As filed with the Securities and Exchange Commission on July 30, 2007
Securities Act File No. 333-132380
Investment Company Act File No. 811-21864
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. _____ |_|
Post-Effective Amendment No. 5 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Post-Effective Amendment No. 7 |X|
(Check appropriate box or boxes.)
________________________
WISDOMTREE TRUST
(Exact Name of Registrant as Specified in Charter)
48 Wall Street, 11th Floor
New York, NY 10005
(Address of Principal Executive Offices) (Zip Code)
(Registrant's Telephone Number, including Area Code): 1-866-909-9973
JONATHAN STEINBERG
WISDOMTREE TRUST
48 Wall Street, 11th Floor
New York, NY 10005
(Name and Address of Agent for Service)
Counsel for the Trust: Richard Morris, Esq.
Ropes & Gray LLP WisdomTree Asset Management, Inc.
1211 Avenue of the Americas 48 Wall Street, 11th Floor
New York, New York 10036 New York, New York 10005
Attention: Robert J. Borzone, Jr., Esq.
It is proposed that this filing will become effective (check appropriate box):
|X| Immediately upon filing pursuant to paragraph (b)
|_| On (date) pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(1)
|_| On (date) pursuant to paragraph (a)(1)
|_| 75 days after filing pursuant to paragraph (a)(2)
|_| On (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
|_| This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Dividend Funds
[WISDOMTREE(SM) LOGO]
PROSPECTUS
July 27, 2007
WisdomTree(SM) Trust
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 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
THE SECURITIES AND EXCHANGE COMMISSION ("SEC") HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
WisdomTree Trust
WisdomTree Trust (the "Trust") is a registered investment company that consists
of separate investment portfolios called "Funds." Each Fund seeks investment
results that closely correspond to the price and yield performance, before fees
and expenses, of a particular index that defines a dividend-paying segment of
the U.S. or international stock market. The indexes are created using a
proprietary methodology developed by WisdomTree Investments, Inc. The Funds
described in this Prospectus are listed in the Table of Contents.
Each Fund is an "exchange traded fund." This means that shares of the Funds are
listed on a national securities exchange, such as the New York Stock Exchange or
the American Stock Exchange, and trade at market prices. The market price for a
Fund's shares may be different from its net asset value per share ("NAV"). Each
Fund has its own CUSIP number and exchange trading symbol.
Each Fund described in this Prospectus issues and redeems shares at 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.
--------------------------------------------------------------------------------
A NOTE TO RETAIL INVESTORS
Shares can be purchased directly from the issuing Fund only in exchange for a
basket of securities that is expected to be worth several million dollars. Most
individual investors, therefore, will not be able to purchase shares directly
from a Fund. Instead, these investors will purchase shares in the secondary
market through a brokerage account or with the assistance of a broker. Thus,
some of the information contained in this Prospectus - such as information about
purchasing and redeeming shares from a Fund and references to transaction fees
imposed on purchases and redemptions - is not relevant to most individual
investors. Shares purchased or sold through a brokerage account or with the
assistance of a broker may be subject to brokerage commissions and charges.
--------------------------------------------------------------------------------
INVESTMENT PRODUCTS: o ARE NOT FDIC INSURED o MAY LOSE VALUE o ARE NOT BANK
GUARANTEED
WisdomTree Trust
Table of Contents
Overview 2
Investment Objective 2
Principal Investment Strategies 2
Principal Risk Factors Common to All Funds 3
Portfolio Holdings Information 5
WisdomTree Domestic Dividend Funds 6
WisdomTree Total Dividend Fund 6
WisdomTree High-Yielding Equity Fund 9
WisdomTree LargeCap Dividend Fund 12
WisdomTree Dividend Top 100 Fund 14
WisdomTree MidCap Dividend Fund 17
WisdomTree SmallCap Dividend Fund 20
WisdomTree International Dividend Funds 23
WisdomTree DEFA Fund 23
WisdomTree DEFA High-Yielding Equity Fund 26
WisdomTree Europe Total Dividend Fund 29
WisdomTree Europe High-Yielding Equity Fund 32
WisdomTree Europe SmallCap Dividend Fund 35
WisdomTree Japan Total Dividend Fund 39
WisdomTree Japan High-Yielding Equity Fund 42
WisdomTree Japan SmallCap Dividend Fund 45
WisdomTree Pacific ex-Japan Total Dividend Fund 49
WisdomTree Pacific ex-Japan High-Yielding Equity Fund 52
WisdomTree International LargeCap Dividend Fund 55
WisdomTree International Dividend Top 100 Fund 58
WisdomTree International MidCap Dividend Fund 61
WisdomTree International SmallCap Dividend Fund 64
WisdomTree Emerging Markets High-Yielding Equity Fund 68
Management 71
Investment Adviser 71
Sub-Adviser 72
Portfolio Managers 73
Administrator, Custodian and Transfer Agent 73
Shareholder Information 73
Buying and Selling Shares 73
Share Trading Prices 74
Determination of Net Asset Value 74
Dividends and Distributions 75
Book Entry 75
Delivery of Shareholder Documents - Householding 75
Frequent Purchases and Redemptions of Fund Shares 75
Investments by Registered Investment Companies 76
Taxes 76
Taxes on Distributions 76
Taxes When Fund Shares are Sold 77
Taxes on Creation and Redemption of Creation Units 77
Creation and Redemption 78
Authorized Participants and the Continuous Offering of Shares 78
Creation and Redemption Transaction Fees for Creation Units 78
Distribution 79
Additional Notices 80
Financial Highlights 80
WisdomTree Trust Prospectus 1
Overview
This Prospectus provides the information you need to make an informed decision
about investing in the Funds.* It contains important facts about the Trust as a
whole and each Fund in particular.
Each Fund is an exchange-traded fund ("ETF"). ETFs are index funds whose shares
are listed on a stock exchange and traded like equity securities at market
prices. ETFs, such as the Funds, allow you to buy or sell shares that represent
the collective performance of a selected group of securities. ETFs are designed
to add the flexibility, ease and liquidity of stock-trading to the benefits of
traditional index-fund investing.
WisdomTree Asset Management, Inc. ("WisdomTree Asset Management") is the
investment adviser to each Fund. WisdomTree Investments, Inc. ("WisdomTree
Investments") is the parent company of WisdomTree Asset Management.
Investment Objective
Each Fund seeks investment returns that closely correspond to the price and
yield performance, before fees and expenses, of a particular index ("Index" or
"Dividend Index") developed by WisdomTree Investments. Each Index consists of
dividend-paying securities in the market suggested by its name that meet
specific criteria developed by WisdomTree Investments.
Principal Investment Strategies
This Prospectus describes six Funds that invest in dividend-paying U.S. equity
securities and fifteen Funds that invest in dividend-paying non-U.S. equity
securities. Each Fund tracks a specific U.S. or international stock Index
created by WisdomTree Investments. Each Dividend Index is designed to measure a
specific segment of the market for U.S. or international dividend-paying
securities. Each Fund seeks investment returns that closely correspond to the
price and yield performance, before fees and expenses, of its underlying Index.
The WisdomTree Indexes are "fundamentally weighted." The Dividend Indexes differ
from most traditional indexes in that the proportion, or "weighting," of the
securities in each Dividend Index is based on a measure of fundamental value.
The Dividend Indexes are weighted based on either the amount of cash dividends
that companies in each Index pay or the dividend yield of the companies in each
Index. This means that securities of companies that pay higher amounts of cash
dividends or have higher dividend yields generally will be more heavily weighted
in each Index and Fund. Most traditional indexes and index funds weight their
securities by looking simply at the market capitalization of such securities.
Common stocks, real estate investment trusts, tracking stocks, and holding
companies are eligible for inclusion in each Index. Only regular dividends
(i.e., established or quarterly dividends as opposed to non-recurring or special
dividends) are included in the determination of cash dividends or dividend
yield.
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 will normally 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. Each Fund generally may invest up to 5% of
its total assets in securities not included in its 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 its Index in order to reflect various
corporate actions and other changes to its 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 securities of its Index, it also may
invest its other assets in cash and cash equivalents, as well as in shares of
other investment companies, futures contracts, options on futures contracts,
options, and swaps. WisdomTree Asset Management expects that, over time, the
correlation between each Fund's performance and that of its Index, before fees
and expenses, will be 95% or better.
----------
* "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.
2 WisdomTree Trust Prospectus
Each Fund may use a "Replication" strategy or a "Representative Sampling"
strategy in seeking to track the performance of its Index. A Fund using a
Replication strategy generally will invest in all or substantially all of the
securities in its Index in approximately the same proportions as such securities
are found in the Index. A Fund using a Representative Sampling strategy
generally will invest in a sample of the securities in its Index whose risk,
return and other characteristics closely resemble the risk, return and other
characteristics of the Index as a whole.
To the extent that a Fund's underlying Index concentrates (i.e., holds 25% or
more of its total assets) in the securities of a particular industry or group of
industries, a Fund will concentrate its investments to approximately the same
extent as its Index.
Principal Risk Factors Common to All Funds
Each Fund is subject to the principal risks described below. Certain additional
risks associated with a Fund are discussed in the specific section describing
that Fund. Some or all of these risks may adversely affect a Fund's NAV, trading
price, yield, total return and/or its ability to meet its objectives.
Stock Market Risk
The trading price of equity securities fluctuates in response to a variety of
factors. These factors include events impacting a single issuer, as well as
political, market and economic developments that affect specific market segments
and the market as a whole. Each Fund's NAV and market price, like stock prices
generally, will fluctuate within a wide range in response to these factors. As a
result, an investor could lose money over short or even long periods.
Investment Style Risk
The returns from the types of securities in which a Fund invests may
underperform returns from the various general securities markets or different
asset classes. This may cause a Fund to underperform other investment vehicles
that invest in different asset classes. Different types of securities (for
example, large-, mid- and small-capitalization stocks) tend to go through cycles
of doing better - or worse - than the general securities markets. In the past,
these periods have lasted for as long as several years.
Interest Rate Risk
Each of the underlying Indexes, and therefore the Funds, may be more heavily
weighted than other types of investments in market sectors that are sensitive to
interest rate fluctuations (such as the financial and real estate sectors). The
Funds therefore may be more sensitive to fluctuations in interest rates than
other types of investments. In particular, increases to prevailing interest
rates could have a negative impact on the performance of the Funds.
Investment Approach Risk
Each Fund invests in the securities included in, or representative of, its Index
regardless of their investment merit. The Funds do not attempt to outperform
their Indexes or take defensive positions in declining markets. As a result,
each Fund's performance may be adversely affected by a general decline in the
U.S. or foreign market segments relating to its Index.
WisdomTree Trust Prospectus 3
Concentration Risk
To the extent that a Fund's Index concentrates in the securities of a particular
industry or group of industries, the Fund will concentrate its investments to
approximately the same extent as its Index. A Fund that concentrates, or
otherwise invests a large portion of its assets in a single industry or group of
industries, may be more susceptible to any single economic, market, political or
regulatory occurrence affecting that industry or group of industries. In such
case, a Fund may be more volatile than funds based on broader or less volatile
market segments.
The Funds generally invest a relatively large percentage of their assets in the
financial services industry and therefore the performance of the Funds will be
impacted by events affecting the financial services industry. This industry can
be significantly affected by changes in interest rates, the rate of corporate
and consumer debt defaulted, price competition, and the availability and cost of
capital funds.
Non-Diversification Risk
Each Fund is considered to be non-diversified, which means that it may invest
more of its assets in the securities of a single issuer or a smaller number of
issuers than if it were a diversified fund. As a result, a Fund may be more
exposed to the risks associated with and developments affecting an individual
issuer or a smaller number of issuers than a fund that invests more widely. This
may increase the Fund's volatility and cause the performance of a relatively
smaller number of issuers to have a greater impact on the Fund's performance.
Issuer-Specific Risk
Changes in the financial condition of an issuer or counterparty, changes in
specific economic or political conditions that affect a particular type of
security or issuer, and changes in general economic or political conditions can
affect a security's or instrument's value. The value of securities of smaller,
less well-known issuers can be more volatile than that of larger issuers.
Issuer-specific events can have a negative impact on the value of a Fund.
Non-Correlation Risk
The performance of a Fund and its Index may vary somewhat for a variety of
reasons. For example, each Fund incurs operating expenses and portfolio
transaction costs not incurred by its Index. In addition, a Fund may not be
fully invested in the securities of its Index at all times. The use of sampling
techniques may affect a Fund's ability to achieve close correlation with its
Index. A Fund using a Representative Sampling strategy generally can be expected
to have a greater non-correlation risk than a Fund using a Replication strategy.
Management Risk
Because each Fund may not fully replicate its Index and may hold securities not
included in its Index, a Fund is subject to management risk. This is the risk
that the Fund's investment strategy, the implementation of which is subject to a
number of constraints, may not produce the intended results.
Market Trading Risk
Although Fund shares are listed on national securities exchanges, there can be
no assurance that an active trading market for Fund shares will develop or be
maintained. If an active market is not maintained, investors may find it
difficult to buy or sell Fund shares.
4 WisdomTree Trust Prospectus
Lack of Market Liquidity
Trading of shares of a Fund on a stock exchange may be halted if exchange
officials deem such action appropriate, if the Fund is delisted, or if the
activation of marketwide "circuit breakers" halts stock trading generally. If a
Fund's shares are delisted, the Fund may seek to list its shares on another
market, merge with another ETF or traditional mutual fund, or redeem its shares
at NAV. WisdomTree Asset Management believes that, under normal market
conditions, large market price discounts or premiums to NAV will not be
sustained because of arbitrage opportunities.
Shares of the Funds May Trade at Prices Other Than NAV
As with all ETFs, Fund shares may be bought and sold in the secondary market at
market prices. Although it is expected that the market price of the shares of
each Fund will approximate the respective Fund's NAV, there may be times when
the market price and the NAV vary significantly. Thus, you may pay more than NAV
when you buy shares of a Fund in the secondary market, and you may receive less
than NAV when you sell those shares in the secondary market.
The market price of Fund shares during the trading day, like the price of any
exchange-traded security, includes a "bid/ask" spread charged by the exchange
specialist, market makers or other participants that trade the Fund shares. The
bid/ask spread on ETF shares is likely to be larger on ETFs that are traded less
frequently. In addition, in times of severe market disruption, the bid/ask
spread can increase significantly. At those times, Fund shares are most likely
to be traded at a discount to NAV, and the discount is likely to be greatest
when the price of shares is falling fastest, which may be the time that you most
want to sell your shares. WisdomTree Asset Management believes that, under
normal market conditions, large market price discounts or premiums to NAV will
not be sustained because of arbitrage opportunities.
Lack of Governmental Insurance or Guarantee
An investment in a Fund is not a bank deposit and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Fiscal Policy Risk
Any repeal or failure to extend the current federal tax treatment of qualified
dividend income could make dividend-paying securities less appealing to
investors and could have a negative impact on the performance of the Funds.
Portfolio Holdings Information
Information about each Fund's daily portfolio holdings is available at
www.wisdomtree.com.
In addition, each Fund discloses its complete portfolio holdings as of the end
of its fiscal year (March 31) and its second fiscal quarter (September 30) in
its reports to shareholders.
Each Fund files its complete portfolio holdings as of the end of its first and
third fiscal quarters (June 30 and December 31, respectively) with the SEC on
Form N-Q no later than 60 days after the relevant fiscal period.
You can find the SEC filings on the SEC's website, www.sec.gov. A summarized
description of the Funds' policies and procedures with respect to the disclosure
of each Fund's portfolio holdings is available in the Trust's Statement of
Additional Information ("SAI").
WisdomTree Trust Prospectus 5
WisdomTree Domestic Dividend Funds
o WisdomTree Total Dividend Fund
o WisdomTree High-Yielding Equity Fund
o WisdomTree LargeCap Dividend Fund
o WisdomTree Dividend Top 100 Fund
o WisdomTree MidCap Dividend Fund
o WisdomTree SmallCap Dividend Fund
--------------------------------------------------------------------------------
WisdomTree Total Dividend Fund
Fund Facts
Cusip Number:
o 97717W109
Exchange Trading Symbol:
o DTD
--------------------------------------------------------------------------------
WisdomTree Total Dividend Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree Dividend Index. Since the Fund's investment
objective has been adopted as a non-fundamental investment policy, the Fund's
investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree Dividend Index. The Fund
attempts to invest all, or substantially all, of its assets in the stocks that
make up the Index. The Fund generally uses a Representative Sampling strategy to
achieve its investment objective.
Index Description
The WisdomTree Dividend Index measures the performance of U.S. companies that
pay regular cash dividends on shares of their common stock and that meet
specified requirements as of the Index measurement date. 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 ("NYSE"), American Stock
Exchange ("AMEX"), the NASDAQ Global Select Market or NASDAQ Global Market
("NASDAQ"), (iii) pay regular cash dividends on shares of their common stock,
(iv) have a market capitalization of at least $100 million on the Index
measurement date, and (v) have an average daily dollar trading volume of at
least $100,000 for the three months prior to the Index measurement date.
Companies are weighted in the Index based on their projected cash dividends as
of the Index measurement date. The Index includes all large-capitalization,
mid-capitalization and small-capitalization securities that meet the Index
requirements and is, in this sense, a total market index for the dividend-paying
segment of the U.S. market. As of June 30, 2007, approximately 82% of the
capitalization of the Index consisted of companies with market capitalizations
over $10.0 billion.
Primary Investment Risks
The following risk, in addition to the principal risk factors common to all
Funds, is one of the risks that can significantly affect the Fund's performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree Total Dividend Fund, will
fluctuate within a wide range, so an investor could lose money over short
or even long periods. If the value of the Fund's investments goes down, you
may lose money.
6 WisdomTree Trust Prospectus
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.28%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.28%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$29 $90 $157 $356
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$29 $90 $157 $356
WisdomTree Trust Prospectus 7
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$4,000 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $3,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $4,000 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $3,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $16,598 if the
Creation Unit is redeemed after one year, $35,031 if the Creation Unit is
redeemed after three years, $55,246 if the Creation Unit is redeemed after five
years and $114,745 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
8 WisdomTree Trust Prospectus
WisdomTree Domestic Dividend Funds
o WisdomTree Total Dividend Fund
o WisdomTree High-Yielding Equity Fund
o WisdomTree LargeCap Dividend Fund
o WisdomTree Dividend Top 100 Fund
o WisdomTree MidCap Dividend Fund
o WisdomTree SmallCap Dividend Fund
--------------------------------------------------------------------------------
WisdomTree High-Yielding Equity Fund
Fund Facts
Cusip Number:
o 97717W208
Exchange Trading Symbol:
o DHS
--------------------------------------------------------------------------------
WisdomTree High-Yielding Equity Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree High-Yielding Equity Index. Since the Fund's
investment objective has been adopted as a non-fundamental investment policy,
the Fund's investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree High-Yielding Equity Index.
The Fund attempts to invest all, or substantially all, of its assets in the
stocks that make up the Index. The Fund generally uses a Replication strategy to
achieve its investment objective and generally will hold each stock in
approximately the same proportion as its weighting in the Index.
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 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 their projected cash dividends as of the
Index measurement date. The Index includes large-capitalization,
mid-capitalization and small-capitalization stocks. In this sense, it is a
dividend-weighted U.S. multi-capitalization index. As of June 30, 2007,
approximately 82%of the capitalization of the Index consisted of companies with
market capitalizations over $10.0 billion.
Primary Investment Risks
The following risk, in addition to the principal risk factors common to all
Funds, is one of the risks that can significantly affect the Fund's performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree High-Yielding Equity Fund,
will fluctuate within a wide range, so an investor could lose money over
short or even long periods. If the value of the Fund's investments goes
down, you may lose money.
WisdomTree Trust Prospectus 9
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.38%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.38%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$39 $122 $213 $480
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$39 $122 $213 $480
10 WisdomTree Trust Prospectus
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$2,200 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $3,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $2,200 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $3,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $16,063 if the
Creation Unit is redeemed after one year, $41,031 if the Creation Unit is
redeemed after three years, $68,360 if the Creation Unit is redeemed after five
years and $148,524 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 11
WisdomTree Domestic Dividend Funds
o WisdomTree Total Dividend Fund
o WisdomTree High-Yielding Equity Fund
o WisdomTree LargeCap Dividend Fund
o WisdomTree Dividend Top 100 Fund
o WisdomTree MidCap Dividend Fund
o WisdomTree SmallCap Dividend Fund
--------------------------------------------------------------------------------
WisdomTree LargeCap Dividend Fund
Fund Facts
Cusip Number:
o 97717W307
Exchange Trading Symbol:
o DLN
--------------------------------------------------------------------------------
WisdomTree LargeCap Dividend Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree LargeCap Dividend Index. Since the Fund's investment
objective has been adopted as a non-fundamental investment policy, the Fund's
investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree LargeCap Dividend Index. The
Fund attempts to invest all, or substantially all, of its assets in the stocks
that make up the Index. The Fund generally uses a Replication strategy to
achieve its investment objective and generally will hold each stock in
approximately the same proportion as its weighting in the Index.
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 and that meet specified requirements as of the Index
measurement date. 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. As of June 30, 2007,
approximately 97% of the capitalization of the Index consisted of companies with
market capitalizations over $10.0 billion.
Primary Investment Risks
The following risk, in addition to the principal risk factors common to all
Funds, is one of the risks that can significantly affect the Fund's performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree LargeCap Dividend Fund, will
fluctuate within a wide range, so an investor could lose money over short
or even long periods. If the value of the Fund's investments goes down, you
may lose money.
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
12 WisdomTree Trust Prospectus
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.28%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.28%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$29 $90 $157 $356
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$29 $90 $157 $356
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$1,500 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $3,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $1,500 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $3,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $11,598 if the
Creation Unit is redeemed after one year, $30,031 if the Creation Unit is
redeemed after three years, $50,246 if the Creation Unit is redeemed after five
years and $109,745 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 13
WisdomTree Domestic Dividend Funds
o WisdomTree Total Dividend Fund
o WisdomTree High-Yielding Equity Fund
o WisdomTree LargeCap Dividend Fund
o WisdomTree Dividend Top 100 Fund
o WisdomTree MidCap Dividend Fund
o WisdomTree SmallCap Dividend Fund
--------------------------------------------------------------------------------
WisdomTree Dividend Top 100 Fund
Fund Facts
Cusip Number:
o 97717W406
Exchange Trading Symbol:
o DTN
--------------------------------------------------------------------------------
WisdomTree Dividend Top 100 Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree Dividend Top 100 Index. The WisdomTree Dividend Top
100 Index measures the performance of the 100 highest dividend-yielding
companies in the WisdomTree LargeCap Dividend Index. Since the Fund's investment
objective has been adopted as a non-fundamental investment policy, the Fund's
investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree Dividend Top 100 Index. The
Fund attempts to invest all, or substantially all, of its assets in the stocks
that make up the Index. The Fund generally uses a Replication strategy to
achieve its investment objective and generally will hold each stock in
approximately the same proportion as its weighting in the Index.
Index Description
The WisdomTree Dividend Top 100 Index measures the performance of the 100
highest dividend-yielding companies in the WisdomTree LargeCap Dividend Index
that meet specified requirements as of the Index measurement date. Unlike the
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 primarily of 100
large-capitalization securities and is, in this sense, a dividend-yield weighted
U.S. large-capitalization index. As of June 30, 2007, approximately 86% of the
capitalization of the Index consisted of companies with market capitalizations
over $10.0 billion.
Primary Investment Risks
The following risk, in addition to the principal risk factors common to all
Funds, is one of the risks that can significantly affect the Fund's performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree Dividend Top 100 Fund, will
fluctuate within a wide range, so an investor could lose money over short
or even long periods. If the value of the Fund's investments goes down, you
may lose money.
14 WisdomTree Trust Prospectus
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.38%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.38%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$39 $122 $213 $480
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$39 $122 $213 $480
WisdomTree Trust Prospectus 15
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$500 is charged to each purchaser of Creation Units.* The fee is a single charge
and will be the same regardless of the number of Creation Units purchased by an
investor on the same day. The approximate value of a Creation Unit as of July 1,
2007 was $3,000,000. An investor who holds Creation Units and wishes to redeem
at NAV would also pay a standard redemption transaction fee of $500 on the date
of such redemption(s), regardless of the number of Creation Units redeemed that
day. Investors who hold Creation Units will also pay the annual fund operating
expenses described in the table above. Assuming an investment in a Creation Unit
of $3,000,000 and a 5% return each year, and assuming the Fund's operating
expenses remain the same, the total costs would be $12,663 if the Creation Unit
is redeemed after one year, $37,631 if the Creation Unit is redeemed after
three years, $64,960 if the Creation Unit is redeemed after five years and
$145,124 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
16 WisdomTree Trust Prospectus
WisdomTree Domestic Dividend Funds
o WisdomTree Total Dividend Fund
o WisdomTree High-Yielding Equity Fund
o WisdomTree LargeCap Dividend Fund
o WisdomTree Dividend Top 100 Fund
o WisdomTree MidCap Dividend Fund
o WisdomTree SmallCap Dividend Fund
--------------------------------------------------------------------------------
WisdomTree MidCap Dividend Fund
Fund Facts
Cusip Number:
o 97717W505
Exchange Trading Symbol:
o DON
--------------------------------------------------------------------------------
WisdomTree MidCap Dividend Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree MidCap Dividend Index. Since the Fund's investment
objective has been adopted as a non-fundamental investment policy, the Fund's
investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree MidCap Dividend Index. The
Fund attempts to invest all, or substantially all, of its assets in the stocks
that make up the Index. A portion of the Index is comprised of stocks issued by
REITs. The Fund generally uses a Replication strategy to achieve its investment
objective and generally will hold each stock in approximately the same
proportion as its weighting in the Index.
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 and that 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
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 Dividend Index. Companies
are weighted in the Index based on their projected cash dividends as of the
Index measurement date. A relatively large portion of the Index is comprised of
stocks issued by REITs. The Index includes primarily mid-capitalization
securities and is, in this sense, a dividend-weighted U.S. mid-capitalization
index. As of June 30, 2007, approximately 91% of the capitalization of the Index
consisted of companies with market capitalizations between $2.0 billion and
$10.0 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree MidCap Dividend Fund, will
fluctuate within a wide range, so an investor could lose money over short
or even long periods. If the value of the Fund's investments goes down, you
may lose money.
WisdomTree Trust Prospectus 17
o Mid-Capitalization Investing. The Fund invests primarily in securities of
mid-capitalization companies. As a result, the Fund may be more volatile
than funds that invest in larger, more established companies.
o The securities of mid-capitalization companies may be more vulnerable
to adverse issuer, market, political, or economic developments than
the market as a whole or other types of securities.
o The securities of mid-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of mid-capitalization companies.
o Investments in REITs. The Fund generally invests a relatively large
percentage of its assets in real estate investment trusts or "REITs."
Investments in REITs subject the Fund to risks associated with the direct
ownership of real estate. Market conditions or events affecting the overall
market for REITs, such as declining property values or rising interest
rates, could have a negative impact on the Fund's performance.
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.38%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.38%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
18 WisdomTree Trust Prospectus
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$39 $122 $213 $480
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$39 $122 $213 $480
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$2,500 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $3,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $2,500 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $3,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $16,663 if the
Creation Unit is redeemed after one year, $41,631 if the Creation Unit is
redeemed after three years, $68,960 if the Creation Unit is redeemed after five
years and $149,124 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 19
WisdomTree Domestic Dividend Funds
o WisdomTree Total Dividend Fund
o WisdomTree High-Yielding Equity Fund
o WisdomTree LargeCap Dividend Fund
o WisdomTree Dividend Top 100 Fund
o WisdomTree MidCap Dividend Fund
o WisdomTree SmallCap Dividend Fund
--------------------------------------------------------------------------------
WisdomTree SmallCap Dividend Fund
Fund Facts
Cusip Number:
o 97717W604
Exchange Trading Symbol:
o DES
--------------------------------------------------------------------------------
WisdomTree SmallCap Dividend Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree SmallCap Dividend Index. Since the Fund's investment
objective has been adopted as a non-fundamental investment policy, the Fund's
investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree SmallCap Dividend Index. The
Fund attempts to invest all, or substantially all, of its assets in the stocks
that make up the Index. A portion of the Index is comprised of stocks issued by
REITs. The Fund generally uses a Replication strategy to achieve its investment
objective and generally will hold each stock in approximately the same
proportion as its weighting in the Index.
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 and that 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 Dividend Index. Those companies that comprise the bottom 25% of the
remaining market capitalization of the WisdomTree Dividend Index as of the Index
measurement date are included in the WisdomTree SmallCap Dividend Index.
Companies are weighted in the Index based on their projected cash dividends as
of the Index measurement date. A relatively large portion of the Index is
comprised of stocks issued by REITs. The Index includes primarily
small-capitalization securities and is, in this sense, a dividend-weighted U.S.
small-capitalization index. As of June 30, 2007, approximately 97% of the
capitalization of the Index consisted of companies with market capitalizations
less than $2.0 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree SmallCap Dividend Fund, will
fluctuate within a wide range, so an investor could lose money over short
or even long periods. If the value of the Fund's investments goes down, you
may lose money.
20 WisdomTree Trust Prospectus
o Small-Capitalization Investing. The Fund invests primarily in securities of
small-capitalization companies. As a result, the Fund may be more volatile
than funds that invest in larger, more established companies.
o Small-capitalization companies may be less financially secure than
larger, more established mid- and large- capitalization companies.
o The securities of small-capitalization companies may be more
vulnerable to adverse issuer, market, political, or economic
developments than the market as a whole or other types of securities.
o The securities of small-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of small-capitalization companies.
o Small-capitalization companies may be particularly sensitive to
changes in interest rates, borrowing costs and earnings.
o Investments in REITs. The Fund generally invests a relatively large
percentage of its assets in real estate investment trusts or "REITs."
Investments in REITs subject the Fund to risks associated with the direct
ownership of real estate. Market conditions or events affecting the overall
market for REITs, such as declining property values or rising interest
rates, could have a negative impact on the Fund's performance.
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
WisdomTree Trust Prospectus 21
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.38%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.38%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$39 $122 $213 $480
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$39 $122 $213 $480
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$4,000 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $3,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $4,000 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $3,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $19,663 if the
Creation Unit is redeemed after one year, $44,631 if the Creation Unit is
redeemed after three years, $71,960 if the Creation Unit is redeemed after five
years and $152,124 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
22 WisdomTree Trust Prospectus
WisdomTree International Dividend Funds
o WisdomTree DEFA Fund
o WisdomTree DEFA High-Yielding Equity Fund
o WisdomTree Europe Total Dividend Fund
o WisdomTree Europe High-Yielding Equity Fund
o WisdomTree Europe SmallCap Dividend Fund
o WisdomTree Japan Total Dividend Fund
o WisdomTree Japan High-Yielding Equity Fund
o WisdomTree Japan SmallCap Dividend Fund
o WisdomTree Pacific ex-Japan Total Dividend Fund
o WisdomTree Pacific ex-Japan High-Yielding Equity Fund
o WisdomTree International LargeCap Dividend Fund
o WisdomTree International Dividend Top 100 Fund
o WisdomTree International MidCap Dividend Fund
o WisdomTree International SmallCap Dividend Fund
o WisdomTree Emerging Markets High-Yielding Equity Fund
--------------------------------------------------------------------------------
WisdomTree DEFA Fund
Fund Facts
Cusip Number:
97717W703
Exchange Trading Symbol:
DWM
--------------------------------------------------------------------------------
WisdomTree DEFA Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree Dividend Index of Europe, Far East Asia and
Australasia (the "WisdomTree DEFA Index"). Since the Fund's investment objective
has been adopted as a non-fundamental investment policy, the Fund's investment
objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree DEFA Index. The Fund
attempts to invest all, or substantially all, of its assets in the stocks that
make up the Index. The Fund generally uses a Representative Sampling strategy to
achieve its investment objective.
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 specified requirements as of the Index measurement
date. To be included in the WisdomTree DEFA Index, companies must be
incorporated in one of 16 developed-market European countries represented by the
WisdomTree Europe Dividend Index, 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 large-capitalization, mid-capitalization and small-capitalization
securities that meet the Index requirements. As of June 30, 2007, approximately
81% of the capitalization of the Index consisted of companies with market
capitalizations over $10.0 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree DEFA Fund, will fluctuate
within a wide range, so an investor could lose money over short or even
long periods. If the value of the Fund's investments goes down, you may
lose money.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement,
WisdomTree Trust Prospectus 23
custodial, and other operational risks; and, in some cases, less stringent
investor protection and disclosure standards. Since foreign exchanges may
be open on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders
will not be able to purchase or sell the Fund's shares. All of these
factors can make foreign investments more volatile and potentially less
liquid than U.S. investments. In addition, foreign markets can perform
differently from the U.S. market due to increased risks of adverse issuer,
political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country or region it is
more likely to be impacted by events or conditions affecting that country
or region. For example, political and economic conditions and changes in
regulatory, tax, or economic policy in a country could significantly affect
the market in that country and in surrounding or related countries and have
a negative impact on a Fund's performance. The Fund generally invests a
relatively large percentage of its assets in companies organized in the
United Kingdom.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the
Creation Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.48%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.48%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
24 WisdomTree Trust Prospectus
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$49 $154 $269 $604
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$49 $154 $269 $604
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 250,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$15,000 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $17,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $15,000 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $17,000,000 and a 5% return each year, and assuming the
Fund's operating expenses remain the same, the total costs would be $113,444 if
the Creation Unit is redeemed after one year, $291,818 if the Creation Unit
is redeemed after three years, $486,681 if the Creation Unit is redeemed after
five years and $1,056,334 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 25
WisdomTree International Dividend Funds
o WisdomTree DEFA Fund
o WisdomTree DEFA High-Yielding Equity Fund
o WisdomTree Europe Total Dividend Fund
o WisdomTree Europe High-Yielding Equity Fund
o WisdomTree Europe SmallCap Dividend Fund
o WisdomTree Japan Total Dividend Fund
o WisdomTree Japan High-Yielding Equity Fund
o WisdomTree Japan SmallCap Dividend Fund
o WisdomTree Pacific ex-Japan Total Dividend Fund
o WisdomTree Pacific ex-Japan High-Yielding Equity Fund
o WisdomTree International LargeCap Dividend Fund
o WisdomTree International Dividend Top 100 Fund
o WisdomTree International MidCap Dividend Fund
o WisdomTree International SmallCap Dividend Fund
o WisdomTree Emerging Markets High-Yielding Equity Fund
--------------------------------------------------------------------------------
WisdomTree DEFA High-Yielding Equity Fund
Fund Facts
Cusip Number:
97717W802
Exchange Trading Symbol:
DTH
--------------------------------------------------------------------------------
WisdomTree DEFA High-Yielding Equity Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree DEFA High-Yielding Equity Index. Since the Fund's
investment objective has been adopted as a non-fundamental investment policy,
the Fund's investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree DEFA Index. The Fund
attempts to invest all, or substantially all, of its assets in the stocks that
make up the Index. The Fund generally uses a Representative Sampling strategy to
achieve its investment objective.
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. In this sense, it is a dividend-weighted,
multi-cap index for the high-yielding dividend segment of the industrialized
world outside of the U.S. and Canada. As of June 30, 2007, approximately 84% of
the capitalization of the Index consisted of companies with market
capitalizations over $10.0 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree DEFA High-Yielding Equity
Fund, will fluctuate within a wide range, so an investor could lose money
over short or even long periods. If the value of the Fund's investments
goes down, you may lose money.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
26 WisdomTree Trust Prospectus
disclosure standards of some foreign markets. Since foreign exchanges may be
open on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders will not
be able to purchase or sell the Fund's shares. All of these factors can make
foreign investments more volatile and potentially less liquid than U.S.
investments. In addition, foreign markets can perform differently from the U.S.
market due to increased risks of adverse issuer, political, regulatory, market,
and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country or region it is
more likely to be impacted by events or conditions affecting that country
or region. For example, political and economic conditions and changes in
regulatory, tax, or economic policy in a country could significantly affect
the market in that country and in surrounding or related countries and have
a negative impact on a Fund's performance. The Fund generally invests a
relatively large percentage of its assets in companies organized in the
United Kingdom.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
WisdomTree Trust Prospectus 27
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 100,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$9,500 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $7,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $9,500 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $7,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $60,497 if the
Creation Unit is redeemed after one year, $149,075 if the Creation Unit is
redeemed after three years, $245,657 if the Creation Unit is redeemed after five
years and $527,033 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
28 WisdomTree Trust Prospectus
WisdomTree International Dividend Funds
o WisdomTree DEFA Fund
o WisdomTree DEFA High-Yielding Equity Fund
o WisdomTree Europe Total Dividend Fund
o WisdomTree Europe High-Yielding Equity Fund
o WisdomTree Europe SmallCap Dividend Fund
o WisdomTree Japan Total Dividend Fund
o WisdomTree Japan High-Yielding Equity Fund
o WisdomTree Japan SmallCap Dividend Fund
o WisdomTree Pacific ex-Japan Total Dividend Fund
o WisdomTree Pacific ex-Japan High-Yielding Equity Fund
o WisdomTree International LargeCap Dividend Fund
o WisdomTree International Dividend Top 100 Fund
o WisdomTree International MidCap Dividend Fund
o WisdomTree International SmallCap Dividend Fund
o WisdomTree Emerging Markets High-Yielding Equity Fund
--------------------------------------------------------------------------------
WisdomTree Europe Total Dividend Fund
Fund Facts
Cusip Number:
97717W885
Exchange Trading Symbol:
DEB
--------------------------------------------------------------------------------
WisdomTree Europe Total Dividend Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree Europe Dividend Index. Since the Fund's investment
objective has been adopted as a non-fundamental investment policy, the Fund's
investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree Europe Dividend Index. The
Fund attempts to invest all, or substantially all, of its assets in the stocks
that make up the underlying Index. The Fund generally uses a Representative
Sampling strategy to achieve its investment objective.
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 specified requirements as of the
Index measurement date. 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 ("Europe"). Companies must have paid
at least $5 million in cash dividends on shares of 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 large-capitalization,
mid-capitalization and small-capitalization securities. In this sense, it is a
dividend-weighted total market index for the dividend-paying segment of
developed-market Europe. As of June 30, 2007, approximately 85% of the
capitalization of the Index consisted of companies with market capitalizations
over $10.0 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree Europe Total Dividend Fund,
will fluctuate within a wide range, so an investor could lose money over
short or even long periods. If the value of the Fund's investments goes
down, you may lose money.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement,
WisdomTree Trust Prospectus 29
custodial, and other operational risks; and the less stringent investor
protection and disclosure standards of some foreign markets. Since foreign
exchanges may be open on days when the Fund does not price its shares, the
value of the securities in the Fund's portfolio may change on days when
shareholders will not be able to purchase or sell the Fund's shares. All of
these factors can make foreign investments more volatile and potentially
less liquid than U.S. investments. In addition, foreign markets can perform
differently from the U.S. market due to increased risks of adverse issuer,
political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country or region it is
more likely to be impacted by events or conditions affecting that country
or region. For example, political and economic conditions and changes in
regulatory, tax, or economic policy in a country could significantly affect
the market in that country and in surrounding or related countries. Most
developed countries in Western Europe are members of the European Union
(EU), and many are also members of the European Monetary Union (EMU), which
requires compliance with restrictions on inflation rates, deficits, and
debt levels. Unemployment in certain European nations is historically high.
In addition, the tight fiscal and monetary controls necessary to join the
EMU can significantly affect every country in Europe. The Fund generally
invests a relatively large percentage of its assets in companies organized
in the United Kingdom.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.48%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.48%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
30 WisdomTree Trust Prospectus
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$49 $154 $269 $604
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$49 $154 $269 $604
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 100,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$7,500 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $7,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $7,500 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $7,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $49,359 if the
Creation Unit is redeemed after one year, $122,807 if the Creation Unit is
redeemed after three years, $203,045 if the Creation Unit is redeemed after five
years and $437,608 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 31
WisdomTree International Dividend Funds
o WisdomTree DEFA Fund
o WisdomTree DEFA High-Yielding Equity Fund
o WisdomTree Europe Total Dividend Fund
o WisdomTree Europe High-Yielding Equity Fund
o WisdomTree Europe SmallCap Dividend Fund
o WisdomTree Japan Total Dividend Fund
o WisdomTree Japan High-Yielding Equity Fund
o WisdomTree Japan SmallCap Dividend Fund
o WisdomTree Pacific ex-Japan Total Dividend Fund
o WisdomTree Pacific ex-Japan High-Yielding Equity Fund
o WisdomTree International LargeCap Dividend Fund
o WisdomTree International Dividend Top 100 Fund
o WisdomTree International MidCap Dividend Fund
o WisdomTree International SmallCap Dividend Fund
o WisdomTree Emerging Markets High-Yielding Equity Fund
--------------------------------------------------------------------------------
WisdomTree Europe High-Yielding Equity Fund
Fund Facts
Cusip Number:
97717W877
Exchange Trading Symbol:
DEW
--------------------------------------------------------------------------------
WisdomTree Europe High-Yielding Equity Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree Europe High-Yielding Equity Index. Since the Fund's
investment objective has been adopted as a non-fundamental investment policy,
the Fund's investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" -- or indexing -- investment approach
designed to track the performance of the WisdomTree Europe High-Yielding Equity
Index. The Fund attempts to invest all, or substantially all, of its assets in
the stocks that make up the Index. The Fund generally uses a Representative
Sampling strategy to achieve its investment objective.
