed to include expenses,
incomes and activities that reflect the actual profitability of a company's
ongoing operations. The Index includes primarily large-capitalization
securities.
WisdomTree MidCap Earnings Index
Number of Components: approximately 785
Index Description. The WisdomTree MidCap Earnings Index is a fundamentally
weighted index that measures the performance of earnings-generating companies
within the mid-capitalization segment of the U.S. stock market. The Index is
created by first removing the 500 companies with the highest market
capitalizations as of the Index measurement date from the WisdomTree Earnings
Index. Those companies that comprise the top 75% of the remaining market
capitalization of the WisdomTree Earnings Index are included in the WisdomTree
MidCap Earnings Index. For these purposes, Companies are weighted in the Index
based on their earnings over their most recent four fiscal quarters preceding
the Index measurement date. For these purposes, "earnings" are determined using
a company's "Core Earnings." Core Earnings is a standardized calculation of
earnings developed by Standard & Poor's that is designed to include expenses,
incomes and activities that reflect the actual profitability of a company's
ongoing operations. The Index includes primarily mid-capitalization securities.
WisdomTree SmallCap Earnings Index
Number of Components: approximately 1080
Index Description. The WisdomTree SmallCap Earnings Index is a fundamentally
weighted index that measures the performance of earnings-generating companies
within the small-capitalization segment of the U.S. stock market. The Index is
created by first removing the 500 companies with the highest market
capitalizations as of the Index measurement date from the WisdomTree Earnings
Index. Those companies that comprise the bottom 25% of the remaining market
capitalization of the WisdomTree Earnings Index are included in the WisdomTree
SmallCap Earnings Index. Companies are weighted in the Index based on their
earnings over their most recent four fiscal quarters preceding the Index
measurement date. For these purposes, "earnings" are determined using a
company's "Core Earnings." Core Earnings is a standardized calculation of
earnings developed by Standard & Poor's that is designed to include expenses,
incomes and activities that reflect the actual profitability of a company's
ongoing operations. The Index includes primarily small-capitalization
securities.
WisdomTree Earnings Top 100 Index
Number of Components: approximately 100
Index Description. The WisdomTree Earnings Top 100 Index is a fundamentally
weighted Index that measures the performance of 100 large-cap companies with
relatively high earnings yields. The Index is created by selecting the 100
companies with the highest earnings yields from the 300 largest companies within
the WisdomTree Earnings 500 Index. Unlike the other Earnings Indexes which
weight companies based on aggregate earnings, the Index is weighted by earnings
yield. A component company's weight in the Index at the Index measurement date
is determined by its earnings yield. Earnings yield is calculated by dividing a
company's trailing 12 months earnings
18
by its market capitalization. This amount is then divided by the sum of all
earnings yields for all the component companies in the Index. For these
purposes, "earnings" are determined using a company's "Core Earnings." Core
Earnings is a standardized calculation of earnings developed by Standard &
Poor's that is designed to include expenses, incomes and activities that reflect
the actual profitability of a company's ongoing operations. The Index includes
primarily large-capitalization securities.
WisdomTree Low P/E Index
Number of Components: approximately 700
Index Description. The WisdomTree Low P/E Index is a fundamentally weighted
index that measures the performance of companies with the lowest
price-to-earnings ratios ("P/E ratios") within the WisdomTree Earnings Index
that meet certain requirements. To be included in the Low P/E Index, companies
must have market capitalizations of at least $200 million as of the Index
measurement date. On the Index measurement date companies that meet these
requirements are ranked by P/E ratio. Those companies with the lowest P/E ratios
are ranked highest. The top 30% of these companies are included in the Index.
Companies are weighted in the Index based on their earnings over the four
quarters preceding the Index measurement date. For these purposes, "earnings"
are determined using a company's "Core Earnings." Core Earnings is a
standardized calculation of earnings developed by Standard & Poor's that is
designed to include expenses, incomes and activities that reflect the actual
profitability of a company's ongoing operations. The Index includes primarily
large-capitalization securities.
WisdomTree India Earnings Index
Number of Components: approximately 150
The WisdomTree India Earnings Index is a fundamentally weighted index that
measures the performance of profitable companies incorporated and traded in
India that are eligible to be purchased by foreign investors and that meet
specific other criteria developed by WisdomTree Investments. The Index consists
of companies that: (i) are incorporated in India, (ii) are listed on a major
stock exchange in India, (iii) have generated at least $5 million in earnings in
their fiscal year prior to the Index measurement date, (iv) have a market
capitalization of at least $200 million on the Index measurement date, (v) have
an average daily dollar volume of at least $200,000 for each of the six months
prior to the Index measurement date, (vi) have traded at least 250,000 shares
per month for each of the six months prior to the index measurement date, and
(vii) have a price to earnings ratio ("P/E ratio") of at least 2 as of the Index
measurement date. Companies are weighted in the Index based on earnings in their
fiscal year prior to the Index measurement date adjusted for a factor that takes
into account shares available to foreign investors. "Earnings" are determined
using a company's reported net income. Only common stocks and holding companies,
including real estate holding companies, are eligible for inclusion in the
Index. The Index includes large-capitalization, mid-capitalization and
small-capitalization securities.
WISDOMTREE INTERNATIONAL DIVIDEND INDEXES
WisdomTree DEFA Index
Number of Components: approximately 2390
Index Description. The WisdomTree DEFA Index measures the performance of
companies in developed markets outside of the U.S. and Canada that pay regular
cash dividends on shares of common stock and that meet certain other
requirements. To be included in the WisdomTree DEFA Index, companies must be
incorporated in one of 16 developed-market European countries (Austria, Belgium,
Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway,
Portugal, Spain, Sweden, Switzerland, or the United Kingdom), Japan, Hong Kong,
Singapore, Australia, or New Zealand, and must be listed on a major securities
exchange in one of those countries. Companies must have paid at least $5 million
in cash dividends on their common stock as of the most recent Index measurement
date and must also satisfy specified liquidity and other requirements. Companies
are weighted in the Index based on regular cash dividends paid. The Index
includes large-capitalization, mid-capitalization and small-capitalization
securities.
19
WisdomTree DEFA High-Yielding Equity Index
Number of Components: approximately 690
Index Description. The WisdomTree DEFA High-Yielding Equity Index measures the
performance of the highest dividend yielding stocks within the WisdomTree DEFA
Index that meet specified requirements as of the Index measurement date. The
Index is created by selecting from the WisdomTree DEFA Index those companies
with market capitalizations of at least $200 million and average daily dollar
trading volumes of at least $200,000 for the three months prior to the Index
measurement date. The top 30% of these companies ranked by dividend yield are
included in the Index. Companies are weighted in the Index based on regular cash
dividends paid. The Index includes large-capitalization, mid-capitalization and
small-capitalization securities.
WisdomTree Europe Dividend Index
Number of Components: approximately 1160
Index Description. The WisdomTree Europe Dividend Index measures the performance
of companies incorporated in 16 developed-market European countries that pay
regular cash dividends on shares of common stock and meet certain other
requirements. The Index is comprised of companies that are incorporated in and
have their shares of common stock listed on a major stock exchange in one of the
following countries: Austria, Belgium, Denmark, Finland, France, Germany,
Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden,
Switzerland, or the United Kingdom. Companies must have paid at least $5 million
in cash dividends on shares of their common stock as of the most recent Index
measurement date and must also satisfy specified liquidity and other
requirements. Companies are weighted in the Index based on regular cash
dividends paid. The Index includes large-capitalization, mid-capitalization and
small-capitalization securities.
WisdomTree Europe High-Yielding Equity Index
Number of Components: approximately 330
Index Description. The WisdomTree Europe High-Yielding Equity Index measures the
performance of the highest dividend yielding stocks within the WisdomTree Europe
Dividend Index that meet specified requirements as of the Index measurement
date. The Index is created by selecting from the WisdomTree Europe Dividend
Index those companies with market capitalizations of at least $200 million and
average daily dollar trading volumes of at least $200,000 for the three months
prior to the Index measurement date. The top 30% of these companies are ranked
by dividend yield are included in the Index. Companies are weighted in the Index
based on regular cash dividends paid. The Index includes large-capitalization,
mid-capitalization and small-capitalization securities.
WisdomTree Europe SmallCap Dividend Index
Number of Components: approximately 520
Index Description. The WisdomTree Europe SmallCap Dividend Index measures the
performance of small-capitalization companies incorporated in Western Europe
that pay regular cash dividends on shares of common stock and meet specified
requirements as of the Index measurement date. The Index is created by first
removing from the WisdomTree Europe Dividend Index the 300 companies with the
highest market capitalizations as of the Index measurement date. Those companies
that comprise the bottom 25% of the remaining market capitalization of this
group are included in the WisdomTree Europe SmallCap Dividend Index. Companies
are weighted in the Index based on regular cash dividends paid. The Index
includes primarily small-capitalization securities. In this sense, it is a
dividend-weighted small-cap index for the dividend-paying segment of Western
Europe.
WisdomTree Japan Dividend Index
Number of Components: approximately 820
Index Description. The WisdomTree Japan Dividend Index measures the performance
of companies incorporated in Japan that pay regular cash dividends on shares of
common stock and meet certain other requirements. The Index is comprised of
companies incorporated in Japan that list their shares on the Tokyo Stock
Exchange. Companies must have paid at least $5 million in cash dividends on
their common stock as of the most recent Index measurement date and must also
satisfy specified liquidity and other requirements. Companies are weighted in
the Index based on regular cash dividends paid. The Index includes
large-capitalization, mid-capitalization and small-capitalization securities.
20
WisdomTree Japan High-Yielding Equity Index
Number of Components: approximately 240
Index Description. The WisdomTree Japan High-Yielding Equity Index measures the
performance of the highest dividend yielding stocks within the WisdomTree Japan
Dividend Index that meet specified requirements as of the Index measurement
date. The Index is created by selecting from the WisdomTree Japan Dividend Index
those companies with market capitalizations of at least $200 million and average
daily dollar trading volumes of at least $200,000 for three months prior to the
Index measurement date. The top 30% of these companies ranked by dividend yield
are included in the Index. Companies are weighted in the Index based on regular
cash dividends paid. The Index includes large-capitalization, mid-capitalization
and small-capitalization securities.
WisdomTree Japan SmallCap Dividend Index
Number of Components: approximately 520
Index Description. The WisdomTree Japan SmallCap Dividend Index measures the
performance of small-capitalization companies incorporated in Japan that pay
regular cash dividends on shares of common stock and meet specified requirements
as of the Index measurement date. The Index is created by first removing the 300
companies with the highest market capitalizations as of the Index measurement
date from the WisdomTree Japan Dividend Index. The remaining companies are then
weighted in the Index based on regular cash dividends paid. The Index includes
primarily small-capitalization securities. In this sense, it is a
dividend-weighted small-cap index for the dividend-paying segment of Japan.
WisdomTree Pacific ex-Japan Dividend Index
Number of Components: approximately 411
Index Description. The WisdomTree Pacific ex-Japan Dividend Index measures the
performance of companies in Hong Kong, Singapore, Australia and New Zealand that
pay regular cash dividends on shares of common stock and meet certain other
requirements. The WisdomTree Pacific ex-Japan Dividend Index is comprised of
companies that are incorporated in and have their shares listed on a major stock
exchange in Hong Kong, Singapore, Australia or New Zealand. Companies must have
paid at least $5 million in cash dividends on their common stock as of the most
recent Index measurement date and must also satisfy specified liquidity and
other requirements. Companies are weighted in the Index based on regular cash
dividends paid. The Index includes large-capitalization, mid-capitalization and
small-capitalization securities.
WisdomTree Pacific ex-Japan High-Yielding Equity Index
Number of Components: approximately 110
Index Description. The WisdomTree Pacific ex-Japan High-Yielding Equity Index
measures the performance of the highest dividend paying stocks within the
WisdomTree Pacific ex-Japan Dividend Index that meet specified requirements as
of the Index measurement date. The Index is created by selecting from the
WisdomTree Pacific ex-Japan Dividend Index those companies with market
capitalizations of at least $200 million and average daily trading volumes of at
least $200,000 for the three months prior to the measurement date. The top 30%
of these companies ranked by dividend yield are included in the Index. Companies
are weighted in the Index based on regular cash dividends paid. The Index
includes large-capitalization, mid-capitalization and small-capitalization
securities.
WisdomTree International LargeCap Dividend Index
Number of Components: approximately 300
Index Description. The WisdomTree International LargeCap Dividend Index measures
the performance of companies that pay regular cash dividends from the
large-capitalization segment of Europe, Far East Asia and Australasia. The Index
is created by selecting from the WisdomTree DEFA Index the 300 companies in the
Index with the highest market capitalizations as of the Index measurement date.
Companies are weighted in the Index based on regular cash dividends paid. The
Index includes primarily large-capitalization securities.
WisdomTree International Dividend Top 100 Index
Number of Components: approximately 100
Index Description. The WisdomTree International Dividend Top 100 Index measures
the performance of the 100 highest dividend-yielding companies from Europe, Far
East Asia and Australasia. The Index is created by selecting
21
the 100 highest dividend-yielding companies from the WisdomTree International
LargeCap Dividend Index. Unlike other WisdomTree International Indexes, which
weight index components based on regular cash dividends paid, a component's
weight in the Index is based on its annual dividend yield as of the Index
measurement date. A component company's weight in the Index is determined by
dividing its indicated annual dividend yield by the sum of all the indicated
annual dividend yields for all the component companies in the Index. The Index
consists of selected large-capitalization securities.
WisdomTree International MidCap Dividend Index
Number of Components: approximately 690
Index Description. The WisdomTree International MidCap Dividend Index measures
the performance of companies that pay regular cash dividends from the
mid-capitalization segment of markets in Europe, Far East Asia and Australasia.
The Index is created by first removing from the WisdomTree DEFA Index the 300
companies with the highest market capitalizations as of the Index measurement
date. Those companies that comprise the top 75% of the remaining market
capitalization of this group are included in the WisdomTree International MidCap
Dividend Index. Companies are weighted in the Index based on regular cash
dividends paid. The Index includes primarily mid-capitalization securities.
WisdomTree International SmallCap Dividend Index
Number of Components: approximately 1400
Index Description. The WisdomTree International SmallCap Dividend Index measures
the performance of companies that pay regular cash dividends from the
small-capitalization segment of markets in Europe, Far East Asia and
Australasia. The Index is created by first removing from the WisdomTree DEFA
Index the 300 companies with the highest market capitalizations as of the Index
measurement date. Those companies that comprise the bottom 25% of the remaining
market capitalization of this group are included in the WisdomTree International
SmallCap Dividend Index. Companies are weighted in the Index based on regular
cash dividends paid. The Index includes primarily small-capitalization
securities.
WisdomTree Emerging Markets High-Yielding Equity Index
Number of Components: approximately 220
Index Description. The WisdomTree Emerging Markets High-Yielding Equity Index
measures the performance of emerging market stocks with relatively high dividend
yields. Companies in the Index must meet specified liquidity and other
requirements as of the Index measurement date. The Index is created by selecting
the top 30% of Index constituents ranked by dividend yield from the WisdomTree
Emerging Markets Dividend Index. Companies eligible for inclusion in the Index
must be incorporated in and have their shares listed on a major stock exchange
in Argentina, Brazil, Chile, China, Czech Republic, Hungary, India, Indonesia,
Israel, Malaysia, Mexico, Philippines, Poland, Russia, South Africa, South
Korea, Taiwan, Thailand or Turkey. Companies must have paid at least $5 million
in cash dividends on their common stock in the 12 months prior to the most
recent Index measurement date. Companies are weighted in the Index based on
regular cash dividends paid. The Index includes large-capitalization,
mid-capitalization and small-capitalization securities.
WisdomTree Emerging Markets SmallCap Dividend Index
Number of Components: approximately 395
Index Description. The WisdomTree Emerging Markets SmallCap Dividend Index is a
fundamentally weighted index that measures the performance of primarily small
cap stocks selected from the WisdomTree Emerging Markets Dividend Index.
Companies included in the Index fall within the bottom 10% of total market
capitalization of the WisdomTree Emerging Markets Dividend Index as of the
annual index measurement date. Companies eligible for inclusion in the Index
must be incorporated in and have their shares listed on a major stock exchange
in Argentina, Brazil, Chile, China, Czech Republic, Hungary, India, Indonesia,
Israel, Malaysia, Mexico, Philippines, Poland, Russia, South Africa, South
Korea, Taiwan, Thailand or Turkey. Companies must have paid at least $5 million
in cash dividends on their common stock in the 12 months prior to the most
recent Index measurement date. Companies are weighted in the Index based on
regular cash dividends paid. The Index is composed of primarily small
capitalization stocks.
22
WisdomTree Middle East Dividend Index
Number of Components: approximately 100
Index Description. The WisdomTree Middle East Dividend Index is a fundamentally
weighted index that measures the performance of companies in the Middle East
region that pay regular cash dividends on shares of their common stock and that
meet specified requirements as of the index measurement date. Companies eligible
for inclusion in the Index must be incorporated in and have their shares listed
on a major stock exchange in Bahrain, Egypt, Jordan, Kuwait, Morocco, Oman,
Qatar, or the United Arab Emirates (including Abu Dhabi and Dubai). As of the
index measurement date, shares of companies must be eligible to be purchased by
foreign investors. Companies must have paid at least $5 million in cash
dividends on their common stock in the annual cycle prior to the most recent
index measurement date. Companies are ranked by market capitalization and the
100 largest companies by market capitalization are selected for inclusion.
Companies are weighted in the Index based on regular cash dividends paid in the
annual cycle prior to the index measurement date. Country weights are capped so
that no country's weight in the Index exceeds 33% at the annual index
measurement date. As of May 30, 2008, approximately 40% of the Index consisted
of companies with market capitalizations of over $10 billion and 45% of the
Index consisted of companies with a market capitalization between $2 billion and
$10 billion.
WISDOMTREE INTERNATIONAL SECTOR INDEXES
WisdomTree International Basic Materials Sector Index
Number of Components: approximately 180
Index Description. The WisdomTree International Basic Materials Sector Index is
derived from the WisdomTree DEFA Index. The WisdomTree DEFA Index measures the
performance of companies in developed markets outside the U.S. (i.e., Europe,
Far East Asia and Australasia) that pay regular cash dividends and meet certain
other requirements. The WisdomTree International Basic Materials Sector Index
measures the performance of companies that WisdomTree Investments classifies as
being in the "Basic Materials" sector of the WisdomTree DEFA Index. Companies
are weighted in the Index based on regular cash dividends paid. The Index
includes the following types of companies: chemicals, forest products and paper,
iron/steel, and mining. The Index includes large-capitalization,
mid-capitalization and small-capitalization securities.
WisdomTree International Communications Sector Index
Number of Components: approximately 150
Index Description. The WisdomTree International Communications Sector Index is
derived from the WisdomTree DEFA Index. The WisdomTree DEFA Index measures the
performance of companies in developed markets outside the U.S. (i.e., Europe,
Far East Asia and Australasia) that pay regular cash dividends and meet certain
other requirements. The WisdomTree International Communications Sector Index
measures the performance of companies that WisdomTree Investments classifies as
being in the "Communications" sector of the WisdomTree DEFA Index. Companies are
weighted in the Index based on regular cash dividends paid. The Index includes
the following types of companies: advertising, internet, media, and telecom. The
Index includes large-capitalization, mid-capitalization and small-capitalization
securities.
WisdomTree International Consumer Discretionary Sector Index
Number of Components: approximately 425
Index Description. The WisdomTree International Consumer Discretionary Sector
Index is derived from the WisdomTree DEFA Index. The WisdomTree DEFA Index
measures the performance of companies in developed markets outside the U.S.
(i.e., Europe, Far East Asia and Australasia) that pay regular cash dividends
and meet certain other requirements. The WisdomTree International Consumer
Discretionary Sector Index measures the performance of companies that WisdomTree
Investments classifies as being in the "Consumer Discretionary" sector of the
WisdomTree DEFA Index. Companies are weighted in the Index based on regular cash
dividends paid. The Index includes the following types of companies: airlines,
apparel, automobiles and parts, entertainment, food service, home builders,
housewares, leisure time, lodging, office furnishings, retail, textiles, and
toys/games. The Index includes large-capitalization, mid-capitalization and
small-capitalization securities.
23
WisdomTree International Consumer Staples Sector Index
Number of Components: approximately 375
Index Description. The WisdomTree International Consumer Staples Sector Index is
derived from the WisdomTree DEFA Index. The WisdomTree DEFA Index measures the
performance of companies in developed markets outside the U.S. (i.e., Europe,
Far East Asia and Australasia) that pay regular cash dividends and meet certain
other requirements. The WisdomTree International Consumer Staples Sector Index
measures the performance of companies that WisdomTree Investments classifies as
being in the "Consumer Staples" sector of the WisdomTree DEFA Index. Companies
are weighted in the Index based on regular cash dividends paid. The Index
includes the following types of companies: agriculture, tobacco, beverages,
biotechnology, commercial services, cosmetics/personal care, food, health care,
pharmaceuticals, and household products. The Index includes
large-capitalization, mid-capitalization and small-capitalization securities.
WisdomTree International Energy Sector Index
Number of Components: approximately 60
Index Description. The WisdomTree International Energy Sector Index is derived
from the WisdomTree DEFA Index. The WisdomTree DEFA Index measures the
performance of companies in developed markets outside the U.S. (i.e., Europe,
Far East Asia and Australasia) that pay regular cash dividends and meet certain
other requirements. The WisdomTree International Energy Sector Index measures
the performance of companies that WisdomTree Investments classifies as being in
the "Energy" sector of the WisdomTree DEFA Index. Companies are weighted in the
Index based on regular cash dividends paid. The Index includes the following
types of companies: oil and gas producers, oil and gas services, pipelines,
alternative energy sources, and coal. The Index includes large-capitalization,
mid-capitalization and small-capitalization securities.
WisdomTree International Financial Sector Index
Number of Components: approximately 450
Index Description. The WisdomTree International Financial Sector Index is
derived from the WisdomTree DEFA Index. The WisdomTree DEFA Index measures the
performance of companies in developed markets outside the U.S. (i.e., Europe,
Far East Asia and Australasia) that pay regular cash dividends and meet certain
other requirements. The WisdomTree International Financial Sector Index measures
the performance of companies that WisdomTree Investments classifies as being in
the "Financial" sector of the WisdomTree DEFA Index. Companies are weighted in
the Index based on regular cash dividends paid. The Index includes the following
types of companies: banks, savings and loans, insurance companies, investment
companies, real estate companies, and diversified financial service companies.
The Index includes large-capitalization, mid-capitalization and
small-capitalization securities.
WisdomTree International Health Care Sector Index
Number of Components: approximately 100
Index Description. The WisdomTree International Health Care Sector Index is
derived from the WisdomTree DEFA Index. The WisdomTree DEFA Index measures the
performance of companies in developed markets outside the U.S. (i.e., Europe,
Far East Asia and Australasia) that pay regular cash dividends and meet certain
other requirements. The WisdomTree International Health Care Sector Index
measures the performance of companies that WisdomTree Investments classifies as
being in the "Health Care" sector of the WisdomTree DEFA Index. Companies are
weighted in the Index based on regular cash dividends paid. The Index includes
the following types of companies: health care products, health care services,
pharmaceuticals, and biotechnology. The Index includes large-capitalization,
mid-capitalization and small-capitalization securities.
WisdomTree International Industrial Sector Index
Number of Components: approximately 560
Index Description. The WisdomTree International Industrial Sector Index is
derived from the WisdomTree DEFA Index. The WisdomTree DEFA Index measures the
performance of companies in developed markets outside the U.S. (i.e., Europe,
Far East Asia and Australasia) that pay regular cash dividends and meet certain
other requirements. The WisdomTree International Industrial Sector Index
measures the performance of companies that WisdomTree Investments classifies as
being in the "Industrial" sector of the WisdomTree DEFA Index. Companies
24
are weighted in the Index based on regular cash dividends paid. The Index
includes the following types of companies: aerospace and defense, building
materials, electronic components and equipment, engineering and construction,
hand and machine tools, machinery, metal fabrication, packaging and containers,
shipbuilding, transportation, and trucking and leasing. The Index includes
large-capitalization, mid-capitalization and small-capitalization securities.
