Schwab Expands with Dividend Focused ETF
October 26, 2011

Charles Schwab (NYSE: SCHW) expanded its exchange-traded fund (ETF) lineup by introducing the Schwab U.S. Dividend Equity ETF (NYSEArca: SCHD).

The new Schwab U.S. Dividend Equity ETF aims to track financially strong companies, relative to their peers, that have a history of paying dividends. The dividend ETF is linked to the Dow Jones U.S. Dividend 100 Index and charges annual expenses of 0.17 percent. 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 a subset of the Dow Jones U.S. Broad Market Index, 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. The index is modified market capitalization weighted.

Schwab also announced changes to the underlying benchmarks for its index mutual funds. Starting on December 14, 2011, the $1.6 billion Schwab Small-Cap Index Fund (Nasdaq: 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 (Nasdaq: SWISX) will begin tracking the MSCI EAFE Index as its benchmark.

At the end of September 2011, Charles Schwab managed $4.1 billion in Schwab ETFs.

Other ETF Happenings: KBW Bank ETF Ticker Changes
SPDR ETFs that were previously linked to KBW Financial Indexes have changed their underlying indexes to S&P Select Industry Indices as of October 24, 2011. The impacted ETFs are the following:

--SPDR S&P Bank ETF (NYSEArca: KBE)
--SPDR S&P Capital Markets ETF (NYSEArca: KCE)
--SPDR S&P Insurance ETF (NYSEArca: KIE)
--SPDR S&P Mortgage Finance ETF (NYSEArca: KME)
--SPDR S&P Regional Banking ETF (NYSEArca: KRE)

Invesco PowerShares will begin tracking KBW Financial Indexes that SPDRs formerly covered. The new and below listed PowerShares ETF ticker symbols linked to KBW Indexes will become effective on November 1, 2011.

--PowerShares KBW Bank Portfolio (NYSEArca: KBWB) is linked to the KBW Bank Index.
--PowerShares KBW Capital Markets Portfolio (NYSEArca: KBWC) is linked to the KBW Capital Markets Index.
--PowerShares KBW Insurance Portfolio (NYSEArca: KBWI) is linked to the KBW Insurance Index.
--PowerShares KBW Regional Banking Portfolio (NYSEArca: KBWR) is linked to the KBW Regional Banking Index.