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 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 stocks. In this sense, it is a dividend-weighted,
multi-capitalization index for the high-yielding segment of developed-market
Europe. As of June 30, 2007, approximately 89% of the capitalization of the
Index consisted of companies with market capitalizations over $10.0 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree Europe High-Yielding Equity
Fund, will fluctuate within a wide range, so an investor could lose money
over short or even long periods. If the value of the Fund's investments
goes down, you may lose money.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
32 WisdomTree Trust Prospectus
disclosure standards of some foreign markets. Since foreign exchanges may
be open on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders
will not be able to purchase or sell the Fund's shares. All of these
factors can make foreign investments more volatile and potentially less
liquid than U.S. investments. In addition, foreign markets can perform
differently from the U.S. market due to increased risks of adverse issuer,
political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country or region, it
is more likely to be impacted by events or conditions affecting that
country or region. For example, political and economic conditions and
changes in regulatory, tax, or economic policy in a country could
significantly affect the market in that country and in surrounding or
related countries. Most developed countries in Western Europe are members
of the European Union (EU), and many are also members of the European
Monetary Union (EMU), which requires compliance with restrictions on
inflation rates, deficits, and debt levels. Unemployment in certain
European nations is historically high. In addition, the tight fiscal and
monetary controls necessary to join the EMU can significantly affect every
country in Europe. The Fund generally invests a relatively large percentage
of its assets in companies organized in the United Kingdom.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
WisdomTree Trust Prospectus 33
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 100,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$2,500 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $7,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $2,500 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $7,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $46,497 if the
Creation Unit is redeemed after one year, $135,075 if the Creation Unit is
redeemed after three years, $231,657 if the Creation Unit is redeemed after five
years and $513,033 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
34 WisdomTree Trust Prospectus
WisdomTree International Dividend Funds
o WisdomTree DEFA Fund
o WisdomTree DEFA High-Yielding Equity Fund
o WisdomTree Europe Total Dividend Fund
o WisdomTree Europe High-Yielding Equity Fund
o WisdomTree Europe SmallCap Dividend Fund
o WisdomTree Japan Total Dividend Fund
o WisdomTree Japan High-Yielding Equity Fund
o WisdomTree Japan SmallCap Dividend Fund
o WisdomTree Pacific ex-Japan Total Dividend Fund
o WisdomTree Pacific ex-Japan High-Yielding Equity Fund
o WisdomTree International LargeCap Dividend Fund
o WisdomTree International Dividend Top 100 Fund
o WisdomTree International MidCap Dividend Fund
o WisdomTree International SmallCap Dividend Fund
o WisdomTree Emerging Markets High-Yielding Equity Fund
--------------------------------------------------------------------------------
WisdomTree Europe SmallCap Dividend Fund
Fund Facts
Cusip Number:
97717W869
Exchange Trading Symbol:
DFE
--------------------------------------------------------------------------------
WisdomTree Europe SmallCap Dividend Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree Europe SmallCap Dividend Index. Since the Fund's
investment objective has been adopted as a non-fundamental investment policy,
the Fund's investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree Europe SmallCap Dividend
Index. The Fund attempts to invest all, or substantially all, of its assets in
the stocks that make up the Index. The Fund generally uses a Replication
strategy to achieve its investment objective and generally will hold each stock
in approximately the same proportion as its weighting in the Index.
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. As of June
30, 2007, approximately 87% of the capitalization of the Index consisted of
companies with market capitalizations less than $2.0 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree Europe SmallCap Dividend Fund,
will fluctuate within a wide range, so an investor could lose money over
short or even long periods. If the value of the Fund's investments goes
down, you may lose money.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
WisdomTree Trust Prospectus 35
disclosure standards of some foreign markets. Since foreign exchanges may
be open on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders
will not be able to purchase or sell the Fund's shares. All of these
factors can make foreign investments more volatile and potentially less
liquid than U.S. investments. In addition, foreign markets can perform
differently from the U.S. market due to increased risks of adverse issuer,
political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country or region it is
more likely to be impacted by events or conditions affecting that country
or region. For example, political and economic conditions and changes in
regulatory, tax, or economic policy in a country could significantly affect
the market in that country and in surrounding or related countries. Most
developed countries in Western Europe are members of the European Union
(EU), and many are also members of the European Monetary Union (EMU), which
requires compliance with restrictions on inflation rates, deficits, and
debt levels. Unemployment in certain European nations is historically high.
In addition, the tight fiscal and monetary controls necessary to join the
EMU can significantly affect every country in Europe. The Fund generally
invests a relatively large percentage of its assets in companies organized
in the United Kingdom.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
o Small-Capitalization Investing. The Fund invests primarily in securities of
small-capitalization companies. As a result, the Fund may be more volatile
than funds that invest in larger, more established companies.
o Small-capitalization companies may be less financially secure than
larger, more established mid- and large-capitalization companies.
o The securities of small-capitalization companies may be more
vulnerable to adverse issuer, market, political, or economic
developments than the market as a whole or other types of securities.
o The securities of small-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of small-capitalization companies.
o Small-capitalization companies may be particularly sensitive to
changes in interest rates, borrowing costs and earnings.
o Industrial Investing. The Fund generally invests a relatively large
percentage of its assets in the industrial sector. The industrial sector
can be significantly affected by, among other things, overall capital
spending levels, economic cycles, technical obsolescence, labor relations,
government regulations, the volatility of commodity prices and currency
exchange rates, and worldwide competition.
o Consumer Cyclical Investing. The Fund generally invests a relatively large
percentage of its assets in the "consumer cyclical" sector. The consumer
cyclical sector of the economy can be significantly affected by the
performance of the overall economy, interest rates, competition, consumer
confidence and spending, and changes in demographics and consumer tastes.
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
36 WisdomTree Trust Prospectus
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
WisdomTree Trust Prospectus 37
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 100,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$10,000 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $7,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $10,000 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $7,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $61,497 if the
Creation Unit is redeemed after one year, $150,075 if the Creation Unit is
redeemed after three years, $246,657 if the Creation Unit is redeemed after five
years and $528,033 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
38 WisdomTree Trust Prospectus
WisdomTree International Dividend Funds
o WisdomTree DEFA Fund
o WisdomTree DEFA High-Yielding Equity Fund
o WisdomTree Europe Total Dividend Fund
o WisdomTree Europe High-Yielding Equity Fund
o WisdomTree Europe SmallCap Dividend Fund
o WisdomTree Japan Total Dividend Fund
o WisdomTree Japan High-Yielding Equity Fund
o WisdomTree Japan SmallCap Dividend Fund
o WisdomTree Pacific ex-Japan Total Dividend Fund
o WisdomTree Pacific ex-Japan High-Yielding Equity Fund
o WisdomTree International LargeCap Dividend Fund
o WisdomTree International Dividend Top 100 Fund
o WisdomTree International MidCap Dividend Fund
o WisdomTree International SmallCap Dividend Fund
o WisdomTree Emerging Markets High-Yielding Equity Fund
--------------------------------------------------------------------------------
WisdomTree Japan Total Dividend Fund
Fund Facts
Cusip Number:
97717W851
Exchange Trading Symbol:
DXJ
--------------------------------------------------------------------------------
WisdomTree Japan Total Dividend Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree Japan Dividend Index. Since the Fund's investment
objective has been adopted as a non-fundamental investment policy, the Fund's
investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree Japan Dividend Index. The
Fund attempts to invest all, or substantially all, of its assets in the stocks
that make up the Index. The Fund generally uses a Representative Sampling
strategy to achieve its investment objective.
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 specified requirements as of the Index measurement date. 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 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 large-capitalization, mid-capitalization and
small-capitalization securities. In this sense, it is a dividend-weighted broad
market index for the dividend-paying segment of Japan. As of June 30, 2007,
approximately 64% of the capitalization of the Index consisted of companies with
market capitalizations over $10.0 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree Japan Total Dividend Fund,
will fluctuate within a wide range, so an investor could lose money over
short or even long periods. If the value of the Fund's investments goes
down, you may lose money.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
disclosure standards of some foreign markets. Since foreign exchanges may
be open on days when the Fund does not price its shares, the value of the
securities in the
WisdomTree Trust Prospectus 39
Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's shares. All of these factors can make foreign
investments more volatile and potentially less liquid than U.S.
investments. In addition, foreign markets can perform differently from the
U.S. market due to increased risks of adverse issuer, political,
regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country it is more
likely to be impacted by events or conditions affecting that country. For
example, political and economic conditions and changes in regulatory, tax,
or economic policy in a country could significantly affect the market in
that country and in surrounding or related countries. The Japanese economy
has only recently emerged from a prolonged economic downturn. Since the
year 2000, Japan's economic growth rate has remained relatively low. The
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 of the financial services sector and other troubled sectors, and
consistent government policy. The United States is Japan's largest single
trading partner, but close to half of Japan's trade is conducted with
developing nations, almost all of which are in Southeast Asia. Slowdowns in
the U.S. and China could have a negative impact on Japan. Exposure to
China, in terms of both imports and exports, has been increasing in recent
years.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
o Mid-Capitalization Investing. The Fund invests in securities of
mid-capitalization companies.
o The securities of mid-capitalization companies may be more vulnerable
to adverse issuer, market, political, or economic developments than
the market as a whole or other types of securities.
o The securities of mid-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of mid-capitalization companies.
o Consumer Cyclical Investing. The Fund generally invests a relatively large
percentage of its assets in the "consumer cyclical" industry. The consumer
cyclical sector of the economy can be significantly affected by the
performance of the overall economy, interest rates, competition, consumer
confidence and spending, and changes in demographics and consumer tastes.
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
40 WisdomTree Trust Prospectus
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.48%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.48%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$49 $154 $269 $604
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$49 $154 $269 $604
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 100,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$4,000 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $6,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $4,000 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $6,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $37,451 if the
Creation Unit is redeemed after one year, $100,406 if the Creation Unit is
redeemed after three years, $169,182 if the Creation Unit is redeemed after five
years and $370,236 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 41
WisdomTree International Dividend Funds
o WisdomTree DEFA Fund
o WisdomTree DEFA High-Yielding Equity Fund
o WisdomTree Europe Total Dividend Fund
o WisdomTree Europe High-Yielding Equity Fund
o WisdomTree Europe SmallCap Dividend Fund
o WisdomTree Japan Total Dividend Fund
o WisdomTree Japan High-Yielding Equity Fund
o WisdomTree Japan SmallCap Dividend Fund
o WisdomTree Pacific ex-Japan Total Dividend Fund
o WisdomTree Pacific ex-Japan High-Yielding Equity Fund
o WisdomTree International LargeCap Dividend Fund
o WisdomTree International Dividend Top 100 Fund
o WisdomTree International MidCap Dividend Fund
o WisdomTree International SmallCap Dividend Fund
o WisdomTree Emerging Markets High-Yielding Equity Fund
--------------------------------------------------------------------------------
WisdomTree Japan High-Yielding Equity Fund
Fund Facts
Cusip Number:
97717W844
Exchange Trading Symbol:
DNL
--------------------------------------------------------------------------------
WisdomTree Japan High-Yielding Equity Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree Japan High-Yielding Equity Index. Since the Fund's
investment objective has been adopted as a non-fundamental investment policy,
the Fund's investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree Japan High-Yielding Equity
Index. The Fund attempts to invest all, or substantially all, of its assets in
the stocks that make up the Index. The Fund generally uses a Replication
strategy to achieve its investment objective and generally will hold each stock
in approximately the same proportion as its weighting in the Index.
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 stocks. In this sense, it is a dividend-weighted,
multi-capitalization index for the high-yielding dividend segment of Japan. As
of June 30, 2007, approximately 65% of the capitalization of the Index consisted
of companies with market capitalizations over $10.0 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree Japan High-Yielding Equity
Fund, will fluctuate within a wide range, so an investor could lose money
over short or even long periods. If the value of the Fund's investments
goes down, you may lose money.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
disclosure standards of some foreign markets. Since foreign exchanges may
be open
42 WisdomTree Trust Prospectus
on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders
will not be able to purchase or sell the Fund's shares. All of these
factors can make foreign investments more volatile and potentially less
liquid than U.S. investments. In addition, foreign markets can perform
differently from the U.S. market due to increased risks of adverse issuer,
political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent a Fund invests a significant
portion of its assets in the securities of a single country it is more
likely to be impacted by events or conditions in that country. For example,
political and economic conditions and changes in regulatory, tax, or
economic policy in a country could significantly affect the market in that
country and in surrounding or related countries. The Japanese economy has
only recently emerged from a prolonged economic downturn. Since the year
2000, Japan's economic growth rate has remained relatively low. The 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 of
the financial services sector and other troubled sectors, and consistent
government policy. The United States is Japan's largest single trading
partner, but close to half of Japan's trade is conducted with developing
nations, almost all of which are in Southeast Asia. Slowdowns in the U.S.
and China could have a negative impact on Japan. Exposure to China, in
terms of both imports and exports, has been increasing in recent years.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
WisdomTree Trust Prospectus 43
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 100,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$2,500 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $6,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $2,500 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $6,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $40,569 if the
Creation Unit is redeemed after one year, $116,493 if the Creation Unit is
redeemed after three years, $199,277 if the Creation Unit is redeemed after five
years and $440,457 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
44 WisdomTree Trust Prospectus
WisdomTree International Dividend Funds
o WisdomTree DEFA Fund
o WisdomTree DEFA High-Yielding Equity Fund
o WisdomTree Europe Total Dividend Fund
o WisdomTree Europe High-Yielding Equity Fund
o WisdomTree Europe SmallCap Dividend Fund
o WisdomTree Japan Total Dividend Fund
o WisdomTree Japan High-Yielding Equity Fund
o WisdomTree Japan SmallCap Dividend Fund
o WisdomTree Pacific ex-Japan Total Dividend Fund
o WisdomTree Pacific ex-Japan High-Yielding Equity Fund
o WisdomTree International LargeCap Dividend Fund
o WisdomTree International Dividend Top 100 Fund
o WisdomTree International MidCap Dividend Fund
o WisdomTree International SmallCap Dividend Fund
o WisdomTree Emerging Markets High-Yielding Equity Fund
--------------------------------------------------------------------------------
WisdomTree Japan SmallCap Dividend Fund
Fund Facts
Cusip Number:
97717W836
Exchange Trading Symbol:
DFJ
--------------------------------------------------------------------------------
WisdomTree Japan SmallCap Dividend Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree Japan SmallCap Dividend Index. Since the Fund's
investment objective has been adopted as a non-fundamental investment policy,
the Fund's investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree Japan SmallCap Dividend
Index. The Fund attempts to invest all, or substantially all, of its assets in
the stocks that make up the Index. The Fund generally uses a Replication
strategy to achieve its investment objective and generally will hold each stock
in approximately the same proportion as its weighting in the Index.
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. As of June 30, 2007,
approximately 90% of the capitalization of the Index consisted of companies with
market capitalizations less than $2.0 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree Japan SmallCap Dividend Fund,
will fluctuate within a wide range, so an investor could lose money over
short or even long periods. If the value of the Fund's investments goes
down, you may lose money.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
disclosure standards of some foreign markets. Since foreign exchanges may
be open on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders
will not be able to purchase
WisdomTree Trust Prospectus 45
or sell the Fund's shares. All of these factors can make foreign
investments more volatile and potentially less liquid than U.S.
investments. In addition, foreign markets can perform differently from the
U.S. market due to increased risks of adverse issuer, political,
regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country it is more
likely to be impacted by events or conditions affecting that country. For
example, political and economic conditions and changes in regulatory, tax,
or economic policy in a country could significantly affect the market in
that country and in surrounding or related countries. The Japanese economy
has only recently emerged from a prolonged economic downturn. Since the
year 2000, Japan's economic growth rate has remained relatively low. The
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 of the financial services sector and other troubled sectors, and
consistent government policy. The United States is Japan's largest single
trading partner, but close to half of Japan's trade is conducted with
developing nations, almost all of which are in Southeast Asia. Slowdowns in
the U.S. and China could have a negative impact on Japan. Exposure to
China, in terms of both imports and exports, has been increasing in recent
years.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
o Small-Capitalization Investing. The Fund invests primarily in securities of
small-capitalization companies. As a result, the Fund may be more volatile
than funds that invest in larger, more established companies.
o Small-capitalization companies may be less financially secure than
larger, more established mid-and large-capitalization companies.
o The securities of small-capitalization companies may be more
vulnerable to adverse issuer, market, political or economic
developments than the market as a whole or other types of securities.
o The securities of small-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of small-capitalization companies.
o Small-capitalization companies may be particularly sensitive to
changes in interest rates, borrowing costs and earnings.
o Consumer Cyclical Investing. The Fund generally invests a relatively large
percentage of its assets in the "consumer cyclical" industry. The consumer
cyclical sector of the economy can be significantly affected by the
performance of the overall economy, interest rates, competition, consumer
confidence and spending, and changes in demographics and consumer tastes.
46 WisdomTree Trust Prospectus
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
WisdomTree Trust Prospectus 47
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 100,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$5,000 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $5,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $5,000 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $5,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $39,641 if the
Creation Unit is redeemed after one year, $102,911 if the Creation Unit is
redeemed after three years, $171,898 if the Creation Unit is redeemed after five
years and $372,881 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
48 WisdomTree Trust Prospectus
WisdomTree International Dividend Funds
o WisdomTree DEFA Fund
o WisdomTree DEFA High-Yielding Equity Fund
o WisdomTree Europe Total Dividend Fund
o WisdomTree Europe High-Yielding Equity Fund
o WisdomTree Europe SmallCap Dividend Fund
o WisdomTree Japan Total Dividend Fund
o WisdomTree Japan High-Yielding Equity Fund
o WisdomTree Japan SmallCap Dividend Fund
o WisdomTree Pacific ex-Japan Total Dividend Fund
o WisdomTree Pacific ex-Japan High-Yielding Equity Fund
o WisdomTree International LargeCap Dividend Fund
o WisdomTree International Dividend Top 100 Fund
o WisdomTree International MidCap Dividend Fund
o WisdomTree International SmallCap Dividend Fund
o WisdomTree Emerging Markets High-Yielding Equity Fund
--------------------------------------------------------------------------------
WisdomTree Pacific ex-Japan Total Dividend Fund
Fund Facts
Cusip Number:
97717W828
Exchange Trading Symbol:
DND
--------------------------------------------------------------------------------
WisdomTree Pacific ex-Japan Total Dividend Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree Pacific ex-Japan Dividend Index. Since the Fund's
investment objective has been adopted as a non-fundamental investment policy,
the Fund's investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree Pacific ex-Japan Dividend
Index. The Fund attempts to invest all, or substantially all, of its assets in
the stocks that make up the Index. The Fund generally uses a Representative
Sampling strategy to achieve its investment objective.
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 specified requirements as of
the Index measurement date. The 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 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 large-capitalization, mid-capitalization and
small-capitalization securities. In this sense, it is a dividend-weighted total
market index for the dividend-paying segment of Hong Kong, Singapore, Australia
and New Zealand. As of June 30, 2007, approximately 67% of the capitalization of
the Index consisted of companies with market capitalizations over $10 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree Pacific ex-Japan Total
Dividend Fund, will fluctuate within a wide range, so an investor could
lose money over short or even long periods. If the value of the Fund's
investments goes down, you may lose money.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
disclosure standards of some foreign markets. Since foreign exchanges may
be open
WisdomTree Trust Prospectus 49
on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders
will not be able to purchase or sell the Fund's shares. All of these
factors can make foreign investments more volatile and potentially less
liquid than U.S. investments. In addition, foreign markets can perform
differently from the U.S. market due to increased risks of adverse issuer,
political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of companies of a single country or
region it is more likely to be impacted by events or conditions affecting
that country or region. For example, political and economic conditions and
changes in regulatory, tax, or economic policy in a country could
significantly affect the market in that country and in surrounding or
related countries. The Pacific Basin economies are in all stages of
economic development. The majority of the economies in the region can be
characterized as either developing or newly industrialized. Many of the
Pacific Basin economies are generally in recession. Many of their economies
are characterized by high inflation, undeveloped financial services
sectors, and heavy reliance on international trade. Currency devaluations
or restrictions, political and social instability, and deteriorating
economic conditions have resulted in significant market downturns and
volatility. The Australia and New Zealand economies are dependent on the
economies of Asian countries and on the price and demand for agricultural
products and natural resources. The Fund generally invests a relatively
large percentage of its assets in companies organized in Australia or Hong
Kong.
o Mid-Capitalization Investing. The Fund invests in securities of
mid-capitalization companies.
o The securities of mid-capitalization companies may be more vulnerable
to adverse issuer, market, political, or economic developments than
the market as a whole or other types of securities.
o The securities of mid-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of mid-capitalization companies.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
50 WisdomTree Trust Prospectus
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.48%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.48%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$49 $154 $269 $604
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$49 $154 $269 $604
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 100,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$8,000 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $7,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $8,000 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $7,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $50,359 if the
Creation Unit is redeemed after one year, $123,807 if the Creation Unit is
redeemed after three years, $204,045 if the Creation Unit is redeemed after five
years and $438,608 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 51
WisdomTree International Dividend Funds
o WisdomTree DEFA Fund
o WisdomTree DEFA High-Yielding Equity Fund
o WisdomTree Europe Total Dividend Fund
o WisdomTree Europe High-Yielding Equity Fund
o WisdomTree Europe SmallCap Dividend Fund
o WisdomTree Japan Total Dividend Fund
o WisdomTree Japan High-Yielding Equity Fund
o WisdomTree Japan SmallCap Dividend Fund
o WisdomTree Pacific ex-Japan Total Dividend Fund
o WisdomTree Pacific ex-Japan High-Yielding Equity Fund
o WisdomTree International LargeCap Dividend Fund
o WisdomTree International Dividend Top 100 Fund
o WisdomTree International MidCap Dividend Fund
o WisdomTree International SmallCap Dividend Fund
o WisdomTree Emerging Markets High-Yielding Equity Fund
--------------------------------------------------------------------------------
WisdomTree Pacific ex-Japan High-Yielding Equity Fund
Fund Facts
Cusip Number:
97717W810
Exchange Trading Symbol:
DNH
--------------------------------------------------------------------------------
WisdomTree Pacific ex-Japan High-Yielding Equity Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree Pacific ex-Japan High-Yielding Equity Index. Since
the Fund's investment objective has been adopted as a non-fundamental investment
policy, the Fund's investment objective may be changed without a vote of
shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree Pacific ex-Japan
High-Yielding Equity Index. The Fund attempts to invest all, or substantially
all, of its assets in the stocks that make up the Index. The Fund generally uses
a Replication strategy to achieve its investment objective and generally will
hold each stock in approximately the same proportion as its weighting in the
Index.
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 dollar 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. In
this sense, it is a dividend-weighted, multi-capitalization index for the
high-yielding dividend segment of Hong Kong, Singapore, Australia and New
Zealand. As of June 30, 2007, approximately 59% of the capitalization of the
Index consisted of companies with market capitalizations over $10 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree Pacific ex-Japan High-Yielding
Equity Fund, will fluctuate within a wide range, so an investor could lose
money over short or even long periods. If the value of the Fund's
investments goes down, you may lose money.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement,
52 WisdomTree Trust Prospectus
custodial, and other operational risks; and the less stringent investor
protection and disclosure standards of some foreign markets. Since foreign
exchanges may be open on days when the Fund does not price its shares, the
value of the securities in the Fund's portfolio may change on days when
shareholders will not be able to purchase or sell the Fund's shares. All of
these factors can make foreign investments more volatile and potentially
less liquid than U.S. investments. In addition, foreign markets can perform
differently from the U.S. market due to increased risks of adverse issuer,
political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of companies of a single country or
region it is more likely to be impacted by events or conditions affecting
that country or region. For example, political and economic conditions and
changes in regulatory, tax, or economic policy in a country could
significantly affect the market in that country and in surrounding or
related countries. The Pacific Basin economies are in all stages of
economic development. The majority of the economies in the region can be
characterized as either developing or newly industrialized. Many of the
Pacific Basin economies are generally in recession. Many of their economies
are characterized by high inflation, undeveloped financial services
sectors, and heavy reliance on international trade. Currency devaluations
or restrictions, political and social instability, and deteriorating
economic conditions have resulted in significant market downturns and
volatility. The Australia and New Zealand economies are dependent on the
economies of Asian countries and on the price and demand for agricultural
products and natural resources. The Fund generally invests a significant
percentage of its assets (sometimes more than 80%) in companies organized
in Australia.
o Mid-Capitalization Investing. The Fund invests in securities of
mid-capitalization companies.
o The securities of mid-capitalization companies may be more vulnerable
to adverse issuer, market, political, or economic developments than
the market as a whole or other types of securities.
o The securities of mid-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of mid-capitalization companies.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
WisdomTree Trust Prospectus 53
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment,but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 100,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$3,500 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $7,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $3,500 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $7,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $48,497 if the
Creation Unit is redeemed after one year, $137,075 if the Creation Unit is
redeemed after three years, $233,657 if the Creation Unit is redeemed after five
years and $515,033 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
54 WisdomTree Trust Prospectus
WisdomTree International Dividend Funds
o WisdomTree DEFA Fund
o WisdomTree DEFA High-Yielding Equity Fund
o WisdomTree Europe Total Dividend Fund
o WisdomTree Europe High-Yielding Equity Fund
o WisdomTree Europe SmallCap Dividend Fund
o WisdomTree Japan Total Dividend Fund
o WisdomTree Japan High-Yielding Equity Fund
o WisdomTree Japan SmallCap Dividend Fund
o WisdomTree Pacific ex-Japan Total Dividend Fund
o WisdomTree Pacific ex-Japan High-Yielding Equity Fund
o WisdomTree International LargeCap Dividend Fund
o WisdomTree International Dividend Top 100 Fund
o WisdomTree International MidCap Dividend Fund
o WisdomTree International SmallCap Dividend Fund
o WisdomTree Emerging Markets High-Yielding Equity Fund
--------------------------------------------------------------------------------
WisdomTree International LargeCap Dividend Fund
Fund Facts
Cusip Number:
97717W794
Exchange Trading Symbol:
DOL
--------------------------------------------------------------------------------
WisdomTree International LargeCap Dividend Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree International LargeCap Dividend Index. Since the
Fund's investment objective has been adopted as a non-fundamental investment
policy, the Fund's investment objective may be changed without a vote of
shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree International LargeCap
Dividend Index. The Fund attempts to invest all, or substantially all, of its
assets in the stocks that make up the Index. The Fund generally uses a
Representative Sampling strategy to achieve its investment objective.
Index Description
The WisdomTree International LargeCap Dividend Index measures the performance of
companies that pay regular cash dividends from the large-capitalization segment
of markets in Europe, Far East Asia and Australasia and that meet specified
requirements as of the Index measurement date. The Index is created by selecting
from the WisdomTree DEFA Index the 300 companies in the Index with the highest
market capitalizations. Companies are weighted in the Index based on regular
cash dividends paid. The Index consists of large-capitalization securities. In
this sense, it is a dividendweighted, large-capitalization index for Europe, Far
East Asia and Australasia. As of June 30, 2007, approximately 100% of the
capitalization of the Index consisted of companies with market capitalizations
over $10.0 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree International LargeCap
Dividend Fund, will fluctuate within a wide range, so an investor could
lose money over short or even long periods. If the value of the Fund's
investments goes down, you may lose money.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
disclosure standards of some foreign markets. Since foreign exchanges may
be open on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders
will not be able to purchase
WisdomTree Trust Prospectus 55
or sell the Fund's shares. All of these factors can make foreign
investments more volatile and potentially less liquid than U.S.
investments. In addition, foreign markets can perform differently from the
U.S. market due to increased risks of adverse issuer, political,
regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of companies of a single country or
region it is more likely to be impacted by events or conditions affecting
that country or region. For example, political and economic conditions and
changes in regulatory, tax, or economic policy in a country could
significantly affect the market in that country and in surrounding or
related countries and have a negative impact on a Fund's performance. The
Fund generally invests a relatively large percentage of its assets in
companies organized in the United Kingdom.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.48%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.48%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
56 WisdomTree Trust Prospectus
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$49 $154 $269 $604
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$49 $154 $269 $604
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 100,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$6,000 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $7,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $6,000 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $7,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $46,359 if the
Creation Unit is redeemed after one year, $119,807 if the Creation Unit is
redeemed after three years, $200,045 if the Creation Unit is redeemed after five
years and $434,608 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 57
WisdomTree International Dividend Funds
o WisdomTree DEFA Fund
o WisdomTree DEFA High-Yielding Equity Fund
o WisdomTree Europe Total Dividend Fund
o WisdomTree Europe High-Yielding Equity Fund
o WisdomTree Europe SmallCap Dividend Fund
o WisdomTree Japan Total Dividend Fund
o WisdomTree Japan High-Yielding Equity Fund
o WisdomTree Japan SmallCap Dividend Fund
o WisdomTree Pacific ex-Japan Total Dividend Fund
o WisdomTree Pacific ex-Japan High-Yielding Equity Fund
o WisdomTree International LargeCap Dividend Fund
o WisdomTree International Dividend Top 100 Fund
o WisdomTree International MidCap Dividend Fund
o WisdomTree International SmallCap Dividend Fund
o WisdomTree Emerging Markets High-Yielding Equity Fund
--------------------------------------------------------------------------------
WisdomTree International Dividend Top 100 Fund
Fund Facts
Cusip Number:
97717W786
Exchange Trading Symbol:
DOO
--------------------------------------------------------------------------------
WisdomTree International Dividend Top 100 Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree International Dividend Top 100 Index. Since the
Fund's investment objective has been adopted as a non-fundamental investment
policy, the Fund's investment objective may be changed without a vote of
shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree International Dividend Top
100 Index. The Fund attempts to invest all, or substantially all, of its assets
in the stocks that make up the Index. The Fund generally uses a Replication
strategy to achieve its investment objective and generally will hold each stock
in approximately the same proportion as its weighting in the Index.
Index Description
The WisdomTree International Dividend Top 100 Index measures the performance of
100 high dividend-yielding companies from Europe, Far East Asia and Australasia.
The Index is created by selecting the 100 highest dividend-yielding companies
from the WisdomTree International LargeCap Dividend Index that meet specified
requirements as of the Index measurement date. 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 annual dividend yield by the sum of all
the annual dividend yields for all the component companies in the Index. The
Index consists of selected large-capitalization securities. In this sense, it is
a dividend-yield weighted large-capitalization developed market index for
Europe, Far East Asia and Australasia. As of June 30, 2007, approximately 100%
of the capitalization of the Index consisted of companies with market
capitalizations over $10.0 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree International Dividend Top 100
Fund, will fluctuate within a wide range, so an investor could lose money
over short or even long periods. If the value of the Fund's investments
goes down, you may lose money.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include
58 WisdomTree Trust Prospectus
fluctuations in foreign currencies; withholding or other taxes; trading,
settlement, custodial, and other operational risks; and the less stringent
investor protection and disclosure standards of some foreign markets. Since
foreign exchanges may be open on days when the Fund does not price its
shares, the value of the securities in the Fund's portfolio may change on
days when shareholders will not be able to purchase or sell the Fund's
shares. All of these factors can make foreign investments more volatile and
potentially less liquid than U.S. investments. In addition, foreign markets
can perform differently from the U.S. market due to increased risks of
adverse issuer, political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of companies of a single country or
region it is more likely to be impacted by events or conditions affecting
that country or region. For example, political and economic conditions and
changes in regulatory, tax, or economic policy in a country could
significantly affect the market in that country and in surrounding or
related countries and have a negative impact on a Fund's performance. The
Fund generally invests a relatively large percentage of its assets in
companies organized in the United Kingdom.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
WisdomTree Trust Prospectus 59
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 100,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$2,500 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $7,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $2,500 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $7,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $46,497 if the
Creation Unit is redeemed after one year, $135,075 if the Creation Unit is
redeemed after three years, $231,657 if the Creation Unit is redeemed after five
years and $513,033 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
60 WisdomTree Trust Prospectus
WisdomTree International Dividend Funds
o WisdomTree DEFA Fund
o WisdomTree DEFA High-Yielding Equity Fund
o WisdomTree Europe Total Dividend Fund
o WisdomTree Europe High-Yielding Equity Fund
o WisdomTree Europe SmallCap Dividend Fund
o WisdomTree Japan Total Dividend Fund
o WisdomTree Japan High-Yielding Equity Fund
o WisdomTree Japan SmallCap Dividend Fund
o WisdomTree Pacific ex-Japan Total Dividend Fund
o WisdomTree Pacific ex-Japan High-Yielding Equity Fund
o WisdomTree International LargeCap Dividend Fund
o WisdomTree International Dividend Top 100 Fund
o WisdomTree International MidCap Dividend Fund
o WisdomTree International SmallCap Dividend Fund
o WisdomTree Emerging Markets High-Yielding Equity Fund
--------------------------------------------------------------------------------
WisdomTree International MidCap Dividend Fund
Fund Facts
Cusip Number:
97717W778
Exchange Trading Symbol:
DIM
--------------------------------------------------------------------------------
WisdomTree International MidCap Dividend Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree International MidCap Dividend Index. Since the
Fund's investment objective has been adopted as a non-fundamental investment
policy, the Fund's investment objective may be changed without a vote of
shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree International MidCap
Dividend Index. The Fund attempts to invest all, or substantially all, of its
assets in the stocks that make up the Index. The Fund generally uses a
Representative Sampling strategy to achieve its investment objective.
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 consists
of primarily mid-capitalization securities. In this sense, it is a
dividend-weighted, mid-capitalization index for Europe, Far East Asia and
Australasia. As of June 30, 2007, approximately 74% of the capitalization of the
Index consisted of companies with market capitalizations between $2.0 and $10.0
billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree International MidCap Dividend
Fund, will fluctuate within a wide range, so an investor could lose money
over short or even long periods. If the value of the Fund's investments
goes down, you may lose money.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
disclosure standards of some foreign markets. Since foreign exchanges may
be open
WisdomTree Trust Prospectus 61
on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders
will not be able to purchase or sell the Fund's shares. All of these
factors can make foreign investments more volatile and potentially less
liquid than U.S. investments. In addition, foreign markets can perform
differently from the U.S. market due to increased risks of adverse issuer,
political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of companies of a single country or
region it is more likely to be impacted by events or conditions affecting
that country or region. For example, political and economic conditions and
changes in regulatory, tax, or economic policy in a country could
significantly affect the market in that country and in surrounding or
related countries and have a negative impact on a Fund's performance. The
Fund generally invests a relatively large percentage of its assets in
companies organized in the United Kingdom.
o Mid-Capitalization Investing. The Fund invests primarily in
mid-capitalization companies. As a result, the Fund may be more volatile
than funds that invest in larger, more established companies.
o The securities of mid-capitalization companies may be more vulnerable
to adverse issuer, market, political, or economic developments than
the market as a whole or other types of securities.
o The securities of mid-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of mid-capitalization companies.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
62 WisdomTree Trust Prospectus
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 100,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$8,000 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $7,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $8,000 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $7,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $57,497 if the
Creation Unit is redeemed after one year, $146,075 if the Creation Unit is
redeemed after three years, $242,657 if the Creation Unit is redeemed after five
years and $524,033 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 63
WisdomTree International Dividend Funds
o WisdomTree DEFA Fund
o WisdomTree DEFA High-Yielding Equity Fund
o WisdomTree Europe Total Dividend Fund
o WisdomTree Europe High-Yielding Equity Fund
o WisdomTree Europe SmallCap Dividend Fund
o WisdomTree Japan Total Dividend Fund
o WisdomTree Japan High-Yielding Equity Fund
o WisdomTree Japan SmallCap Dividend Fund
o WisdomTree Pacific ex-Japan Total Dividend Fund
o WisdomTree Pacific ex-Japan High-Yielding Equity Fund
o WisdomTree International LargeCap Dividend Fund
o WisdomTree International Dividend Top 100 Fund
o WisdomTree International MidCap Dividend Fund
o WisdomTree International SmallCap Dividend Fund
o WisdomTree Emerging Markets High-Yielding Equity Fund
--------------------------------------------------------------------------------
WisdomTree International SmallCap Dividend Fund
Fund Facts
Cusip Number:
97717W760
Exchange Trading Symbol:
DLS
--------------------------------------------------------------------------------
WisdomTree International SmallCap Dividend Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree International SmallCap Dividend Index. Since the
Fund's investment objective has been adopted as a non-fundamental investment
policy, the Fund's investment objective may be changed without a vote of
shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree International SmallCap
Dividend Index. The Fund attempts to invest all, or substantially all, of its
assets in the stocks that make up the Index. The Fund generally uses a
Representative Sampling strategy to achieve its investment objective.
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 consists
of primarily smallcapitalization securities. In this sense, it is a
dividend-weighted, small-capitalization index for Europe, Far East Asia and
Australasia. As of June 30, 2007, approximately 76% of the capitalization of the
Index consisted of companies with market capitalizations less than $2.0 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree International SmallCap
Dividend Fund, will fluctuate within a wide range, so an investor could
lose money over short or even long periods. If the value of the Fund's
investments goes down, you may lose money.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
disclosure standards of some foreign markets. Since foreign exchanges may
be open
WisdomTree Trust Prospectus 64
on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders
will not be able to purchase or sell the Fund's shares. All of these
factors can make foreign investments more volatile and potentially less
liquid than U.S. investments. In addition, foreign markets can perform
differently from the U.S. market due to increased risks of adverse issuer,
political, regulatory, market, and economic developments.
o Small-Capitalization Investing. The Fund invests primarily in
small-capitalization companies. As a result, the Fund may be more volatile
than funds that invest in larger, more established companies.
o Small-capitalization companies may be less financially secure than
larger, more established mid- and large capitalization companies.
o The securities of small-capitalization companies may be more
vulnerable to adverse issuer, market, political, or economic
developments than the market as a whole or other types of securities.
o The securities of small-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of small-capitalization companies.
o Small-capitalization companies may be particularly sensitive to
changes in interest rates, borrowing costs and earnings.
o Mid-Capitalization Investing. The Fund invests in securities of
mid-capitalization companies.
o The securities of mid-capitalization companies may be more vulnerable
to adverse issuer, market, political, or economic developments than
the market as a whole or other types of securities.
o The securities of mid-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of mid-capitalization companies.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of companies of a single country or
region it is more likely to be impacted by events or conditions affecting
that country or region. For example, political and economic conditions and
changes in regulatory, tax, or economic policy in a country could
significantly affect the market in that country and in surrounding or
related countries and have a negative impact on a Fund's performance. The
Fund generally invests a relatively large percentage of its assets in
companies organized in Japan.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
o Industrial Sector Investing. The Fund generally invests a relatively large
percentage of its assets in the industrial sector. The industry sector can
be significantly affected by, among other things, overall capital spending
levels, economic cycles, technical obsolescence, labor relations,
government regulations, the volatility of commodity prices and currency
exchange rates, and worldwide competition.
Performance Information
Although the Fund commenced operations on June 16, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
WisdomTree Trust Prospectus 65
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
66 WisdomTree Trust Prospectus
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 100,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$10,000 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $7,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $10,000 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $7,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $61,497 if the
Creation Unit is redeemed after one year, $150,075 if the Creation Unit is
redeemed after three years, $246,657 if the Creation Unit is redeemed after five
years and $528,033 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 67
WisdomTree International Dividend Funds
o WisdomTree DEFA Fund
o WisdomTree DEFA High-Yielding Equity Fund
o WisdomTree Europe Total Dividend Fund
o WisdomTree Europe High-Yielding Equity Fund
o WisdomTree Europe SmallCap Dividend Fund
o WisdomTree Japan Total Dividend Fund
o WisdomTree Japan High-Yielding Equity Fund
o WisdomTree Japan SmallCap Dividend Fund
o WisdomTree Pacific ex-Japan Total Dividend Fund
o WisdomTree Pacific ex-Japan High-Yielding Equity Fund
o WisdomTree International LargeCap Dividend Fund
o WisdomTree International Dividend Top 100 Fund
o WisdomTree International MidCap Dividend Fund
o WisdomTree International SmallCap Dividend Fund
o WisdomTree Emerging Markets High-Yielding Equity Fund
--------------------------------------------------------------------------------
WisdomTree Emerging Markets High-Yielding Equity Fund
Fund Facts
Cusip Number:
o 97717W315
Exchange Trading Symbol:
o DEM
--------------------------------------------------------------------------------
WisdomTree Emerging Markets High-Yielding Equity Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree Emerging Markets High-Yielding Equity Index. Since
the Fund's investment objective has been adopted as a non-fundamental investment
policy, the Fund's investment objective may be changed without a vote of
shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree Emerging Markets High-
Yielding Equity Index. The Fund attempts to invest all, or substantially all, of
its assets in the stocks that make up the Index. The Fund generally uses a
Representative Sampling strategy to achieve its investment objective.
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,
midcapitalization and small-capitalization securities. As of June 30, 2007,
approximately 47% of the Index consisted of companies with market
capitalizations over $10 billion and 41% of the Index consisted of companies
with market capitalizations between $2 and $10 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the Wisdom Tree Emerging Markets
High-Yielding Equity Fund, will fluctuate within a wide range, so an
investor could lose money over short or even long periods. If the value of
the Fund's investments goes down, you may lose money.
68 WisdomTree Trust Prospectus
o Mid-Capitalization Investing. The Fund invests in securities of
mid-capitalization companies.
o The securities of mid-capitalization companies may be more vulnerable
to adverse issuer, market, political, or economic developments than
the market as a whole or other types of securities.
o The securities of mid-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of mid-capitalization companies.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and, in some cases, less stringent investor protection
and disclosure standards. Since foreign exchanges may be open on days when
the Fund does not price its shares, the value of the securities in the
Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's shares. All of these factors can make foreign
investments more volatile and potentially less liquid than U.S.
investments. In addition, foreign markets can perform differently from the
U.S. market due to increased risks of adverse issuer, political,
regulatory, market, and economic developments.
o Emerging Markets Risk. 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.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of companies of a single country or
region it is more likely to be impacted by events or conditions affecting
that country or region. For example, political and economic conditions and
changes in regulatory, tax, or economic policy in a country could
significantly affect the market in that country and in surrounding or
related countries and have a negative impact on a Fund's performance. The
Fund generally invests a relatively large percentage of its assets in
companies organized in Taiwan, Brazil and South Korea.
o Basic Materials Investing. The Fund may invest a relatively large amount of
its assets in companies in the international Basic Materials sector. As
such, the Fund is more likely to be impacted by risks or events affecting
this sector of the world economy. These risks include but are not limited
to: commodity price volatility, sluggish demand for basic materials, world
economic growth, product liability for environmental damage, depletion of
natural resources, technological progress, and government regulations.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
Performance Information
No performance information is presented for the Fund because it has been in
operation for less than one full calendar year. After the first full calendar
year, a risk/return chart and table will be provided. Any past performance of
the Fund that will be shown will not be an indication of future results.
