What changed in this filing

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Item 1. Business

2021-02-19 compared with 2020-02-28 · 308 added, 275 removed, 379 unchanged (61% of the section changed)

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ETP is an umbrella term that includes exchange-traded funds, or ETFs, exchange-traded notes and exchange-traded commodities.

Our family of ETFs includes funds that track our own indexes, funds that track third-party indexes and actively managed funds.

Most of our equity-based funds employ a fundamentally weighted investment methodology, which weights securities based on factors such as dividends, earnings or investment factors, whereas most other ETF industry indexes use a capitalization weighted methodology.

We distribute our ETFs through all major channels within the asset management industry, including brokerage firms, registered investment advisers, institutional investors, private wealth managers and discount brokers primarily through our sales force.

Our sales efforts are not directed towards the retail segment but rather are directed towards financial or investment advisers that act as intermediaries between the end-client

We focus on creating ETFs for investors that offer thoughtful innovation, smart engineering and redefined investing.

Our family of ETPs includes products that track our own indexes, third-party indexes and market prices of commodities.

We also offer actively managed products.

Most of our equity-based funds employ a fundamentally weighted investment methodology, which weights securities based on factors such as dividends, earnings or investment factors, whereas most other industry indexes use a capitalization weighted methodology.

We distribute our products through all major channels within the asset management industry, including banks, brokerage firms, registered investment advisers, institutional investors, private wealth managers and online brokers primarily through our sales force.

Our sales efforts are not primarily directed towards the retail segment but rather are directed towards financial advisers that act as intermediaries between the end-client

and us or institutional investors.

We focus on creating products for investors that offer thoughtful innovation, smart engineering and redefined investing.

We have launched many first-to-market

ETFs and pioneered alternative weighting and performance methods commonly referred to as “smart beta.” However, our U.S.

listed ETFs are not beta, but rather an investment approach we call “Modern Alpha,” which combines the outperformance potential of active management with the benefits of passive management to offer investors cost-effective ETFs that are built to perform.

products and pioneered alternative weighting methods we call “Modern Alpha,” which combines the outperformance potential of active management with the benefits of passive management to offer investors cost-effective funds that are built to perform.

We strive to deliver a better investing experience through innovative solutions.

Continued investments in technology-enabled services and our Advisor Solutions program, which includes portfolio construction, asset allocation, practice management services and digital tools for financial advisors, are meant to differentiate us in the market, expand our distribution and further enhance our relationships with financial advisors.

Continued investments in technology-enabled and research-driven solutions and our Advisor Solutions program, which includes portfolio construction, asset allocation, practice management services and digital tools for financial advisors, are meant to differentiate us in the market, expand our distribution and further enhance our relationships with financial advisors.

We were incorporated under the laws of the state of Delaware on September 19, 1985 as Financial Data Systems, Inc.

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on September 6, 2005.

Impact on our Business

pandemic introduced volatility and uncertainty in the global financial markets.

However, economic stimulus packages and loose monetary policies have proven to counterbalance the adverse effect of the pandemic on the global economy.

Accommodative policies have contributed toward financial markets performing favorably since the pandemic’s onset.

Our AUM experienced a significant decline at the onset of the pandemic and has since recovered, increasing 5.9% from the prior year.

While our AUM has increased, our revenues declined 5.5% due to a 4 basis point decline in our average global advisory fee arising from AUM mix shift, notwithstanding the increase in our average AUM.

Our operating expenses decreased 7.6% from the prior year as we tempered our discretionary spending due to the uncertain market conditions arising from the pandemic.

The pandemic has not adversely impacted our capital management strategy.

During the year, we issued and sold $175.0 million in aggregate principal amount of 4.25% Convertible Senior Notes due 2023, repaid our debt previously outstanding and terminated our former credit facility.

We also repurchased shares of our common stock totaling $31.2 million and maintained our $0.03 per share quarterly cash dividend.

Additional share repurchases will depend upon our future operating results, available cash on hand and strategic priorities.

The Coronavirus Aid, Relief, and Economic Security Act of 2020, or the CARES Act, was enacted in March 2020 in response to the COVID-19

pandemic, which provided financial assistance under various programs to help companies cope with economic hardships.

Additionally, on December 27, 2020, the Economic Aid to Hard-Hit Small Business, Nonprofits, and Venues Act, or Economic Aid Act, was enacted, providing additional financial stimulus.

We did not apply for any financial assistance afforded by the CARES Act or the Economic Aid Act.

Assets Under Management

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The chart below sets forth the asset mix of our ETPs for the last three years:

Our concentrations in the WisdomTree Europe Hedged Equity Fund, or HEDJ, our European equity ETF which hedges exposure to the euro, and the WisdomTree Japan Hedged Equity Fund, or DXJ, our Japanese equity ETF which hedges exposure to the yen, have declined dramatically over the last three years from 35% at December 31, 2017 to 10% at December 31, 2019, as negative investor sentiment toward these strategies led to net outflows of $13.0 billion during this timeframe.

These outflows largely have been offset by strong inflows into our U.S.

equity, fixed income, commodity and emerging markets products.

During the years ended December 31, 2017, 2018 and 2019, net inflows were $3.7 billion, $3.2 billion and $3.3 billion, respectively, excluding outflows from HEDJ and DXJ.

The diversified nature of our global asset mix dampened volatility during 2020 and positions us for further growth in 2021.

Our Operating and Financial Results

We operate as an ETP sponsor and asset manager providing investment advisory services globally through our subsidiaries in the United States and Europe.

Sale of our Former Canadian ETF Business

In February 2020, we completed the sale of all of the outstanding shares of our wholly-owned Canadian subsidiary, WisdomTree Asset Management Canada, Inc., or the Canadian ETF business, to CI Financial Corp.

We received CDN $3.7 million (USD $2.8 million) in cash at closing and will receive additional cash consideration of CDN $2.0 million to $8.0 million, depending on the achievement of certain AUM growth targets over the next three years.

Our Canadian ETF business reported operating losses during the years ended December 31, 2018, 2019 and 2020 of $3.9 million, $2.8 million and $0.4 million, respectively.

Acquisition of ETFS

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Throughout this Report, we refer to the acquired business as ETFS and the acquisition as the ETFS Acquisition.

Following the ETFS Acquisition we became the largest global independent ETP provider based on AUM, with significant scale and presence in the U.S.

and Europe, the two largest ETP markets.

The ETFS Acquisition diversified our investment theme concentrations by adding European-listed gold and commodity products.

Our Operating and Financial Results

We operate as an ETP sponsor and asset manager providing investment advisory services globally.

These activities are reported in our U.S.

Business and International Business segments.

Business Segment

listed ETFs’ AUM increased from $35.5 billion at December 31, 2018 to $40.6 billion at December 31, 2019 due to market appreciation and net inflows into our U.S.

equity, fixed income and emerging markets ETFs.

These increases were partly offset by outflows from our international equity ETFs and HEDJ/DXJ.

Business segment included our Japan sales office, WTJ, which engaged in selling our U.S.

listed ETFs to Japanese institutions.

In July 2018, we determined to restructure our distribution strategy in Japan and expanded our existing relationship with Premia Partners Company Limited to manage distribution of our ETFs in Japan.

As a result, WTJ has ceased operations and was liquidated during the year ended December 31, 2019.

WTJ reported operating losses during the years ended December 31, 2017, 2018 and 2019 of $4.6 million, $4.5 million and $0.6 million, respectively.

International Business Segment

Our international ETPs’ AUM increased from $18.6 billion at December 31, 2018 to $23.0 billion at December 31, 2019 due to market appreciation and net inflows into our commodity ETPs.

The increase in our AUM from December 31, 2017 to December 31, 2018 was primarily due to the $17.6 billion of AUM acquired in connection with the ETFS Acquisition.

The AUM shown above includes $0.3 billion, $0.5 billion and $0.8 billion of AUM from our Canadian business at December 31, 2017, 2018 and 2019, respectively.

On November 6, 2019, we entered into a definitive agreement to sell all of the outstanding shares of our wholly-owned Canadian subsidiary, WisdomTree Asset Management Canada, Inc., or WTAMC, to CI Financial Corp.

On February 19, 2020, we completed the sale of WTAMC, with CI Financial paying CDN $5.0 million (USD $3.8 million) in cash at closing, with total consideration ranging from CDN $7.0 million to CDN $13.0 million (USD $5.4 million to USD $9.9 million), depending on the achievement of certain AUM growth targets over the next three years.

Our Canadian business reported operating losses during the years ended December 31, 2017, 2018 and 2019 of $3.6 million, $3.9 million and $2.8 million, respectively.

listed ETFs’ AUM decreased from $40.6 billion at December 31, 2019 to $38.5 billion at December 31, 2020, primarily due to net outflows and market depreciation.

International Listed ETPs

Our international listed ETPs’ AUM increased from $23.0 billion at December 31, 2019 to $28.9 billion at December 31, 2020, due to market appreciation (primarily in our gold products) and net inflows.

Consolidated Operating Results

The following table sets forth our revenues and net income/(loss) for the last three years.

Our operating results for the prior periods reported in this Report are not directly comparable to the current periods as the ETFS Acquisition was completed on April 11, 2018.

– We recorded operating revenues of $268.4 million during the year ended December 31, 2019, down 2.1% from the year ended December 31, 2018 due to a 3 basis point decline in our average global advisory fee and lower average AUM of our U.S.

listed products, partly offset by higher revenues earned from the ETFS acquired business, which were recognized for the entire year of 2019.

– Total operating expenses increased 1.0% from the year ended December 31, 2018 to $214.9 million due to expenses associated with the ETFS acquired business which were recognized for the entire year of 2019 and higher compensation expenses.

