POPULAR BOND INDEXES MAY CONTAIN SIGNIFICANT EXPOSURE TO NON-U.S. ISSUERS. Non-U.S. Exposure in the Most Popular Corporate Bond Indexes

Transcription

1 WisdomTree ETFs STRATEGIC CORPORATE BOND FUND CRDT In the current market environment, investors have increasingly targeted corporate bonds 1 as one approach to enhance income in their portfolios. Through popular passively managed corporate bond exchange-traded funds (ETFs), they have gained access to the debt of not only U.S. corporations, but also, to the surprise of some investors, to the debt of non-u.s. companies. POPULAR BOND INDEXES MAY CONTAIN SIGNIFICANT EXPOSURE TO NON-U.S. ISSUERS Non-U.S. Exposure in the Most Popular Corporate Bond Indexes 50% 40% 40% % of Non-U.S. Issuers 30% 20% Dollar figures represent ETF assets tied to each index as of 9/30/15. 21% 20% 18% 19% 18% 33% 10% 0% $22.13 B $12.69 B $8.96 B $10.56 B $10.96 B $3.32 B $6.14 B Markit iboxx USD Liquid Investment Grade Index Markit iboxx USD Liquid High Yield Index Barclays High Yield Very Liquid Index Barclays U.S. 1-5 Year Corporate Index Barclays U.S. 1-3 Year Credit Bond Index Barclays U.S. High Yield 350mn Cash Pay 0-5 Year 2% Capped Index Barclays U.S. Intermediate Credit Bond Index Source: Markit, Barclays, As of 9/30/15. You cannot invest directly in an index. Subject to change. With a wide array of opportunities and potential pitfalls, we believe investors should think strategically about their corporate bond allocations and take advantage of the steady hand that an experienced portfolio manager can provide in navigating the credit 2 markets. The WisdomTree Strategic Corporate Bond Fund (CRDT) seeks to offer a differentiated corporate bond exposure that: + Focuses Fundamentally 3 to identify opportunities and avoid deteriorating credits + Extends Globally to take advantage of the full range of corporate credit opportunities + Allocates Strategically up and down the credit spectrum and across sectors 1 Corporate bond: A debt security issued by a corporation. 2 Credit: A contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some date in the future. 3 Fundamental value: The value of a firm that is related to its actual operations and production as opposed to changes in share price.

2 CRDT offers a strategic approach to investing in corporate bonds powered by the expertise of Western Asset Management Company (Western Asset), one of the world s leading 4 institutional fixed income managers. As a fully transparent, actively managed 5 ETF, CRDT provides full access to Western s favorite ideas in corporate credit as a core holding with daily liquidity 6. Consider that: + Many investors around the world use corporate bonds as a core position to help generate income, reduce risk and broaden portfolio exposures. 7 + Fundamental analysis can not only be helpful in finding select opportunities, but also in avoiding deteriorating credits. + There is a much wider opportunity set in corporate bonds when investors do not restrict themselves to U.S. issuers a global universe now features 3,391 issuers and $12.7 trillion in overall debt. 8 + Historically, incorporating non-u.s. corporate debt has provided less correlated 9 returns versus positions in a U.S.-only corporate bond portfolio Frequent rotation in performance leadership among corporate sectors can offer opportunities for nimble managers to add value. + Active management can offer the potential to exploit certain market inefficiencies through disciplined credit research and active risk oversight to help manage portfolios through credit cycles. + As an ETF, CRDT offers daily liquidity and transparency. 11 FOCUS FUNDAMENTALLY: SOMETIMES IT IS NOT JUST WHAT YOU OWN, BUT WHAT YOU DON T OWN By definition, market capitalization-based 12 indexes take an agnostic view of issuer fundamentals. Normally, as a company issues more debt, it rises in prominence in the index. Additionally, adverse credit events seldom happen overnight. Through a combination of fundamental analysis and the ability to deviate from a mechanical investment process, active management may be able to help add value by avoiding deteriorating credits. In the past 10 years, avoiding the worst performing issuers (bottom 10%) in the Barclays U.S. Credit Index would have increased average annual performance by 1.1% per year. In a low-yield environment, potentially avoiding these underperforming issuers could have a significant impact on total returns. 4 Source: Morningstar, 9/30/15. 5 Active management: Investment manager with a mandate that does not include tracking the returns of an index. 6 Liquidity: The degree to which an asset or security can be bought or sold in the market without affecting the asset s price. 7 Source: Western Asset Management, 9/30/15. 8 Source: Barclays Global Credit Index, 9/30/15. 9 Correlation: Statistical measure of how two sets of returns move in relation to each other. 10 Source: Barclays, WisdomTree, 9/30/ Daily fund holdings are available at 12 Market capitalization weighting: Market cap = share price x number of shares outstanding. Firms with the highest values receive the highest weights.

