getting to know charles schwab investment management

GETTING TO KNOW CHARLES SCHWAB
INVESTMENT MANAGEMENT
Schwab is renowned for its commitment to helping investors with financial
advice that is client-focused, disciplined and straightforward. An extension
of Schwab’s commitment to investors is its strong lineup of mutual funds
and exchange traded funds that embody the same principles. These
investment products fall under the umbrella of Charles Schwab Investment
Management, Inc. (CSIM).
Founded in 1989, CSIM—a subsidiary of The Charles Schwab Corporation—
has grown to become a sizable asset management company, with more
than $224 billion in assets under management as of December 31, 2012.
CSIM’s investment products include money funds, index funds, exchange
traded funds (ETFs), sub-advised funds, asset allocation funds and disciplined
active funds. In addition to managing Schwab ETFs™ and Schwab Funds,®
CSIM is the investment adviser for the institutional-style sub-advised Laudus
Funds family. Our high-quality investment products span multiple asset
classes, offering investors the ability to select those that best align with
their financial goals.
At CSIM, we believe that success comes from discipline and strict adherence
to a clearly defined process. Drawing from expertise across many disciplines
to implement a variety of strategies, our team is united in its quest for
performance, consistency and value.
2
CSIM ranked 8th of
58 in Barron’s/Lipper’s
Best Fund Families
of 2011.1
Omar Aguilar
CIO, Equities, CSIM
A Broad Range of Investment Products
CSIM offers a robust lineup of thoughtfully developed
investment products to address the ever-evolving needs of our
clients. Many have been designed to serve as core building
blocks of a well-diversified portfolio. While each targets a
specific investment objective, they are united by a common
mission: solid long-term performance at an attractive value.
MONEY FUNDS
This is where it all began for CSIM: creating and managing
money market funds that seek to provide investors with
preservation of capital, liquidity and yield. Today, CSIM offers
a broad range of taxable and tax-free money market funds,
including several state-specific tax-free funds—many available
exclusively through Schwab.
INDEX FUNDS
Our flagship equity index fund, the Schwab 1000 Index® Fund,
was launched in 1991. Its popularity led to the development of
additional equity index funds designed to meet the needs of
many investors, including those seeking a focus on small-caps
and international equities, as well as funds that pursue a
fundamental-index strategy—an alternative to traditional
cap-weighted indexes.
Schwab Fundamental Index
Funds are equity index funds
that provide investors with
access to an innovative indexing
approach that seeks to offset
the risks of traditional capweighted index products while
offering the potential for
higher returns. These funds
select and weight their holdings
based on fundamental financial
measures of company scale
and success. The Funds
passively track the Russell
Fundamental Index® Series,
which ranks stocks by three
metrics: adjusted sales, retained
operating cash flows, and
dividends plus buybacks.
3
ETFs
Laudus Funds open the door for
independent investment advisers
and sophisticated individual
investors to gain access to the
expertise of some of the world’s
leading investment managers.
Designed to work as core
and complementary components
of a diversified portfolio,
Laudus Funds are actively
managed, adhering to a highly
disciplined management
approach that seeks to optimize
performance across fluctuating
market conditions.
Schwab ETFs are designed to serve as core building blocks
of a diversified portfolio. Each provides exposure to a specific
segment of the market, including U.S. equities, international
equities and U.S. bonds. Schwab ETFs track established,
well-respected market indexes, providing exposure to discrete
equity groupings across a range of market capitalizations,
styles and regions as well as multiple types of U.S. Treasuries.
With their low costs, trading flexibility and transparency,
Schwab ETFs present a compelling value to investors.
SUB-ADVISED FUNDS
CSIM provides oversight for the institutional-style Laudus
Funds family, a suite of high-quality funds actively managed
by distinguished investment managers. The family comprises
Laudus Mondrian Funds, which apply a defensive, valueoriented approach to global equity and fixed-income investing;
Laudus MarketMasters Funds, which pool the expertise of
well-known investment advisers who focus on U.S. small
caps and international equities; and Laudus Growth Investors,
which applies a fundamental, growth-oriented approach
to investing.
In addition, CSIM provides non-discretionary advisory
services to the Charles Schwab Bank Collective Trust Funds,
including research and recommendations relating to asset
allocation, portfolio construction, cash-flow monitoring and
adviser selection and retention.
ASSET ALLOCATION FUNDS
CSIM also manages a variety of asset allocation funds,
including target date funds, a series of all-in-one portfolios
based on various risk-tolerance levels, and several annuity
portfolios ranging from conservative to aggressive.
Charles Schwab Bank
Collective Trust Funds,
maintained by Charles Schwab
Bank, offer innovative and
diverse investment solutions
for qualified retirement plans
through sub-advised strategies
across a range of approaches.
The suite of Collective Trust
Funds includes target date,
global asset allocation, domestic
and international equity, and
fixed-income options.