WisdomTree International Technology Sector Index
Number of Components: approximately 85
Index Description. The WisdomTree International Technology Sector Index is
derived from the WisdomTree DEFA Index. The WisdomTree DEFA Index measures the
performance of companies in developed markets outside the U.S. (i.e., Europe,
Far East Asia and Australasia) that pay regular cash dividends and meet certain
other requirements. The WisdomTree International Technology Sector Index
measures the performance of companies that WisdomTree Investments classifies as
being in the "Technology" sector of the WisdomTree DEFA Index. Companies are
weighted in the Index based on regular cash dividends paid. The Index includes
the following types of companies: computers, office and business equipment,
semiconductors, and software. The Index includes large-capitalization,
mid-capitalization and small-capitalization securities.
WisdomTree International Utilities Sector Index
Number of Components: approximately 70
Index Description. The WisdomTree International Utilities Sector Index is
derived from the WisdomTree DEFA Index. The WisdomTree DEFA Index measures the
performance of companies in developed markets outside the U.S. (i.e., Europe,
Far East Asia and Australasia) that pay regular cash dividends and meet certain
other requirements. The WisdomTree International Utilities Sector Index measures
the performance of companies that WisdomTree Investments classifies as being in
the "Utilities" sector of the WisdomTree DEFA Index. Companies are weighted in
the Index based on regular cash dividends paid. The Index includes the following
types of companies: gas, electric, and water. The Index includes
large-capitalization, mid-capitalization and small-capitalization securities.
WisdomTree International Real Estate Index
Number of Components: approximately 220
Index Description. The WisdomTree International Real Estate Index measures the
performance of companies in developed markets outside of the U.S. and Canada
that pay regular cash dividends on shares of common stock that WisdomTree
Investments classifies as being part of the "International Real Estate" sector.
Companies in the Index must meet specified requirements as of the Index
measurement date. To be included in the Index, companies must be incorporated in
one of 16 developed-market European countries, Japan, Hong Kong, Singapore,
Australia, or New Zealand, and must be listed on a major securities exchange in
one of those countries. Companies must have paid at least $5 million in cash
dividends on their common stock in the 12 months prior to the most recent Index
measurement date and must also satisfy specified liquidity and other
requirements. Companies are weighted in the Index based on regular cash
dividends paid. The Index includes the following types of companies: real estate
operating companies; real estate development companies; and diversified REITs.
The Index also includes companies that may be classified as PFICs.
25
INVESTMENT LIMITATIONS
The following fundamental investment policies and limitations supplement those
set forth in each Fund's Prospectus. Unless otherwise noted, whenever a
fundamental investment policy or limitation states a maximum percentage of a
Fund's assets that may be invested in any security or other asset, or sets forth
a policy regarding quality standards, such standard or percentage limitation
will be determined immediately after and as a result of the Fund's acquisition
of such security or other asset. Accordingly, other than with respect to a
Fund's limitations on borrowings, any subsequent change in values, net assets,
or other circumstances will not be considered when determining whether the
investment complies with a Fund's investment policies and limitations.
Each Fund's fundamental investment policies cannot be changed without the
approval of the holders of a majority of that Fund's outstanding voting
securities as defined under the 1940 Act. Each Fund, however, may change the
non-fundamental investment policies described below, its investment objective,
and its underlying Index without a shareholder vote provided that it obtains
Board approval and notifies its shareholders with at least sixty (60) days prior
written notice of any such change.
Fundamental Policies. The following investment policies and limitations are
fundamental and may NOT be changed without shareholder approval.
Each Fund, as a fundamental investment policy, may not:
Senior Securities
Issue senior securities, except as permitted under the 1940 Act.
Borrowing
Borrow money, except as permitted under the 1940 Act.
Underwriting
Act as an underwriter of another issuer's securities, except to the extent
that each Fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of portfolio securities.
Concentration
Purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the Fund's total
assets would be invested in the securities of companies whose principal
business activities are in the same industry, except that each Fund will
invest more than 25% of its total assets in securities of the same
industry to approximately the same extent that each Fund's underlying
Index concentrates in the securities of a particular industry or group of
industries.
Real Estate
Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the fund from
investing in securities or other instruments backed by real estate, real
estate investment trusts or securities of companies engaged in the real
estate business).
Commodities
Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
each Fund from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical
commodities).
Loans
Lend any security or make any other loan except as permitted under the
Investment Company Act of 1940.
26
This means that no more than 33 1/3% of its total assets would be lent to
other parties. This limitation does not apply to purchases of debt
securities or to repurchase agreements, or to acquisitions of loans, loan
participations or other forms of debt instruments, permissible under each
Fund's investment policies.
Non-Fundamental Policies. The following investment policy is not
fundamental and MAY be changed without shareholder approval.
Each Fund has adopted a non-fundamental investment policy in accordance
with Rule 35d-1 under the 1940 Act to invest, under normal circumstances,
at least 80% of the value of its net assets, plus the amount of any
borrowings for investment purposes, in the types of securities suggested
by the Fund's name. If, subsequent to an investment, the 80% requirement
is no longer met, a Fund's future investments will be made in a manner
that will bring the Fund into compliance with this policy.
CONTINUOUS OFFERING
The method by which Creation Unit Aggregations of shares are created and traded
may raise certain issues under applicable securities laws. Because new Creation
Unit Aggregations of shares are issued and sold by the Funds on an ongoing
basis, at any point a "distribution," as such term is used in the Securities
Act, may occur. Broker-dealers and other persons are cautioned that some
activities on their part may, depending on the circumstances, result in their
being deemed participants in a distribution in a manner which could render them
statutory underwriters and subject them to the prospectus delivery requirement
and liability provisions of the Securities Act.
For example, a broker-dealer firm or its client may be deemed a statutory
underwriter if it takes Creation Unit Aggregations after placing an order with
the Distributor, breaks them down into constituent shares, and sells such shares
directly to customers, or if it chooses to couple the creation of a supply of
new shares with an active selling effort involving solicitation of secondary
market strikes demand for shares. A determination of whether one is an
underwriter for purposes of the Securities Act must take into account all the
facts and circumstances pertaining to the activities of the broker-dealer or its
client in the particular case, and the examples mentioned above should not be
considered a complete description of all the activities that could lead to a
categorization as an underwriter.
Broker-dealer firms should also note that dealers who are not "underwriters" but
are effecting transactions in shares, whether or not participating in the
distribution of shares, generally are required to deliver a prospectus. This is
because the prospectus delivery exemption in Section 4(3) of the Securities Act
is not available in respect of such transactions as a result of Section 24(d) of
the 1940 Act. Firms that incur a prospectus delivery obligation with respect to
shares of the Funds are reminded that, pursuant to Rule 153 under the Securities
Act, a prospectus delivery obligation under Section 5(b)(2) of the Securities
Act owed to an exchange member in connection with the sale on the Listing
Exchange is satisfied by the fact that the prospectus is available at the
Listing Exchange upon request. The prospectus delivery mechanism provided in
Rule 153 is only available with respect to transactions on an exchange.
27
MANAGEMENT OF THE TRUST
Trustees and Officers
The Board of Trustees has responsibility for the overall management and
operations of the Funds, including general supervision of the duties performed
by WisdomTree Asset Management and other service providers. The Board of
Trustees elects the officers of the Trust who are responsible for administering
the Trust's day-to-day operations. Each Trustee serves until his or her
successor is duly elected or appointed and qualified.
The address of each Trustee and Officer is c/o WisdomTree Asset Management,
Inc., 380 Madison Avenue, 21st Floor, New York, NY 10017.
Interested Trustee and Officers
Number of
Term of Portfolios
office in Fund Other
and Complex Directorships
Length Overseen Held by
of Time Principal Occupation(s) During by Trustee Trustee and
Name (year of birth) Position Served the Past 5 Years and Officers Officers
-------------------- ------------- ----------- -------------------------------------- ------------ -------------
Jonathan Steinberg Trustee, Trustee Chief Executive Officer of WisdomTree 49 None.
(1964) President* and officer Investments, Inc. (formerly, Index
since Development Partners, Inc.) and
2005 Director of WisdomTree Investments,
Inc. since 1989.
Amit Muni Treasurer*, Officer Chief Financial Officer of WisdomTree 49 None.
(1969) Assistant since Investments, Inc. since March 2008;
Secretary* 2008 International Securities Exchange
Holdings, Inc. (ISE), Controller and
Chief Accounting Officer, from 2003 to
2008; Instinet Group Inc., Vice
President Finance, from 2000 to 2003.
Richard Morris Secretary*, Officer Deputy General Counsel of WisdomTree 49 None.
(1967) Chief Legal since Investments, Inc. since 2005; Senior
Officer* 2005 Counsel at Barclays Global Investors,
N.A. from 2002 to 2005; Counsel at
Barclays Global Investors, N.A. from
2000 to 2001.
----------
* Elected by and serves at the pleasure of the Board of Trustees.
28
Independent Trustees
Term of Number of
office Portfolios
and in Fund Other
Length Complex Directorships
of Time Principal Occupation(s) During Overseen Held by
Name (year of birth) Position Served the Past 5 Years by Trustee Trustee
-------------------- ------------- ----------- -------------------------------------- ------------ -------------
Gregory Barton Trustee Trustee General Counsel of Martha Stewart 49 None.
(1961)* since Living Omnimedia, Inc. Since 2007;
2006 Executive Vice President of Licensing
and Legal Affairs, General Counsel and
Secretary of Ziff Davis Media Inc.
2003 to 2007; Executive Vice President
of Legal Affairs, General Counsel and
Secretary of Ziff Davis Media Inc.
from 2002 to 2003; President (2001 to
2002), Chief Financial Officer (2000
to 2002), Vice President of Business
Development (1999 to 2001) and General
Counsel and Secretary (1998 to 2002)
of WisdomTree Investments, Inc.
(formerly, Index Development Partners,
Inc.)
Toni Massaro Trustee Trustee Dean at University of Arizona James E. 49 None.
(1955)** since Rogers College of Law since 1999;
2006 Professor at University of Arizona
James E. Rogers College of Law since
1990.
Victor Ugolyn Trustee, Trustee President and Chief Executive Officer 49 Trustee on
(1947) Chairman since of William D. Witter, Inc. 2005 to Board of
of the 2006 August 2006; Consultant to AXA Trustees of
Board of Enterprise in 2004; Chairman, Naismith
Trustees President and Chief Executive Officer Memorial
of Enterprise Capital Management Basketball
(subsidiary of The MONY Group, Inc.) Hall of Fame;
and Enterprise Group of Funds, Member of the
Chairman of MONY Securities Board of
Corporation, and Chairman of the Fund Overseers of
Board of Enterprise Group of Funds the Hoover
from 1991 to 2004. Institution
at Stanford
University.
----------
* Chair of the Audit Committee.
** Chair of the Governance and Nominating Committee.
29
The following table sets forth, as of December 31, 2006 the dollar range of
equity securities beneficially owned by each Trustee in the Funds and in other
registered investment companies overseen by the Trustee within the same family
of investment companies as the Trust.
Aggregate Dollar Range of Equity Securities
in All Registered Investment Companies
Dollar Range of Equity Overseen by Trustee in Family of
Name of Trustee Securities in the Funds Investment Companies
---------------------- ----------------------- -------------------------------------------
Interested Trustee:
Jonathan Steinberg Over $100,000 Over $100,000
Independent Trustees:
Gregory Barton Over $100,000 Over $100,000
Toni Massaro $0 - $10,000 $0 - $10,000
Victor Ugolyn $50,001 - $100,000 $50,001 - $100,000
As of December 31, 2006 none of the Trustees who are not interested persons (as
defined in the 1940 Act) of the Trust ("Independent Trustees") or their
immediate family members owned beneficially or of record any securities of
WisdomTree Asset Management, the Sub-Adviser, the Distributor, or any person
controlling, controlled by or under control with WisdomTree Asset Management,
the Sub-Adviser or the Distributor.
The Board of Trustees of the Trust met six times during the fiscal year ended
March 31, 2007.
Committees of the Board of Trustees
Audit Committee. Each Independent Trustee is a member of the Trust's Audit
Committee (the "Audit Committee"). The principal responsibilities of the Audit
Committee are the appointment, compensation and oversight of the Trust's
independent auditors, including the resolution of disagreements regarding
financial reporting between Trust management and such independent auditors. The
Audit Committee's responsibilities include, without limitation, to (i) oversee
the accounting and financial reporting processes of the Trust and its internal
control over financial reporting and, as the Committee deems appropriate, to
inquire into the internal control over financial reporting of certain
third-party service providers; (ii) oversee the quality and integrity of the
Funds' financial statements and the independent audits thereof; (iii) oversee,
or, as appropriate, assist Board oversight of, the Trust's compliance with legal
and regulatory requirements that relate to the Trust's accounting and financial
reporting, internal control over financial reporting and independent audits;
(iv) approve prior to appointment the engagement of the Trust's independent
auditors and, in connection therewith, to review and evaluate the
qualifications, independence and performance of the Trust's independent
auditors; and (vi) act as a liaison between the Trust's independent auditors and
the full Board. The Board of the Trust has adopted a written charter for the
Audit Committee. The Audit Committee has retained independent legal counsel to
assist it in connection with these duties. During the fiscal year ended March
31, 2007, the Audit Committee held one meeting.
Governance and Nominating Committee. Each Independent Trustee is also a member
of the Trust's Governance and Nominating Committee. The principal
responsibilities of the Governance and Nominating Committee are to (i) oversee
Fund governance matters and (ii) identify individuals qualified to serve as
Independent Trustees of the Trust and to recommend its nominees for
consideration by the full Board. While the Governance and Nominating Committee
is solely responsible for the selection and nomination of the Trust's
Independent Trustees, the Nominating Committee may consider nominations for the
office of Trustee made by Trust stockholders as it deems appropriate. The
Governance and Nominating Committee considers nominees recommended by
shareholders if such nominees are submitted in accordance with Rule 14a-8 of the
Securities Exchange Act of 1934 (the "1934 Act"), in conjunction with a
shareholder meeting to consider the election of Trustees. Trust stockholders who
wish to recommend a nominee should send nominations to the Secretary of the
Trust that include biographical information and set forth the qualifications of
the proposed nominee. During the fiscal year ended March 31, 2007, the
Nominating Committee held one meeting.
Approval of Investment Advisory Agreement and Sub-Advisory Agreement
The Board of Trustees of the Trust, including a majority of the Independent
Trustees, has the responsibility under the 1940 Act to approve the Trust's
Investment Advisory Agreement and Sub-Advisory Agreement (collectively,
30
the "Investment Advisory Agreements"). In addition, the Trust's Board of
Trustees will receive, review and evaluate information concerning the services
and personnel of the Investment Adviser and the Sub-Adviser at each quarterly
meeting of the Board of Trustees. While particular emphasis will be placed on
information concerning profitability, comparability of fees and total expenses,
and the Trust's investment performance at any future meeting at which a renewal
of the Investment Advisory Agreements is considered, the process of evaluating
the Investment Adviser and the Sub-Adviser and the Trust's investment
arrangements is an ongoing one. In this regard, the Board's consideration of the
nature, extent and quality of the services to be provided by the Investment
Adviser and the Sub-Adviser under the Investment Advisory Agreements will
include deliberations at future quarterly meetings.
Approval of Investment Advisory Agreement. The Trust and the Investment Adviser
have entered into an investment advisory agreement covering each Fund, except
the India Earnings Fund and the Middle East Dividend Fund. The Trust and the
Investment Advisor have entered into separate agreements with respect to the
India Earnings Fund and the Middle East Dividend Fund. Each such Agreement is an
"Advisory Agreement." At meetings held on February 21, 2006 with respect to
certain Domestic Dividend Funds and certain International Dividend Funds, May 3,
2006 with respect to certain International Dividend Funds, May 25, 2006 with
respect to certain Domestic Dividend Funds and International Dividend Funds,
June 12, 2006 and December 4, 2006 with respect to the International Sector
Funds, December 4, 2006 with respect to the Earnings Funds, June 11, 2007 with
respect to the Emerging Markets High-Yielding Equity Fund, September 17, 2007
with respect to Emerging Markets SmallCap Dividend Fund, December 3, 2007 with
respect to India Earnings Fund, and June 10, 2008 with respect to the Middle
East Dividend Fund. The Board of Trustees, including a majority of the
Independent Trustees, approved the respective Advisory Agreements with
WisdomTree Asset Management ("WTAM") for each Fund. In approving the Advisory
Agreements with WTAM, the Board reviewed and analyzed the factors it deemed
relevant, including: (i) the nature, quality and extent of the services to be
provided to the Funds by WTAM; (ii) WTAM's personnel and operations; (iii)
WTAM's financial condition; (iv) the level and method of computing each Fund's
advisory fee; (v) the anticipated profitability of WTAM under the Advisory
Agreement; (vi) "fall-out" benefits to WTAM and its affiliates (i.e., ancillary
benefits that may be realized by WTAM or its affiliates from WTAM's relationship
with the Funds); (vii) the anticipated effect of growth and size on each Fund's
performance and expenses; and (viii) possible conflicts of interest.
The Board also considered the nature and quality of the services to be provided
by WTAM to the Funds, recognizing WTAM's operational capabilities and resources.
The Board also noted the extensive responsibilities that WTAM has as investment
adviser to the Funds, including the selection of the Funds' sub-adviser and
oversight of the sub-adviser's compliance with Fund policies and objectives,
oversight of general Fund compliance with federal and state laws, and the
implementation of Board directives as they relate to the Funds.
The Board gave substantial consideration to the fees payable under the Advisory
Agreement. In this connection, the Board evaluated WTAM's anticipated costs and
profitability in serving as investment adviser to the Funds, including the costs
associated with developing and maintaining the indexes to be used by the Funds,
the personnel, systems and equipment necessary to manage the Funds and the costs
associated with compensating the sub-adviser. The Board also examined the fees
to be paid by each Fund in light of fees paid to other investment managers by
comparable funds and the method of computing each Fund's fee. After comparing
the fees with those of comparable funds and in light of the quality and extent
of services to be provided and the costs anticipated to be incurred by WTAM, the
Board concluded that the level of the fees paid to WTAM with respect to each
Fund is fair and reasonable.
The Board also approved the Sub-Advisory Agreement with the sub-adviser to the
Funds, BNY Investment Advisors ("BNYIA"), using essentially the same criteria it
used for WTAM. The Board considered BNYIA's operational capabilities and
resources and BNYIA's experience in serving as an adviser to ETFs, noting that
BNYIA currently provides investment advisory and management services to other
ETFs. The Board also evaluated the performance of comparable funds managed by
BNYIA in comparison to a peer group, and the expertise and performance of the
BNYIA personnel. The Board also noted that Bank of New York ("BNY"), an
affiliate of BNYIA, is proposed to serve as the Funds' administrator,
accountant, custodian and transfer agent and will receive compensation for
acting in these capacities and will be responsible for, among other things,
coordinating the Funds' audits, financial statements and tax returns, managing
expenses and budgeting for the Funds, processing trades on behalf of each Fund
and custodying Fund assets. As such, the Board concluded that the benefits
accruing
31
to BNYIA and its affiliates by virtue of their relationship to the Trust are
reasonable and fair in comparison with the anticipated costs of providing the
relevant services. The Board noted that WTAM, not the Funds, pays the fees to
BNYIA under the Sub-Advisory Agreement.
Based on these considerations and the overall high quality of the personnel,
operations, financial condition, investment advisory capabilities,
methodologies, and performance of WTAM and BNYIA, the Board determined that the
approval of the Advisory Agreement and the Sub-Advisory Agreement was in the
best interests of each Fund. After full consideration of these and other
factors, the Board, including a majority of the Independent Trustees, with the
assistance of independent counsel, approved the Advisory Agreement and
Sub-Advisory Agreement.
Remuneration of Trustees. Pursuant to its Investment Advisory Agreement with the
Trust, WisdomTree Asset Management pays all compensation of officers and
employees of the Trust as well as the fees of all Trustees of the Trust who are
affiliated persons of WisdomTree Investments or its subsidiaries.
Each Independent Trustee receives annual compensation of $110,000. The Audit
Committee Chairman will be paid an additional 10% and the Independent Chairman
of the Board will be paid an additional 50% of this amount. The Trust also
reimburses each Trustee for travel and other out-of-pocket expenses incurred by
him/her in connection with attending meetings. Prior to December 2007, each
Independent Trustee received $40,000 annually. The Audit Committee Chairman
received an additional 10% and the Independent Chairman received an additional
50% of this amount.
The following table sets forth the fees paid to each Trustee for the fiscal
year-ended March 31, 2007.
Pension or Retirement
Aggregate Benefits Accrued As Estimated Annual Total Compensation
Name of Interested Compensation Part of Company Benefits upon From the Funds and
Trustee from the Trust Expenses Retirement Fund Complex
------------------------------------ -------------- --------------------- ---------------- ------------------
Jonathan Steinberg None None None None
Pension or Retirement
Aggregate Benefits Accrued As Estimated Annual Total Compensation
Name of Independent Compensation Part of Company Benefits upon From the Funds and
Trustee from the Trust Expenses Retirement Fund Complex
------------------------------------ -------------- --------------------- ---------------- ------------------
Gregory Barton $44,000 None None $44,000
Toni Massaro $40,000 None None $40,000
Victor Ugolyn $60,000 None None $60,000
Trustees and officers of the Trust collectively owned less than 1% of each of
the Trust's outstanding shares as of June 30, 2007.
Control Persons and Principal Holders of Securities.