3 EXTEND GLOBALLY: GLOBAL CORPORATE BONDS MAY HELP REDUCE PORTFOLIO RISK Global economic growth continues to expand the opportunity set for investors. Historically, investing in corporate bonds globally has reduced portfolio risk compared to investments in U.S. credit markets alone. The global corporate composite shown below provides attractive risk-adjusted returns 13 when compared to popular U.S. corporate bond indexes. AVERAGE ANNUAL RISK-RETURN FOR CORPORATE BOND INDEXES [ October 1, 2005 September 30, 2015 ] Average Annual Return (%) 10% 9% 8% 7% 6% (75% IG/ 25% HY) Composite Unhedged (75% IG/ 25% HY) Barclays Global Credit Index (Hedged) Barclays U.S. Corporate High Yield Index Barclays U.S. Corporate Index Barclays U.S. Aggregate Index 5% 4% 0% 2% 4% 6% 8% 10% 12% Annualized Standard Deviation (%) OCTOBER 1, SEPTEMBER 30, 2015: ANNUALIZED SUMMARY STATISTICS v Return (%) Std Dev (%) Downside Risk (%) Sharpe Ratio 5.66% 5.69% 4.39% Composite Unhedged 5.25% 7.75% 5.91% Barclays Global Credit Index (Hedged) 5.14% 4.53% 3.48% Barclays U.S. Corporate High Yield Index 7.25% 10.49% 8.05% Barclays U.S. Corporate Index 5.39% 5.98% 4.45% Barclays U.S. Aggregate Index 4.64% 3.23% 2.25% Source: Barclays Capital. Past performance is not indicative of future results. You cannot invest directly in an index. Index performance does not represent actual fund or portfolio performance. A fund or portfolio may differ significantly from the securities included in the index. Index performance assumes reinvestment of dividends but does not reflect any management fees, transaction costs or other expenses that would be incurred by a portfolio or fund, or brokerage commissions on transactions in fund shares. Such fees, expenses and commissions could reduce returns. Standard deviation: A measure of how widely an investment or investment strategy s returns move compared to its average returns for an observed period. A higher value implies more risk, in that there is more of a chance the actual return observed is farther away from the average return. Downside risk: Standard deviation of negative returns. Sharpe ratio: Measure of risk-adjusted return. Higher values indicate greater return per unit of risk. 13 Risk-adjusted returns: Returns measured in relation to their own variability. High returns with a high level of risk indicate a lower probability that actual returns were close to average returns. High returns with a low level of risk would be more desirable, as they indicate a higher probability that actual returns were close to average returns.

