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Schwab Reduces Online Equity Commissions
Lower-Cost Access to Full Breadth of Schwab Services and Research
SAN FRANCISCO, Feb. 4 /PRNewswire-FirstCall/ -- Charles Schwab & Co., Inc.
today announced a 35 percent reduction of its online equity commission for
domestic retail investors with household assets(1) of between $50,000 and $1
million with Schwab. The new $12.95 trade price(2), reduced from $19.95, is
effective February 8.
"We've said we will be relentless about creating the best value for individual
investors," said Chairman and Chief Executive Officer Charles R. Schwab. "This
change is especially important for the center and heart of the investing
population -- those investors with assets between $50,000 and $1 million. Our
intention is to ensure that price isn't a barrier to the superior research,
tools, service, and advice that are available to them only at Schwab."
The new pricing also applies to clients who trade 9-29 times a quarter (36-119
times a year).
The new pricing increases the affordability of Schwab's extensive offering of
brokerage services and industry-leading research:
-- Equity research -- at-a-glance snapshots and in-depth analyses that
incorporate multiple third-party opinions as well as Schwab's own point
of view (through Schwab Equity Ratings(R))
-- Mutual fund research -- analysis of over 10,000 mutual funds as well as
a quarterly-updated selection of Schwab's view of the leading no-load
no-transaction-fee funds available through Schwab
-- State-of-the-art portfolio monitoring and performance tracking
-- Personalized portfolio advice and in-person access to Schwab financial
consultants
-- 280 branch offices throughout the U.S.
-- Specialized trading consultants and access to StreetSmart Pro, Schwab's
premiere trading platform for active traders
-- Access to a complete range of investment and Schwab Bank products
-- 24x7 telephone service
Active traders at Schwab who make at least 30 equity or option trades per
quarter, or 120 trades over the prior 12 months, will continue to pay only
$9.95 per online equity trade for unlimited shares. Clients with more than $1
million in household assets at Schwab will also continue to pay the same low
flat rate.
Clients with less than $50,000 in household assets or fewer than 9 trades per
quarter will continue to pay $19.95 per online equity trade for the first 1,000
shares (plus $0.15 per share for each additional share).
Schwab Institutional, which provides custodial, operational and trading support
for approximately 5,000 independent fee-based investment advisors with $348
billion in client assets at Schwab, expects to roll out a comparable pricing
model in the second quarter for advisors' clients who enroll in electronic
delivery of client reports.
Enhanced Delivery of the Industry-Recognized Schwab Equity Ratings
Schwab also announced that Schwab Independent Investing Signature(TM) clients
are now eligible to receive a comprehensive Quarterly Portfolio Profile that
highlights sector and equity concentration, current vs. target asset
allocation, as well as performance ratings on each security in their portfolio,
including the Schwab Equity Rating on each stock they hold. A re-designed
account page on schwab.com, which will soon be available to all clients, will
also show the Schwab Equity Rating on the stocks held in each client account.
"Our objective is to help our clients achieve the best investment outcomes
possible, and that means great tools and services that cover the entire
investing process, from setting objectives to selecting investments to
monitoring performance and making adjustments over time," said William Atwell,
executive vice president of Schwab's Individual Investor enterprise. "We want
to make sure our clients have a clear picture of how their investments are
doing -- as well as the right advice to help them at every step along the way."
Schwab Equity Ratings are available exclusively to Schwab clients. In January,
Schwab's model equity portfolio, based on Schwab Equity Ratings, took first
place for the second consecutive year in a ranking by Zack's Investment
Services of the three-year stock-picking performance of a number of well-known
brokerage firms. Schwab's portfolio took first place for the three-year period
2002-2004, producing substantially greater returns than any of the 13 competing
brokerages. For the three-year period ended December 31, 2004, Schwab's picks
returned 53%, compared to the S&P's 11% and the second place winner's 31%.
Schwab took first place in the same category last year, returning 18.3% for the
2001-2003 period compared to a 12% drop in the S&P 500.
Schwab Equity Ratings also drive the selection of the 30 stocks on Schwab's
Composite List, available on schwab.com, which as a model portfolio has
outperformed the broad market in 59 out of the past 60 rolling 52-week periods
as of January 3, 2005.(3) For more information on Schwab Equity Ratings,
including performance details, how performance was calculated, comparison of
performance to benchmarks and limitations of model performance, visit
http://www.schwab.com/serperformance.
"In addition to Schwab Equity Ratings, we also offer a full menu of independent
third-party research," noted Atwell. "But the truth is that investors are
interested in Schwab's opinion, and they want an actionable point of view
that's relevant to them, more than sheer volume of research opinions."
Financial Considerations
The Charles Schwab Corporation believes that the pricing changes described
above will enhance its value proposition and competitive position, and result
in the consolidation of client assets and trades at Schwab. While the actual
timing and extent of any such consolidation is uncertain, management estimates
that these pricing changes could reduce consolidated revenues by approximately
1 percent from current levels during the 12-month period following
implementation. Schwab Chief Financial Officer Christopher Dodds commented, "We
are continuing to focus on delivering better value for our clients by improving
productivity and reducing costs, and we remain committed to our 2005 objectives
of a 25 percent pre-tax operating profit margin and a return on stockholders'
equity of at least 15 percent."