These items were partly offset by lower acquisition and disposition-related costs, professional fees, marketing and advertising expenses and fund management and administration costs associated with our U.S.

listed products.

The following table sets forth our revenues and net (loss)/income for the last three years.

– We recorded operating revenues of $253.7 million during the year ended December 31, 2020, down 5.5% from the year ended December 31, 2019 due to a 4 basis point decline in our average global advisory fee arising from AUM mix shift, notwithstanding the increase in our average AUM.

– Total operating expenses decreased 7.6% from the year ended December 31, 2019 to $198.6 million due to lower incentive compensation accruals as well as $3.5 million of severance expense included in the prior year, lower sales and business development costs, third party distribution costs, marketing expenses and other expenses, and lower fund management and administration costs primarily due to the sale of our Canadian ETF business.

These declines were partly offset by higher contractual gold payments due to higher average gold prices.

Other Income/(Expenses)

– Other income/(expenses) includes interest income and interest expense, (losses)/gains on revaluation of deferred consideration – gold payments, impairments and other gains and losses.

For the years ended December 31, 2018 and 2019, the gain/(loss) on revaluation of deferred consideration – gold payments were $12.2 million and ($11.3) million, respectively.

– Other income/(expenses) includes interest income and interest expense, (losses)/gains on revaluation of deferred consideration – gold payments, impairments, loss on extinguishment of debt and other gains and losses.

For the years ended December 31, 2018, 2019 and 2020, the gain/(loss) on revaluation of deferred consideration – gold payments was $12.2 million, ($11.3) million and ($56.8) million, respectively.

Net (loss)/income

– We reported a net loss of ($10.4) million during the year ended December 31, 2019, compared to net income of $36.6 million during the year ended December 31, 2018.

The net loss reported in the current year includes the loss on revaluation of deferred consideration – gold payments of $11.3 million and impairment charges of $30.7 million (See Note 26 to our Consolidated Financial Statements).

– We reported a net loss of ($10.4) million and ($35.7) million during the years ended December 31, 2019 and 2020, respectively.

The change in net loss was impacted by the change in revenue and expenses described above, impairment charges recorded in each year and an increase in the loss on revaluation of deferred consideration – gold payments of $45.5 million.

See “Non-GAAP

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We believe seasonal fluctuations in the asset management industry are common, however such trends are generally masked by global market events and market volatility in general.

Therefore, period to period comparisons of ours or the industry’s flows and operating results may not be meaningful or indicative of results in future periods.

An ETF is an investment fund that holds securities such as equities or bonds and/or other assets such as derivatives or commodities, that usually tracks the performance of an index and generally trades at approximately the same price as the net asset value of its underlying components over the course of the trading day.

ETFs offer exposure to a wide variety of asset classes and investment themes, including domestic, international and global equities, fixed income, commodities, currencies and alternative strategies, as well as securities in specific industries and countries.

We believe ETPs, the vast majority of which are comprised of ETFs, have been one of the most innovative investment products to emerge in the last two decades in the asset management industry.

Therefore, period to period comparisons of our or the industry’s flows and operating results may not be meaningful or indicative of results in future periods.

We believe ETPs have been one of the most innovative investment products to emerge in the last two decades in the asset management industry.

As of December 31, 2020, aggregate AUM of ETPs globally was $7.8 trillion.

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As of December 31, 2020, we were the fourteenth largest ETP sponsor globally based on AUM.

GLOBAL RANKING

(in billions)

Charles Schwab

ETFs have become more popular among a broad range of investors as they come to understand the benefits of ETFs and use them for a variety of purposes and strategies, including low cost index investing and asset allocation, access to specific asset classes, protective hedging, income generation, arbitrage opportunities and diversification.

While ETFs are similar to mutual funds in many respects, they have some important differences as well:

While ETFs are similar to mutual funds in many respects, they also have some important differences:

ETFs disclose the composition of their underlying portfolios on a daily basis, unlike mutual funds, which typically disclose their holdings every 90 days.

Intraday trading, hedging strategies and complex orders

Like stocks, ETFs can be bought and sold on exchanges throughout the trading day at market prices.

Like stocks, ETFs and other exchange-traded products can be bought and sold on exchanges throughout the trading day at market prices.

ETFs update the indicative values of their underlying portfolios every 15 seconds.

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From a cost perspective, ETFs are one of the most equitable investment products on the market.

Investors in U.S.

listed ETFs, regardless of their size, structure or sophistication, pay identical advisory fees.

Investors in a U.S.

listed ETF pay identical advisory fees regardless of the investors’ size, structure or sophistication.

Unlike mutual funds, U.S.

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Improved access to specific asset classes

Investors often use ETFs to gain access to specific market sectors or regions around the world by investing in an ETF that holds a portfolio of securities in that region or segment rather gaining exposure by purchasing individual securities or physical commodities.

Investors often use ETFs to gain access to specific market sectors or regions around the world or a particular asset, such as physical gold, by investing in an ETF that holds a portfolio of securities in that region or segment rather than gaining exposure by purchasing individual securities or physical commodities.

Asset allocation

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The “instant diversification” of ETFs provides investors with broad exposure to an asset class, market sector or geography.

ETP net flows experienced a modest improvement from the prior year as positive market performance overshadowed global trade uncertainties and growth concerns.

The ETP sector of the asset management industry continues to demonstrate that it is favored amongst investors.

According to the Investment Company Institute, from January 1, 2017 through December 31, 2019, equity ETFs have generated positive inflows of approximately $721 billion while long-term equity mutual funds have experienced outflows of approximately $776 billion.

The ETF sector of the asset management industry continues to demonstrate that it is favored among investors.

According to the Morningstar Direct, from January 1, 2018 through December 31, 2020, equity ETFs have generated positive inflows of approximately $986 billion, while long-term equity mutual funds have experienced outflows of approximately $254 billion.

In addition, ETF fixed income flows are benefiting from a broader range of investors gravitating toward fixed income products in the ETF structure.

We believe this trend is due to the inherent benefits of ETFs – transparency, liquidity and tax efficiency.

We believe our growth, and the growth of the ETF industry in general, will continue to be driven by the following factors:

We believe our growth, and the growth of the industry in which we operate, will continue to be driven by the following factors:

Education and greater investor awareness

Over the last several years, ETFs have been taking a greater share of inflows and AUM from mutual funds.

Over the last several years, ETPs have been taking a greater share of inflows and AUM from mutual funds.

We believe investors have become more aware of some of the deficiencies of mutual funds and other financial products and are increasing their focus on important characteristics of their traditional investments—namely transparency, tradability, liquidity, tax efficiency and fees.

Their attention and education focused on these important investment characteristics may be one of the drivers of the shift in inflows from traditional mutual funds to ETFs.

We believe as investors continue to become more aware and educated about ETFs and their benefits, ETFs will continue to take market share from traditional mutual funds and other financial products or structures such as hedge funds, separate accounts and individual stocks.

Move to fee-based models

In response to preparing for compliance with the Department of Labor’s Fiduciary Rule to address conflicts of interest in retirement advice before it was vacated in 2018, and thereafter for compliance with Regulation Best Interest, which was adopted by the SEC in June 2019 and requires broker-dealers to act in the best interest of their retail customers when making a recommendation, many financial advisors changed the revenue model that they charge clients from one that is “transaction-based,” that is, based on commissions for trades or receiving sales loads, to a “fee-based”

Their attention and education focused on these important investment characteristics may be one of the drivers of the shift in inflows from traditional mutual funds to ETPs.

We believe these products will continue to take market share from traditional mutual funds and other financial products or structures such as hedge funds, separate accounts and individual stocks as investors continue to become more aware and educated about ETPs and their benefits.

Move to fee-based

Financial advisors are shifting their business model from one that is “transaction-based,” that is, based on commissions for trades or receiving sales loads, to a “fee-based”

approach, where an overall fee is charged based on the value of AUM.

This fee-based

approach, which is in the spirit of Regulation Best Interest, lends itself to the advisor selecting no-load,

approach lends itself to the advisor selecting lower-fee

financial products, and in our opinion, better aligns advisers with the interests of their clients.

Since ETFs generally charge lower fees than mutual funds, we believe this model shift, which we anticipate will remain in place even though the Fiduciary Rule was vacated, will benefit the ETF industry.

As major brokerage firms and asset managers encourage their advisors to move towards fee-based

models, we believe overall usage of ETFs likely will increase.

Since ETFs generally charge lower fees than mutual funds, we believe this model shift will benefit the ETF industry.

Innovative product offerings

Historically, ETFs tracked traditional equity indexes, but the volume of ETF growth has led to significant innovation and product development.

As demand has increased, the number of ETFs also has increased and today, ETFs are available for virtually every asset class including equities, fixed income, commodities, alternative strategies, leveraged/inverse, real estate and currencies.

However, we believe that there remain substantial areas for ETF sponsors to continue to innovate, including alternative- and investment theme-based strategies, digital assets, hard and soft commodities, and actively managed strategies.

We also believe the further expansion of ETFs will fuel additional growth and investments from investors who typically access these products through hedge funds, separate accounts, stock investments or the futures and commodity markets.

New distribution channels

Recently, several of the largest custodial platforms and online brokerage firms eliminated trading commissions for ETFs.

Our arrangements with these platforms had offered us

preferred or exclusive access for our products, enabling investors to purchase ETFs without paying commissions.

While exclusivity is no longer available, the elimination of commissions removes a component of trading costs previously affecting ETFs and is therefore a positive development for the ETF industry.

ETF sponsors are also now better positioned to target access to all platforms, thereby creating additional opportunities.