4 ALLOCATE STRATEGICALLY Historically, investors have seen considerable rotation among the performance of corporate bond sectors, regions, industries and credit ratings. In our view, this rotation presents opportunities to add value through strategically tilting a portfolio to issuers that appear attractively priced from a risk-return perspective. PERFORMANCE ROTATION ACROSS CORPORATE BOND SECTORS % Corporate 70.9% High Yield 16.4% High Yield 8.5% Sovereign 25.0% High Yield 7.4% 7.5% -4.9% 58.2% 15.1% 8.2% 18.5% Sovereign 7.0% High Yield 7.3% Corporate -10.9% Sovereign 37.5% Corporate 12.5% Corporate 5.0% 15.8% 2.2% 5.9% -11.0% 28.2% Sovereign 12.0% Sovereign 4.4% 15.2% Corporate 1.2% Corporate 5.5% Sovereign -16.8% Corporate 26.7% 9.6% 3.0% Corporate 13.6% -1.3% Corporate 3.6% Corporate -26.2% 15.2% 9.0% 2.5% Corporate 11.5% Corporate -1.5% 2.7% High Yield -29.9% High Yield 4.4% Corporate 5.9% Corporate -1.2% High Yield 9.8% -6.6% Sovereign 2.5% Values represent calendar-year returns. Past performance is not indicative of future results. You cannot invest directly in an index. Index performance does not represent actual fund or portfolio performance. A fund or portfolio may differ significantly from the securities included in the index. Index performance assumes reinvestment of dividends but does not reflect any management fees, transaction costs or other expenses that would be incurred by a portfolio or fund, or brokerage commissions on transactions in fund shares. Such fees, expenses and commissions could reduce returns. Investment, U.S. Investment and U.S. High Yield represented by the Barclays Global Aggregate Corporate ex-u.s. Total Return Index Hedged USD, the Barclays U.S. Aggregate Corporate Total Return USD and the Barclays U.S. Corporate High Yield Total Return Index, respectively. Corporates and Sovereigns are represented by the JPMorgan CEMBI Broad and JPMorgan EMBI Global Composite Indexes, respectively. High Yield are represented by the Merrill Lynch ex-u.s. Issuers High Yield Constrained Index. Sources: Zephyr, Barclays, JPMorgan, BofA Merrill Lynch, as of 12/31/14.

5 THE ACTIVE MANAGER DIFFERENCE The market for global corporate debt is continuing to evolve. The diverse universe presents different risks and unique opportunities. We believe that successfully navigating the swiftly changing landscape and economic cycles requires the flexibility, discipline and focus of a dedicated manager. That s why WisdomTree chose to partner with Western Asset. THE WISDOMTREE STRATEGIC CORPORATE BOND FUND (CRDT) WisdomTree brings you a strategic approach to corporate bonds and a leading institutional fixed income manager in an ETF. CRDT seeks to provide a high level of total return through investments in corporate bonds from around the world. CRDT AT THE CORE OF YOUR PORTFOLIO Potential ETF Advantages Access to a leading global fixed income manager Access to a dynamic market No investment minimums No redemption fees A low fee of only 0.45%* Intraday liquidity Full transparency of holdings Potential Advantages of Active Management Opportunity to capitalize on a rapidly evolving global fixed income market Potential ability to exploit certain market inefficiencies Flexibility to potentially avoid deteriorating credits and impaired industries *Ordinary brokerage commissions apply. WisdomTree WisdomTree sponsors distinct ETFs that span asset classes and countries around the world. WisdomTree pioneered the concept of fundamentally weighted 14 ETFs and active ETFs and is an industry leader in both categories (as measured by assets under management). Western Asset Management Company ( Western Asset ) Western Asset has more than 20 years of experience in managing corporate debt portfolios and currently oversees more than $134 billion in corporate debt. 15 Western Asset s core strength is in corporate credit research; the company has more than 37 dedicated credit analysts averaging more than 19 years of experience in market centers around the world. A DISCIPLINED INVESTMENT PROCESS Western believes that integrating fundamental credit research with relative value analysis has the potential to lead to outperformance compared to index-based strategies. Although Western Asset s process begins with a top-down assessment of the global economy by examining country and sector specific risks, bottom-up company and industry analysis is what truly drives the Fund s investment selection methodology. The portfolio management team at Western Asset: + Focuses on identifying the sectors and companies that offer relative value in the context of the risk they entail + Uses disciplined credit research and a global footprint to identify opportunities when risk is potentially mispriced + Adheres to a strict sell discipline once targets are reached and avoids participation when risks no longer justify holding a security 14 Fundamental weighting: A type of equity index in which components are chosen based on fundamental criteria as opposed to market capitalization. Fundamentally weighted indexes may be based on fundamental metrics such as revenue, dividend rates, earnings or book value. 15 Source: Western Asset Management, 9/30/15.

