Category: Open Ended Investment Company
The Fund seeks to track the price and yield performance, before fees and expenses of the WisdomTree US Equity Income Index (the “Index”). The Index is rule-based and fundamentally weighted and is comprised of the highest dividend yielding common stocks selected from the WisdomTree US Dividend Index (the “Parent Index") based on a composite risk score screening ("Composite Risk Score") which is made up of three factors (value, quality and momentum) each carrying an equal weighting. Companies within the Parent Index are ranked by dividend yield and Composite Risk Score, respectively. Securities ranking in the highest 30% by dividend yield and which do not fall in the bottom 20% of the Composite Risk Score are selected for inclusion within the Index. The share class seeks to deliver exposure to the Index while at the same time neutralising exposure to fluctuations of the US Dollar relative to the Euro by implementing a hedging methodology used in the WisdomTree US EUR Hedged Equity Income Index (the“Hedged Index”). The weight of each component company in the Index is calculated based on the aggregate cash dividends it is projected to pay in the coming year (the "Dividend Stream") and its Composite Risk Score. The component companies with the top/middle/bottom 1/3 Composite Risk Scores will have their Dividend Stream adjusted by 1.5x, 1.0x and 0.5x respectively (the "Adjusted Dividend Stream"). Component companies are then weighted annually in the Index to reflect their proportionate share of the Adjusted Dividend Stream. Companies projected to pay more dividends and have higher Composite Risk Scores are more heavily weighted. The Index is "reconstituted" annually on the basis of the above eligibility and weighting methodology. A "passive management" (or indexing) investment approach will be employed and the Fund will invest in a portfolio of equity securities that so far as possible and practicable consists of a representative sample of the component securities of the Index and forward foreign exchange contracts that so far as possible and practicable replicate the currency hedging methodology of the Hedged Index The currency hedging methodology consists of entering into forward exchange contracts (contracts between two parties to buy or sell a specific currency in the future at an agreed upon exchange rate) in order to hedge the US Dollar exposure arising as a result of the difference between the US Dollar and the Euro. As it may be difficult, expensive or otherwise inefficient to purchase all the securities in the Index, the Fund may also hold shares or other securities which produce a similar investment return to securities in the Index or may invest in collective investment schemes.