We believe the promotion of ETF trading by these platforms and online brokerage firms and their marketing of ETFs and model portfolios to a wider retail channel will contribute to the growth of ETFs.

Additionally, digital wealth management is evolving, and online tools and robo-advisors are gaining wider acceptance with retail investors to assist with investment decisions.

These advisors are increasingly utilizing model portfolios, which we believe also will contribute to the growth of ETFs.

Institutional investors such as pensions, endowments and even mutual funds are also increasing their use of ETFs as trading tools as well as core holdings.

ETPs are now available for virtually every asset class including equities, fixed income, commodities, alternative strategies, leveraged-and-inverse

and currencies.

However, we believe that there remain substantial areas for sponsors to continue to innovate, including liquid alternative, thematic and ESG strategies.

We also believe the further expansion of ETPs will fuel additional growth and investments from investors who typically access these products through hedge funds, separate accounts, stock investments or the futures and commodity markets.

Changing demographics

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International markets.

We believe the growth of ETFs is a global phenomenon.

We believe the growth of ETPs is a global phenomenon.

While the U.S.

currently represents the vast majority of global ETF assets, many of the same growth drivers powering the U.S.

ETF industry are taking hold in global markets.

Changing regulatory landscape

Many regulators globally are implementing rules that favor fee-based

account structures, barring of commissions or incentives to advisors that put their interests ahead of clients and promoting trading of ETFs.

We believe these regulatory changes are conducive to ETF growth.

currently represents the vast majority of global ETP assets, many of the same growth drivers in the U.S.

market are also taking hold in global markets.

Our Competitive Strengths

Well-positioned in large and growing markets

We believe that ETFs are well positioned to grow significantly faster than the asset management industry as a whole, making our focus on ETFs an advantage over traditional asset management firms.

In the ETF industry, being a first mover, or one of the first providers of ETFs in a particular asset class, can be a significant advantage.

We believe that ETPs are well positioned to grow significantly faster than the asset management industry as a whole, making our focus on ETPs an advantage over traditional asset management firms.

Being a first mover, or one of the first providers of products in a particular asset class, can be a significant advantage.

We believe that our early leadership in a number of asset classes positions us well to maintain a leadership position.

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Differentiated product set, powered by innovation and performance

Our products span a variety of traditional and high growth asset classes, including equities, commodities, fixed income, currencies and

alternatives, and include both passive and actively managed funds.

Our products span a variety of traditional and high growth asset classes, including equities, commodities, fixed income, leveraged-and-inverse,

currencies and alternatives, and include both passive and actively managed funds.

Our innovations include launching the following industry firsts:

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Self-indexing is a significant component of this approach.

The majority of our ETFs are based on proprietary WisdomTree indexes which we believe gives us several advantages.

Many of our products are based on proprietary WisdomTree indexes which we believe gives us several advantages.

First, it minimizes our third-party index licensing fees, which increases our profitability.

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Fourth, because these indexes are proprietary to WisdomTree, we may face similar competition, but we never face exact competition.

We believe that our Modern Alpha approach and our expertise in product development combined with our self-indexing capabilities provides a strategic advantage, enabling us to launch innovative ETFs.

Our expertise in product development combined with our self-indexing capabilities provides a strategic advantage, enabling us to launch innovative products.

Extensive marketing, research and sales efforts

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Close to half of our employees are dedicated to marketing, research and sales.

Our sales professionals are the primary points of contact for financial advisors, independent advisory firms and institutional investors who use our ETFs.

Our sales professionals are the primary points of contact for financial advisors, independent advisory firms and institutional investors who invest in our ETPs.

Their efforts are enhanced through value-added services provided by our research and marketing efforts.

We have strong relationships with financial advisors at leading national brokerage firms, registered investment advisers and high net worth advisers.

We believe that by strategically aligning these adviser relationships and marketing campaigns with targeted research and sales initiatives and products that align with market sentiment, we differentiate ourselves from our competitors.

We have strong relationships with financial advisors and institutional investors and we believe that by strategically aligning these adviser relationships and marketing campaigns with targeted research and sales initiatives and products that align with market sentiment, we differentiate ourselves from our competitors.

Efficient business model with lower risk profile

We have invested heavily in digital tools and data to market and sell our products and in the internal development of our core competencies with respect to product development, marketing, research and sales of ETFs.

We outsource to third parties those services that are not our core competencies or may be resource or risk intensive, such as the portfolio management responsibilities and fund accounting operations of our ETFs.

In addition, our licensing costs are moderated since we create our own indexes for most of our ETFs.

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We have built a strong and dedicated senior leadership team.

Most of our leadership team has significant ETF or financial services industry experience in fund operations, regulatory and compliance oversight, product development and

management or marketing and communications.

We believe our team, by developing an ETF sponsor from the ground up despite significant competitive, regulatory and operational barriers, has demonstrated an ability to innovate as well as recognize and respond to market opportunities and effectively execute our strategy.

Most of our leadership team has significant ETP or financial services industry experience in fund operations, regulatory and compliance oversight, product development and management or marketing and communications.

We believe our team, by developing an ETP sponsor from the ground up despite significant competitive, regulatory and operational barriers, has demonstrated an ability to innovate as well as recognize and respond to market opportunities and effectively execute our strategy.

Our Growth Strategies

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We will seek to increase our market share and build additional scale by continuing to implement the following growth strategies:

Foster deeper relationships through technology-driven solutions

Launch innovative new products that diversify our product offerings and revenues

We have launched many first-to-market

ETFs in the U.S.

and pioneered alternative weighting and performance methods we call “Modern Alpha,” which combines the outperformance potential of active management with the benefits of passive management to offer investors cost-effective funds that are built to perform.

Our growth plan includes the following:

target 20 new global product launches with a focus on core, tactical, thematic and ESG exposures in 2021 to complement our crypto ETP offering in Europe, our cloud, artificial intelligence, battery and recent global cybersecurity launch as well as our leading ESG offering;

to be a leader in the ESG space.

We currently rank third in the U.S.

in this category by ESG assets under management, and our multifactor and ex-state-owned

suites, together comprising six funds and $5 billion in AUM in total, each represent differentiated performance-oriented investment strategies.

Recently, we further enhanced our ex-state-owned

suite by adding environmental and social screens ensuring they will appear in more third-party ESG classifications and be more visible to ESG oriented investors.

In Europe, the same broad ESG screen has been applied to our core UCITS equity funds to meet increasing local demand for such considerations and traditional exposures;

to establish ourselves as a leader in digital assets.

This includes leveraging our European experience to offer exchange-traded bitcoin exposures beyond Europe.

We are also seeking to have a regulated gold token in the market as we are committed to competing for the future of gold, which we believe is both digital and global.

We also plan to pursue “tokenized” or digital versions of certain WisdomTree strategies on the blockchain covering other core building block asset classes, including treasuries.

Foster deeper relationships through technology-enabled and research-driven solutions

We believe that the asset management industry is undergoing rapid change and technology is altering the way financial advisors conduct business.

Our Advisor Solutions platform, which was named “Fund Innovation of the Year” at the 2018 Mutual Fund Industry Awards, is focused on providing technology-enabled solutions to help financial advisors address technology challenges and grow and scale their businesses.

Our award-winning Advisor Solutions platform is focused on providing technology-enabled and research-driven solutions to help financial advisors address technology challenges and grow and scale their businesses.

The Advisor Solutions program includes:

wealth investment research and ETF education;

portfolio construction services such as the award-winning Digital Portfolio Developer, or DPD, an enhanced portfolio construction tool that assists financial advisors in analyzing an existing investment portfolio by examining the data and providing alternative portfolio approaches to consider in seeking to improve outcomes based on different measures.

DPD won the “Thought Leadership Initiative of the Year” award at the 2018 WealthManagement.com Industry Awards;

access to ETF model portfolios, which are currently available on a number of platforms, including TD Ameritrade, Envestnet and others.

access to over 30 model portfolios, which are currently available on a number of platforms, including TD Ameritrade, Merrill Lynch, Envestnet, 55ip and others.

Our model portfolios are a natural extension of our research capabilities and provide advisors access to an open-architecture approach, a tenured team and a firm dedicated to innovation and value creation.

Innovation is demonstrated in part by our recent launch of two model portfolios in collaboration with Professor Jeremy Siegel;

As part of this initiative, we launched two of our model portfolios in collaboration with Professor Jeremy Siegel;

portfolio construction services such as our award-winning Digital Portfolio Developer, an enhanced portfolio construction tool that assists financial advisors in analyzing an existing investment portfolio by examining the data and providing alternative portfolio approaches to consider in seeking to improve outcomes based on different measures;

wealth investment research and ETF education, such as a recent first of its kind study we conducted on the practice management and adoption of third-party model portfolios, the results of which revealed investors view model portfolios as a more sophisticated approach to asset allocation, yet adoption remains low;

practice management resources, including access to thought leaders in retirement planning, leadership and behavioral finance.

Increase penetration within existing distribution channels and expand into new distribution channels and relationships with distribution platforms.

Recently, several of the largest custodial platforms and online brokerage firms eliminated trading commissions for ETFs.

Our arrangements with these platforms, including TD Ameritrade, Charles Schwab and E *

Trade had offered us preferred or exclusive access for our products, enabling investors to purchase our ETFs without paying commissions.

While exclusivity on these platforms is no longer available, we are now better positioned to target access to all platforms, thereby creating additional opportunities to increase our market share by further penetrating existing distribution channels, expanding into new distribution channels and cross-selling additional WisdomTree ETFs.

In addition, we continue to maintain preferred or exclusive access on the following platforms:

Deepen relationships with distribution platforms

We maintain relationships with certain distribution platforms that allow commission free trading of our ETFs.