Forward Looking Statements
This press release contains forward-looking statements relating to client
assets, trading and revenues, as well as pre-tax operating profit margin and
return on stockholders' equity. These statements reflect management's current
expectations and objectives, the achievement of which is subject to certain
risks and uncertainties that could cause actual results to differ from the
expressed expectations and objectives. These risks include, but are not limited
to, the Company's ability to accurately assess the elasticity of client demand
for trading services and the effect of pricing changes on client acquisition,
retention and asset levels; a sustained decline in securities prices, trading
volumes and investor confidence from recent levels; the company's ability to
meet its expense plans; and other risks set forth in the Company's most recent
10-Q.
New Pricing Schedule (Effective February 8, 2005)
Commissions for Executed Online Equity Trades
Number of less than $50,000 to $1 million or
household $50,000 in $999,999 in more in
trades per household assets household assets household assets
quarter
8 or fewer $19.95 for the $12.95 for the $9.95 unlimited
first 1,000 first 1,000
shares, plus shares, plus
$.015 cents per $.015 cents per
share thereafter share thereafter
9 to 29 $12.95 for the $12.95 for the $9.95 unlimited
first 1,000 first 1,000
shares, plus $.015 shares, plus $.015
cents per cents per
share thereafter share thereafter
30 or more $9.95 unlimited $9.95 unlimited $9.95 unlimited
Previous Pricing Schedule
Commissions for Executed Online Equity Trades
Number of less than $100,000 to $1 million or
household $100,000 in $999,999 in more in
trades per household assets household assets household assets
quarter
8 or fewer $19.95 for the $19.95 for the $9.95 unlimited
first 1,000 first 1,000
shares, plus shares, plus
$.015 cents per $.015 cents per
share thereafter share thereafter
9 to 29 $19.95 for the $19.95 for the $9.95 unlimited
first 1,000 first 1,000
shares, plus shares, plus
$.015 cents per $.015 cents per
share thereafter share thereafter
30 or more $9.95 unlimited $9.95 unlimited $9.95 unlimited
About Charles Schwab
The Charles Schwab Corporation (NYSE / Nasdaq: SCH), through its operating
subsidiaries, provides securities brokerage and financial services to
individual investors and the independent investment advisors who work with
them. With over 7 million individual investor accounts and more than $1
trillion in client assets, The Charles Schwab Corporation is one of the
nation's largest financial services firms. Its subsidiary Charles Schwab & Co.,
Inc. (member SIPC) provides a complete range of investment services and
products, including an extensive selection of mutual funds; financial planning
and investment advice; retirement plans; referrals to independent fee-based
investment advisors; and custodial, operational and trading support for
independent fee-based investment advisors through its Schwab Institutional
division. Its subsidiary Charles Schwab Bank (member FDIC) provides banking and
mortgage services and products. The corporation's other operating subsidiaries
include U.S. Trust Corporation (member FDIC) and CyberTrader(R), Inc. (member
SIPC). These companies' Web sites can be reached at http://www.schwab.com/,
http://www.schwabbank.com/, http://www.ustrust.com/, and
http://www.cybertrader.com/.
Brokerage products: Not FDIC insured. No Bank Guarantee. May Lose Value.
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. Please read the prospectus
carefully before investing. Investment value will fluctuate, and shares, when
redeemed, may be worth more or less than original cost.
(1) "Household assets" are the aggregate balance of accounts of a household
that meet Schwab's householding guidelines (generally, accounts of clients with
the same last name, or who are related, who reside at the same home address).
(2) The $12.95 rate applies to the first 1,000 shares (plus $.015 for each
additional share).
(3) Limitations of Model Performance
For all 3 model performance results (Barron's, Composite List, and SER Cohort),
there are inherent limitations which investors should understand. Simulated
results do not represent actual investment performance or trading and do not
indicate what returns would actually have been realized by relying on Schwab
Equity Ratings or any stock list or model mentioned. The results may have
under- or over-compensated for the impact, if any, of certain market factors,
such as limited trading liquidity. The results presented reflect past
performance and should not and cannot be viewed as an indicator of future
performance or an indicator of results which any investor will realize.
Schwab Equity Ratings and the lists or models mentioned are not personal
recommendations for any particular investor and do not take into account the
financial, investment or other objectives and may not be suitable for any
particular investor. Before buying, investors should consider whether the
investment is suitable for themselves and their portfolio. Additionally,
investors should consider any recent market or company news. Stocks can be
volatile and entail risk and individual stocks may not be suitable for you.
The Schwab Composite Stock list is updated weekly. The performance assumes a
hypothetical investor purchased all stocks appearing on the Composite Stock
list for that week. The 52 week performance for each Composite Stock List is
calculated as the equal weighted average of all the simple total returns
associated with each stock in that Composite Stock List. The Broad Market is
represented by the S&P 500 index, a capitalization weighted index of the
largest 500 companies from leading industries.
For additional information about the Zack's competition, as reported by
Barron's, visit http://www.schwab.com/.
For additional information about SER cohorts, visit
http://www.schwab.com/public/schwab/advice_research/schwab_equity_ratings?cmsi
d=P-362160&lvl1=advice_research&lvl2=schwab_equity_ratings
DATASOURCE: Charles Schwab
CONTACT: media, Sarah Bulgatz, +1-415-636-5940, or Glen Mathison,
+1-415-636-5448, or investors, Rich Fowler, +1-415-636-9869, all for Charles
Schwab & Co., Inc.
Web site: http://www.schwab.com/