Although the Trust does not have information concerning the beneficial ownership
of shares held in the names of Depository Trust Company participants ("DTC
Participants"), as of June 30, 2007, the name and percentage ownership of each
DTC Participant that owned of record 5% or more of the outstanding shares of a
Fund is set forth in the table below:
Percentage of
Fund Name Ownership
----------------------------------------------- -------------
WisdomTree Total Dividend Fund
NFS LLC 23.68%
200 LIBERTY STREET
NEW YORK CITY NY 10281
CHARLES SCHWAB 15.95%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
PERSHING 9.81%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
32
Percentage of
Fund Name Ownership
----------------------------------------------- -------------
CITIGROUP 8.53%
333 W. 34TH STREET
NEW YORK NY 10001
MERRILL LYNCH 5.44%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
-------------------------------------------------------------------------------
WisdomTree High-Yielding Equity Fund
CHARLES SCHWAB 21.10%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
MSDW INC. 17.29%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
SWISS AME 9.16%
12 EAST 49TH STREET
41ST FLOOR
NEW YORK NY 10017
NFS LLC 8.25%
200 LIBERTY STREET
NEW YORK CITY NY 10281
MERRILL LYNCH 7.34%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
PERSHING 7.02%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
FIRST CLEAR 6.59%
10700 WHEAT FIRST DRIVE
WS 1024
GLEN ALLEN VA 23060
CITIGROUP 5.51%
333 W. 34TH STREET
NEW YORK NY 10001
-------------------------------------------------------------------------------
WisdomTree DEFA(SM) Fund
FIRST CLEAR 18.57%
10700 WHEAT FIRST DRIVE
WS 1024
GLEN ALLEN VA 23060
CHARLES SCHWAB 15.33%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
NFS LLC 12.10%
200 LIBERTY STREET
NEW YORK CITY NY 10281
MERRILL LYNCH 9.77%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
PERSHING 8.39%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
33
Percentage of
Fund Name Ownership
----------------------------------------------- -------------
AMERITRADE 5.98%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
-------------------------------------------------------------------------------
WisdomTree DEFA(SM) High-Yielding Equity Fund
CHARLES SCHWAB 24.24%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
MERRILL LYNCH 13.04%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
NFS LLC 7.62%
200 LIBERTY STREET
NEW YORK CITY NY 10281
PERSHING 7.18%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
MSDW INC. 6.16%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
FIRST CLEAR 5.73%
10700 WHEAT FIRST DRIVE
WS 1024
GLEN ALLEN VA 23060
CITIGROUP 5.42%
333 W. 34TH STREET
NEW YORK NY 10001
-------------------------------------------------------------------------------
WisdomTree Pacific ex-Japan High Yielding Equity Fund
NFS LLC 18.90%
200 LIBERTY STREET
NEW YORK CITY NY 10281
GOLDMAN SKPG 16.00%
30 HUDSON STREET
JERSEY CITY NJ 07302
CHARLES SCHWAB 11.31%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
MERRILL LYNCH 8.29%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
AMERITRADE 6.72%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
PERSHING 5.82%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
FIRST CLEAR 5.67%
10700 WHEAT FIRST DRIVE
WS 1024
GLEN ALLEN VA 23060
-------------------------------------------------------------------------------
34
Percentage of
Fund Name Ownership
----------------------------------------------- -------------
WisdomTree Pacific ex-Japan Total Dividend Fund
GOLDMAN SKPG 20.51%
30 HUDSON STREET
JERSEY CITY NJ 07302
NFS LLC 11.19%
200 LIBERTY STREET
NEW YORK CITY NY 10281
CHARLES SCHWAB 10.77%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
CITIGROUP 9.09%
333 W. 34TH STREET
NEW YORK NY 10001
FISERV TR 5.49%
717 - 17TH STREET
SUITE 2600
DENVER CO 80202
AMERITRADE 5.29%
C/O ADP PROXY SERVICES
51 MERCEDES WA
EDGEWOOD NY 11717
-------------------------------------------------------------------------------
WisdomTree Europe Total Dividend Fund
MERRILL LYNCH 20.62%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
MERRIL 9.12%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
NFS LLC 8.16%
200 LIBERTY STREET
NEW YORK CITY NY 10281
CHARLES SCHWAB 7.80%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
CITIGROUP 6.65%
333 W. 34TH STREET
NEW YORK NY 10001
MSDW INC. 6.04%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
JP MORGAN CHASE BANK NA 5.66%
PROXY SERVICES
14201 DALLAS PKWAY
DALLAS, TX 75254
-------------------------------------------------------------------------------
35
Percentage of
Fund Name Ownership
----------------------------------------------- -------------
WisdomTree Europe High-Yielding Equity Fund
MERRILL LYNCH 15.93%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
NFS LLC 11.93%
200 LIBERTY STREET
NEW YORK CITY NY 10281
PERSHING 9.59%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
MSDW INC. 8.46%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
CHARLES SCHWAB 8.30%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
FIRST CLEAR 7.54%
10700 WHEAT FIRST DRIVE
WS 1024
GLEN ALLEN VA 23060
CITIGROUP 6.76%
333 W. 34TH STREET
NEW YORK NY 10001
AMERITRADE 4.82%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
-------------------------------------------------------------------------------
WisdomTree Europe SmallCap Dividend Fund
NFS LLC 17.35%
200 LIBERTY STREET
NEW YORK CITY NY 10281
GOLDMAN SKPG 16.54%
30 HUDSON STREET
JERSEY CITY NJ 07302
CHARLES SCHWAB 10.22%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
AMERITRADE 6.43%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
FIRST CLEAR 6.15%
10700 WHEAT FIRST DRIVE
WS 1024
GLEN ALLEN VA 23060
-------------------------------------------------------------------------------
36
Percentage of
Fund Name Ownership
----------------------------------------------- -------------
WisdomTree Japan Total Dividend Fund
GOLDMAN SKPG 16.33%
30 HUDSON STREET
JERSEY CITY NJ 07302
GOLDMAN 15.56%
30 HUDSON STREET
JERSEY CITY NJ 07302
MSDW INC. 10.67%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
MERRILL LYNCH 9.86%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
NFS LLC 7.62%
200 LIBERTY STREET
NEW YORK CITY NY 10281
CITIGROUP 7.38%
333 W. 34TH STREET
NEW YORK NY 10001
CHARLES SCHWAB 6.07%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
-------------------------------------------------------------------------------
WisdomTree Japan High-Yielding Equity Fund
GOLDMAN SKPG 26.42%
30 HUDSON STREET
JERSEY CITY NJ 07302
NFS LLC 10.52%
200 LIBERTY STREET
NEW YORK CITY NY 10281
FISERV TR 10.29%
717 - 17TH STREET
SUITE 2600
DENVER CO 80202
FIRST CLEAR 7.11%
10700 WHEAT FIRST DRIVE
WS 1024
GLEN ALLEN VA 23060
MERRILL LYNCH 7.01%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
CHARLES SCHWAB 6.78%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
PERSHING 5.14%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
-------------------------------------------------------------------------------
37
Percentage of
Fund Name Ownership
--------------------------------------------------------------- -------------
WisdomTree Japan SmallCap Dividend Fund
MERRILL LYNCH 30.34%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
GOLDMAN SKPG 14.15%
30 HUDSON STREET
JERSEY CITY NJ 07302
CHARLES SCHWAB 10.96%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
NFS LLC 5.93%
200 LIBERTY STREET
NEW YORK CITY NY 10281
UBS FINANCIAL 5.77%
1200 HARBOR BLVD
WEEHAWKEN NJ 07086
--------------------------------------------------------------------------------
WisdomTree Dividend Top 100 Fund
CHARLES SCHWAB 21.48%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
NFS LLC 14.65%
200 LIBERTY STREET
NEW YORK CITY NY 10281
MERRILL LYNCH 8.64%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
PERSHING 7.46%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
CITIGROUP 7.43%
333 W. 34TH STREET
NEW YORK NY 10001
FIRST CLEAR 7.27%
10700 WHEAT FIRST DRIVE
WS 1024
GLEN ALLEN VA 23060
MSDW INC. 5.98%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
--------------------------------------------------------------------------------
WisdomTree LargeCap Dividend Fund
CHARLES SCHWAB 44.52%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
NORTHRN TRUST 8.04%
801 S. CANAL C-IN
CHICAGO, IL 60607
--------------------------------------------------------------------------------
38
Percentage of
Fund Name Ownership
--------------------------------------------------------------- -------------
WisdomTree MidCap Dividend Fund
CHARLES SCHWAB 23.34%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
CITIGROUP 11.37%
333 W. 34TH STREET
NEW YORK NY 10001
NFS LLC 8.86%
200 LIBERTY STREET
NEW YORK CITY NY 10281
PERSHING 8.59%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
MERRILL LYNCH 6.99%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
MSDW INC. 5.32%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
FIRST CLEAR 5.26%
10700 WHEAT FIRST DRIVE
WS 1024
GLEN ALLEN VA 23060
UBS FINANCIAL 5.16%
1200 HARBOR BLVD
WEEHAWKEN NJ 07086
--------------------------------------------------------------------------------
WisdomTree SmallCap Dividend Fund
CHARLES SCHWAB 23.95%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
NFS LLC 10.61%
200 LIBERTY STREET
NEW YORK CITY NY 10281
MERRILL LYNCH 10.36%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
PERSHING 8.38%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
CITIGROUP 8.10%
333 W. 34TH STREET
NEW YORK NY 10001
FIRST CLEAR 6.43%
10700 WHEAT FIRST DRIVE
WS 1024
GLEN ALLEN VA 23060
--------------------------------------------------------------------------------
39
Percentage of
Fund Name Ownership
--------------------------------------------------------------- -------------
WisdomTree International LargeCap Dividend Fund
MERRILL LYNCH 11.94%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
NFS LLC 11.07%
200 LIBERTY STREET
NEW YORK CITY NY 10281
CHARLES SCHWAB 10.81%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
WILMING TRUST 9.70%
RODNEY SQUARE NORTH
1100 NORTH MARKET STREET
WILMINGTON DE 19890-2212
CITIGROUP 8.55%
333 W. 34TH STREET
NEW YORK NY 10001
--------------------------------------------------------------------------------
WisdomTree International Dividend Top 100 Fund
CHARLES SCHWAB 17.10%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
NFS LLC 13.11%
200 LIBERTY STREET
NEW YORK CITY NY 10281
MERRILL LYNCH 9.11%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
PERSHING 9.00%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
FIRST CLEAR 8.64%
10700 WHEAT FIRST DRIVE
WS 1024
GLEN ALLEN VA 23060
CITIGROUP 7.41%
333 W. 34TH STREET
NEW YORK NY 10001
--------------------------------------------------------------------------------
WisdomTree International MidCap Dividend Fund
FIRST CLEAR 26.23%
10700 WHEAT FIRST DRIVE
WS 1024
GLEN ALLEN VA 23060
CHARLES SCHWAB 18.72%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
NFS LLC 12.49%
200 LIBERTY STREET
NEW YORK CITY NY 10281
CITIGROUP 10.86%
333 W. 34TH STREET
NEW YORK NY 10001
--------------------------------------------------------------------------------
40
Percentage of
Fund Name Ownership
--------------------------------------------------------------- -------------
WisdomTree International SmallCap Dividend Fund
FIRST CLEAR 17.97%
10700 WHEAT FIRST DRIVE
WS 1024
GLEN ALLEN VA 23060
CHARLES SCHWAB 17.13%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
NFS LLC 12.94%
200 LIBERTY STREET
NEW YORK CITY NY 10281
PERSHING 8.10%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
FIDELITY TRUST 6.83%
82 DEVONSHIRE ST.
BOSTON, MA 02109
AMERITRADE 5.47%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
--------------------------------------------------------------------------------
WisdomTree International Basic Materials Sector Fund
NFS LLC 27.20%
200 LIBERTY STREET
NEW YORK CITY NY 10281
CHARLES SCHWAB 17.99%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
AMERITRADE 11.93%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
PERSHING 5.82%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
CITIGROUP 5.63%
333 W. 34TH STREET
NEW YORK NY 10001
--------------------------------------------------------------------------------
WisdomTree International Communications Sector Fund
GOLDMAN SKPG 43.30%
30 HUDSON STREET
JERSEY CITY NJ 07302
MERRILL LYNCH 19.72%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
NFS LLC 7.72%
200 LIBERTY STREET
NEW YORK CITY NY 10281
--------------------------------------------------------------------------------
41
Percentage of
Fund Name Ownership
--------------------------------------------------------------- -------------
WisdomTree International Consumer Discretionary Sector Fund
MERRIL 42.39%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
MERRILL LYNCH 13.25%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
NFS LLC 7.86%
200 LIBERTY STREET
NEW YORK CITY NY 10281
BEAR STEARNS 7.55%
ONE METROTECH CENTER NORTH
4TH FLOOR
BROOKLYN NY 11201-3862
AM ENT SV 6.48%
2178 AXP FINANCIAL CENTER
MINNEAPOLIS MN 55474
CHARLES SCHWAB 5.34%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
--------------------------------------------------------------------------------
WisdomTree International Consumer Staples Sector Fund
PERSHING 43.02%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
MERRILL LYNCH 22.63%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
NFS LLC 6.56%
200 LIBERTY STREET
NEW YORK CITY NY 10281
--------------------------------------------------------------------------------
WisdomTree International Energy Sector Fund
MERRILL LYNCH 19.49%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
NFS LLC 16.00%
200 LIBERTY STREET
NEW YORK CITY NY 10281
CHARLES SCHWAB 15.22%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
AMERITRADE 13.37%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
--------------------------------------------------------------------------------
42
Percentage of
Fund Name Ownership
--------------------------------------------------------------- -------------
WisdomTree International Financial Sector Fund
GOLDMAN SKPG 57.46%
30 HUDSON STREET
JERSEY CITY NJ 07302
CIBC WORLD 5.72%
161 BAY ST. 10TH FL.
TORONTO, ON M5J258
NFS LLC 5.57%
200 LIBERTY STREET
NEW YORK CITY NY 10281
--------------------------------------------------------------------------------
WisdomTree International Industrial Sector Fund
GOLDMAN SKPG 28.37%
30 HUDSON STREET
JERSEY CITY NJ 07302
MSDW INC. 19.91%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
NFS LLC 14.74%
200 LIBERTY STREET
NEW YORK CITY NY 10281
CHARLES SCHWAB 8.23%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
MERRILL LYNCH 6.01%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
AMERITRADE 5.94%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
--------------------------------------------------------------------------------
WisdomTree International Technology Sector Fund
CITIGROUP 40.91%
333 W. 34TH STREET
NEW YORK NY 10001
GOLDMAN SKPG 25.73%
30 HUDSON STREET
JERSEY CITY NJ 07302
MERRILL LYNCH 13.27%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
NFS LLC 5.20%
200 LIBERTY STREET
NEW YORK CITY NY 10281
--------------------------------------------------------------------------------
43
Percentage of
Fund Name Ownership
--------------------------------------------------------------- -------------
WisdomTree International Utilities Sector Fund
GOLDMAN SKPG 12.83%
30 HUDSON STREET
JERSEY CITY NJ 07302
NFS LLC 12.05%
200 LIBERTY STREET
NEW YORK CITY NY 10281
CHARLES SCHWAB 11.92%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
AMERITRADE 10.56%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
CITIGROUP 10.48%
333 W. 34TH STREET
NEW YORK NY 10001
MERRILL LYNCH 7.15%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
UBS FINANCIAL 7.07%
1200 HARBOR BLVD
WEEHAWKEN NJ 07086
PERSHING 7.02%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
AM ENT SV 5.84%
2178 AXP FINANCIAL CENTER
MINNEAPOLIS MN 55474
--------------------------------------------------------------------------------
WisdomTree International Health Care Sector Fund
PERSHING 41.03%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
GOLDMAN SKPG 20.41%
30 HUDSON STREET
JERSEY CITY NJ 07302
NFS LLC 6.87%
200 LIBERTY STREET
NEW YORK CITY NY 10281
MERRILL LYNCH 5.39%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
--------------------------------------------------------------------------------
44
Percentage of
Fund Name Ownership
--------------------------------------------------------------- --------------
WisdomTree Total Earnings Fund
TIMBER HIL 41.80%
1 PICKWICK PLAZA
GREENWICH CT 06830
PERSHING 29.91%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
NFS LLC 8.39%
200 LIBERTY STREET
NEW YORK CITY NY 10281
CHARLES SCHWAB 5.27%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
--------------------------------------------------------------------------------
WisdomTree Earnings 500 Fund
GOLDMAN 40.85%
30 HUDSON STREET
JERSEY CITY NJ 07302
NFS LLC 14.06%
200 LIBERTY STREET
NEW YORK CITY NY 10281
CHARLES SCHWAB 9.10%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
PERSHING 6.88%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
FIRST CLEAR 6.15%
10700 WHEAT FIRST DRIVE
WS 1024
GLEN ALLEN VA 23060
--------------------------------------------------------------------------------
WisdomTree MidCap Earnings Fund
CHARLES SCHWAB 21.49%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
NFS LLC 21.02%
200 LIBERTY STREET
NEW YORK CITY NY 10281
FIRST CLEAR 17.58%
10700 WHEAT FIRST DRIVE
WS 1024
GLEN ALLEN VA 23060
MERRILL LYNCH 10.89%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
PERSHING 7.20%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
CITIGROUP 5.00%
333 W. 34TH STREET
NEW YORK NY 10001
--------------------------------------------------------------------------------
45
Percentage of
Fund Name Ownership
--------------------------------------------------------------- --------------
WisdomTree SmallCap Earnings Fund
NFS LLC 21.63%
200 LIBERTY STREET
NEW YORK CITY NY 10281
PERSHING 10.97%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
CHARLES SCHWAB 10.52%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
SEI PRIVAT 9.32%
ONE FREEDOM VALLEY DRIVE
OAKS PA 19456
GOLDMAN SACHS 8.17%
30 HUDSON STREET
JERSEY CITY NJ 07302
AMERITRADE 6.63%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
FIRST CLEAR 5.90%
10700 WHEAT FIRST DRIVE
WS 1024
GLEN ALLEN VA 23060
BEAR STEARNS 5.46%
ONE METROTECH CENTER NORTH
4TH FLOOR
BROOKLYN NY 11201-3862
--------------------------------------------------------------------------------
WisdomTree Earnings Top 100 Fund
TIMBER HIL 30.07%
1 PICKWICK PLAZA
GREENWICH CT 06830
PERSHING 12.80%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
AMERITRADE 12.08%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
NFS LLC 9.68%
200 LIBERTY STREET
NEW YORK CITY NY 10281
CHARLES SCHWAB 8.26%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
--------------------------------------------------------------------------------
46
Percentage of
Fund Name Ownership
--------------------------------------------------------------- --------------
WisdomTree Low P/E Fund
TIMBER HIL 14.76%
1 PICKWICK PLAZA
GREENWICH CT 06830
PERSHING 13.61%
SECURITIES CORPORATION
1 PERSHING PLAZA
JERSEY CITY NJ 07399
NFS LLC 12.32%
200 LIBERTY STREET
NEW YORK CITY NY 10281
CHARLES SCHWAB 11.78%
ATTN PROXY DEPARTMENT
211 MAIN STREET
SAN FRANCISCO CA 94105
AMERITRADE 11.06%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
FIRST CLEAR 7.33%
10700 WHEAT FIRST DRIVE
WS 1024
GLEN ALLEN VA 23060
--------------------------------------------------------------------------------
WisdomTree International Real Estate Fund
GOLDMAN LP
30 HUDSON STREET 32.01%
JERSEY CITY NJ 07302
GOLDMAN 15.10%
30 HUDSON STREET
JERSEY CITY NJ 07302
NFS LLC 10.26%
200 LIBERTY STREET
NEW YORK CITY NY 10281
CHS SCHWAB 8.92%
211 MAIN STREET
SAN FRANCISCO CA 94105
PERSHING 8.32%
1 PERSHING PLAZA
JERSEY CITY NJ 07399
ML SFKPG 5.14%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
--------------------------------------------------------------------------------
WisdomTree Emerging Markets High-Yielding Equity Fund* N/A
--------------------------------------------------------------------------------
WisdomTree Emerging Markets SmallCap Dividend Fund* N/A
--------------------------------------------------------------------------------
WisdomTree India Earnings Fund* N/A
--------------------------------------------------------------------------------
WisdomTree Middle East Dividend Fund* N/A
--------------------------------------------------------------------------------
----------
* Information not available as of the date of this SAI.
Investment Adviser. WisdomTree Asset Management serves as investment adviser to
each Fund pursuant to an Investment Advisory Agreement between the Trust and
WisdomTree Asset Management. WisdomTree Asset Management, which does not manage
any other investment companies and has limited experience as an investment
adviser, is a Delaware corporation registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and has
offices located at 380 Madison Avenue, 21st Floor, New York, NY 10017.
Under the Investment Advisory Agreement, WisdomTree Asset Management has overall
responsibility for the general management and administration of the Trust.
WisdomTree Asset Management provides an investment program for each Fund.
WisdomTree Asset Management also arranges for sub-advisory, transfer agency,
custody, fund administration and all other non-distribution related services
necessary for the Funds to operate.
47
Each Fund pays WisdomTree Asset Management the Management Fee indicated below.
Name of Fund Management Fee
-------------------------------------------------------------- --------------
WisdomTree Total Dividend Fund 0.28%
WisdomTree High-Yielding Equity Fund 0.38%
WisdomTree LargeCap Dividend Fund 0.28%
WisdomTree Dividend Top 100 Fund 0.38%
WisdomTree MidCap Dividend Fund 0.38%
WisdomTree SmallCap Dividend Fund 0.38%
WisdomTree Total Earnings Fund 0.28%
WisdomTree Earnings 500 Fund 0.28%
WisdomTree MidCap Earnings Fund 0.38%
WisdomTree SmallCap Earnings Fund 0.38%
WisdomTree Earnings Top 100 Fund 0.38%
WisdomTree Low P/E Fund 0.38%
WisdomTree DEFA Fund 0.48%
WisdomTree DEFA High-Yielding Equity Fund 0.58%
WisdomTree Europe Total Dividend Fund 0.48%
WisdomTree Europe High-Yielding Equity Fund 0.58%
WisdomTree Europe SmallCap Dividend Fund 0.58%
WisdomTree Japan Total Dividend Fund 0.48%
WisdomTree Japan High-Yielding Equity Fund 0.58%
WisdomTree Japan SmallCap Dividend Fund 0.58%
WisdomTree Pacific ex-Japan Total Dividend Fund 0.48%
WisdomTree Pacific ex-Japan High-Yielding Equity Fund 0.58%
WisdomTree International LargeCap Dividend Fund 0.48%
WisdomTree International Dividend Top 100 Fund 0.58%
WisdomTree International MidCap Dividend Fund 0.58%
WisdomTree International SmallCap Dividend Fund 0.58%
WisdomTree Emerging Markets High-Yielding Equity Fund 0.63%
WisdomTree Emerging Markets SmallCap Dividend Fund 0.63%
WisdomTree India Earnings Fund 0.68%
WisdomTree Middle East Dividend Fund 0.68%
WisdomTree International Basic Materials Sector Fund 0.58%
WisdomTree International Communications Sector Fund 0.58%
WisdomTree International Consumer Discretionary Sector Fund 0.58%
WisdomTree International Consumer Staples Sector Fund 0.58%
WisdomTree International Energy Sector Fund 0.58%
WisdomTree International Financial Sector Fund 0.58%
WisdomTree International Health Care Sector Fund 0.58%
WisdomTree International Industrial Sector Fund 0.58%
WisdomTree International Technology Sector Fund 0.58%
WisdomTree International Utilities Sector Fund 0.58%
WisdomTree International Real Estate Fund 0.58%
48
With respect to each Fund (other than the WisdomTree India Earnings Fund and the
Middle East Dividend Fund) WisdomTree Asset Management has agreed to pay all
expenses of the Trust, except for: (i) brokerage expenses and other expenses
(such as stamp taxes) connected with the execution of portfolio transactions or
in connection with creation and redemption transactions; (ii) legal fees or
expenses in connection with any arbitration, litigation or pending or threatened
arbitration or litigation, including any settlements in connection therewith;
(iii) compensation and expenses of each Independent Trustee; (iv) compensation
and expenses of counsel to the Independent Trustees; (v) compensation and
expenses of the Trust's chief compliance officer; (vi) extraordinary expenses;
(vii) distribution fees and expenses paid by the Trust under any distribution
plan adopted pursuant to Rule 12b-1 under the 1940 Act; and (viii) the advisory
fee payable to WisdomTree Asset Management. Pursuant to a separate contractual
arrangement with respect to each Fund (other than the WisdomTree India Earnings
Fund and the Middle East Dividend Fund) WisdomTree arranges for the provision of
chief compliance officer ("CCO") services and is liable and responsible for, and
administers, payments to the CCO, the Independent Trustees and counsel to the
Independent Trustees, in exchange for a fee paid by each Fund of up to 0.0044%
of the Fund's average daily net assets.
The Portfolio is advised by WisdomTree Asset Management. WisdomTree Asset
Management does not receive any additional compensation for advising the
Portfolio.