These relationships are beneficial to us as it allows us greater access and marketing privileges with the platforms’ advisors.

As financial advisors continue to migrate away from mutual funds, we use our expertise in ETFs to build new relationships and educate advisors on the benefits of ETFs.

Some of these relationships that exist today include:

LPL Financial.

In December 2019, we became an inaugural partner on LPL Financial’s newly launched ETF network where advisors can trade 67 of our ETFs commission free.

We are an inaugural partner on LPL Financial’s ETF network where advisors can trade many of our ETFs commission free.

BNY Mellon/Pershing.

In June 2019, we expanded our offerings of our U.S.

listed ETFs on BNY Mellon’s Pershing Fundvest ®

Many of our U.S.

listed ETFs are available on BNY Mellon’s Pershing Fundvest ®

ETF no-transaction-fee

platform, adding 43 additional WisdomTree U.S.

listed ETFs to the original eight added in January 2019.

In March 2019, ten of our UCITS ETFs with 28 asset classes were added to the online platform of Swissquote, Switzerland’s largest execution-only broker.

In August 2018, our full range of U.S.

listed ETFs were made available commission-free on Ally Invest’s online trading platform.

In July 2018, our U.S.

listed ETFs and our Advisor Solutions program were made available on the no-transaction

Certain of our UCITS ETFs are available on the online platform of Swissquote, Switzerland’s largest execution-only broker.

Our full range of U.S.

listed ETFs are available commission-free on Ally Invest’s online trading platform.

listed ETFs and our Advisor Solutions program are available on the no-transaction

fee product platform of Cetera Financial Group, the second largest independent financial advisor network in the nation.

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Leverage data intelligence to serve and expand investor base and improve sales and marketing effectiveness

Our collaboration with IBM’s Advanced Analytics platform led to the development of a cognitive customer-focused lead prioritization system leveraging IBM Watson which has enhanced our distribution efforts.

We utilize a cognitive customer-focused lead prioritization system which has enhanced our distribution efforts.

The system evaluates data across structured and unstructured sources such as historical investment data, market data and investor activity history, extracting behavioral insights, and is designed to enable our sales and marketing teams to optimize outreach to our current and potential investor base.

Launch innovative new products that diversify our product offerings and revenues

We have launched many first-to-market

ETFs in the United States and pioneered alternative weighting and performance methods commonly referred to as “smart beta.” However, our U.S.

We are also seeking to enhance the ETF structure through blockchain technology and digital securities and bring the benefits of the ETF structure to the digital ecosystem.

To that end, we are pursuing the launch of “tokenized” or digital versions of existing WisdomTree ETFs on blockchain covering core building block asset classes, including gold and treasuries.

We believe our track record demonstrates that we can create and sell innovative ETFs that meet market demand.

Selectively pursue acquisitions or other strategic transactions.

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We believe pursuing acquisitions or other strategic transactions is a cost-effective means of growing our business and AUM.

Regulatory Framework of the ETF Industry

Not all ETPs are ETFs.

ETFs are a distinct type of security with features that are different than other ETPs.

ETFs are open-end

investment companies or unit investment trusts regulated in the U.S.

by the Investment Company Act of 1940, or the Investment Company Act.

This regulatory structure is designed to provide investor protection within a pooled investment product.

For example, the Investment Company Act requires that at least 40% of the Trustees for each ETF must not be affiliated persons of the fund’s investment manager, or Independent Trustees.

If the ETF seeks to rely on certain rules under the Investment Company Act, a majority of the Trustees for that ETF must be Independent Trustees.

In addition, as discussed below, ETFs have received exemptive orders from the staff of the SEC which exempt them from certain provisions of the Investment Company Act;

however, ETFs generally operate under regulations that prohibit affiliated transactions, are subject to standard pricing and valuation rules and have mandated compliance programs.

ETPs can take a number of forms in addition to ETFs, including exchange-traded notes, grantor trusts or limited partnerships.

market, a key factor differentiating ETFs, grantor trusts and limited partnerships from exchange-traded notes is that the former hold assets underlying the ETP.

Exchange traded notes, on the other hand, are debt instruments issued by the exchange-traded note sponsor.

Also, each of these structures has implications for taxes, liquidity, tracking error and credit risk.

Because ETFs do not fit into the regulatory provisions governing mutual funds, ETF sponsors and ETFs historically needed to obtain “exemptive relief” from the SEC from certain provisions of the Investment

Company Act in order to operate ETFs, which could be costly and time consuming depending on the type of exemptive relief sought and type of ETF.

In September 2019, the SEC approved Rule 6c-11,

commonly referred to as the “ETF Rule,” which is designed to simplify the rules governing ETFs.

See “Business—U.S.

Regulation and—International Regulation” below for more information about the ETF Rule and other regulations to which we are subject.

Human Capital Resources

We compete in the highly competitive asset management industry.

Attracting, retaining and motivating highly skilled, and sometimes highly specialized, employees in operations, product development, research, sales and marketing and other positions is crucial to our ability to compete effectively.

Our ability to recruit and retain such employees depends on a number of factors, including our corporate culture and work environment, informed by our values and behaviors, talent development and career opportunities and compensation and benefits.

We strive to differentiate ourselves in the asset management industry through our sense of community and purpose integrated into our culture, while encouraging a culture where every employee has a voice.

Employee Profile

At December 31, 2020, we had 217 full-time employees globally, consisting of 140 in the U.S.

and 77 in the U.K.

and other European countries.

None of our employees are covered by a collective bargaining agreement and we consider our relations with employees to be good.

Diversity, Equity and Inclusion

We recognize that a diverse set of perspectives is critical to innovation and have built a diverse and inclusive workforce that includes all genders, races, and ages, as well as those in the disabled community.

We actively seek candidates from different backgrounds and outside traditional fields and reinforce our commitment to diversity through organizational policies, such as mandating fairness and equality for all employees and creating performance appraisal systems that are non-discriminatory.

In 2019, we launched the Women’s Initiative Network, or WIN, an employee-led

network designed to provide opportunities and support from all genders for women at WisdomTree;

career development and professional training opportunities;

and female empowerment and leadership within the organization.

Since inception, WIN has held several successful global events including a panel discussion on women in the workforce featuring notable guest speakers;

an interactive seminar on negotiation skills;

workshops and coaching sessions to enhance confidence to speak up;

and various roundtable forums, informal coffee catch-ups

and virtual happy hours to promote connectivity while working remotely.

We pride ourselves on the ethnic diversity of our employee base globally and seek to continuously strengthen our commitment to diversity, equity and inclusion, or DEI.

In 2020 we partnered with a third-party consulting firm to assist us in developing a DEI strategic plan.

The objectives of this plan include driving clarity and accountability around our commitment to fostering an inclusive culture where employees feel empowered to do their best work;

building trust across differences to ensure employees feel a sense of community and belonging;

providing clear paths for growth and development opportunities;

and encouraging diverse voices and perspectives.

In addition, we are in the process of establishing a global DEI council of senior leaders and employees to provide oversight and guidance as we implement programs contemplated by our strategic plan to increase diversity and promote inclusion.

Employee Wellness, Health and Safety

The wellbeing of our employees is a primary focus.

In response to the COVID-19

pandemic, we established a committee that led a coordinated strategy and acted quickly, implementing significant changes across the organization to protect our people.

Our entire global workforce transitioned seamlessly and has been working remotely and successfully throughout the COVID-19

We provided frequent communications to keep our employees informed about health, safety and remote working logistics and introduced expanded health, wellness and other benefits.

For example, we support employees with their information technology needs, provide a monthly stipend to cover remote work-related business expenses and provide guidance for managers to ensure that employees remain connected and maintain physical, mental and emotional wellbeing.

We also offer numerous wellness programs including meditation and yoga classes, health webinars, a weekly wellness newsletter and access to mental health professionals and other resources.

We also transitioned to flexible paid time-off

and sick leave policies to provide employees additional flexibility.

As the virtual work environment has led to efficiencies, increased transparency and further collaboration throughout our business, we have adopted a “remote first” philosophy with plans to significantly reduce our office footprints in New York and London.

This means that when we are able to safely meet in person, time in the office will no longer be prescribed, and individuals and teams will be empowered to determine how they work best, based on their role, while remaining accountable for achieving individual and team outcomes.

This decision was made after soliciting feedback from our employees, a significant number of which were highly supportive of these plans.

Compliance, Training and Development

We comply with all applicable government laws, rules and regulations and it is the responsibility of each employee to adhere to the standards and restrictions imposed by those laws, rules and regulations.

Our employees are required to attend firmwide annual compliance training and to complete compliance certifications annually and in some instances, quarterly.

As we believe that our employees are our greatest asset, we recognize the importance of investing in their continued development.

We provide a variety of opportunities for our employees to build new skills and further their career development.

These include job-specific

training courses, virtual executive lunches and webinars hosted by various departments to gain a holistic view of the company.

We also support employees continuing education, including through our educational reimbursement program.

In addition, we invest in our current and future leaders through leadership development courses and coaching.

We also hold monthly town halls to inform our employees of business developments and job openings for those seeking career development opportunities.

Employee Engagement

We believe engaging our employees is key to fostering new ideas and driving commitment and productivity.

We communicate frequently and transparently with our employees through a variety of communication methods, including monthly town halls, firmwide weekly emails championing the team’s work and global virtual lunches with firm leaders.

We also seek feedback from our employees through annual engagement surveys and follow-up

pulse surveys on various topics.

We also believe it is important to celebrate employee and company accomplishments.

In November 2020, we launched our first annual “Team Alpha” Awards to celebrate significant events and successes and to recognize employees who led those successes while exhibiting extraordinary teamwork and demonstrating strong character.