DISCIPLINED ACTIVE FUNDS
CSIM applies discipline and strict adherence to a well-thoughtout process in the management of our active funds. Products
range from broad equity asset-class coverage, including
large-cap growth and core equity, to narrower concentrations
in areas such as health care and global real estate, as well
as taxable and municipal bond funds.
4
Schwab/Laudus Funds
was named one of
only four fund families
that increased market
share in 2011.2
—Cogent Research
Brett Wander
CIO, Fixed Income, CSIM
Set Apart by Our People and Our Approach
We believe that investors seek professional
money management for the expertise that
will help them achieve long-term performance,
particularly as market conditions change.
CSIM draws from expertise across many
disciplines to deliver performance in a variety
of investment strategies and across varied
market cycles. Portfolio managers, analysts
and traders support one another through
collective judgment, wisdom and deep
expertise to provide a more comprehensive
level of perspective and insight than is likely to
be achieved by a standalone portfolio manager.
As of December 31, 2012, CSIM’s team
included 34 portfolio managers and 35 analysts.
CLEAR AND FOCUSED OBJECTIVES
Although each of CSIM’s investment products
targets a specific objective, they are united
by a common mission—solid long-term
performance at an attractive value. Whether
for a market capitalization–weighted ETF or an
actively managed bond fund, CSIM seeks to
deliver consistent performance across diverse
market conditions.
A DISCIPLINED, CONSISTENT APPROACH
Discipline is the cornerstone of CSIM’s
investment process. CSIM’s portfolio
management teams seek to employ consistent
investment methodologies that focus on the
current market environment, historical analysis
and time-tested strategies. Active-equity
managers, for example, use Schwab’s stock
research methodology—Schwab Equity
Ratings®—to help determine stock selection.
Similarly, CSIM money market and bond
managers assess a range of factors that are
specifically relevant to fixed-income investing.
AN EYE TOWARD RISK
Effective risk management is another
important element in the success of our fund
management teams. CSIM focuses on
thoughtful diversification, maintaining
appropriate exposure to various sectors and
styles, and assuming risk only to the degree
that it is balanced by expectations for potential
return. We employ sophisticated technology
and perform attribution analyses to enhance
our decision-making while continually examining
alternative portfolio models.
5
“I’m proud of our
contributions to Schwab’s
heritage of innovation
and excellence, and I
encourage you to explore
CSIM’s lineup.”
—Marie Chandoha
Marie Chandoha
CEO & President, CSIM
Schwab
Equity Ratings
launched;
Schwab Core
Equity Fund
and Schwab
Hedged Equity
Fund introduced
using the
Schwab Equity
Ratings model
CSIM MILESTONES
CSIM founded and
Schwab Funds
launched
CSIM reaches
$10 billion in
indexed assets
under management
1997
1989
1999
1998
CSIM’s family
of mutual funds
are made
available on
third-party mutual
fund platforms
2004
2002
2007
2005
Schwab Bank
Collective Trust
Funds launched
CSIM reaches
$5 billion in
indexed assets
under management
Schwab ETFs
launched
2010
2009
Fundamental
Index Funds
launched
Laudus Funds
launched
Schwab ETFs
and indexed
mutual funds
reach $25 billion
in assets under
management
Contact Us
For more information on CSIM’s investment products:
Call 877-824-5615
Visit csimfunds.com
6
Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges
and expenses. You can request a prospectus for Schwab Funds by visiting schwabfunds.com, for Schwab ETFs by visiting
schwabetfs.com and for Laudus Funds by visiting laudus.com. Please read the prospectuses carefully before investing.
For more information including other time periods, please see “Worth the Risk,” by Michael Shari, Barron’s, February 6, 2012. Referenced information in the
article is for the period from January 1 through December 31, 2011. For other time periods included in the full article, CSIM’s scores may differ.
1
“Only Four Firms Increased 2011 Market Share,” by Maureen Brody, Ignites, February 24, 2012.
2
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, share of ETFs are not individually redeemable directly with the ETF.
An investment in a money market fund is neither insured nor guaranteed by the FDIC or any other government agency. Yields will fluctuate, and, although the fund
seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the fund. Compared to the total return, the seven-day
yield more closely reflects the current earnings of the fund.
Diversification does not eliminate the risk of market loss.
Fixed-income securities are subject to increased loss of principal during periods of rising interest rates. Fixed-income investments are subject to various other
risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors.
Investments in foreign assets may incur greater risks than domestic investments. Investing in emerging markets may accentuate these risks.
Small-cap funds may be subject to greater volatility than those in other asset categories.
Transactions in shares of the funds will generate tax consequences and transaction expenses; other account fees may apply. All registered investment companies
are obliged to distribute portfolio gains to shareholders at year’s end regardless of performance. The information provided is not intended to be investment or tax
advice. Tax consequences vary by individual taxpayer.
