objective, meaning it generally will invest in a sample of the securities in
the Index whose risk, return and other characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least 80% of the Fund’s total assets (exclusive of collateral held from
securities lending) will be invested in component securities of the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities.
The Index consists of equity securities of U.S. companies that
derive more than 80% of their revenue from the United States. Companies in the Index are incorporated and headquartered in the United States, and have positive cumulative earnings over the four fiscal quarters preceding the annual reconstitution
date. To be eligible for inclusion in the Index a company must meet the following criteria: (i) market capitalization of at least $5 billion as of the Index screening date; (ii) average daily dollar volume of at least $200,000 for the six months
preceding the Index screening date; and (iii) a calculated volume factor (the average daily dollar volume for the three months preceding the Index screening date divided by the preliminary weight of the security in the Index) greater than $200
million. For these purposes, a company’s “preliminary weight” is determined by applying the weighting scheme described below to all of the companies eligible for inclusion in the Index before taking into account their calculated
volume factors.
The Index is a modified earnings stream
weighted index. The earnings for each company are adjusted based on the percent of revenue from within the United States. The maximum weight of any individual security is capped at 5%. In addition, the maximum weight of any one sector in the Index,
at the time of the Index’s annual screening date, is capped at 25%; however, the real estate and utilities sectors are each capped at 5%. These sector weights may fluctuate above the specified cap in response to market conditions and/or the
application of volume factor adjustments. If a component security no longer meets applicable trading volume thresholds as of the annual Index screening date, the Index methodology applies a volume factor adjustment to reduce such component
security's weight in the Index and reallocates the reduction in the weight pro rata among the other remaining securities.
WisdomTree Investments, Inc. (“WisdomTree
Investments”), as index provider, currently uses Standard & Poor’s Global Industry Classification Standards (“S&P GICS”) to define companies within a sector. The following sectors are included in the Index: consumer
discretionary, consumer staples, financials, health care, industrials, information technology, real estate, telecommunication services, and utilities. A sector is comprised of multiple industries. For example, the consumer discretionary sector is
comprised of companies in, among others, the automobiles and components, consumer durables and apparel, consumer services, media, and retailing industries. As of September 30, 2017, a significant portion of the Index is comprised of companies in the
financial and consumer discretionary sectors.
To the
extent the Index concentrates (i.e., holds 25% or more of its total assets) in the securities of a particular industry or group of industries, the Fund will concentrate its investments to approximately the
same extent as the Index.
Principal Risks of Investing in
the Fund
You can lose money on your investment in the Fund. The Fund is
subject to the risks described below. Some or all of these risks may adversely affect the Fund’s net asset value per share (“NAV”), trading price, yield, total return and/or ability to meet its objectives. For more information
about the risks of investing in the Fund, see the sections in the Fund’s Prospectus titled “Additional Principal Risk Information About the Funds” and “Additional Non-Principal Risk Information.”
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Investment Risk. As with all investments, an investment in the Fund is subject to investment risk. Investors in the Fund could lose money, including the possible loss of the entire principal amount of an investment, over short or long
periods of time. |
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Market Risk. The trading prices of equity securities and other instruments fluctuate in response to a variety of factors, such as economic, financial or political events that impact the entire market, market segments, or specific
issuers. The Fund’s NAV and market price may fluctuate significantly in response to these and other factors. As a result, an investor could lose money over short or long periods of time. |
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Shares of
the Fund May Trade at Prices Other Than NAV. As with all exchange-traded funds (“ETFs”), Fund shares may be bought and sold in the secondary market at market prices. The trading prices of the
Fund’s shares in the secondary market generally differ from the Fund’s daily NAV and there may be times when the market price of the shares is more than the NAV (premium) or less than the NAV (discount). This risk is heightened in times
of market volatility or periods of steep market declines. |