Schwab Launches New U.S. Dividend Equity Exchange-Traded Fund

Thursday, October 20, 2011 6:30 am PDT

Dateline:

SAN FRANCISCO

Public Company Information:

NYSE:
SCHW
"We’ve worked hard to construct a fund that offers investors the potential for both current income and capital appreciation in one low-cost ETF, and we’re pleased with the outcome"

SAN FRANCISCO--(BUSINESS WIRE)--Charles Schwab, a retail marketplace leader for exchange-traded funds (ETFs), announced today that the Schwab U.S. Dividend Equity ETF™ (SCHD) has begun trading. The new Schwab U.S. Dividend Equity ETF offers investors the potential for current income as well as capital appreciation through exposure to companies with a record of paying consistent dividends and strong relative fundamental strength.

Unlike other dividend equity funds, which typically have either an income or a capital appreciation objective, the Schwab U.S. Dividend Equity ETF takes a blended approach that seeks to track financially strong companies, relative to their peers, that have a history of paying dividends. The Schwab U.S. Dividend Equity ETF seeks investment results that track the total return of the Dow Jones U.S. Dividend 100 IndexSM as closely as possible before fees and expenses. The fund’s 0.17 percent operating expense ratio is the lowest among ETFs and mutual funds in the Lipper Equity Income category1. Like Schwab’s other 14 proprietary ETFs, it can be bought and sold commission-free** online in Schwab accounts.

“We’ve worked hard to construct a fund that offers investors the potential for both current income and capital appreciation in one low-cost ETF, and we’re pleased with the outcome,” said John Sturiale, vice president of product management at Schwab. “With an expense ratio of just 17 basis points, this newest ETF can diversify a portfolio’s income stream at an incredibly impressive value.”

The Dow Jones U.S. Dividend 100 Index is designed to measure the performance of high dividend yielding stocks issued by U.S. companies that have a record of consistently paying dividends and are selected for fundamental strength relative to their peers, based on select financial ratios. The 100-component index is a subset of the Dow Jones U.S. Broad Market IndexSM, excluding REITs, master limited partnerships, preferred stocks and convertibles. All index eligible stocks must have sustained at least 10 consecutive years of dividend payments, have a minimum float-adjusted market capitalization of $500 million and meet minimum liquidity criteria. The highest dividend yielding stocks from the universe of index-eligible stocks are generally included in the index, subject to further qualitative evaluation. There can be no assurance that stocks in the index will pay a dividend. If stocks held by the fund reduce or stop paying dividends, the fund’s ability to generate income may be affected. The index is modified market capitalization weighted.

Schwab is also refining two of its low-cost indexed mutual funds by aligning them with even more recognizable benchmarks. Starting on December 14, 2011, the $1.6 billion Schwab Small-Cap Index Fund® (SWSSX) will begin following the Russell 2000® Index. Effective November 1, 2011, the fund’s operating expense ratio will drop from 19 basis points to 17 basis points. On December 20, 2011, the $1.5 billion Schwab International Index Fund® (SWISX) will begin tracking the MSCI EAFE Index as its benchmark.

Charles Schwab continues to be a leader in the retail ETF marketplace, with $109 billion in ETF assets custodied on its platform, including $4.1 billion in Schwab ETFs, as of September 30, 2011. In addition to its suite of 15 proprietary ETFs, Schwab offers a host of resources to help clients choose ETFs, including the Schwab ETF Select List™; tutorials, research and tools available online; and events at local Schwab branches.

About Charles Schwab Investment Management

Founded in 1989, Charles Schwab Investment Management, Inc., a subsidiary of The Charles Schwab Corporation, is one of the nation's largest asset management companies with more than $193 billion in assets under management as of September 30, 2011. It is among the country's largest money market fund managers and is the third-largest provider of retail index funds2. In addition to managing Schwab proprietary funds, CSIM provides oversight for the institutional-style, sub-advised Laudus Fund family. CSIM currently manages 71 mutual funds, 25 of which are actively-managed funds, in addition to four separate account model portfolios, and 15 ETF offerings3.

