CXSE
- WISDOMTREE CHINA EX-STATE-OWNED ENTERPRISES FUNDKey Information
Earliest date | 2012-09-20 |
About CXSE
The Fund employs a “passive management” – or indexing– investment approach designed to track the performance of the Index. The Fund generally uses a representative sampling strategyto achieve its investment objective, meaning it generally will invest in a sample of the securities in the Index whose risk, return andother characteristics resemble the risk, return and other characteristics of the Index as a whole. Under normal circumstances, at least80% of the Fund’s total assets (exclusive of collateral held from securities lending) will be invested in constituent securitiesof the Index and investments that have economic characteristics that are substantially identical to the economic characteristics of suchconstituent securities. The Index is a modified float-adjusted market cap weighted indexthat consists of common stocks in China, excluding common stocks of “state-owned enterprises.” WisdomTree, Inc. (“WisdomTree”),as Index Provider, defines state-owned enterprises as companies with over 20% government ownership. The Index consists of companies that:(i) are incorporated or domiciled (i.e., maintain their principal place of business) in China; (ii) list shares on a stock exchangein Hong Kong or the United States; (iii) have a float-adjusted market capitalization of at least $1 billion as of the annual Index screeningdate (“float-adjusted” means that the share amounts reflect only shares available to investors); (iv) have a median dailydollar trading volume of at least $100,000 for the three months preceding the annual Index screening date; (v) trade at least 250,000shares per month or $25 million notional for each of the six months preceding the annual Index screening date; and (vi) are not state-ownedenterprises as of the annual Index screening date. The Index also consists of the 100 largest companies by float-adjustedmarket capitalization that are incorporated in mainland China, listed and traded on the Shanghai Stock Exchange (“SSE”) orShenzhen Stock Exchange (“SZSE”) via the Shanghai-Hong Kong or Shenzhen-Hong Kong Stock Connect (“Stock Connect”)programs in Chinese renminbi (“A-Shares”) and meet the trading requirements set forth above. Stock Connect is a securitiestrading and clearing linked program between either SSE or SZSE, and the Stock Exchange of Hong Kong Limited (“SEHK”), HongKong Securities Clearing Company Limited (“HKSCC”), and China Securities Depository and Clearing Corporation Limited (“ChinaClear”),with an aim to achieve mutual stock market access between the People’s Republic of China (“PRC”) and Hong Kong. Themaximum weight of China A-Shares in the Index, at the time of the Index’s annual screening date, is capped at 33%; however, theweight of China A-Shares in the Index may fluctuate above the cap in response to market conditions and/or the application of volume factoradjustments, as described below. Securities are weighted in the Index based on float-adjusted marketcapitalization, as modified pursuant to certain limitations set forth below. On the Index’s annual screening date, the maximumweight of any security in the Index is capped at 10%, and the Index caps the weight of constituents exposed to any one sector at 30%.The Index also may adjust the weight of individual constituents on the annual screening date based on certain quantitative thresholdsor limits tied to key metrics of a constituent security, such as its trading volume. To the extent the Index reduces an individual constituent’sweight, the excess weight will be reallocated pro rata among the other constituents. Similarly, if the Index increases a constituent’sweight, the weight of the other constituents will be reduced on a pro rata basis to contribute the weight needed for such increase. Theweight of a sector or individual constituent in the Index may fluctuate above or below specified caps and thresholds, respectively, betweenscreening dates in response to market conditions. WisdomTree, the Index Provider andparent company of WisdomTree Asset Management, Inc. (“WisdomTree Asset Management” or the “Adviser”), currentlyuses the Global Industry Classification Standard (GICS®),a widely recognized industry classification methodology developed by MSCI, Inc. and Standard & Poor’s Financial Services LLC,to identify the extent of the Index’s exposure to a sector or industry. A GICS sector typically is comprised of multiple industries.Because the Fund seeks to track the Index it is expected to have the same sector and industry exposure as the Index. While the Index’sand the Fund’s sector exposure may vary from time to time, as of June 30, 2024, the Index had significant exposure (e.g.,approximately 15% or more of the Index’s total weight) to the Consumer Discretionary and Communication Services Sectors. Tothe extent the Index’s constituents are concentrated (i.e., holds more than 25% of constituents) in the securities of companiesassigned to a particular industry or group of industries, the Fund will seek to concentrate its investments in such industry or groupof industries to approximately the same extent as the Index.