Supplement dated October 19, 2007
to the
Prospectus dated July 27, 2007
for the
WisdomTree Domestic Dividend Funds and WisdomTree International Dividend Funds
The following information supplements the information found under the
"WisdomTree International Dividend Funds" section beginning on page 23.
WisdomTree Emerging Markets SmallCap Dividend Fund
Fund Facts
Cusip Number: 97717W281
Exchange Trading Symbol: DGS
-------------------------------------------------------------------------------
WisdomTree Emerging Markets SmallCap Dividend Fund
Investment Objective
The Fund seeks to track the price and yield performance, before fees and
expenses, of the WisdomTree Emerging Markets 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 Emerging Markets 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 Emerging Markets SmallCap Dividend Index is a fundamentally
weighted index that measures the performance of primarily small cap stocks
selected from the WisdomTree Emerging Markets Dividend Index. Companies included
in the Index fall within the bottom 10% of total market capitalization of the
WisdomTree Emerging Markets Dividend Index as of the annual index measurement
date. Companies eligible for inclusion in the Index must be incorporated in and
have their shares listed on a major stock exchange in Argentina, Brazil, Chile,
China, Czech Republic, Hungary, India, Indonesia, Israel, Malaysia, Mexico,
Philippines, Poland, Russia, South Africa, South Korea, Taiwan, Thailand or
Turkey. Companies must have paid at least $5 million in cash dividends on their
common stock in the 12 months prior to the most recent Index measurement date.
Companies are weighted in the Index based on regular cash dividends paid. The
Index is composed of primarily small capitalization stocks. As of September 30,
2007, approximately
70% of the index consisted of companies with a market capitalization less than
$2 billion and approximately 15% of the Index consisted of companies with a
market capitalization between $2.0 billion and $2.5 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 Emerging Markets 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 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 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 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 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 generally invests a relatively large
percentage of its assets in the Industrial Sector and as such is
particularly sensitive to risks to the 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
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 0.63%
Distribution and/or Service (12b-1) Fees None
Other Expenses(a) 0.00%
Total Annual Fund Operating Expenses 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.
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
--------------------------------------------------------------------------------
$64 $202
You would pay the following expenses if you did not redeem your shares:
1 Year 3 Years
--------------------------------------------------------------------------------
$64 $202
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
$7,000 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
September 30, 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
$7,000 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
$46,188 if the Creation Unit is redeemed after one year and $114,846 if the
Creation Unit is redeemed after three 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.
Creation and Redemption Transaction Fees for Creation Units
The following table shows, as of September 30, 2007, the approximate value of
one Creation Unit of the 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.
--------------------------------------------------------------------------------------------------------------------------------
Name of Fund Approximate Standard Creation/ Maximum Creation/ Redemption
Value of One Redemption Transaction Fee
Creation Unit Transaction Fee
--------------------------------------------------------------------------------------------------------------------------------
WisdomTree Emerging Markets SmallCap
Dividend Fund $5,000,000 $7,000 $21,000
--------------------------------------------------------------------------------------------------------------------------------
-------------------------------
The following information replaces similar information found on page 3 under the
caption "Principal Investment Strategies." All references to "Replication"
strategy in the prospectus are removed.
Each Fund uses a "Representative Sampling" strategy in seeking to track the
performance of its Index.