Schwab Funds are distributed by Charles Schwab & Co., Inc. (Member SIPC).
The Laudus Funds includes the Laudus Mondrian Funds and Laudus Growth Investors Fund, which are part of the Laudus Trust and Laudus Institutional Trust
and distributed by ALPS Distributors, Inc. (ALPS), and the Laudus MarketMasters Funds,® which are part of the Schwab Capital Trust and distributed by
Charles Schwab & Co., Inc.
Schwab ETFs are distributed by SEI Investment Distribution Co. (SIDCO).
Charles Schwab & Co., Inc., ALPS, and SIDCO are unaffiliated entities.
Schwab is a registered trademark of Charles Schwab & Co., Inc. Fundamental Index, Fundamental U.S. Large Company, Fundamental U.S. Small Company,
Fundamental International, Fundamental Emerging Markets, and RAFI are trademarks of Research Affiliates, LLC (RA). Schwab Fundamental Index Funds are not
sponsored, endorsed, sold or promoted by Russell Investments (Russell) or RA, and Russell and RA do not make any representation regarding the advisability
of investing in shares of the fund. Schwab is not affiliated with either Russell Investments or RA.
Schwab Equity Ratings and Schwab Equity Ratings International (“the Ratings”) are produced be the Schwab Center for Financial Research. The Schwab Center
for Financial Research is a division of Charles Schwab & Co., Inc. Schwab utilizes third-party data in the forming of a rating. While Schwab believes such thirdparty information is reliable, we do not guarantee its accuracy, timeliness or completeness. Schwab, its affiliates and/or their employees may publish or otherwise
express other viewpoints or trading strategies that may conflict with the Ratings. Please be aware that Schwab and/or its affiliates and the investment funds and
managed accounts they manage may take positions that may be contrary to the Ratings.
In addition to the ratings, CSIM may also receive research-related information from the Schwab Center for Financial Research that is not included in the Schwab
Equity Ratings or Schwab Equity Ratings International as published for the retail universe.
The Schwab Managed Retirement Trust Funds™ and the Schwab Institutional Trust Funds® are collective trust funds maintained by Charles Schwab Bank, trustee
of the Funds. The Charles Schwab Bank collective trust funds are not insured by FDIC or any other type of deposit insurance; are not deposits or other obligations
of, and are not guaranteed by Charles Schwab Bank or any of its affiliates; and involve investment risks, including possible loss of principal invested. The
Funds are not mutual funds, and their units are not registered under the Securities Act of 1933, as amended, or applicable securities laws of any state or other
jurisdiction. The Funds are exempt from registration under the Investment Company Act of 1940, as amended, or other applicable law, and unit holders are not
entitled to the protections of the 1940 Act. As more specifically defined in the Funds’ Declaration of Trust and Participation Agreement documents, the Funds are
available for investment by (i) retirement plan trusts that qualify for exemption from federal income tax pursuant to Section 501(a) of the Internal Revenue Code
(“the Code”) because they are qualified under Section 401(a) of the Code, (ii) eligible governmental plans under Section 457(b) of the Code, which are exempt
from tax under Section 457(g) of the Code, or (iii) group trusts that consist solely of the assets of these types of plans. The decision to invest in the Funds should
be carefully considered. The unit values for the Funds will fluctuate, and investors may lose money.
Charles Schwab Investment Management, Inc is the investment adviser for Schwab Funds, Laudus Funds and Schwab ETFs. Charles Schwab & Co., Inc., Charles
Schwab Investment Management, Inc. and Charles Schwab Bank are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation.