About Charles Schwab

The Charles Schwab Corporation (NYSE: SCHW) is a leading provider of financial services, with more than 300 offices and 8.5 million active brokerage accounts, 1.46 million corporate retirement plan participants, 769,000 banking accounts, and $1.58 trillion in client assets. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and mortgage services and products. More information is available at www.schwab.com and www.aboutschwab.com. (1011-6791)

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**Restrictions Apply: Online trades of Schwab ETFs™ are commission-free at Schwab, while trades of third-party ETFs are subject to commissions. Broker-Assisted and Automated Phone trades are subject to service charges. Minimum $1,000 deposit is required to open most Schwab brokerage accounts. Waivers may apply. See the Charles Schwab Pricing Guide for details. All ETFs are subject to management fees and expenses.

Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by calling Schwab at 1-800-435-4000 or by visiting www.schwabetfs.com or www.schwabfunds.com. Please read the prospectus carefully before investing.

Investment returns will fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost. Unlike mutual funds, shares of ETFs are not individually redeemable directly with the ETF. Diversification does not eliminate the risk of market loss.

1This claim is based on expense ratio data for non-Schwab ETFs obtained from the funds' most recent prospectuses as of 9/30/11 per Strategic Insight in the Lipper Equity Income category. ETFs in the same asset class may track different indexes, have differences in holdings, and show different performances. Expense ratios are subject to change.

2As of 9/30/2011, Strategic Insight

3As of 10/20/2011, CSIM

Indexes are unmanaged, do not incur management fees, costs and expenses (or "transaction fees or other related expenses"), and cannot be invested in directly.

The Schwab International Index® includes common stocks of the 350 largest publicly traded companies from select countries outside the United States that have developed securities markets.

The Schwab Small-Cap Index® consists of the stocks of the second 1,000 largest publicly traded U.S. companies with size being determined by market capitalization (total market values of all shares outstanding).

“Dow Jones” and “The Dow Jones U.S. Dividend 100 IndexSM” are service marks of Dow Jones Trademark Holdings, LLC, (“Dow Jones”), have been licensed to CME Group Index Services LLC (“CME”), and sublicensed for use for certain purposes by CSIM, the fund’s investment adviser. Fees payable under the license are payable by CSIM. The fund is not sponsored, endorsed, sold or promoted by Dow Jones or CME and neither makes any representation regarding the advisability of trading in such fund.

The Russell 2000® Index is an established index that measures the performance of the small-cap segment of the U.S. equity market. The Russell 2000 Index is a subset of the Russell 3000® Index, representing approximately the 2,000 smallest issues and approximately 10% of the total market capitalization of the Russell 3000 Index as of July 31, 2011. “Russell 2000” is a registered mark of the Frank Russell Company (“Russell”) and has been licensed for the use by the Schwab Small-Cap Index Fund. The Schwab Small-Cap Index Fund is not sponsored, endorsed, sold or promoted by Russell and Russell makes no representation regarding the advisability of investing in the fund.

The MSCI EAFE Index is an industry-recognized index composed of MSCI country indices representing developed markets outside of North America—Europe, Australasia, and the Far East. The Schwab International Index Fund referred to herein is not sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to the Schwab International Index Fund or any index on which such Fund is based. The Schwab International Index Fund’s Prospectus and Statement of Additional Information will contain a more detailed description of the limited relationship MSCI has with Charles Schwab Investment Management, Inc. and the Schwab International Index Fund.

Not FDIC Insured • No Bank Guarantee • May Lose Value

Commission-free trades are available through the broker-dealer subsidiary of The Charles Schwab Corporation, Charles Schwab & Co., Inc. (Member SIPC).

Schwab Funds® are Schwab's proprietary funds managed by Charles Schwab Investment Management, Inc. and distributed by Charles Schwab & Co., Inc.

Charles Schwab Investment Management, Inc., is an affiliate of Charles Schwab & Co., Inc.

Schwab ETFs are distributed by SEI Investments Distribution Co. (SIDCO). SIDCO is not affiliated with The Charles Schwab Corporation or any of its affiliates.

© 2011 Charles Schwab & Co., Inc. Member SIPC

Contact:

Charles Schwab
Alyson Nikulicz, 212-403-9240
alyson.nikulicz@schwab.com
or
The Neibart Group
Holly Holt, 718-875-2122
hholt@neibartgroup.com

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