WisdomTree Trust Prospectus 69
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.63%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.63%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the Fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$64 $202 $351 $786
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$64 $202 $351 $786
Creation and Redemption Transaction Fees for Creation Units
The Fund issues and redeems shares at NAV only in blocks of 100,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$9,000 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $5,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $9,000 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $5,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $50,188 if the
Creation Unit is redeemed after one year, $118,846 if the Creation Unit is
redeemed after three years, $193,636 if the Creation Unit is redeemed after five
years and $411,152 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
70 WisdomTree Trust Prospectus
Management
Investment Adviser
As investment adviser, 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 does not manage any other investment companies and has limited
experience as an investment adviser. 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.
Under the Investment Advisory Agreement, WisdomTree Asset Management agrees to
pay all expenses of the Trust, except compensation and expenses of the
Independent Trustees, counsel to the Independent Trustees and the Trust's Chief
Compliance Officer, interest expenses and taxes, brokerage expenses, and other
expenses connected with the execution of portfolio transactions, any
distribution fees or expenses, legal fees or expenses and extraordinary
expenses. Pursuant to a separate contractual arrangement, WisdomTree Asset
Management arranges for the provision of chief compliance officer ("CCO")
services to the Trust, and is liable and responsible for, and administers,
payments to the CCO, the Independent Trustees and counsel to the Independent
Trustees.
The basis for the Board of Trustees' approval of the Investment Advisory
Agreement is available in the Trust's Annual Report to Shareholders for the
period ended March 31, 2007.
WisdomTree Asset Management expects to receive fees from each Fund, based on a
percentage of the Fund's average daily net assets, as shown in the following
table:
WisdomTree Trust Prospectus 71
Name of Fund Management Fee
--------------------------------------------------------------------------------
WisdomTree Domestic Dividend Funds
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 International Dividend Funds
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 Asset Management is a registered investment adviser with offices
located at 48 Wall Street, Suite 1100, New York, NY 10005.
Sub-Adviser
BNY Investment Advisors, a separately identifiable division of The Bank of New
York, a New York state banking corporation, serves as the sub-adviser for each
Fund (the "Sub-Adviser"). BNY Investment Advisors has its principal place of
business at 1633 Broadway, 13th Floor, New York, New York, 10019. The Bank of
New York began offering investment services in the 1830s, and as of June 2007
managed more that $142 billion in investments for institutions and individuals.
The Bank of New York 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.
The Sub-Adviser is entitled to receive the fees indicated below for acting as
Sub-Adviser to the Domestic Equity Funds:
o 5 basis points (0.05%) of the first $100 million in combined daily net
assets of all Domestic Equity Funds; and
o 3 basis points (0.03%) of the combined daily net assets of all
Domestic Equity Funds in excess of $100 million.
The Sub-Adviser is entitled to receive the fees indicated below for acting as
Sub-Adviser to the International Funds:
o 20 basis points (0.20%) of the first $50 million in the total daily
net assets of all International Funds;
o 15 basis points (0.15%) of the next $50 million in the total daily net
assets of all International Funds;
72 WisdomTree Trust Prospectus
o 10 basis points (0.10%) of the total daily net assets of all
International Funds in excess of $100 million; and
o 5 basis points (0.05%) of the total daily net assets of all
International Funds in excess of $1 billion.
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 this Division. Mr. Zyla, a Managing
Director of the Sub-Adviser, has supervised the Index Fund 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 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 Fund Management 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 Division, Mr Rose worked in the 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 Portfolio Manager is responsible for various functions related to portfolio
management, including, but not limited to, investing cash inflows, implementing
investment strategy, researching and reviewing investment strategy, and
overseeing members of his or her portfolio management team with more limited
responsibilities. Each Portfolio Manager is authorized to make investment
decisions for all portfolios managed by the team. Each Portfolio Manager has
appropriate limitations on his or her authority for risk management and
compliance purposes. No member of the portfolio team manages assets outside of
the team. Mr. Zyla manages the team.
The Trust's SAI provides additional information about the Portfolio Managers'
compensation, other accounts managed by the Portfolio Managers, and the
Portfolio Managers' ownership of shares in the Funds for which they are
Portfolio Managers.
Administrator, Custodian and Transfer Agent
The Bank of New York is the administrator, custodian and transfer agent for each
Fund.
Shareholder Information
Additional shareholder information is available free of charge by calling:
1-866-909-WISE (9473) or visiting the Funds' website at www.wisdomtree.com.
Buying and Selling Shares
Most investors will buy and sell shares of the Funds through brokers. Shares of
the Funds trade on national securities exchanges and elsewhere during the
trading day and can be bought and sold throughout the trading day like other
shares of publicly traded securities. When buying or selling shares through a
broker most investors will incur customary brokerage commissions and charges.
WisdomTree Trust Prospectus 73
Shares of the Funds trade under the trading symbols listed for each respective
Fund in the section describing such Fund.
Shares of the Funds may be acquired or redeemed directly from a Fund only in
Creation Units or multiples thereof, as discussed in the Creation and Redemption
section. Once created, shares of the Funds trade in the secondary market in
amounts less than a Creation Unit.
Share Trading Prices
As with other types of securities, the trading prices of shares in the secondary
market can be affected by market forces such as supply and demand, economic
conditions and other factors. The price you pay or receive when you buy or sell
your shares in the secondary market may be more or less than the NAV of such
shares.
The approximate value of shares of each Fund is disseminated every fifteen
seconds throughout the trading day by the national securities exchange on which
such Fund is listed or by other information providers. This approximate value
should not be viewed as a "real-time" update of the NAV, because the approximate
value may not be calculated in the same manner as the NAV, which is computed
once per day. The approximate value generally is determined by using current
market quotations and/or price quotations obtained from broker-dealers that may
trade in the portfolio securities held by the Funds. The Funds are not involved
in, or responsible for, the calculation or dissemination of the approximate
value and make no warranty as to its accuracy.
Determination of Net Asset Value
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 may also use fair-value pricing if the
value of a security it holds has been materially affected by events occurring
before the Fund's pricing time but after the close of the primary markets or
exchanges on which the security is traded. For example, this may occur 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 may include price movements in U.S. markets that
are deemed to affect the value of foreign securities. Fair-value pricing also
may be used if, for example, 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. Since the International Equity 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.
74 WisdomTree Trust Prospectus
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.
Book Entry
Shares of the Funds are held in book-entry form, which means that no stock
certificates are issued. The Depository Trust Company ("DTC") or its nominee is
the record owner of all outstanding shares of each Fund.
Investors owning shares of the Funds are beneficial owners as shown on the
records of DTC or its participants. DTC serves as the securities depository for
all shares of the Funds. Participants include DTC, securities brokers and
dealers, banks, trust companies, clearing corporations, and other institutions
that directly or indirectly maintain a custodial relationship with DTC. As a
beneficial owner of shares, you are not entitled to receive physical delivery of
stock certificates or to have shares registered in your name, and you are not
considered a registered owner of shares. Therefore, to exercise any right as an
owner of shares, you must rely upon the procedures of DTC and its participants.
These procedures are the same as those that apply to any securities that you
hold in book entry or "street name" form. Your broker will provide you with
account statements, confirmations of your purchases and sales, and tax
information.
Delivery of Shareholder Documents - Householding
Householding is an option available to certain investors of the Funds.
Householding is a method of delivery, based on the preference of the individual
investor, in which a single copy of certain shareholder documents can be
delivered to investors who share the same address, even if their accounts are
registered under different names. Householding for the Funds is available
through certain broker-dealers. If you are interested in enrolling in
householding and receiving a single copy of prospectuses and other shareholder
documents, please contact your broker-dealer. If you are currently enrolled in
householding and wish to change your householding status, please contact your
broker-dealer.
Frequent Purchases and Redemptions of Fund Shares
Since the Funds are ETFs, only a few institutional investors (known as
"Authorized Participants") are authorized to purchase and redeem shares directly
with the issuing Fund. Since frequent in-kind purchases and redemptions of
shares of a Fund do not disrupt portfolio management, increase the Funds'
trading costs, lead to realization of capital gains or otherwise harm the Fund
shareholders, the Board of Trustees has determined that it is not necessary to
adopt policies and procedures to detect and deter frequent purchases and
redemptions of Fund shares ("frequent trading"). Because these trades are
effected in-kind (i.e., for securities and not for cash), they do not cause any
of the aforementioned harmful effects that may result from frequent cash trades.
Each Fund accommodates frequent purchases and redemptions of Creation Units by
Authorized Participants and does not place a limit on purchases or redemptions
of Creation Units by these investors. Each Fund reserves the right, but does not
have the obligation, to reject any order at any time. Each Fund reserves the
right to impose restrictions on disruptive, excessive, or short-term trading.
The vast majority of trading in shares of the Funds occurs on national
securities exchanges and does not directly involve the issuance or redemption of
Fund shares. Because these trades do not involve the issuing Fund directly, they
do not cause any of the harmful effects discussed above that may result from
frequent cash trades.
WisdomTree Trust Prospectus 75
Investments by Registered Investment Companies
Section 12(d)(1) of the Investment Company Act of 1940 restricts investments by
registered investment companies in the securities of other investment companies,
including shares of each Fund. Registered investment companies are permitted to
invest in the Funds beyond the limits set forth in section 12(d)(1), subject to
certain terms and conditions set forth in an SEC exemptive order issued to the
WisdomTree Trust, including that such investment companies enter into an
agreement with the Funds.
Taxes
As with any investment, you should consider how your investment in shares of the
Funds will be taxed. The tax information in this Prospectus is provided as
general information. You should consult your own tax professional about the tax
consequences of an investment in shares of the Funds.
Unless your investment in shares is made through a tax-exempt entity or
tax-deferred retirement account, such as an IRA plan, you need to be aware of
the possible tax consequences when:
o A Fund makes distributions,
o You sell shares, and
o You purchase or redeem Creation Units.
Taxes on Distributions
Distributions from a Fund's net investment income (other than qualified dividend
income), including distributions out of a Fund's net short-term capital gains,
if any, and distributions of income from securities lending, are taxable to you
as ordinary income. Distributions by a Fund of net long-term capital gains in
excess of net short-term capital losses (capital gain dividends) are taxable to
you as long-term capital gains, regardless of how long you have held a Fund's
shares. Distributions by a Fund that qualify as qualified dividend income are
taxable to you at long-term capital gain rates. Under current law, the taxation
of qualified dividend income at long-term capital gain rates will no longer
apply for taxable years beginning after December 31, 2010. In order for a
distribution by the Fund to be treated as qualified dividend income, a Fund must
meet holding period and other requirements with respect to its dividend paying
stocks and you must meet holding period requirements and other requirements with
respect to the Fund's shares. In general, your distributions are subject to
federal income tax for the year when they are paid. Certain distributions paid
in January, however, may be treated as paid on December 31 of the prior year.
Dividends and interest received by a Fund with respect to foreign securities may
give rise to withholding and other taxes imposed by foreign countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. Since more than 50% of the total assets of each of
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 Fund,
WisdomTree International Dividend Top 100 Fund, WisdomTree International MidCap
Fund,WisdomTree International SmallCap Dividend Fund and WisdomTree Emerging
Markets High-Yielding Equity Fund will consist of foreign stocks or securities,
those Funds intend to "pass through" to you certain foreign income taxes
(including withholding taxes) paid by those Funds. This means that you will be
considered to have received as an additional dividend your share of such foreign
taxes, but you may be entitled to either a corresponding tax deduction in
calculating your taxable income, or, subject to certain limitations, a credit in
calculating your federal income tax.
76 WisdomTree Trust Prospectus
If you are neither a resident nor a citizen of the United States or if you are a
foreign entity, the Fund's ordinary income dividends (which include
distributions of net short-term capital gains) will generally be subject to a
30% U.S. withholding tax, unless a lower treaty rate applies, provided, however,
that for taxable years of the Fund beginning after December 31, 2004, but not
beginning after December 31, 2007, interest related dividends and short-term
capital gain dividends generally will not be subject to such U.S. withholding
tax.
If you are a resident or a citizen of the United States, by law, back-up
withholding will apply to your distributions and proceeds if you have not
provided a taxpayer identification number or social security number and made
other required certifications.
Taxes When Fund Shares are Sold
Currently, any capital gain or loss realized upon a sale of Fund shares is
generally treated as a long-term gain or loss if shares have been held for more
than one year. Any capital gain or loss realized upon a sale of shares held for
one year or less is generally treated as a short-term gain or loss, except that
any capital loss on the sale of shares held for six months or less is treated as
long-term capital loss to the extent that capital gain dividends were paid with
respect to such shares. The ability to deduct capital losses may be limited.
Taxes on Creation and Redemption of Creation Units
An Authorized Participant who exchanges equity securities for Creation Units
generally will recognize a gain or a loss. The gain or loss will be equal to the
difference between the market value of the Creation Units at the time and the
exchanger's aggregate basis in the securities surrendered and the cash component
paid. A person who exchanges Creation Units for equity securities will generally
recognize a gain or loss equal to the difference between the exchanger's basis
in the Creation Units and the aggregate market value of the securities received
and a cash component. The Internal Revenue Service, however, may assert a loss
realized upon an exchange of securities for Creation Units cannot be deducted
currently under the rules governing "wash sales," or on the basis that there has
been no significant change in economic position. Persons exchanging securities
should consult their own tax adviser with respect to whether wash sale rules
apply and when a loss might be deductible.
Under current law, any capital gain or loss realized upon the redemption (or
creation) of Creation Units will generally be treated as long-term capital gain
or loss if the shares (or equity securities) have been held for more than one
year and otherwise as short-term capital gain or loss.
Under current federal tax law, any capital gain or loss realized upon redemption
of Creation Units is generally treated as long-term capital gain or loss if the
shares have been held for more than one year and as a short-term capital gain or
loss if the shares have been held for one year or less.
If you purchase or redeem Creation Units, you will be sent a confirmation
statement showing how many shares you purchased or sold and at what price.
The foregoing discussion summarizes some of the consequences under current
federal tax law of an investment in a Fund. It is not a substitute for personal
tax advice. You may also be subject to state and local taxation on Fund
distributions and sales of shares. Consult your personal tax adviser about the
potential tax consequences of an investment in shares of a Fund under all
applicable tax laws.
WisdomTree Trust Prospectus 77
Creation and Redemption
The shares that trade in the secondary market are "created" at NAV. Each Fund
issues and redeems shares at 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.
Each "creator" enters into an authorized participant agreement with the
Distributor, and deposits into the applicable Fund a portfolio of securities
closely approximating the holdings of the Fund and pays or receives a specified
amount of cash equal to the difference between the NAV of a Creation Unit and
the market value of the basket of securities ("cash component") in exchange for
a specified number of Creation Units. Each business day, prior to the opening of
trading, the Fund will designate through the National Securities Clearing
Corporation ("NSCC"), the names and number of shares of each security to be
included in that day's basket. Each Fund reserves the right to accept a basket
of securities or cash that differs from the published basket. A Fund will not
issue fractional Creation Units.
Similarly, shares can only be redeemed in a specified number of Creation Units
principally in-kind for a portfolio of securities held by the Fund and the
payment or receipt of the specified cash component. Except when aggregated in
Creation Units, shares are not redeemable by a Fund. Each Fund reserves the
right to honor a redemption request by delivering a basket of securities or cash
that differs from the published basket. The prices at which creations and
redemptions occur are based on the next calculation of NAV after an order is
received in proper form.
Creations and redemptions must be made by an Authorized Participant or through a
firm that is either a member of the Continuous Net Settlement System of the NSCC
or 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. Information about the procedures regarding creation and redemption
of Creation Units (including the cut-off times for receipt of creation and
redemption orders) is included in the Trust's SAI.
Authorized Participants and the Continuous Offering of Shares
Because new shares may be created and issued on an ongoing basis, at any point
during the life of a Fund, a "distribution," as such term is used in the
Securities Act of 1933 ("Securities Act"), may be occurring. 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 that could render them statutory underwriters and subject to the
prospectus-delivery and liability provisions of the Securities Act. Nonetheless,
any determination of whether one is an underwriter must take into account all
the relevant facts and circumstances of each particular case.
Broker-dealers should also note that dealers who are not "underwriters," but are
participating in a distribution (as contrasted to ordinary secondary
transactions), and thus dealing with shares that are part of an "unsold
allotment" within the meaning of Section 4(3)(C) of the Securities Act, would be
unable to take advantage of the prospectus delivery exemption provided by
Section 4(3) of the Securities Act. For delivery of prospectuses to exchange
members, the prospectus delivery mechanism of Rule 153 under the Securities Act
is only available with respect to transactions on a national securities
exchange.
Creation and Redemption Transaction Fees for Creation Units
Each Fund may impose a creation transaction fee and a redemption transaction fee
to offset transfer and other transaction costs associated with the issuance and
redemption of Creation Units of shares. The creation and redemption transaction
fees for creations and redemptions using the "in-kind" creation and redemption
process are listed below. The standard creation transaction fee is charged to
each purchaser on the day such purchaser creates a Creation Unit. The fee is a
single charge and will be the amount indicated below regardless of the number of
Creation Units purchased by an investor on the same day. Similarly, the standard
redemption transaction fee will be the amount indicated regardless of the number
of Creation Units
78 WisdomTree Trust Prospectus
redeemed that day. Purchasers and redeemers of Creation Units for cash (when
cash creations and redemptions are permitted) will also be subject to an
additional variable charge of up to a maximum of four times the amount shown
below under "Maximum Creation/Redemption Transaction Fee" to offset the
transaction cost to the Fund of buying portfolio securities. In addition,
purchasers and redeemers of shares in Creation Units are responsible for payment
of the costs of transferring securities to or out of a Fund. From time to time,
WisdomTree Asset Management may cover the cost of any transaction fees.
The following table also shows, as of July 1, 2007, the approximate value of one
Creation Unit per Fund, including the standard creation and redemption
transaction fee. These fees are payable only by investors who purchase shares
directly from a Fund. Retail investors who purchase shares through their
brokerage account will not pay these fees.
Approximate Standard Creation/ Maximum Creation/
Value of One Redemption Redemption
Name of Fund Creation Unit Transaction Fee Transaction Fee
--------------------------------------------------------------------------------------------------------------
WisdomTree Domestic Dividend Funds
WisdomTree Total Dividend Fund $ 3,000,000 $ 4,000 $ 8,500
WisdomTree High-Yielding Equity Fund $ 3,000,000 $ 2,200 $ 2,500
WisdomTree LargeCap Dividend Fund $ 3,000,000 $ 1,500 $ 2,000
WisdomTree Dividend Top 100 Fund $ 3,000,000 $ 500 $ 600
WisdomTree MidCap Dividend Fund $ 3,000,000 $ 2,500 $ 3,000
WisdomTree SmallCap Dividend Fund $ 3,000,000 $ 4,000 $ 4,500
WisdomTree International Dividend Funds
WisdomTree DEFA Fund $17,000,000 $15,000 $50,000
WisdomTree DEFA High-Yielding Equity Fund $ 7,000,000 $ 9,500 $20,000
WisdomTree Europe Total Dividend Fund $ 7,000,000 $ 7,500 $25,000
WisdomTree Europe High-Yielding Equity Fund $ 7,000,000 $ 2,500 $ 7,500
WisdomTree Europe SmallCap Dividend Fund $ 7,000,000 $10,000 $11,000
WisdomTree Japan Total Dividend Fund $ 6,000,000 $ 4,000 $10,000
WisdomTree Japan High-Yielding Equity Fund $ 6,000,000 $ 2,500 $ 3,500
WisdomTree Japan SmallCap Dividend Fund $ 5,000,000 $ 5,000 $ 6,000
WisdomTree Pacific ex-Japan Total Dividend Fund $ 7,000,000 $ 8,000 $18,500
WisdomTree Pacific ex-Japan High-Yielding Equity Fund $ 7,000,000 $ 3,500 $ 4,500
WisdomTree International LargeCap Dividend Fund $ 7,000,000 $ 6,000 $ 8,000
WisdomTree International Dividend Top 100 Fund $ 7,000,000 $ 2,500 $ 3,500
WisdomTree International MidCap Dividend Fund $ 7,000,000 $ 8,000 $20,000
WisdomTree International SmallCap Dividend Fund $ 7,000,000 $10,000 $25,000
WisdomTree Emerging Markets High-Yielding Equity Fund $ 5,000,000 $ 9,000 $27,000
Distribution
ALPS Distributors, Inc. (the "Distributor") serves as the distributor of
Creation Units for each Fund on an agency basis. The Distributor does not
maintain a secondary market in shares of the Funds. The Distributor's principal
address is 1290 Broadway, Suite 1100, Denver, Colorado 80203.
The Distributor has no role in determining the policies of any Fund or the
securities that are purchased or sold by any Fund.
WisdomTree Trust Prospectus 79
Additional Notices
Shares of the Trust are not sponsored, endorsed, or promoted by any listing
exchange ("Exchange"). The Exchange makes no representation or warranty, express
or implied, to the owners of the shares of any Fund or any member of the public
regarding the ability of a fund to track the total return performance of any
Index or the ability of any Index identified herein to track stock market
performance. The Exchange is not responsible for, nor has it participated in,
the determination of the compilation or the calculation of any Index, nor in the
determination of the timing of, prices of, or quantities of the shares of any
Fund to be issued, nor in the determination or calculation of the equation by
which the shares are redeemable. The Exchange has no obligation or liability to
owners of the shares of any Fund in connection with the administration,
marketing, or trading of the shares of the Fund.
The Exchange does not guarantee the accuracy and/or the completeness of any
Index or any data included therein. The Exchange makes no warranty, express or
implied, as to results to be obtained by the WisdomTree Trust on behalf of its
Funds, owners of the shares, or any other person or entity from the use of the
subject Indexes or any data included therein. The Exchange makes no express or
implied warranties, and hereby expressly disclaims all warranties of
merchantability or fitness for a particular purpose with respect to any Index or
any data included therein. Without limiting any of the foregoing, in no event
shall the Exchange have any liability for any lost profits or indirect,
punitive, special, or consequential damages even if notified of the possibility
thereof.
WisdomTree Investments, WisdomTree Asset Management and the Funds make no
representation or warranty, express or implied, to the owners of shares of the
Funds or any member of the public regarding the advisability of investing in
securities generally or in the Funds particularly or the ability of the Indexes
to track general stock market performance. WisdomTree Investments is the
licensor of certain trademarks, service marks and trade names of the Funds.
WisdomTree Investments has no obligation to take the needs of the Funds or the
owners of shares of the Funds into consideration in determining, composing, or
calculating the Indexes. WisdomTree Investments is not responsible for and has
not participated in the determination of the timing of, prices at, or quantities
of shares of the Funds to be issued or in the determination or calculation of
the equation by which the shares of the Funds are redeemable.
The Funds,WisdomTree Investments and WisdomTree Asset Management do not
guarantee the accuracy, completeness, or performance of any Index or the data
included therein and shall have no liability in connection with any Index or
Index calculation. WisdomTree Investments has contracted with Standard & Poor's
("S&P") to calculate the Emerging Markets High-Yielding Equity Index. S&P shall
have no liability for any errors or omissions in calculating this Index.
Financial Highlights
The financial highlights table is intended to help you understand the Funds'
financial performance. The total return in the table represents the rate that an
investor would have earned (or lost) on an investment in the respective Fund
(assuming reinvestment of all dividends and distributions). For the period June
16, 2006 (commencement of investment operations) through March 31, 2007 (the
Funds' fiscal year end), the information has been derived from the financial
statements audited by Ernst & Young LLP, independent registered public
accounting firm, whose report, along with the Funds' financial statements, are
included in the Funds' Annual Report, which is available upon request.
Information is not presented for the Emerging Markets High-Yielding Equity Fund
as this Fund had not commenced operations as of the end of the fiscal year.
80 WisdomTree Trust Prospectus
Financial Highlights
WisdomTree Domestic Dividend Funds
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
June 16, 2006(1)
through
WisdomTree Total Dividend Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $50.32
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 1.18
Net realized and unrealized gain 7.28
--------------------------------------------------------------------------------
Total from investment operations 8.46
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.91)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.91)
--------------------------------------------------------------------------------
Net asset value, end of period $57.87
================================================================================
TOTAL RETURN(3) 16.84%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $89,698
Ratio to average net assets of:
Expenses, net of expense reimbursements/waivers 0.28%(4)
Expenses, prior to expense reimbursements/waivers 0.31%(4)
Net investment income 2.76%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 12%
================================================================================
For the period
June 16, 2006(1)
through
WisdomTree High-Yielding Equity Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 50.01
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 1.56
Net realized and unrealized gain 7.54
--------------------------------------------------------------------------------
Total from investment operations 9.10
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (1.12)
--------------------------------------------------------------------------------
Total dividends to shareholders (1.12)
--------------------------------------------------------------------------------
Net asset value, end of period $ 57.99
================================================================================
TOTAL RETURN(3) 18.23%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $205,874
Ratio to average net assets of:
Expenses, net of expense reimbursements/waivers 0.38%(4)
Expenses, prior to expense reimbursements/waivers 0.40%(4)
Net investment income 3.68%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 11%
================================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized. The total return would have been lower if
certain expenses had not been reimbursed/waived by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
WisdomTree Trust Prospectus 81
Financial Highlights (continued)
WisdomTree Domestic Dividend Funds
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
June 16, 2006(1)
through
WisdomTree LargeCap Dividend Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 50.34
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 1.11
Net realized and unrealized gain 7.32
--------------------------------------------------------------------------------
Total from investment operations 8.43
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.80)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.80)
--------------------------------------------------------------------------------
Net asset value, end of period $ 57.97
================================================================================
TOTAL RETURN(3) 16.77%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $333,339
Ratio to average net assets of:
Expenses, net of expense reimbursements/waivers 0.28%(4)
Expenses, prior to expense reimbursements/waivers 0.29%(4)
Net investment income 2.65%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 13%
================================================================================
For the period
June 16, 2006(1)
through
WisdomTree Dividend Top 100 Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 50.12
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 1.40
Net realized and unrealized gain 9.09
--------------------------------------------------------------------------------
Total from investments operations 10.49
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.92)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.92)
--------------------------------------------------------------------------------
Net asset value, end of period $ 59.69
================================================================================
TOTAL RETURN(3) 20.99%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $188,009
Ratio to average net assets of:
Expenses, net of expense reimbursements/waivers 0.38%(4)
Expenses, prior to expense reimbursements/waivers 0.40%(4)
Net investment income 3.29%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 21%
================================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized. The total return would have been lower if
certain expenses had not been reimbursed/waived by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
82 WisdomTree Trust Prospectus
Financial Highlights (concluded)
WisdomTree Domestic Dividend Funds
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
June 16, 2006(1)
through
WisdomTree MidCap Dividend Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 50.21
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 1.45
Net realized and unrealized gain 7.41
--------------------------------------------------------------------------------
Total from investment operations 8.86
--------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income (1.04)
Capital gains (0.01)
--------------------------------------------------------------------------------
Total dividends and distributions to shareholders (1.05)
--------------------------------------------------------------------------------
Net asset value, end of period $ 58.02
--------------------------------------------------------------------------------
TOTAL RETURN(3) 17.71%
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $78,333
Ratio to average net assets of:
Expenses, net of expense reimbursements/waivers 0.38%(4)
Expenses, prior to expense reimbursements/waivers 0.43%(4)
Net investment income 3.47%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 12%
================================================================================
For the period
June 16, 2006(1)
through
WisdomTree SmallCap Dividend Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 50.24
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 1.79
Net realized and unrealized gain 6.65
--------------------------------------------------------------------------------
Total from investments operations 8.44
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (1.27)
--------------------------------------------------------------------------------
Total dividends to shareholders (1.27)
--------------------------------------------------------------------------------
Net asset value, end of period $ 57.41
================================================================================
TOTAL RETURN(3) 16.88%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $111,948
Ratio to average net assets of:
Expenses, net of expense reimbursements/waivers 0.38%(4)
Expenses, prior to expense reimbursements/waivers 0.42%(4)
Net investment income 4.25%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 16%
================================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized. The total return would have been lower if
certain expenses had not been reimbursed/waived by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
WisdomTree Trust Prospectus 83
Financial Highlights
WisdomTree International Dividend Funds
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
June 16, 2006(1)
through
WisdomTree DEFA Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 49.94
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.86
Net realized and unrealized gain 13.58
--------------------------------------------------------------------------------
Total from investment operations 14.44
--------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income (0.21)
Capital gains (0.02)
--------------------------------------------------------------------------------
Total dividends and distributions to shareholders (0.23)
--------------------------------------------------------------------------------
Net asset value, end of period $ 64.15
--------------------------------------------------------------------------------
TOTAL RETURN(3) 28.94%
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $128,303
Ratio to average net assets of:
Expenses, net of expense reimbursements/waivers 0.48%(4)
Expenses, prior to expense reimbursements/waivers 0.51%(4)
Net investment income 1.97%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 11%
================================================================================
For the period
June 16, 2006(1)
through
WisdomTree DEFA High-Yielding Equity Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 49.77
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 1.19
Net realized and unrealized gain 12.94
--------------------------------------------------------------------------------
Total from investment operations 14.13
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.28)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.28)
--------------------------------------------------------------------------------
Net asset value, end of period $ 63.62
================================================================================
TOTAL RETURN(3) 28.41%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $184,498
Ratio to average net assets of:
Expenses, net of expense reimbursements/waivers 0.58%(4)
Expenses, prior to expense reimbursements/waivers 0.61%(4)
Net investment income 2.71%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 19%
================================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized. The total return would have been lower if
certain expenses had not been reimbursed/waived by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
84 WisdomTree Trust Prospectus
Financial Highlights (continued)
WisdomTree International Dividend Funds
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
June 16, 2006(1)
through
WisdomTree Europe Total Dividend Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 49.95
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.73
Net realized and unrealized gain 13.17
--------------------------------------------------------------------------------
Total from investment operations 13.90
--------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income (0.21)
Capital gains (0.00)(6)
--------------------------------------------------------------------------------
Total dividends and distributions to shareholders (0.21)
--------------------------------------------------------------------------------
Net asset value, end of period $ 63.64
================================================================================
TOTAL RETURN(3) 27.84%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $38,185
Ratio to average net assets of:
Expenses, net of expense reimbursements/waivers 0.48%(4)
Expenses, prior to expense reimbursements/waivers 0.58%(4)
Net investment income 1.71%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 24%
================================================================================
For the period
June 16, 2006(1)
through
WisdomTree Europe High-Yielding Equity Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 49.83
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 1.09
Net realized and unrealized gain 12.55
--------------------------------------------------------------------------------
Total from investment operations 13.64
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.32)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.32)
--------------------------------------------------------------------------------
Net asset value, end of period $ 63.15
================================================================================
TOTAL RETURN(3) 27.39%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $50,520
Ratio to average net assets of:
Expenses, net of expense reimbursements/waivers 0.58%(4)
Expenses, prior to expense reimbursements/waivers 0.65%(4)
Net investment income 2.44%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 24%
================================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized. The total return would have been lower if
certain expenses had not been reimbursed/waived by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
6. Amount is less than $0.005.
WisdomTree Trust Prospectus 85
Financial Highlights (continued)
WisdomTree International Dividend Funds
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
June 16, 2006(1)
through
WisdomTree Europe SmallCap Dividend Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 50.42
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 1.31
Net realized and unrealized gain 18.89
--------------------------------------------------------------------------------
Total from investment operations 20.20
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.47)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.47)
--------------------------------------------------------------------------------
Net asset value, end of period $ 70.15
================================================================================
TOTAL RETURN(3) 40.14%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $147,316
Ratio to average net assets of:
Expenses, net of expense reimbursements/waivers 0.58%(4)
Expenses, prior to expense reimbursements/waivers 0.62%(4)
Net investment income 2.99%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 47%
================================================================================
For the period
June 16, 2006(1)
through
WisdomTree Japan Total Dividend Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $50.32
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.56
Net realized and unrealized gain 6.33
--------------------------------------------------------------------------------
Total from investment operations 6.89
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.21)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.21)
--------------------------------------------------------------------------------
Net asset value, end of period $57.00
================================================================================
TOTAL RETURN(3) 13.71%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $51,301
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.48%(4)
Expenses, prior to expense reimbursements 0.54%(4)
Net investment income 1.40%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 6%
================================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized. The total return would have been lower if
certain expenses had not been reimbursed/waived by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
86 WisdomTree Trust Prospectus
Financial Highlights (continued)
WisdomTree International Dividend Funds
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
June 16, 2006(1)
through
WisdomTree Japan High-Yielding Equity Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $50.14
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 1.18
Net realized and unrealized gain 8.44
--------------------------------------------------------------------------------
Total from investment operations 9.62
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.34)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.34)
--------------------------------------------------------------------------------
Net asset value, end of period $59.42
================================================================================
TOTAL RETURN(3) 19.22%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $95,069
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.58%(4)
Expenses, prior to expense reimbursements 0.64%(4)
Net investment income 3.00%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 6%
================================================================================
For the period
June 16, 2006(1)
through
WisdomTree Japan SmallCap Dividend Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $50.69
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.95
Net realized and unrealized gain 0.74
--------------------------------------------------------------------------------
Total from investment operations 1.69
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.05)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.05)
--------------------------------------------------------------------------------
Net asset value, end of period $52.33
================================================================================
TOTAL RETURN(3) 3.34%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $99,419
Ratio to average net assets of:
Expenses, net of expense reimbursements/waivers 0.58%(4)
Expenses, prior to expense reimbursements/waivers 0.64%(4)
Net investment income 2.75%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 25%
================================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized. The total return would have been lower if
certain expenses had not been reimbursed/waived by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
WisdomTree Trust Prospectus 87
Financial Highlights (continued)
WisdomTree International Dividend Funds
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
June 16, 2006(1)
through
WisdomTree Pacific ex-Japan Total Dividend Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $49.71
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 1.40
Net realized and unrealized gain 16.85
--------------------------------------------------------------------------------
Total from investment operations 18.25
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.39)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.39)
--------------------------------------------------------------------------------
Net asset value, end of period $67.57
================================================================================
TOTAL RETURN(3) 36.80%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $74,329
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.48%(4)
Expenses, prior to expense reimbursements 0.54%(4)
Net investment income 3.31%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 21%
================================================================================
For the period
June 16, 2006(1)
through
WisdomTree Pacific ex-Japan High-Yielding Equity Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $49.02
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 2.18
Net realized and unrealized gain 16.40
--------------------------------------------------------------------------------
Total from investment operations 18.58
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.52)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.52)
--------------------------------------------------------------------------------
Net asset value, end of period $67.08
================================================================================
TOTAL RETURN(3) 38.02%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $87,205
Ratio to average net assets of:
Expenses, net of expense reimbursements/waivers 0.58%(4)
Expenses, prior to expense reimbursements/waivers 0.63%(4)
Net investment income 5.11%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 7%
================================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized. The total return would have been lower if
certain expenses had not been reimbursed/waived by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
88 WisdomTree Trust Prospectus
Financial Highlights (continued)
WisdomTree International Dividend Funds
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
June 16, 2006(1)
through
WisdomTree International LargeCap Dividend Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 49.86
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.85
Net realized and unrealized gain 12.14
--------------------------------------------------------------------------------
Total from investment operations 12.99
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.30)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.30)
--------------------------------------------------------------------------------
Net asset value, end of period $ 62.55
================================================================================
TOTAL RETURN(3) 26.08%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $87,569
Ratio to average net assets of:
Expenses, net of expense reimbursements/waivers 0.48%(4)
Expenses, prior to expense reimbursements/waivers 0.52%(4)
Net investment income 1.99%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 8%
================================================================================
For the period
June 16, 2006(1)
through
WisdomTree International Dividend Top 100 Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 49.77
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 1.03
Net realized and unrealized gain 15.80
--------------------------------------------------------------------------------
Total from investment operations 16.83
--------------------------------------------------------------------------------
Dividends and distributiond to shareholders:
Net investment income (0.22)
Capital gains (0.01)
--------------------------------------------------------------------------------
Total dividends and distributiond to shareholders (0.23)
--------------------------------------------------------------------------------
Net asset value, end of period $ 66.37
================================================================================
TOTAL RETURN(3) 33.83%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $278,743
Ratio to average net assets of:
Expenses, net of expense reimbursements/waivers 0.58%(4)
Expenses, prior to expense reimbursements/waivers 0.60%(4)
Net investment income 2.30%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 8%
================================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized. The total return would have been lower if
certain expenses had not been reimbursed/waived by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
WisdomTree Trust Prospectus 89
Financial Highlights (concluded)
WisdomTree International Dividend Funds
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
June 16, 2006(1)
through
WisdomTree International MidCap Dividend Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 50.13
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 1.08
Net realized and unrealized gain 16.73
--------------------------------------------------------------------------------
Total from investment operations 17.81
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.38)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.38)
--------------------------------------------------------------------------------
Net asset value, end of period $ 67.56
================================================================================
TOTAL RETURN(3) 35.57%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $168,889
Ratio to average net assets of:
Expenses, net of expense reimbursements/waivers 0.58%(4)
Expenses, prior to expense reimbursements/waivers 0.61%(4)
Net investment income 2.53%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 44%
================================================================================
For the period
June 16, 2006(1)
through
WisdomTree International SmallCap Dividend Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 50.35
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 1.43
Net realized and unrealized gain 16.28
--------------------------------------------------------------------------------
Total from investment operations 17.71
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.26)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.26)
--------------------------------------------------------------------------------
Net asset value, end of period $ 67.80
================================================================================
TOTAL RETURN(3) 35.21%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $298,315
Ratio to average net assets of:
Expenses, net of expense reimbursements/waivers 0.58%(4)
Expenses, prior to expense reimbursements/waivers 0.60%(4)
Net investment income 3.33%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 39%
================================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized. The total return would have been lower if
certain expenses had not been reimbursed/waived by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
90 WisdomTree Trust Prospectus
Frequency Distribution of Discounts & Premiums (unaudited)
WisdomTree Domestic Dividend Funds
The chart below presents information about differences between the per share net
asset value ("NAV") of each Fund and the market trading price of shares of each
Fund. For these purposes, the "market price" is the mid-point of the highest bid
and lowest offer for Fund shares as of the close of trading on the exchange
where Fund shares are listed. The term "premium" is sometimes used to describe a
market price in excess of NAV and the term "discount" is sometimes used to
describe a market price below NAV. The chart presents information about the size
and frequency of end of day premiums or discounts. As with other exchange traded
funds, the market price of Fund shares is typically slightly higher or lower
than the Fund's per share NAV. Factors that contribute to the differences
between market price and NAV include the supply and demand for Fund shares and
investors' assessments of the underlying value of a Fund's portfolio securities.
The information is presented for the period from June 16, 2006 (commencement of
investment operations) through June 29, 2007.
Market Price Above or Market Price Below
Equal to Net Asset Value Net Asset Value
------------------------ -----------------------
Basis Point Number Percentage of Number Percentage of
Differential* of Days Total Days of Days Total Days
---------------------------------------------------------------------------------------------------------
WisdomTree Total Dividend Fund
June 16, 2006 - June 29, 2007 0-24.9 138 52.87% 116 44.44%
------------------------------------------------------------------
25-49.9 3 1.15% 3 1.15%
------------------------------------------------------------------
50-74.9 0 0.00% 0 0.00%
------------------------------------------------------------------
75-100.0 0 0.00% 0 0.00%
------------------------------------------------------------------
>100.0 1 0.38% 0 0.00%
------------------------------------------------------------------
Total 142 54.41% 119 45.59%
---------------------------------------------------------------------------------------------------------
WisdomTree High-Yielding Equity Fund
June 16, 2006 - June 29, 2007 0-24.9 137 52.49% 121 46.36%
------------------------------------------------------------------
25-49.9 2 0.77% 1 0.38%
------------------------------------------------------------------
50-74.9 0 0.00% 0 0.00%
------------------------------------------------------------------
75-100.0 0 0.00% 0 0.00%
------------------------------------------------------------------
>100.0 0 0.00% 0 0.00%
------------------------------------------------------------------
Total 139 53.26% 122 46.74%
---------------------------------------------------------------------------------------------------------
WisdomTree LargeCap Dividend Fund
June 16, 2006 - June 29, 2007 0-24.9 177 67.82% 59 22.61%
------------------------------------------------------------------
25-49.9 14 5.36% 4 1.53%
------------------------------------------------------------------
50-74.9 2 0.77% 0 0.00%
------------------------------------------------------------------
75-100.0 0 0.00% 0 0.00%
------------------------------------------------------------------
>100.0 5 1.92% 0 0.00%
------------------------------------------------------------------
Total 198 75.86% 63 24.14%
---------------------------------------------------------------------------------------------------------
WisdomTree MidCap Dividend Fund
June 16, 2006 - June 29, 2007 0-24.9 164 62.84% 81 31.03%
------------------------------------------------------------------
25-49.9 6 2.30% 0 0.00%
------------------------------------------------------------------
50-74.9 3 1.15% 0 0.00%
------------------------------------------------------------------
75-100.0 1 0.38% 0 0.00%
------------------------------------------------------------------
>100.0 5 1.92% 1 0.38%
------------------------------------------------------------------
Total 179 68.58% 82 31.42%
---------------------------------------------------------------------------------------------------------
WisdomTree Trust Prospectus 91
Frequency Distribution of Discounts & Premiums (unaudited) (concluded)
WisdomTree Domestic Dividend Funds
Market Price Above or Market Price Below
Equal to Net Asset Value Net Asset Value
------------------------ -----------------------
Basis Point Number Percentage of Number Percentage of
Differential* of Days Total Days of Days Total Days
------------------------------------------------------------------------------------------------------
WisdomTree SmallCap Dividend Fund
June 16, 2006 - June 29, 2007 0-24.9 144 55.17% 99 37.93%
------------------------------------------------------------------
25-49.9 8 3.07% 4 1.53%
------------------------------------------------------------------
50-74.9 0 0.00% 0 0.00%
------------------------------------------------------------------
75-100.0 1 0.38% 0 0.00%
------------------------------------------------------------------
>100.0 4 1.53% 1 0.38%
------------------------------------------------------------------
Total 157 60.15% 104 39.85%
------------------------------------------------------------------------------------------------------
WisdomTree Dividend Top 100 Fund
June 16, 2006 - June 29, 2007 0-24.9 162 62.07% 63 24.14%
------------------------------------------------------------------
25-49.9 25 9.58% 4 1.53%
------------------------------------------------------------------
50-74.9 0 0.00% 0 0.00%
------------------------------------------------------------------
75-100.0 2 0.77% 0 0.00%
------------------------------------------------------------------
>100.0 5 1.92% 0 0.00%
------------------------------------------------------------------
Total 194 74.33% 67 25.67%
------------------------------------------------------------------------------------------------------
* A basis point equals one-hundredth of one percent (0.01%).
