WisdomTree U.S. SmallCap Quality Dividend Growth Fund (DGRS US) – Portfolio Construction Methodology

The underlying WisdomTree U.S. SmallCap Quality Dividend Growth Index targets dividend-paying U.S. small caps selected from the WisdomTree U.S. Dividend Index after removing the 300 largest companies; it then focuses on the bottom-capitalization segment using buffers so names typically migrate only when size ranks move materially. Eligibility requires positive trailing earnings, a regular cash dividend, market cap ≥USD 100m and minimum liquidity (≥USD 100k ADTV). Securities are scored on a composite of ROE (50%), ROA (25%) and long-term earnings growth expectations (25%); projected earnings yield must exceed dividend yield to avoid distressed payers. Constituents are dividend-weighted by indicated cash dividends with a 2% single-name cap; sector weights reflect constituent totals subject to diversification constraints. Reconstitution occurs annually in December (screened earlier in the fall) with buffer rules to limit turnover; rebalances align to the reconstitution.

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