6 Top-Down Broad Market Strategy Committee Macro themes Global Credit Committee (GCC) Credit risk profile Sector allocation Industry allocation Risk Management Independent risk monitoring CRDT Portfolio & Quantitative Analysis Efficient strategy implementation Bottom-Up Source: Western Asset Management. Disciplined Fundamental Research Relative value focus Emphasis on management Team-based contribution ASSET ALLOCATION While the Fund will adhere to a broadly defined set of investment parameters, Western Asset has the flexibility to take advantage of perceived market opportunities and to adopt a more defensive position when valuations become less attractive or risks intensify. 45% 15% 85% 40% 10% 67.5% 25% 50% 5% 10% 0% High Yield Debt 0% Emerging Market Debt 0% U.S. Issuer Debt Source: WisdomTree. Subject to change. Asset allocation cannot assure a profit nor protect against a loss.

7 WisdomTree Strategic Corporate Bond Fund Quick Facts Ticker: CRDT Exchange: NASDAQ Expense Ratio: 0.50%, contractually waived to 0.45% through December 31, Sub-advisor: Western Asset Management Company Structure: Open-end ETF. Registered under the Investment Company Act of Objective: The Fund seeks to provide a high level of total return consisting of both income and capital appreciation. Primary Exposure: of corporate and quasi-sovereign issuers throughout the world, including the United States. Currency Exposure: The Fund will look to hedge non-u.s. currency exposure back to U.S. dollars. Country Diversification: The Fund may invest up to 25% of its assets in corporations domiciled in a single country, with the exception of the United States, where it may invest up to 85%. Development Concentration: At least 85% developed market. Credit Quality: The Fund will invest at least 55% of its net assets in securities deemed to be of investment-grade quality. Liquidity: The Fund will have at least 95% of its investments in debt securities with at least $200 million in par amount outstanding. Interest Rate Risk: Moderate; duration between 2 and 10 years. At WisdomTree, we do things differently. We build our ETFs with proprietary methodologies, smart structures and/ or uncommon access to provide investors with the potential for income, performance, diversification and more. For more information or to invest in CRDT, contact your WisdomTree representative or call WISE (9473).