92 WisdomTree Trust Prospectus
Frequency Distribution of Discounts & Premiums (unaudited)
WisdomTree International Dividend Funds
The chart below presents information about differences between the per share net
asset value ("NAV") of each Fund and the market trading price of shares of each
Fund. For these purposes, the "market price" is the mid-point of the highest bid
and lowest offer for Fund shares as of the close of trading on the exchange
where Fund shares are listed. The term "premium" is sometimes used to describe a
market price in excess of NAV and the terra "discount" is sometimes used to
describe a market price below NAV. The chart presents information about the size
and frequency of end of day premiums or discounts. As with other exchange traded
funds, the market price of Fund shares is typically slightly higher or lower
than the Fund's per share NAV. Factors that contribute to the differences
between market price and NAV include the supply and demand for Fund shares and
investors' assessments of the underlying value of a Fund's portfolio securities.
Differences between the closing times of U.S. and non-U.S. markets may
contribute to differences between the NAV and market price of Fund shares. Many
non-U.S. markets close prior to the close of the U.S. securities exchanges.
Developments after the close of such markets as a result of ongoing price
discovery may be reflected in a Fund's market price but not in its NAV (or vice
versa).
The information is presented for the period from June 16, 2006 (commencement of
investment operations) through June 29, 2007. Information is not presented for
the Emerging Markets High-Yielding Equity Fund as this Fund was not in operation
on June 29, 2007.
Market Price Above or Market Price Below
Equal to Net Asset Value Net Asset Value
------------------------ -----------------------
Basis Point Number Percentage of Number Percentage of
Differential* of Days Total Days of Days Total Days
----------------------------------------------------------------------------------------------------------------
WisdomTree DEFA Fund
June 16, 2006 - June 29, 2007 0-24.9 42 16.09% 21 8.05%
------------------------------------------------------------------
25-49.9 73 27.97% 14 5.36%
------------------------------------------------------------------
50-74.9 54 20.69% 6 2.30%
------------------------------------------------------------------
75-100.0 24 9.20% 0 0.00%
------------------------------------------------------------------
>100.0 22 8.43% 5 1.92%
------------------------------------------------------------------
Total 215 82.38% 46 17.62%
----------------------------------------------------------------------------------------------------------------
WisdomTree DEFA High-Yielding Equity Fund
June 16, 2006 - June 29, 2007 0-24.9 39 14.94% 21 8.05%
------------------------------------------------------------------
25-49.9 66 25.29% 14 5.36%
------------------------------------------------------------------
50-74.9 49 18.77% 6 2.30%
------------------------------------------------------------------
75-100.0 37 14.18% 0 0.00%
------------------------------------------------------------------
>100.0 24 9.20% 5 1.92%
------------------------------------------------------------------
Total 215 82.38% 46 17.62%
----------------------------------------------------------------------------------------------------------------
WisdomTree Europe Total Dividend Fund
June 16, 2006 - June 29, 2007
0-24.9 58 22.22% 29 11.11%
------------------------------------------------------------------
25-49.9 57 21.84% 15 5.75%
------------------------------------------------------------------
50-74.9 43 16.48% 9 3.45%
------------------------------------------------------------------
75-100.0 22 8.43% 4 1.53%
------------------------------------------------------------------
>100.0 19 7.28% 5 1.92%
------------------------------------------------------------------
Total 199 76.25% 62 23.75%
----------------------------------------------------------------------------------------------------------------
WisdomTree Europe High-Yielding Equity Fund
June 16, 2006 - June 29, 2007
0-24.9 61 23.37% 32 12.26%
------------------------------------------------------------------
25-49.9 53 20.31% 13 4.98%
------------------------------------------------------------------
50-74.9 45 17.24% 7 2.68%
------------------------------------------------------------------
75-100.0 21 8.05% 6 2.30%
------------------------------------------------------------------
>100.0 21 8.05% 2 0.77%
------------------------------------------------------------------
Total 201 77.01% 60 22.99%
----------------------------------------------------------------------------------------------------------------
* A basis point equals one-hundredth of one percent (0.01%).
WisdomTree Trust Prospectus 93
Frequency Distribution of Discounts & Premiums (unaudited) (continued)
WisdomTree International Dividend Funds
Market Price Above or Market Price Below
Equal to Net Asset Value Net Asset Value
--------------------------- -----------------------
Basis Point Number Percentage of Number Percentage of
Differential* of Days Total Days of Days Total Days
--------------------------------------------------------------------------------------------------------------------
WisdomTree Europe SmallCap Dividend Fund
June 16, 2006 - June 29, 2007
0-24.9 44 16.86% 16 6.13%
25-49.9 57 21.84% 15 5.75%
50-74.9 55 21.07% 6 2.30%
75-100.0 25 9.58% 2 0.77%
>100.0 34 13.03% 7 2.68%
------------------------------------------------------------------
Total 215 82.38% 46 17.62%
--------------------------------------------------------------------------------------------------------------------
WisdomTree Japan Total Dividend Fund
June 16, 2006 - June 29, 2007
0-24.9 36 13.79% 27 10.34%
25-49.9 42 16.09% 19 7.28%
50-74.9 37 14.18% 11 4.21%
75-100.0 32 12.26% 3 1.15%
>100.0 44 16.86% 10 3.83%
------------------------------------------------------------------
Total 191 73.18% 70 26.82%
--------------------------------------------------------------------------------------------------------------------
WisdomTree Japan High-Yielding Equity Fund
June 16, 2006 - June 29, 2007 0-24.9 31 11.88% 30 11.49%
25-49.9 37 14.18% 18 6.90%
50-74.9 42 16.09% 14 5.36%
75-100.0 28 10.73% 4 1.53%
>100.0 47 18.01% 10 3.83%
------------------------------------------------------------------
Total 185 70.88% 76 29.12%
--------------------------------------------------------------------------------------------------------------------
WisdomTree Japan SmallCap Dividend Fund
June 16, 2006 - June 29, 2007 0-24.9 35 13.41% 21 8.05%
25-49.9 49 18.77% 21 8.05%
50-74.9 24 9.20% 11 4.21%
75-100.0 36 13.79% 9 3.45%
>100.0 42 16.09% 13 4.98%
------------------------------------------------------------------
Total 186 71.26% 75 28.74%
--------------------------------------------------------------------------------------------------------------------
WisdomTree Pacific ex-Japan Total Dividend Fund
June 16, 2006 - June 29, 2007 0-24.9 50 19.16% 28 10.73%
25-49.9 46 17.62% 26 9.96%
50-74.9 33 12.64% 8 3.07%
75-100.0 27 10.34% 9 3.45%
>100.0 20 7.66% 14 5.36%
------------------------------------------------------------------
Total 176 67.43% 85 32.57%
--------------------------------------------------------------------------------------------------------------------
* A basis point equals one-hundredth of one percent (0.01%).
94 WisdomTree Trust Prospectus
Frequency Distribution of Discounts & Premiums (unaudited) (concluded)
WisdomTree International Dividend Funds
Market Price Above or Market Price Below
Equal to Net Asset Value Net Asset Value
------------------------ -----------------------
Basis Point Number Percentage of Number Percentage of
Differential* of Days Total Days of Days Total Days
--------------------------------------------------------------------------------------------------------------------
WisdomTree Pacific ex-Japan High-Yielding Equity
Fund
June 16, 2006 - June 29, 2007 0-24.9 43 16.48% 30 11.49%
25-49.9 48 18.39% 24 9.20%
50-74.9 27 10.34% 13 4.98%
75-100.0 32 12.26% 8 3.07%
>100.0 21 8.05% 15 5.75%
------------------------------------------------------------------
Total 171 65.52% 90 34.48%
--------------------------------------------------------------------------------------------------------------------
WisdomTree International LargeCap Dividend Fund
June 16, 2006 - June 29, 2007 0-24.9 33 12.64% 21 8.05%
25-49.9 81 31.03% 8 3.07%
50-74.9 51 19.54% 3 1.15%
75-100.0 24 9.20% 0 0.00%
>100.0 36 13.79% 4 1.53%
------------------------------------------------------------------
Total 225 86.21% 36 13.79%
--------------------------------------------------------------------------------------------------------------------
WisdomTree International Dividend Top 100 Fund
June 16, 2006 - June 29, 2007
0-24.9 31 11.88% 14 5.36%
25-49.9 69 26.44% 8 3.07%
50-74.9 69 26.44% 2 0.77%
75-100.0 25 9.58% 0 0.00%
>100.0 39 14.94% 4 1.53%
------------------------------------------------------------------
Total 233 89.27% 28 10.73%
--------------------------------------------------------------------------------------------------------------------
WisdomTree International MidCap Dividend Fund
June 16, 2006 - June 29, 2007 0-24.9 34 13.03% 17 6.51%
25-49.9 67 25.67% 11 4.21%
50-74.9 61 23.37% 1 0.38%
75-100.0 24 9.20% 2 0.77%
>100.0 40 15.33% 4 1.53%
------------------------------------------------------------------
Total 226 86.59% 35 13.41%
--------------------------------------------------------------------------------------------------------------------
WisdomTree International SmallCap Dividend Fund
June 16, 2006 - June 29, 2007 0-24.9 27 10.34% 14 5.36%
25-49.9 53 20.31% 7 2.68%
50-74.9 64 24.52% 0 0.00%
75-100.0 48 18.39% 1 0.38%
>100.0 42 16.09% 5 1.92%
------------------------------------------------------------------
Total 234 89.66% 27 10.34%
--------------------------------------------------------------------------------------------------------------------
* A basis point equals one-hundredth of one percent (0.01%).
WisdomTree Trust Prospectus 95
The Trust's current SAI provides additional detailed information about the
Funds. The Trust has electronically filed the SAI with the SEC. It is
incorporated by reference in this Prospectus.
To make shareholder inquiries, for more detailed information on the Funds or to
request the SAI, free of charge, please:
Call: 1-866-909-9473
Monday through Friday
8:00 a.m.- 8:00 p.m. (Eastern time)
Write: WisdomTree Trust
c/o ALPS Distributors, Inc.
1290 Broadway, Suite 1100
Denver, Colorado 80203
Visit: www.wisdomtree.com
Information about the Funds (including the SAI) can be reviewed and copied at
the SEC's Public Reference Room in Washington, D.C., and information on the
operation of the Public Reference Room may be obtained by calling the SEC at
1-202-551-8090. Reports and other information about the Funds are available on
the EDGAR Database on the SEC's Internet site at www.sec.gov, and copies of this
information may be obtained, after paying a duplicating fee, by electronic
request at the following E-mail address: publicinfo@sec.gov, or by writing the
SEC's Public Reference Section, Washington, D.C. 20549-0102.
No person is authorized to give any information or to make any representations
about any Fund and its shares not contained in this Prospectus and you should
not rely on any other information. Read and keep this Prospectus for future
reference.
(C)2007 WisdomTree Trust
WisdomTree Funds are distributed by
ALPS Distributors, Inc.
1290 Broadway, Suite 1100
Denver, Colorado 80203
WisdomTree(SM) is a service mark of WisdomTree
Investments, Inc.
INVESTMENT COMPANY ACT FILE NO. 811-21864
[WISDOMTREE(SM) LOGO]
WisdomTree Trust
48 Wall Street, Suite 1100
New York, NY 10005
PROSPECTUS
July 27, 2007
Equity Funds
[WISDOMTREE(SM) LOGO]
WisdomTree(SM) Trust
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
THE SECURITIES AND EXCHANGE COMMISSION ("SEC") HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
WisdomTree Trust
WisdomTree Trust (the "Trust") is a registered investment company that consists
of separate investment portfolios called "Funds." Each Fund seeks investment
results that closely correspond to the price and yield performance, before fees
and expenses, of a particular index that defines a specific segment of the U.S.
stock market. The indexes are created using proprietary methodologies developed
by WisdomTree Investments, Inc. The Funds described in this Prospectus are
listed in the Table of Contents.
Each Fund is an "exchange traded fund." This means that shares of the Funds are
listed on a national securities exchange, such as the New York Stock Exchange
("NYSE") or the American Stock Exchange ("AMEX"), and trade at market prices.
The market price for a Fund's shares may be different from its net asset value
per share ("NAV"). Each Fund has its own CUSIP number and exchange trading
symbol.
Each Fund described in this Prospectus issues and redeems shares at 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.
--------------------------------------------------------------------------------
A NOTE TO RETAIL INVESTORS
Shares can be purchased directly from the issuing Fund only in exchange for a
basket of securities that is expected to be worth several million dollars. Most
individual investors, therefore, will not be able to purchase shares directly
from a Fund. Instead, these investors will purchase shares in the secondary
market through a brokerage account or with the assistance of a broker. Thus,
some of the information contained in this Prospectus - such as information about
purchasing and redeeming shares from a Fund and references to transaction fees
imposed on purchases and redemptions - is not relevant to most individual
investors. Shares purchased or sold through a brokerage account or with the
assistance of a broker may be subject to brokerage commissions and charges.
--------------------------------------------------------------------------------
INVESTMENT PRODUCTS: o ARE NOT FDIC INSURED o MAY LOSE VALUE
o ARE NOT BANK GUARANTEED
WisdomTree Trust
Table of Contents
Overview 2
Investment Objective 2
Principal Investment Strategies 2
Principal Risk Factors Common to All Funds 3
Portfolio Holdings Information 5
WisdomTree Earnings Funds 6
WisdomTree Total Earnings Fund 6
WisdomTree Earnings 500 Fund 9
WisdomTree MidCap Earnings Fund 12
WisdomTree SmallCap Earnings Fund 15
WisdomTree Earnings Top 100 Fund 18
WisdomTree Low P/E Fund 21
Management 24
Investment Adviser 24
Sub-Adviser 24
Portfolio Managers 25
Administrator, Custodian and Transfer Agent 25
Shareholder Information 25
Buying and Selling Shares 25
Share Trading Prices 26
Determination of Net Asset Value 26
Dividends and Distributions 27
Book Entry 27
Delivery of Shareholder Documents - Householding 27
Frequent Purchases and Redemptions of Fund Shares 27
Investments by Registered Investment Companies 28
Taxes 28
Taxes on Distributions 28
Taxes When Fund Shares are Sold 29
Taxes on Creation and Redemption of Creation Units 29
Creation and Redemption 29
Authorized Participants and the Continuous Offering of Shares 30
Creation and Redemption Transaction Fees for Creation Units 30
Distribution 31
Additional Notices 31
Financial Highlights 32
WisdomTree Trust Prospectus 1
Overview
This Prospectus provides the information you need to make an informed decision
about investing in the Funds.* It contains important facts about the Trust as a
whole and each Fund in particular.
Each Fund is an exchange-traded fund ("ETF"). ETFs are index funds whose shares
are listed on a stock exchange and traded like equity securities at market
prices. ETFs, such as the Funds, allow you to buy or sell shares that represent
the collective performance of a selected group of securities. ETFs are designed
to add the flexibility, ease and liquidity of stock-trading to the benefits of
traditional index-fund investing.
WisdomTree Asset Management, Inc. ("WisdomTree Asset Management") is the
investment adviser to each Fund. WisdomTree Investments, Inc. ("WisdomTree
Investments") is the parent company of WisdomTree Asset Management.
Investment Objective
Each Fund seeks investment returns that closely correspond to the price and
yield performance, before fees and expenses, of a particular index ("Index")
developed by WisdomTree Investments. Each Index consists of securities in the
market suggested by its name that meet specific criteria developed by WisdomTree
Investments.
Principal Investment Strategies
Each Fund tracks a specific stock Index created by WisdomTree Investments that
is designed to measure a specific segment of the market for U.S. securities.
Each Fund seeks investment returns that closely correspond to the price and
yield performance, before fees and expenses, of its underlying Index. Common
stocks, real estate investment trusts and holding companies are eligible for
inclusion in each Index.
The WisdomTree Indexes are "fundamentally weighted." The Indexes differ from
most traditional indexes in that the proportion, or weighting, of the securities
in each Index is based on a measure of fundamental value. In this case, the
Indexes are weighted based on earnings or earnings yield. Most traditional
indexes and index funds weight their securities by looking simply at the market
capitalization of such securities.
The "Earnings" Indexes weight securities based on either the amount of earnings
of the companies in each Index or the earnings yields of such companies. This
means that securities of companies that have higher earnings or earnings yields
generally will be more heavily weighted in each Earnings Index and Fund. To
determine a company's earnings, each Earnings Index currently uses the concept
of "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.**
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 will normally 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. Each Fund generally may invest up to 5% of
its total assets in securities not included in its 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 its Index in order to reflect various
corporate actions and other changes to its 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 securities of its Index, it also may
invest its other assets in cash and cash equivalents, as well as in shares of
other investment companies, futures contracts, options on futures contracts,
options, and swaps. WisdomTree Asset Management expects that, over time, the
correlation between each Fund's performance and that of its Index, before fees
and expenses, will be 95% or better.
----------
* "WisdomTree" is a service mark of WisdomTree Investments and has been
licensed for use by the Trust. WisdomTree Investments has patent
applications pending on the methodology and operation of its Indexes and
the Funds.
** WisdomTree Investments has contracted with Standard & Poor's ("S&P") to
calculate each Earnings Index. S&P shall have no liability for any errors
or omissions in calculating any Earnings Index.
2 WisdomTree Trust Prospectus
Each Fund uses a "Representative Sampling" strategy in seeking to track the
performance of its Index. A Fund using a Representative Sampling strategy
generally will invest in a sample of the securities in its Index whose risk,
return and other characteristics closely resemble the risk, return and other
characteristics of the Index as a whole.
To the extent that a Fund's underlying Index concentrates (i.e., holds 25% or
more of its total assets) in the securities of a particular industry or group of
industries, a Fund will concentrate its investments to approximately the same
extent as its Index.
Principal Risk Factors Common to All Funds
Each Fund is subject to the principal risks described below. Certain additional
risks associated with a Fund are discussed in the specific section describing
that Fund. Some or all of these risks may adversely affect a Fund's NAV, trading
price, yield, total return and/or its ability to meet its objectives.
Stock Market Risk
The trading price of equity securities fluctuates in response to a variety of
factors. These factors include events impacting a single issuer, as well as
political, market and economic developments that affect specific market segments
and the market as a whole. Each Fund's NAV and market price, like stock prices
generally, will fluctuate within a wide range in response to these factors. As a
result, an investor could lose money over short or even long periods.
Investment Style Risk
The returns from the types of securities in which a Fund invests may
underperform returns from the various general securities markets or different
asset classes. This may cause a Fund to underperform other investment vehicles
that invest in different asset classes. Different types of securities (for
example, large-, mid- and small-capitalization stocks) tend to go through cycles
of doing better - or worse - than the general securities markets. In the past,
these periods have lasted for as long as several years.
Interest Rate Risk
Each of the underlying Indexes, and therefore the Funds, may be more heavily
weighted than other types of investments in market sectors that are sensitive to
interest rate fluctuations (such as the financial and real estate sectors). The
Funds therefore may be more sensitive to fluctuations in interest rates than
other types of investments. In particular, increases to prevailing interest
rates could have a negative impact on the performance of the Funds.
Investment Approach Risk
Each Fund invests in the securities included in, or representative of, its Index
regardless of their investment merit. The Funds do not attempt to outperform
their Indexes or take defensive positions in declining markets. As a result,
each Fund's performance may be adversely affected by a general decline in the
U.S. or foreign market segments relating to its Index.
Concentration Risk
To the extent that a Fund's Index concentrates in the securities of a particular
industry or group of industries, the Fund will concentrate its investments to
approximately the same extent as its Index. A Fund that concentrates, or
otherwise invests a large portion of its assets in a single industry or group of
industries, may be more susceptible to any single economic, market, political or
regulatory occurrence affecting that industry or group of industries. In such
case, a Fund may be more volatile than funds based on broader or less volatile
market segments.
WisdomTree Trust Prospectus 3
The Funds generally invest a relatively large percentage of their assets in
securities in the financial services industry and therefore the performance of
the Funds will be impacted by events affecting the financial services industry.
This industry can be significantly affected by changes in interest rates, the
rate of corporate and consumer debt defaulted, price competition, and the
availability and cost of capital funds.
Non-Diversification Risk
Each Fund is considered to be non-diversified, which means that it may invest
more of its assets in the securities of a single issuer or a smaller number of
issuers than if it were a diversified fund. As a result, a Fund may be more
exposed to the risks associated with and developments affecting an individual
issuer or a smaller number of issuers than a fund that invests more widely. This
may increase the Fund's volatility and cause the performance of a relatively
smaller number of issuers to have a greater impact on a Fund's performance.
Issuer-Specific Risk
Changes in the financial condition of an issuer or counterparty, changes in
specific economic or political conditions that affect a particular type of
security or issuer, and changes in general economic or political conditions can
affect a security's or instrument's value. The value of securities of smaller,
less-well-known issuers can be more volatile than that of larger issuers.
Issuer-specific events can have a negative impact on the value of a Fund.
Non-Correlation Risk
The performance of a Fund and its Index may vary somewhat for a variety of
reasons. For example, each Fund incurs operating expenses and portfolio
transaction costs not incurred by its Index. In addition, a Fund may not be
fully invested in the securities of its Index at all times. The use of sampling
techniques may affect a Fund's ability to achieve close correlation with its
Index. A Fund using a Representative Sampling strategy generally can be expected
to have a greater non-correlation risk.
Management Risk
Because each Fund may not fully replicate its Index and may hold securities not
included in its Index, a Fund is subject to management risk. This is the risk
that the Fund's investment strategy, the implementation of which is subject to a
number of constraints, may not produce the intended results.
Market Trading Risk
Although Fund shares are listed on national securities exchanges, there can be
no assurance that an active trading market for Fund shares will develop or be
maintained.
If an active market is not maintained, investors may find it difficult to buy or
sell Fund shares.
Lack of Market Liquidity
Trading of shares of a Fund on a stock exchange may be halted if exchange
officials deem such action appropriate, if the Fund is delisted, or if the
activation of marketwide "circuit breakers" halts stock trading generally. If a
Fund's shares are delisted, the Fund may seek to list its shares on another
market, merge with another ETF or traditional mutual fund, or redeem its shares
at NAV. WisdomTree Asset Management believes that, under normal market
conditions, large market price discounts or premiums to NAV will not be
sustained because of arbitrage opportunities.
4 WisdomTree Trust Prospectus
Shares of the Funds May Trade at Prices Other Than NAV
As with all ETFs, Fund shares may be bought and sold in the secondary market at
market prices. Although it is expected that the market price of the shares of
each Fund will approximate the respective Fund's NAV, there may be times when
the market price and the NAV vary significantly. Thus, you may pay more than NAV
when you buy shares of a Fund in the secondary market, and you may receive less
than NAV when you sell those shares in the secondary market.
The market price of Fund shares during the trading day, like the price of any
exchange-traded security, includes a "bid/ask" spread charged by the exchange
specialist, market makers or other participants that trade the Fund shares. The
bid/ask spread on ETF shares is likely to be larger on ETFs that are traded less
frequently. In addition, in times of severe market disruption, the bid/ask
spread can increase significantly. At those times, Fund shares are most likely
to be traded at a discount to NAV, and the discount is likely to be greatest
when the price of shares is falling fastest, which may be the time that you most
want to sell your shares. WisdomTree Asset Management believes that, under
normal market conditions, large market price discounts or premiums to NAV will
not be sustained because of arbitrage opportunities.
Lack of Governmental Insurance or Guarantee
An investment in a Fund is not a bank deposit and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Portfolio Holdings Information
Information about each Fund's daily portfolio holdings is available at
www.wisdomtree.com.
In addition, each Fund discloses its complete portfolio holdings as of the end
of its fiscal year (March 31) and its second fiscal quarter (September 30) in
its reports to shareholders.
Each Fund files its complete portfolio holdings as of the end of its first and
third fiscal quarters (June 30 and December 31, respectively) with the SEC on
Form N-Q no later than 60 days after the relevant fiscal period.
You can find the SEC filings on the SEC's website, www.sec.gov. A summarized
description of the Funds' policies and procedures with respect to the disclosure
of each Fund's portfolio holdings is available in the Trust's Statement of
Additional Information ("SAI").
WisdomTree Trust Prospectus 5
WisdomTree Earnings Funds
o WisdomTree Total Earnings Fund
o WisdomTree Earnings 500 Fund
o WisdomTree MidCap Earnings Fund
o WisdomTree SmallCap Earnings Fund
o WisdomTree Earnings Top 100 Fund
o WisdomTree Low P/E Fund
--------------------------------------------------------------------------------
WisdomTree Total Earnings Fund
Fund Facts
Cusip Number:
o 97717W596
Exchange Trading Symbol:
o EXT
--------------------------------------------------------------------------------
WisdomTree Total Earnings Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree Earnings Index. Since the Fund's investment
objective has been adopted as a non-fundamental investment policy, the Fund's
investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree Earnings Index. The Fund
attempts to invest all, or substantially all, of its assets in the stocks that
make up the Index. The Fund generally uses a Representative Sampling strategy to
achieve its investment objective.
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 Market, or NASDAQ Global Market
("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 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
large-capitalization, mid-capitalization and small-capitalization securities and
is, in this sense, an earnings-weighted index for the total U.S. market. As of
June 30, 2007, approximately 79% of the capitalization of the Index consisted of
companies with market capitalizations over $10 billion.
Primary Investment Risk
The following risk, in addition to the principal risk factors common to all
Funds, is one of the risks that can significantly affect the Fund's performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree Total Earnings Fund, will
fluctuate within a wide range, so an investor could lose money over short
or even long periods. If the value of the Fund's investments goes down, you
may lose money.
6 WisdomTree Trust Prospectus
Performance Information
Although the Fund commenced operations on February 23, 2007, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.28%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.28%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. Wisdom Tree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$29 $90 $157 $356
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$29 $90 $157 $356
WisdomTree Trust Prospectus 7
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$5,500 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $3,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $5,500 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $3,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $19,598 if the
Creation Unit is redeemed after one year and $38,031 if the Creation Unit is
redeemed after three years, $58,246 if the Creation Unit is redeemed after five
years and $117,745 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
8 WisdomTree Trust Prospectus
WisdomTree Earnings Funds
o WisdomTree Total Earnings Fund
o WisdomTree Earnings 500 Fund
o WisdomTree MidCap Earnings Fund
o WisdomTree SmallCap Earnings Fund
o WisdomTree Earnings Top 100 Fund
o WisdomTree Low P/E Fund
--------------------------------------------------------------------------------
WisdomTree Earnings 500 Fund
Fund Facts
Cusip Number:
o 97717W588
Exchange Trading Symbol:
o EPS
--------------------------------------------------------------------------------
WisdomTree Earnings 500 Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree Earnings 500 Index. Since the Fund's investment
objective has been adopted as a non-fundamental investment policy, the Fund's
investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree Earnings 500 Index. The Fund
attempts to invest all, or substantially all, of its assets in the stocks that
make up the Index. The Fund generally uses a Representative Sampling strategy to
achieve its investment objective.
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. As of June 30, 2007, approximately 92% of the capitalization of the
Index consisted of companies with market capitalizations over $10 billion.
Primary Investment Risk
The following risk, in addition to the principal risk factors common to all
Funds, is one of the risks that can significantly affect the Fund's performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree Earnings 500 Fund, will
fluctuate within a wide range, so an investor could lose money over short
or even long periods. If the value of the Fund's investments goes down, you
may lose money.
WisdomTree Trust Prospectus 9
Performance Information
Although the Fund commenced operations on February 23, 2007, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.28%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.28%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. Wisdom Tree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$29 $90 $157 $356
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$29 $90 $157 $356
10 WisdomTree Trust Prospectus
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$2,500 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $3,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $2,500 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $3,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $13,598 if the
Creation Unit is redeemed after one year and $32,031 if the Creation Unit is
redeemed after three years, $52,246 if the Creation Unit is redeemed after five
years and $111,745 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 11
WisdomTree Earnings Funds
o WisdomTree Total Earnings Fund
o WisdomTree Earnings 500 Fund
o WisdomTree MidCap Earnings Fund
o WisdomTree SmallCap Earnings Fund
o WisdomTree Earnings Top 100 Fund
o WisdomTree Low P/E Fund
--------------------------------------------------------------------------------
WisdomTree MidCap Earnings Fund
Fund Facts
Cusip Number:
o 97717W570
Exchange Trading Symbol:
o EZM
--------------------------------------------------------------------------------
WisdomTree MidCap Earnings Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree MidCap Earnings Index. Since the Fund's investment
objective has been adopted as a non-fundamental investment policy, the Fund's
investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree MidCap Earnings Index. The
Fund attempts to invest all, or substantially all, of its assets in the stocks
that make up the Index. The Fund generally uses a Representative Sampling
strategy to achieve its investment objective.
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.
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, income and activities that reflect
the actual profitability of a company's ongoing operations. The Index includes
primarily mid-capitalization securities. As of June 30, 2007, approximately 76%
of the capitalization of the Index consisted of companies with market
capitalizations between $2 billion and $10 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree MidCap Earnings Fund, will
fluctuate within a wide range, so an investor could lose money over short
or even long periods. If the value of the Fund's investments goes down, you
may lose money.
12 WisdomTree Trust Prospectus
o Mid-Capitalization Investing. The Fund invests primarily in securities of
mid-capitalization companies. As a result, the Fund may be more volatile
than funds that invest in larger, more established companies.
o The securities of mid-capitalization companies may be more vulnerable
to adverse issuer, market, political, or economic developments than
the market as a whole or other types of securities.
o The securities of mid-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of mid-capitalization companies.
o Small-Capitalization Investing. The Fund may also invest in securities of
small-capitalization companies. As a result, the Fund may be more volatile
than funds that invest in larger, more established companies.
o Consumer Cyclical Investing. The Fund may also invest in Consumer Cyclical
companies. Consumer Cyclical sector risks include, but are not limited to,
economic growth, worldwide demand, and consumers' disposable income levels
and propensity to spend.
Performance Information
Although the Fund commenced operations on February 23, 2007, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.38%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.38%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. Wisdom Tree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the fund.
(b) Expenses have been restated to reflect current fees.
WisdomTree Trust Prospectus 13
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$39 $122 $213 $480
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$39 $122 $213 $480
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$3,500 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $3,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $3,500 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $3,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $18,663 if the
Creation Unit is redeemed after one year and $43,631 if the Creation Unit is
redeemed after three years, $70,960 if the Creation Unit is redeemed after five
years and $151,124 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
14 WisdomTree Trust Prospectus
WisdomTree Earnings Funds
o WisdomTree Total Earnings Fund
o WisdomTree Earnings 500 Fund
o WisdomTree MidCap Earnings Fund
o WisdomTree SmallCap Earnings Fund
o WisdomTree Earnings Top 100 Fund
o WisdomTree Low P/E Fund
--------------------------------------------------------------------------------
WisdomTree SmallCap Earnings Fund
Fund Facts
Cusip Number:
o 97717W562
Exchange Trading Symbol:
o EES
--------------------------------------------------------------------------------
WisdomTree SmallCap Earnings Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree SmallCap Earnings Index. Since the Fund's investment
objective has been adopted as a non-fundamental investment policy, the Fund's
investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree SmallCap Earnings Index. The
Fund attempts to invest all, or substantially all, of its assets in the stocks
that make up the Index. The Fund generally uses a Representative Sampling
strategy to achieve its investment objective.
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. As of June 30, 2007, approximately
100% of the capitalization of the Index consisted of companies with market
capitalizations less than $2 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree SmallCap Earnings Fund, will
fluctuate within a wide range, so an investor could lose money over short
or even long periods. If the value of the Fund's investments goes down, you
may lose money.
WisdomTree Trust Prospectus 15
o Small-Capitalization Investing. The Fund invests primarily in securities of
small-capitalization companies. As a result, the Fund may be more volatile
than funds that invest in larger, more established companies.
o Small-capitalization companies may be less financially secure than
larger, more established mid- and large-capitalization companies.
o The securities of small-capitalization companies may be more
vulnerable to adverse issuer, market, political, or economic
developments than the market as a whole or other types of securities.
o The securities of small-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of small-capitalization companies.
o Small-capitalization companies may be particularly sensitive to
changes in interest rates, borrowing costs and earnings.
Performance Information
Although the Fund commenced operations on February 23, 2007, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.38%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.38%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. Wisdom Tree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the fund.
(b) Expenses have been restated to reflect current fees.
16 WisdomTree Trust Prospectus
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$39 $122 $213 $480
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$39 $122 $213 $480
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$4,000 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $3,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $4,000 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $3,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $19,663 if the
Creation Unit is redeemed after one year and $44,631 if the Creation Unit is
redeemed after three years, $71,960 if the Creation Unit is redeemed after five
years and $152,124 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 17
WisdomTree Earnings Funds
o WisdomTree Total Earnings Fund
o WisdomTree Earnings 500 Fund
o WisdomTree MidCap Earnings Fund
o WisdomTree SmallCap Earnings Fund
o WisdomTree Earnings Top 100 Fund
o WisdomTree Low P/E Fund
--------------------------------------------------------------------------------
WisdomTree Earnings Top 100 Fund
Fund Facts
Cusip Number:
o 97717W554
Exchange Trading Symbol:
o EEZ
--------------------------------------------------------------------------------
WisdomTree Earnings Top 100 Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree Earnings Top 100 Index. Since the Fund's investment
objective has been adopted as a non-fundamental investment policy, the Fund's
investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree Earnings Top 100 Index. The
Fund attempts to invest all, or substantially all, of its assets in the stocks
that make up the Index. The Fund generally uses a Representative Sampling
strategy to achieve its investment objective.
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 as of the Index measurement date. Unlike the other Earnings
Indexes, which weight companies based on aggregate earnings, the Earnings Top
100 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
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. As of June 30, 2007, approximately
99% of the capitalization of the Index consisted of companies with market
capitalizations over $10 billion.
Primary Investment Risks
The following risk, in addition to the principal risk factors common to all
Funds, is one of the risks that can significantly affect the Fund's performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree Earnings Top 100 Fund, will
fluctuate within a wide range, so an investor could lose money over short
or even long periods. If the value of the Fund's investments goes down, you
may lose money.
18 WisdomTree Trust Prospectus
Performance Information
Although the Fund commenced operations on February 23, 2007, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.38%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.38%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. Wisdom Tree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$39 $122 $213 $480
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$39 $122 $213 $480
WisdomTree Trust Prospectus 19
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$500 is charged to each purchaser of Creation Units.* The fee is a single charge
and will be the same regardless of the number of Creation Units purchased by an
investor on the same day. The approximate value of a Creation Unit as of July 1,
2007 was $3,000,000. An investor who holds Creation Units and wishes to redeem
at NAV would also pay a standard redemption transaction fee of $500 on the date
of such redemption(s), regardless of the number of Creation Units redeemed that
day. Investors who hold Creation Units will also pay the annual fund operating
expenses described in the table above. Assuming an investment in a Creation Unit
of $3,000,000 and a 5% return each year, and assuming the Fund's operating
expenses remain the same, the total costs would be $12,663 if the Creation Unit
is redeemed after one year and $37,631 if the Creation Unit is redeemed after
three years, $64,960 if the Creation Unit is redeemed after five years and
$145,124 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
20 WisdomTree Trust Prospectus
WisdomTree Earnings Funds
o WisdomTree Total Earnings Fund
o WisdomTree Earnings 500 Fund
o WisdomTree MidCap Earnings Fund
o WisdomTree SmallCap Earnings Fund
o WisdomTree Earnings Top 100 Fund
o WisdomTree Low P/E Fund
--------------------------------------------------------------------------------
WisdomTree Low P/E Fund
Fund Facts
Cusip Number:
o 97717W547
Exchange Trading Symbol:
o EZY
--------------------------------------------------------------------------------
WisdomTree Low P/E Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree Low P/E Index. Since the Fund's investment objective
has been adopted as a non-fundamental investment policy, the Fund's investment
objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree Low P/E Index. The Fund
attempts to invest all, or substantially all, of its assets in the stocks that
make up the Index. The Fund generally uses a Representative Sampling strategy to
achieve its investment objective.
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, or "P/E", ratios
within the WisdomTree Earnings Index. The starting point for the calculation of
the WisdomTree Low P/E Index is the WisdomTree Earnings Index. Companies in the
Earnings Index with market capitalizations of at least $200 million as of the
Index measurement date are ranked by their respective P/E ratios. Those
companies with the lowest P/E ratios are ranked highest. The top 30% of these
companies are included in the low P/E 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 large-capitalization
securities. As of June 30, 2007, approximately 81% of the Index consisted of
companies with market capitalizations over $10 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree Low P/E Fund, will fluctuate
within a wide range, so an investor could lose money over short or even
long periods. If the value of the Fund's investments goes down, you may
lose money.
WisdomTree Trust Prospectus 21
o Energy Investing. The Fund generally invests a relatively large percentage
of its assets in the Energy sector. Energy sector risks include but are not
limited to: slowdowns in economic growth, worldwide demand, political
instability in the Middle East, and volatile oil prices.
Performance Information
Although the Fund commenced operations on February 23, 2007, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.38%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.38%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. Wisdom Tree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$39 $122 $213 $480
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$39 $122 $213 $480
22 WisdomTree Trust Prospectus
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 50,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$2,000 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $3,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $2,000 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $3,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $15,663 if the
Creation Unit is redeemed after one year and $40,631 if the Creation Unit is
redeemed after three years, $67,960 if the Creation Unit is redeemed after five
years and $148,124 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 23
Management
Investment Adviser
As investment adviser, 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 does not manage any other investment companies and has limited
experience as an investment adviser. 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.
Under the Investment Advisory Agreement, WisdomTree Asset Management agrees to
pay all expenses of the Trust, except compensation and expenses of the
Independent Trustees, counsel to the Independent Trustees and the Trust's Chief
Compliance Officer, interest expenses and taxes, brokerage expenses, and other
expenses connected with the execution of portfolio transactions, any
distribution fees or expenses, legal fees or expenses and extraordinary
expenses. Pursuant to a separate contractual arrangement, WisdomTree Asset
Management arranges for the provision of chief compliance officer ("CCO")
services to the Trust, and is liable and responsible for, and administers,
payments to the CCO, the Independent Trustees and counsel to the Independent
Trustees.
The basis for the Board of Trustees' approval of the Investment Advisory
Agreement is available in the Trust's Annual Report to Shareholders for the
period ended March 31, 2007.
WisdomTree Asset Management expects to receive fees from each Fund, based on a
percentage of the Fund's average daily net assets, as shown in the following
table:
Name of Fund Management Fee
--------------------------------------------------
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 Asset Management is a registered investment adviser with offices
located at 48 Wall Street, Suite 1100, New York, NY 10005.
Sub-Adviser
BNY Investment Advisors, a separately identifiable division of The Bank of New
York, a New York state banking corporation, serves as the sub-adviser for each
Fund (the "Sub-Adviser"). BNY Investment Advisors has its principal place of
business at 1633 Broadway, 13th Floor, New York, New York, 10019. The Bank of
New York began offering investment services in the 1830s and as of June 30, 2007
managed more that $142 billion in investments for institutions and individuals.
The Bank of New York 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.
The Sub-Adviser is entitled to receive the fees indicated below for acting as
Sub-Adviser to the Domestic Funds:
o 5 basis points (0.05%) of the first $100 million in combined daily net
assets of all Domestic Equity Funds; and
o 3 basis points (0.03%) of the combined daily net assets of all
Domestic Equity Funds in excess of $100 million.
24 WisdomTree Trust Prospectus
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 this Division. Mr. Zyla, a Managing
Director of the Sub-Adviser, has supervised the Index Fund 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 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 Fund Management 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 Division, Mr. Rose worked in the
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 Portfolio Manager is responsible for various functions related to portfolio
management, including, but not limited to, investing cash inflows, implementing
investment strategy, researching and reviewing investment strategy, and
overseeing members of his or her portfolio management team with more limited
responsibilities. Each Portfolio Manager is authorized to make investment
decisions for all portfolios managed by the team. Each Portfolio Manager has
appropriate limitations on his or her authority for risk management and
compliance purposes. No member of the portfolio team manages assets outside of
the team. Mr. Zyla manages the Team.
The Trust's SAI provides additional information about the Portfolio Managers'
compensation, other accounts managed by the Portfolio Managers, and the
Portfolio Managers' ownership of shares in the Funds for which they are
Portfolio Managers.
Administrator, Custodian and Transfer Agent
The Bank of New York is the administrator, custodian and transfer agent for each
Fund.
Shareholder Information
Additional shareholder information is available free of charge by calling:
1-866-909-WISE (9473) or visiting the Funds' website at www.wisdomtree.com.
Buying and Selling Shares
Most investors will buy and sell shares of the Funds through brokers. Shares of
the Funds trade on national securities exchanges and elsewhere during the
trading day and can be bought and sold throughout the trading day like other
shares of publicly-traded securities. When buying or selling shares through a
broker, most investors will incur customary brokerage commissions and charges.
WisdomTree Trust Prospectus 25
Shares of the Funds trade under the trading symbols listed for each respective
Fund in the section describing such Fund.
Shares of the Funds may be acquired or redeemed directly from a Fund only in
Creation Units or multiples thereof, as discussed in the Creation and Redemption
section. Once created, shares of the Funds trade in the secondary market in
amounts less than a Creation Unit.
Share Trading Prices
As with other types of securities, the trading prices of shares in the secondary
market can be affected by market forces such as supply and demand, economic
conditions and other factors. The price you pay or receive when you buy or sell
your shares in the secondary market may be more or less than the NAV of such
shares.
The approximate value of shares of each Fund is disseminated every fifteen
seconds throughout the trading day by the national securities exchange on which
such Fund is listed or by other information providers. This approximate value
should not be viewed as a "real-time" update of the NAV, because the approximate
value may not be calculated in the same manner as the NAV, which is computed
once per day. The approximate value generally is determined by using current
market quotations and/or price quotations obtained from broker-dealers that may
trade in the portfolio securities held by the Funds. The Funds are not involved
in, or responsible for, the calculation or dissemination of the approximate
value and make no warranty as to its accuracy.
Determination of Net Asset Value
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 may also use fair-value pricing if the
value of a security it holds has been materially affected by events occurring
before the Fund's pricing time but after the close of the primary markets or
exchanges on which the security is traded. For example, this may occur 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 may include price movements in U.S. markets that
are deemed to affect the value of foreign securities. Fair-value pricing also
may be used if, for example, 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.