©2013 Charles Schwab Investment Management, Inc. All rights reserved. IAN (1012-6243) MKT70574FM-01 (01/13)
7
Money Funds
Inception
Date
Government and Treasury Money Market Funds
Schwab Government Money Fund
Sweep Fund
1/26/90
Schwab US Treasury Money Fund
Sweep Fund
11/6/91
Schwab US Treasury Obligation Money Fund
Value Advantage Share Class
4/24/12
Sweep Shares
6/5/12
Prime Money Market Funds
Schwab Money Market Fund
Sweep Fund
1/26/90
Schwab Cash Reserves Money Fund
Sweep Fund (Investor Services Only)
8/12/04
Schwab Adviser Cash Reserves Money Fund
Sweep Shares (Advisor Services Only)
8/19/04
Premier Sweep Shares (Advisor Services Only) 8/19/04
Schwab Value Advantage Money Fund
Investor Share
4/30/92
Select Shares
2/28/03
Institutional Shares
7/1/02
Institutional Prime Shares
10/5/06
Schwab Retirement Advantage Money Fund
(Retirement Services Only)
1/4/94
Schwab Investor Money Fund
Retirement Only
3/2/94
Retail Only
12/1/05
Tax-Free Money Market Funds
Schwab Municipal Money Fund
Value Advantage Shares
7/7/95
Select Shares
6/2/03
Institutional Shares
6/2/03
Sweep Shares
1/26/90
Schwab California Municipal Money Fund
Value Advantage Shares
10/3/95
Sweep Shares
11/5/90
Schwab Pennsylvania Municipal Money Fund
Sweep Fund
2/2/98
Schwab AMT Tax-Free Money Fund
Value Advantage Shares
11/6/06
Sweep Shares
3/18/98
Schwab California AMT Tax-Free Money Fund
Value Advantage Shares
11/16/07
Schwab Massachusetts AMT Tax-Free Money Fund
Sweep Fund
5/16/03
Schwab New Jersey AMT Tax-Free Money Fund
Sweep Fund
2/2/98
Schwab New York AMT Tax-Free Money Fund
Value Advantage Shares
7/7/95
Sweep Shares
2/27/95
Ticker
Morningstar
Category
Expense
Ratio 1
Investment
Minimums
SWGXX
Money Market–Taxable
0.73%
$12
SWUXX
Money Market–Taxable
0.60%
–3
SNOXX
SNTXX
Money Market–Taxable
Money Market–Taxable
0.45%
0.65%
$25,000
$12
SWMXX
Money Market–Taxable
0.71%
–4
SWSXX
Money Market–Taxable
0.66%
$12
SWQXX
SWZXX
Money Market–Taxable
Money Market–Taxable
0.66%
0.59%
$12
$12
SWVXX
SWBXX
SWAXX
SNAXX
Money Market–Taxable
Money Market–Taxable
Money Market–Taxable
Money Market–Taxable
0.45%
0.35% 5
0.24% 5
0.21% 5
$25,000
$1,000,000
$3,000,000
$10,000,000
SWIXX
Money Market–Taxable
0.49% 5
$25,000
SWRXX
SW2XX
Money Market–Taxable
Money Market–Taxable
0.62%
0.62%
$1
$2,500
SWTXX
SWLXX
SWOXX
SWXXX
Money Market–Tax-Free
Money Market–Tax-Free
Money Market–Tax-Free
Money Market–Tax-Free
0.45%
0.35% 5
0.24% 5
0.62%
$25,000
$1,000,000
$3,000,000
$12
SWKXX
SWCXX
Money Market–Tax-Free
Money Market–Tax-Free
0.45%
0.60%
$25,000
$12
SWEXX
Money Market–Tax-Free
0.65%
$12
SWWXX
SWFXX
Money Market–Tax-Free
Money Market–Tax-Free
0.45%
0.62%
$25,000
$12
SNKXX
Money Market–Tax-Free
0.45%
$25,000
SWDXX
Money Market–Tax-Free
0.65%
$12
SWJXX
Money Market–Tax-Free
0.65%
$12
SWYXX
SWNXX
Money Market–Tax-Free
Money Market–Tax-Free
0.45%
0.65%
$25,000
$12
Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and
expenses. You can request a prospectus for Schwab Funds by visiting schwabfunds.com. Please read the prospectuses carefully
before investing.
An investment in a money market fund is neither insured nor guaranteed by the FDIC or any other government agency. Yields will
fluctuate, and, although the fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by
investing in the fund. Compared to the total return, the seven-day yield more closely reflects the current earnings of the fund.
Not FDIC insured • No bank guarantee • May lose value
For more disclosure information see back page.
Charles Schwab Investment Management, Inc. (‘CSIM’), the investment adviser for Schwab’s proprietary funds, and Charles Schwab & Co., Inc.(‘Schwab’), the distributor for
Schwab Funds, are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation.
1Expense
ratio refers to the fund’s total annual operating expenses after expense reduction waivers. Unless otherwise noted in footnote 5 below, the investment adviser
and its affiliates have agreed to limit the total annual fund operating expenses (excluding interest, taxes, and certain non-routine expenses) to the amount disclosed in the
prospectus for so long as the investment adviser serves as the adviser to the fund. This agreement may only be amended or terminated with the approval of the fund’s Board
of Trustees.
2Investor
Services (retail) client eligibility for the fund is based on minimum household assets of $500,000 and is subject to the eligibility terms and conditions of your
account agreement, as amended from time to time. Advisor Services’ (institutional) clients, see your advisor for details.
3Fund
closed as sweep option for new accounts at Schwab. As of September 26, 2011.
4Fund
closed to most new investor accounts at Schwab. May still be available to certain new accounts that are not eligible for Schwab One Interest or Bank Sweep features,
including 403(b)(7) accounts, company retirement (including pension trust) accounts, Schwab Personal Choice Retirement Accounts,® qualified retirement plan accounts,
Individual 401(k) accounts, and nonqualified retirement plan accounts.