For the following periods, the Adviser received the following fees:
Advisory Fee
Period Ended
Name March 31, 2007
------------------------------------------------------------- ---------------
WisdomTree Total Dividend Fund* $ 113,719
WisdomTree High-Yielding Equity Fund* $ 295,809
WisdomTree DEFA Fund* $ 199,673
WisdomTree DEFA High-Yielding Equity Fund* $ 317,496
WisdomTree Pacific ex-Japan High Yielding Equity Fund* $ 160,899
WisdomTree Pacific ex-Japan Total Dividend Fund* $ 105,496
WisdomTree Europe Total Dividend Fund* $ 67,833
WisdomTree Europe High-Yielding Equity Fund* $ 122,153
WisdomTree Europe SmallCap Dividend Fund* $ 221,137
WisdomTree Japan Total Dividend Fund* $ 103,330
WisdomTree Japan High-Yielding Equity Fund* $ 133,841
WisdomTree Japan SmallCap Dividend Fund* $ 128,531
WisdomTree Dividend Top 100 Fund* $ 233,421
WisdomTree LargeCap Dividend Fund* $ 326,902
WisdomTree MidCap Dividend Fund* $ 103,769
WisdomTree SmallCap Dividend Fund* $ 152,022
WisdomTree International LargeCap Dividend Fund* $ 156,254
WisdomTree International Dividend Top 100 Fund* $ 469,927
WisdomTree International MidCap Dividend Fund* $ 230,677
WisdomTree International SmallCap Dividend Fund* $ 398,322
WisdomTree International Basic Materials Sector Fund** $ 15,338
WisdomTree International Communications Sector Fund** $ 32,387
WisdomTree International Consumer Discretionary Sector Fund** $ 15,129
WisdomTree International Consumer Staples Sector Fund** $ 42,549
WisdomTree International Energy Sector Fund** $ 41,504
WisdomTree International Financial Sector Fund** $ 16,936
WisdomTree International Industrial Sector Fund** $ 26,520
WisdomTree International Technology Sector Fund** $ 13,947
WisdomTree International Utilities Sector Fund** $ 46,704
WisdomTree International Health Care Sector Fund** $ 41,870
WisdomTree Total Earnings Fund*** $ 6,912
WisdomTree Earnings 500 Fund*** $ 5,511
WisdomTree MidCap Earnings Fund*** $ 1,867
WisdomTree SmallCap Earnings Fund*** $ 3,386
WisdomTree Earnings Top 100 Fund*** $ 9,423
WisdomTree Low P/E Fund*** $ 9,375
WisdomTree International Real Estate Fund**** N/A
WisdomTree Emerging Markets High-Yielding Equity Fund**** N/A
WisdomTree Emerging Markets SmallCap Dividend Fund**** N/A
WisdomTree India Earnings Fund**** N/A
WisdomTree Middle East Dividend Fund**** N/A
----------
* For the period June 16, 2006 (commencement of operations) through March
31, 2007
** For the period October 13, 2006 (commencement of operations) through March
31, 2007
*** For the period February 23, 2007 (commencement of operations) through
March 31, 2007
**** The Fund did not commence operations as of the end of the fiscal year
49
The Advisory Agreement with respect to each Fund continues in effect for two
years from its effective date, and thereafter is subject to annual approval by
(i) the Board of Trustees of the Trust or (ii) the vote of a majority of the
outstanding voting securities (as defined in the 1940 Act) of the Fund, provided
that in either event such continuance also is approved by a vote of a majority
of the Trustees of the Trust who are not interested persons (as defined in the
1940 Act) of the Fund, by a vote cast in person at a meeting called for the
purpose of voting on such approval. If the shareholders of any Fund fail to
approve the Advisory Agreement, WisdomTree Asset Management may continue to
serve in the manner and to the extent permitted by the 1940 Act and rules and
regulations thereunder.
The Advisory Agreement with respect to any Fund is terminable without any
penalty, by vote of the Board of Trustees of the Trust or by vote of a majority
of the outstanding voting securities (as defined in the 1940 Act) of that Fund,
or by WisdomTree Asset Management, in each case on not less than 30 days nor
more than 60 days prior written notice to the other party; provided, that a
shorter notice period shall be permitted for a Fund in the event its shares are
no longer listed on a national securities exchange. The Investment Advisory
Agreement will terminate automatically and immediately in the event of its
"assignment" (as defined in the 1940 Act).
Sub-Adviser. BNY Investment Advisers, a separately identifiable division of The
Bank of New York ("BNY") and a registered investment adviser with offices
located at 1633 Broadway, 13th floor, New York, NY 10019, serves as the
Sub-Adviser for each Fund. BNY began offering investment services in the 1830s
and as of June 30, 2007 managed more than $142 billion in investments for
institutions and individuals. BNY is a subsidiary of The Bank of New York Mellon
Corporation. The Sub-Adviser chooses each Fund's portfolio investments and
places orders to buy and sell the Fund's portfolio investments. WisdomTree Asset
Management pays the Sub-Adviser for providing sub-advisory services to the Funds
in accordance with the table set forth below.
Sub-adviser's Fees for the Domestic Funds
The Sub-Adviser is entitled to receive the fees indicated below for acting
as Sub-Adviser to the Domestic Funds:
n 3 basis points (0.03%) of the first $2 billion in combined
daily net assets of all Domestic Funds;
n 2 basis points (0.02%) of the next $3 billion in combined
daily net assets of all Domestic Funds; and
n 1.5 basis points (0.015%) of the combined daily net assets of
all Domestic Funds in excess of $5 billion.
Sub-adviser's Fees for the International Funds
The Sub-Adviser is entitled to receive the fees indicated below for acting
as Sub-Adviser to the International Funds:
n 7.5 basis points (0.075%) of the first $1 billion in combined
daily net assets of all International Equity Funds;
n 5 basis points (0.05%) of the next $1 billion in combined
daily net assets of all International Equity Funds;
n 3 basis points (0.03%) of the next $3 billion in combined
daily net assets of all International Equity Funds; and
n 2 basis points (0.02%) of the combined daily net assets of all
International Equity Funds in excess of $5 billion.
50
The Portfolio is sub-advised by BNY Investment Advisors. BNY Investment Advisors
does not receive any additional compensation for sub-advising the Portfolio.
For the following periods, the Sub-Adviser received the following fees:
Sub-Advisory Fee
Period Ended March 31,
Name 2007
------------------------------------------------------------- ----------------------
WisdomTree Total Dividend Fund* $ 7,575
WisdomTree High-Yielding Equity Fund* $ 17,145
WisdomTree DEFA(SM) Fund* $ 19,410
WisdomTree DEFA(SM) High-Yielding Equity Fund* $ 26,790
WisdomTree Pacific ex-Japan High Yielding Equity Fund* $ 14,521
WisdomTree Pacific ex-Japan Total Dividend Fund* $ 14,521
WisdomTree Europe Total Dividend Fund* $ 14,521
WisdomTree Europe High-Yielding Equity Fund* $ 14,521
WisdomTree Europe SmallCap Dividend Fund* $ 18,790
WisdomTree Japan Total Dividend Fund* $ 14,521
WisdomTree Japan High-Yielding Equity Fund* $ 14,521
WisdomTree Japan SmallCap Dividend Fund* $ 14,521
WisdomTree Dividend Top 100 Fund* $ 14,028
WisdomTree LargeCap Dividend Fund* $ 23,512
WisdomTree MidCap Dividend Fund* $ 7,260
WisdomTree SmallCap Dividend Fund* $ 8,914
WisdomTree International LargeCap Dividend Fund* $ 14,521
WisdomTree International Dividend Top 100 Fund* $ 40,587
WisdomTree International MidCap Dividend Fund* $ 18,258
WisdomTree International SmallCap Dividend Fund* $ 36,444
WisdomTree International Basic Materials Sector Fund** N/A
WisdomTree International Communications Sector Fund** N/A
WisdomTree International Consumer Discretionary Sector Fund** N/A
WisdomTree International Consumer Staples Sector Fund** N/A
WisdomTree International Energy Sector Fund** N/A
WisdomTree International Financial Sector Fund** N/A
WisdomTree International Industrial Sector Fund** N/A
WisdomTree International Technology Sector Fund** N/A
WisdomTree International Utilities Sector Fund** N/A
WisdomTree International Health Care Sector Fund** N/A
WisdomTree Total Earnings Fund** N/A
WisdomTree Earnings 500 Fund** N/A
WisdomTree MidCap Earnings Fund** N/A
WisdomTree SmallCap Earnings Fund** N/A
WisdomTree Earnings Top 100 Fund** N/A
WisdomTree Low P/E Fund** N/A
WisdomTree International Real Estate Fund** N/A
WisdomTree Emerging Markets High-Yielding Equity Fund** N/A
WisdomTree Emerging Markets SmallCap Dividend Fund** N/A
WisdomTree India Earnings Fund** N/A
WisdomTree Middle East Dividend Fund** N/A
----------
* For the period June 16, 2006 (commencement of operations) through March
31, 2007
** The billing period commenced on April 15, 2007, accordingly, no fees were
paid for the period ended March 31, 2007
BNY believes that it may perform Sub-Advisory and related services for the Trust
without violating applicable banking laws or regulations. However, the legal
requirements and interpretations about the permissible activities of banks and
their affiliates may change in the future. These changes could prevent BNY from
continuing to perform services for the Trust. If this happens, the Board would
consider selecting other qualified firms. Any new investment Sub-Advisory
agreement would be subject to shareholder approval.
Portfolio Managers. Each Fund is managed by the Sub-Adviser's Index Fund
Management Division. The five most senior members are Kurt Zyla, Lloyd Buchanan,
Denise Krisko, Robert McCormack and Todd Rose. Mr. Zyla manages the Division.
Mr. Zyla, a Managing Director of the Sub-Adviser, has supervised the Index Fund
51
Management Division since 1996. He joined the Sub-Adviser in 1989. Prior to his
current position, he was employed by the Sub-Adviser in a number of capacities.
Mr. Buchanan has been a Portfolio Manager in the Index Fund Management Division
since January 2002. Prior to joining the Sub-Adviser, Mr. Buchanan was a Vice
President and Chief Operating Officer of Axe Houghton Associates, Inc., an
investment management subsidiary of Hoenig Group. He joined Axe Houghton in May
1988.
Ms. Krisko is a Managing Director, CIO and Head of Index Management in the Index
Fund Management Division. Ms. Krisko joined the Sub-Adviser in August, 2005.
Prior to joining the Sub-Adviser, Ms. Krisko acted as a Senior Portfolio Manager
and Equity Trader for Quantitative Equity Management at Northern Trust from
January 2003 until August 2005 and at Deutsche Asset Management from June 2000
to January 2003. Ms. Krisko has also worked as a Senior Quantitative Equity
Portfolio Manager and Trader for The Vanguard Group.
Mr. McCormack is a Senior Portfolio Manager in the Index Fund Management
Division. He is responsible for domestic indexed portfolio management. Prior to
joining the Index Management Fund Division in 1999, Mr. McCormack was a
relationship manager in the Sub-Adviser's Master Trust/Master Custody Division,
specializing in working with foundations and endowments and other not-for-profit
organizations. Mr. McCormack joined the Sub-Adviser in 1987.
Mr. Rose has been a Portfolio Manager in the Index Fund Management Division
since 2000. Prior to joining the Index Fund Management Division, Mr. Rose worked
in the Sub-Adviser's Mutual Funds Accounting Division in various functions.
Before joining the Sub-Adviser in 1997, Mr. Rose was a Financial Consultant at
Merrill Lynch. He began his career trading futures with Linnco Futures Group in
Chicago.
Each of the portfolios or accounts for which the Portfolio Managers are
primarily responsible for the day-to-day management seeks to track the rate of
return, risk profile and other characteristics of its underlying Index by either
replicating the same combination of securities that compose that benchmark or
through a representative sampling of the securities that compose that benchmark
based on objective criteria and data. The Portfolio Managers are required to
manage each portfolio or account to meet those objectives. Each Portfolio
Manager on the Index Fund Management team is authorized to make investment
decisions for all portfolios managed by the team. No member of the Portfolio
Management team manages assets professionally outside of the team. Mr. Zyla
manages the team. Each Portfolio Manager has served as manager of each Fund
since its inception.
Including the WisdomTree portfolios, as of June 30, 2007, the Index Fund
Management team managed 73 other registered investment companies with
approximately $8.4 billion in assets; twenty-five pooled investment vehicles
with approximately $19.7 billion in assets and one hundred seventy-one other
accounts with approximately $39.9 billion in assets.
Portfolio Manager Fund Ownership
As of June 30, 2007, the dollar range of securities beneficially owned by the
following Portfolio Managers in the Trust is as follows:
Dollar Range of Securities
Portfolio Manager Beneficially Owned
-------------------- --------------------------
Kurt Zyla None
Lloyd Buchanan None
Denise Krisko None
Robert McCormack None
Todd Rose None
Portfolio Manager Compensation
As of June 30, 2007, the Sub-Adviser's Portfolio Managers' compensation
generally consists of base salary, bonus, and various long-term incentive
compensation vehicles, if eligible. In addition, Portfolio Managers are eligible
for the standard retirement benefits and health and welfare benefits available
to all BNY employees. In the case of Portfolio Managers responsible for managing
the Funds and managed accounts, the method used to determine their compensation
is the same for all Funds and investment accounts. A Portfolio Manager's base
salary is determined by the manager's experience and performance in the role,
taking into account the ongoing compensation benchmark analyses performed by
BNY's Human Resources Department. A Portfolio Manager's base salary is
52
generally a fixed amount that may change as a result of periodic reviews, upon
assumption of new duties, or when a market adjustment of the position occurs. A
Portfolio Manager's bonus is determined by a number of factors.
One factor is gross, pre-tax performance of a fund relative to expectations for
how the fund should have performed, given its objectives, policies, strategies
and limitations, and the market environment during the measurement period. This
performance factor is not based on the value of assets held in a fund's
portfolio. For each Fund, the performance factor depends on how the Portfolio
Manager performs relative to the Fund's benchmark and the Fund's peer group,
over one-year and three-year time periods. Additional factors include the
Portfolio Manager's contributions to the investment management functions within
the sub-asset class, contributions to the development of other investment
professionals and supporting staff, and overall contributions to strategic
planning and decisions for the investment group. The bonus is paid on an annual
basis.
The Portfolio Managers for each Fund manage multiple portfolios for multiple
clients. These accounts may include investment companies, separate accounts
(assets managed on behalf of individuals and institutions such as pension funds,
insurance companies and foundations), and bank collective and common trust
accounts. Each Portfolio Manager generally manages portfolios having
substantially the same investment style as the relevant Fund. However, the
portfolios managed by a Portfolio Manager may not have portfolio compositions
identical to those of the Fund(s) managed by the Portfolio Manager due, for
example, to specific investment limitations or guidelines present in some
portfolio or Funds but not others. The Portfolio Managers may purchase
securities for one portfolio and not another portfolio, and the performance of
securities purchased for one portfolio may vary from the performance of
securities purchased for other portfolios. A Portfolio Manager may place
transactions on behalf of other accounts that are directly or indirectly
contrary to investment decisions made on behalf of a Fund, or make investment
decisions that are similar to those made for a Fund, both of which have the
potential to adversely impact the Fund depending on market conditions. For
example, a Portfolio Manager may purchase a security in one portfolio while
appropriately selling that same security in another portfolio. In addition, some
of these portfolios have fee structures that are or have the potential to be
higher than the Sub-Advisory fees paid by a Fund. However, the compensation
structure for Portfolio Managers generally does not provide any incentive to
favor one account over another because that part of a Portfolio Manager's bonus
based on performance is not based on the performance of one account to the
exclusion of others.
Code of Ethics. The Trust, WisdomTree Asset Management, the Sub-Adviser and the
Distributor have adopted Codes of Ethics pursuant to Rule 17j-1 under the 1940
Act. Employees subject to the Codes of Ethics may invest in securities for their
personal investment accounts, including securities that may be purchased or held
by the Funds. The Codes of Ethics are on public file with, and are available
from, the SEC.
Administrator, Custodian and Transfer Agent. The Bank of New York serves as
administrator, custodian and transfer agent for the Funds. BNY's principal
address is One Wall Street, New York, New York 10286. Under the Fund
Administration and Accounting Agreement with the Trust, BNY provides necessary
administrative, legal, tax, accounting services, and financial reporting for the
maintenance and operations of the Trust and each Fund. In addition, BNY makes
available the office space, equipment, personnel and facilities required to
provide such services. Under the custody agreement with the Trust, BNY maintains
in separate accounts cash, securities and other assets of the Trust and each
Fund, keeps all necessary accounts and records, and provides other services. BNY
is required, upon the order of the Trust, to deliver securities held by BNY and
to make payments for securities purchased by the Trust for each Fund. Also,
under a Delegation Agreement, BNY is authorized to appoint certain foreign
custodians or foreign custody managers for Fund investments outside the United
States. Pursuant to a Transfer Agency and Service Agreement with the Trust, BNY
acts as transfer agent for each Fund's authorized and issued shares of
beneficial interest, and as dividend disbursing agent of the Trust. As
compensation for the foregoing services, BNY receives certain out of pocket
costs, transaction fees and asset-based fees which are accrued daily and paid
monthly by the Trust from the Trust's custody account with BNY.
BNY serves as the Portfolio's custodian. BNY does not receive any additional
compensation for performing these services.
53
For the following periods the Administrator received the following fees:
Administration Fee
Name Period Ended March 31, 2007
------------------------------------------------------------ ---------------------------
WisdomTree Total Dividend Fund* $ 11,551
WisdomTree High-Yielding Equity Fund* $ 22,767
WisdomTree DEFA(SM) Fund* $ 11,928
WisdomTree DEFA(SM) High-Yielding Equity Fund* $ 16,262
WisdomTree Pacific ex-Japan High Yielding Equity Fund* $ 8,506
WisdomTree Pacific ex-Japan Total Dividend Fund* $ 7,025
WisdomTree Europe Total Dividend Fund* $ 4,082
WisdomTree Europe High-Yielding Equity Fund* $ 5,941
WisdomTree Europe SmallCap Dividend Fund* $ 12,071
WisdomTree Japan Total Dividend Fund* $ 6,561
WisdomTree Japan High-Yielding Equity Fund* $ 7,612
WisdomTree Japan SmallCap Dividend Fund* $ 7,484
WisdomTree Dividend Top 100 Fund* $ 18,472
WisdomTree LargeCap Dividend Fund* $ 34,785
WisdomTree MidCap Dividend Fund* $ 7,931
WisdomTree SmallCap Dividend Fund* $ 11,785
WisdomTree International LargeCap Dividend Fund* $ 9,781
WisdomTree International Dividend Top 100 Fund* $ 24,454
WisdomTree International MidCap Dividend Fund* $ 12,087
WisdomTree International SmallCap Dividend Fund* $ 21,693
WisdomTree International Basic Materials Sector Fund** $ 698
WisdomTree International Communications Sector Fund** $ 1,705
WisdomTree International Consumer Discretionary Sector Fund** $ 686
WisdomTree International Consumer Staples Sector Fund** $ 1,962
WisdomTree International Energy Sector Fund** $ 1,992
WisdomTree International Financial Sector Fund** $ 964
WisdomTree International Industrial Sector Fund** $ 1,384
WisdomTree International Technology Sector Fund** $ 627
WisdomTree International Utilities Sector Fund** $ 2,345
WisdomTree International Health Care Sector Fund** $ 1,917
WisdomTree Total Earnings Fund*** $ 552
WisdomTree Earnings 500 Fund*** $ 440
WisdomTree MidCap Earnings Fund*** $ 110
WisdomTree SmallCap Earnings Fund*** $ 237
WisdomTree Earnings Top 100 Fund*** $ 556
WisdomTree Low P/E Fund*** $ 553
WisdomTree International Real Estate Fund**** N/A
WisdomTree Emerging Markets High-Yielding Equity Fund**** N/A
WisdomTree Emerging Markets SmallCap Dividend Fund**** N/A
WisdomTree India Earnings Fund**** N/A
WisdomTree Middle East Dividend Fund**** N/A
----------
* For the period June 16, 2006 (commencement of operations) through March
31, 2007
** For the period October 13, 2006 (commencement of operations) through March
31, 2007
*** For the period February 23, 2007 (commencement of operations) through
March 31, 2007
**** The Fund did not commence operations as of the end of the fiscal year
ending March 31, 2007
Distributor. ALPS Distributors, Inc. ("Distributor") is the distributor of
shares of the Trust. Its principal address is 1290 Broadway, Suite 1100, Denver,
Colorado 80203. The Distributor has entered into a Distribution Agreement with
the Trust pursuant to which it distributes shares of each Fund. The Distribution
Agreement will continue for two years from its effective date and is renewable
annually. Shares are continuously offered for sale by the Funds through the
Distributor only in Creation Unit Aggregations, as described in the applicable
Prospectus and below in the Creation and Redemption of Creation Units
Aggregations section. Shares in less than Creation Unit Aggregations are not
distributed by the Distributor. The Distributor will deliver the applicable
Prospectus and, upon request, this SAI to persons purchasing Creation Unit
Aggregations and will maintain records of both orders placed with it and
confirmations of acceptance furnished by it. The Distributor is a broker-dealer
registered under the 1934 Act and a member of the National Association of
Securities Dealers, Inc. ("NASD"). The Distributor is not affiliated with
WisdomTree Investments, WisdomTree Asset Management, nor any stock exchange.
54
The Distribution Agreement for each Fund will provide that it may be terminated
at any time, without the payment of any penalty, on at least sixty (60) days
prior written notice to the other party (i) by vote of a majority of the
Independent Trustees or (ii) by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the relevant Fund. The Distribution
Agreement will terminate automatically in the event of its "assignment" (as
defined in the 1940 Act).
The Distributor may also enter into agreements with securities dealers
("Soliciting Dealers") who will solicit purchases of Creation Unit Aggregations
of shares. Such Soliciting Dealers may also be Authorized Participants (as
defined below) or DTC Participants (as defined below).
WisdomTree Asset Management may, from time to time and from its own resources,
pay, defray or absorb costs relating to distribution, including payments out of
its own resources to the Distributor, or to otherwise promote the sale of
shares.
Brokerage Transactions
The Sub-Adviser assumes general supervision over placing orders on behalf of
each Fund for the purchase and sale of portfolio securities. In selecting the
brokers or dealers for any transaction in portfolio securities, the
Sub-Adviser's policy is to make such selection based on factors deemed relevant,
including but not limited to, the breadth of the market in the security, the
price of the security, the reasonableness of the commission or mark-up or
mark-down, if any, execution capability, settlement capability, back office
efficiency and the financial condition of the broker or dealer, both for the
specific transaction and on a continuing basis. The overall reasonableness of
brokerage commissions paid is evaluated by the Sub-Adviser based upon its
knowledge of available information as to the general level of commissions paid
by other institutional investors for comparable services. Brokers may also be
selected because of their ability to handle special or difficult executions,
such as may be involved in large block trades, less liquid securities, broad
distributions, or other circumstances. The Sub-Adviser does not consider the
provision or value of research, products or services a broker or dealer may
provide, if any, as a factor in the selection of a broker or dealer or the
determination of the reasonableness of commissions paid in connection with
portfolio transactions. The Trust has adopted policies and procedures that
prohibit the consideration of sales of a Fund's shares as a factor in the
selection of a broker or a dealer to execute its portfolio transactions.
55
Brokerage Commissions.
The table below sets forth the brokerage commissions paid by each Fund during
the Funds' first fiscal year of operation ended March 31, 2007.
Commissions Paid
During Fiscal Year Ended
Fund March 31, 2007
----------------------------------------------------------- ------------------------
WisdomTree Total Dividend Fund $ 3,648
WisdomTree High-Yielding Equity Fund $ 7,502
WisdomTree LargeCap Dividend Fund $ 9,823
WisdomTree Dividend Top 100 Fund $ 7,919
WisdomTree MidCap Dividend Fund $ 2,679
WisdomTree SmallCap Dividend Fund $ 8,570
WisdomTree Total Earnings Fund $ 263
WisdomTree Earnings 500 Fund $ 43
WisdomTree MidCap Earnings Fund $ 2
WisdomTree SmallCap Earnings Fund $ 11
WisdomTree Earnings Top 100 Fund $ 135
WisdomTree Low P/E Fund $ 109
WisdomTree DEFA Fund $ 6,687
WisdomTree DEFA High-Yielding Equity Fund $ 14,180
WisdomTree Europe Total Dividend Fund $ 4,498
WisdomTree Europe High-Yielding Equity Fund $ 6,629
WisdomTree Europe SmallCap Dividend Fund $ 30,281
WisdomTree Japan Total Dividend Fund $ 1,752
WisdomTree Japan High-Yielding Equity Fund $ 1,968
WisdomTree Japan SmallCap Dividend Fund $ 8,864
WisdomTree Pacific ex-Japan Total Dividend Fund $ 6,681
WisdomTree Pacific ex-Japan High-Yielding Equity Fund $ 2,670
WisdomTree International LargeCap Dividend Fund $ 4,068
WisdomTree International Dividend Top 100 Fund $ 8,459
WisdomTree International MidCap Dividend Fund $ 33,778
WisdomTree International SmallCap Dividend Fund $ 49,713
WisdomTree Emerging Markets High-Yielding Equity Fund* N/A
WisdomTree Emerging Markets SmallCap Dividend Fund N/A
WisdomTree International Basic Materials Sector Fund $ 23
WisdomTree International Communications Sector Fund $ 56
WisdomTree International Consumer Discretionary Sector Fund $ 136
WisdomTree International Consumer Staples Sector Fund $ 393
WisdomTree International Energy Sector Fund $ 169
WisdomTree International Financial Sector Fund $ 528
WisdomTree International Health Care Sector Fund $ 364
WisdomTree International Industrial Sector Fund $ 120
WisdomTree International Technology Sector Fund $ 90
WisdomTree International Utilities Sector Fund $ 225
WisdomTree International Real Estate Fund* N/A
WisdomTree India Earnings Fund* N/A
WisdomTree Middle East Dividend Fund* N/A
----------
* The Fund did not commence operations as of March 31, 2007.