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.
26 WisdomTree Trust Prospectus
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.
Book Entry
Shares of the Funds are held in book-entry form, which means that no stock
certificates are issued. The Depository Trust Company ("DTC") or its nominee is
the record owner of all outstanding shares of each Fund.
Investors owning shares of the Funds are beneficial owners as shown on the
records of DTC or its participants. DTC serves as the securities depository for
all shares of the Funds. Participants include DTC, securities brokers and
dealers, banks, trust companies, clearing corporations, and other institutions
that directly or indirectly maintain a custodial relationship with DTC. As a
beneficial owner of shares, you are not entitled to receive physical delivery of
stock certificates or to have shares registered in your name, and you are not
considered a registered owner of shares. Therefore, to exercise any right as an
owner of shares, you must rely upon the procedures of DTC and its participants.
These procedures are the same as those that apply to any securities that you
hold in book entry or "street name" form. Your broker will provide you with
account statements, confirmations of your purchases and sales, and tax
information.
Delivery of Shareholder Documents - Householding
Householding is an option available to certain investors of the Funds.
Householding is a method of delivery, based on the preference of the individual
investor, in which a single copy of certain shareholder documents can be
delivered to investors who share the same address, even if their accounts are
registered under different names. Householding for the Funds is available
through certain broker-dealers. If you are interested in enrolling in
householding and receiving a single copy of prospectuses and other shareholder
documents, please contact your broker-dealer. If you are currently enrolled in
householding and wish to change your householding status, please contact your
broker-dealer.
Frequent Purchases and Redemptions of Fund Shares
Since the Funds are ETFs, only a few institutional investors (known as
"Authorized Participants") are authorized to purchase and redeem shares directly
with the issuing Fund. Since frequent in-kind purchases and redemptions of
shares of a Fund do not disrupt portfolio management, increase the Funds'
trading costs, lead to realization of capital gains or otherwise harm the Fund
shareholders, the Board of Trustees has determined that it is not necessary to
adopt policies and procedures to detect and deter frequent purchases and
redemptions of Fund shares ("frequent trading"). Because these trades are
effected in-kind (i.e., for securities and not for cash), they do not cause any
of the aforementioned harmful effects that may result from frequent cash trades.
Each Fund accommodates frequent purchases and redemptions of Creation Units by
Authorized Participants and does not place a limit on purchases or redemptions
of Creation Units by these investors. Each Fund reserves the right, but does not
have the obligation, to reject any order at any time. Each Fund reserves the
right to impose restrictions on disruptive, excessive, or short-term trading.
The vast majority of trading in shares of the Funds occurs on national
securities exchanges and does not directly involve the issuance or redemption of
Fund shares. Because these trades do not involve the issuing Fund directly, they
do not cause any of the harmful effects discussed above that may result from
frequent cash trades.
WisdomTree Trust Prospectus 27
Investments by Registered Investment Companies
Section 12(d)(1) of the Investment Company Act of 1940 restricts investments by
registered investment companies in the securities of other investment companies,
including shares of each Fund. Registered investment companies are permitted to
invest in the Funds beyond the limits set forth in section 12(d)(1), subject to
certain terms and conditions set forth in an SEC exemptive order issued to the
WisdomTree Trust, including that such investment companies enter into an
agreement with the Funds.
Taxes
As with any investment, you should consider how your investment in shares of the
Funds will be taxed. The tax information in this Prospectus is provided as
general information. You should consult your own tax professional about the tax
consequences of an investment in shares of the Funds.
Unless your investment in shares is made through a tax-exempt entity or
tax-deferred retirement account, such as an IRA plan, you need to be aware of
the possible tax consequences when:
o A Fund makes distributions,
o You sell shares, and
o You purchase or redeem Creation Units.
Taxes on Distributions
Distributions from a Fund's net investment income (other than qualified dividend
income), including distributions out of a Fund's net short-term capital gains,
if any, and distributions of income from securities lending, are taxable to you
as ordinary income. Distributions by a Fund of net long-term capital gains in
excess of net short-term capital losses (capital gain dividends) are taxable to
you as long-term capital gains, regardless of how long you have held a Fund's
shares. Distributions by a Fund that qualify as qualified dividend income are
taxable to you at long-term capital gain rates. Under current law, the taxation
of qualified dividend income at long-term capital gain rates will no longer
apply for taxable years beginning after December 31, 2010. In order for a
distribution by the Fund to be treated as qualified dividend income, a Fund must
meet holding period and other requirements with respect to its dividend paying
stocks and you must meet holding period requirements and other requirements with
respect to the Fund's shares. In general, your distributions are subject to
federal income tax for the year when they are paid. Certain distributions paid
in January, however, may be treated as paid on December 31 of the prior year.
Dividends and interest received by a Fund with respect to foreign securities may
give rise to withholding and other taxes imposed by foreign countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. Since more than 50% of the total assets of each of
WisdomTree International Funds will consist of foreign stocks or securities,
those Funds intend to "pass through" to you certain foreign income taxes
(including withholding taxes) paid by those Funds. This means that you will be
considered to have received as an additional dividend your share of such foreign
taxes, but you may be entitled to either a corresponding tax deduction in
calculating your taxable income, or, subject to certain limitations, a credit in
calculating your federal income tax.
If you are neither a resident nor a citizen of the United States or if you are a
foreign entity, the Fund's ordinary income dividends (which include
distributions of net short-term capital gains) will generally be subject to a
30% U.S. withholding tax, unless a lower treaty rate applies, provided, however,
that for taxable years of the Fund beginning after December 31, 2004, but not
beginning after December 31, 2007, interest related dividends and short-term
capital gain dividends generally will not be subject to such U.S. withholding
tax.
If you are a resident or a citizen of the United States, by law, back-up
withholding will apply to your distributions and proceeds if you have not
provided a taxpayer identification number or social security number and made
other required certifications.
28 WisdomTree Trust Prospectus
Taxes When Fund Shares are Sold
Currently, any capital gain or loss realized upon a sale of Fund shares is
generally treated as a long-term gain or loss if shares have been held for more
than one year. Any capital gain or loss realized upon a sale of shares held for
one year or less is generally treated as a short-term gain or loss, except that
any capital loss on the sale of shares held for six months or less is treated as
long-term capital loss to the extent that capital gain dividends were paid with
respect to such shares. The ability to deduct capital losses may be limited.
Taxes on Creation and Redemption of Creation Units
An Authorized Participant who exchanges equity securities for Creation Units
generally will recognize a gain or a loss. The gain or loss will be equal to the
difference between the market value of the Creation Units at the time and the
exchanger's aggregate basis in the securities surrendered and the cash component
paid. A person who exchanges Creation Units for equity securities will generally
recognize a gain or loss equal to the difference between the exchanger's basis
in the Creation Units and the aggregate market value of the securities received
and a cash component. The Internal Revenue Service, however, may assert a loss
realized upon an exchange of securities for Creation Units cannot be deducted
currently under the rules governing "wash sales," or on the basis that there has
been no significant change in economic position. Persons exchanging securities
should consult their own tax adviser with respect to whether wash sale rules
apply and when a loss might be deductible.
Under current law, any capital gain or loss realized upon the redemption (or
creation) of Creation Units will generally be treated as long-term capital gain
or loss if the shares (or equity securities) have been held for more than one
year and otherwise as short-term capital gain or loss.
Under current federal tax law, any capital gain or loss realized upon redemption
of Creation Units is generally treated as long-term capital gain or loss if the
shares have been held for more than one year and as a short-term capital gain or
loss if the shares have been held for one year or less.
If you purchase or redeem Creation Units, you will be sent a confirmation
statement showing how many shares you purchased or sold and at what price. The
foregoing discussion summarizes some of the consequences under current federal
tax law of an investment in a Fund. It is not a substitute for personal tax
advice. You may also be subject to state and local taxation on Fund
distributions and sales of shares. Consult your personal tax adviser about the
potential tax consequences of an investment in shares of a Fund under all
applicable tax laws.
Creation and Redemption
The shares that trade in the secondary market are "created" at NAV. Each Fund
issues and redeems shares at 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.
Each "creator" enters into an authorized participant agreement with the
Distributor, and deposits into the applicable Fund a portfolio of securities
closely approximating the holdings of the Fund and pays or receives a specified
amount of cash equal to the difference between the NAV of a Creation Unit and
the market value of the basket of securities ("cash component") in exchange for
a specified number of Creation Units. Each business day, prior to the opening of
trading, the Fund will designate, through the National Securities Clearing
Corporation ("NSCC"), the names and number of shares of each security to be
included in that day's basket. Each Fund reserves the right to accept a basket
of securities or cash that differs from the published basket. A Fund will not
issue fractional Creation Units.
WisdomTree Trust Prospectus 29
Similarly, shares can only be redeemed in a specified number of Creation Units
principally in-kind for a portfolio of securities held by the Fund and the
payment or receipt of the specified cash component. Except when aggregated in
Creation Units, shares are not redeemable by a Fund. Each Fund reserves the
right to honor a redemption request by delivering a basket of securities or cash
that differs from the published basket. The prices at which creations and
redemptions occur are based on the next calculation of NAV after an order is
received in proper form.
Creations and redemptions must be made by an Authorized Participant or through a
firm that is either a member of the Continuous Net Settlement System of the NSCC
or 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. Information about the procedures regarding creation and redemption
of Creation Units (including the cut-off times for receipt of creation and
redemption orders) is included in the Trust's SAI.
Authorized Participants and the Continuous Offering of Shares
Because new shares may be created and issued on an ongoing basis, at any point
during the life of a Fund, a "distribution," as such term is used in the
Securities Act of 1933 ("Securities Act"), may be occurring. 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 that could render them statutory underwriters and subject to the
prospectus-delivery and liability provisions of the Securities Act. Nonetheless,
any determination of whether one is an underwriter must take into account all
the relevant facts and circumstances of each particular case.
Broker-dealers should also note that dealers who are not "underwriters," but are
participating in a distribution (as contrasted to ordinary secondary
transactions), and thus dealing with shares that are part of an "unsold
allotment" within the meaning of Section 4(3)(C) of the Securities Act, would be
unable to take advantage of the prospectus delivery exemption provided by
Section 4(3) of the Securities Act. For delivery of prospectuses to exchange
members, the prospectus delivery mechanism of Rule 153 under the Securities Act
is only available with respect to transactions on a national securities
exchange.
Creation and Redemption Transaction Fees for Creation Units
Each Fund may impose a creation transaction fee and a redemption transaction fee
to offset transfer and other transaction costs associated with the issuance and
redemption of Creation Units of shares. The creation and redemption transaction
fees for creations and redemptions using the "in-kind" creation and redemption
process are listed below. The standard creation transaction fee is charged to
each purchaser on the day such purchaser creates a Creation Unit. The fee is a
single charge and will be the amount indicated below regardless of the number of
Creation Units purchased by an investor on the same day. Similarly, the standard
redemption transaction fee will be the amount indicated regardless of the number
of Creation Units redeemed that day. Purchasers and redeemers of Creation Units
for cash (when cash creations and redemptions are permitted) will also be
subject to an additional variable charge of up to a maximum of four times the
amount shown below under "Maximum Creation/Redemption Transaction Fee" to offset
the transaction cost to the Fund of buying portfolio securities. In addition,
purchasers and redeemers of shares in Creation Units are responsible for payment
of the costs of transferring securities to or out of a Fund. From time to time,
WisdomTree Asset Management may cover the cost of any transaction fees.
The following table also shows, as of July 1, 2007, the approximate value of one
Creation Unit per Fund, including the standard creation and redemption
transaction fee. These fees are payable only by investors who purchase shares
directly from a Fund. Retail investors who purchase shares through their
brokerage account will not pay these fees.
30 WisdomTree Trust Prospectus
Approximate Standard Creation/ Maximum Creation/
Value of One Redemption Redemption
Name of Fund Creation Unit Transaction Fee Transaction Fee
------------------------------------------------------------------------------------------
WisdomTree Earnings Funds
WisdomTree Total Earnings Fund $3,000,000 $5,500 $12,090
WisdomTree Earnings 500 Fund $3,000,000 $2,500 $ 2,500
WisdomTree MidCap Earnings Fund $3,000,000 $3,500 $ 4,000
WisdomTree SmallCap Earnings Fund $3,000,000 $4,000 $ 5,705
WisdomTree Earnings Top 100 Fund $3,000,000 $ 500 $ 500
WisdomTree Low P/E Fund $3,000,000 $2,000 $ 3,500
Distribution
ALPS Distributors, Inc. (the "Distributor") serves as the distributor of
Creation Units for each Fund on an agency basis. The Distributor does not
maintain a secondary market in shares of the Funds. The Distributor's principal
address is 1290 Broadway, Suite 1100, Denver, Colorado 80203.
The Distributor has no role in determining the policies of any Fund or the
securities that are purchased or sold by any Fund.
Additional Notices
Shares of the Trust are not sponsored, endorsed, or promoted by any listing
exchange ("Exchange"). The Exchange makes no representation or warranty, express
or implied, to the owners of the shares of any Fund or any member of the public
regarding the ability of a fund to track the total return performance of any
Index or the ability of any Index identified herein to track stock market
performance. The Exchange is not responsible for, nor has it participated in,
the determination of the compilation or the calculation of any Index, nor in the
determination of the timing of, prices of, or quantities of the shares of any
Fund to be issued, nor in the determination or calculation of the equation by
which the shares are redeemable. The Exchange has no obligation or liability to
owners of the shares of any Fund in connection with the administration,
marketing, or trading of the shares of the Fund.
The Exchange does not guarantee the accuracy and/or the completeness of any
Index or any data included therein. The Exchange makes no warranty, express or
implied, as to results to be obtained by the WisdomTree Trust on behalf of its
Funds, owners of the shares, or any other person or entity from the use of the
subject Indexes or any data included therein. The Exchange makes no express or
implied warranties, and hereby expressly disclaims all warranties of
merchantability or fitness for a particular purpose with respect to any Index or
any data included therein. Without limiting any of the foregoing, in no event
shall the Exchange have any liability for any lost profits or indirect,
punitive, special, or consequential damages even if notified of the possibility
thereof.
WisdomTree Investments, WisdomTree Asset Management and the Funds make no
representation or warranty, express or implied, to the owners of shares of the
Funds or any member of the public regarding the advisability of investing in
securities generally or in the Funds particularly or the ability of the Indexes
to track general stock market performance. WisdomTree Investments is the
licensor of certain trademarks, service marks and trade names of the Funds.
WisdomTree Investments has no obligation to take the needs of the Funds or the
owners of shares of the Funds into consideration in determining, composing, or
calculating the Indexes. WisdomTree Investments is not responsible for, and has
not participated in, the determination of the timing of, prices at, or
quantities of shares of the Funds to be issued or in the determination or
calculation of the equation by which the shares of the Funds are redeemable.
WisdomTree Trust Prospectus 31
The Funds, WisdomTree Investments and WisdomTree Asset Management do not
guarantee the accuracy, completeness, or performance of any Index or the data
included therein and shall have no liability in connection with any Index or
Index calculation. WisdomTree Investments has contracted with Standard & Poor's
("S&P") to maintain and calculate each Earnings Index. S&P shall have no
liability for any errors or omissions in calculating any Earnings Index.
Financial Highlights
The financial highlights table is intended to help you understand the Funds'
financial performance. The total return in the table represents the rate that an
investor would have earned (or lost) on an investment in the respective Fund
(assuming reinvestment of all dividends and distributions). For the period
February 23, 2007 (commencement of investment operations) through March 31, 2007
(the Fund's fiscal year end), the information has been derived from the
financial statements audited by Ernst & Young LLP, independent registered public
accounting firm, whose report, along with the Funds' financial statements, are
included in the Funds' Annual Report, which is available upon request.
32 WisdomTree Trust Prospectus
Financial Highlights
WisdomTree Domestic Earnings Funds
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
February 23, 2007(1)
through
WisdomTree Total Earnings Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 49.97
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.11
Net realized and unrealized loss (1.00)
--------------------------------------------------------------------------------
Total from investment operations (0.89)
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.09)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.09)
--------------------------------------------------------------------------------
Net asset value, end of period $ 48.99
================================================================================
TOTAL RETURN(3) (1.79)%
================================================================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $24,497
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.28%(4)
Expenses, prior to expense reimbursements 0.35%(4)
Net investment income 2.21%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 1%
================================================================================
For the period
February 23, 2007(1)
through
WisdomTree Earnings 500 Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 49.77
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.11
Net realized and unrealized loss (0.94)
--------------------------------------------------------------------------------
Total from investment operations (0.83)
================================================================================
Dividends to shareholders:
Net investment income (0.09)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.09)
--------------------------------------------------------------------------------
Net asset value, end of period $ 48.85
--------------------------------------------------------------------------------
TOTAL RETURN(3) (1.67)%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $19,538
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.28%(4)
Expenses prior to expense reimbursements 0.37%(4)
Net investment income 2.24%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 1%
================================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized. The total return would have been lower if
certain expenses had not been reimbursed by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
WisdomTree Trust Prospectus 33
Financial Highlights (continued)
WisdomTree Domestic Earnings Funds
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
February 23, 2007(1)
through
WisdomTree Midcap Earnings Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $50.01
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.07
Net realized and unrealized loss (1.25)
--------------------------------------------------------------------------------
Total from investment operations (1.18)
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.06)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.06)
--------------------------------------------------------------------------------
Net asset value, end of period $48.77
================================================================================
TOTAL RETURN(3) (2.37)%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $4,877
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.38%(4)
Expenses, prior to expense reimbursements 0.74%(4)
Net investment income 1.47%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 0%(6)
--------------------------------------------------------------------------------
For the period
February 23, 2007(1)
through
WisdomTree SmallCap Earnings Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $50.03
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.06
Net realized and unrealized loss (2.02)
--------------------------------------------------------------------------------
Total from investment operations (1.96)
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.04)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.04)
--------------------------------------------------------------------------------
Net asset value, end of period $48.03
================================================================================
TOTAL RETURN(3) (3.92)%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $9,607
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.38%(4)
Expenses, prior to expense reimbursements 0.58%(4)
Net investment income 1.39%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 0%(6)
================================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized. The total return would have been lower if
certain expenses had not been reimbursed by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
6 Amount represents less than 1%.
34 WisdomTree Trust Prospectus
Financial Highlights (concluded)
WisdomTree Domestic Earnings Fund
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
February 23, 2007(1)
through
WisdomTree Earnings Top 100 Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 50.15
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.10
Net realized and unrealized loss (0.80)
--------------------------------------------------------------------------------
Total from investment operations (0.70)
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.07)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.07)
--------------------------------------------------------------------------------
Net asset value, end of period $ 49.38
================================================================================
TOTAL RETURN(3) (1.39)%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $24,688
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.38%(4)
Expenses, prior to expense reimbursements 0.45%(4)
Net investment income 2.03%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 2%
================================================================================
For the period
February 23, 2007(1)
through
WisdomTree Low P/E Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 49.99
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.10
Net realized and unrealized loss (0.95)
--------------------------------------------------------------------------------
Total from investment operations (0.85)
--------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.08)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.08)
--------------------------------------------------------------------------------
Net asset value, end of period $ 49.06
--------------------------------------------------------------------------------
TOTAL RETURN(3) (1.69)%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $24,529
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.38%(4)
Expenses, prior to expense reimbursements 0.45%(4)
Net investment income 1.98%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 1%
================================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized. The total return would have been lower if
certain expenses had not been reimbursed by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
WisdomTree Trust Prospectus 35
Frequency Distribution of Discounts & Premiums (unaudited)
WisdomTree Earnings Funds
The chart below presents information about differences between the per share net
asset value ("NAV") of each Fund and the market trading price of shares of each
Fund. For these purposes, the "market price" is the mid-point of the highest bid
and lowest offer for Fund shares as of the close of trading on the exchange
where Fund shares are listed. The term "premium" is sometimes used to describe a
market price in excess of NAV and the term "discount" is sometimes used to
describe a market price below NAV. The chart presents information about the size
and frequency of end of day premiums or discounts. As with other exchange traded
funds, the market price of Fund shares is typically slightly higher or lower
than the Fund's per share NAV. Factors that contribute to the differences
between market price and NAV include the supply and demand for Fund shares and
investors' assessments of the underlying value of a Fund's portfolio securities.
The information is presented for the period from February 23, 2007 (commencement
of investment operations) through June 29, 2007.
Market Price Above or Market Price Below
Equal to Net Asset Value Net Asset Value
------------------------ -----------------------
Basis Point Number Percentage of Number Percentage of
Differential* of Days Total Days of Days Total Days
------------------------------------------------------------------------------------------------------
February 23, 2007 - June 29, 2007
WisdomTree Total Earnings Fund 0-24.9 28 31.46% 59 66.29%
25-49.9 0 0.00% 0 0.00%
50-74.9 1 1.12% 0 0.00%
75-100.0 0 0.00% 0 0.00%
>100.0 1 1.12% 0 0.00%
------------------------------------------------------------------
Total 30 33.71% 59 66.29%
------------------------------------------------------------------------------------------------------
February 23, 2007 - June 29, 2007
WisdomTree Earnings 500 Fund 0-24.9 38 42.70% 49 55.06%
25-49.9 1 1.12% 0 0.00%
50-74.9 1 1.12% 0 0.00%
75-100.0 0 0.00% 0 0.00%
>100.0 0 0.00% 0 0.00%
------------------------------------------------------------------
Total 40 44.94% 49 55.06%
------------------------------------------------------------------------------------------------------
February 23, 2007 - June 29, 2007
WisdomTree MidCap Earnings Fund 0-24.9 55 61.80% 32 35.96%
25-49.9 1 1.12% 0 0.00%
50-74.9 1 1.12% 0 0.00%
75-100.0 0 0.00% 0 0.00%
>100.0 0 0.00% 0 0.00%
------------------------------------------------------------------
Total 57 64.04% 32 35.96%
------------------------------------------------------------------------------------------------------
February 23, 2007 - June 29, 2007
WisdomTree SmallCap Earnings Fund 0-24.9 40 44.94% 44 49.44%
25-49.9 3 3.37% 1 1.12%
50-74.9 1 1.12% 0 0.00%
75-100.0 0 0.00% 0 0.00%
>100.0 0 0.00% 0 0.00%
------------------------------------------------------------------
Total 44 49.44% 45 50.56%
------------------------------------------------------------------------------------------------------
36 WisdomTree Trust Prospectus
Frequency Distribution of Discounts & Premiums (unaudited) (concluded)
WisdomTree Earnings Funds
Market Price Above or Market Price Below
Equal to Net Asset Value Net Asset Value
------------------------ -----------------------
Basis Point Number Percentage of Number Percentage of
Differential* of Days Total Days of Days Total Days
-----------------------------------------------------------------------------------------------------
April 23, 2007 - June 29, 2007
WisdomTree Earnings Top 100 Fund 0-24.9 30 33.71% 58 65.17%
25-49.9 0 0.00% 0 0.00%
50-74.9 1 1.12% 0 0.00%
75-100.0 0 0.00% 0 0.00%
>100.0 0 0.00% 0 0.00%
------------------------------------------------------------------
Total 31 34.83% 58 65.17%
-----------------------------------------------------------------------------------------------------
April 23, 2007 - June 29, 2007
WisdomTree Low P/E Fund 0-24.9 29 32.58% 59 66.29%
25-49.9 0 0.00% 0 0.00%
50-74.9 0 0.00% 0 0.00%
75-100.0 0 0.00% 0 0.00%
>100.0 1 1.12% 0 0.00%
------------------------------------------------------------------
Total 30 33.71% 59 66.29%
-----------------------------------------------------------------------------------------------------
* A basis point equals one-hundredth of one percent (0.01%).
WisdomTree Trust Prospectus 37
The Trust's current SAI provides additional detailed information about the
Funds. The Trust has electronically filed the SAI with the SEC. It is
incorporated by reference in this Prospectus.
To make shareholder inquiries, for more detailed information on the Funds or to
request the SAI, free of charge, please:
Call: 1-866-909-9473
Monday through Friday
8:00 a.m. to 8:00 p.m. (Eastern time)
Write: WisdomTree Trust
c/o ALPS Distributors, Inc.
1290 Broadway, Suite 1100
Denver, Colorado 80203
Visit: www.wisdomtree.com
Information about the Funds (including the SAI) can be reviewed and copied at
the SEC's Public Reference Room in Washington, D.C., and information on the
operation of the Public Reference Room may be obtained by calling the SEC at
1-202-551-8090. Reports and other information about the Funds are available on
the EDGAR Database on the SEC's Internet site at www.sec.gov, and copies of this
information may be obtained, after paying a duplicating fee, by electronic
request at the following E-mail address: publicinfo@sec.gov, or by writing the
SEC's Public Reference Section, Washington, D.C. 20549-0102.
No person is authorized to give any information or to make any representations
about any Fund and its shares not contained in this Prospectus and you should
not rely on any other information. Read and keep this Prospectus for future
reference.
(C)2007 WisdomTree Trust
WisdomTree Funds are distributed by
ALPS Distributors, Inc.
1290 Broadway, Suite 1100
Denver, Colorado 80203
WisdomTree(SM) is a service mark of WisdomTree
Investments, Inc.
INVESTMENT COMPANY ACT FILE NO. 811-21864
[WISDOMTREE(SM) LOGO]
WisdomTree Trust
48 Wall Street, Suite 1100
New York, NY 10005
International Sector Funds
PROSPECTUS
July 27, 2007
[WISDOMTREE(SM) LOGO]
WisdomTree(SM) Trust
WisdomTree
International Sector Funds
WisdomTree International Basic Materials Sector Fund
WisdomTree International Communications Sector Fund
WisdomTree International Consumer Cyclical Sector Fund
WisdomTree International Consumer Non-Cyclical 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 SECURITIES AND EXCHANGE COMMISSION ("SEC") HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
WisdomTree Trust
WisdomTree Trust (the "Trust") is a registered investment company that consists
of separate investment portfolios called "Funds." Each Fund seeks investment
results that closely correspond to the price and yield performance, before fees
and expenses, of a particular index that defines a dividend-paying segment of
the international stock market. The indexes are created using a proprietary
methodology developed by WisdomTree Investments, Inc. The Funds described in
this Prospectus are listed in the Table of Contents.
Each Fund is an "exchange traded fund." This means that shares of the Funds are
listed on a national securities exchange, such as the New York Stock Exchange or
the American Stock Exchange and trade at market prices. The market price for a
Fund's shares may be different from its net asset value per share ("NAV"). Each
Fund has its own CUSIP number and exchange trading symbol.
Each Fund described in this Prospectus issues and redeems shares at NAV only in
large blocks of shares, typically 200,000 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.
--------------------------------------------------------------------------------
A NOTE TO RETAIL INVESTORS
Shares can be purchased directly from the issuing Fund only in exchange for a
basket of securities that is expected to be worth several million dollars. Most
individual investors, therefore, will not be able to purchase shares directly
from a Fund. Instead, these investors will purchase shares in the secondary
market through a brokerage account or with the assistance of a broker. Thus,
some of the information contained in this Prospectus - such as information about
purchasing and redeeming shares from a Fund and references to transaction fees
imposed on purchases and redemptions - is not relevant to most individual
investors. Shares purchased or sold through a brokerage account or with the
assistance of a broker may be subject to brokerage commissions and charges.
--------------------------------------------------------------------------------
INVESTMENT PRODUCTS: o ARE NOT FDIC INSURED o MAY LOSE VALUE
o ARE NOT BANK GUARANTEED
WisdomTree Trust
Table of Contents
Overview 2
Investment Objective 2
Principal Investment Strategies 2
Principal Risk Factors Common to All Funds 3
Portfolio Holdings Information 5
WisdomTree International Sector Funds 6
WisdomTree International Basic Materials Sector Fund 6
WisdomTree International Communications Sector Fund 9
WisdomTree International Consumer Cyclical Sector Fund 12
WisdomTree International Consumer Non-Cyclical Sector Fund 15
WisdomTree International Energy Sector Fund 18
WisdomTree International Financial Sector Fund 21
WisdomTree International Health Care Sector Fund 24
WisdomTree International Industrial Sector Fund 27
WisdomTree International Technology Sector Fund 30
WisdomTree International Utilities Sector Fund 33
WisdomTree International Real Estate Fund 36
Management 39
Investment Adviser 39
Sub-Adviser 39
Portfolio Managers 40
Administrator, Custodian and Transfer Agent 40
Shareholder Information 40
Buying and Selling Shares 41
Share Trading Prices 41
Determination of Net Asset Value 41
Dividends and Distributions 42
Book Entry 42
Delivery of Shareholder Documents - Householding 42
Frequent Purchases and Redemptions of Fund Shares 42
Investments by Registered Investment Companies 43
Taxes 43
Taxes on Distributions 43
Taxes When Fund Shares are Sold 44
Taxes on Creation and Redemption of Creation Units 44
Creation and Redemption 45
Authorized Participants and the Continuous Offering of Shares 45
Creation and Redemption Transaction Fees for Creation Units 45
Distribution 46
Additional Notices 47
Financial Highlights 47
WisdomTree Trust Prospectus 1
Overview
This Prospectus provides the information you need to make an informed decision
about investing in the Funds.* It contains important facts about the Trust as a
whole and each Fund in particular.
Each Fund is an exchange-traded fund ("ETF"). ETFs are index funds whose shares
are listed on a stock exchange and traded like equity securities at market
prices. ETFs, such as the Funds, allow you to buy or sell shares of a Fund that
represent the collective performance of a selected group of securities. ETFs are
designed to add the flexibility, ease and liquidity of stocktrading to the
benefits of traditional index-fund investing.
WisdomTree Asset Management, Inc. ("WisdomTree Asset Management") is the
investment adviser to each Fund. WisdomTree Investments, Inc. ("WisdomTree
Investments") is the parent company of WisdomTree Asset Management.
Investment Objective
Each Fund seeks investment returns that closely correspond to the price and
yield performance, before fees and expenses, of a particular index ("Index" or
"Dividend Index") developed by WisdomTree Investments. Each Index consists of
dividend-paying securities in the market suggested by its name that meet
specific criteria developed by WisdomTree Investments.
Principal Investment Strategies
This Prospectus describes eleven Funds that invest in dividend-paying non-U.S.
equity securities. Each Fund tracks a specific international Index created by
WisdomTree Investments. Each Fund seeks investment returns that closely
correspond to the price and yield performance, before fees and expenses, of its
underlying Index.
The WisdomTree Indexes are "fundamentally weighted." The Dividend Indexes differ
from most traditional indexes in that the proportion - or "weighting" - of the
securities in each Index is based on a measure of fundamental value. The
Dividend Indexes are weighted based on either the amount of cash dividends that
companies in each Index pay or the dividend yield of the companies in each
Index. This means that securities of companies that pay higher amounts of cash
dividends or have higher dividend yields generally will be more heavily weighted
in each Index and Fund. Most traditional indexes and index funds weight their
securities by looking simply at the market capitalization of such securities.
Common stocks, real estate investment trusts, tracking stocks, and holding
companies are eligible for inclusion in each Index. Only regular dividends
(i.e., established or quarterly dividends as opposed to non-recurring or special
dividends) are included in the determination of cash dividends or dividend
yield.
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 will normally 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. Each Fund generally may invest up to 5% of
its total assets in securities not included in its 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 its Index in order to reflect various
corporate actions and other changes to its 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 securities of its Index, it also may
invest its other assets in cash and cash equivalents, as well as in shares of
other investment companies, futures contracts, options on futures contracts,
options, and swaps. WisdomTree Asset Management expects that, over time, the
correlation between each Fund's performance and that of its Index, before fees
and expenses, will be 95% or better.
----------
* "WisdomTree" and "WisdomTree DEFA" 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.
2 WisdomTree Trust Prospectus
Each Fund may use a "Replication" strategy or a "Representative Sampling"
strategy in seeking to track the performance of its Index. A Fund using a
Replication strategy generally will invest in all or substantially all of the
securities in its Index in approximately the same proportions as such securities
are found in the Index. A Fund using a Representative Sampling strategy
generally will invest in a sample of the securities in its Index whose risk,
return and other characteristics (such as dividends paid, industry sector,
country, trading volume and liquidity) closely resemble the risk, return and
other characteristics of the Index as a whole.
Each Fund intends to concentrate (i.e., hold 25% or more of its total assets) in
the securities of the particular industry or group of industries suggested by
its name and the name of its underlying Index.
Principal Risk Factors Common to All Funds
Each Fund is subject to the principal risks described below. Certain additional
risks associated with a Fund are discussed in the specific section describing
that Fund. Some or all of these risks may adversely affect a Fund's NAV, trading
price, yield, total return and/or its ability to meet its objectives.
Stock Market Risk
The trading price of equity securities fluctuates in response to a variety of
factors. These factors include events impacting a single issuer, as well as
political, market and economic developments that affect specific market segments
and the market as a whole. Each Fund's NAV and market price, like stock prices
generally, will fluctuate within a wide range in response to these factors. As a
result, an investor could lose money over short or even long periods.
Investment Style Risk
The returns from the types of securities in which a Fund invests may
underperform returns from the various general securities markets or different
asset classes. This may cause a Fund to underperform other investment vehicles
that invest in different asset classes. Different types of securities (for
example, large-, mid- and small-capitalization stocks) tend to go through cycles
of doing better - or worse - than the general securities markets. In the past,
these periods have lasted for as long as several years.
Interest Rate Risk
Each of the underlying Indexes, and therefore the Funds, may be more heavily
weighted than other types of investments in market sectors that are sensitive to
interest rate fluctuations (such as the financial and real estate sectors). The
Funds therefore may be more sensitive to fluctuations in interest rates than
other types of investments. In particular, increases to prevailing interest
rates could have a negative impact on the performance of the Funds.
Investment Approach Risk
Each Fund invests in the securities included in, or representative of, its Index
regardless of their investment merit. The Funds do not attempt to outperform
their Indexes or take defensive positions in declining markets. As a result,
each Fund's performance may be adversely affected by a general decline in the
foreign market segments relating to its Index.
Concentration Risk
Each Index and Fund is concentrated in the industry or group of industries
suggested by its name. A Fund that concentrates, or otherwise invests a large
portion of its assets in a single industry or group of industries, may be more
susceptible to any single economic, market, political or regulatory occurrence
affecting that industry or group of industries. In such case, a Fund may be more
volatile than funds based on broader or less volatile market segments.
WisdomTree Trust Prospectus 3
Non-Diversification Risk
Each Fund is considered to be non-diversified, which means that it may invest
more of its assets in the securities of a single issuer or a smaller number of
issuers than if it were a diversified fund. As a result, a Fund may be more
exposed to the risks associated with and developments affecting an individual
issuer or a smaller number of issuers than a fund that invests more widely. This
may increase the Fund's volatility and cause the performance of a relatively
smaller number of issuers to have a greater impact on a Fund's performance.
Issuer-Specific Risk
Changes in the financial condition of an issuer or counterparty, changes in
specific economic or political conditions that affect a particular type of
security or issuer, and changes in general economic or political conditions can
affect a security's or instrument's value. The value of securities of smaller,
less well-known issuers can be more volatile than that of larger issuers.
Issuer-specific events can have a negative impact on the value of a Fund.
Foreign Securities Risk
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-Correlation Risk
The performance of a Fund and its Index may vary somewhat for a variety of
reasons. For example, each Fund incurs operating expenses and portfolio
transaction costs not incurred by its Index. In addition, a Fund may not be
fully invested in the securities of its Index at all times. The use of sampling
techniques may affect a Fund's ability to achieve close correlation with its
Index. A Fund using a Representative Sampling strategy generally can be expected
to have a greater non-correlation risk than a Fund using a Replication strategy.
Management Risk
Because each Fund may not fully replicate its Index and may hold securities not
included in its Index, a Fund is subject to management risk. This is the risk
that the Fund's investment strategy, the implementation of which is subject to a
number of constraints, may not produce the intended results.
Market Trading Risk
Although Fund shares are listed on national securities exchanges, there can be
no assurance that an active trading market for Fund shares will develop or be
maintained.
If an active market is not maintained, investors may find it difficult to buy or
sell Fund shares.
4 WisdomTree Trust Prospectus
Lack of Market Liquidity
Trading of shares of a Fund on a stock exchange may be halted if exchange
officials deem such action appropriate, if the Fund is delisted, or if the
activation of marketwide "circuit breakers" halts stock trading generally. If a
Fund's shares are delisted, the Fund may seek to list its shares on another
market, merge with another ETF or traditional mutual fund, or redeem its shares
at NAV. WisdomTree Asset Management believes that, under normal market
conditions, large market price discounts or premiums to NAV will not be
sustained because of arbitrage opportunities.
Shares of the Funds May Trade at Prices Other Than NAV
As with all ETFs, Fund shares may be bought and sold in the secondary market at
market prices. Although it is expected that the market price of the shares of
each Fund will approximate the respective Fund's NAV, there may be times when
the market price and the NAV vary significantly. Thus, you may pay more than NAV
when you buy shares of a Fund in the secondary market, and you may receive less
than NAV when you sell those shares in the secondary market.
The market price of Fund shares during the trading day, like the price of any
exchange-traded security, includes a "bid/ask" spread charged by the exchange
specialist, market makers or other participants that trade the Fund shares. The
bid/ask spread on ETF shares is likely to be larger on ETFs that are traded less
frequently. In addition in times of severe market disruption, the bid/ask spread
can increase significantly. At those times, Fund shares are most likely to be
traded at a discount to NAV, and the discount is likely to be greatest when the
price of shares is falling fastest, which may be the time that you most want to
sell your shares. WisdomTree Asset Management believes that, under normal market
conditions, large market price discounts or premiums to NAV will not be
sustained because of arbitrage opportunities.
Lack of Governmental Insurance or Guarantee
An investment in a Fund is not a bank deposit and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
Fiscal Policy Risk
Any repeal or failure to extend the current federal tax treatment of qualified
dividend income could make dividend paying securities less appealing to
investors and could have a negative impact on the performance of the Funds.
Portfolio Holdings Information
Information about each Fund's daily portfolio holdings is available at
www.wisdomtree.com.
In addition, each Fund discloses its complete portfolio holdings as of the end
of its fiscal year (March 31) and its second fiscal quarter (September 30) in
its reports to shareholders.
Each Fund files its complete portfolio holdings as of the end of its first and
third fiscal quarters (June 30 and December 31, respectively) with the SEC on
Form N-Q no later than 60 days after the relevant fiscal period.
You can find the SEC filings on the SEC's website, www.sec.gov. A summarized
description of the Funds' policies and procedures with respect to the disclosure
of each Fund's portfolio holdings is available in the Trust's Statement of
Additional Information ("SAI").
WisdomTree Trust Prospectus 5
WisdomTree International Sector Funds
o WisdomTree International Basic Materials Sector Fund
o WisdomTree International Communications Sector Fund
o WisdomTree International Consumer Cyclical Sector Fund
o WisdomTree International Consumer Non-Cyclical Sector Fund
o WisdomTree International Energy Sector Fund
o WisdomTree International Financial Sector Fund
o WisdomTree International Health Care Sector Fund
o WisdomTree International Industrial Sector Fund
o WisdomTree International Technology Sector Fund
o WisdomTree International Utilities Sector Fund
o WisdomTree International Real Estate Fund
--------------------------------------------------------------------------------
WisdomTree International Basic Materials Sector Fund
Fund Facts
Cusip Number:
o 97717W752
Exchange Trading Symbol:
o DBN
--------------------------------------------------------------------------------
WisdomTree International Basic Materials Sector Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree International Basic Materials Sector Index. Since
the Fund's investment objective has been adopted as a non-fundamental investment
policy, the Fund's investment objective may be changed without a vote of
shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree International Basic
Materials Sector Index. The Fund attempts to invest all, or substantially all,
of its assets in the stocks that make up the Index. The Fund generally uses a
Representative Sampling strategy to achieve its investment objective.
Index Description
The WisdomTree International Basic Materials Sector Index measures the
performance of companies in developed markets outside of the U.S. that pay
regular cash dividends on shares of common stock that WisdomTree Investments
classifies as being part of the "International Basic Materials" sector. The
Index is derived from the WisdomTree Dividend Index of Europe, Far East and
Australasia ("DEFA Index"). 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
included in the WisdomTree DEFA Index, 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 the following
types of companies: chemicals, forest products and paper, iron/steel, and
mining. As of June 30, 2007, approximately 68% of the Index consisted of
companies with market capitalizations over $10 billion, and approximately 27% of
the Index consisted of securities of companies with market capitalizations
between $2 and $10 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree International Basic Materials
Sector Fund, will fluctuate within a wide range, so an investor could lose
money over short or even long periods. If the value of the Fund's
investments goes down, you may lose money.
6 WisdomTree Trust Prospectus
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and, in some cases, less stringent investor protection
and disclosure standards. Since foreign exchanges may be open on days when
the Fund does not price its shares, the value of the securities in the
Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's shares. All of these factors can make foreign
investments more volatile and potentially less liquid than U.S.
investments. In addition, foreign markets can perform differently from the
U.S. market due to increased risks of adverse issuer, political,
regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country or region it is
more likely to be impacted by events or conditions affecting that country
or region. For example, political and economic conditions and changes in
regulatory, tax, or economic policy in a country could significantly affect
the market in that country and in surrounding or related countries and have
a negative impact on a Fund's performance. The Fund generally invests a
relatively large percentage of its assets in companies organized in the
United Kingdom and Australia.
o Mid-Capitalization Investing. The Fund invests in securities of
mid-capitalization companies.
o The securities of mid-capitalization companies may be more vulnerable
to adverse issuer, market, political, or economic developments than
the market as a whole or other types of securities.
o The securities of mid-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of mid-capitalization companies.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
o Basic Materials Investing. The Fund invests substantially all of its assets
in one sector of the market and as such is particularly sensitive to risks
to the International Basic Materials sector. These risks include but are
not limited to: commodity price volatility, sluggish demand for basic
materials, world economic growth, product liability for environmental
damage, depletion of natural resources, technological progress, and
government regulations.