5The
investment adviser and its affiliates have agreed to limit the total annual fund operating expenses (excluding interest, taxes, and certain non-routine expenses) to the
amount disclosed in the prospectus through 4/29/14. This agreement may only be amended or terminated with the approval of the fund’s Board of Trustees. Without these
waivers, each fund’s total operating expenses (Gross Expense Ratio) would be:
Schwab Value Advantage Money Fund – Select Shares
0.47%
Schwab Value Advantage Money Fund – Institutional Shares
0.36%
Schwab Value Advantage Money Fund – Institutional Prime Shares
0.34%
Schwab Retirement Advantage Money Fund
0.60%
Schwab Municipal Money Fund – Select Shares
0.55%
Schwab Municipal Money Fund – Institutional Shares
0.55%
©2013 Charles Schwab Investment Management, Inc. All rights reserved. Member SIPC. IAN (0213-0831) MKT70575-01 (02/13)
Index and Passive Funds
Inception
Date
Ticker
Morningstar
Category
Expense Ratio
Gross
Net 1
Minimum
Investment
SFLNX
Large Value
0.44%
0.35%
$100
SFSNX
Small Blend
0.50%
0.35%
$100
Foreign Large Value
0.57%
0.35%
$100
Foreign Small/Mid Growth
0.99%
0.55%
$100
Schwab Fundamental Index Funds
Schwab Fundamental US Large Company Index Fund
4/2/07
Schwab Fundamental US Small Company Index Fund
4/2/07
Schwab Fundamental International Large Company Index Fund
4/2/07
SFNNX
Schwab Fundamental International Small Company Index Fund
1/31/08
SFILX
Schwab Fundamental Emerging Markets Large Company Index Fund
1/31/08
SFENX
Diversified Emerging Mkts
0.91%
0.60%
$100
4/2/91
SNXFX
Large Blend
0.34%
0.29%
$100
5/19/97
SWPPX
Large Blend
0.10%
0.09%
$100
5/19/97
SWSSX
Small Blend
0.19%
0.17%
$100
5/19/97
SWISX
Foreign Large Blend
0.21%
0.19%
$100
SWTSX
Large Blend
0.11%
0.09%
$100
11/5/91
SWBDX
Short-Term Bond
0.62%
0.29%
$100
3/5/93
SWLBX
Intermediate-Term Bond
0.59%
0.29%
$100
Schwab Equity Index Funds
Schwab 1000 Index® Fund
Schwab S&P 500 Index Fund
Schwab Small-Cap Index Fund®
Schwab International Index Fund®
Schwab Total Stock Market Index Fund®
6/1/99
Schwab Taxable Fixed Income Fund
Schwab Short-Term Bond Market Fund™
Schwab Total Bond Market Fund™
2
Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and
expenses. You can request a prospectus for Schwab Funds by visiting schwabfunds.com. Please read the prospectuses 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.
Not FDIC insured • No bank guarantee • May lose value
Charles Schwab Investment Management, Inc. (‘CSIM’), the investment adviser for Schwab’s proprietary funds, and Charles Schwab & Co., Inc. (‘Schwab’), the distributor for
Schwab Funds, are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation.
1Unless
otherwise noted in footnote 2 below, the investment adviser and its affiliates have agreed to limit the total annual fund operating expenses as stated in the most
recent prospectus for each fund. The limitation excludes interest, taxes, expenses for dividends and interest paid on securities sold short, and certain non-routine expenses,
which may result in a fund incurring total annual fund operating expenses above the limitation. This agreement is limited to the funds’ direct operating expenses and does not
apply to any acquired fund fees and expenses.
2The
investment adviser and its affiliates have agreed to limit the total annual fund operating expenses (excluding interest, taxes and certain non-routine expenses) of the
fund to 0.29% for so long as the investment adviser serves as the adviser to the fund. This agreement may only be amended or termindated with the approval of the fund’s
Board of Trustees. Schwab and the investment adviser have agreed to advance the fund certain litigation expenses to the extent necessary to maintain these expense
limitations (excluding amounts paid in connection with judments and settlements) in connection with certain legal matters. These advances are subject to repayment by the
fund to Schwab and the investment adviser to the extent the litigation expenses are subsequently paid or reimbursed to the fund by its insurance carriers.