56
Affiliated Brokers
During the Funds' first fiscal year of operation ended March 31, 2007, the Funds
did not pay any commissions to any affiliated brokers.
Regular Broker-Dealers
The following table lists each Fund that acquired securities of its regular
brokers or dealers (as defined in the 1940 Act) or of their parents during the
fiscal year ended March 31, 2007, the name of each such broker or dealer and the
value of each Fund's aggregate holdings of the securities of each issuer as of
March 31, 2007.
Aggregate Value of
Holdings as of
Fund Name of Broker or Dealer March 31, 2007
----------------------------------------------------- ------------------------ ------------------
WisdomTree Total Dividend Fund
AMERICAN FINANCIAL GROUP, INC. $ 25,019
AMERIPRISE FINANCIAL, INC. 42,512
BANK OF AMERICA CORP. 3,226,963
BANK OF NEW YORK CO., INC. (THE) 247,314
BB&T CORP. 284,310
BEAR STEARNS & CO., INC. 46,609
BLACKROCK, INC. 76,123
CHARLES SCHWAB CORP. (THE) 81,500
CITIGROUP, INC. 3,365,901
COMERICA, INC. 122,970
CULLEN/FROST BANKERS, INC. 42,387
FEDERATED INVESTORS, INC. 26,512
FRANKLIN RESOURCES, INC. 48,694
GOLDMAN SACHS GROUP, INC. 214,689
H&R BLOCK, INC. 49,633
JPMORGAN CHASE & CO. 1,664,852
LEGG MASON, INC. 38,249
LEHMAN BROTHERS HOLDINGS, INC. 76,026
LINCOLN NATIONAL CORP. 151,443
MARSH & MCLENNAN COS., INC. 116,018
MELLON FINANCIAL CORP 124,502
MERRILL LYNCH & CO., INC. 265,591
METLIFE, INC. 155,728
MORGAN STANLEY 394,902
NORTHERN TRUST CORP. 70,845
NUVEEN INVESTMENTS, INC. 21,995
PEOPLE'S BANK 52,303
PNC FINANCIAL SERVICES GROUP, INC. (THE) 245,274
PROTECTIVE LIFE CORP. 19,113
PRUDENTIAL FINANCIAL, INC. 147,485
RAYMOND JAMES FINANCIAL, INC. 20,296
REGIONS FINANCIAL CORP. 333,822
STATE STREET CORP. 84,305
T. ROWE PRICE GROUP, INC. 55,590
WACHOVIA CORP. 1,551,308
WADDELL & REED FINANCIAL, INC. 20,965
WELLS FARGO & CO. 1,252,149
WINTRUST FINANCIAL CORP. 16,595
ZIONS BANCORP. 60,939
AG EDWARDS, INC. 40,747
--------------------------------------------------------------------------------------------------------------------------
57
Aggregate Value of
Holdings as of
Fund Name of Broker or Dealer March 31, 2007
----------------------------------------------------- ------------------------ ------------------
WisdomTree High-Yielding Equity Fund
BANK OF AMERICA CORP. $ 12,989,130
BB&T CORP. 1,193,805
CINCINNATI FINANCIAL CORP. 302,312
CITIGROUP, INC. 13,659,982
COMERICA, INC. 517,832
JPMORGAN CHASE & CO. 6,744,753
KEYCORP 793,090
PNC FINANCIAL SERVICES GROUP, INC. (THE) 896,170
REGIONS FINANCIAL CORP. 1,338,719
WACHOVIA CORP. 6,241,293
WELLS FARGO & CO. 5,034,836
--------------------------------------------------------------------------------------------------------------------------
WisdomTree LargeCap Dividend Fund
AMERIPRISE FINANCIAL, INC. $ 191,705
BANK OF AMERICA CORP. 14,355,548
BANK OF NEW YORK CO., INC. 1,136,779
BB&T CORP. 1,459,615
BEAR STEARNS & CO., INC. 208,987
BLACKROCK, INC. 329,033
CHARLES SCHWAB CORP. (THE) 370,190
COAMERICA, INC. 628,327
CITIGROUP, INC. 15,018,541
FRANKLIN RESOURCES, INC. 204,807
GOLDMAN SACHS GROUP, INC. 952,358
JPMORGAN CHASE & CO. 7,429,861
KEYCORP 866,831
LEGG MASON, INC. 176,455
LEHMAN BROTHERS HOLDINGS, INC. 364,154
LINCOLN NATIONAL CORP. 703,592
MARSH & MCLENNAN COS., INC. 526,341
MBIA, INC. 257,703
MELLON FINANCIAL CORP 585,712
MERRILL LYNCH & CO., INC 1,240,567
METLIFE, INC. 726,730
MORGAN STANLEY 1,780,527
NORTHERN TRUST CORP. 365,711
PNC FINANCIAL SERVICES GROUP, INC. (THE) 992,322
PRUDENTIAL FINANCIAL, INC. 752,317
REGIONS FINANCIAL CORP. 1,604,100
SOVEREIGN BANCORP, INC. 779,151
STATE STREET CORP. 417,249
T. ROWE PRICE GROUP, INC. 260,914
WACHOVIA CORP 6,894,627
WELLS FARGO & CO. 5,565,196
ZIONS BANCORP. 283,142
--------------------------------------------------------------------------------------------------------------------------
WisdomTree Dividend Top 100 Fund
BANK OF AMERICA CORP. $ 2,263,094
BANK OF NEW YORK CO., INC. (THE) 1,622,122
BB&T CORP. 2,141,121
CITIGROUP, INC. 2,341,874
COMERICA, INC. 2,176,207
JPMORGAN CHASE & CO. 1,323,677
KEYCORP 2,270,532
LINCOLN NATIONAL CORP. 2,212,665
NATIONAL CITY CORP. 2,530,356
PNC FINANCIAL SERVICES GROUP, INC. (THE) 1,624,579
REGIONS FINANCIAL CORP. 2,110,988
U. S. BANCORP. 2,325,435
WACHOVIA CORP. 2,426,769
WASHINGTON MUTUAL, INC. 2,517,168
WELLS FARGO & CO. 1,777,173
--------------------------------------------------------------------------------------------------------------------------
58
Aggregate Value of
Holdings as of
Fund Name of Broker or Dealer March 31, 2007
----------------------------------------------------- ------------------------ ------------------
WisdomTree MidCap Dividend Fund
A. G. EDWARDS, INC. $ 175,025
ALLIED CAPITAL CORP. 831,889
AMERICAN CAPITAL STRATEGIES LTD 1,333,421
AMERICAN FINANCIAL GROUP, INC. 107,328
COMPASS BANCHARES, INC. 591,335
CULIEN/FROST BANKERS, INC. 177,242
FEDERATED INVESTORS, INC. 202,180
FIRST HORIZON NATIONAL CORP. 563,438
HUNTINGTON BANCSHARES, INC. 515,616
NUVEEN INVESTMENTS, INC. 171,794
PEOPLE'S BANK 341,658
PROTECTIVE LIFE CORP 131,944
RAYMOND JAMES FINANCIAL, INC. 117,909
WADDELL & REED FINANCIAL, INC. 113,662
--------------------------------------------------------------------------------------------------------------------------
WisdomTree SmallCap Dividend Fund
BANKATLANTIC BANCORP, INC. $ 69,958
CITIZENS BANKING CORP. 970,852
FNB CORP / PA. 498,086
OLD NATIONAL BANCORP 509,149
SANDERS MORRIS HARRIS GROUP, INC. 32,610
SWS GROUP, INC. 87,927
UNITED COMMUNITY FINANCIAL CORP. 101,130
WINTRUST FINANCIAL CORP. 66,201
--------------------------------------------------------------------------------------------------------------------------
WisdomTree Total Earnings Fund
AFFILIATED MANAGERS GROUP, INC. $ 6,501
A.G. EDWARDS, INC. 8,302
AMERICAN FINANCIAL GROUP, INC. 9,531
AMERICAN INTERNATIONAL GROUP, INC. 307,867
BANK OF AMERICA CORP 508,669
BANK OF NEW YORK CO., INC. (THE) 39,739
BB&T CORP. 42,661
BEAR, STEARNS & COS., INC. 49,616
BLACKROCK, INC. 6,252
CHARLES SCHWAB CORP. (THE) 24,326
CINCINNATI FINANCIAL CORP. 13,568
CITIGROUP, INC. 536,503
COMERICA, INC. 21,283
FEDERATED INVESTORS, INC. 6,610
FRANKLIN RESOURCES, INC. 25,374
GOLDMAN SACHS GROUP, INC. 225,226
H&R BLOCK, INC. 9,889
INVESTMENT TECHNOLOGY GROUP, INC. 5,488
JP MORGAN CHASE & CO. 329,952
KEYCORP 32,599
KNIGHT CAPITAL GROUP, INC. 5,702
LABRANCHE & CO., INC. 9,360
LEGG MASON, INC. 15,074
LEHMAN BROTHERS HOLDINGS, INC. 93,193
LINCOLN NATINAL CORP. 32,539
MARSH & MCLENNAN COS., INC. 13,473
MBIA, INC. 20,302
MELLON FINANCIAL CORP. 23,296
MERRILL LYNCH & CO., INC. 124,955
METLIFE, INC. 107,986
MORGAN STANLEY 194,536
NORTHERN TRUST CORP. 18,042
NUVEEN INVESTMENTS, INC. 5,676
59
Aggregate Value of
Holdings as of
Fund Name of Broker or Dealer March 31, 2007
----------------------------------------------------- ------------------------ ------------------
PEOPLE'S BANK $ 6,216
PNC FINANCIAL SERVICES GROUP, INC. (THE) 68,372
PROTECTIVE LIFE CORP. 6,166
PRUDENTIAL FINANCIAL, INC. 70,403
RAYMOND JAMES FINANCIAL, INC. 5,952
REGIONS FINANCIAL CORP. 32,187
STATE STREET CORP. 27,843
T. ROWE PRICE GROUP, INC. 14,157
UNITED COMMUNITY FINANCIAL CORP. 6,155
WADDELL & REED FINANCIAL, INC. 5,830
ZIONS BANCORP 16,059
E*TRADE FINANCIAL CORP. 12,095
FISERV, INC. 12,734
--------------------------------------------------------------------------------------------------------------------------
WisdomTree Earnings 500 Fund
AMERICAN INTERNATIONAL GROUP, INC. $ 299,869
BANK OF AMERICA CORP. 476,323
BANK OF NEW YORK CO., INC. (THE) 36,982
BB&T CORP. 40,036
BEAR, STEARNS & CO., INC. 45,706
BLACKROCK, INC. 6,252
CHARLES SCHWAB CORP. (THE) 22,680
CINCINNATI FINANCIAL CORP. 12,550
CITIGROUP, INC. 501,489
COMERICA, INC. 19,864
FRANKLIN RESOURCES, INC. 24,166
GOLDMAN SACHS GROUP, INC. 209,317
JPMORGAN CHASE & CO. 308,471
LEGG MASON, INC. 14,320
LEHMAN BROTHERS HOLDINGS, INC. 87,447
LINCOLN NATIONAL CORP. 30,370
MBIA, INC. 18,861
MELLON FINANCIAL CORP. 21,743
MERRILL LYNCH & CO., INC. 116,951
METLIFE, INC. 101,040
MORGAN STANLEY 192,411
NORTHERN TRUST CORP. 16,839
PEOPLE'S BANK 1,421
PNC FINANCIAL SERVICES GROUP, INC. (THE) 63,909
PRUDENTIAL FINANCIAL, INC. 65,709
REGIONS FINANCIAL CORP. 29,994
SOVEREIGN BANCORP, INC. 10,990
STATE STREET CORP. 25,900
WACHOVIA CORP. 171,756
ZIONS BANCORP 14,876
--------------------------------------------------------------------------------------------------------------------------
WisdomTree MidCap Earnings Fund
AFFILIATED MANAGERS GROUP, INC. $ 7,151
A.G. EDWARDS, INC. 15,220
ALLIED CAPITAL CORP. 23,797
AMERICAN FINANCIAL GROUP, INC. 17,155
CULLEN/FROST BANKERS, INC. 8,582
FEDERATED INVESTORS, INC. 10,208
FIRST MARBLEHEAD CORP. (THE) 15,802
INVESTMENT TECHNOLOGY GROUP, INC. 3,998
KNIGHT CAPITAL GROUP, INC. 4,625
NUVEEN INVESTMENTS, INC. 7,663
PROTECTIVE LIFE CORP. 9,072
RADIAN GROUP, INC. 25,246
RAYMOND JAMES FINANCIAL, INC. 9,523
WADDELL & REED FINANCIAL, INC. 4,338
CHITTENDEN CORP. 4,106
--------------------------------------------------------------------------------------------------------------------------
60
Aggregate Value of
Holdings as of
Fund Name of Broker or Dealer March 31, 2007
----------------------------------------------------- ------------------------ ------------------
WisdomTree SmallCap Earnings Fund
BANKATLANTIC BANCORP, INC. $ 4,033
INFINITY PROPERTY & CASUALTY CORP. 30,178
LABRANCHE & CO., INC. 29,589
LANDAMERICA FINANCIAL GROUP, INC. 44,937
SAFETY INSURANCE GROUP, INC. 28,967
SANDERS MORRIS HARRIS GROUP, INC. 564
STIFEL FINANCIAL CORP. 4,607
SWS GROUP, INC. 9,924
UNITED COMMUNITY FINANCIAL CORP. 6,895
OCWEN FINANCIAL CORP. 52,715
--------------------------------------------------------------------------------------------------------------------------
WisdomTree Earnings Top 100 Fund
ALLSTATE CORP. (THE) $ 322,523
BANK OF AMERICA CORP. 232,702
BB&T CORP. 195,665
BEARS, STEARNS & CO. INC. 303,707
CITIGROUP, INC. 282,062
GOLDMAN SACHS GROUP, INC. 309,738
HARTFORD FINANCIAL SERVICES GROUP, INC. (THE) 316,561
JPMORGAN CHASE & CO. 254,576
KEYCORP 235,686
LINCOLN NATIONAL CORP. 191,168
MERRILL LYNCH & CO., INC. 201,562
METLIFE, INC. 257,652
MORGAN STANLEY 285,899
PNC FINANCIAL SERVICES GROUP, INC. (THE) 347,615
PRUDENTIAL FINANCIAL, INC. 202,453
WACHOVIA CORP. 187,170
--------------------------------------------------------------------------------------------------------------------------
WisdomTree Low P/E Fund
A.G. EDWARDS, INC. $ 14,528
AMERICAN INTERNATIONAL GROUP, INC. 530,366
BANK OF AMERICA CORP. 881,115
BB&T CORP. 73,836
BEAR, STEARNS & CO., INC. 84,196
CINCINNATI FINANCIAL CORP. 22,896
CITIGROUP, INC. 928,228
COMERICA, INC. 36,654
CULLEN/FROST BANKERS, INC. 12,036
GOLDMAN SACHS GROUP, INC. 386,398
JPMORGAN CHASE & CO. 570,884
KEYCORP 55,830
KNIGHT CAPITAL GROUP, INC. 11,088
LABRANCHE & CO., INC. 14,965
LEHMAN BROTHERS HOLDINGS, INC. 161,161
MERRILL LYNCH & CO., INC. 216,426
METLIFE, INC. 187,556
MORGAN STANLEY 337,093
PNC FINANCIAL SERVICES GROUP, INC. (THE) 118,031
PROTECTIVE LIFE CORP. 11,891
PRUDENTIAL FINANCIAL, INC. 119,775
WACHOVIA CORP. 316,537
ZIONS BANCORP. 27,892
--------------------------------------------------------------------------------------------------------------------------
WisdomTree DEFA Fund
BANCO SANTANDER CENTRAL HISPANO SA $ 1,283,378
BARCLAYS PLC 1,223,041
HSBC HOLDINGS PLC 2,538,214
LLOYDS TSB GROUP PLC 1,293,919
ROYAL BANK OF SCOTLAND GROUP PLC 1,357,020
--------------------------------------------------------------------------------------------------------------------------
61
Aggregate Value of
Holdings as of
Fund Name of Broker or Dealer March 31, 2007
----------------------------------------------------- ------------------------ ------------------
WisdomTree DEFA High-Yielding Equity Fund
BANCO SANTANDER CENTRAL HISPANO SA $ 2,776,197
BARCLAYS PLC 2,890,347
HSBC HOLDING PLC 6,004,845
LLOYDS TSB GROUP PLC 3,061,535
ROYAL BANK OF SCOTLAND GROUP PLC 3,209,249
--------------------------------------------------------------------------------------------------------------------------
WisdomTree Europe Total Dividend Fund
BANCO SANTANDER CENTRAL HISPANO SA $ 434,112
BARCLAYS PLC 471,161
HSBC HOLDINGS PLC 978,889
LLOYDS TSB GROUP PLC 599,768
ROYAL BANK OF SCOTLAND GROUP PLC 533,655
--------------------------------------------------------------------------------------------------------------------------
WisdomTree Europe High-Yielding Equity Fund
BANCO SANTANDER CENTRAL HISPANO SA $ 1,151,774
BARCLAYS PLC 1,197,516
HSBC HOLDINGS PLC 2,752,157
LLOYDS TSB GROUP PLC 1,514,842
ROYAL BANK OF SCOTLAND GROUP PLC 1,330,519
--------------------------------------------------------------------------------------------------------------------------
WisdomTree Europe SmallCap Dividend Fund
ABG SUNDAL COLLIER ASA $ 921,705
ACTA HOLDINGS ASA 1,554,464
AWD HOLDINGS AG 993,287
D CARNEGIE AB 1,289,862
INTERMEDIATE CAPITAL GROUP PLC 1,210,718
--------------------------------------------------------------------------------------------------------------------------
WisdomTree Japan Total Dividend Fund
MITSUBISHI UFJ FINANCIAL GROUP INC. $ 833,537
MIZUHO FINANCIAL GROUP, INC. 404,970
NIKKO CORDIAL CORP. 384,849
NOMURA HOLDINGS, INC. 509,400
SUMITOMO TRUST & BANKING INC. CO., LTD. (THE) 374,711
--------------------------------------------------------------------------------------------------------------------------
WisdomTree Japan High-Yielding Equity Fund
BANK OF YOKOHAMA LTD. (THE) $ 468,999
DAIWA SECURITIES GROUP, INC, 1,156,959
NIKKO CORDIAL CORP. 1,475,252
OKASAN HOLDINGS, INC. 124,667
SHINKO SECURITIES CO., LTD. 166,852
--------------------------------------------------------------------------------------------------------------------------
WisdomTree Japan SmallCap Dividend Fund
DAISHI BANK LTD. (THE) $ 380,350
KEIYO BANK LTD (THE) 323,523
JUROKU BANK LTD (THE) 334,288
OKASAN HOLDINGS, INC. 342,833
TOKAI TOKYO SECURITIES CO., LTD. 580,987
--------------------------------------------------------------------------------------------------------------------------
WisdomTree Pacific ex-Japan Total Dividend Fund
AUSTRALIA & NEW ZEALAND BANKING GROUP LTD. $ 3,072,848
COMMONWEALTH BANK OF AUSTRALIA 4,002,637
HANG SENG BANK LTD. 1,756,099
NATIONAL AUSTRALIA BANK LTD. 3,779,281
WESTPAC BANKING CORP. 2,768,205
--------------------------------------------------------------------------------------------------------------------------
WisdomTree Pacific ex-Japan High-Yielding Equity Fund
AUSTRALIA & NEW ZEALAND BANKING GROUP LTD. $ 6,998,342
COMMONWEALTH BANK OF AUSTRALIA 7,327,945
NATIONAL AUSTRALIA BANK LTD. 7,166,363
ST. GEORGE BANK LTD. 3,265,560
WESTPAC BANKING CORP. 6,377,495
--------------------------------------------------------------------------------------------------------------------------
62
Aggregate Value of
Holdings as of
Fund Name of Broker or Dealer March 31, 2007
----------------------------------------------------- ------------------------ ------------------
WisdomTree International LargeCap Dividend Fund
BANCO SANTANDER CENTRAL HISPANO SA $ 1,073,417
BARCLAYS PLC 1,164,836
HSBC HOLDINGS PLC 2,419,911
LLOYDS TSB GROUP PLC 1,233,662
ROYAL BANK OF SCOTLAND GROUP PLC 1,294,136
--------------------------------------------------------------------------------------------------------------------------
WisdomTree International Dividend Top 100 Fund
ABN AMRO HOLDING N.V. $ 4,184,702
BANCA INTESA SPA 6,127,075
COMMONWEALTH BANK OF AUSTRALIA 4,086,564
LLOYDS TSB GROUP PLC 4,681,445
ST. GEORGE BANK LTD. 4,606,337
--------------------------------------------------------------------------------------------------------------------------
WisdomTree International MidCap Dividend Fund
ALLIANCE & LEICESTER PLC $ 1,067,402
AMVESCAP PLC 871,227
BANCA POPOLARE ITALIANA SCRL 1,079,107
SAMPO OYJ 1,364,023
SUNCORP - METWAY LTD. 1,749,321
--------------------------------------------------------------------------------------------------------------------------
WisdomTree International SmallCap Dividend Fund
ACTA HOLDING ASA $ 1,879,695
ALINTA LTD. 2,876,719
INDUSTRIAL & COMMERCIAL BANK OF CHINA LTD. 1,554,496
INTERMEDIATE CAPITAL GROUP PLC 1,166,184
RATOS AB 1,386,963
--------------------------------------------------------------------------------------------------------------------------
WisdomTree Emerging Markets High-Yielding Equity Fund
N/A
--------------------------------------------------------------------------------------------------------------------------
WisdomTree Emerging Markets SmallCap Dividend Fund
N/A
--------------------------------------------------------------------------------------------------------------------------
WisdomTree International Basic Materials Sector Fund
None
--------------------------------------------------------------------------------------------------------------------------
WisdomTree International Communications Sector Fund
None
--------------------------------------------------------------------------------------------------------------------------
WisdomTree International Consumer Discretionary Sector Fund
BETER BED HOLDING NV $ 3,974
TAT HONG HOLDINGS LTD. 1,818
--------------------------------------------------------------------------------------------------------------------------
WisdomTree International Consumer Staples Sector Fund
None
--------------------------------------------------------------------------------------------------------------------------
WisdomTree International Energy Sector Fund
None
--------------------------------------------------------------------------------------------------------------------------
WisdomTree International Financial Sector Fund
BANCO SANTANDER CENTRAL HISPANO SA $ 677,043
BARCLAYS PLC 694,947
HSBC HOLDINGS PLC 1,443,935
LLOYDS TSB GROUP PLC 781,722
ROYAL BANK OF SCOTLAND GROUP PLC 772,310
--------------------------------------------------------------------------------------------------------------------------
WisdomTree International Health Care Sector Fund
None
--------------------------------------------------------------------------------------------------------------------------
WisdomTree International Industrial Sector Fund
IBIDEN CO., LTD. $ 20,699
ITALCEMENTI SPA 50,079
--------------------------------------------------------------------------------------------------------------------------
63
Aggregate Value of
Holdings as of
Fund Name of Broker or Dealer March 31, 2007
----------------------------------------------------- ------------------------ ------------------
WisdomTree International Technology Sector Fund
None
--------------------------------------------------------------------------------------------------------------------------
WisdomTree International Utilities Sector Fund
ALINTA LTD. $ 237,544
--------------------------------------------------------------------------------------------------------------------------
WisdomTree International Real Estate Fund
N/A
--------------------------------------------------------------------------------------------------------------------------
WisdomTree India Earnings Fund
N/A
--------------------------------------------------------------------------------------------------------------------------
WisdomTree Middle East Dividend Fund
N/A
--------------------------------------------------------------------------------------------------------------------------
Portfolio turnover may vary from year to year, as well as within a year. High
turnover rates are likely to result in comparatively greater brokerage expenses.