Performance Information
Although the Fund commenced operations on October 13, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
WisdomTree Trust Prospectus 7
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment,but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 200,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$4,000 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $7,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $4,000 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $7,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $49,497 if the
Creation Unit is redeemed after one year and $138,075 if the Creation Unit is
redeemed after three years, $234,657 if the Creation Unit is redeemed after five
years and $516,033 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
8 WisdomTree Trust Prospectus
WisdomTree International Sector Funds
o WisdomTree International Basic Materials Sector Fund
o WisdomTree International Communications Sector Fund
o WisdomTree International Consumer Cyclical Sector Fund
o WisdomTree International Consumer Non-Cyclical Sector Fund
o WisdomTree International Energy Sector Fund
o WisdomTree International Financial Sector Fund
o WisdomTree International Health Care Sector Fund
o WisdomTree International Industrial Sector Fund
o WisdomTree International Technology Sector Fund
o WisdomTree International Utilities Sector Fund
o WisdomTree International Real Estate Fund
--------------------------------------------------------------------------------
WisdomTree International Communications Sector Fund
Fund Facts
Cusip Number:
o 97717W745
Exchange Trading Symbol:
o DGG
--------------------------------------------------------------------------------
WisdomTree International Communications Sector Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree International Communications Sector Index. Since the
Fund's investment objective has been adopted as a non-fundamental investment
policy, the Fund's investment objective may be changed without a vote of
shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree International Communications
Sector Index. The Fund attempts to invest all, or substantially all, of its
assets in the stocks that make up the Index. The Fund generally uses a
Representative Sampling strategy to achieve its investment objective.
Index Description
The WisdomTree International Communications Sector Index measures the
performance of companies in developed markets outside of the U.S. that pay
regular cash dividends on shares of common stock that WisdomTree Investments
classifies as being part of the "International Communications" sector. The Index
is derived from the WisdomTree Dividend Index of Europe, Far East and
Australasia ("DEFA Index"). 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
included in the WisdomTree DEFA Index, 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 the following
types of companies: advertising, internet, media, and telecom. As of June 30,
2007, approximately 85% of the Index consisted of companies with market
capitalizations over $10 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree International Communications
Sector Fund, will fluctuate within a wide range, so an investor could lose
money over short or even long periods. If the value of the Fund's
investments goes down, you may lose money.
WisdomTree Trust Prospectus 9
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
disclosure standards of some foreign markets. Since foreign exchanges may
be open on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders
will not be able to purchase or sell the Fund's shares. All of these
factors can make foreign investments more volatile and potentially less
liquid than U.S. investments. In addition, foreign markets can perform
differently from the U.S. market due to increased risks of adverse issuer,
political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country or region it is
more likely to be impacted by events or conditions affecting that country
or region. For example, political and economic conditions and changes in
regulatory, tax, or economic policy in a country could significantly affect
the market in that country and in surrounding or related countries and have
a negative impact on a Fund's performance. The Fund generally invests a
relatively large percentage of its assets in companies organized in the
United Kingdom.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
o Communications Investing. The Fund invests substantially all of its assets
in one sector of the market and as such is particularly sensitive to risks
to the International Communications sector. These risks include but are not
limited to: rapid technological developments, intensive capital usage, and
government regulation.
Performance Information
Although the Fund commenced operations on October 13, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment,but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the fund.
(b) Expenses have been restated to reflect current fees.
10 WisdomTree Trust Prospectus
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 200,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$3,250 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $6,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $3,250 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $6,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $42,069 if the
Creation Unit is redeemed after one year and $117,993 if the Creation Unit is
redeemed after three years, $200,777 if the Creation Unit is redeemed after five
years and $441,957 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 11
WisdomTree International Sector Funds
o WisdomTree International Basic Materials Sector Fund
o WisdomTree International Communications Sector Fund
o WisdomTree International Consumer Cyclical Sector Fund
o WisdomTree International Consumer Non-Cyclical Sector Fund
o WisdomTree International Energy Sector Fund
o WisdomTree International Financial Sector Fund
o WisdomTree International Health Care Sector Fund
o WisdomTree International Industrial Sector Fund
o WisdomTree International Technology Sector Fund
o WisdomTree International Utilities Sector Fund
o WisdomTree International Real Estate Fund
--------------------------------------------------------------------------------
WisdomTree International Consumer Cyclical Sector Fund
Fund Facts
Cusip Number:
o 97717W737
Exchange Trading Symbol:
o DPC
--------------------------------------------------------------------------------
WisdomTree International Consumer Cyclical Sector Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree International Consumer Cyclical Sector Index. Since
the Fund's investment objective has been adopted as a non-fundamental investment
policy, the Fund's investment objective may be changed without a vote of
shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree International Consumer
Cyclical Sector Index. The Fund attempts to invest all, or substantially all, of
its assets in the stocks that make up the Index. The Fund generally uses a
Representative Sampling strategy to achieve its investment objective.
Index Description
The WisdomTree International Consumer Cyclical Sector Index measures the
performance of companies in developed markets outside of the U.S. that pay
regular cash dividends on shares of common stock that WisdomTree Investments
classifies as being part of the "International Consumer Cyclical" sector. The
Index is derived from the WisdomTree Dividend Index of Europe, Far East and
Australasia ("DEFA Index"). 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
included in the WisdomTree DEFA Index, 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 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. As of June 30, 2007,
approximately 61% of the Index consisted of companies with market
capitalizations over $10 billion and approximately 27% of the Index consisted of
companies with market capitalizations between $2 and $10 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree International Consumer
Cyclical Sector Fund, will fluctuate within a wide range, so an investor
could lose money over short or even long periods. If the value of the
Fund's investments goes down, you may lose money.
12 WisdomTree Trust Prospectus
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
disclosure standards of some foreign markets. Since foreign exchanges may
be open on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders
will not be able to purchase or sell the Fund's shares. All of these
factors can make foreign investments more volatile and potentially less
liquid than U.S. investments. In addition, foreign markets can perform
differently from the U.S. market due to increased risks of adverse issuer,
political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country or region it is
more likely to be impacted by events or conditions affecting that country
or region. For example, political and economic conditions and changes in
regulatory, tax, or economic policy in a country could significantly affect
the market in that country and in surrounding or related countries and have
a negative impact on a Fund's performance. The Fund generally invests a
relatively large percentage of its assets in companies organized in Japan.
o Mid-Capitalization Investing. The Fund invests in securities of
mid-capitalization companies.
o The securities of mid-capitalization companies may be more vulnerable
to adverse issuer, market, political, or economic developments than
the market as a whole or other types of securities.
o The securities of mid-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of mid-capitalization companies.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
o Consumer Cyclical Investing. The Fund invests substantially all of its
assets in one sector of the market and as such is particularly sensitive to
risks to the International Consumer Cyclical sector. These risks include
but are not limited to: economic growth, worldwide demand, and consumers'
disposable income levels and propensity to spend.
Performance Information
Although the Fund commenced operations on October 13, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
WisdomTree Trust Prospectus 13
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 200,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$9,500 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $6,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $9,500 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $6,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $54,569 if the
Creation Unit is redeemed after one year and $130,493 if the Creation Unit is
redeemed after three years, $213,277 if the Creation Unit is redeemed after five
years and $454,457 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
14 WisdomTree Trust Prospectus
WisdomTree International Sector Funds
o WisdomTree International Basic Materials Sector Fund
o WisdomTree International Communications Sector Fund
o WisdomTree International Consumer Cyclical Sector Fund
o WisdomTree International Consumer Non-Cyclical Sector Fund
o WisdomTree International Energy Sector Fund
o WisdomTree International Financial Sector Fund
o WisdomTree International Health Care Sector Fund
o WisdomTree International Industrial Sector Fund
o WisdomTree International Technology Sector Fund
o WisdomTree International Utilities Sector Fund
o WisdomTree International Real Estate Fund
--------------------------------------------------------------------------------
WisdomTree International Consumer Non-Cyclical Sector Fund
Fund Facts
Cusip Number:
o 97717W729
Exchange Trading Symbol:
o DPN
--------------------------------------------------------------------------------
WisdomTree International Consumer Non-Cyclical Sector Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree International Consumer Non-Cyclical Sector Index.
Since the Fund's investment objective has been adopted as a non-fundamental
investment policy, the Fund's investment objective may be changed without a vote
of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree International Consumer
Non-Cyclical Sector Index. The Fund attempts to invest all, or substantially
all, of its assets in the stocks that make up the Index. The Fund generally uses
a Representative Sampling strategy to achieve its investment objective.
Index Description
The WisdomTree International Consumer Non-Cyclical Sector Index measures the
performance of companies in developed markets outside of the U.S. that pay
regular cash dividends on shares of common stock that WisdomTree Investments
classifies as being part of the "International Consumer Non-Cyclical" sector.
The Index is derived from the WisdomTree Dividend Index of Europe, Far East and
Australasia ("DEFA Index"). 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
included in the WisdomTree DEFA Index, 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 the following
types of companies: agriculture, tobacco, beverages, biotechnology, commercial
services, cosmetics/personal care, food, health care, pharmaceuticals, and
household products. As of June 30, 2007, approximately 81% of the Index
consisted of companies with market capitalizations over $10 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree International Consumer
Non-Cyclical Sector Fund, will fluctuate within a wide range, so an
investor could lose money over short or even long periods. If the value of
the Fund's investments goes down, you may lose money.
WisdomTree Trust Prospectus 15
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
disclosure standards of some foreign markets. Since foreign exchanges may
be open on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders
will not be able to purchase or sell the Fund's shares. All of these
factors can make foreign investments more volatile and potentially less
liquid than U.S. investments. In addition, foreign markets can perform
differently from the U.S. market due to increased risks of adverse issuer,
political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country or region it is
more likely to be impacted by events or conditions affecting that country
or region. For example, political and economic conditions and changes in
regulatory, tax, or economic policy in a country could significantly affect
the market in that country and in surrounding or related countries and have
a negative impact on a Fund's performance. The Fund generally invests a
relatively large percentage of its assets in companies organized in the
United Kingdom.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
o Consumer Non-Cyclical Investing. The Fund invests substantially all of its
assets in one sector of the market and as such is particularly sensitive to
risks to the International Consumer Non-Cyclical sector. These risks
include but are not limited to: patent protection lapses for health care
companies, litigation for tobacco companies, price wars for food companies,
and FDA drug approval process for pharmaceutical companies.
Performance Information
Although the Fund commenced operations on October 13, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year, a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the fund.
(b) Expenses have been restated to reflect current fees.
16 WisdomTree Trust Prospectus
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 200,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$8,000 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $6,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $8,000 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $6,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $51,569 if the
Creation Unit is redeemed after one year and $127,493 if the Creation Unit is
redeemed after three years, $210,277 if the Creation Unit is redeemed after five
years and $451,457 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 17
WisdomTree International Sector Funds
o WisdomTree International Basic Materials Sector Fund
o WisdomTree International Communications Sector Fund
o WisdomTree International Consumer Cyclical Sector Fund
o WisdomTree International Consumer Non-Cyclical Sector Fund
o WisdomTree International Energy Sector Fund
o WisdomTree International Financial Sector Fund
o WisdomTree International Health Care Sector Fund
o WisdomTree International Industrial Sector Fund
o WisdomTree International Technology Sector Fund
o WisdomTree International Utilities Sector Fund
o WisdomTree International Real Estate Fund
--------------------------------------------------------------------------------
WisdomTree International Energy Sector Fund
Fund Facts
Cusip Number:
o 97717W711
Exchange Trading Symbol:
o DKA
--------------------------------------------------------------------------------
WisdomTree International Energy Sector Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree International Energy Sector Index. Since the Fund's
investment objective has been adopted as a non-fundamental investment policy,
the Fund's investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree International Energy Sector
Index. The Fund attempts to invest all, or substantially all, of its assets in
the stocks that make up the Index. The Fund generally uses a Representative
Sampling strategy to achieve its investment objective.
Index Description
The WisdomTree International Energy Sector Index measures the performance of
companies in developed markets outside of the U.S. that pay regular cash
dividends on shares of common stock that WisdomTree Investments classifies as
being part of the "International Energy" sector. The Index is derived from the
WisdomTree Dividend Index of Europe, Far East and Australasia ("DEFA Index").
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 included in the WisdomTree DEFA
Index, 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 the following types of companies: oil and gas
producers, oil and gas services, pipelines, alternative energy sources, and
coal. As of June 30, 2007, approximately 74% of the Index consisted of companies
with market capitalizations over $10 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree International Energy Sector
Fund, will fluctuate within a wide range, so an investor could lose money
over short or even long periods. If the value of the Fund's investments
goes down, you may lose money.
18 WisdomTree Trust Prospectus
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
disclosure standards of some foreign markets. Since foreign exchanges may
be open on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders
will not be able to purchase or sell the Fund's shares. All of these
factors can make foreign investments more volatile and potentially less
liquid than U.S. investments. In addition, foreign markets can perform
differently from the U.S. market due to increased risks of adverse issuer,
political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country or region it is
more likely to be impacted by events or conditions affecting that country
or region. For example, political and economic conditions and changes in
regulatory, tax, or economic policy in a country could significantly affect
the market in that country and in surrounding or related countries and have
a negative impact on a Fund's performance. The Fund generally invests a
relatively large percentage of its assets in companies organized in the
United Kingdom.
o Mid-Capitalization Investing. The Fund invests in securities of
mid-capitalization companies.
o The securities of mid-capitalization companies may be more vulnerable
to adverse issuer, market, political, or economic developments than
the market as a whole or other types of securities.
o The securities of mid-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of mid-capitalization companies.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
o Energy Investing. The Fund invests substantially all of its assets in one
sector of the market and as such is particularly sensitive to risks to the
International Energy sector. These risks include but are not limited to:
economic growth, worldwide demand, political instability in the Middle
East, and volatile oil prices.
Performance Information
Although the Fund commenced operations on October 13, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
WisdomTree Trust Prospectus 19
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 200,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$1,250 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $7,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $1,250 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $7,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $43,997 if the
Creation Unit is redeemed after one year and $132,575 if the Creation Unit is
redeemed after three years, $229,157 if the Creation Unit is redeemed after five
years and $510,533 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
20 WisdomTree Trust Prospectus
WisdomTree International Sector Funds
o WisdomTree International Basic Materials Sector Fund
o WisdomTree International Communications Sector Fund
o WisdomTree International Consumer Cyclical Sector Fund
o WisdomTree International Consumer Non-Cyclical Sector Fund
o WisdomTree International Energy Sector Fund
o WisdomTree International Financial Sector Fund
o WisdomTree International Health Care Sector Fund
o WisdomTree International Industrial Sector Fund
o WisdomTree International Technology Sector Fund
o WisdomTree International Utilities Sector Fund
o WisdomTree International Real Estate Fund
--------------------------------------------------------------------------------
WisdomTree International Financial Sector Fund
Fund Facts
Cusip Number:
o 97717W695
Exchange Trading Symbol:
o DRF
--------------------------------------------------------------------------------
WisdomTree International Financial Sector Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree International Financial Sector Index. Since the
Fund's investment objective has been adopted as a non-fundamental investment
policy, the Fund's investment objective may be changed without a vote of
shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree International Financial
Sector Index. The Fund attempts to invest all, or substantially all, of its
assets in the stocks that make up the Index. The Fund generally uses a
Representative Sampling strategy to achieve its investment objective.
Index Description
The WisdomTree International Financial Sector Index measures the performance of
companies in developed markets outside of the U.S. that pay regular cash
dividends on shares of common stock that WisdomTree Investments classifies as
being part of the "International Financial" sector. The Index is derived from
the WisdomTree Dividend Index of Europe, Far East and Australasia ("DEFA
Index"). 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 included in the WisdomTree DEFA
Index, 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 the following types of companies: banks,
savings and loans, insurance companies, investment companies, real estate
companies, and diversified financial companies. As of June 30, 2007,
approximately 88% of the Index consisted of companies with market
capitalizations over $10 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree International Financial Sector
Fund, will fluctuate within a wide range, so an investor could lose money
over short or even long periods. If the value of the Fund's investments
goes down, you may lose money.
WisdomTree Trust Prospectus 21
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
disclosure standards of some foreign markets. Since foreign exchanges may
be open on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders
will not be able to purchase or sell the Fund's shares. All of these
factors can make foreign investments more volatile and potentially less
liquid than U.S. investments. In addition, foreign markets can perform
differently from the U.S. market due to increased risks of adverse issuer,
political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country or region it is
more likely to be impacted by events or conditions affecting that country
or region. For example, political and economic conditions and changes in
regulatory, tax, or economic policy in a country could significantly affect
the market in that country and in surrounding or related countries and have
a negative impact on a Fund's performance. The Fund generally invests a
relatively large percentage of its assets in companies organized in the
United Kingdom.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
o Financial Investing. The Fund invests substantially all of its assets in
one sector of the market and as such is particularly sensitive to risks to
the International Financial sector. These risks include but are not limited
to: interest rate sensitivity, stock market activity, mergers and
acquisition activity, losses on loans, and government regulation.
Performance Information
Although the Fund commenced operations on October 13, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the fund.
(b) Expenses have been restated to reflect current fees.
22 WisdomTree Trust Prospectus
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 200,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$9,000 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $6,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $9,000 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $6,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $53,569 if the
Creation Unit is redeemed after one year and $129,493 if the Creation Unit is
redeemed after three years, $212,277 if the Creation Unit is redeemed after five
years and $453,457 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 23
WisdomTree International Sector Funds
o WisdomTree International Basic Materials Sector Fund
o WisdomTree International Communications Sector Fund
o WisdomTree International Consumer Cyclical Sector Fund
o WisdomTree International Consumer Non-Cyclical Sector Fund
o WisdomTree International Energy Sector Fund
o WisdomTree International Financial Sector Fund
o WisdomTree International Health Care Sector Fund
o WisdomTree International Industrial Sector Fund
o WisdomTree International Technology Sector Fund
o WisdomTree International Utilities Sector Fund
o WisdomTree International Real Estate Fund
--------------------------------------------------------------------------------
WisdomTree International Health Care Sector Fund
Fund Facts
Cusip Number:
o 97717W687
Exchange Trading Symbol:
o DBR
--------------------------------------------------------------------------------
WisdomTree International Health Care Sector Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree International Health Care Sector Index. Since the
Fund's investment objective has been adopted as a non-fundamental investment
policy, the Fund's investment objective may be changed without a vote of
shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree International Health Care
Sector Index. The Fund attempts to invest all, or substantially all, of its
assets in the stocks that make up the Index. The Fund generally uses a
Representative Sampling strategy to achieve its investment objective.
Index Description
The WisdomTree International Health Care Sector Index measures the performance
of companies in developed markets outside of the U.S. that pay regular cash
dividends on shares of common stock that WisdomTree Investments classifies as
being part of the "International Health Care" sector. The Index is derived from
the WisdomTree Dividend Index of Europe, Far East and Australasia ("DEFA
Index"). 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 included in the WisdomTree Europe
Dividend Index, 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 the following types of companies: health
care products, health care services, pharmaceuticals, and biotechnology. As of
June 30, 2007, approximately 66% of the Index consisted of companies with market
capitalizations over $10 billion and approximately 24% of the Index consisted of
companies with market capitalizations between $2 billion and $10 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree International Health Care
Sector Fund, will fluctuate within a wide range, so an investor could lose
money over short or even long periods. If the value of the Fund's
investments goes down, you may lose money.
24 WisdomTree Trust Prospectus
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
disclosure standards of some foreign markets. Since foreign exchanges may
be open on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders
will not be able to purchase or sell the Fund's shares. All of these
factors can make foreign investments more volatile and potentially less
liquid than U.S. investments. In addition, foreign markets can perform
differently from the U.S. market due to increased risks of adverse issuer,
political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country or region it is
more likely to be impacted by events or conditions affecting that country
or region. For example, political and economic conditions and changes in
regulatory, tax, or economic policy in a country could significantly affect
the market in that country and in surrounding or related countries and have
a negative impact on a Fund's performance. The company invests a relatively
large percentage of its assets in companies organized in the United
Kingdom.
o Mid-Capitalization Investing. The Fund invests in securities of
mid-capitalization companies.
o The securities of mid-capitalization companies may be more vulnerable
to adverse issuer, market, political, or economic developments than
the market as a whole or other types of securities.
o The securities of mid-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of mid-capitalization companies.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
o Health Care Investing. The Fund invests substantially all of its assets in
one sector of the market and as such is particularly sensitive to risks to
the International Health Care sector. These risks include but are not
limited to: lapsing patent protection, technological developments that make
drugs obsolete, government regulation, price controls, and approvals for
drugs.
Performance Information
Although the Fund commenced operations on October 13, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
WisdomTree Trust Prospectus 25
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 200,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$2,250 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $5,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $2,250 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $5,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $34,141 if the
Creation Unit is redeemed after one year and $97,411 if the Creation Unit is
redeemed after three years, $166,398 if the Creation Unit is redeemed after five
years and $367,381 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
26 WisdomTree Trust Prospectus
WisdomTree International Sector Funds
o WisdomTree International Basic Materials Sector Fund
o WisdomTree International Communications Sector Fund
o WisdomTree International Consumer Cyclical Sector Fund
o WisdomTree International Consumer Non-Cyclical Sector Fund
o WisdomTree International Energy Sector Fund
o WisdomTree International Financial Sector Fund
o WisdomTree International Health Care Sector Fund
o WisdomTree International Industrial Sector Fund
o WisdomTree International Technology Sector Fund
o WisdomTree International Utilities Sector Fund
o WisdomTree International Real Estate Fund
--------------------------------------------------------------------------------
WisdomTree International Industrial Sector Fund
Fund Facts
Cusip Number:
o 97717W679
Exchange Trading Symbol:
o DDI
--------------------------------------------------------------------------------
WisdomTree International Industrial Sector Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree International Industrial Sector Index. Since the
Fund's investment objective has been adopted as a non-fundamental investment
policy, the Fund's investment objective may be changed without a vote of
shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree International Industrial
Sector Index. The Fund attempts to invest all, or substantially all, of its
assets in the stocks that make up the Index. The Fund generally uses a
Representative Sampling strategy to achieve its investment objective.
Index Description
The WisdomTree International Industrial Sector Index measures the performance of
companies in developed markets outside of the U.S. that pay regular cash
dividends on shares of common stock that WisdomTree Investments classifies as
being part of the "International Industrial" sector. The Index is derived from
the WisdomTree Dividend Index of Europe, Far East and Australasia ("DEFA
Index"). 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 included in the WisdomTree DEFA
Index, 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 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. As of June 30, 2007, approximately 54% of the Index
consisted of companies with market capitalizations over $10 billion and
approximately 31% of the Index consisted of companies with market
capitalizations between $2 billion and $10 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree International Industrial
Sector Fund, will
WisdomTree Trust Prospectus 27
fluctuate within a wide range, so an investor could lose money over short
or even long periods. If the value of the Fund's investments goes down, you
may lose money.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
disclosure standards of some foreign markets. Since foreign exchanges may
be open on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders
will not be able to purchase or sell the Fund's shares. All of these
factors can make foreign investments more volatile and potentially less
liquid than U.S. investments. In addition, foreign markets can perform
differently from the U.S. market due to increased risks of adverse issuer,
political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country or region it is
more likely to be impacted by events or conditions affecting that country
or region. For example, political and economic conditions and changes in
regulatory, tax, or economic policy in a country could significantly affect
the market in that country and in surrounding or related countries and have
a negative impact on a Fund's performance. The Fund generally invests a
relatively large percentage of its assets in companies organized in Japan.
o Mid-Capitalization Investing. The Fund invests in securities of
mid-capitalization companies.
o The securities of mid-capitalization companies may be more vulnerable
to adverse issuer, market, political, or economic developments than
the market as a whole or other types of securities.
o The securities of mid-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of mid-capitalization companies.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
o Industrial Investing. The Fund invests substantially all of its assets in
one sector of the market and as such is particularly sensitive to risks to
the International Industrial sector. These risks include but are not
limited to: worldwide economy growth, supply and demand for specific
products and services, rapid technological developments, and government
regulation.
Performance Information
Although the Fund commenced operations on October 13, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
28 WisdomTree Trust Prospectus
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment,but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 200,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$9,500 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $7,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $9,500 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $7,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $60,497 if the
Creation Unit is redeemed after one year and $149,075 if the Creation Unit is
redeemed after three years, $245,657 if the Creation Unit is redeemed after five
years and $527,033 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 29
WisdomTree International Sector Funds
o WisdomTree International Basic Materials Sector Fund
o WisdomTree International Communications Sector Fund
o WisdomTree International Consumer Cyclical Sector Fund
o WisdomTree International Consumer Non-Cyclical Sector Fund
o WisdomTree International Energy Sector Fund
o WisdomTree International Financial Sector Fund
o WisdomTree International Health Care Sector Fund
o WisdomTree International Industrial Sector Fund
o WisdomTree International Technology Sector Fund
o WisdomTree International Utilities Sector Fund
o WisdomTree International Real Estate Fund
--------------------------------------------------------------------------------
WisdomTree International Technology Sector Fund
Fund Facts
Cusip Number:
o 97717W661
Exchange Trading Symbol:
o DBT
--------------------------------------------------------------------------------
WisdomTree International Technology Sector Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree International Technology Sector Index. Since the
Fund's investment objective has been adopted as a non-fundamental investment
policy, the Fund's investment objective may be changed without a vote of
shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree International Technology
Sector Index. The Fund attempts to invest all, or substantially all, of its
assets in the stocks that make up the Index. The Fund generally uses a
Representative Sampling strategy to achieve its investment objective.
Index Description
The WisdomTree International Technology Sector Index measures the performance of
companies in developed markets outside of the U.S. that pay regular cash
dividends on shares of common stock that WisdomTree Investments classifies as
being part of the "International Technology" sector. The Index is derived from
the WisdomTree Dividend Index of Europe, Far East and Australasia ("DEFA
Index"). 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 included in the WisdomTree DEFA
Index, 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 the following types of companies: computers,
office and business equipment, semiconductors, and software. As of June 30,
2007, approximately 56% of the Index consisted of companies with market
capitalizations over $10 billion and approximately 28% of the Index consisted of
companies with market capitalizations between $2 billion and $10 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree International Technology
Sector Fund, will fluctuate within a wide range, so an investor could lose
money over short or even long periods. If the value of the Fund's
investments goes down, you may lose money.
30 WisdomTree Trust Prospectus
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and the less stringent investor protection and
disclosure standards of some foreign markets. Since foreign exchanges may
be open on days when the Fund does not price its shares, the value of the
securities in the Fund's portfolio may change on days when shareholders
will not be able to purchase or sell the Fund's shares. All of these
factors can make foreign investments more volatile and potentially less
liquid than U.S. investments. In addition, foreign markets can perform
differently from the U.S. market due to increased risks of adverse issuer,
political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country or region it is
more likely to be impacted by events or conditions affecting that country
or region. For example, political and economic conditions and changes in
regulatory, tax, or economic policy in a country could significantly affect
the market in that country and in surrounding or related countries and have
a negative impact on a Fund's performance. The Fund generally invests a
relatively large percentage of its assets (sometimes up to 45% or more) in
companies organized in Japan.
o Mid-Capitalization Investing. The Fund invests in securities of
mid-capitalization companies.
o The securities of mid-capitalization companies may be more vulnerable
to adverse issuer, market, political, or economic developments than
the market as a whole or other types of securities.
o The securities of mid-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of mid-capitalization companies.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
o Technology Investing. The Fund invests substantially all of its assets in
one sector of the market and as such is particularly sensitive to risks to
the International Technology sector. These risks include but are not
limited to: worldwide economic growth, supply and demand for specific
products and services, rapid technological developments, and government
regulation.
Performance Information
Although the Fund commenced operations on October 13, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
WisdomTree Trust Prospectus 31
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 200,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$2,000 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $6,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $2,000 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $6,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $39,569 if the
Creation Unit is redeemed after one year and $115,493 if the Creation Unit is
redeemed after three years, $198,277 if the Creation Unit is redeemed after five
years and $439,457 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
32 WisdomTree Trust Prospectus
WisdomTree International Sector Funds
o WisdomTree International Basic Materials Sector Fund
o WisdomTree International Communications Sector Fund
o WisdomTree International Consumer Cyclical Sector Fund
o WisdomTree International Consumer Non-Cyclical Sector Fund
o WisdomTree International Energy Sector Fund
o WisdomTree International Financial Sector Fund
o WisdomTree International Health Care Sector Fund
o WisdomTree International Industrial Sector Fund
o WisdomTree International Technology Sector Fund
o WisdomTree International Utilities Sector Fund
o WisdomTree International Real Estate Fund
--------------------------------------------------------------------------------
WisdomTree International Utilities Sector Fund
Fund Facts
Cusip Number:
o 97717W653
Exchange Trading Symbol:
o DBU
--------------------------------------------------------------------------------
WisdomTree International Utilities Sector Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree International Utilities Sector Index. Since the
Fund's investment objective has been adopted as a non-fundamental investment
policy, the Fund's investment objective may be changed without a vote of
shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree International Utilities
Sector Index. The Fund attempts to invest all, or substantially all, of its
assets in the stocks that make up the Index. The Fund generally uses a
Representative Sampling strategy to achieve its investment objective.
Index Description
The WisdomTree International Utilities Sector Index measures the performance of
companies in developed markets outside of the U.S. that pay regular cash
dividends on shares of common stock that WisdomTree Investments classifies as
being part of the "International Utilities" sector. The Index is derived from
the WisdomTree Dividend Index of Europe, Far East and Australasia ("DEFA
Index"). 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 included in the WisdomTree DEFA
Index, 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 the following types of companies: gas,
electric, and water. As of June 30, 2007, approximately 82% of the Index
consisted of companies with market capitalizations over $10 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree International Utilities Sector
Fund, will fluctuate within a wide range, so an investor could lose money
over short or even long periods. If the value of the Fund's investments
goes down, you may lose money.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include
WisdomTree Trust Prospectus 33
fluctuations in foreign currencies; withholding or other taxes; trading,
settlement, custodial, and other operational risks; and the less stringent
investor protection and disclosure standards of some foreign markets. Since
foreign exchanges may be open on days when the Fund does not price its
shares, the value of the securities in the Fund's portfolio may change on
days when shareholders will not be able to purchase or sell the Fund's
shares. All of these factors can make foreign investments more volatile and
potentially less liquid than U.S. investments. In addition, foreign markets
can perform differently from the U.S. market due to increased risks of
adverse issuer, political, regulatory, market, and economic developments.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country or region it is
more likely to be impacted by events or conditions affecting that country
or region. For example, political and economic conditions and changes in
regulatory, tax, or economic policy in a country could significantly affect
the market in that country and in surrounding or related countries and have
a negative impact on a Fund's performance.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
o Utilities Investing. The Fund invests substantially all of its assets in
one sector of the market and as such is particularly sensitive to risks to
the International Utilities sector. These risks include but are not limited
to: government regulation stipulating rates charged by utilities, interest
rate sensitivity, and the cost of providing the specific utility service.
Performance Information
Although the Fund commenced operations on October 13, 2006, no performance
information is presented for the Fund because it has been in operation for less
than one full calendar year. After the first full calendar year a risk/return
chart and table will be provided. Any past performance of the Fund that will be
shown will not be an indication of future results.
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment,but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the fund.
(b) Expenses have been restated to reflect current fees.
34 WisdomTree Trust Prospectus
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 200,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$1,500 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $6,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $1,500 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $6,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $38,569 if the
Creation Unit is redeemed after one year and $114,493 if the Creation Unit is
redeemed after three years, $197,277 if the Creation Unit is redeemed after five
years and $438,457 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
WisdomTree Trust Prospectus 35
WisdomTree International Sector Funds
o WisdomTree International Basic Materials Sector Fund
o WisdomTree International Communications Sector Fund
o WisdomTree International Consumer Cyclical Sector Fund
o WisdomTree International Consumer Non-Cyclical Sector Fund
o WisdomTree International Energy Sector Fund
o WisdomTree International Financial Sector Fund
o WisdomTree International Health Care Sector Fund
o WisdomTree International Industrial Sector Fund
o WisdomTree International Technology Sector Fund
o WisdomTree International Utilities Sector Fund
o WisdomTree International Real Estate Fund
--------------------------------------------------------------------------------
WisdomTree International Real Estate Fund
Fund Facts
Cusip Number:
o 97717W331
Exchange Trading Symbol:
o DRW
--------------------------------------------------------------------------------
WisdomTree International Real Estate Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree International Real Estate Index. Since the Fund's
investment objective has been adopted as a non-fundamental investment policy,
the Fund's investment objective may be changed without a vote of shareholders.
Primary Investment Strategies
The Fund employs a "passive management" - or indexing - investment approach
designed to track the performance of the WisdomTree International Real Estate
Index. The Fund attempts to invest all, or substantially all, of its assets in
the stocks that make up the Index. The Fund generally uses a Representative
Sampling strategy to achieve its investment objective.
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 Passive Foreign Investment Companies
(PFICs). As of June 30, 2007, approximately 43% of the Index consisted of
companies with market capitalizations between $2 and $10 billion.
Primary Investment Risks
The following risks, in addition to the principal risk factors common to all
Funds, are some of the risks that can significantly affect the Fund's
performance.
o Stock Market Risk. Like stock prices generally, the price, and therefore
the total return of shares of the WisdomTree International Real Estate
Fund, will fluctuate within a wide range, so an investor could lose money
over short or even long periods. If the value of the Fund's investments
goes down, you may lose money.
o Investments in Real Estate, REITs and PFICs. The Fund invests substantially
all of its assets in one sector of the Market and as such is particularly
sensitive to risks to the international real estate market. The Fund
generally invests a relatively large percentage of its assets in real
estate investment trusts or "REITs." Investments in REITs subject the Fund
to risks associated with the direct ownership of real estate. Market
conditions or events affecting the overall market for Real Estate and
REITs,
36 WisdomTree Trust Prospectus
such as declining property values or rising interest rates, could have a
negative impact on the Fund's performance. Investments in PFICs may
decrease the tax efficiency of the Fund.
o Mid-Capitalization Investing. The Fund invests in securities of
mid-capitalization companies.
o The securities of mid-capitalization companies may be more vulnerable
to adverse issuer, market, political, or economic developments than
the market as a whole or other types of securities.
o The securities of mid-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of mid-capitalization companies.
o Small-Capitalization Investing. The Fund invests in securities of
small-capitalization companies. As a result, the Fund may be more volatile
than funds that invest in larger, more established companies.
o Small-capitalization companies may be less financially secure than
larger, more established mid- and large-capitalization companies.
o The securities of small-capitalization companies may be more
vulnerable to adverse issuer, market, political, or economic
developments than the market as a whole or other types of securities.
o The securities of small-capitalization companies generally trade in
lower volumes and are subject to greater and more unpredictable price
changes than larger capitalization stocks or the stock market as a
whole. As a result, it may be relatively more difficult for the Fund
to buy and sell securities of small-capitalization companies.
o Small-capitalization companies may be particularly sensitive to
changes in interest rates, borrowing costs and earnings.
o Foreign Securities Risk. Foreign securities can involve additional risks
relating to political, economic, or regulatory conditions in foreign
countries. These risks include fluctuations in foreign currencies;
withholding or other taxes; trading, settlement, custodial, and other
operational risks; and, in some cases, less stringent investor protection
and disclosure standards. Since foreign exchanges may be open on days when
the Fund does not price its shares, the value of the securities in the
Fund's portfolio may change on days when shareholders will not be able to
purchase or sell the Fund's shares. All of these factors can make foreign
investments more volatile and potentially less liquid than U.S.
investments. In addition, foreign markets can perform differently from the
U.S. market due to increased risks of adverse issuer, political,
regulatory, market, and economic developments. The Fund invests a
relatively large percentage of its assets in companies organized in
Australia and Hong Kong.
o Geographic Concentration Risk. To the extent the Fund invests a significant
portion of its assets in the securities of a single country or region it is
more likely to be impacted by events or conditions affecting that country
or region. For example, political and economic conditions and changes in
regulatory, tax, or economic policy in a country could significantly affect
the market in that country and in surrounding or related countries and have
a negative impact on a Fund's performance.
o Currency Risk. Because the Fund's NAV is determined on the basis of U.S.
dollars, the U.S. dollar value of your investment in the Fund may go down
if the value of the local currency of the non-U.S. markets in which the
Fund invests depreciates against the U.S. dollar. This is true even if the
local currency value of securities in the Fund's holdings goes up.
Performance Information
No performance information is presented for the Fund because it has been in
operation for less than one full calendar year. After the first full calendar
year a risk/return chart and table will be provided. Any past performance of the
Fund that will be shown will not be an indication of future results.
WisdomTree Trust Prospectus 37
Fees and Expenses
The following table describes the fees and expenses you may pay if you buy and
hold shares of the Fund. The fees are expressed as a percentage of the Fund's
average net assets. You may also incur customary brokerage charges when buying
or selling Fund shares.
Shareholder Fees None
(fees paid directly from your investment, but see the Creation
Transaction Fees and Redemption Transaction Fees section below)
Annual Fund Operating Expenses (expenses deducted from Fund assets)
Management Fees 0.58%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses(b) 0.58%
(a) "Other Expenses" are based on estimated amounts for the current fiscal
year. WisdomTree Asset Management receives a fee of up to .0044% in
exchange for providing certain non-advisory services to the fund.
(b) Expenses have been restated to reflect current fees.
The following example is intended to help retail investors compare the cost of
investing in the Fund with the cost of investing in other funds. It illustrates
the hypothetical expenses that such investors would incur over various periods
if they invest $10,000 in the Fund for the time periods indicated and then
redeemed all of the shares at the end of those periods. This example assumes
that the Fund provides a return of 5% a year and that operating expenses remain
the same. This example does not include the brokerage commission that retail
investors will pay to buy and sell shares of the Fund. It also does not include
the transaction fees on purchases and redemptions of Creation Units, because
these fees will not be imposed on retail investors. Although your actual costs
may be higher or lower, based on these assumptions, your costs would be:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years 5 Years 10 Years
-------------------------------------------------------------
$59 $186 $324 $726
Creation Transaction Fees and Redemption Transaction Fees
The Fund issues and redeems shares at NAV only in blocks of 100,000 shares or
multiples thereof. As a practical matter, only institutions or large investors
purchase or redeem these Creation Units. A standard creation transaction fee of
$6,500 is charged to each purchaser of Creation Units.* The fee is a single
charge and will be the same regardless of the number of Creation Units purchased
by an investor on the same day. The approximate value of a Creation Unit as of
July 1, 2007 was $5,000,000. An investor who holds Creation Units and wishes to
redeem at NAV would also pay a standard redemption transaction fee of $6,500 on
the date of such redemption(s), regardless of the number of Creation Units
redeemed that day. Investors who hold Creation Units will also pay the annual
fund operating expenses described in the table above. Assuming an investment in
a Creation Unit of $5,000,000 and a 5% return each year, and assuming the Fund's
operating expenses remain the same, the total costs would be $42,641 if the
Creation Unit is redeemed after one year and $105,911 if the Creation Unit is
redeemed after three years, $174,898 if the Creation Unit is redeemed after five
years and $375,881 if the Creation Unit is redeemed after ten years.
----------
* See the Creation and Redemption Transaction Fees for Creation Units
discussion in the Shareholder Information section of this Prospectus. If a
Creation Unit is purchased or redeemed outside the usual process through
the National Securities Clearing Corporation or for cash, a variable fee
will be charged of up to four times the standard creation or redemption
transaction fee.
38 WisdomTree Trust Prospectus
Management
Investment Adviser
As investment adviser, 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 does not manage any other investment companies and has limited
experience as an investment adviser. 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.
Under the Investment Advisory Agreement, WisdomTree Asset Management agrees to
pay all expenses of the Trust, except compensation and expenses of the
Independent Trustees, counsel to the Independent Trustees and the Trust's Chief
Compliance Officer, interest expenses and taxes, brokerage expenses, and other
expenses connected with the execution of portfolio transactions, any
distribution fees or expenses, legal fees or expenses and extraordinary
expenses. Pursuant to a separate contractual arrangement, WisdomTree Asset
Management arranges for the provision of chief compliance officer ("CCO")
services to the Trust, and is liable and responsible for, and administers,
payments to the CCO, the Independent Trustees and counsel to the Independent
Trustees.
WisdomTree Asset Management expects to receive fees from each Fund, based on a
percentage of the Fund's average daily net assets, as shown in the following
table:
Name of Fund Management Fee
--------------------------------------------------------------------------------
WisdomTree International Basic Materials Sector Fund 0.58%
WisdomTree International Communications Sector Fund 0.58%
WisdomTree International Consumer Cyclical Sector Fund 0.58%
WisdomTree International Non-Consumer Cyclical 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%
WisdomTree Asset Management is a registered investment adviser with offices
located at 48 Wall Street, Suite 1100, New York, NY 10005.
WisdomTree Trust Prospectus 39
Sub-Adviser
BNY Investment Advisors, a separately identifiable division of The Bank of New
York, a New York state banking corporation, serves as the sub-adviser for each
Fund (the "Sub-Adviser"). BNY Investment Advisors has its principal place of
business at 1633 Broadway, 13th Floor, New York, New York 10019. The Bank of New
York began offering investment services in the 1830s and as of June 2007 managed
more than $142 billion in investments for institutions and individuals.The Bank
of New York 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 as set forth below.
o 20 basis points (0.20%) of the first $50 million in the total daily net
assets of all International Funds;
o 15 basis points (0.15%) of the next $50 million in the total daily net
assets of all International Funds;
o 10 basis points (0.10%) of the total daily net assets of all International
Funds in excess of $100 million; and
o 5 basis points (0.05%) of the total daily net assets of all International
Funds in excess of $1 billion.
Portfolio Managers
Each Fund is managed by the Sub-Adviser's Index Fund Management Division. The
four most senior members are Kurt Zyla, Lloyd Buchanan, Denise Krisko, and Todd
Rose. Mr. Zyla, a Managing Director of the Sub-Adviser, has supervised the Index
Fund 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 Senior Portfolio Manager 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 Quantiative 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. Rose has been a
Portfolio Manager in the Index Fund Management Division since 2000. Prior to
joining the Division, Mr. Rose worked in the 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 Portfolio Manager is responsible for various functions related to portfolio
management, including, but not limited to, investing cash inflows, implementing
investment strategy, researching and reviewing investment strategy, and
overseeing members of his or her Portfolio Management team with more limited
responsibilities. Each Portfolio Manager is authorized to make investment
decisions for all portfolios managed by the team. Each Portfolio Manager has
appropriate limitations on his or her authority for risk management and
compliance purposes. No member of the Portfolio Management team manages assets
outside of the team.