©2013 Charles Schwab Investment Management, Inc. All rights reserved. Member SIPC. IAN (1112-7416) MKT70576 (01/13)
Exchange Traded Funds (ETFs)
Inception
Date
Ticker
Morningstar
Category
Expense
Ratio
11/03/09
SCHB
Large Blend
0.04%
11/03/09
SCHX
Large Blend
0.04%
12/11/09
SCHG
Large Growth
0.07%
12/11/09
SCHV
Large Value
0.07%
10/20/11
SCHD
Large Blend
0.07%
1/13/11
SCHM
Mid-Cap Blend
0.07%
11/03/09
SCHA
Small Blend
0.10%
1/13/11
SCHH
Real Estate
0.07%
11/03/09
SCHF
Foreign Large Blend
0.09%
01/14/10
SCHC
Foreign Small/Mid Blend
0.20%
01/14/10
SCHE
Diversified Emerging Markets
0.15%
08/05/10
SCHP
Inflation-Protected Bond
0.07%
08/05/10
SCHO
Short Government
0.08%
08/05/10
SCHR
Intermediate Government
0.10%
07/14/11
SCHZ
Intermediate-Term Bond
0.05%
Schwab U.S. Broad Market ETF™
Schwab U.S. Large-Cap ETF™
Schwab U.S. Large-Cap Growth ETF™
Schwab U.S. Large-Cap Value ETF™
Schwab U.S. Dividend Equity ETF™
Schwab U.S. Mid-Cap ETF™
Schwab U.S. Small-Cap ETF™
Schwab U.S. REIT ETF™
Schwab International Equity ETF™
Schwab International Small-Cap Equity ETF™
Schwab Emerging Markets Equity ETF™
Schwab U.S. TIPS ETF™
Schwab Short-Term U.S. Treasury ETF™
Schwab Intermediate-Term U.S. Treasury ETF™
Schwab U.S. Aggregate Bond ETF™
Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges, and
expenses. You can request a prospectus by visiting schwabetfs.com. Please read the prospectuses carefully before in vesting.
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.
Not FDIC insured • No bank guarantee • May lose value
Charles Schwab Investment Management, Inc. (‘CSIM’), the investment adviser for the Schwab’s proprietary funds, is a subsidiary of The Charles Schwab Corporation.
Schwab ETFs are distributed by SEI Investments Distribution Co. (SIDCO). SIDCO is not affiliated with The Charles Schwab Corporation or any of its affiliates.
©2013 Charles Schwab Investment Management, Inc. All rights reserved. Member SIPC. IAN (1112-7416) MKT70577 (01/13)
Sub-Advised Funds
Inception
Date
Ticker
Morningstar
Category
Expense Ratio
Gross
Net
Minimum
Investment
Laudus Mondrian Funds
International
Laudus Mondrian International Equity Fund 1
Investor Share Class
6/16/08
LIEQX
Foreign Large Value
1.63%
1.40%
$100
Select Share Class
6/16/08
LIEFX
Foreign Large Value
1.40%
1.12%
$50,000
Institutional Share Class
6/16/08
LIEIX
Foreign Large Value
1.23%
1.05%
$500,000
Laudus Mondrian Emerging Markets Fund 1
Investor Share Class
11/2/07
LEMIX
Diversified Emerging Mkts
1.90%
1.80%
$100
Select Share Class
11/2/07
LEMSX
Diversified Emerging Mkts
1.66%
1.52%
$50,000
Institutional Share Class
11/2/07
LEMNX
Diversified Emerging Mkts
1.50%
1.45%
$500,000
LIFNX
World Bond
0.71%
0.71%
$100
LMGDX
World Bond
1.03%
0.85%
$100
Diversified Emerging Mkts
1.43%
1.27%
$1,000,000
Foreign Large Value
1.91%
0.90%
$1,000,000
LGILX
Large Growth
0.88%
0.78%
$100
Fixed Income
Laudus Mondrian International Fixed Income Fund 1
Fund
11/2/07
Laudus Mondrian Global Fixed Income Fund
Fund
7/11/12
2
Institutional Funds 3
Laudus Mondrian Institutional Emerging Markets Fund
Institutional Fund
4/24/08
LIEMX
Laudus Mondrian Institutional International Equity Fund
Institutional Fund
Laudus Growth Investors
4/24/08
LIIEX
4
U.S. Large Cap
Laudus Growth Investors U.S. Large Cap Growth Fund
Fund
10/14/97
Laudus MarketMaster Funds™
5
U.S. Small/Mid Cap
Laudus Small-Cap MarketMaster Fund™
Investors Share Class
9/16/97
SWOSX
Small Growth
1.59%
1.36%
$100
Select Share Class
6/9/04
SWMSX
Small Growth
1.52%
1.21%
$50,000
10/16/96
SWOIX
Foreign Large Growth
1.61%
1.41%
$100
4/2/04
SWMIX
Foreign Large Growth
1.48%
1.26%
$50,000
International
Laudus International MarketMaster Fund™
Investors Share Class
Select Share Class
Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges
and expenses. You can request a prospectus for Laudus Funds by visiting laudus.com. Please read the prospectuses 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.
Not FDIC insured • No bank guarantee • May lose value
For more disclosure information see back page.
The Laudus Group of Funds includes the Laudus Mondrian Funds and Laudus Growth Investors Fund, which are part of the Laudus Trust and Laudus Institutional Trust, and
distributed by ALPS Distributors, Inc. (ALPS), and the Laudus MarketMasters Funds®, which are part of the Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
ALPS Distributors, Inc. and Charles Schwab & Co., Inc. are unaffiliated entities.
