Schwab To Launch U.S. Large-Cap Value ETF Friday Under The Symbol (SCHV)

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December 10, 2009 12:28pm NYSE:SCHV

schwabSchwab will begin trading the Schwab U.S Large-Cap Value ETF tomorrow under the symbol (SCHV). The fund’s goal will be to track as closely as possible, before fees and expenses, the total return of the Dow Jones


 U.S. Large-Cap Value Total Stock Market Index. The fund’s benchmark index includes the large-cap value portion of the Dow Jones U.S. Total Stock Market IndexSMactually available to investors in the marketplace. The Dow Jones U.S. Large-Cap Value Total Stock Market IndexSM includes the components ranked 1-750 by full market capitalization and that are classified as “value” based on a number of factors. The index is a float-adjusted market capitalization weighted index. As of June 30, 2009, the index was composed of 310 stocks.

To pursue its goal, the fund generally invests in stocks that are included in the index. It is the fund’s policy that under normal circumstances it will invest at least 90% of its net assets in these stocks. The fund will notify its shareholders at least 60 days before changing this policy. The fund will generally give the same weight to a given stock as the index does. However, when the Adviser believes it is appropriate to do so, such as to avoid purchasing odd-lots (i.e., purchasing less than the usual number of shares traded for a security), for tax considerations, or to address liquidity considerations with respect to a stock, the Adviser may cause the fund’s weighting of a stock to be more or less than the index’s weighting of the stock. The fund may sell securities that are represented in the index in anticipation of their removal from the index.

Under normal circumstances, the fund may invest up to 10% of its net assets in securities not included in its index. The principal types of these investments include those which the Adviser believes will help the fund track the index, such as investments in (a) securities that are not represented in the index but the Adviser anticipates will be added to the index or as necessary to reflect various corporate actions (such as mergers and spin-offs), (b) other investment companies, and (c) futures contracts, options on futures contracts, options and swaps. The fund may also invest in cash and cash equivalents, and may lend its securities to minimize the difference in performance that naturally exists between an index fund and its corresponding index.

The fund will concentrate its investments (i.e., hold 25% or more of its total assets) in a particular industry, group of industries or sector to approximately the same extent that its index is so concentrated. For purposes of this limitation, securities of the U.S. government (including its agencies and instrumentalities), and repurchase agreements collateralized by U.S. government securities are not considered to be issued by members of any industry.

The Adviser seeks to achieve, over time, a correlation between the fund’s performance and that of its index, before fees and expenses, of 95% or better. However, there can be no guarantee that the fund will achieve a high degree of correlation with the index. A number of factors may affect the fund’s ability to achieve a high correlation with its index, including the degree to which the fund utilizes a sampling technique. The correlation between the performance of the fund and its index may also diverge due to transaction costs, asset valuations, corporate actions (such as mergers and spin-offs), timing variances, and differences between the fund’s portfolio and the index resulting from legal restrictions (such as diversification requirements) that apply to the fund but not to the index.

 Fund fees and expenses

The following table describes what you could expect to pay as a fund investor. “Shareholder fees” are charged to you directly by the fund. “Annual operating expenses” are paid out of fund assets, so their effect is included in the fund’s total return. You may also incur customary brokerage charges when buying or selling fund shares.

Fee table (%) 

 

     
    Shares
Shareholder fees*
  None
 
Annual operating expenses**
     
Management fees
  0.15
Distribution (12b-1) fees***
  0.00
Other expenses****
  None
     
Total annual operating expenses
  0.15

Although Schwab ETFs can be purchased from nearly any broker, free online trading is available to Schwab clients trading Schwab ETFs at Schwab.

For the full prospectus click: HERE

 

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