If I buy into this fund or any dividend index fund, are the dividends
automatically reinvested or are they paid?  If paid, how are they paid?

Through my scottrade, they are given as a cash dist.  They go right
into my cash account.  I do not know if they able to be automatically
re-invested.  I use the dist to go against new stock buys in my IRA
account, thus not having to pay tax.

Corny,
Could you please elaborate on that? I have an IRA account (just opened
last month for last year's contribution). It'd be great if I can
contribute to my IRA without having to pay tax. Thanks in advance.

Unlike mutual funds, an ETF must be bought in whole shares.  (Mutual
funds can be bought in partial shares, and therefore you can reinvest
all dividends, even if your balance does not add up to a total share.)

Depending on your broker or account, dividends from a stock or ETF
should be paid into a cash balance within the IRA.  If these dividend
gains remain within the IRA account--i.e. you leave it as a cash
balance, you reinvest it, or you use it to pay for commission costs--
then you will not pay tax, provided you will not currently pay taxes
because the gains are still within the IRA balance.  (For traditional
IRA, you will pay taxes when your funds are finally disbursed from the
account.  For a Roth IRA, you will not pay taxes on gains if you
disburse your account within certain conditions.)

It depends on your brokerage account. As another poster noted,
Scottrade doesn't reinvest dividends. I just opened my Roth IRA with
TD Ameritrade instead of Scottrade for that reason -- TD Ameritrade
will automatically reinvest dividends, giving fractional shares, with
no transaction costs. Sharebuilder is another one that reinvests
automatically and allows fractional shares.