1Laudus
Mondrian Funds. Net Expenses: Reflects expenses expected to be charged to shareholders through at least 7/30/14. Adviser expects to hold expenses at this level by
waiving its management fee and/or bearing other expenses. Please see the prospectus for more information. Gross Operating Expenses: Provides the expense ratio projected
for this Share Class for the period 7/31/12–7/30/13. Actual expenses influenced by total assets and may be reduced based on contractual fee waiver by Adviser. Please see
the prospectus for more information.
2Laudus
Mondrian Global Fixed Income Fund. For the period 7/11/12 through 1/10/13, the investment adviser has agreed to waive the funds net operating expenses to 0.00%
(excluding interests, taxes, and certain non-routine expenses).
The investment adviser has agreed to limit the total annual fund operating expenses (excluding interests, taxes, and certain non-routine expenses) of the fund to 0.85% for at
least two years from the date the fund commences operations. Please see the prospectus for more information.
Total Annual Fund Operating Expenses. Actual expenses influenced by total assets and may be reduced based on contractual fee waiver by Adviser.
3Laudus
Mondrian Institutional Funds. Net Expenses: Reflects expenses expected to be charged to shareholders through at least 7/30/22. Adviser expects to hold expenses
at this level by waiving its management fee and /or bearing other expenses. Please see the prospectus for more information. Gross Operating Expenses: Provides the expense
ratio projected for this Share Class for the peridos 7/31/12–7/30/13. Actual expenses influenced by total assets and may be reduced based on contractual fee waiver by
Adviser. Please see prospectus for more information.
The institutional funds are primarily designed for Plan Sponsors, Institutional Investors who can meet the $1 million minimum investment.
4Laudus
Growth Investors Fund. Net Expenses: Reflects expenses expected to be charged to shareholders through at least 7/30/14. Adviser expects to hold expenses at this
level by waiving its management fee and/or bearing other expenses. Please see the prospectus for more information. Gross Operating Expenses: Provides the expense ratio
projected for the fund for the period 7/31/12–7/30/13. Actual expenses influenced by total assets and may be reduced based on contractual fee waiver by Adviser. Please
see the prospectus for more information.
5Laudus
MarketMasters Funds. the investment adviser and its affiliates have agreed to limit the total annual fund operating expenses as stated in the most recent prospectus
for each fund, for so long as the investment adviser serves as the adviser to the fund. This agreement may only be amended or terminated with the approval of the fund’s Board
of Trustees. The limitation excludes interest, taxes, expenses for dividends and interest paid on securities sold short, and certain non-routine expenses, which may result in a
fund incurring total annual fund operating expenses above the limitation. This agreement is limited to the funds’ direct operating expenses and does not apply to
any acquired fund fees and expenses.
©2013 Charles Schwab Investment Management, Inc. All rights reserved. Member SIPC. IAN (1112-7416) MKT70578 (01/13)
Asset Allocation Funds Inception
Date
Ticker
Morningstar
Category
Expense Ratio
Gross
Net 1
Minimum
Investment
SWEGX
Large Blend
0.68%
0.65%
$100
SWHGX
Aggressive Allocation
0.68%
0.66%
$100
SWBGX
Moderate Allocation
0.71%
0.69%
$100
11/20/95
SWCGX
Conservative Allocation
0.77%
0.72%
$100
11/18/96
SWOBX
Moderate Allocation
0.80%
0.64%
$100
7/1/05
SWBRX
Target Date 2000–2010
0.89%
0.55%
$100
3/12/08
SWGRX
Target Date 2011–2015
0.85%
0.63%
$100
7/1/05
SWCRX
Target Date 2016–2020
0.74%
0.68%
$100
3/12/08
SWHRX
Target Date 2021–2025
0.88%
0.74%
$100
7/1/05
SWDRX
Target Date 2026–2030
0.82%
0.77%
$100
3/12/08
SWIRX
Target Date 2031–2035
0.99%
0.82%
$100
7/1/05
SWERX
Target Date 2036–2040
0.90%
0.84%
$100
SWJRX
Retirement Income
1.13%
0.67%
$100
SWKRX
Retirement Income
0.73%
0.58%
$100
SWLRX
Retirement Income
0.66%
0.49%
$100
Schwab MarketTrack All Equity Portfolio™
5/20/98
Schwab MarketTrack Growth Portfolio™
11/20/95
Schwab MarketTrack Balanced Portfolio™
11/20/95
Schwab MarketTrack Conservative Portfolio™
Schwab Balanced Fund
Schwab Target Funds
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Funds
Schwab Target 2025 Funds
Schwab Target 2030 Funds
Schwab Target 2035 Funds
Schwab Target 2040 Funds
Schwab Income Funds
Schwab Monthly Income Moderate Payout Fund
3/28/08
Schwab Monthly Income Enhanced Payout Fund
3/28/08
Schwab Monthly Income Maximum Payout Fund
3/28/08
Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and
expenses. You can request a prospectus for Schwab Funds by visiting schwabfunds.com. Please read the prospectuses 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.