The overall reasonableness of brokerage commissions is evaluated by the Adviser
based upon its knowledge of available information as to the general level of
commissions paid by the other institutional investors for comparable services.
The table below sets forth the portfolio turnover rates of each Fund during the
Funds' first fiscal year of operation ended March 31, 2007.
Portfolio Turnover Rates During Fiscal
Fund Year Ended March 31, 2007
---------------------------------------------------------- ---------------------------------------
WisdomTree Total Dividend Fund 12%
WisdomTree High-Yielding Equity Fund 11%
WisdomTree LargeCap Dividend Fund 13%
WisdomTree Dividend Top 100 Fund 21%
WisdomTree MidCap Dividend Fund 12%
WisdomTree SmallCap Dividend Fund 16%
WisdomTree Total Earnings Fund 1%
WisdomTree Earnings 500 Fund 1%
WisdomTree MidCap Earnings Fund 0%*
WisdomTree SmallCap Earnings Fund 0%*
WisdomTree Earnings Top 100 Fund 2%
WisdomTree Low P/E Fund 1%
WisdomTree DEFA Fund 11%
WisdomTree DEFA High-Yielding Equity Fund 19%
WisdomTree Europe Total Dividend Fund 24%
WisdomTree Europe High-Yielding Equity Fund 24%
WisdomTree Europe SmallCap Dividend Fund 47%
WisdomTree Japan Total Dividend Fund 6%
WisdomTree Japan High-Yielding Equity Fund 6%
WisdomTree Japan SmallCap Dividend Fund 25%
WisdomTree Pacific ex-Japan Total Dividend Fund 21%
WisdomTree Pacific ex-Japan High-Yielding Equity Fund 7%
WisdomTree International LargeCap Dividend Fund 8%
WisdomTree International Dividend Top 100 Fund 8%
WisdomTree International MidCap Dividend Fund 44%
WisdomTree International SmallCap Dividend Fund 39%
WisdomTree Emerging Markets High-Yielding Equity Fund** N/A
WisdomTree Emerging Markets SmallCap Dividend Fund N/A
WisdomTree International Basic Materials Sector Fund 0%*
WisdomTree International Communications Sector Fund 0%*
WisdomTree International Consumer Discretionary Sector Fund 3%
WisdomTree International Consumer Staples Sector Fund 2%
WisdomTree International Energy Sector Fund 1%
WisdomTree International Financial Sector Fund 5%
WisdomTree International Health Care Sector Fund 3%
WisdomTree International Industrial Sector Fund 1%
WisdomTree International Technology Sector Fund 2%
WisdomTree International Utilities Sector Fund 1%
WisdomTree International Real Estate Fund** N/A
WisdomTree India Earnings Fund** N/A
WisdomTree Middle East Dividend Fund** N/A
----------
* Amount represents less than 1%.
** The Fund did not commence operations as of March 31, 2007.
64
Additional Information Concerning the Trust
Shares. The Trust was established as a Delaware statutory trust on December 15,
2005. The Trust currently is comprised of 40 Funds. Each Fund issues shares of
beneficial interest, with $0.001 par value. The Board may designate additional
Funds. The Trust is registered with the SEC as an open-end management investment
company.
Each share issued by a Fund has a pro rata interest in the assets of that Fund.
Shares have no preemptive, exchange, subscription or conversion rights and are
freely transferable. Each share is entitled to participate equally in dividends
and distributions declared by the Board of Trustees with respect to the relevant
Fund, and in the net distributable assets of such Fund on liquidation.
Each share has one vote with respect to matters upon which a shareholder vote is
required consistent with the requirements of the 1940 Act and the rules
promulgated thereunder. Shares of all Funds vote together as a single class
except that, if the matter being voted on affects only a particular Fund, and,
if a matter affects a particular Fund differently from other Funds, that Fund
will vote separately on such matter.
Under Delaware law, the Trust is not required to hold an annual meeting of
shareholders unless required to do so under the 1940 Act. The policy of the
Trust is not to hold an annual meeting of shareholders unless required to do so
under the 1940 Act. All shares (regardless of the Fund) have noncumulative
voting rights for the Board. Under Delaware law, Trustees of the Trust may be
removed by vote of the shareholders.
Following the creation of the initial Creation Unit Aggregation(s) of shares of
a Fund and immediately prior to the commencement of trading in such Fund's
shares, a holder of shares may be a "control person" of the Fund, as defined in
the 1940 Act. A Fund cannot predict the length of time for which one or more
shareholders may remain a control person of the Fund.
Shareholders may make inquiries by writing to the Trust, c/o ALPS Distributors,
Inc. at 1290 Broadway, Suite 1100, Denver, Colorado 80203.
Absent an applicable exemption or other relief from the SEC or its staff,
beneficial owners of more than 5% of the shares of a Fund may be subject to the
reporting provisions of Section 13 of the 1934 Act and the SEC's rules
promulgated thereunder. In addition, absent an applicable exemption or other
relief from the SEC staff, officers and Trustees of a Fund and beneficial owners
of 10% of the shares of a Fund ("Insiders") may be subject to the insider
reporting, short-swing profit and short sale provisions of Section 16 of the
1934 Act and the SEC's rules promulgated thereunder. Beneficial owners and
Insiders should consult with their own legal counsel concerning their
obligations under Sections 13 and 16 of the 1934 Act.
Termination of the Trust or a Fund. The Trust or a Fund may be terminated by a
majority vote of the Board of Trustees or the affirmative vote of a super
majority of the holders of the Trust or such Fund entitled to vote on
termination. Although the shares are not automatically redeemable upon the
occurrence of any specific event, the Trust's organizational documents provide
that the Board will have the unrestricted power to alter the number of shares in
a Creation Unit Aggregation. In the event of a termination of the Trust or a
Fund, the Board, in its sole discretion, could determine to permit the shares to
be redeemable in aggregations smaller than Creation Unit Aggregations or to be
individually redeemable. In such circumstance, the Trust may make redemptions
in-kind, for cash, or for a combination of cash or securities.
Role of DTC. DTC Acts as Securities Depository for the Shares of the Trust.
Shares of each Fund are represented by securities registered in the name of DTC
or its nominee and deposited with, or on behalf of, DTC.
DTC, a limited-purpose trust company, was created to hold securities of its
participants ("DTC Participants") and to facilitate the clearance and settlement
of securities transactions among the DTC Participants in such securities through
electronic book-entry changes in accounts of the DTC Participants, thereby
eliminating the need for physical movement of securities' certificates. DTC
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations, some of whom (and/or
their representatives) own DTC. More specifically, DTC is owned by a number of
its DTC Participants and by the NYSE, the AMEX and the NASD. Access to the DTC
system is also available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a DTC
Participant, either directly or indirectly ("Indirect Participants").
65
Beneficial ownership of shares is limited to DTC Participants, Indirect
Participants and persons holding interests through DTC Participants and Indirect
Participants. Ownership of beneficial interests in shares (owners of such
beneficial interests are referred to herein as "Beneficial Owners") is shown on,
and the transfer of ownership is effected only through, records maintained by
DTC (with respect to DTC Participants) and on the records of DTC Participants
(with respect to Indirect Participants and Beneficial Owners that are not DTC
Participants). Beneficial Owners will receive from or through the DTC
Participant a written confirmation relating to their purchase of shares. No
Beneficial Owner shall have the right to receive a certificate representing such
shares.
Conveyance of all notices, statements and other communications to Beneficial
Owners is effected as follows. Pursuant to the Depositary Agreement between the
Trust and DTC, DTC is required to make available to the Trust upon request and
for a fee to be charged to the Trust a listing of the shares of each Fund held
by each DTC Participant. The Trust shall inquire of each such DTC Participant as
to the number of Beneficial Owners holding shares, directly or indirectly,
through such DTC Participant. The Trust shall provide each such DTC Participant
with copies of such notice, statement or other communication, in such form,
number and at such place as such DTC Participant may reasonably request, in
order that such notice, statement or communication may be transmitted by such
DTC Participant, directly or indirectly, to such Beneficial Owners. In addition,
the Trust shall pay to each such DTC Participant a fair and reasonable amount as
reimbursement for the expenses attendant to such transmittal, all subject to
applicable statutory and regulatory requirements.
Share distributions shall be made to DTC or its nominee, Cede & Co., as the
registered holder of all shares of the Trust. DTC or its nominee, upon receipt
of any such distributions, shall credit immediately DTC Participants' accounts
with payments in amounts proportionate to their respective beneficial interests
in shares of each Fund as shown on the records of DTC or its nominee. Payments
by DTC Participants to Indirect Participants and Beneficial Owners of shares
held through such DTC Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in a "street name", and will be the
responsibility of such DTC Participants.
The Trust has no responsibility or liability for any aspect of the records
relating to or notices to Beneficial Owners, or payments made on account of
beneficial ownership interests in such shares, or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests, or for
any other aspect of the relationship between DTC and the DTC Participants or the
relationship between such DTC Participants and the Indirect Participants and
Beneficial Owners owning through such DTC Participants. DTC may decide to
discontinue providing its service with respect to shares of the Trust at any
time by giving reasonable notice to the Trust and discharging its
responsibilities with respect thereto under applicable law. Under such
circumstances, the Trust shall take action to find a replacement for DTC to
perform its functions at a comparable cost.
Creation & Redemption of Creation Unit Aggregations
Creation. The Trust issues and sells shares of each Fund only in Creation Unit
Aggregations on a continuous basis through the Distributor, without a sales
load, at the NAV next determined after receipt, on any Business Day (as defined
below), of an order in proper form.
A "Business Day" with respect to each Fund is any day on which the national
securities exchange on which the Fund is listed for trading (each a "Listing
Exchange") is open for business. As of the date of this SAI, each Listing
Exchange observes the following holidays: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day (observed), Independence
Day, Labor Day, Thanksgiving Day and Christmas Day.
Fund Deposit. The consideration for purchase of Creation Unit Aggregations of a
Fund generally consists of the in-kind deposit of a designated portfolio of
equity securities (the "Deposit Securities"), which constitutes a substantial
replication, or a portfolio sampling representation, of the stocks involved in
the relevant Fund's underlying Index and an amount of cash (the "Cash
Component") computed as described below. Together, the Deposit Securities and
the Cash Component constitute the "Fund Deposit," which represents the minimum
initial and subsequent investment amount for a Creation Unit Aggregation of any
Fund.
The Cash Component is sometimes also referred to as the "Balancing Amount." The
Cash Component serves the function of compensating for any differences between
the NAV per Creation Unit Aggregation and the Deposit
66
Amount (as defined below). The Cash Component is an amount equal to the
difference between the NAV of the shares (per Creation Unit Aggregation) and the
"Deposit Amount," which is an amount equal to the market value of the Deposit
Securities. If the Cash Component is a positive number (i.e., the NAV per
Creation Unit Aggregation exceeds the Deposit Amount), the creator will deliver
the Cash Component. If the Cash Component is a negative number (i.e., the NAV
per Creation Unit Aggregation is less than the Deposit Amount), the creator will
receive the Cash Component. Computation of the Cash Component excludes any stamp
duty or other similar fees and expenses payable upon transfer of beneficial
ownership of the Deposit Securities, which shall be the sole responsibility of
the Authorized Participant.
Each Fund, through the National Securities Clearing Corporation makes available
on each Business Day, prior to the opening of business on the applicable Listing
Exchange (currently 9:30 a.m., Eastern time), the list of the names and the
required number of shares of each Deposit Security to be included in the current
Fund Deposit (based on information at the end of the previous Business Day) for
each Fund.
Such Deposit Securities are applicable, subject to any adjustments as described
below, in order to effect creations of Creation Unit Aggregations of a given
Fund until such time as the next-announced composition of the Deposit Securities
is made available.
The identity and number of shares of the Deposit Securities required for a Fund
Deposit for each Fund changes as rebalancing adjustments and corporate action
events are reflected from time to time by the Trust with a view to the
investment objective of the relevant Fund. The composition of the Deposit
Securities may also change in response to adjustments to the weighting or
composition of the component securities of the relevant underlying Index.
In addition, the Trust reserves the right to permit or require the substitution
of an amount of cash (i.e., a "cash in lieu" amount) to be added to the Cash
Component to replace any Deposit Security that may not be available in
sufficient quantity for delivery or that may not be eligible for transfer
through the systems of DTC or the Clearing Process (discussed below). The Trust
also reserves the right to permit or require a "cash in lieu" amount where the
delivery of the Deposit Security by the Authorized Participant (as described
below) would be restricted under the securities laws or where the delivery of
the Deposit Security to the Authorized Participant would result in the
disposition of the Deposit Security by the Authorized Participant becoming
restricted under the securities laws, or in certain other situations. The
adjustments described above will reflect changes known to the Trust on the date
of announcement to be in effect by the time of delivery of the Fund Deposit, in
the composition of the underlying Index being tracked by the relevant Fund or
resulting from certain corporate actions. The WisdomTree India Earnings Fund
intends to issue and redeem Creation Unit Aggregations solely for cash or a
specified amount of non-U.S. Currency in an amount equal to the NAV per Creation
Unit Aggregation. The other Fund's reserve the right to use this approach.
Procedures for Creation of Creation Unit Aggregations. To be eligible to place
orders with the Distributor and to create a Creation Unit Aggregation of a Fund,
an entity must be: (i) a "Participating Party," i.e., a broker-dealer or other
participant in the clearing process through the Continuous Net Settlement System
of the NSCC (the "Clearing Process"), a clearing agency that is registered with
the SEC; or (ii) a DTC Participant, and, in each case, must have executed an
agreement with the Distributor with respect to creations and redemptions of
Creation Unit Aggregations ("Participant Agreement") (discussed below). A
Participating Party and DTC Participant are collectively referred to as an
"Authorized Participant." Investors should contact the Distributor for the names
of Authorized Participants that have signed a Participant Agreement. All shares
of a Fund, however created, will be entered on the records of DTC in the name of
Cede & Co. for the account of a DTC Participant.
All orders to create shares must be placed for one or more Creation Unit
Aggregations. Orders to create Creation Unit Aggregations of the International
Funds cannot be placed through the Clearing Process. Except as described herein,
all orders to create Creation Unit Aggregations, whether through the Clearing
Process (through a Participating Party) or outside the Clearing Process (through
a DTC Participant), must be received by the Distributor no later than the
closing time of the regular trading session on the applicable Listing Exchange
("Closing Time") (ordinarily 4:00 p.m., Eastern time) in each case on the date
such order is placed in order for creation of Creation Unit Aggregations to be
effected based on the NAV of shares of the applicable Fund as next determined on
such date after receipt of the order in proper form.
67
The date on which an order to create Creation Unit Aggregations (or an order to
redeem Creation Unit Aggregations, as discussed below) is placed is referred to
as the "Transmittal Date." Orders must be transmitted by an Authorized
Participant by telephone or other transmission method acceptable to the
Distributor pursuant to procedures set forth in the Participant Agreement, as
described below. Economic or market disruptions or changes, or telephone or
other communication failure, may impede the ability to reach the Distributor or
an Authorized Participant.
All orders to create Creation Unit Aggregations shall be placed with an
Authorized Participant, as applicable, in the form required by such Authorized
Participant. In addition, the Authorized Participant may request the investor to
make certain representations or enter into agreements with respect to the order,
e.g., to provide for payments of cash, when required. Investors should be aware
that their particular broker may not have executed a Participant Agreement and,
therefore, orders to create Creation Unit Aggregations of a Fund have to be
placed by the investor's broker through an Authorized Participant that has
executed a Participant Agreement. In such cases, there may be additional charges
to such investor. At any given time, there may be only a limited number of
broker-dealers that have executed a Participant Agreement and only a small
number of such Authorized Participants may have international capabilities.
Those placing orders for Creation Unit Aggregations of Domestic Funds through
the Clearing Process should afford sufficient time to permit proper submission
of the order to the Distributor prior to the Closing Time on the Transmittal
Date. Orders for Creation Unit Aggregations of Domestic Funds that are effected
outside the Clearing Process are likely to require transmittal by the DTC
Participant earlier on the Transmittal Date than orders effected using the
Clearing Process. Those persons placing orders outside the Clearing Process
should ascertain the deadlines applicable to DTC and the Federal Reserve Bank
wire system by contacting the operations department of the broker or depository
institution effectuating such transfer of Deposit Securities and Cash Component.
Those placing orders for Creation Unit Aggregations of International Funds
should ascertain the applicable deadline for cash transfers by contacting the
operations department of the broker or depositary institution making the
transfer of the Cash Component. This deadline is likely to be significantly
earlier than the closing time of the regular trading session on the applicable
Listing Exchange. Investors should be aware that the Authorized Participant may
require orders for Creation Units placed with it to be in the form required by
the individual Authorized Participant, which form may not be the same as the
form of purchase order specified by the Trust that the Authorized Participant
must deliver to the Distributor.
Placement of Creation Orders for Domestic Dividend and Earnings Funds Using the
Clearing Process. The Clearing Process is the process of creating or redeeming
Creation Unit Aggregations. Fund Deposits made through the Clearing Process must
be delivered through a Participating Party that has executed a Participant
Agreement. The Participant Agreement authorizes the Distributor to transmit
through BNY to NSCC, on behalf of the Participating Party, such trade
instructions as are necessary to effect the Participating Party's creation
order. Pursuant to such trade instructions to NSCC, the Participating Party
agrees to deliver the requisite Deposit Securities and the Cash Component to the
Trust, together with such additional information as may be required by the
Distributor. An order to create Creation Unit Aggregations through the Clearing
Process is deemed received by the Distributor on the Transmittal Date if: (i)
such order is received by the Distributor not later than the Closing Time on
such Transmittal Date; and (ii) all other procedures set forth in the
Participant Agreement are properly followed.
Placement of Creation Orders for Domestic Dividend and Earnings Funds Outside
the Clearing Process. Fund Deposits made outside the Clearing Process must be
delivered through a DTC Participant that has executed a Participant Agreement. A
DTC participant who wishes to place an order creating Creation Unit Aggregations
to be effected outside the Clearing Process does not need to be a Participating
Party, but such orders must state that the DTC Participant is not using the
Clearing Process and that the creation of Creation Unit Aggregations will
instead be effected through a transfer of securities and cash directly through
DTC. The Fund Deposit transfer must be ordered by the DTC Participant on the
Transmittal Date in a timely fashion so as to ensure the delivery of the
requisite number of Deposit Securities through DTC to the account of the Fund by
no later than 2:00 p.m., Eastern
68
time, on the "Settlement Date". The Settlement Date is typically the third
Business Day following the Transmittal Date. Each Fund reserves the right to
settle transactions on a basis other than T+3 "T" plus three Business Days
(i.e., days on which the New York Stock Exchange is open) ("T+3"). In certain
cases Authorized Participants will create and redeem Creation Unit Aggregations
of the same Fund on the same trade date. In these instances, the Trust reserves
the right to settle these transactions on a net basis.
All questions as to the number of Deposit Securities to be delivered, and the
validity, form and eligibility (including time of receipt) for the deposit of
any tendered securities, will be determined by the Trust, whose determination
shall be final and binding. The amount of cash equal to the Cash Component must
be transferred directly to BNY through the Federal Reserve Bank wire transfer
system in a timely manner so as to be received by BNY later than 2:00 p.m.,
Eastern time, on the Settlement Date. An order to create Creation Unit
Aggregations outside the Clearing Process is deemed received by the Distributor
on the Transmittal Date if: (i) such order is received by the Distributor not
later than the Closing Time on such Transmittal Date; and (ii) all other
procedures set forth in the Participant Agreement are properly followed.
However, if BNY does not receive both the required Deposit Securities and the
Cash Component by 2:00 p.m. on the Settlement Date, such order may be canceled.
Upon written notice to the Distributor, such canceled order may be resubmitted
the following Business Day using a Fund Deposit as newly constituted to reflect
the then current NAV of the Fund. The delivery of Creation Unit Aggregations so
created generally will occur no later than the Settlement Date.
An additional charge of up to three (3) times the normal transaction fee (for a
total charge of up to four (4) times the normal transaction fee) may be imposed
with respect to transactions effected outside the Clearing Process (through a
DTC participant) and in the limited circumstances in which any cash can be used
in lieu of Deposit Securities to create Creation Units.
Creation Unit Aggregations of Domestic Funds may be created in advance of
receipt by the Trust of all or a portion of the applicable Deposit Securities as
described below. In these circumstances, the initial deposit will have a value
greater than the NAV of the shares on the date the order is placed in proper
form since, in addition to available Deposit Securities, cash must be deposited
in an amount equal to the sum of (i) the Cash Component, plus (ii) at least
105%, which the Trust may change from time to time, of the market value of the
undelivered Deposit Securities (the "Additional Cash Deposit") with the Fund
pending delivery of any missing Deposit Securities.
If an Authorized Participant determines to post an additional cash deposit as
collateral for any undelivered Deposit Securities, such Authorized Participant
must deposit with BNY the appropriate amount of federal funds by 2:00 p.m.,
Eastern time, on the date of requested settlement. If the Authorized Participant
does not place its purchase order by the closing time or BNY does not receive
federal funds in the appropriate amount by such time, then the order may be
deemed to be rejected and the Authorized Participant shall be liable to the Fund
for losses, if any, resulting therefrom. An additional amount of cash shall be
required to be deposited with BNY, pending delivery of the missing Deposit
Securities to the extent necessary to maintain the Additional Cash Deposit with
the Trust in an amount at least equal to 105%, which the Trust may change from
time to time, of the daily marked to market value of the missing Deposit
Securities. To the extent that missing Deposit Securities are not received by
2:00 p.m., Eastern time, on the Settlement Date or in the event a
marked-to-market payment is not made within one Business Day following
notification by the Distributor that such a payment is required, the Trust may
use the cash on deposit to purchase the missing Deposit Securities. Authorized
Participants will be liable to the Trust for the costs incurred by the Trust in
connection with any such purchases. These costs will be deemed to include the
amount by which the actual purchase price of the Deposit Securities exceeds the
market value of such Deposit Securities on the transmittal date plus the
brokerage and related transaction costs associated with such purchases. The
Trust will return any unused portion of the Additional Cash Deposit once all of
the missing Deposit Securities have been properly received by BNY or purchased
by the Trust and deposited into the Trust. In addition, a transaction fee, as
listed below, will be charged in all cases. The delivery of Creation Unit
Aggregations so created generally will occur no later than the Settlement Date.
Placement of Creation Orders for International Funds. Fund Deposits in
connection with the International Funds will not be made either through the
Clearing Process or through DTC. For each International Fund, BNY shall cause
the sub-custodian of the Funds to maintain an account into which the Authorized
Participant shall deliver, on behalf of itself or the party on whose behalf it
is acting, the securities included in the designated Fund Deposit (or the cash
value of all or part of such securities, in the case of a permitted or required
cash purchase or "cash in lieu" amount), with any appropriate adjustments as
advised by the Trust. Deposit Securities must be delivered to
69
an account maintained at the applicable local sub-custodian(s). Except as
described herein, orders to purchase Creation Unit Aggregations must be received
by the Distributor from an Authorized Participant on its own or another
investor's behalf by the closing time of the regular trading session on the
applicable Listing Exchange on the relevant Business Day. When a relevant local
market is closed due to local market holidays, the local market settlement
process will not commence until the end of the local holiday period. Settlement
must occur by 2:00 p.m., Eastern time, on the contractual settlement date.