Over 90 nominations were submitted and narrowed down by a selection committee.

The winners received a modest incentive compensation award, the opportunity to donate to a charity of their choice and to recognize other employees who assisted them.

The success of our employee engagement efforts is demonstrated by our employee retention rate of 92% in 2020.

We also achieved overall positive results from our 2020 global employee engagement survey, with a 100% participation rate.

Additionally, in the U.S., we were named a 2020 Best Places to Work in Money Management by Pension

& Investments

, earning the recognition in the category for managers with 100-499

employees, as well as a 2020 Great Place to Work certification in the U.K.

Compensation and Benefits

We are committed to rewarding and supporting our employees in order to continue to attract, retain top talent.

Our incentive compensation program has been designed to reward our employees for their individual performance as well as the Company’s performance and includes various quantitative metrics and qualitative results that incentivize growth.

We believe a key factor in our success has been and continues to be fostering an entrepreneurial culture where our employees act and think like our owners.

As such, we believe that equity awards are an important part of our employees’ overall compensation package and that incentivizing our employees with equity aligns the interests of our employees with our stockholders.

We also offer a wide array of benefits including generous healthcare coverage, paid vacation, parental, sabbatical and sick leave, life insurance, short- and long-term disability benefits and a 401(k) plan with a matching contribution of up to 50% of eligible employee contributions.

Our Product Categories

Commodity & Currency

The ETFS Acquisition provided us with an industry leading position in European listed gold and commodity products.

The platform also offers products with exposure to other precious metals and commodities such as silver and platinum, oil and energy, agriculture and broad basket commodities.

This category also includes our recently launched cryptocurrency product, the WisdomTree Bitcoin ETP.

We have an industry leading position in European listed gold and commodity products and also offer products with exposure to other precious metals and commodities such as silver and platinum, oil and energy, agriculture and broad basket commodities.

This category also includes our cryptocurrency product, the WisdomTree Bitcoin ETP.

Our currency products provide investors with exposure to developed and emerging markets currencies, as well as exposures to foreign currencies relative to the U.S.

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International Developed Market Equity

Our International Developed Market Equity products offer a variety of strategies including currency hedged and dynamic currency hedged products, exposures to large, mid and small cap companies in these markets and multifactor strategies.

Our International Developed Market Equity products offer a variety of strategies including currency hedged and dynamic currency hedged products, exposures to large, mid and small-cap

companies in these markets and multifactor strategies.

Included within this family are DXJ and HEDJ.

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Total AUM of our Alternative products was $0.2 billion at December 31, 2020.

Sales, Marketing and Research

We distribute our ETFs through all major channels within the asset management industry, including brokerage firms, registered investment advisers and institutional investors.

Our Sales, Marketing and Research Efforts

Our primary sales efforts are not directed towards the retail segment but rather are directed towards the financial or investment adviser who acts as the intermediary between the end-client

We do not pay commissions, nor do we offer 12b-1

fees to financial advisors to use or recommend the use of our ETFs.

We have developed an extensive network and relationships with financial advisors and we believe our ETFs and related research are well structured to meet their needs and those of their clients.

We have taken steps to enhance and form new relationships through our Advisor Solutions program which focuses on providing technology-enabled solutions to help financial advisors grow and scale their businesses.

fees to financial advisors to use or recommend the use of our products.

We have developed an extensive network and relationships with financial advisors and we believe our products and related research are well structured to meet their needs and those of their clients.

We have taken steps to enhance and form new relationships through our Advisor Solutions program which focuses on providing technology-enabled and research-driven solutions to help financial advisors grow and scale their businesses.

In addition, senior advisors of ours participate as keynote speakers in various industry and WisdomTree hosted conferences and events.

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sales force to enhance our interactions with financial advisors to further penetrate existing sales channels, and to better service new emerging distribution channels.

In addition, we have agreements with third parties to serve as the external marketing agents for the WisdomTree ETFs in Latin America, Israel and specific Asian countries, including Japan, as well as with select brokerage firms and independent broker-dealers to allow certain of our ETFs to trade commission free on their platforms in exchange for a percentage of our advisory fee revenues from certain AUM.

In addition, we have agreements with third parties to serve as the external marketing agents for our products in Latin America and Israel, as well as with select brokerage firms and independent broker-dealers to allow certain of our products to trade commission free on their platforms in exchange for a percentage of our advisory fee revenues from certain AUM.

We believe these arrangements expand our distribution capabilities in a cost-effective manner and we may continue to enter into such arrangements in the future.

Our marketing efforts are focused on three objectives:

Increase our global brand awareness, leverage a robust-data driven digital sales experience to generate new clients and drive inflows to our ETFs and ETF model portfolios and retaining existing clients, with a focus on cross-selling additional WisdomTree ETFs.

Increase our global brand awareness, leverage a robust-data driven digital sales experience to generate new clients and drive inflows to our products and model portfolios and retain existing clients, with a focus on cross-selling additional WisdomTree ETPs.

We pursue these objectives through an omni-channel marketing strategy targeting financial advisors.

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We create highly targeted multi-media advertising campaigns limited to established core financial media.

For example, our television advertising runs exclusively on the cable networks CNBC, Fox Business and Bloomberg Television;

online advertising runs on investing or ETF-specific

web sites, such as www.seekingalpha.com and www.etfdatabase.com using targeted dynamic and personalized ad messaging.

For example, our television advertising runs exclusively on the cable networks CNBC and Fox Business.

Also, our online advertising runs on investing or ETF-specific

web sites, such as www.seekingalpha.com

and www.etfdatabase.com

using targeted dynamic and personalized ad messaging.

We recently introduced Connected TV (CTV) advertising that leverages the same targeted segments of users who use CTV devices.

Media relations.

We have a full-time global corporate communications and public relations team who has established relationships with major financial media outlets.

We utilize these relationships to help increase global awareness of the WisdomTree ETFs and the ETF industry in general in the United States and Europe.

We utilize these relationships to help increase global awareness of the WisdomTree ETPs and the ETP industry in general in the United States and Europe.

Several members of our management team and multiple members of our research team are frequent market commentators and conference panelists.

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We have a database of financial advisors to which we regularly market through a series of messages across channels (email, display, site) that are triggered based on user interest and predictive analytics, on-demand

research presentations, ETF-specific

research presentations, ETP-specific

or educational events and presentations and market commentary from our senior investment strategy adviser, Professor Jeremy Siegel.

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We have implemented a social media strategy that allows us to connect directly with financial advisors and investors by offering timely access to our research material and more general market commentary.

Our social media strategy allows us to continually enhance our brand reputation of expertise and thought leadership in the ETF industry.

Our social media strategy allows us to continually enhance our brand reputation of expertise and thought leadership in the ETP industry.

For example, we have an established presence on LinkedIn, Twitter and YouTube, and our blog content is syndicated across multiple business-oriented websites.

Sales support

We create comprehensive materials to support our sales process including whitepapers, research reports, webinars, blogs, podcasts, videos and performance data for our ETFs.

We will continue to evolve our marketing and communication efforts in response to changes in the ETF industry, market conditions and marketing trends.

Our research team has three core functions:

product development and oversight, investment research and sales support.

We create comprehensive materials to support our sales process including whitepapers, research reports, webinars, blogs, podcasts, videos and performance data for our products.

We will continue to evolve our marketing and communication efforts in response to changes in the ETP industry, market conditions and marketing trends.

Our research team has four core functions:

product development and oversight, investment research, model portfolio management and sales support.

In its index and active equity product development and oversight role, the research group is responsible for creating the investment methodologies and overseeing the maintenance of indexes and active strategies.

The team also provides a variety of investment research around these indexes and markets.

Our research is typically academic-type research to support our products, including white papers on the strategies underlying our indexes and ETFs, investment insights on current market trends, and types of investment strategies that drive long-term performance.

We distribute our research through our sales professionals, online through our website and blog, targeted emails to financial advisors, or through financial media outlets.

On some occasions, our research has been included in “op-ed”

articles appearing various publications.

Shorter research notes are also developed to promote our ideas, which are distributed online through social media channels.

The team also provides a variety of investment research around these indexes and markets and manages a series of model portfolios that incorporate WisdomTree and third party products for various investment platforms.

Our research is typically academic-type research to support our products, including white papers on the strategies underlying our indexes and ETPs, investment insights on current market trends, and types of investment strategies that drive long-term performance.

We distribute our research through our sales professionals, online through our website and blog, targeted emails to financial advisors, or through financial media or social media outlets.

Finally, the research team supports our sales professionals in meetings as market experts and through custom analysis on client portfolio holdings.

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We are focused on driving continued growth through innovative product development including through our Modern Alpha approach which combines the outperformance potential of active management with the benefits of passive management to offer investors cost-effective products that are built to perform.

Due to our proprietary index development capabilities and a strategic focus on product development, we have demonstrated an ability to launch innovative and differentiated ETFs.

Due to our proprietary index development capabilities and a strategic focus on product development, we have demonstrated an ability to launch innovative and differentiated ETPs.

When developing new funds, we seek to introduce products that can be first to market, offer improvement in structure or strategy relative to an incumbent product or offer some other key distinction relative to an incumbent product.

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Factors affecting our business include fees for our products, investment performance, brand recognition, business reputation, quality of service and the continuity of our financial advisor and platform relationships.

We compete directly with other ETF sponsors and mutual fund companies and indirectly against other investment management firms, insurance companies, banks, brokerage firms and other financial institutions.

The vast majority of the firms we compete with are subsidiaries of large diversified financial companies and many others are much larger in terms of AUM, years in operations and revenues and, accordingly, have much larger sales organizations and budgets.