8 Investors should carefully consider the investment objectives, risks, charges and expenses of the Fund before investing. To obtain a prospectus containing this and other important information, call WISE (9473) or visit wisdomtree.com. Read the prospectus carefully before you invest. Asset allocation does not ensure a profit or protect against loss. There are risks associated with investing, including possible loss of principal. Foreign investing involves special risks, such as risk of loss from currency fluctuation or political or economic uncertainty. Investments in emerging, offshore or frontier markets are generally less liquid and less efficient than investments in developed markets and are subject to additional risks, such as risks of adverse governmental regulation and intervention or political developments. Derivative investments can be volatile, and these investments may be less liquid than other securities and more sensitive to the effects of varied economic conditions. Fixed income investments are subject to interest rate risk; their value will normally decline as interest rates rise. In addition, when interest rates fall, income may decline. Fixed income investments are also subject to credit risk, the risk that the issuer of a bond will fail to pay interest and principal in a timely manner, or that negative perceptions of the issuer s ability to make such payments will cause the price of that bond to decline. Unlike typical exchange-traded funds, there is no index that the Fund attempts to track or replicate. Thus, the ability of the Fund to achieve its objective will depend on the effectiveness of the portfolio manager. Please read the Fund s prospectus for specific details regarding the Fund s risk profile. Past performance is not indicative of future results. Forecasts and estimates have certain inherent limitations and may not actually come to pass. The sources, opinions and forecasts expressed by the investment strategists are as of 5/16/14; are subject to change; and should not to be considered or interpreted as a recommendation to participate in any particular trading strategy or deemed to be an offer or sale of any investment product, and they should not be relied on as such. The user of this information assumes the entire risk of any use made of the information provided herein. Unless expressly stated otherwise, the opinions, interpretations or findings expressed herein do not necessarily represent the views of WisdomTree or any of its affiliates. Markit iboxx USD Liquid Index: Designed to represent the corporate investment-grade, USD-denominated bond market using the most liquid issues available. Markit iboxx USD Liquid High Yield Index: Comprises the most liquid USD-denominated, sub-investment-grade issues of the bond market. Barclays High Yield Very Liquid Index: Publicly issued U.S. dollar denominated, non-investment-grade, fixed-rate, taxable corporate bonds that have a remaining maturity of at least one year. Barclays U.S. 1-5 Year Corporate Index: Includes U.S. dollar-denominated, investment-grade, fixed-rate, taxable securities issued by industrial, utility and financial companies, with maturities between one and five years. Barclays U.S. 1-3 Year Credit Bond Index: Measures the performance of investment-grade corporate debt and sovereign, supranational, local authority and non-u.s. agency bonds that are U.S. dollar-denominated and have a remaining maturity of greater than or equal to one year and less than three years. Barclays U.S. High Yield 350mn Cash Pay 0-5 Year 2% Capped Index: Includes short-term, publicly issued, U.S. dollar-denominated, high-yield corporate bonds that have $350 million or more of issuance. Barclays U.S. Intermediate Credit Bond Index: Comprises U.S. dollar-denominated government, government-related and investment-grade U.S. corporate bonds with remaining maturities between one and 10 years. Barclays U.S. Credit Index: A subindex of the Barclays U.S. Government/Credit Index. The index includes both corporate and noncorporate sectors. Global Corporate : Consists of a blend of 75% Barclays Global Aggregate Corporate Index Hedged USD and 25% Barclays Global High Yield Index Hedged USD. U.S. Corporate Composite: Consists of a blend of 75% Barclays U.S. Corporate Index and 25% Barclays U.S. Corporate High Yield Index. Composite Unhedged: Consists of a blend of 75% Barclays Global Aggregate Corporate Index Unhedged and 25% Barclays Global High Yield Index Unhedged. Barclays Global Credit Index (Hedged): Contains investment-grade and high-yield credit securities from the Multiverse Index hedged in U.S. dollars. Barclays Global Credit Index (Unhedged): Contains investment-grade and high-yield credit securities from the Multiverse Index. Barclays Multiverse Index: The merger of two index groups, the Global Aggregate Index and the Global High Yield Index. Barclays U.S. Corporate High Yield Index: Covers the universe of fixed-rate, non-investment-grade corporate debt. Barclays U.S. Corporate Index: Represents publicly issued U.S. corporate and specified foreign debentures and secured notes that meet the specified maturity, liquidity and quality requirements. To qualify, bonds must be SEC-registered. Barclays U.S. Aggregate Index: Represents securities that are SEC-registered, taxable and dollar denominated. The index covers the U.S. investment-grade, fixed-rate bond market, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities. S&P 500 Index: Market capitalization-weighted benchmark of 500 stocks selected by the Standard & Poor s Index Committee designed to represent the performance of the leading industries in the United States economy. Barclays Global Aggregate Corporate ex-u.s. Total Return Index Hedged USD: A broad-based measure of the global investment-grade, fixed-rate, fixed income corporate markets outside the United States hedged in U.S. dollars. Barclays U.S. Aggregate Corporate Total Return USD: A broad-based measure of the global investment-grade, fixed-rate, fixed income corporate markets outside the United States. JPMorgan Corporate Emerging Market Bond Index Broad (CEMBI Broad): A market capitalization-weighted index consisting of U.S. dollar-denominated emerging market corporate bonds. JPMorgan Emerging Market Bond Index Global (EMBI Global): Tracks total returns for U.S. dollar-denominated debt instruments issued by emerging market sovereign and quasi-sovereign entities, including Brady bonds, loans and eurobonds. Merrill Lynch ex-u.s. Issuers High Yield Constrained Index: Contains all securities outside of the U.S. in the BofA Merrill Lynch U.S. High Yield Index and caps issuer exposure at 2%. Foreside Fund Services, LLC is not affiliated the other entities mentioned. WisdomTree Funds are distributed by Foreside Fund Services, LLC, in the U.S. only. WTGM-0901