The Authorized Participant must also make available no later than 2:00 p.m.,
Eastern time, on the contractual settlement date, by means satisfactory to the
Trust, immediately-available or same-day funds estimated by the Trust to be
sufficient to pay the Cash Component next determined after acceptance of the
purchase order, together with the applicable purchase transaction fee. Any
excess funds will be returned following settlement of the issue of the Creation
Unit Aggregation.
To the extent contemplated by the applicable Participant Agreement, Creation
Unit Aggregations of International Funds will be issued to such Authorized
Participant notwithstanding the fact that the corresponding Fund Deposits have
not been received in part or in whole, in reliance on the undertaking of the
Authorized Participant to deliver the missing Deposit Securities as soon as
possible, which undertaking shall be secured by such Authorized Participant's
delivery and maintenance of collateral consisting of cash in the form of U.S.
dollars in immediately available funds having a value (marked to market daily)
at least equal to 110%, which WisdomTree Asset Management may change from time
to time of the value of the missing Deposit Securities. Such cash collateral
must be delivered no later than 2:00 p.m., Eastern time, on the contractual
settlement date. The Participant Agreement will permit the Fund to buy the
missing Deposit Securities at any time and will subject the Authorized
Participant to liability for any shortfall between the cost to the Trust of
purchasing such securities and the value of the collateral.
Cash Purchases. When, in the sole discretion of Trust, cash purchases of
Creation Unit Aggregations of Shares are available or specified for a Fund, such
purchases shall be effected in essentially the same manner as in-kind purchases
thereof. In the case of a cash purchase, the Authorized Participant must pay the
cash equivalent of the Deposit Securities it would otherwise be required to
provide through an in-kind purchase, plus the same Cash Component required to be
paid by an in-kind purchaser. In addition, to offset Trust's brokerage and other
transaction costs associated with using the cash to purchase the requisite
Deposit Securities, the Authorized Participant must pay a fixed purchase
Transaction Fee, plus an additional variable charge for cash purchases, which is
expressed as a percentage of the value of the Deposit Securities. The
Transaction Fees for in-kind and cash purchases of Creation Units of Shares are
described in the Prospectus. The Trust requires purchases of Creation Units of
Shares of the WisdomTree India Earnings Fund to be paid in cash - either U.S.
dollars or Indian Rupee as specified by the Trust.
Acceptance of Orders for Creation Unit Aggregations. The Trust reserves the
absolute right to reject or revoke acceptance of a creation order transmitted to
it by the Distributor in respect of any Fund if: (i) the order is not in proper
form; (ii) the investor(s), upon obtaining the shares ordered, would own 80% or
more of the currently outstanding shares of any Fund; (iii) the Deposit
Securities delivered are not as disseminated through the facilities of the NSCC
for that date by the Fund as described above; (iv) acceptance of the Deposit
Securities would have certain adverse tax consequences to the Fund; (v)
acceptance of the Fund Deposit would, in the opinion of counsel, be unlawful;
(vi) acceptance of the Fund Deposit would otherwise, in the discretion of the
Trust or WisdomTree Asset Management, have an adverse effect on the Trust or the
rights of beneficial owners; or (vii) in the event that circumstances outside
the control of the Trust, BNY, the Distributor or WisdomTree Asset Management
make it for all practical purposes impossible to process creation orders.
Examples of such circumstances include acts of God; public service or utility
problems such as fires, floods, extreme weather conditions and power outages
resulting in telephone, telecopy and computer failures; market conditions or
activities causing trading halts; systems failures involving computer or other
information systems affecting the Trust, WisdomTree Asset Management, the
Distributor, DTC, NSCC, BNY or sub-custodian or any other participant in the
creation process, and similar extraordinary events. The Distributor shall notify
a prospective creator of a Creation Unit and/or the Authorized Participant
acting on behalf of the creator of a Creation Unit Aggregation of its rejection
of the order of such person. The Trust, BNY, a sub-custodian and the Distributor
are under no duty, however, to give notification of any defects or
irregularities in the delivery of Fund Deposits nor shall any of them incur any
liability for the failure to give any such notification.
70
All questions as to the number of shares of each security in the Deposit
Securities and the validity, form, eligibility and acceptance for deposit of any
securities to be delivered shall be determined by the Trust, and the Trust's
determination shall be final and binding.
Creation Transaction Fee. Each Fund imposes a "Transaction Fee" on investors
purchasing or redeeming Creation Units. For this reason, investors purchasing or
redeeming through the DTC Process generally will pay a higher Transaction Fee
than will investors doing so through the NSCC Process. The Transaction Fee will
be limited to amounts that have been determined by WisdomTree Asset Management
to be appropriate. The purpose of the Transaction Fee is to protect the existing
shareholders of the Funds from the dilutive costs associated with the purchase
and redemption of Creation Units. Where a Fund permits an in-kind purchaser to
deposit cash in lieu of depositing one or more Deposit Securities, the purchaser
may be assessed a higher Transaction Fee to offset the transaction cost to the
Fund of buying those particular Deposit Securities. Transaction Fees will differ
for each Fund, depending on the transaction expenses related to each Fund's
portfolio securities. Every purchaser of a Creation Unit will receive a
Prospectus that contains complete disclosure about the Transaction Fee,
including the maximum amount of the Transaction Fee charged by the Fund.
Investors who use the services of a broker or other such intermediary may be
charged a fee for such services.
The following table sets forth the standard and maximum creation transaction fee
for each of the Funds.
Standard Creation Maximum Creation
Name of Fund Transaction Fee Transaction Fee
---------------------------------------------------------- ----------------- ----------------
WisdomTree Total Dividend Fund $ 4,000 $ 8,500
WisdomTree High-Yielding Equity Fund $ 2,200 $ 2,500
WisdomTree LargeCap Dividend Fund $ 1,500 $ 2,000
WisdomTree Dividend Top 100 Fund $ 500 $ 600
WisdomTree MidCap Dividend Fund $ 2,500 $ 3,000
WisdomTree SmallCap Dividend Fund $ 4,000 $ 4,500
WisdomTree Total Earnings Fund $ 5,500 $ 12,090
WisdomTree Earnings 500 Fund $ 2,500 $ 2,500
WisdomTree MidCap Earnings Fund $ 3,500 $ 4,000
WisdomTree SmallCap Earnings Fund $ 4,000 $ 5,705
WisdomTree Earnings Top 100 Fund $ 500 $ 500
WisdomTree Low P/E Fund $ 2,000 $ 3,500
WisdomTree DEFA Fund $ 15,000 $ 50,000
WisdomTree DEFA High-Yielding Equity Fund $ 9,500 $ 20,000
WisdomTree Europe Total Dividend Fund $ 7,500 $ 25,000
WisdomTree Europe High-Yielding Equity Fund $ 2,500 $ 7,500
WisdomTree Europe SmallCap Dividend Fund $ 10,000 $ 11,000
WisdomTree Japan Total Dividend Fund $ 4,000 $ 10,000
WisdomTree Japan High-Yielding Equity Fund $ 2,500 $ 3,500
WisdomTree Japan SmallCap Dividend Fund $ 5,000 $ 6,000
WisdomTree Pacific ex-Japan Total Dividend Fund $ 8,000 $ 18,500
WisdomTree Pacific ex-Japan High-Yielding Equity Fund $ 3,500 $ 4,500
WisdomTree International LargeCap Dividend Fund $ 6,000 $ 8,000
WisdomTree International Dividend Top 100 Fund $ 2,500 $ 3,500
WisdomTree International MidCap Dividend Fund $ 8,000 $ 20,000
WisdomTree International SmallCap Dividend Fund $ 10,000 $ 25,000
WisdomTree Emerging Markets High-Yielding Equity Fund $ 9,000 $ 27,000
WisdomTree Emerging Markets SmallCap Dividend Fund $ 7,000 $ 21,000
WisdomTree India Earnings Fund $ 5,000 $ 20,000
WisdomTree International Basic Materials Sector Fund $ 4,000 $ 5,000
WisdomTree International Communications Sector Fund $ 3,250 $ 5,100
WisdomTree International Consumer Discretionary Sector Fund $ 9,500 $ 11,500
WisdomTree International Consumer Staples Sector Fund $ 8,000 $ 10,500
WisdomTree International Energy Sector Fund $ 1,250 $ 2,000
WisdomTree International Financial Sector Fund $ 9,000 $ 14,000
WisdomTree International Health Care Sector Fund $ 2,250 $ 3,500
WisdomTree International Industrial Sector Fund $ 9,500 $ 12,500
WisdomTree International Technology Sector Fund $ 2,000 $ 2,500
WisdomTree International Utilities Sector Fund $ 1,500 $ 2,500
WisdomTree International Real Estate Fund $ 6,500 $ 10,150
WisdomTree Middle East Dividend Fund $ 6,500 $ 26,000
71
Placement of Redemption Orders for Domestic Dividend and Earnings Funds Using
the Clearing Process. Orders to redeem Creation Unit Aggregations of Domestic
Equity Funds through the Clearing Process must be delivered through a
Participating Party that has executed the Participant Agreement. Except as
described herein, an order to redeem Creation Unit Aggregations using the
Clearing Process is deemed received by the Trust on the Transmittal Date if (i)
such order is received by BNY (in its capacity as Transfer Agent) not later than
the Closing Time on such Transmittal Date, and (ii) all other procedures set
forth in the Participant Agreement are properly followed. Such order will be
effected based on the NAV of the Fund as next determined. The requisite Fund
Securities and the Cash Redemption Amount generally will be transferred by the
third NSCC Business Day following the date on which such request for redemption
is deemed received.
Placement of Redemption Orders for Domestic Dividend and Earnings Funds Outside
the Clearing Process. Orders to redeem Creation Unit Aggregations of Domestic
Funds outside the Clearing Process must be delivered through a DTC Participant
that has executed the Participant Agreement. A DTC Participant who wishes to
place an order for redemption of Creation Unit Aggregations to be effected
outside the Clearing Process does not need to be a Participating Party, but such
orders must state that the DTC Participant is not using the Clearing Process and
that redemption of Creation Unit Aggregations will instead be effected through
transfer of shares directly through DTC. An order to redeem Creation Unit
Aggregations outside the Clearing Process is deemed received by the Trust on the
Transmittal Date if: (i) such order is received by BNY (in its capacity as
Transfer Agent) not later than the Closing Time on such Transmittal Date; (ii)
such order is accompanied or followed by the requisite number of shares of the
Fund specified in such order, which delivery must be made through DTC to BNY no
later than 11:00 a.m., Eastern time, on the contracted settlement date; and
(iii) all other procedures set forth in the Participant Agreement are properly
followed. After the Trust has deemed an order for redemption outside the
Clearing Process received, the Trust will initiate procedures to transfer the
requisite Fund Securities which are expected to be delivered within three
Business Days and the Cash Redemption Amount to the Authorized Participant on
behalf of the redeeming Beneficial Owner by the Settlement Date. In certain
cases Authorized Participants will redeem and create Creation Unit Aggregations
of the same Fund on the same trade date. In these instances, the Trust reserves
the right to settle these transactions on a net basis.
Placement of Redemption Orders for International Funds. Orders to redeem
Creation Unit Aggregations of International Funds must be delivered through an
Authorized Participant that has executed a Participant Agreement. Investors
other than Authorized Participants are responsible for making arrangements for a
redemption request to be made through an Authorized Participant. Except as
described herein, an order to redeem Creation Unit Aggregations of International
Funds is deemed received by the Trust on the Transmittal Date if: (i) such order
is received by BNY (in its capacity as Transfer Agent) not later than the
Closing Time on the Transmittal Date; (ii) such order is accompanied or followed
by the requisite number of shares of the Fund specified in such order, which
delivery must be made through DTC to BNY no later than 10:00 a.m., Eastern time,
on the next Business Day following the Transmittal Date; and (iii) all other
procedures set forth in the Participant Agreement are properly followed.
Deliveries of Fund Securities to redeeming investors generally will be made
within three Business Days. Due to the schedule of holidays in certain
countries, however, the delivery of in-kind redemption proceeds for
International Funds may take longer than three Business Days after the day on
which the redemption request is received in proper form. In such cases, the
local market settlement procedures will not commence until the end of the local
holiday periods. See below for a list of the local holidays in the foreign
countries relevant to the International Funds.
In connection with taking delivery of shares of Fund Securities upon redemption
of shares of International Funds, a redeeming Beneficial Owner, or Authorized
Participant action on behalf of such Beneficial Owner must maintain appropriate
security arrangements with a qualified broker-dealer, bank or other custody
provider in each jurisdiction in which any of the Fund Securities are
customarily traded, to which account such Fund Securities will be delivered.
72
To the extent contemplated by an Authorized Participant's agreement, in the
event the Authorized Participant has submitted a redemption request in proper
form but is unable to transfer all or part of the Creation Unit Aggregation to
be redeemed to the Funds' Transfer Agent, the Transfer Agent will nonetheless
accept the redemption request in reliance on the undertaking by the Authorized
Participant to deliver the missing shares as soon as possible. Such undertaking
shall be secured by the Authorized Participant's delivery and maintenance of
collateral consisting of cash having a value (marked to market daily) at least
equal to 110%, which WisdomTree Asset Management may change from time to time,
of the value of the missing shares.
The current procedures for collateralization of missing shares require, among
other things, that any cash collateral shall be in the form of U.S. dollars in
immediately-available funds and shall be held by BNY and marked to market daily,
and that the fees of BNY and any sub-custodians in respect of the delivery,
maintenance and redelivery of the cash collateral shall be payable by the
Authorized Participant. The Authorized Participant's agreement will permit the
Trust, on behalf of the affected Fund, to purchase the missing shares or acquire
the Deposit Securities and the Cash Component underlying such shares at any time
and will subject the Authorized Participant to liability for any shortfall
between the cost to the Trust of purchasing such shares, Deposit Securities or
Cash Component and the value of the collateral.
The calculation of the value of the Fund Securities and the Cash Redemption
Amount to be delivered upon redemption will be made by BNY according to the
procedures set forth under Determination of NAV computed on the Business Day on
which a redemption order is deemed received by the Trust. Therefore, if a
redemption order in proper form is submitted to BNY by a DTC Participant not
later than Closing Time on the Transmittal Date, and the requisite number of
shares of the relevant Fund are delivered to BNY prior to the DTC Cut-Off-Time,
then the value of the Fund Securities and the Cash Redemption Amount to be
delivered will be determined by BNY on such Transmittal Date. If, however, a
redemption order is submitted to BNY by a DTC Participant not later than the
Closing Time on the Transmittal Date but either (i) the requisite number of
shares of the relevant Fund are not delivered by the DTC Cut-Off-Time, as
described above, on such Transmittal Date, or (ii) the redemption order is not
submitted in proper form, then the redemption order will not be deemed received
as of the Transmittal Date. In such case, the value of the Fund Securities and
the Cash Redemption Amount to be delivered will be computed on the Business Day
that such order is deemed received by the Trust, i.e., the Business Day on which
the shares of the relevant Fund are delivered through DTC to BNY by the DTC
Cut-Off-Time on such Business Day pursuant to a properly submitted redemption
order.
If it is not possible to effect deliveries of the Fund Securities, the Trust may
in its discretion exercise its option to redeem such shares in cash, and the
redeeming Beneficial Owner will be required to receive its redemption proceeds
in cash. In addition, an investor may request a redemption in cash that the Fund
may, in its sole discretion, permit. In either case, the investor will receive a
cash payment equal to the NAV of its shares based on the NAV of shares of the
relevant Fund next determined after the redemption request is received in proper
form (minus a redemption transaction fee and additional charge for requested
cash redemptions specified above, to offset the Trust's brokerage and other
transaction costs associated with the disposition of Fund Securities). A Fund
may also, in its sole discretion, upon request of a shareholder, provide such
redeemer a portfolio of securities that differs from the exact composition of
the Fund Securities but does not differ in NAV.
Redemptions of shares for Fund Securities will be subject to compliance with
applicable federal and state securities laws and each Fund (whether or not it
otherwise permits cash redemptions) reserves the right to redeem Creation Unit
Aggregations for cash to the extent that the Trust could not lawfully deliver
specific Fund Securities upon redemptions or could not do so without first
registering the Fund Securities under such laws. An Authorized Participant or an
investor for which it is acting subject to a legal restriction with respect to a
particular stock included in the Fund Securities applicable to the redemption of
a Creation Unit Aggregation may be paid an equivalent amount of cash. The
Authorized Participant may request the redeeming Beneficial Owner of the shares
to complete an order form or to enter into agreements with respect to such
matters as compensating cash payment.
Because the Portfolio Securities of an International Fund may trade on the
relevant exchange(s) on days that the Listing Exchange for the International
Fund is closed or are otherwise not Business Days for such International Fund,
stockholders may not be able to redeem their shares of such International Fund,
or to purchase and sell shares of such International Fund on the Listing
Exchange for the International Fund, on days when the NAV of such International
Fund could be significantly affected by events in the relevant foreign markets.
73
Cash Redemptions. In the event that, in the sole discretion of Trust, cash
redemptions are permitted or required by Trust, proceeds will be paid to the
Authorized Participant redeeming Shares on behalf of the redeeming investor as
soon as practicable after the date of redemption. The Trust intends to pay
redemptions of Creation Unit Aggregations of Shares of the WisdomTree India
Earnings Fund in cash, either U.S. dollars or Indian Rupee as specified by the
Trust.
REGULAR HOLIDAYS. Each Fund generally intends to effect deliveries of Creation
Unit Aggregations and Portfolio Securities on a basis of T+3. Each Fund may
effect deliveries of Creation Unit Aggregations and Portfolio Securities on a
basis other than T plus three in order to accommodate local holiday schedules,
to account for different treatment among foreign and U.S. markets of dividend
record dates and ex-dividend dates, or under certain other circumstances. The
ability of the Trust to effect in-kind creations and redemptions within three
Business Days of receipt of an order in good form is subject, among other
things, to the condition that, within the time period from the date of the order
to the date of delivery of the securities, there are no days that are holidays
in the applicable foreign market. For every occurrence of one or more
intervening holidays in the applicable foreign market that are not holidays
observed in the U.S. equity market, the redemption settlement cycle will be
extended by the number of such intervening holidays. In addition to holidays,
other unforeseeable closings in a foreign market due to emergencies may also
prevent the Trust from delivering securities within normal settlement period.
The securities delivery cycles currently practicable for transferring Portfolio
Securities to redeeming investors, coupled with foreign market holiday
schedules, will require a delivery process longer than seven calendar days for
some Funds, in certain circumstances. The holidays applicable to each Fund
during such periods are listed below, as are instances where more than seven
days will be needed to deliver redemption proceeds. Although certain holidays
may occur on different dates in subsequent years, the number of days required to
deliver redemption proceeds in any given year is not expected to exceed the
maximum number of days listed below for each Fund. The proclamation of new
holidays, the treatment by market participants of certain days as "informal
holidays" (e.g., days on which no or limited securities transactions occur, as a
result of substantially shortened trading hours), the elimination of existing
holidays, or changes in local securities delivery practices, could affect the
information set forth herein at some time in the future.
Listed below are the dates in calendar year 2008 in which the regular holidays
in non-U.S. markets may impact Fund settlement. This list may not be complete
and is subject to change.
Argentina
Jan 1 Jun 16 Dec 25
March 20, 21, 24 July 9
April 2 Aug 18
May 1 Nov 8
Australia
Jan 1, 28 Dec 25
Mar 21, 24 Dec 26
Apr 25
Jun 9
Austria
Jan 1 Aug 15
March 21, 24 Dec 8
May 1, 12 Dec 25
May 22 Dec 26
Bahrain
Jan 1, 10, 20, 21 Dec 8, 9, 10
March 20 Dec 16, 17
May 1, 14
Oct 1, 2
Belgium
Jan 1
March 21, 24
May 1
Dec 25, 26
74
Brazil
Jan 1 May 1, 22
Feb 4, 5 July 9
Mar 21 Nov 20
Apr 21 Dec 25, 24
Canada
Jan 1 Jul 1 Dec 25
Feb 18 Aug 4 Dec 26
March 21 Sep 1
May 19 Oct 13
Chile
Jan 1 July 16 Dec 8
March 21 Aug 15 Dec 25, 31
Apr 14 Sep 18
May 1, 21 Sep 19
China (Shanghai)
Jan 1 May 2 Oct 3
Feb 6, 7, 8, 11, 12 June 9
Apr 4 Sept 15, 29, 30
May 1 Oct 1, 2
China (Shenzhen)
Jan 1 May 2 Oct 2
Feb 6, 7, 8, 11, 12 June 9 Oct 3
Apr 4 Sept 15, 29, 30
May 1 Oct 1
Denmark
Jan 1 May 1, 12
Mar 20, 21, 24 Jun 5
Apr 18 Dec 25, 24, 31
Apr 18 Dec 26
Egypt
Jan 1, 7, 9, 20 Oct 2, 6, 9
April 27, 28 Dec 10, 25
May 1
July 23
Finland
Jan 1 Dec 25, 26, 31
March 21, 24
May 1
Jun 20
France
Jan 1 Dec 26
March 21, 24
May 1
Dec 25
Greece
Jan 1 Apr 21 Aug 15
Mar 10, 21 Apr 24 Dec 25
Apr 14 May 1 Dec 26
Apr 17 Jun 12
Germany
Jan 1 June 16 Dec 26
March 21, 24, 10, 25 Aug 15
April 25, 28 Oct 28
May 1 Dec 25
75
Hong Kong
Jan 1 May 1, 12 Oct 1, 7
Feb 7, 8 June 9 Dec 25
March 21, 24 July 1 Dec 26
Apr 4 Sept 15
India
March 6, 20, 21 Sept 3
Apr 14, 18 Oct 2, 9, 28, 30
May 1, 19 Dec 9, 25
Aug 15, 19
Ireland
Jan 1 Dec 25
March 21, 24 Dec 26
May 5
Jun 2
Israel
Mar 21 Aug 10 Oct 9, 13, 14, 19, 20, 21
Apr 20 Sept 29, 30
May 7, 8 Oct 1
Jun 8, 9 Oct 8
Italy
Jan 1 Aug 15
March 21, 24 Dec 25
Apr 25 Dec 26
May 1
Japan
Jan 1, 2 April 29 Nov 3
Jan 3 May 5, 6 Nov 24
Jan 14 Jul 21 Dec 23, 31
Feb 11 Sep 15, 23
Mar 20 Oct 13
Jordan
Jan 1, 10, 30 Dec 8, 9, 10, 11
March 20
May 1, 25
Sept 30
Oct 1, 2, 6
Kuwait
Jan 1, 9 July 30
Feb 25, 26 Oct 2, 5
March 20 Dec 8, 9, 10, 11
May 14, 15
Malaysia
Jan 1 May 1, 19 Dec 25, 8, 29
Jan 10, 23 Sept 1
Feb 1, 7, 8 Oct 1, 2
March 20 Oct 27
Mexico
Jan 1 May 1 Dec 12
Feb 4 Sept 16 Dec 25
March 17, 20, 21 Nov 17
Morocco
Jan 1, 10, 11 Aug 14, 20, 21
March 20, 21 Oct 1, 2
May 1 Nov 6, 18
July 30 Dec 9, 10
76
New Zealand
Jan 1 Apr 25 Dec 26
Jan 2 Jun 2
Feb 6 Oct 27
March 21, 24 Dec 25
Netherlands
Jan 1 Dec 26
March 21, 24
May 1
Dec 25
Norway
Jan 1 Dec 26
March 20, 21, 24
May 1, 12
Dec 25, 24
Oman
Jan 1, 10, 12 Nov 18, 19
March 22 Dec 7, 8, 9, 10
July 23, 30
Oct 1, 2
Portugal
Jan 1 Dec 26
March 21, 24, 25
May 1
Dec 25
Qatar
Jan 1
Oct 1, 2
Dec 7, 8, 9, 10, 11, 18
Singapore
Jan 1 Oct 1, 28
Feb 7, 8 Dec 8, 25
March 21
May 1, 19
South Africa
Jan 1 Jun 16
Mar 21, 24 Sep 24
Apr 28 Dec 16, 25
May 1 Dec 26
South Korea
Jan 1 May 31 Oct 3
Feb 6, 7, 8 Jun 6 Oct 6
Apr 9 Jul 17 Dec 25
May 1 Aug 15 Dec 31
May 5, 12 Sept 15
Spain
Jan 1, 7 Dec 25
March 21, 24 Dec 26
May 1
Sweden
Jan 1 Jun 6
March 21, 24 Dec 24, 25
May 1 Dec 26, 31
Switzerland
Jan 1, 2 May 12 Dec 26
March 21, 24 Aug 1
May 1 Dec 25
77
Taiwan
Jan 1 May 1
Feb 6, 7, 8, 11, 28 Oct 10
Apr 4
Thailand
Jan 1 May 5 Oct 23
Feb 21 May 19 Dec 5
Apr 7, 14, 15 Jul 1, 17 Dec 10
May 1 Aug 12
U.A.E.