We compete directly with other ETP sponsors and mutual fund companies and indirectly against other investment management firms, insurance companies, banks, brokerage firms and other financial institutions.

Many of the firms we compete with are subsidiaries of large diversified financial companies and many others are much larger in terms of AUM, years in operations and revenues and, accordingly, have much larger sales organizations and budgets.

In addition, these larger competitors may attract business through means that are not available to us, including retail bank offices, investment banking, insurance agencies and broker-dealers.

The ETF industry is becoming significantly more competitive.

Existing players have broadened their suite of products offering strategies that are, in some cases, similar to ours and large traditional asset managers are also launching ETFs, some with similar strategies as well.

Price competition exists in not only commoditized product categories such as traditional, market capitalization weighted index exposures, but also in fundamental or other non-market

capitalization weighted or factor-based exposures.

Fee reduction by certain of our competitors has been a trend over the last few years and continues to persist and many of our competitors are well positioned to benefit from this trend.

Certain larger competitors are able to offer products at lower price points or otherwise as loss leaders due to other revenue sources available within such competitor that are available to us.

Funds are being offered with fees of 20 bps or less, which have attracted approximately 76% of the net flows globally during the last three years.

The ETP industry is becoming significantly more competitive.

Existing players have broadened their suite of products offering strategies that are, in some cases, similar to ours and large traditional asset managers are also launching ETPs, some with similar strategies as well.

Price competition exists in not only commoditized product categories such as traditional, market capitalization weighted index exposures and commodities, but also in non-market

capitalization weighted or factor-based exposures and commodities.

Fee reductions by certain of our competitors has been a trend over the last few years and continues to persist and many of our competitors are well positioned to benefit from this trend.

Certain larger competitors are able to offer products at lower price points or otherwise as loss leaders due to other revenue sources available within such competitors that are currently unavailable to us.

Newer players have also been entering the ETP industry and frequently seek to differentiate by offering ETPs at a lower price point.

Funds are being offered with fees of 20 basis points or less, which have attracted approximately 84% of the net flows globally during the last three years.

However, while these low-cost

ETFs have accumulated a significant amount of AUM recently, we estimate that these same funds represent only approximately 32% of global revenues.

In the ETF industry, being a first mover, or one of the first providers of ETFs in a particular asset class, can be a significant advantage, as the first ETF in a category to attract scale in AUM and trading liquidity is generally viewed as the most attractive ETF.

We believe that our early launch of ETFs in a number of asset classes or strategies, including fundamental weighting and currency hedging along with gold and commodities and certain fixed income categories, positions us well to maintain our position as one of the leaders of the ETF industry.

Additionally, we believe our affiliated indexing or “self-indexing” model, as well as our more recent active ETFs, enable us to launch proprietary products that do not have exact competition and are positioned to generate alpha versus benchmarks.

As investors increasingly become more comfortable with the ETF structure, we believe there will be a greater focus on after-fee

performance, rather than using ETFs primarily as low-cost

products have accumulated a significant amount of AUM recently, we estimate that these same funds represent only approximately 30% of global revenues.

Being a first mover, or one of the first providers of ETPs in a particular asset class, can be a significant advantage, as the first ETP in a category to attract scale in AUM and trading liquidity is generally viewed as the most attractive product.

We believe that our early launch of products in a number of asset classes or strategies, including fundamental weighting and currency hedging, along with commodities including gold, and certain fixed income, alternative and thematic categories, positions us well to maintain our standing as one of the leaders of the ETP industry.

Additionally, we believe our affiliated indexing or “self-indexing” model, as well as our more recent active ETFs, enable us to launch proprietary products that do not have direct competition and are positioned to generate alpha

versus benchmarks.

As investors increasingly become more comfortable with the product structure, we believe there will be a greater focus on after-fee

performance, rather than using ETPs primarily as low-cost

market access vehicles.

While we have selectively lowered fee rates on certain products that have yet to attain scale, and there is no assurance that we will not lower fee rates on certain ETFs in the future, our strategy continues to include launching new funds in the same category with a differentiated exposure at a lower fee rate, rather than reducing fees on existing ETFs with a significant amount of AUM, long performance track records, and secondary market liquidity.

While we have selectively lowered fee rates on certain products that have yet to attain scale, and there is no assurance that we will not lower fee rates on certain products in the future, our strategy continues to include launching new funds in the same category with a differentiated exposure at a lower fee rate, rather than reducing fees on existing products with a significant amount of AUM, long performance track records, and secondary market liquidity, which continue to remain competitively priced for the value provided, among other factors.

We generally believe we are well positioned from a product pricing perspective.

While we are not immune to fee pressure, we believe our ability to successfully compete will depend largely on our competitive product offerings and our ability to offer exposure to compelling investment strategies with strong after-fee

While we are not immune to fee pressure and have selectively lowered prices on a limited number of products and launched recent products at lower fees, we believe our ability to successfully compete will depend largely on our competitive product offerings and our ability to offer exposure to compelling investment strategies with strong after-fee

performance, develop distribution relationships, create new investment products, build trading volume, AUM and outperforming track records in existing funds, offer a diverse platform of investment choices, promote thought leadership and a differentiated solutions program, build upon our brand and attract and retain talented sales professionals and other employees.

Regulatory Framework of the ETF Industry

Not all ETPs are ETFs.

ETFs are a distinct type of security with features that are different than other ETPs.

ETFs are open-end

investment companies or unit investment trusts regulated in the U.S.

by the Investment Company Act of 1940, or the Investment Company Act.

This regulatory structure is designed to provide investor protection within a pooled investment product.

For example, the Investment Company Act requires that at least 40% of the Trustees for each ETF must not be affiliated persons of the fund’s investment manager, or Independent Trustees.

If the ETF seeks to rely on certain rules under the Investment Company Act, a majority of the Trustees for that ETF must be Independent Trustees.

ETFs generally operate under regulations that allow them to operate within the ETF structure, while ETFs also operate under regulations that prohibit affiliated transactions, are subject to standard pricing and valuation rules and have mandated compliance programs.

ETPs can take a number of forms in addition to ETFs, including exchange-traded notes, grantor trusts or limited partnerships.

market, a key factor differentiating ETFs, grantor trusts and limited partnerships from exchange-traded notes is that the former hold assets underlying the ETP.

Exchange traded notes, on the other hand, are debt instruments issued by the exchange-traded note sponsor.

Also, each of these structures has implications for taxes, liquidity, tracking error and credit risk.

The investment management industry is subject to extensive regulation and virtually all aspects of our business are subject to various federal and state laws and regulations.

These laws and regulations are primarily

intended to protect investment advisory clients and shareholders of registered investment companies.

These laws and regulations are primarily intended to protect investment advisory clients and shareholders of registered investment companies.

These laws generally grant supervisory agencies broad administrative powers, including the power to limit or restrict the conduct of our business and to impose sanctions for failure to comply with these laws and regulations.

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WisdomTree Asset Management, Inc., or WTAM, one of our subsidiaries, is registered as an investment adviser under the Investment Advisers Act and, as such, is regulated by the SEC.

The Investment Advisers Act requires registered investment advisers to comply with numerous and broad obligations, including, among others, recordkeeping requirements, operational procedures, registration and reporting and disclosure obligations.

The Investment Advisers Act requires registered investment advisers to comply with numerous and broad obligations, including, among others, recordkeeping requirements, operational procedures, and registration, reporting and disclosure obligations.

The Investment Company Act of 1940 (ICA)

Nearly all of our WisdomTree ETFs are registered with the SEC pursuant to the Investment Company Act.

These WisdomTree ETFs must comply with the requirements of the Investment Company Act and other regulations related to publicly offering and listing shares, as well as conditions imposed in the exemptive orders received by the ETFs, including, among others, requirements relating to operations, fees charged, sales, accounting, recordkeeping, disclosure and governance.

In addition, the SEC has proposed, and is expected to continue to propose, new and/or revised provisions under the ICA that may impact current and future ETF investments and/or operations.

All of our WisdomTree U.S.

listed ETFs are registered with the SEC pursuant to the Investment Company Act.

These products must comply with the requirements of the Investment Company Act and other regulations related to publicly offering and listing shares, as well as requirements of Rule 6c-11,

or the ETF Rule, including, among others, requirements relating to operations, fees charged, sales, accounting, recordkeeping, disclosure, transparency and governance.

In addition, the SEC has recently finalized new rules and/or rule amendments related to valuation, fund of fund investing, derivatives and marketing/advertising, which will be implemented in 2021-2022, and the SEC is expected to continue to propose, new and/or revised provisions under the ICA that will impact current and future ETF operations and/or investments.

Broker-Dealer Regulations

Although we are not registered with the SEC as a broker-dealer under the Securities Exchange Act of 1934, as amended, or Exchange Act, nor are we a member firm of the Financial Industry Regulatory Authority, or FINRA, many of our employees, including all of our salespersons, are licensed with FINRA and are registered as associated persons of the distributor of the WisdomTree ETFs and, as such, are subject to the regulations of FINRA that relate to licensing, continuing education requirements and sales practices.

listed ETFs and, as such, are subject to the regulations of FINRA that relate to licensing, continuing education requirements and sales practices.

FINRA also regulates the content of our marketing and sales material.

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Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA)

In 2012, the CFTC adopted regulations that have required us to become a member of the NFA and register as a commodity pool operator for a select number of our ETFs.

In addition, in January 2016, we acquired the ownership interest in two commodity pool operators (one of which has since been dissolved) to ETFs that are not registered under the ICA and are thereby subject to additional requirements imposed by the CFTC and NFA.

Each commodity pool operator is required to comply with numerous CFTC and NFA requirements.

Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

This comprehensive overhaul of the financial services regulatory environment requires the implementation of numerous rules, which, as they continue to be adopted and/or modified, may impose additional regulatory burdens and expenses on our business, and may negatively impact WisdomTree ETFs.

Employee Retirement Income Security Act of 1974 (ERISA)

We have established a platform for offering collective investment funds under the WisdomTree Collective Investment Trust, or CIT, to target the retirement sector.

The CIT is exempt from registration with the SEC as a bank-maintained collective investment fund established for employee benefit trusts.

As investment adviser to the CIT,

WTAM is subject to the fiduciary responsibility standards and prohibited transaction restrictions of ERISA and is required to comply with certain requirements under ERISA to satisfy those standards and avoid liability.

SEC Rule 6c-11 (ETF Rule)

In September 2019, the SEC approved Rule 6c-11,

commonly referred to as the “ETF Rule,” which became effective in December 2019 and ETF issuers have one year to implement.

The ETF Rule is designed to simplify the rules governing ETFs.

The rule includes several items that level the playing field for ETF issuers, including removing the need to file for exemptive relief in order to issue ETFs, which historically has been a costly and time consuming process, removing the regulatory distinction between actively managed and index-based ETFs (including removing specific requirements associated with self-indexed ETFs) and making custom baskets available to all issuers subject to policy and procedure requirements.

The rule also requires issuers to disclose a number of items in a standardized format on a daily basis, including portfolio holdings and median bid-ask

spread over the prior 30-day

Regulations adopted by the CFTC have required us to become a member of the NFA and register as a commodity pool operator for a select number of our ETFs.

Exchange Listing Requirements

Each WisdomTree ETF is listed on a secondary market (each, an Exchange), including NYSE Arca, the NASDAQ Market and the BATS Exchange, and accordingly is subject to the listing requirements of these Exchanges.

Any new WisdomTree ETF will seek listing on an Exchange and also will need to meet continued Exchange listing requirements.

While the SEC has already approved rules for Exchanges to allow index-based ETFs and active ETFs to list that meet prescribed requirements (e.g., minimum number, market value and trading volume of securities in the new ETF’s benchmark index or in its portfolio, as applicable), these rules do not allow ETFs that do not meet the prescribed requirements without specific SEC approval.

The SEC may ultimately determine not to allow such potential new WisdomTree ETFs or may require strategy modifications prior to approval.

In November 2019, each of the Exchanges filed rule changes with the SEC to more closely align initial and continued listing requirements with the ETF Rule, which we view as a positive development, although it is unclear when or if such rule changes will be approved by the SEC.

Each WisdomTree U.S.

listed ETF is listed on a secondary market (each, an Exchange), including NYSE Arca, the NASDAQ Market and the CBOE Exchange, and accordingly is subject to the listing requirements of these Exchanges.

Any new WisdomTree U.S.

listed ETF will seek listing on an Exchange and also will need to meet continued Exchange listing requirements, which generally align with requirements of the ETF Rule.

However, the SEC or an Exchange may ultimately determine not to allow the issuance of potential new WisdomTree U.S.

listed ETFs or may require strategy modifications as part of the registration and/or listing process.

In addition, our common stock is traded on the NASDAQ Global Select Market and we are therefore also subject to its rules including corporate governance listing standards, as well as federal and state securities laws.

FINRA rules and guidance may affect how WisdomTree ETFs are sold by member firms.

FINRA rules and guidance may affect how WisdomTree U.S.

listed ETFs are sold by member firms.

Although we currently do not offer so-called

leveraged ETFs in the U.S., which may include within their holdings derivative instruments such as options, futures or swaps to obtain leveraged exposures, recent FINRA guidance on margin requirements and suitability determinations with respect to customers trading in leveraged ETFs may influence how member firms effect sales of certain WisdomTree ETFs, such as our currency ETFs, which also use some forms of derivatives, including forward currency contracts and swaps, our international hedged equity ETFs, which use currency forwards, and our rising rates bond ETFs and alternative strategy ETFs, which use futures or options.

In 2018, FINRA requested comment on potential changes to a rule related to payments to market makers and the potential timing and/or consequences with respect to changes to such rule, if implemented, are unclear.

leveraged ETFs in the U.S., which may include within their holdings derivative instruments such as options, futures or swaps to obtain leveraged exposures, FINRA guidance, the recently issued derivatives rules by the SEC and/or other future rules or regulations may influence how member firms effect sales of certain WisdomTree U.S.

listed ETFs, such as our currency ETFs, or how such ETFs operate, which also use some forms of derivatives, including forward currency contracts and swaps, our international hedged equity ETFs, which use currency forwards, and our rising rates bond ETFs and alternative strategy ETFs, which use futures or options.

International Regulation

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Jersey-Domiciled Issuers (Managed by WisdomTree Management Jersey Limited)

One of our subsidiaries, WisdomTree Management Jersey Limited, or ManJer, is a Jersey based management company providing investment and other management services to eight Jersey-domiciled issuers, or ManJer Issuers, of exchange-traded commodities, or ETCs, each of which was established as a special purpose vehicle to issue exchange-traded securities.

All ETCs (with the exception of those issued by WisdomTree Issuer X Limited) are listed and marketed across the European Union, or EU, under Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 (as amended), or the Prospectus Regulation, and in compliance with the Prospectus Regulation Rules made under sections 73A and 84 of the Financial Services and Markets Act 2000, of the United Kingdom as amended, or FSMA.

Listing Authority, or UKLA, approves all ETC Base Prospectuses as meeting the requirements imposed under U.K.

One of our subsidiaries, WisdomTree Management Jersey Limited, or ManJer, is a Jersey based management company providing investment and other management services to several Jersey-domiciled issuers, or ManJer Issuers, of exchange-traded commodities, or ETCs, each of which was established as a special purpose vehicle to issue exchange-traded securities.

Since January 4, 2021, the Central Bank of Ireland, or CBI, approves all ETC Base Prospectuses as meeting the requirements imposed under U.K.

and EU law pursuant to the Prospectus Regulation.

Such approval relates only to those securities to be admitted to trading on a regulated market for the purpose of Markets in Financial Instruments Directive (recast) – Directive 2014/65/EU of the European Parliament and the Council, or MiFID II, and/or which are to be offered to the public in any European Economic Area, or EEA, Member State.

All ETC prospectuses are also approved by the Financial Conduct Authority, or FCA, as UK Listing Authority, as competent authority pursuant to the UK version of Regulation (EU) No 2017/1129 of the European Parliament and the Council of 14 June 2017 on the form and content of such prospectuses and repealing Directive 2003/71/EC which is part of UK law by virtue of the European Union (Withdrawal) Act 2018, or the UK Prospectus Regulation.

Each prospectus (apart from that of WisdomTree Issuer X Limited) is prepared, and a copy of it is sent to the Jersey Financial Services Commission, or JFSC, in accordance with the Collective Investment Funds (Certified Funds – Prospectuses) (Jersey) Order 2012.

Each ManJer Issuer (other than WisdomTree Issuer X Limited) has obtained a certificate under the Collective Investment Funds (Jersey) Law 1988 (as amended), to enable it to undertake its functions in relation to its ETCs.

The UKLA has, at the request of the relevant ManJer Issuer, notified the approval of the Base Prospectus in accordance with the Prospectus Regulation to other EU listing authorities, including Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Spain, Sweden and the U.K., by providing them with certificates of approval attesting that the Base Prospectus has been prepared in accordance with the Prospectus Regulation.

Each issuer may request the UKLA to provide competent authorities in other EEA Member States with such certificates for the purposes of making a public offer in such Member States and/or for admission to trading of all or any securities on a regulated market.

The WisdomTree Bitcoin securities issued by WisdomTree Issuer X Limited do not constitute a collective investment fund for the purpose of the Collective Investment Funds (Jersey) Law 1988 (as amended) as they are investment products designed for financially sophisticated investors only and they satisfy the requirements of Article 2 of the Collective Investments Funds (Restriction of Scope) (Jersey) Order 2000.

A copy of the WisdomTree Issuer X Limited prospectus is delivered to the Registrar of Companies in Jersey in accordance with Article 5 of the Companies (General Provisions) (Jersey) Order 2002, and the Registrar has consented to its circulation.

The CBI has, at the request of the relevant ManJer Issuer, notified the approval of the Base Prospectus in accordance with the Prospectus Regulation to other EU listing authorities, including Austria, Belgium, Denmark, Finland, France, Germany, Italy, the Netherlands, Norway, Spain and Sweden, by providing them with certificates of approval attesting that the Base Prospectus has been prepared in accordance with the Prospectus Regulation.

Each issuer may request the CBI to provide competent authorities in other EEA Member States with such certificates for the purposes of making a public offer in such Member States and/or for admission to trading of all or any securities on a regulated market.

WisdomTree Issuer X Limited’s program for the issuance of WisdomTree Bitcoin securities does not constitute a collective investment fund for the purpose of the Collective Investment Funds (Jersey) Law 1988 (as amended) as it satisfies the requirements of Article 2 of the Collective Investments Funds (Restriction of Scope) (Jersey) Order 2000.

A copy of the WisdomTree Issuer X Limited prospectus

has been delivered to the Registrar of Companies in Jersey in accordance with Article 5 of the Companies (General Provisions) (Jersey) Order 2002, and the Registrar has consented to its circulation.

The JFSC has consented under Article 4 of the Control of Borrowing (Jersey) Order 1958 to the issue of the WisdomTree Bitcoin securities by WisdomTree Issuer X Limited.

Currently, the prospectus of WisdomTree Issuer X Limited is approved in Switzerland only and WisdomTree Bitcoin securities currently are only listed on the SIX Swiss Exchange.