The Trust's SAI provides additional information about the Portfolio Managers'
compensation, other accounts managed by the Portfolio Managers, and the
Portfolio Managers' ownership of shares in the Funds for which they are
Portfolio Managers.
Administrator, Custodian and Transfer Agent
The Bank of New York is the administrator, custodian and transfer agent for each
Fund.
40 WisdomTree Trust Prospectus
Shareholder Information
Additional shareholder information, is available free of charge by calling toll
free: 1-866-909-WISE(9473) or visiting the Funds' website at www.wisdomtree.com.
Buying and Selling Shares
Most investors will buy and sell shares of the Funds through brokers. Shares of
the Funds trade on national securities exchanges and elsewhere during the
trading day and can be bought and sold throughout the trading day like other
shares of publicly-traded securities. When buying or selling shares through a
broker most investors will incur customary brokerage commissions and charges.
Shares of the Funds trade under the trading symbols listed for each respective
Fund in the section describing such Fund.
Shares of the Funds may be acquired or redeemed directly from a Fund only in
Creation Units or multiples thereof, as discussed in the Creation and Redemption
section. Once created, shares of the Funds trade in the secondary market in
amounts less than a Creation Unit.
Share Trading Prices
As with other types of securities, the trading prices of shares in the secondary
market can be affected by market forces such as supply and demand, economic
conditions and other factors. The price you pay or receive when you buy or sell
your shares in the secondary market may be more or less than the NAV of such
shares.
The approximate value of shares of each Fund is disseminated every fifteen
seconds throughout the trading day by the national securities exchange on which
such Fund is listed or by other information providers. This approximate value
should not be viewed as a "real-time" update of the NAV, because the approximate
value may not be calculated in the same manner as the NAV, which is computed
once per day. The approximate value generally is determined by using current
market quotations and/or price quotations obtained from broker-dealers that may
trade in the portfolio securities held by the Funds. The Funds are not involved
in, or responsible for, the calculation or dissemination of the approximate
value and make no warranty as to its accuracy.
Determination of Net Asset Value
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 may also use fair-value pricing if the
value of a security it holds has been materially affected by events occurring
before the Fund's pricing time but after the close of the primary markets or
exchanges on which the security is traded. For example, this may occur 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 may include price movements in U.S. markets that
are deemed to affect the value of foreign securities. Fair-value pricing also
may be used if, for example, trading in a security is halted and does not
WisdomTree Trust Prospectus 41
resume before the Fund's pricing time or if a security does not trade in the
course of a day. Since the International Sector 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.
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.
Book Entry
Shares of the Funds are held in book-entry form, which means that no stock
certificates are issued. The Depository Trust Company ("DTC") or its nominee is
the record owner of all outstanding shares of each Fund.
Investors owning shares of the Funds are beneficial owners as shown on the
records of DTC or its participants. DTC serves as the securities depository for
all shares of the Funds. Participants include DTC, securities brokers and
dealers, banks, trust companies, clearing corporations, and other institutions
that directly or indirectly maintain a custodial relationship with DTC. As a
beneficial owner of shares, you are not entitled to receive physical delivery of
stock certificates or to have shares registered in your name, and you are not
considered a registered owner of shares. Therefore, to exercise any right as an
owner of shares, you must rely upon the procedures of DTC and its participants.
These procedures are the same as those that apply to any securities that you
hold in book entry or "street name" form. Your broker will provide you with
account statements, confirmations of your purchases and sales, and tax
information.
Delivery of Shareholder Documents - Householding
Householding is an option available to certain investors of the Funds.
Householding is a method of delivery, based on the preference of the individual
investor, in which a single copy of certain shareholder documents can be
delivered to investors who share the same address, even if their accounts are
registered under different names. Householding for the Funds is available
through certain broker-dealers. If you are interested in enrolling in
householding and receiving a single copy of prospectuses and other shareholder
documents, please contact your broker-dealer. If you are currently enrolled in
householding and wish to change your householding status, please contact your
broker-dealer.
Frequent Purchases and Redemptions of Fund Shares
Since the Funds are ETFs, only a few institutional investors (known as
"Authorized Participants") are authorized to purchase and redeem shares directly
with the issuing Fund. Authorized Participants generally transact with the Funds
on an "in-kind" basis (i.e., for securities and not cash). Because these trades
are effected in-kind, they should not cause any of the harmful
42 WisdomTree Trust Prospectus
effects that may result from frequent cash trades. Since frequent in-kind
purchases and redemptions of shares of a Fund do not disrupt portfolio
management, increase the Fund's trading costs, lead to realization of capital
gains or otherwise harm the Fund shareholders, the Board of Trustees has
determined that it is not necessary to adopt policies and procedures to detect
and deter frequent purchases and redemptions of Fund shares.
Each Fund accommodates frequent purchases and redemptions of Creation Units by
Authorized Participants and does not place a limit on purchases or redemptions
of Creation Units by these investors. Each Fund reserves the right, but does not
have the obligation, to reject any order at any time. Each Fund reserves the
right to impose restrictions on disruptive, excessive, or short-term trading.
The vast majority of trading in shares of the Funds occurs on national
securities exchanges and does not directly involve the issuance or redemption of
Fund shares. Because these trades do not involve the issuing Fund directly, they
do not cause any of the harmful effects discussed above that may result from
frequent cash trades.
Investments by Registered Investment Companies
Section 12(d)(1) of the Investment Company Act of 1940 restricts investments by
registered investment companies in the securities of other investment companies,
including shares of each Fund. Registered investment companies are permitted to
invest in the Funds beyond the limits set forth in section 12(d)(1), subject to
certain terms and conditions set forth in an SEC exemptive order issued to the
WisdomTree Trust, including that such investment companies enter into an
agreement with the Funds.
Taxes
As with any investment, you should consider how your investment in shares of the
Funds will be taxed. The tax information in this Prospectus is provided as
general information. You should consult your own tax professional about the tax
consequences of an investment in shares of the Funds.
Unless your investment in shares is made through a tax-exempt entity or
tax-deferred retirement account, such as an IRA plan, you need to be aware of
the possible tax consequences when:
o A Fund makes distributions,
o You sell shares, and
o You purchase or redeem Creation Units.
Taxes on Distributions
Distributions from a Fund's net investment income (other than qualified dividend
income), including distributions out of a Fund's net short-term capital gains,
if any, and distributions of income from securities lending, are taxable to you
as ordinary income. Distributions by a Fund of net long-term capital gains in
excess of net short-term capital losses (capital gain dividends) are taxable to
you as long-term capital gains, regardless of how long you have held a Fund's
shares. Distributions by a Fund that qualify as qualified dividend income are
taxable to you at long-term capital gain rates. Under current law, the taxation
of qualified dividend income at long-term capital gain rates will no longer
apply for taxable years beginning after December 31, 2010. In order for a
distribution by the Fund to be treated as qualified dividend income, a Fund must
meet holding period and other requirements with respect to its dividend paying
stocks and you must meet holding period
WisdomTree Trust Prospectus 43
requirements and other requirements with respect to the Fund's shares. In
general, your distributions are subject to federal income tax for the year when
they are paid. Certain distributions paid in January, however, may be treated as
paid on December 31 of the prior year.
Dividends and interest received by a Fund with respect to foreign securities may
give rise to withholding and other taxes imposed by foreign countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. Since more than 50% of the total assets of each Fund will
consist of foreign stocks or securities, each Fund intends to "pass through" to
you certain foreign income taxes (including withholding taxes) paid by that
Fund. This means that you will be considered to have received as an additional
dividend your share of such foreign taxes, but you may be entitled to either a
corresponding tax deduction in calculating your taxable income, or, subject to
certain limitations, a credit in calculating your federal income tax.
If you are neither a resident nor a citizen of the United States or if you are a
foreign entity, the Fund's ordinary income dividends (which include
distributions of net short-term capital gains) will generally be subject to a
30% U.S. withholding tax, unless a lower treaty rate applies, provided, however,
that for taxable years of the Fund beginning after December 31, 2004, but not
beginning after December 31, 2007, interest related dividends and short-term
capital gain dividends generally will not be subject to such U.S. withholding
tax.
If you are a resident or a citizen of the United States, by law, back-up
withholding will apply to your distributions and proceeds if you have not
provided a taxpayer identification number or social security number and made
other required certifications.
Taxes When Fund Shares are Sold
Currently, any capital gain or loss realized upon a sale of Fund shares is
generally treated as a long-term gain or loss if shares have been held for more
than one year. Any capital gain or loss realized upon a sale of shares held for
one year or less is generally treated as a short-term gain or loss, except that
any capital loss on the sale of shares held for six months or less is treated as
long-term capital loss to the extent that capital gain dividends were paid with
respect to such shares. The ability to deduct capital losses may be limited.
Taxes on Creation and Redemption of Creation Units
An Authorized Participant who exchanges equity securities for Creation Units
generally will recognize a gain or a loss. The gain or loss will be equal to the
difference between the market value of the Creation Units at the time and the
exchanger's aggregate basis in the securities surrendered and the cash component
paid. A person who exchanges Creation Units for equity securities will generally
recognize a gain or loss equal to the difference between the exchanger's basis
in the Creation Units and the aggregate market value of the securities received
and a cash component. The Internal Revenue Service, however, may assert a loss
realized upon an exchange of securities for Creation Units cannot be deducted
currently under the rules governing "wash sales," or on the basis that there has
been no significant change in economic position. Persons exchanging securities
should consult their own tax adviser with respect to whether wash sale rules
apply and when a loss might be deductible.
Under current law, any capital gain or loss realized upon the redemption (or
creation) of Creation Units will generally be treated as long-term capital gain
or loss if the shares (or equity securities) have been held for more than one
year and otherwise as short-term capital gain or loss.
If you purchase or redeem Creation Units, you will be sent a confirmation
statement showing how many shares you purchased or sold and at what price.
44 WisdomTree Trust Prospectus
The foregoing discussion summarizes some of the consequences under current
federal tax law of an investment in a Fund. It is not a substitute for personal
tax advice. You may also be subject to state and local taxation on Fund
distributions and sales of shares. Consult your personal tax adviser about the
potential tax consequences of an investment in shares of a Fund under all
applicable tax laws.
Creation and Redemption
The shares that trade in the secondary market are "created" at NAV. Each Fund
described in this Prospectus issues and redeems shares at NAV only in large
blocks of shares, typically 200,000 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. Each "creator" enters into an authorized participant
agreement with the Distributor, and deposits into the applicable Fund a
portfolio of securities closely approximating the holdings of the Fund and pays
or receives a specified amount of cash equal to the difference between the NAV
of a Creation Unit and the market value of the basket of securities ("cash
component") in exchange for a specified number of Creation Units. Each business
day, prior to the opening of trading, the Fund will designate through the
National Securities Clearing Corporation ("NSCC"), the names and number of
shares of each security to be included in that day's basket. Each Fund reserves
the right to accept a basket of securities or cash that differs from the
published basket. A Fund will not issue fractional Creation Units.
Similarly, shares can only be redeemed in a specified number of Creation Units
principally in-kind for a portfolio of securities held by the Fund and the
payment or receipt of the specified cash component. Except when aggregated in
Creation Units, shares are not redeemable by a Fund. Each Fund reserves the
right to honor a redemption request by delivering a basket of securities or cash
that differs from the published basket. The prices at which creations and
redemptions occur are based on the next calculation of NAV after an order is
received in proper form.
Creations and redemptions must be made by an Authorized Participant or through a
firm that is either a member of the Continuous Net Settlement System of the NSCC
or 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. Information about the procedures regarding creation and redemption
of Creation Units (including the cut-off times for receipt of creation and
redemption orders) is included in the Trust's SAI.
Authorized Participants and the Continuous Offering of Shares
Because new shares may be created and issued on an ongoing basis, at any point
during the life of a Fund, a "distribution," as such term is used in the
Securities Act of 1933 ("Securities Act"), may be occurring. 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 that could render them statutory underwriters and subject to the
prospectus delivery and liability provisions of the Securities Act. Nonetheless,
any determination of whether one is an underwriter must take into account all
the relevant facts and circumstances of each particular case.
Broker-dealers should also note that dealers who are not "underwriters," but are
participating in a distribution (as contrasted to ordinary secondary
transactions), and thus dealing with shares that are part of an "unsold
allotment" within the meaning of Section 4(3)(C) of the Securities Act, would be
unable to take advantage of the prospectus delivery exemption provided by
Section 4(3) of the Securities Act. For delivery of prospectuses to exchange
members, the prospectus delivery mechanism of Rule 153 under the Securities Act
is only available with respect to transactions on a national securities
exchange.
WisdomTree Trust Prospectus 45
Creation and Redemption Transaction Fees for Creation Units
Each Fund may impose a creation transaction fee and a redemption transaction fee
to offset transfer and other transaction costs associated with the issuance and
redemption of Creation Units of shares. The creation and redemption transaction
fees for creations and redemptions using the "in-kind" creation and redemption
process are listed below. The standard creation transaction fee is charged to
each purchaser on the day such purchaser creates a Creation Unit. The fee is a
single charge and will be the amount indicated below regardless of the number of
Creation Units purchased by an investor on the same day. Similarly, the standard
redemption transaction fee will be the amount indicated regardless of the number
of Creation Units redeemed that day. Purchasers and redeemers of Creation Units
for cash (when cash creations and redemptions are permitted) will also be
subject to an additional variable charge of up to a maximum of four times the
amount shown below under "Maximum Creation/Redemption Transaction Fee" to offset
the transaction cost to the Fund of buying portfolio securities. In addition,
purchasers and redeemers of shares in Creation Units are responsible for payment
of the costs of transferring securities to or out of a Fund. From time to time,
WisdomTree Asset Management may cover the cost of any transaction fees.
The following table also shows, as of July 1, 2007, the approximate value of one
Creation Unit per Fund, including the standard creation and redemption
transaction fee. These fees are payable only by investors who purchase shares
directly from a Fund. Retail investors who purchase shares through their
brokerage account will not pay these fees.
Approximate Standard Creation/ Maximum Creation/
Value of One Redemption Redemption
Name of Fund Creation Unit Transaction Fee Transaction Fee
-------------------------------------------------------------------------------------------------------------------
WisdomTree International Basic Materials Sector Fund $7,000,000 $4,000 $ 5,000
WisdomTree International Communications Sector Fund $6,000,000 $3,250 $ 5,100
WisdomTree International Consumer Cyclical Sector Fund $6,000,000 $9,500 $11,500
WisdomTree International Consumer Non-Cyclical Sector Fund $6,000,000 $8,000 $10,500
WisdomTree International Energy Sector Fund $7,000,000 $1,250 $ 2,000
WisdomTree International Financial Sector Fund $6,000,000 $9,000 $14,000
WisdomTree International Health Care Sector Fund $5,000,000 $2,250 $ 3,500
WisdomTree International Industrial Sector Fund $7,000,000 $9,500 $12,500
WisdomTree International Technology Sector Fund $6,000,000 $2,000 $ 2,500
WisdomTree International Utilities Sector Fund $6,000,000 $1,500 $ 2,500
WisdomTree International Real Estate Fund $5,000,000 $6,500 $10,150
Distribution
ALPS Distributors, Inc. (the "Distributor") serves as the distributor of
Creation Units for each Fund on an agency basis. The Distributor does not
maintain a secondary market in shares of the Funds. The Distributor's principal
address is 1290 Broadway, Suite 1100, Denver, Colorado 80203.
The Distributor has no role in determining the policies of any Fund or the
securities that are purchased or sold by any Fund.
46 WisdomTree Trust Prospectus
Additional Notices
Shares of the Trust are not sponsored, endorsed, or promoted by any listing
exchange ("Exchange"). The Exchange makes no representation or warranty, express
or implied, to the owners of the shares of any Fund or any member of the public
regarding the ability of a Fund to track the total return performance of any
Index or the ability of any Index identified herein to track stock market
performance. The Exchange is not responsible for, nor has it participated in,
the determination of the compilation or the calculation of any Index, nor in the
determination of the timing of, prices of, or quantities of the shares of any
Fund to be issued, nor in the determination or calculation of the equation by
which the shares are redeemable. The Exchange has no obligation or liability to
owners of the shares of any Fund in connection with the administration,
marketing, or trading of the shares of the Fund.
The Exchange does not guarantee the accuracy and/or the completeness of any
Index or any data included therein. The Exchange makes no warranty, express or
implied, as to results to be obtained by the WisdomTree Trust on behalf of its
Funds, owners of the shares, or any other person or entity from the use of the
subject Indexes or any data included therein. The Exchange makes no express or
implied warranties, and hereby expressly disclaims all warranties of
merchantability or fitness for a particular purpose with respect to any Index or
any data included therein. Without limiting any of the foregoing, in no event
shall the Exchange have any liability for any lost profits or indirect,
punitive, special, or consequential damages even if notified of the possibility
thereof.
WisdomTree Investments, WisdomTree Asset Management and the Funds make no
representation or warranty, express or implied, to the owners of shares of the
Funds or any member of the public regarding the advisability of investing in
securities generally or in the Funds particularly or the ability of the Indexes
to track general stock market performance. WisdomTree Investments is the
licensor of certain trademarks, service marks and trade names of the Funds.
WisdomTree Investments has no obligation to take the needs of the Funds or the
owners of shares of the Funds into consideration in determining, composing, or
calculating the Indexes. WisdomTree Investments is not responsible for and has
not participated in the determination of the timing of, prices at, or quantities
of shares of the Funds to be issued or in the determination or calculation of
the equation by which the shares of the Funds are redeemable.
WisdomTree Investments, WisdomTree Asset Management and the Funds do not
guarantee the accuracy, completeness, or performance of any Index or the data
included therein.
Financial Highlights
The financial highlights table is intended to help you understand the Funds'
financial performance. The total return in the table represent the rate that an
investor would have earned (or lost) on an investment in the respective Fund
(assuming reinvestment of all dividends and distributions). For the period
October 13, 2006 (commencement of investment operations) through March 31, 2007
(the Funds' fiscal year end), the information has been derived from the
financial statements audited by Ernst & Young LLP, independent registered public
accounting firm, whose report, along with the Funds' financial statements, are
included in the Funds' Annual Report, which is available upon request.
Information is not presented for the International Real Estate Fund as the Fund
had not commenced operations as of the end of the fiscal year.
WisdomTree Trust Prospectus 47
Financial Highlights
WisdomTree International Dividend Sector Funds
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
October 13, 2006(1)
through
WisdomTree International Basic Materials Sector Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $25.46
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.25
Net realized and unrealized gain 6.32
--------------------------------------------------------------------------------
Total from investment operations 6.57
--------------------------------------------------------------------------------
Net asset value, end of period $32.03
================================================================================
TOTAL RETURN(3) 25.81%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $6,406
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.58%(4)
Expenses, prior to expense reimbursements 0.88%(4)
Net investment income 1.89%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 0%(6)
================================================================================
For the period
October 13, 2006(1)
through
WisdomTree International Communications Sector Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 25.38
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.16
Net realized and unrealized gain 3.61
--------------------------------------------------------------------------------
Total from investment operations 3.77
--------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income (0.18)
Capital gains (0.00)(7)
--------------------------------------------------------------------------------
Total dividends and distributions to shareholders (0.18)
--------------------------------------------------------------------------------
Net asset value, end of period $ 28.97
================================================================================
TOTAL RETURN(3) 14.87%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $23,174
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.58%(4)
Expenses, prior to expense reimbursements 0.72%(4)
Net investment income 1.43%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 0%(6)
================================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized. The total return would have been lower if
certain expenses had not been reimbursed by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
6. Amount represents less than 1%.
7. Amount is less than $0.005.
48 WisdomTree Trust Prospectus
Financial Highlights (continued)
WisdomTree International Dividend Sector Funds
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
October 13, 2006(1)
through
WisdomTree International Consumer Cyclical Sector Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $25.27
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.15
Net realized and unrealized gain 5.06
--------------------------------------------------------------------------------
Total from investment operations 5.21
--------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net Investment Income (0.04)
Capital gains (0.00)(6)
--------------------------------------------------------------------------------
Total dividends and distributions to shareholders (0.04)
--------------------------------------------------------------------------------
Net asset value, end of period $30.44
================================================================================
TOTAL RETURN(3) 20.63%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $6,089
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.58%(4)
Expenses, prior to expense reimbursements 0.89%(4)
Net investment income 1.18%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 3%
================================================================================
For the period
October 13, 2006(1)
through
WisdomTree International Consumer Non-Cyclical Sector Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 24.89
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.25
Net realized and unrealized gain 3.11
--------------------------------------------------------------------------------
Total from investment operations 3.36
--------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income (0.02)
Capital gains (0.00)(6)
--------------------------------------------------------------------------------
Total dividends and distributions to shareholders (0.02)
--------------------------------------------------------------------------------
Net asset value, end of period $ 28.23
--------------------------------------------------------------------------------
TOTAL RETURN(3) 13.49%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $22,583
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.58%(4)
Expenses, prior to expense reimbursements 0.69%(4)
Net investment income 2.08%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 2%
================================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized. The total return would have been lower if
certain expenses had not been reimbursed by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
6. Amount is less than $0.005.
WisdomTree Trust Prospectus 49
Financial Highlights (continued)
WisdomTree International Dividend Sector Funds
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
October 13, 2006(1)
through
WisdomTree International Energy Sector Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 25.44
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.22
Net realized and unrealized gain 2.92
--------------------------------------------------------------------------------
Total from investment operations 3.14
--------------------------------------------------------------------------------
Dividends to shareholders:
Net Investment Income (0.03)
--------------------------------------------------------------------------------
Total dividends to shareholders (0.03)
--------------------------------------------------------------------------------
Net asset value, end of period $ 28.55
================================================================================
TOTAL RETURN(3) 12.36%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $22,840
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.58%(4)
Expenses, prior to expense reimbursements 0.69%(4)
Net investment income 1.82%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 1%
================================================================================
For the period
October 13, 2006(1)
through
WisdomTree International Financial Sector Fund March 31, 2007
--------------------------------------------------------------------------------
Net asset value, beginning of period $ 25.34
--------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.19
Net realized and unrealized gain 2.42
--------------------------------------------------------------------------------
Total from investment operations 2.61
--------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income (0.05)
Capital gains (0.00)(6)
--------------------------------------------------------------------------------
Total dividends and distributions to shareholders (0.05)
--------------------------------------------------------------------------------
Net asset value, end of period $ 27.90
================================================================================
TOTAL RETURN(3) 10.32%
--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $22,321
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.58%(4)
Expenses, prior to expense reimbursements 0.86%(4)
Net investment income 1.98%(4)
--------------------------------------------------------------------------------
Portfolio turnover rate(5) 5%
================================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized. The total return would have been lower if
certain expenses had not been reimbursed by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
6. Amount is less than $0.005.
50 WisdomTree Trust Prospectus
Financial Highlights (continued)
WisdomTree International Dividend Sector Funds
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
October 13, 2006(1) through
WisdomTree International Health Care Sector Fund March 31, 2007
-------------------------------------------------------------------------------
Net asset value, beginning of period $ 24.93
-------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.22
Net realized and unrealized gain 1.78
-------------------------------------------------------------------------------
Total from investment operations 2.00
-------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.01)
-------------------------------------------------------------------------------
Total dividends to shareholders (0.01)
-------------------------------------------------------------------------------
Net asset value, end of period $ 26.92
===============================================================================
TOTAL RETURN(3) 8.03%
-------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $21,536
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.58%(4)
Expenses, prior to expense reimbursements 0.69%(4)
Net investment income 1.81%(4)
-------------------------------------------------------------------------------
Portfolio turnover rate(5) 3%
===============================================================================
For the period
October 13, 2006(1) through
WisdomTree International Industrial Sector Fund March 31, 2007
-------------------------------------------------------------------------------
Net asset value, beginning of period $ 25.39
-------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.23
Net realized and unrealized gain 5.54
-------------------------------------------------------------------------------
Total from investment operations 5.77
-------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Net investment income (0.02)
Capital gains (0.00)(6)
-------------------------------------------------------------------------------
Total dividends and distributions to shareholders (0.02)
-------------------------------------------------------------------------------
Net asset value, end of period $ 31.14
===============================================================================
TOTAL RETURN(3) 22.75%
-------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $24,910
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.58%(4)
Expenses, prior to expense reimbursements 0.76%(4)
Net investment income 1.98%(4)
-------------------------------------------------------------------------------
Portfolio turnover rate(5) 1%
===============================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized. The total return would have been lower if
certain expenses had not been reimbursed by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
6. Amount is less than $0.005.
WisdomTree Trust Prospectus 51
Financial Highlights (concluded)
WisdomTree International Dividend Sector Funds
March 31, 2007
Selected data for a share of beneficial interest outstanding throughout the
period is presented below:
For the period
October 13, 2006(1) through
WisdomTree International Technology Sector Fund March 31, 2007
-------------------------------------------------------------------------------
Net asset value, beginning of period $ 25.13
-------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.11
Net realized and unrealized gain 1.02
-------------------------------------------------------------------------------
Total from investment operations 1.13
-------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.03)
-------------------------------------------------------------------------------
Total dividends to shareholders (0.03)
-------------------------------------------------------------------------------
Net asset value, end of period $ 26.23
===============================================================================
TOTAL RETURN(3) 4.51%
-------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $ 5,246
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.58%(4)
Expenses, prior to expense reimbursements 0.91%(4)
Net investment income 0.87%(4)
-------------------------------------------------------------------------------
Portfolio turnover rate(5) 2%
===============================================================================
For the period
October 13, 2006(1) through
WisdomTree International Utilities Sector Fund March 31, 2007
-------------------------------------------------------------------------------
Net asset value, beginning of period $ 24.96
-------------------------------------------------------------------------------
Investment operations:
Net investment income(2) 0.18
Net realized and unrealized gain 4.61
-------------------------------------------------------------------------------
Total from investment operations 4.79
-------------------------------------------------------------------------------
Dividends to shareholders:
Net investment income (0.04)
-------------------------------------------------------------------------------
Total dividends to shareholders (0.04)
-------------------------------------------------------------------------------
Net asset value, end of period $ 29.71
===============================================================================
TOTAL RETURN(3) 19.18%
-------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's omitted) $23,768
Ratio to average net assets of:
Expenses, net of expense reimbursements 0.58%(4)
Expenses, prior to expense reimbursements 0.68%(4)
Net investment income 1.38%(4)
-------------------------------------------------------------------------------
Portfolio turnover rate(5) 1%
===============================================================================
1. Commencement of investment operations.
2. Based on average shares outstanding.
3. Total return is calculated assuming an initial investment made at the net
reinvestment of asset value at the beginning of the period, all dividends
and distributions at net asset value during the period and redemption on
the last day of the period. Total return calculated for a period of less
would have been than one year is not annualized. The total return lower if
certain expenses had not been reimbursed by the investment advisor.
4. Annualized.
5. Portfolio turnover rate is not annualized and excludes the value of
portfolio securities received or delivered as a result of in-kind creations
or redemptions of the Fund's capital shares.
52 WisdomTree Trust Prospectus
Frequency Distribution of Discounts & Premiums (unaudited)
WisdomTree International Dividend Sector Funds
Except as noted below, the chart below presents information about differences
between the per share net asset value ("NAV") of each Fund and the market
trading price of shares of each Fund. For these purposes, the "market price" is
the mid-point of the highest bid and lowest offer for Fund shares as of the
close of trading on the exchange where Fund shares are listed. The term
"premium" is sometimes used to describe a market price in excess of NAV and the
term "discount" is sometimes used to describe a market price below NAV. The
chart presents information about the size and frequency of premiums or
discounts. As with other exchange traded funds, the market price of Fund shares
is typically slightly higher or lower than the Fund's per share NAV. Factors
that contribute to the differences between market price and NAV include the
supply and demand for Fund shares and investors' assessments of the underlying
value of a Fund's portfolio securities.
Differences between the closing times of U.S. and non-U.S. markets may
contribute to differences between the NAV and market price of Fund shares. Many
non-U.S. markets close prior to the close of the U.S. securities exchanges.
Developments after the close of such markets as a result of ongoing price
discovery may be reflected in a Fund's market price but not in its NAV (or vice
versa).
The information is presented for the period from October 13, 2006 (commencement
of investment operations) through June 29, 2007 for all Funds except WisdomTree
Internation Real Estate Fund, which commenced operations on June 5, 2007.
Market Price Above or Market Price Below
Equal to Net Asset Value Net Asset Value
------------------------ -----------------------
Basis Point Number Percentage of Number Percentage of
Differential* of Days Total Days of Days Total Days
---------------------------------------------------------------------------------------------------------------------------
WisdomTree International Basic Materials Sector Fund
October 13, 2006 - June 29, 2007 0-24.9 35 19.66% 19 10.67%
25-49.9 37 20.79% 2 1.12%
50-74.9 36 20.22% 4 2.25%
75-100.0 21 11.80% 2 1.12%
>100.0 19 10.67% 3 1.69%
------------------------------------------------------------------
Total 148 83.15% 30 16.85%
---------------------------------------------------------------------------------------------------------------------------
WisdomTree International Communications Sector Fund
October 13, 2006 - June 29, 2007 0-24.9 13 7.30% 7 3.93%
25-49.9 37 20.79% 7 3.93%
50-74.9 50 28.09% 2 1.12%
75-100.0 37 20.79% 2 1.12%
>100.0 22 12.36% 1 0.56%
------------------------------------------------------------------
Total 159 89.33% 19 10.67%
---------------------------------------------------------------------------------------------------------------------------
WisdomTree International Consumer Cyclical Sector Fund
October 13, 2006 - June 29, 2007 0-24.9 55 30.90% 29 16.29%
25-49.9 37 20.79% 8 4.49%
50-74.9 21 11.80% 9 5.06%
75-100.0 10 5.62% 2 1.12%
>100.0 3 1.69% 4 2.25%
------------------------------------------------------------------
Total 126 70.79% 52 29.21%
---------------------------------------------------------------------------------------------------------------------------
WisdomTree Trust Prospectus 53
Frequency Distribution of Discounts & Premiums (unaudited) (continued)
WisdomTree International Dividend Sector Funds
Market Price Above or Market Price Below
Equal to Net Asset Value Net Asset Value
------------------------ -----------------------
Basis Point Number Percentage of Number Percentage of
Differential* of Days Total Days of Days Total Days
---------------------------------------------------------------------------------------------------------------------------
WisdomTree International Consumer Non-Cyclical Sector
Fund
October 13, 2006 - June 29, 2007 0-24.9 16 8.99% 4 2.25%
25-49.9 35 19.66% 3 1.69%
50-74.9 53 29.78% 2 1.12%
75-100.0 44 24.72% 1 0.56%
>100.0 19 10.67% 1 0.56%
------------------------------------------------------------------
Total 167 93.82% 11 6.18%
---------------------------------------------------------------------------------------------------------------------------
WisdomTree International Energy Sector Funds
October 13, 2006 - June 29, 2007 0-24.9 18 10.11% 15 8.43%
25-49.9 22 12.36% 4 2.25%
50-74.9 30 16.85% 5 2.81%
75-100.0 29 16.29% 4 2.25%
>100.0 49 27.53% 2 1.12%
------------------------------------------------------------------
Total 148 83.15% 30 16.85%
---------------------------------------------------------------------------------------------------------------------------
WisdomTree International Financial Sector Fund
October 13, 2006 - June 29, 2007 0-24.9 20 11.24% 5 2.81%
25-49.9 31 17.42% 3 1.69%
50-74.9 62 34.83% 3 1.69%
75-100.0 30 16.85% 2 1.12%
>100.0 20 11.24% 2 1.12%
------------------------------------------------------------------
Total 163 91.57% 15 8.43%
---------------------------------------------------------------------------------------------------------------------------
WisdomTree International Health Care Sector Fund
October 13, 2006 - June 29, 2007 0-24.9 13 7.30% 3 1.69%
25-49.9 23 12.92% 5 2.81%
50-74.9 62 34.83% 1 0.56%
75-100.0 39 21.91% 1 0.56%
>100.0 30 16.85% 1 0.56%
------------------------------------------------------------------
Total 167 93.82% 11 6.18%
---------------------------------------------------------------------------------------------------------------------------
WisdomTree International Industrial Sector Fund
October 13, 2006 - June 29, 2007 0-24.9 19 10.67% 6 3.37%
25-49.9 35 19.66% 5 2.81%
50-74.9 57 32.02% 2 1.12%
75-100.0 34 19.10% 0 0.00%
>100.0 18 10.11% 2 1.12%
------------------------------------------------------------------
Total 163 91.57% 15 8.43%
---------------------------------------------------------------------------------------------------------------------------
54 WisdomTree Trust Prospectus
Frequency Distribution of Discounts & Premiums (unaudited) (concluded)
WisdomTree International Dividend Sector Funds
Market Price Above or Market Price Below
Equal to Net Asset Value Net Asset Value
------------------------ -----------------------
Basis Point Number Percentage of Number Percentage of
Differential* of Days Total Days of Days Total Days
---------------------------------------------------------------------------------------------------------------------------
WisdomTree International Utilities Sector Fund
October 13, 2006 - June 29, 2007 0-24.9 12 6.74% 8 4.49%
25-49.9 39 21.91% 2 1.12%
50-74.9 45 25.28% 4 2.25%
75-100.0 47 26.40% 1 0.56%
>100.0 17 9.55% 3 1.69%
------------------------------------------------------------------
Total 160 89.89% 18 10.11%
---------------------------------------------------------------------------------------------------------------------------
WisdomTree International Technology Sector Fund
October 13, 2006 - June 29, 2007 0-24.9 16 8.99% 14 7.87%
25-49.9 33 18.54% 4 2.25%
50-74.9 33 18.54% 7 3.93%
75-100.0 42 23.60% 1 0.56%
>100.0 26 14.61% 2 1.12%
------------------------------------------------------------------
Total 150 84.27% 28 15.73%
---------------------------------------------------------------------------------------------------------------------------
WisdomTree International Real Esate Fund
June 5, 2007 - June 29, 2007 0-24.9 2 10.53% 2 10.53%
25-49.9 2 10.53% 1 5.26%
50-74.9 6 31.58% 1 5.26%
75-100.0 3 15.79% 0 0.00%
>100.0 2 10.53% 0 0.00%
------------------------------------------------------------------
Total 15 78.95% 4 21.05%
---------------------------------------------------------------------------------------------------------------------------
* A basis point equals one-hundredth of one percent (0.01%).
WisdomTree Trust Prospectus 55
The Trust's current SAI provides additional detailed information about the
Funds. The Trust has electronically filed the SAI with the SEC. It is
incorporated by reference in this Prospectus.
To make shareholder inquiries, for more detailed information on the Funds or to
request the SAI, free of charge, please:
Call: 1-866-909-9473
Monday through Friday
8:00 a.m. - 8:00 p.m. (Eastern time)
Write: WisdomTree Trust
c/o ALPS Distributors, Inc.
1290 Broadway, Suite 1100
Denver, Colorado 80203
Visit: www.wisdomtree.com
Information about the Funds (including the SAI) can be reviewed and copied at
the SEC's Public Reference Room in Washington, D.C., and information on the
operation of the Public Reference Room may be obtained by calling the SEC at
1-202-551-8090. Reports and other information about the Funds are available on
the EDGAR Database on the SEC's Internet site at www.sec.gov, and copies of this
information may be obtained, after paying a duplicating fee, by electronic
request at the following E-mail address: publicinfo@sec.gov, or by writing the
SEC's Public Reference Section, Washington, D.C. 20549-0102.
No person is authorized to give any information or to make any representations
about any Fund and its shares not contained in this Prospectus and you should
not rely on any other information. Read and keep this Prospectus for future
reference.
(C)2007 WisdomTree Trust
WisdomTree Funds are distributed by
ALPS Distributors, Inc.
1290 Broadway, Suite 1100
Denver, Colorado 80203
WisdomTree(SM) is a service mark of WisdomTree
Investments, Inc.
INVESTMENT COMPANY ACT FILE NO. 811-21864
[WISDOMTREE(SM) LOGO]
WisdomTree Trust
48 Wall Street, Suite 1100
New York, NY 10005
STATEMENT OF ADDITIONAL INFORMATION DATED JULY 27, 2007
WISDOMTREE(SM) 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 DOMESTIC 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 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
Wisdom Tree Emerging Markets High-Yielding Equity Fund
WISDOMTREE INTERNATIONAL SECTOR FUNDS
WisdomTree International Basic Materials Sector Fund
WisdomTree International Communications Sector Fund
WisdomTree International Consumer Cyclical Sector Fund
WisdomTree International Consumer Non-Cyclical 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
Wisdom Tree International Real Estate Fund
The current Prospectus for each of the Domestic and International Dividend
Funds, the International Sector Funds and the Domestic Earnings Funds is dated
July 27, 2007. The International Dividend Funds and International Sector Funds
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 and the International Real Estate
Fund did not commence operations until after the close of the fiscal year,
financial statements for these two 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
TABLE OF CONTENTS
General Description of the Trust and the Funds ............................ 1
WisdomTree Domestic Dividend Funds ..................................... 1
WisdomTree Domestic 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 .......................................... 5
Investment Company Securities .......................................... 5
Real Estate Investment Trusts .......................................... 5
Non-U.S. Securities .................................................... 5
Depositary Receipts .................................................... 8
Currency Transactions .................................................. 9
Illiquid Securities .................................................... 9
Futures, Options and Options on Futures Contracts ...................... 10
Risks of Futures and Options Transactions .............................. 10
Swap Agreements ........................................................ 10
Tracking Stocks ........................................................ 10
Future Developments .................................................... 11
Proxy Voting Policy ....................................................... 11
Portfolio Holding Disclosure Policies and Procedures ...................... 12
Description of the WisdomTree Indexes ..................................... 13
WisdomTree Domestic Dividend Indexes ................................... 14
WisdomTree Dividend Index ........................................... 14
WisdomTree High-Yielding Equity Index ............................... 14
WisdomTree LargeCap Dividend Index .................................. 15
WisdomTree Dividend Top 100 Index ................................... 15
WisdomTree MidCap Dividend Index .................................... 15
WisdomTree SmallCap Dividend Index .................................. 15
WisdomTree Domestic Earnings Indexes ................................... 15
WisdomTree Earnings Index ........................................... 15
WisdomTree Earnings 500 Index ....................................... 16
WisdomTree MidCap Earnings Index .................................... 16
WisdomTree SmallCap Earnings Index .................................. 16
WisdomTree Earnings Top 100 Index ................................... 16
WisdomTree Low P/E Index ............................................ 17
WisdomTree International Dividend Indexes .............................. 17
WisdomTree DEFA Index ............................................... 17
WisdomTree DEFA High-Yielding Equity Index .......................... 17
WisdomTree Europe Dividend Index .................................... 17
WisdomTree Europe High-Yielding Equity Index ........................ 18
WisdomTree Europe SmallCap Dividend Index ........................... 18
WisdomTree Japan Dividend Index ..................................... 18
WisdomTree Japan High-Yielding Equity Index ......................... 18
WisdomTree Japan SmallCap Dividend Index ............................ 18
WisdomTree Pacific ex-Japan Dividend Index .......................... 19
WisdomTree Pacific ex-Japan High-Yielding Equity Index .............. 19
WisdomTree International LargeCap Dividend Index .................... 19
WisdomTree International Dividend Top 100 Index ..................... 19
WisdomTree International MidCap Dividend Index ...................... 19
WisdomTree International SmallCap Dividend Index .................... 20
WisdomTree Emerging Markets High-Yielding Equity Index .............. 20
WisdomTree International Sector Indexes ................................ 20
WisdomTree International Basic Materials Sector Index ............... 20
WisdomTree International Communications Sector Index ................ 20
WisdomTree International Consumer Cyclical Sector Index ............. 20
WisdomTree International Consumer Non-Cyclical Sector Index ......... 21
WisdomTree International Energy Sector Index ........................ 21
WisdomTree International Financial Sector Index ..................... 21
WisdomTree International Health Care Sector Index ................... 21
WisdomTree International Industrial Sector Index .................... 21
WisdomTree International Technology Sector Index .................... 22
WisdomTree International Utilities Sector Index ..................... 22
WisdomTree International Real Estate Index .......................... 22
Investment Limitations .................................................... 23
Fundamental Policies ...................................................... 23
Senior Securities ...................................................... 23
Borrowing .............................................................. 23
Underwriting ........................................................... 23
Concentration .......................................................... 23
Real Estate ............................................................ 23
Commodities ............................................................ 23
Loans .................................................................. 23
Continuous Offering ....................................................... 24
Management of the Trust ................................................... 25
Trustees and Officers ..................................................... 25
Interested Trustee and Officers ........................................... 25
Independent Trustees ...................................................... 26
Committees of the Board of Trustees .................................... 27
Audit Committee ........................................................ 27
Governance and Nominating Committee .................................... 27
Approval of Investment Advisory Agreement and Sub-Advisory Agreement ... 27
Approval of Investment Advisory Agreement .............................. 28
Remuneration of Trustees ............................................... 29
Control Persons and Principal Holders of Securities .................... 29
Investment Adviser ..................................................... 44
Sub-Adviser ............................................................ 47
Portfolio Managers ..................................................... 48
Portfolio Manager Fund Ownership ....................................... 49
Portfolio Manager Compensation ......................................... 49
Code of Ethics ......................................................... 50
Administrator, Custodian and Transfer Agent ............................ 50
Distributor ............................................................ 51
Brokerage Transactions .................................................... 52
Additional Information Concerning the Trust ............................... 62
Shares ................................................................. 62
Termination of the Trust or a Fund ..................................... 62
Role of DTC ............................................................ 62
Creation & Redemption of Creation Unit Aggregations .................... 63
Creation ............................................................... 63
Fund Deposit ........................................................... 63
Procedures for Creation of Creation Unit ............................... 64
Placement of Creation Orders for Domestic Dividend and Earnings Weighted
Funds Using the Clearing Process .................................... 65
Placement of Creation Orders for Domestic Dividend and Earnings Weighted
Funds Outside the Clearing Process .................................. 65
Placement of Creation Orders for International Funds ................... 66
Acceptance of Orders for Creation Unit Aggregations .................... 67
Creation Transaction Fee ............................................... 67
Placement of Redemption Orders for Domestic Dividend and Earnings
Weighted Funds Using the Clearing Process ........................... 68
Placement of Redemption Orders for Domestic Dividend and Earnings
Weighted Funds Outside the Clearing Process ......................... 68
Placement of Redemption Orders for International Funds ................. 69
Regular Holidays .......................................................... 70
Taxes ..................................................................... 74
Determination of NAV ...................................................... 78
Dividends and Distributions ............................................... 79
Financial Statements ...................................................... 79
Miscellaneous Information ................................................. 79
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 DOMESTIC 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 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 INTERNATIONAL SECTOR FUNDS
WisdomTree International Basic Materials Sector Fund
WisdomTree International Communications Sector Fund
WisdomTree International Consumer Cyclical Sector Fund
WisdomTree International Consumer Non-Cyclical 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
1
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 dividend paying 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
New York Stock Exchange ("NYSE") or American Stock Exchange("AMEX")(each, a
"Listing Exchange"), and trade throughout the day on the Listing Exchange and
other secondary markets at market price 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.
