Introduction
WisdomTree WTI Crude Oil is designed to enable investors to gain an exposure to a total
return investment in crude oil by tracking the Bloomberg Crude Oil Subindex (the
"Index") and providing a collateral yield.
WisdomTree WTI Crude Oil is an exchange traded commodity ("ETC"). Its securities can
be created and redeemed on demand by authorised participants and traded on
exchange just like shares in a company. The ETC is backed by swaps. The payment
obligations of the swap counterparties to the Issuer are protected by collateral held
which is marked to market daily. The collateral is held in segregated accounts at The
Bank of New York Mellon. Details of the collateral held can be found in the Collateral
section of the WisdomTree website (www.wisdomtree.com).
Index Description
The Index is designed to reflect the movement in the price of the WTI crude oil futures
contracts (that are continuously rolled on a pre-determined rolling schedule) used in
the Bloomberg Commodity IndexSM. A futures contract is an agreement to purchase a
commodity at an agreed price, with delivery and payment to take place at a specified
point in the future. Futures contracts are generally disposed of just before the term of
the contract expires and new contracts entered into in order to avoid taking actual
delivery of the commodity in question (a process known as 'rolling'), so that continuous
exposure to the commodity is maintained. The contracts being purchased may be
more expensive than the contracts being sold which would cause an investor in
commodity futures to make an additional loss. This market trend is known as
'contango'. Alternatively the contracts being purchased may be cheaper than the ones
being sold which would result in an additional gain, known as 'backwardation'. This
price difference is commonly referred to as "roll yield". As the roll yield is incorporated
into the calculation of the value of the Index, it may therefore have a positive or
negative impact on the value of the Index depending on whether there is contango or
backwardation. The ETC will also be affected as its value is based upon the value of the
Index.