Pursuant to the UK European Referendum Act 2015, a referendum on the U.K.’s membership in the EU was held on June 23, 2016, with the majority voting to leave the EU.

On March 29, 2017, the U.K.

government exercised its right under Article 50 of the Treaty of the European Union to leave the EU (referred to as “Brexit”).

left the EU on January 31, 2020 with transitional agreements in place until the end of the year.

It is expected that approval of the Base Prospectuses by the UKLA as outlined above will cease to be possible at the end of such transition period.

We are working with an alternate EEA Member State regulator through whom we would seek approval and request passporting at the expiry of the transitional arrangements.

Guidance released by the European Securities and Markets Authority, or ESMA, confirmed that it is not possible to receive a formal approval from an alternate regulator prior to the end of such transition period, but there may be further developments on this ESMA’s position regarding the transitional arrangements means that there may be a short time period, expected to be limited to one day, when the ManJer Issuers may not have EU prospectuses.

If this period is extended for unforeseen reasons beyond one day, there may be an impact to the listing and distribution of our products.

The ManJer Issuers are primarily subject to the following legislation and regulatory requirements:

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The ManJer Issuers (other than WisdomTree Issuer X Limited) are also primarily subject to the following legislation and regulatory requirements:

The Collective Investment Funds (Jersey) Law 1988

Each ManJer Issuer (other than WisdomTree Issuer X Limited) is a collective investment fund and therefore required to comply with the obligations under the Collective Investment Funds (Jersey) Law 1988 and the Code of Practice for Certified Funds.

The Prospectus Regulation

The Base Prospectus of each ManJer Issuer has been drafted, and any offer of ETCs in any EEA Member State that has implemented the Prospectus Regulation is made in compliance with the Prospectus Regulation and any relevant implementing measure in such Member States.

Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories, known as the European Market Infrastructure Regulation (“EMIR”)

Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4

July 2012 on OTC derivatives, central counterparties and trade repositories, known as the European Market Infrastructure Regulation (“EMIR”)

EMIR, which became effective on August 16, 2012, provides for certain over-the-counter,

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financial counterparties (defined as those authorized under MiFID, CRR, AIFMD, UCITS or insurance regulations) or those non-financial

entities that have a rolling three-month notional exposure above a certain amount (between €

3 billion, depending on asset class), which means that the ManJer Issuers are not directly subject to these obligations, but could indirectly be subject to them by virtue of their interaction with EU-based

entities that have a rolling three-month notional exposure above a certain amount (between €1 and €3 billion, depending on asset class), which means that the ManJer Issuers are not directly subject to these obligations, but could indirectly be subject to them by virtue of their interaction with EU-based

financial counterparties.

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Each ManJer Issuer has adhered to the 2013 EMIR Portfolio Reconciliation, Dispute Resolution and Disclosure Protocol published by the International Swaps and Derivatives Association, Inc.

Regulation (EU) No 596/2014 of the European Parliament and of the Council on market abuse (the “Regulation”) and Directive 2014/57/EU of the European Parliament and of the Council on

criminal sanctions for market abuse (the “Directive” and, together with the Regulation, “MAD”)

Regulation (EU) No 596/2014 of the European Parliament and of the Council on market abuse (the “Regulation”) and Directive 2014/57/EU of the European Parliament and of the Council on criminal sanctions for market abuse (the “Directive” and, together with the Regulation, “MAD”)

Obligations imposed on the relevant ManJer Issuer and distributor under MAD, which became effective on July 3, 2016, include the requirement to publish inside information in a public and timely manner, to prepare and maintain a list of insiders and to refrain from market manipulation.

Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (“BMR”)

Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8

June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (“BMR”)

Supervised EU entities which issue financial instruments that reference a benchmark are required to comply with applicable obligations as set out under the BMR.

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entities and as a result, BMR application is very limited, although in some circumstances a few residual obligations could be deemed to be applicable because the ETCs are marketed across Europe.

Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26 November 2014 on key information documents for packaged retail and insurance-based investment products (“PRIIPS”)

Regulation (EU) No 1286/2014 of the European Parliament and of the Council of 26

November 2014 on key information documents for packaged retail and insurance-based investment products (“PRIIPS”)

PRIIPs became effective on January 1, 2018 and applies to investment product manufacturers and distributors.

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MIFID II covers a wide range of areas that affect the relevant issuer and distributor, such as product governance, a new definition of complex products (which captures all physical and synthetic ETCs) and the production of a new document called an EMT to facilitate the dissemination of relevant information to the markets and distributors in relation to each financial product.

Regulation (EU) 2015/2365 of the European Parliament and of the Council of 25 November 2015 on transparency of securities financing transactions and of reuse and amending Regulation (EU) No 648/2012.

Regulation (EU) 2015/2365 of the European Parliament and of the Council of 25

November 2015 on transparency of securities financing transactions and of reuse and amending Regulation (EU) No 648/2012.

Counterparties to securities financing transactions must report the transaction to trade repositories.

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jurisdictions, obligations are only indirectly applicable to them, but a certain level of interaction with EU counterparties is required to comply with some of these requirements.

WisdomTree Issuer X Limited is also primarily subject to the following legislation and regulatory requirements:

The Control of Borrowing (Jersey) Order 1958

WisdomTree Issuer X Limited is required to comply with the obligations under the Control of Borrowing (Jersey) Order 1958 in respect of its issue of the WisdomTree Bitcoin securities.

The Companies (General Provisions) (Jersey) Order 2002

WisdomTree Issuer X Limited is required to comply with the obligations under the Companies (General Provisions) (Jersey) Order 2002 in respect of its circulation of the WisdomTree Bitcoin securities prospectus.

Irish-Domiciled Issuer of our UCITS ETFs (Managed by WisdomTree Management Limited)

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ETFs form part of the Irish and European regulatory frameworks that govern UCITS, with ETFs having been the subject of specific consideration at the European level which is then repeated and/or interpreted by the Central Bank in regulations and related guidance issued by the Central Bank.

One of our subsidiaries, WisdomTree Management Limited, is an Ireland based management company authorized in Ireland providing collective portfolio management services to WisdomTree Issuer PLC, or WTI, and WisdomTree UCITS ETFs.

The WisdomTree UCITS ETFs are issued by WTI.

WTI, a non-consolidated

third party, is a public limited company organized in Ireland and is authorized as a UCITS by the Central Bank.

third party, is an Irish-collective-asset-management vehicle, or ICAV, organized in Ireland and is authorized as a UCITS by the Central Bank.

All UCITS have their basis in EU legislation and once authorized in one EEA Member State, may be marketed throughout the EU, without further authorization.

This is described as an EU passport.

Post Brexit, the WisdomTree UCITS ETFs are expected to continue to be available to U.K.

investors under the U.K.

Financial Conduct Authority, or FCA, Temporary Permissions Regime.

WTI is established and operated as a public limited company with segregated liability between its sub-funds.

The WisdomTree UCITS ETFs have been registered with the FCA under the Temporary Permissions Regime and thus continue to be available to U.K.

WTI is established and operated as an ICAV with segregated liability between its sub-funds.

The sub-funds

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Each sub-fund

has a separate approval from the Central Bank, and each is authorized as an ETF.

has a separate approval from the Central Bank, and each is structured as an ETF.

Each sub-fund

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The Central Bank also has produced guidance that provides direction on issues relating to the funds industry, certain of which set forth conditions not contained in the UCITS Regulations or the Central Bank Regulations with which UCITS must conform.

The Companies Acts 2014 (“Companies Act”).

WTI is incorporated as a public limited company under the Companies Act.

Therefore, WTI is required to comply with various obligations under the Companies Act such as, but not limited to, convening general meetings and keeping proper books and records.

The Irish Collective Asset-Management Vehicle Act 2015 (“ICAV Act”).

WTI is registered as an ICAV under the ICAV Act.

Therefore, WTI is required to comply with various obligations under the ICAV Act such as, but not limited to, keeping proper books and records.

The segregation of liability between sub-funds

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administrators of benchmarks are required to satisfy a number of requirements to enable the benchmarks they provide to be used in the EU.

To ensure investor protection, the BMR provides equivalence, recognition and endorsement

conditions under which third country benchmarks may be used by supervised entities in the EU.

To ensure investor protection, the BMR provides equivalence, recognition and endorsement conditions under which third country benchmarks may be used by supervised entities in the EU.

Since we control the provision of benchmarks, we are required to comply with applicable obligations within the timeframes set out under the BMR.

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MAD has a direct effect in Ireland and strengthens the legal framework underpinning the function of detecting, sanctioning and deterring market abuse.

Broadly, MAD applies to any financial

instrument admitted to, or for which a request for admission has been made to, trading on a regulated market in at least one member state of the EU or in an EEA Member State.

Broadly, MAD applies to any financial instrument admitted to, or for which a request for admission has been made to, trading on a regulated market in at least one member state of the EU or in an EEA Member State.

Obligations imposed on WMAI under MAD include the requirement to publish inside information in a public and timely manner, to draw up and maintain a list of insiders and to refrain from market manipulation.

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Patent and Trademark Office issued to us our patent on Financial Instrument Selection and Weighting System and Method, which is embodied in our dividend weighted equity indexes.

We also have one patent application pending with the U.S.

Patent and Trademark office that relates to the operation of our ETFs and our index methodology.

There is no assurance that a patent will be issued from this application and we currently do not rely upon our recently issued or future patents for a competitive advantage.

As of December 31, 2019, we had 208 full-time employees, of which 137 were in our U.S.

Business segment and 71 were in our International Business segment.

None of our employees are covered by a collective bargaining agreement and we consider our relations with employees to be good.

We currently do not rely upon our patent for a competitive advantage.

Available Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business