Each of the WisdomTree High-Yielding Equity Fund, WisdomTree LargeCap Dividend
Fund, WisdomTree Dividend Top 100 Fund, WisdomTree MidCap Dividend Fund,
WisdomTree SmallCap Dividend Fund, WisdomTree Europe SmallCap Dividend Fund,
WisdomTree Japan High-Yielding Equity Fund, WisdomTree Japan SmallCap Dividend
Fund, WisdomTree Pacific ex-Japan High-Yielding Equity Fund and WisdomTree
2
International Dividend Top 100 Fund intends to invest in all or substantially
all of the securities in its Index in approximately the same proportions as such
securities are found in the Index. This investment strategy is sometimes known
as "Replication."While each of these Funds generally will use a Replication
strategy, each Fund may, in certain circumstances use a "Representative
Sampling" strategy. "Representative Sampling" is explained in more detail below.
Each of the other Funds intends to use a Representative Sampling strategy to
invest a substantial portion of its assets in securities of its underlying
Index. Representative Sampling means that the Fund selects from the underlying
Index a sample of securities that closely resembles the underlying Index in
terms of key performance and risk factors and other characteristics. These
factors and characteristics include, for example, total dividends paid, trading
volume and liquidity, industry weightings, country weightings, market
capitalization, and other financial characteristics. To the extent that a Fund's
underlying Index concentrates (i.e., holds 25% or more of its total assets) in
the securities of a particular industry or group of industries, a Fund may
similarly concentrate its investments.
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.
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
3
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.
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
4
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 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
5
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.
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 WisdomTree Emerging Markets High-Yielding
Equity Fund invests substantially all of its 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 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. The Emerging Markets High-Yielding Equity Fund may invest
a portion of its 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.
6
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. Most of the International Funds (except for
the Europe and Japan Funds) invest a portion of their assets in securities
listed and traded on the Hong Kong Stock Exchange. The Emerging Markets
High-Yielding Equity Fund invests a portion of its assets in securities of
companies organized in China and 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 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 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.
7
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 Cyclical 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 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 Fund may
invest a portion of its 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 Fund may
invest a portion of its 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 Fund may invest
a portion of its 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. Most of the International Funds (except for
the Japan and Pacific ex-Japan 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
8
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 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.
CURRENCY TRANSACTIONS. The International 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.
9
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.
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.
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
10
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 Sub-Adviser. 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 has elected to retain Institutional Shareholder Services, Inc.
("ISS") as a proxy consultant. ISS 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. In
addition, the Sub-Adviser has determined that, except as set forth in the proxy
policy and noted below, proxies will be voted in accordance with the voting
recommendations contained in the proxy voting guidelines, which have been
prepared by the Sub-Adviser and ISS. If the guidelines do not address how a
proxy should be voted, the proxy will be voted in accordance with ISS
recommendations. As ISS will vote proxies in accordance with the proxy voting
guidelines, 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 ISS' 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 ISS 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 ISS 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.
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.
11
PORTFOLIO HOLDING DISCLOSURE POLICIES AND PROCEDURES
The Trust has adopted a Portfolio Holdings Policy (the "Policy") with respect to
each Fund to prevent possible disclosure and misuse of material non-public
information concerning each Fund's portfolio holdings. This Policy applies to
all officers, employees and agents of each Fund. This includes the Funds'
investment adviser, WisdomTree Asset Management, and Sub-Adviser, BNY Investment
Advisers (together, for purposes of this Policy, the "Advisers").
Purpose of the Policy. Each Fund's current portfolio holdings may be material
non-public information and, if so, must not be selectively disclosed, except in
accordance with the Policy or as otherwise required by state law or federal
securities laws. The Policy is designed to prevent the possible misuse of
knowledge of a Fund's portfolio holdings and to ensure that the interests of the
Fund's Advisers, distributor, ALPS Distributors, Inc. (the "Distributor"), or
any affiliated person of the Fund, the Advisers or the Distributor, are not
placed above those of the Fund's shareholders.
General. Each Fund's portfolio holdings information must be disclosed in a
manner that: (i) is consistent with applicable legal requirements and in the
best interests of the Fund's shareholders; (ii) does not put the interests of
the Fund's Advisers or the Distributor, or any affiliated person of the Fund,
the Advisers or the Distributor, above those of the Fund's shareholders; (iii)
does not advantage any current or prospective Fund shareholders over any other
current or prospective Fund shareholders, except to the extent that certain
entities (as described below) may receive portfolio holdings information not
available to other current or prospective Fund shareholders in connection with
the dissemination of information necessary for transactions in Creation Units
(defined below), as contemplated by the WisdomTree Exemptive Orders and
discussed below; and (iv) does not provide selective access to portfolio
holdings information except pursuant to the procedures outlined below and to the
extent appropriate confidentiality arrangements limiting the use of such
information are in effect.
The "entities" referred to in sub-section (iii) above are generally limited to
National Securities Clearing Corporation ("NSCC") members and subscribers to
various fee-based subscription services, including those large institutional
investors (known as "Authorized Participants") that have been authorized by the
Distributor to purchase and redeem large blocks of shares, known as "Creation
Units", pursuant to legal requirements, including the WisdomTree Exemptive
Orders granted by the SEC pursuant to which each Fund offers and redeems its
shares, and other institutional market participants and entities that provide
information services.
The Funds' Chief Compliance Officer may authorize disclosure of portfolio
holdings.
Disclosure of Portfolio Holdings to Service Providers. Each business
day, information about each Fund's portfolio holdings will be provided to the
Distributor or other agent for dissemination through the facilities of the NSCC
and/or other fee-based subscription services to NSCC members and/or subscribers
to those other fee-based subscription services, including Authorized
Participants, and to entities that publish and/or analyze such information in
connection with the process of purchasing or redeeming Creation Units or trading
shares of the Fund in the secondary market. This information typically reflects
each Fund's anticipated portfolio holdings on the following business day, though
it may not represent a pro rata portion of such portfolio.
Daily access to information concerning the Fund's portfolio holdings is
permitted (i) to certain personnel of those service providers that are involved
in portfolio management and providing administrative, operational, risk
management, or other support to portfolio management, including affiliated
broker-dealers and/or Authorized Participants, and (ii) to other personnel of
the Advisers, the Distributor and the Fund's administrator, custodian and
accountant, who deal directly with, or assist in, functions related to
investment management, administration, custody and fund accounting, as may be
necessary to conduct business in the ordinary course in a manner consistent with
the WisdomTree Exemptive Orders, agreements with the Fund, and the terms of the
Trust's current registration statement.
Online Disclosure of Ten Largest Stock Holdings. Each Fund may disclose its
complete portfolio holdings and its ten largest stock portfolio holdings and the
percentages that each of these ten largest stock portfolio holdings represent of
the Fund's total assets as of the close of the prior business day, the following
business day, or as soon as practicable thereafter, online at
www.wisdomtree.com. Online disclosure of such holdings is freely available to
12
all categories of persons, including individual investors, institutional
investors, intermediaries, third-party service providers, rating and ranking
organizations.
Disclosure of Portfolio Holdings As Required by Applicable Law. 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.
Prohibitions on Disclosure of Portfolio Holdings. No person is authorized to
disclose a Fund's portfolio holdings or other investment positions (whether in
writing, by fax, by e-mail, orally, or by other means) except in accordance with
the Policy.
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 National Market ("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, PFIC sand 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.
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 Dividend Indexes takes
place at the end of June and the beginning of July 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
13
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."
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
14
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.
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 DOMESTIC 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
15
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. 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
16
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 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 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.
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
17
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.
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.
18
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 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.
19
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 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 Cyclical Sector Index
Number of Components: approximately 425
Index Description. The WisdomTree International Consumer Cyclical 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 Cyclical
Sector Index measures the
20
performance of companies that WisdomTree Investments classifies as being in the
"Consumer Cyclical" 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.
WisdomTree International Consumer Non-Cyclical Sector Index
Number of Components: approximately 375
Index Description. The WisdomTree International Consumer Non-Cyclical 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
Non-Cyclical Sector Index measures the performance of companies that WisdomTree
Investments classifies as being in the "Consumer Non-Cyclical" 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.
21
(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 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.
22
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.
23
By way of example (but not as a statement of the actual fundamental
policy), this means that, if, as a result, more than 33 1/3% of its total
assets would be lent to other parties, but 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.
24
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., 48 Wall Street, 11th Floor, New York, NY 10005.
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 Officer Officer
-------------------- ----------- ------- --------------------------------------- ----------- -------------
Jonathan Steinberg Trustee, Trustee Chief Executive Officer of 38 None.
(1964) President* since WisdomTree Investments, Inc.
2005 (formerly, Index Development Partners,
Inc.) and Director of WisdomTree
Investments, Inc. since 1989.
Marc Ruskin Treasurer*, Officer Treasurer of WisdomTree Investments 38 None.
(1952) Assistant since (formerly, Index Development
Secretary* 2005 Partners, Inc.); Chief Financial
Officer, RiskMetrics Group, Inc.
from 2003 to 2004; Chief Financial
Officer of Cognet Corp.
from 1999 to 2002.
Richard Morris Secretary*, Officer Deputy General Counsel of 38 None.
(1967) Chief Legal since WisdomTree Investments, Inc. since
Officer* 2005 2005; Senior 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.
25
Independent Trustees
Term of Number of
office Portfolios Other
and in Fund Directorships
Length Complex Held by
of Time Principal Occupation(s) During Overseen Trustee and
Name (year of birth) Position Served the Past 5 Years by Trustee Officer
-------------------- ------------ ------- --------------------------------------- ---------- --------------
Gregory Barton Trustee Trustee Executive Vice President of 38 None.
(1961)* since Licensing and Legal Affairs,
2006 General Counsel and Secretary of
Ziff Davis Media Inc. since 2003;
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 38 None.
(1955)** since E. 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 38 Trustee on
(1947) Chairman of since of William D. Witter, Inc. 2005 to Board of
the Board of 2006 August 2006; Consultant to Trustees of
Trustees AXA Enterprise in 2004; Naismith
Chairman, President and Chief Memorial
Executive Officer of Enterprise Capital Basketball
Management (subsidiary of The Hall of
MONY Group, Inc.) and Enterprise Fame;
Group of Funds, Chairman of MONY Member of
Securities Corporation, and Chairman the Board of
of the Fund Board of Enterprise Group Overseers of
of Funds from 1991 to 2004. the Hoover
Institution at
Stanford
University.
----------
* Chair of the Audit Committee.
** Chair of the Governance and Nominating Committee.
26
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,
27
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 (the "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 Weighted Funds, and June 11, 2007 with respect
to the Emerging Markets High-Yielding Equity Fund, the Board of Trustees,
including a majority of the Independent Trustees, approved the Investment
Advisory Agreement with WisdomTree Asset Management ("WTAM") with respect to the
Funds. In approving the Advisory Agreement 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 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 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.
28
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 an annual fee of $40,000 for meetings of the
Board attended by the Trustee. The Audit Committee Chairman will be paid an
additional $4,000 and the Independent Chairman of the Board will be paid an
additional $20,000. The Trust also reimburses each Trustee for travel and other
out-of-pocket expenses incurred by him/her in connection with attending such
meetings.
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
CITIGROUP 8.53%
333 W. 34TH STREET
NEW YORK NY 10001
MERRILL LYNCH 5.44%
101 HUDSON ST 9TH FL
JERSEY CITY NJ 07302
29
Percentage of
Fund Name Ownership
---------------------------------------------------------------- -------------
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
AMERITRADE 5.98%
C/O ADP PROXY SERVICES
51 MERCEDES WAY
EDGEWOOD NY 11717
30
Percentage of
Fund Name Ownership
---------------------------------------------------------------- -------------
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
31
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 WAY
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
32
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
--------------------------------------------------------------------------------
33
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
34
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
35
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 NY 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
36
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
37
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
FIDELTE 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
38
Percentage of
Fund Name Ownership
---------------------------------------------------------------- -------------
WisdomTree International Consumer Cyclical 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 Non-Cyclical 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
--------------------------------------------------------------------------------
39
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 M5J 258
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
40
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
41
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
42
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 HILL 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
43
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* N/A
--------------------------------------------------------------------------------
WisdomTree Emerging Markets High-Yielding Equity 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 48 Wall Street, 11th Floor, New York, NY 10005.
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.
44
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 International Basic Materials Sector Fund 0.58%
WisdomTree International Communications Sector Fund 0.58%
WisdomTree International Consumer Cyclical Sector Fund 0.58%
WisdomTree International Consumer Non-Cyclical 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%
45
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 WisdomTree
arranges for the provision of chief compliance officer ("CCO") services to the
Trust, 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.
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 Cyclical Sector Fund** $ 15,129
WisdomTree International Consumer Non-Cyclicals 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
----------
* 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
46
The Investment Advisory Agreement with respect to the Funds 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 Investment 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 Investment 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).
If current restrictions on bank activities with mutual funds were relaxed, BNY
or its affiliates, would consider performing additional services for the Trust.
WisdomTree Asset Management cannot predict whether these changes will be
enacted, or the terms under which BNY, or its affiliates, might offer to provide
additional services.
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:
o 5 basis points (0.05%) of the first $100 million in combined daily net
assets of all Domestic Funds; and
o 3 basis points (0.03%) of the combined daily net assets of all
Domestic Funds in excess of $100 million.
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:
o 20 basis points (0.20%) of the first $50 million in the total daily
net assets of all International Funds;
o 15 basis points (0.15%) of the next $50 million in total daily net
assets of all International Funds;
o 10 basis points (0.10%) of the total daily net assets of all
International Funds in excess of $100 million; and;
o 5 basis points (0.05%) of the total daily net assets of all
International Funds in excess of $1 billion
47
For the following periods, the Sub-Adviser received the following fees:
Sub-Advisory Fee
Period Ended
Name March 31, 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 Cyclical Sector Fund** N/A
WisdomTree International Consumer Non-Cyclicals 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
----------
* 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
Current interpretations of federal banking laws and regulations may prohibit BNY
from controlling or underwriting the shares of the Trust, but would not prohibit
BNY generally from acting as an investment adviser, administrator, transfer
agent or custodian to the Funds or from purchasing shares of the Funds as agent
for and upon the order of a customer.
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
Management Division since 1996. He joined the Sub-Adviser in 1989. Prior to his
current position, he was
48
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 outside of the team. Mr. Zyla manages the team.
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 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
49
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.
50
For the following periods the Administrator received the following fees:
Administration Fee
Period Ended
Name 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 Cyclical Sector Fund** $ 686
WisdomTree International Consumer Non-Cyclical 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
----------
* 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.
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
51
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.
52
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
Fund Ended 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* NA
WisdomTree International Basic Materials Sector Fund $ 23
WisdomTree International Communications Sector Fund $ 56
WisdomTree International Consumer Cyclical Sector Fund $ 136
WisdomTree International Consumer Non-Cyclical 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* NA
* The Fund did not commence operations as of March 31, 2007.
53
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
----------------------------------------------------------------------------------------------
54
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
----------------------------------------------------------------------------------------------------
55
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
56
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
----------------------------------------------------------------------------------------------------
57
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
----------------------------------------------------------------------------------------------------------
58
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
----------------------------------------------------------------------------------------------------------
59
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 International Basic Materials Sector Fund
None
----------------------------------------------------------------------------------------------------------
WisdomTree International Communications Sector Fund
None
----------------------------------------------------------------------------------------------------------
WisdomTree International Consumer Cyclical Sector Fund
BETER BED HOLDING NV $ 3,974
TAT HONG HOLDINGS LTD. 1,818
----------------------------------------------------------------------------------------------------------
WisdomTree International Consumer Non-Cyclical 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
----------------------------------------------------------------------------------------------------------
60
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
----------------------------------------------------------------------------------------------------------
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
Year Ended
Fund 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 International Basic Materials Sector Fund 0%*
WisdomTree International Communications Sector Fund 0%*
WisdomTree International Consumer Cyclical Sector Fund 3%
WisdomTree International Consumer Non-Cyclical 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
* Amount represents less than 1%.
** The Fund did not commence operations as of March 31, 2007.
61
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 38 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").
62
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
63
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.
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. 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. 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.
64
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 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
65
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 an account
maintained at the applicable local sub-custodian(s). 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. However, 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
66
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.
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.
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.
67
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 International Basic Materials Sector Fund $ 4,000 $ 5,000
WisdomTree International Communications Sector Fund $ 3,250 $ 5,100
WisdomTree International Consumer Cyclical Sector Fund $ 9,500 $11,500
WisdomTree International Consumer Non-Cyclical 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
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. 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. An order to redeem Creation Unit Aggregations using
the Clearing Process made in proper form but received by the Trust after the
Closing Time, will be deemed received on the next Business Day immediately
following the Transmittal Date and will be effected at the NAV next determined
on such Business Day. The requisite Fund Securities and the Cash Redemption
Amount 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
68
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. 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.
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
69
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.
REGULAR HOLIDAYS. Each Fund generally intends to effect deliveries of Creation
Units and Portfolio Securities on a basis of T+3. Each Fund may effect
deliveries of Creation Units 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.
70
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.
The dates in calendar year 2007 in which the regular holidays affecting the
relevant securities markets of the below listed countries are as follows:
Argentina
Jan 6 May 25 Dec 8
Apr 13 Jun 19 Dec 25
Apr 14 Aug 21
May 1 Oct 16
Australia
Jan 2 Apr 17 Oct 2
Jan 26 Apr 25 Nov 7
Mar 13 Jun 12 Dec 25
Apr 14 Aug 7 Dec 26
Austria
Jan 6 Jun 5 Dec 8
Apr 14 Jun 15 Dec 25
Apr 17 Aug 15 Dec 26
May 1 Oct 26 Dec 29
May 25 Nov 1
Belgium
Apr 14
Apr 17
May 1
Dec 25
Brazil
Jan 20 Apr 14 Nov 2
Jan 25 Apr 21 Nov 15
Feb 27 Jun 15 Dec 25
Feb 28 Sep 7
Mar 1 Oct 12
Canada
Jan 2 Aug 7 Dec 25
Apr 14 Sep 4 Dec 26
May 22 Oct 9
Jul 3 Nov 13
Chile
Apr 14 Aug 15 Nov 1
May 1 Sep 18 Dec 8
Jun 12 Sep 19 Dec 25
Jun 26 Oct 9
China (Shanghai)
Jan 2 Feb 20 Oct 2
Jan 3 Apr 14 Oct 3
Jan 16 May 1 Oct 4
Jan 26 May 2 Oct 5
Jan 27 May 3 Oct 6
Jan 30 May 4 Oct 9
Jan 31 May 5 Nov 23
Feb 1 May 29 Dec 25
Feb 2 Jul 4
Feb 3 Sep 4
71
China (Shenzhen)
Jan 2 Apr 5 Oct 2
Jan 3 Apr 14 Oct 3
Jan 26 Apr 17 Oct 4
Jan 27 May 1 Oct 5
Jan 30 May 2 Oct 6
Jan 31 May 3 Oct 30
Feb 1 May 4 Dec 25
Feb 2 May 5 Dec 26
Feb 3 May 31
Denmark
Apr 13 May 25
Apr 14 Jun 5
Apr 17 Dec 25
May 12 Dec 26
Finland
Jan 6 May 25 Dec 26
Apr 14 Jun 23
Apr 17 Dec 6
May 1 Dec 25
France
Apr 14 Dec 26
Apr 17
May 1
Dec 25
Greece
Jan 6 Apr 21 Aug 15
Mar 6 Apr 24 Dec 25
Apr 14 May 1 Dec 26
Apr 17 Jun 12
Germany
Apr 14 Dec 26
Apr 17
May 1
Dec 25
Hong Kong
Jan 2 Apr 14 May 31
Jan 30 Apr 17 Oct 2
Jan 31 May 1 Oct 30
Apr 5 May 5 Dec 25
Dec 26
India
Jan 11 Mar 31 Aug 15
Jan 26 Apr 6 Oct 2
Feb 9 Apr 11 Oct 24
Mar 15 Apr 14 Oct 25
Mar 30 May 1 Dec 25
Ireland
Apr 14 Dec 25
Apr 17 Dec 26
May 1
Jun 5
Israel
Mar 14 Apr 19 Oct 1
Mar 28 May 2 Oct 2
Apr 12 May 3 Oct 6
Apr 13 Jun 1 Oct 8
Apr 14 Jun 2 Oct 9
72
Apr 16 Aug 3 Oct 10
Apr 17 Sep 22 Oct 11
Apr 18 Sep 24 Oct 12
Oct 13
Italy
Apr 14 Dec 25
Apr 17 Dec 26
May 1
Aug 15
Japan
Jan 2 May 3 Sep 18
Jan 3 May 4 Oct 9
Jan 9 May 5 Nov 3
Mar 21 Jul 17 Nov 23
Malaysia
Jan 2 Feb 2 Oct 24
Jan 10 Apr 11 Oct 25
Jan 30 May 1 Dec 25
Jan 31 May 12
Feb 1 Aug 31
Mexico
Mar 21 May 1 Dec 12
Apr 13 Nov 20 Dec 25
Apr 14 Dec 1
New Zealand
Jan 2 Apr 17 Dec 25
Jan 3 Apr 25 Dec 26
Feb 6 Jun 5
Apr 14 Oct 23
Netherlands
Apr 14 Dec 26
Apr 17
May 1
Dec 25
Norway
Apr 13 May 17 Dec 26
Apr 14 May 25
Apr 17 Jun 5
May 1 Dec 25
Portugal
Apr 14 Dec 26
Apr 17
May 1
Dec 25
Singapore
Jan 2 Apr 14 Oct 24
Jan 10 May 1 Dec 25
Jan 30 May 12
Jan 31 Aug 9
South Africa
Jan 2 Apr 17 Aug 9
Mar 1 Apr 27 Sep 25
Mar 21 May 1 Dec 25
Apr 14 Jun 16 Dec 26
South Korea
Jan 30 May 31 Oct 5
Mar 1 Jun 6 Oct 6
73
Apr 5 Jul 17 Dec 25
May 1 Aug 15 Dec 29
May 5 Oct 3
Spain
Jan 6 Aug 15 Dec 8
Apr 14 Oct 12 Dec 25
Apr 17 Nov 1 Dec 26
May 1 Dec 6
Sweden
Jan 6 May 25 Dec 26
Apr 14 Jun 5
Apr 17 Jun 23
May 1 Dec 25
Switzerland
Jan 2 May 25 Dec 26
Apr 14 Jun 5
Apr 17 Aug 1
May 1 Dec 25
Taiwan
Jan 26 Feb 1 May 1
Jan 27 Feb 2 May 31
Jan 30 Feb 28 Oct 6
Jan 31 Apr 5 Oct 10
Thailand
Jan 2 Apr 19 Aug 14
Feb 13 May 1 Oct 23
Apr 6 May 5 Dec 5
Apr 13 May 12 Dec 11
Apr 14 Jul 11
United Kingdom
Jan 2 May 29
Apr 14 Aug 28
Apr 17 Dec 25
May 1 Dec 26
United States
Jan 2 May 29 Nov 23
Jan 16 Jul 4 Dec 25
Feb 20 Sep 4
Apr 14
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
74
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 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
75
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 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
76
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 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
77
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.
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.
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
78
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.
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.
79
Part C
Other Information
Item 23. Exhibits
Exhibit
Number Description
(a)(1) Trust Instrument of the Registrant dated December 15, 2005 is
incorporated herein by reference to exhibit (a) of Registrant's Initial
Registration Statement on Form N-1A filed on March 13, 2006.
(a)(2) Certificate of Trust as filed with the State of Delaware on December 15,
2005 is incorporated herein by reference to exhibit (a)(2) of Registrant's
Initial Registration Statement on Form N-1A filed on March 13, 2006.
(a)(3) Schedule A, dated November 8, 2006 to the Trust Instrument dated December
15, 2005 is incorporated herein by reference to exhibit (a) of Registrant's
Post-Effective Amendment No. 3 filed on November 8, 2006.
(b) By-Laws of the Registrant is incorporated herein by reference to exhibit (b)
of Registrant's Initial Registration Statement on Form N-1A filed on March 13,
2006.
(c) Portions of the Trust Instrument and By-Laws of the Registrant defining the
rights of holders of shares of the Registrant (Reference is made to Article II
Sections 2, 3 and 8, and Articles III, IV, V, VI, VII, VIII, IX and X of the
Registrant's Trust Instrument, filed as Exhibit (a)(1) to this Registration
Statement; and to Articles I, V, and VI of the Registrant's By-Laws, filed as
Exhibit (b) to this Registration Statement.)
(d)(1) Investment Advisory Agreement between the Registrant and WisdomTree Asset
Management, Inc. is incorporated herein by reference to exhibit (d)(1) of
Registrant's Post-Effective Amendment No. 2 filed on September 29, 2006.
(d)(2) Investment Advisory Agreement Schedule as of February 5, 2007 is
incorporated herein by reference to exhibit (d)(2) of Registrant's
Post-Effective Amendment No. 4 filed on February 15, 2007.
(d)(3) Sub-Advisory Agreement between WisdomTree Asset Management, Inc. and BNY
Investment Advisors is incorporated herein by reference to exhibit (d)(2) of
Registrant's Post-Effective Amendment No. 2 filed on September 29, 2006.
(d)(4) Sub-Advisory Agreement Schedule as of February 5, 2007 is incorporated
herein by reference to exhibit (d)(4) of Registrant's Post-Effective Amendment
No. 4 filed on February 15, 2007.
(e)(1) Distribution Agreement between the Registrant and ALPS Distributors, Inc.
is incorporated herein by reference to exhibit (e)(1) of Registrant's
Post-Effective Amendment No. 2 filed on September 29, 2006.
(e)(2) Distribution Agreement Schedule as of February 5, 2007 is incorporated
herein by reference to exhibit (e)(2) of Registrant's Post-Effective Amendment
No. 4 filed on February 15, 2007.
(e)(3) Form of Authorized Participant Agreement is incorporated herein by
reference to exhibit (e)(2) of Registrant's Initial Registration Statement on
Form N-1A filed on March 13, 2006.
(f) Not applicable.
(g)(1) Custody Agreement between the Registrant and The Bank of New York is
incorporated herein by reference to exhibit (g)(1) of Registrant's
Post-Effective Amendment No. 2 filed on September 29, 2006.
(g)(2) Custody Agreement Schedule as of February 5, 2007 is incorporated herein
by reference to exhibit (g)(2) of Registrant's Post-Effective Amendment No. 4
filed on February 15, 2007.
(g)(3) Foreign Custody Manager Agreement between the Registrant and The Bank of
New York is incorporated herein by reference to exhibit (g)(2) of Registrant's
Post-Effective Amendment No. 2 filed on September 29, 2006.
(g)(4) Foreign Custody Manager Agreement Schedule as of February 5, 2007 is
incorporated herein by reference to exhibit (g)(4) of Registrant's
Post-Effective Amendment No. 4 filed on February 15, 2007.
(h)(1) Administration and Accounting Agreement between the Registrant and The
Bank of New York is incorporated herein by reference to exhibit (h)(1) of
Registrant's Post-Effective Amendment No. 2 filed on September 29, 2006.
(h)(2) Administration and Accounting Agreement Schedule as of February 5, 2007
is incorporated herein by reference to exhibit (h)(2) of Registrant's
Post-Effective Amendment No. 4 filed on February 15, 2007.
(h)(3) Transfer Agency and Service Agreement between the Registrant and The Bank
of New York is incorporated herein by reference to exhibit (h)(2) of
Registrant's Post-Effective Amendment No. 2 filed on September 29, 2006.
(h)(4) Transfer Agency and Service Agreement Schedule as of February 5, 2007 is
incorporated herein by reference to exhibit (h)(4) of Registrant's
Post-Effective Amendment No. 4 filed on February 15, 2007.
(h)(5) License Agreement between the Registrant and WisdomTree Investments, Inc
is incorporated herein by reference to exhibit (h)(3) of Registrant's
Post-Effective Amendment No. 2 filed on September 29, 2006.
(h)(6) License Agreement Schedule as of February 5, 2007 is incorporated herein
by reference to exhibit (h)(6) of Registrant's Post-Effective Amendment No. 4
filed on February 15, 2007.
(h)(7) Securities Lending Agency Agreement between the Registrant and UBS
Securities LLC is incorporated herein by reference to exhibit (h)(4) of
Registrant's Post-Effective Amendment No. 2 filed on September 29, 2006.
(h)(8) Form of Securities Loan Agreement between the Registrant and UBS
Securities LLC is incorporated herein by reference to exhibit (h)(5) of
Registrant's Pre-Effective Amendment No. 1 filed on June 5, 2006.
(h)(9) Chief Compliance Officer Services Agreement between the Registrant and
ALPS Funds Services, Inc. is incorporated herein by reference to exhibit (h)(6))
of Registrant's Post-Effective Amendment No. 2 filed on September 29, 2006.
(h)(10) Chief Compliance Officer Services Agreement Schedule as of February 5,
2007 is incorporated herein by reference to exhibit (h)(10) of Registrant's
Post-Effective Amendment No. 4 filed on February 15, 2007.
(h)(11) Index Methodology is incorporated herein by reference to exhibit (h)(8)
of Registrant's Post-Effective Amendment No. 2 filed on September 29, 2006.
(h)(12) Index Methodology (Earnings) is incorporated herein by reference to
exhibit (h)(12) of Registrant's Post-Effective Amendment No. 4 filed on February
15, 2007.
(h)(13) Services Agreement between the Registrant and WisdomTree Asset
Management, Inc. (filed herewith.)
(i) Legal Opinion and Consent of Ropes & Gray LLP, counsel to the Registrant
(filed herewith).
(j) Consent of Ernst & Young, independent registered public accounting firm for
the Registrant (filed herewith).
(k) Not applicable.
(l) Form of Letter of Representations between the Registrant and The Depository
Trust Company is incorporated herein by reference to exhibit (l) of Registrant's
Pre-Effective Amendment No. 2 filed on June 9, 2006.
(m) None.
(n) Not applicable.
(p) Code of Ethics of the Registrant is incorporated herein by reference to
exhibit (p) of Registrant's Post-Effective Amendment No. 2 filed on September
29, 2006.
Item 24. Persons Controlled by or under Common Control with Registrant
Not applicable.
Item 25. Indemnification
Reference is made to Article IX of the Registrant's Trust Instrument included as
Exhibit (a)(1) to this Registration Statement with respect to the
indemnification of the Registrant's trustees and officers, which is set forth
below:
Section 1. LIMITATION OF LIABILITY.
All Persons contracting with or having any claim against the Trust or a
particular Series shall look only to the assets of the Trust or Assets belonging
to such Series, respectively, for payment under such contract or claim; and
neither the Trustees nor any of the Trust's officers, employees, or agents,
whether past, present, or future, shall be personally liable therefor. Every
written instrument or obligation on behalf of the Trust or any Series shall
contain a statement to the foregoing effect, but the absence of such statement
shall not operate to make any Trustee or officer of the Trust liable thereunder.
Provided they have exercised reasonable care and have acted under the reasonable
belief that their actions are in the best interest of the Trust, the Trustees
and officers of the Trust shall not be responsible or liable for any act or
omission or for neglect or wrongdoing of them or any officer, agent, employee,
Investment Adviser, or independent contractor of the Trust, but nothing
contained in this Trust Instrument or in the Delaware Act shall protect any
Trustee or officer of the Trust against liability to the Trust or to
Shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office.
Section 2. INDEMNIFICATION.
(a) Subject to the exceptions and limitations contained in subsection (b) below:
(i) every Person who is, or has been, a Trustee or an officer,
employee, or agent of the Trust ("Covered Person") shall be indemnified by the
Trust or the appropriate Series (out of Assets belonging to that Series) to the
fullest extent permitted by law against liability and against all expenses
reasonably incurred or paid by him in connection with any claim, action, suit,
or proceeding in which he becomes involved as a party or otherwise by virtue of
his being or having been a Covered Person and against amounts paid or incurred
by him in the settlement thereof; provided that the transfer agent of the Trust
or any Series shall not be considered an agent for these purposes unless
expressly deemed to be such by the Trustees in a resolution referring to this
Article.
(ii) as used herein, the words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits, or proceedings (civil,
criminal, or other, including appeals), actual or threatened, and the words
"liability" and "expenses" shall include attorneys fees, costs, judgments,
amounts paid in settlement, fines, penalties, and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who has been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office or (B) not to have
acted in good faith in the reasonable belief that his action was in the best
interest of the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his office (A) by the court or other body approving the settlement,
(B) by at least a majority of those Trustees who are neither Interested Persons
of the Trust nor are parties to the matter based on a review of readily
available facts (as opposed to a full trial-type inquiry), or (C) by written
opinion of independent legal counsel based on a review of readily available
facts (as opposed to a full trial-type inquiry).
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be exclusive of
or affect any other rights to which any Covered Person may now or hereafter be
entitled, and shall inure to the benefit of the heirs, executors, and
administrators of a Covered Person.
(d) To the maximum extent permitted by applicable law, expenses in connection
with the preparation and presentation of a defense to any claim, action, suit,
or proceeding of the character described in subsection (a) of this Section shall
be paid by the Trust or applicable Series from time to time prior to final
disposition thereof on receipt of an undertaking by or on behalf of such Covered
Person that such amount will be paid over by him to the Trust or applicable
Series if it is ultimately determined that he is not entitled to indemnification
under this Section, provided that either (i) such Covered Person has provided
appropriate security for such undertaking, (ii) the Trust is insured against
losses arising out of any such advance payments, or (iii) either a majority of
the Trustees who are neither Interested Persons of the Trust nor parties to the
matter, or independent legal counsel in a written opinion, has determined, based
on a review of readily available facts (as opposed to a full trial-type inquiry)
that there is reason to believe that such Covered Person will not be
disqualified from indemnification under this Section.
(e) Any repeal or modification of this Article IX by the Shareholders, or
adoption or modification of any other provision of this Trust Instrument or the
By-laws inconsistent with this Article, shall be prospective only, to the extent
that such repeal, modification, or adoption would, if applied retrospectively,
adversely affect any limitation on the liability of any Covered Person or
indemnification available to any Covered Person with respect to any act or
omission that occurred prior to such repeal, modification, or adoption.
Reference is made to Article VI of the Registrant's By-Laws included as Exhibit
(b) to this Registration Statement with respect to the indemnification of the
Registrant's trustees and officers, which is set forth below:
Section 6.2. Limitation of Liability.
The Declaration refers to the Trustees as Trustees, but not as individuals or
personally; and no Trustee, officer, employee or agent of the Trust shall be
held to any personal liability, nor shall resort be had to their private
property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Trust; provided, that nothing contained in
the Declaration or the By-Laws shall protect any Trustee or officer of the Trust
from any liability to the Trust or its Shareholders to which he would otherwise
be subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be provided to trustees, officers and controlling persons
of the Trust, pursuant to the foregoing provisions or otherwise, the Trust has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act of 1933, as amended, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Trust of expenses incurred or paid by a trustee, officer or
controlling person of the Trust in connection with the successful defense of any
action, suit or proceeding or payment pursuant to any insurance policy) is
asserted against the Trust by such trustee, officer or controlling person in
connection with the securities being registered, the Trust will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 26. Business and Other Connections of the Investment Adviser
WisdomTree Asset Management, Inc. ("WTAM"), 48 Wall Street, 11th Floor, New
York, NY 10005, a wholly-owned subsidiary of WisdomTree Investments, Inc., is a
registered investment adviser and serves as manager for all funds of the
Registrant. The description of WTAM under the caption of "Management-Investment
Adviser" in the Prospectus and under the caption "Management of the Trust" in
the Statement of Additional Information constituting Parts A and B,
respectively, of this Registration Statement are incorporated herein by
reference.
Each of the directors and officers of WTAM will also have substantial
responsibilities as directors and/or officers of WisdomTree Investments, Inc.,
48 Wall Street, 11th Floor, New York, NY 10005. To the knowledge of the
Registrant, except as set forth below, none of the directors or executive
officers of WTAM is or has been at any time during the past two fiscal years
engaged in any other business, profession, vocation or employment of a
substantial nature.
Position with WisdomTree Principal Business(es) During
Name Asset Management, Inc. the Last Two Fiscal Years
---- ---------------------- -------------------------
Jonathan Steinberg President, Chief Executive Chief Executive Officer of
Officer and Director WisdomTree Investments
(formerly, Index Development
Partners, Inc.); Director of
WisdomTree Investments, Inc.;
President of the WisdomTree
Funds since 2005
Marc Ruskin Treasurer and Chief Treasurer of WisdomTree
Financial Officer Investments (formerly, Index
Development Partners, Inc.);
Treasurer of the WisdomTree
Funds since 2005
Richard Morris Deputy General Counsel, Secretary and Chief Legal Officer
Chief Legal Officer of the WisdomTree Funds since
2005; Deputy General Counsel of
WisdomTree Investments, Inc.
since 2005; Senior Counsel at
Barclays Global Investors, N.A.
from 2002 to 2005; Counsel at
Barclays Global Investors, N.A.
from 2000 to 2001.
WTAM, with the approval of the Registrant's board of trustees, selects the
sub-adviser for the funds of the Registrant. BNY Investment Advisors serves as
sub-adviser for the funds.
Position with BNY Principal Business(es) During
Name Investment Advisors the last Two Fiscal Years
---- ------------------- -------------------------
Kurt Zyla Managing Director Division Manager
Todd Rose Vice President, Senior Portfolio Management, Index Fund
Portfolio Manager Management
Denise Krisko Managing Director and CIO Head of Index Management
Item 27. Principal Underwriters
(a) The Trust's distributor, ALPS Distributors, Inc. (the "Distributor"), acts
as distributor for the Registrant and the following investment companies:
Accessor Funds, AARP Funds, Agile Funds, Ameristock Mutual Funds, Inc., DIAMONDS
Trust, Drake Funds, Financial Investors Trust, Financial Investors Variable
Insurance Trust, First Funds, Firsthand Funds, Forward Emerald Funds, Henssler
Funds, Inc., Holland Balanced Fund, Laudus Trust, Milestone, Nasdaq 100 Trust,
PowerShares Exchange-Traded Funds Trust, SPDR Trust, MidCap SPDR Trust, Select
Sector SPDR Trust, Stonebridge Funds, Inc., Utopia Funds, W. P. Stewart Funds,
Wasatch Funds, and Westcore Trust.
(b) To the best of Registrant's knowledge, the directors and executive officers
of the Distributor are as follows:
Name Position(s) and Office(s) with the Distributor
---- ----------------------------------------------
Edmund J. Burke President
Thomas Carter Managing Director - Sales and Finance; Treasurer
Jeremy O. May Managing Director - Operations and Client Service; Secretary
Diana Adams Vice President, Controller
Tane Tyler Chief Legal Officer, Assistant Secretary
Brad Swenson Chief Compliance Officer
The business address of each of the Distributor's directors or officers is 1290
Broadway, Suite 1100, Denver, Colorado 80203.
(c) Not applicable.
Item 28. Location of Accounts and Records
(a) The Registrant maintains accounts, books and other documents required by
Section 31(a) of the Investment Company Act of 1940 and the rules thereunder
(collectively, "Records") at its offices at 48 Wall Street, 11th Floor, New
York, NY 10005.
(b) WisdomTree Asset Management Inc. maintains all Records relating to its
services as investment adviser to the Registrant at 48 Wall Street, 11th Floor,
New York, NY 10005.
(c) BNY Investment Advisors maintains all Records relating to its services as
sub-adviser to the Registrant at 1633 Broadway, 13th Floor, New York, NY 10019.
(d) ALPS Distributors, Inc. maintains all Records relating to its services as
Distributor of the Registrant at 1290 Broadway, Suite 1100, Denver, Colorado
80203.
(e) The Bank of New York maintains all Records relating to its services as
administrator, transfer agent and custodian of the Registrant at One Wall
Street, New York, New York 10286.
Item 29. Management Services
Not applicable.
Item 30. Undertakings
The Registrant undertakes to file an amendment to this registration statement
with certified financial statements showing the initial capital received before
accepting subscriptions from more than 25 persons.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York, on the 27th day July, 2007.
WISDOMTREE TRUST
(Registrant)
By: /s/ Jonathan Steinberg
--------------------------
(Jonathan Steinberg, President)
Each Person whose signature appears below hereby authorizes Jonathan Steinberg,
Marc Ruskin, or Richard Morris any of them, attorney-in-fact, to sign on his or
her behalf, individually and in each capacity stated below, any amendments to
this Registration Statement (including Post-Effective Amendments) and to file
the same, with all exhibits thereto, with the Securities and Exchange
Commission.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signatures Title(s) Date
---------- -------- ----
/s/ Jonathan Steinberg President (Principal Executive July 27, 2007
---------------------- Officer) and Trustee
Jonathan Steinberg
/s/ Marc Ruskin* Treasurer (Principal Financial July 27, 2007
---------------- and Accounting Officer)
Marc Ruskin
/s/ Gregory Barton* Trustee July 27, 2007
-------------------
Gregory Barton
/s/ Toni Massaro* Trustee July 27, 2007
-----------------
Toni Massaro
/s/ Victor Ugolyn* Trustee July 27, 2007
------------------
Victor Ugolyn
*By: /s/ Jonathan Steinberg
Jonathan Steinberg
(Attorney-in-Fact)
EXHIBIT INDEX
Exhibit Description
------- -----------
(h)(13) Services Agreement between the Registrant and WisdomTree Asset
Management, Inc.
(i) Legal Opinion and Consent of Ropes & Gray LLP, counsel to the
Registrant.
(j) Consent of Ernst & Young LLP, independent registered public accounting
firm for the Registrant.