Jan 1, 10, 14
March 20
July 31
Oct 1, 2
Dec 2, 7, 8, 9, 28
United Kingdom
Jan 1 Aug 25
March 21, 24 Dec 25
May 5, 26 Dec 26
United States
Jan 1 May 26 Dec 25
Jan 21 Jul 4
Feb 18 Sep 1
March 21 Nov 27
Taxes
Registered Investment Company Qualifications. Each Fund intends to qualify for
and to elect treatment as a separate Regulated Investment Company ("RIC") under
Subchapter M of the IRC. To qualify for treatment as a RIC, each Fund must
distribute with respect to each taxable year at least 90% of its net investment
company taxable income (as that term is defined in the Code without regard to
the deduction for dividends paid-generally, interest and net short-term capital
gains) and meet several other requirements. Among such other requirements are
the following: (i) at least 90% of each Fund's annual gross income must be
derived from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stock or securities or foreign
currencies, or other income (including gains from options, futures or forward
contracts) derived with respect to its business of investing in such stock,
securities or currencies, and net income derived from an interest in a qualified
publicly traded partnership; and (ii) at the close of each quarter of the
company's taxable year, (a) at least 50% of the market value of each Fund's
total assets must be represented by cash and cash items, U.S. Government
securities, securities of other RICs and other securities, with such other
securities limited for purposes of this calculation in respect of any one issuer
to an amount not greater than 5% of the value of each Fund's total assets and
not greater than 10% of the outstanding voting securities of such issuer, and
(b) not more than 25% of the value of the Fund's total assets may be invested in
the securities of any one issuer or two or more issuers that are controlled by
each Fund (within the meaning of Section 851(c)(2) of the IRC), and that are
engaged in the same or similar trades or businesses or related trades or
businesses (other than U.S. Government securities or the securities of other
regulated investment companies) or the securities of one or more qualified
publicly traded partnerships.
Taxation of RICs. If a Fund qualifies as a RIC, the Fund will not be subject to
federal income tax on income distributed in a timely manner to its shareholders
in the form of dividends. If a Fund fails to qualify for any taxable year as a
RIC, all of its taxable income will be subject to tax at regular corporate
income tax rates without any deduction for distributions to shareholders, and
such distributions generally will be taxable to shareholders as ordinary
dividends to the extent of each Fund's current and accumulated earnings and
profits. In such event, distributions to individuals should potentially qualify
as qualified dividend income and distributions to corporate shareholders
generally should potentially be eligible for the dividends-received deduction.
Although each Fund intends to distribute substantially all of its net investment
income and its net capital gains for each taxable year, each Fund will be
subject to federal income taxation to the extent any such income or net capital
gains are not distributed. However, the Fund may designate the retained amount
of net capital gains as undistributed capital
78
gains in a notice to its shareholders who (i) will be required to include in
income for federal income purposes, as long-term capital gain, their shares of
such undistributed amount, and (ii) will be entitled to credit their
proportionate shares of the tax paid by the Fund on such undistributed amount
against their federal income tax liabilities, if any, and to claim refunds to
the extent the credit exceeds such liabilities. For federal income tax purposes,
the tax basis of shares owned by a shareholder of the Fund will be increased by
an amount equal to the difference between the amount of undistributed capital
gains included in the shareholder's gross income and the tax deemed paid by the
shareholder under clause (ii) of the preceding sentence. If a Fund's
distributions exceed its taxable income and capital gains realized during a
taxable year, all or a portion of the distributions made to the Fund's
Shareholder in the taxable year may be recharacterized as a return of capital to
shareholders. A return of capital distribution generally will not be taxable but
will reduce the shareholder's cost basis and result in a higher capital gain or
lower capital loss when those shares on which the distribution was received are
sold.
Excise Tax. Each Fund will be subject to a 4% excise tax on certain
undistributed income if it does not distribute to its shareholders in each
calendar year at least 98% of its ordinary income for the calendar year plus 98%
of its capital gain net income for the twelve months ended October 31 of such
year. Each Fund intends to declare and distribute dividends and distributions in
the amounts and at the times necessary to avoid the application of this 4%
excise tax.
Back-Up Withholding. In certain cases, a Fund will be required to withhold at
the applicable withholding rate, and remit to the U.S. Treasury such amounts
withheld from any distributions paid to a shareholder who: (i) has failed to
provide a correct taxpayer identification number, (ii) is subject to backup
withholding by the Internal Revenue Service; (iii) has failed to certify to a
Fund that such shareholder is not subject to backup withholding; or (iv) has not
certified that such shareholder is a U.S. person (including a U.S. resident
alien).
Section 351. The Trust on behalf of each Fund has the right to reject an order
for a purchase of shares of the Trust if the purchaser (or group of purchasers)
would, upon obtaining the shares so ordered, own 80% or more of the outstanding
shares of a given Fund and if, pursuant to Section 351 of the IRC, that Fund
would have a basis in the securities different from the market value of such
securities on the date of deposit. The Trust also has the right to require
information necessary to determine beneficial share ownership for purposes of
the 80% determination.
Qualified Dividend Income. Distributions by each Fund of investment company
taxable income (excluding any short-term capital gains) whether received in cash
or shares will be taxable either as ordinary income or as qualified dividend
income, eligible for the reduced maximum rate to individuals of 15% (5% for
individuals in lower tax brackets) to the extent each Fund receives qualified
dividend income on the securities it holds and the Fund designates the
distribution as qualified dividend income. Qualified dividend income is, in
general, dividend income from taxable domestic corporations and certain foreign
corporations (e.g., foreign corporations incorporated in a possession of the
United States or in certain countries with a comprehensive tax treaty with the
United States, or the stock of which is readily tradable on an established
securities market in the United States). A dividend will not be treated as
qualified dividend income to the extent that at either the Fund or shareholder
level (i) the shareholder has not held the shares on which the dividend was paid
for more than 60 days during the 121-day period that begins on the date that is
60 days before the date on which the shares become ex dividend with respect to
such dividend (and each Fund also satisfies those holding period requirements
with respect to the securities it holds that paid the dividends distributed to
the shareholder), (ii) the shareholder is under an obligation (whether pursuant
to a short sale or otherwise) to make related payments with respect to
substantially similar or related property, (iii) the shareholder elects to treat
such dividend as investment income under section 163(d)(4)(B) of the IRC, or
(iv) the dividend is received by the Fund from a foreign corporation that is
treated as a passive foreign investment company. Absent further legislation, the
maximum 15% rate on qualified dividend income will not apply to dividends
received in taxable years beginning after December 31, 2010. Distributions by
each Fund of its net short-term capital gains will be taxable as ordinary
income. Distributions of net capital gains from the sale of investments that the
Fund owned for more than one year and are properly designated by the Fund as
capital gain dividends will be taxable as long-term capital gains.
Corporate Dividends Received Deduction. A Fund's dividends that are paid to its
corporate shareholders and are attributable to qualifying dividends it received
from U.S. domestic corporations may be eligible, in the hands of
79
such shareholders, for the corporate dividends received deduction, subject to
certain holding period requirements and debt financing limitations.
Net Capital Loss Carryforwards. Net capital loss carryforwards may be applied
against any net realized capital gains in each succeeding year, or until their
respective expiration dates, whichever occurs first.
Funds Holding Foreign Investments. Each Fund, but in particular the
International Funds may be subject to foreign income taxes withheld at the
source. If more than 50% of the value of a Fund's total assets at the close of
its taxable year consists of foreign stocks or securities, the Fund will be
eligible to make an election to pass through such tax to its shareholders. Each
Fund that is permitted to do so will elect to "pass through" to its investors
the amount of foreign income taxes paid by the Fund provided that the investor
held the shares of the Fund, and the Fund held the security, on the dividend
settlement date and for at least fifteen additional days immediately before
and/or thereafter, with the result that each investor will (i) include in gross
income, even though not actually received, the investor's pro rata share of the
Fund's foreign income taxes, and (ii) either deduct (in calculating U.S. taxable
income) or credit (in calculating U.S. federal income tax) the investor's pro
rata share of the Fund's foreign income taxes. A foreign person who invests in a
Fund that elects to "pass through" its foreign taxes may be treated as receiving
additional dividend income subject to U.S. withholding tax. A foreign tax credit
may not exceed the investor's U.S. federal income tax otherwise payable with
respect to the investor's foreign source income. For this purpose, each
shareholder must treat as foreign source gross income (i) his proportionate
share of foreign taxes paid by the Fund and (ii) the portion of any dividend
paid by the Fund that represents income derived from foreign sources; the Fund's
gain from the sale of securities will generally be treated as U.S. source
income. This foreign tax credit limitation is applied separately to separate
categories of income; dividends from the Fund will be treated as "passive" or
"financial services" income for this purpose. The effect of this limitation may
be to prevent investors from claiming as a credit the full amount of their pro
rata share of the Fund's foreign income taxes.
Under Section 988 of the IRC, gains or losses attributable to fluctuations in
exchange rates between the time the Fund accrues income or receivables or
expenses or other liabilities denominated in a foreign currency and the time the
Fund actually collects such income or pays such liabilities are generally
treated as ordinary income or ordinary loss. Similarly, gains or losses on the
disposition of debt securities denominated in foreign currency, or, unless the
Fund elects otherwise, on foreign currency, foreign currency forward contracts,
certain foreign currency options or futures contracts to the extent attributable
to fluctuations in exchange rates between the acquisition and disposition dates,
are also treated as ordinary income or loss.
If any Fund owns shares in certain foreign investment entities, referred to as
"passive foreign investment companies", ("PFIC"), the Fund will be subject to
one of the following special tax regimes: (i) the Fund is liable for U.S.
federal income tax, and an additional charge in the nature of interest, on a
portion of any "excess distribution" from such foreign entity or any gain from
the disposition of such shares, even if the entire distribution or gain is paid
out by the Fund as a dividend to its shareholders; (ii) if the Fund were able
and elected to treat a passive foreign investment company as a "qualified
electing fund", the Fund would be required each year to include in income, and
distribute to shareholders in accordance with the distribution requirements set
forth above, the Fund's pro rata share of the ordinary earnings and net capital
gains of the passive foreign investment company, whether or not such earnings or
gains are distributed to the Fund; or (iii) the Fund may be entitled to
mark-to-market annually the shares of the passive foreign investment company,
and, in such event, would be required to distribute to shareholders any such
mark-to-market gains in accordance with the distribution requirements set forth
above.
The election of regime (ii) or (iii) may accelerate the recognition of income
(without the receipt of cash) and increase the amount required to be distributed
by the Fund to avoid taxation. Electing either of these regimes may therefore
require the Fund to liquidate other investments (including when it is not
advantageous to do so) to meet its distribution requirement, which also may
accelerate the recognition of gain and affect the Fund's total return. Dividends
paid by PFICs will not be eligible to be treated as "qualified dividend income."
Federal Tax Treatment of Complex Securities. Funds may invest in complex
securities. These investments may be subject to numerous special and complex tax
rules, including mark-to-market, constructive sale, straddle, wash sale and
short sale rules. These rules could affect whether gains and losses recognized
by the Fund are treated as ordinary income or capital gain, accelerate the
recognition of income to a Fund and/or defer a Fund's ability to
80
recognize losses. In turn, these rules may affect the amount, timing or
character of the income distributed to you by the Fund.
Each Fund is required, for federal income tax purposes, to mark-to-market and
recognize as income for each taxable year its net unrealized gains and losses on
certain futures and options contracts as of the end of the year as well as those
actually realized during the year. Gain or loss from certain futures and options
contracts required to be marked-to-market will be 60% long-term and 40%
short-term capital gain or loss. Application of this rule may alter the timing
and character of distributions to shareholders. A Fund may be required to defer
the recognition of losses on futures contracts, option contracts and swaps to
the extent of any unrecognized gains on offsetting positions held by the Fund.
As a result of entering into swap contracts, a Fund may make or receive periodic
net payments. A Fund may also make or receive a payment when a swap is
terminated prior to maturity through an assignment of the swap or other closing
transaction. Periodic net payments will generally constitute ordinary income or
deductions, while termination of a swap will generally result in capital gain or
loss (which will be a long-term capital gain or loss if the Fund has been a
party to the swap for more than one year). The tax treatment of many types of
credit default swaps is uncertain.
It is anticipated that any net gain realized from the closing out of futures or
options contracts entered into by the Funds will be considered qualifying income
for purposes of the 90% requirement for a Fund to qualify as a RIC.
Each Fund intends to distribute to shareholders annually any net capital gains
that have been recognized for federal income tax purposes (including unrealized
gains at the end of the Fund's fiscal year on futures or options transactions
that are subject to the mark-to-market rule). Such distributions are combined
with distributions of capital gains realized on a Fund's other investments and
shareholders are advised on the nature of the distributions.
Additional Tax Information Concerning REITs. A Fund may invest in REITs that
hold residual interests in real estate mortgage investment conduits ("REMICs")
or which are, or have certain wholly-owned subsidiaries that are, "taxable
mortgage pools." Under recently issued Treasury guidance, a portion of the
Fund's income from a REIT that is attributable to the REIT's residual interest
in a REMIC or equity interests in a taxable mortgage pool (referred to in the
IRC as an "excess inclusion") will be subject to federal income tax in all
events. This guidance provides that excess inclusion income of a RIC, such as a
Fund, must generally be allocated to shareholders of the RIC in proportion to
the dividends received by such shareholders, with the same consequences as if
the shareholders held the related REMIC residual interest or taxable mortgage
pool interests directly. In general, excess inclusion income allocated to
shareholders (i) cannot be offset by net operating losses (subject to a limited
exception for certain thrift institutions), (ii) will constitute unrelated
business taxable income to entities (including a qualified pension plan, an
individual retirement account, a 401(k) plan, a Keogh plan or other tax-exempt
entity) subject to tax on unrelated business income, thereby potentially
requiring such an entity that is allocated excess inclusion income, and
otherwise might not be required to file a tax return, to file a tax return and
pay tax on such income, and (iii) in the case of a foreign shareholder, will not
qualify for any reduction in U.S. federal withholding tax. In addition, if at
any time during any taxable year a "disqualified organization" (as defined in
the IRC) is a record holder of a share in a RIC, then the RIC will be subject to
a tax equal to that portion of its excess inclusion income for the taxable year
that is allocable to the disqualified organization, multiplied by the highest
federal income tax rate imposed on corporations. No Fund intends to invest a
substantial portion of its assets in REITs which generate excess inclusion
income.
Foreign shareholders of a Fund must treat a distribution attributable to a
Fund's sale of stock in a REIT or other U.S. real property holding company as
real property gain, subject to U.S. tax and withholding, if 50% or more of the
value of the Fund's assets are invested in REITs and other U.S. real property
holding corporations and if the foreign shareholder has held more than 5% of a
class of stock at any time during the one-year period ending on the date of the
distribution. After December 31, 2007, a distribution from a Fund will be
treated as attributable to a U.S. real property interest only if such
distribution is attributable to a distribution received by the Fund from a REIT.
Restrictions apply regarding wash sales and substitute payment transactions.
Dividends received by the Fund from a REIT will generally not constitute
qualified dividend income.
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Taxation of the India Portfolio
As discussed, the India Earnings Fund invests in Indian securities through a
wholly-owned subsidiary, WisdomTree India Investment Portfolio, Inc. (the "India
Portfolio"). Investors should note that taxation in India of the income of the
India Portfolio arising from its investments in India, and therefore the tax
liability of the Fund, is expected to be minimized under the provisions of the
India Mauritius Double Tax Avoidance Treaty (the "Treaty"). While the validity
of this treaty and its applicability to entities such as the Fund was recently
upheld by the Supreme Court of India, no assurance can be given that the terms
of the Treaty will not be subject to re-intepretation and renegotiation in the
future. Any change in the Treaty's application could have a material adverse
affect on the tax status of the India Portfolio and therefore the returns of the
India Portfolio and the returns of the India Earnings Fund. Further, it is
possible that the Indian tax authorities may seek to take the position that the
India Portfolio is not entitled to the benefits of the Treaty.
In order to claim the benefits of the Treaty, the India Portfolio must be a tax
resident of Mauritius. The India Portfolio is incorporated in Mauritius, has
been issued a certificate of Mauritian tax residence by the Tax Authorities in
Mauritius, and has been granted a Tax Residency Certificate. Accordingly, the
Fund expects to be eligible for the benefits under the Treaty.
It is currently not clear whether income from entities such as the India
Portfolio will be classified as capital gains income or as 'business income'
under Indian law. However, this distinction should not affect the ultimate tax
consequences to the India Portfolio. Under the Treaty, capital gains from
investment in Indian securities, global depositary receipts, or American
depositary receipts issued with respect to Indian companies are exempt from tax,
provided that the India Portfolio does not have a Permanent Establishment in
India. Similarly, 'business income,' is also exempt from taxation under the
Treaty so long as the India Portfolio does not have a Permanent Establishment in
India. Since the India Portfolio has been deemed a tax resident of Mauritius, it
does not expect to be deemed to have a Permanent Establishment in India. If the
India Portfolio were deemed to have such a Permanent Establishment, income
attributable to that Permanent Establishment could be taxable in India at a rate
of 42.23%.
Regardless of the application of the Treaty, all transactions entered on a
recognized stock exchange in India are subject to the Securities Transaction Tax
("STT"), which is levied on the value of a transaction at rates not exceeding
0.25%. The STT can be set off against business income tax calculated under the
Indian Income Tax Act, provided that the gains on the transactions subject to
the STT are taxed as business income and not as capital gains.
It is currently not entirely clear whether the Indian Minimum Alternate Tax
("MAT") applies to The India Portfolio as a beneficiary of the Treaty. Although
the Treaty should override the provisions of the Indian Income Tax Act and thus
the application of the MAT, this is not certain. If the MAT does apply, and the
Indian income tax payable by The India Portfolio is less than 10% of its book
profits, then The India Portfolio would be deemed to owe taxes of 10% of book
profits.
Please note that the above description is based on current provisions of Indian
law, and any change or modification made by subsequent legislation, regulation,
or administrative or judicial decision could increase the Indian tax liability
of the India Portfolio and thus reduce the return to Fund shareholders.
Non-U.S. Shareholders. Each shareholder who is not a U.S. person should consult
his or her tax advisor regarding the U.S. and foreign tax consequences of
ownership of shares of a Fund. Each Fund will withhold a tax at a rate of 30%
(or lower under a tax treaty) on all ordinary dividend distributions to non-U.S.
persons. The withholding obligation generally does not apply to properly
designated dividends derived from certain interest income of the Fund or from
short-term capital gains of the Fund which are paid with respect to Fund years
beginning before January 1, 2008. Depending on the circumstances, the Fund may
make such designations with respect to all, some or none of its potentially
eligible dividends and/or treat such dividends, in whole or in part, as
ineligible for this exemption from withholding. In order to qualify for this
exemption from withholding, a foreign person will need to comply with applicable
certification requirements relating to its non-US status (including, in general,
furnishing an IRS Form W-8BEN or substitute Form). In the case of shares held
through an intermediary, the intermediary may withhold even if the Fund makes a
designation with respect to a payment. Foreign persons should contact their
intermediaries with respect to the application of these rules to their accounts.
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The foregoing discussion is a summary only and is not intended as a substitute
for careful tax planning. Purchasers of shares should consult their own tax
advisers as to the tax consequences of investing in such shares, including under
state, local and foreign tax laws. Finally, the foregoing discussion is based on
applicable provisions of the IRC, regulations, judicial authority and
administrative interpretations in effect on the date of this Statement of
Additional Information. Changes in applicable authority could materially affect
the conclusions discussed above, and such changes often occur.
Determination of NAV
The NAV of each Fund's shares is calculated each day the national securities
exchanges are open for trading as of the close of regular trading on the New
York Stock Exchange, generally 4:00 p.m. New York time (the "NAV Calculation
Time"). NAV per share is calculated by dividing a Fund's net assets by the
number of Fund shares outstanding.
Stocks held by a Fund are valued at their market value when reliable market
quotations are readily available. Certain short-term debt instruments which may
be used to manage a Fund's cash are valued on the basis of amortized cost. The
values of any foreign securities held by a Fund are converted into U.S. dollars
using an exchange rate deemed appropriate by the Fund.
When reliable market quotations are not readily available, securities are priced
at their fair value, which is the price a security's owner might reasonably
expect to receive upon its sale. A Fund also will use fair-value pricing if the
value of a security it holds has been materially affected by events occurring
before the NAV Calculation Time but after the close of the primary markets or
exchanges on which the security is traded. This most commonly occurs with
foreign securities, which may trade on foreign exchanges that close many hours
before the Fund's pricing time. Intervening events might be company-specific
(e.g., earnings report, merger announcement); country-specific (e.g., natural
disaster, economic or political news, act of terrorism, interest rate change);
or global. Intervening events include price movements in U.S. markets that are
deemed to affect the value of foreign securities. Fair-value pricing also may be
used for domestic securities if, for example, (i) trading in a security is
halted and does not resume before the Fund's pricing time or if a security does
not trade in the course of a day, or (ii) the Fund holds enough of the security
that its price could affect the Fund's NAV. Since the International Funds invest
in securities listed on foreign exchanges that trade on weekends or other days
when the Funds do not price their shares, the NAV of these Funds may change on
days when shareholders will not be able to purchase or redeem the Fund's shares.
Fair-value prices are determined by the Funds according to procedures adopted by
the Board of Trustees. When fair-value pricing is employed, the prices of
securities used by a Fund to calculate its NAV may differ from quoted or
published prices for the same securities.
Transactions in Fund shares will be priced at NAV only if you purchase or redeem
shares directly from a Fund in Creation Units. Fund shares are purchased or sold
on a national securities exchange at market prices, which may be higher or lower
than NAV.
Fund shares are purchased or sold on a national securities exchange at market
prices, which may be higher or lower than NAV. No secondary sales will be made
to brokers or dealers at a concession by the Distributor or by a Fund. Purchases
and sales of shares in the secondary market, which will not involve a Fund, will
be subject to customary brokerage commissions and charges. Transactions in Fund
shares will be priced at NAV only if you purchase or redeem shares directly from
a Fund in Creation Units.
Dividends and Distributions
Each Fund pays out dividends, if any, to investors at least annually. Each Fund
distributes its net realized capital gains, if any, to investors annually. The
Funds may occasionally be required to make supplemental distributions at some
other time during the year. Distributions in cash may be reinvested
automatically in additional whole shares only if the broker through whom you
purchased shares makes such option available. Your broker is responsible for
distributing the income and capital gain distributions to you.
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The Trust reserves the right to declare special distributions if, in its
reasonable discretion, such action is necessary or advisable to preserve the
status of each Fund as a RIC or to avoid imposition of income or excise taxes on
undistributed income.
Financial Statements
The audited financial statements, including the financial highlights appearing
in the Trust's annual report to shareholders for the fiscal year ended March 31,
2007 and filed electronically with the Securities and Exchange Commission, are
incorporated by reference and made part of this SAI. You may request a copy of
the Trust's Annual Report at no charge by calling 866-909-9473 or through the
Trust's website at www.wisdomtree.com.
Miscellaneous Information
Counsel. Ropes & Gray LLP, 1211 Avenue of the Americas, New York, New York 10036
is counsel to the Trust.
Independent Registered Public Accounting Firm. Ernst & Young LLP, with offices
located at 5 Times Square, New York, New York 10036, serves as the independent
auditor of the Trust.
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