Not FDIC insured • No bank guarantee • May lose value
Charles Schwab Investment Management, Inc. (‘CSIM’), the investment adviser for Schwab’s proprietary funds, and Charles Schwab & Co., Inc.(‘Schwab’), the distributor for
Schwab Funds, are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation.
1The
investment adviser and its affiliates have agreed to limit the total annual fund operating expenses as stated in the most recent prospectus for each fund, for so long as
the investment adviser serves as the adviser to the fund. This agreement may only be amended or terminated with the approval of the fund’s Board of Trustees. The limitation
excludes interest, taxes, expenses for dividends and interest paid on securities sold short, and certain non-routine expenses, which may result in a fund incurring total annual
fund operating expenses above the limitation. This agreement is limited to the funds’ direct operating expenses and does not apply to any acquired fund fees and expenses.
©2013 Charles Schwab Investment Management, Inc. All rights reserved. Member SIPC. IAN (1112-7416) MKT70579 (01/13)
Disciplined Active Funds
Inception
Date
Ticker
Morningstar
Category
Expense Ratio
Gross
Net 1
Minimum
Investment
7/1/96
SWANX
Large Blend
0.73%
0.73%
$100
9/3/02
SWHEX
Long/Short Equity
1.89%
1.87%
$100
9/2/03
SWDSX
Large Value
0.89%
0.89%
$100
7/1/03
SWSCX
Small Blend
1.12%
1.12%
$100
10/3/05
SWLSX
Large Growth
1.05%
0.99%
$100
7/3/00
SWFFX
Financial
1.06%
0.94%
$100
7/3/00
SWHFX
Health
0.85%
0.82%
$100
5/30/08
SICNX
Foreign Large Blend
1.23%
0.87%
$100
5/31/07
SWASX
Global Real Estate
1.18%
1.05%
$100
Schwab Active Equity Funds
Schwab Core Equity Fund™
Schwab Hedged Equity Fund™
2
Schwab Dividend Equity Fund™
Schwab Small-Cap Equity Fund™
Schwab Large-Cap Growth Fund™
Schwab Financial Services Fund™
Schwab Health Care Fund™
Schwab® International Core Equity Fund
Schwab Real Estate Fund
Schwab Global Real Estate Fund™
Schwab Taxable Fixed Income Funds
Schwab Treasury inflation Protected Securities Fund™
3/31/06
SWRSX
Inflation-Protected Bond
0.63%
0.29%
$100
3/3/03
SWGSX
Intermediate Government
0.61%
0.55%
$100
10/31/07
SWIIX
Intermediate-Term Bond
0.61%
0.61%
$100
2/24/92
SWCAX
Muni California Intermediate
0.59%
0.49%
$100
9/11/92
SWNTX
Muni National Intermediate
0.61%
0.49%
$100
Schwab GNMA Fund™
Schwab® Premier Income Fund
Schwab Tax-Free Fixed Income Funds
Schwab California Tax-Free Bond Fund™
Schwab Tax-Free Bond Fund™
Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and
expenses. You can request a prospectus for Schwab Funds by visiting schwabfunds.com. Please read the prospectuses 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.
Not FDIC insured • No bank guarantee • May lose value
For more disclosure information see back page.
Charles Schwab Investment Management, Inc. (‘CSIM’), the investment adviser for Schwab’s proprietary funds, and Charles Schwab & Co., Inc. (‘Schwab’), the distributor for
Schwab Funds, are separate but affiliated companies and subsidiaries of The Charles Schwab Corporation.
1Unless
otherwise noted in footnote 2 below, the investment adviser and its affiliates have agreed to limit the total annual fund operating expenses as stated in the most
recent prospectus for each fund, for so long as the investment adviser serves as the adviser to the fund. This agreement may only be amended or terminated with the
approval of the fund’s Board of Trustees. The limitation excludes interest, taxes, expenses for dividends and interest paid on securities sold short, and certain non-routine
expenses, which may result in a fund incurring total annual fund operating expenses above the limitation. This agreement is limited to the funds’ direct operating expenses
and does not apply to any acquired fund fees and expenses.
2The
investment adviser and its affiliates have agreed to limit the total annual fund operating expenses (excluding interest, taxes, certain non-routine expenses and expenses
for dividends and interest paid on securities sold short) of the fund to 1.33% for so long as the investment adviser serves as the adviser to the fund. This agreement may only
be amended or terminated with the approval of the fund’s Board of Trustees. This agreement is limited to the fund’s direct operating expenses and does not apply to acquired
fund fees and expenses (AFFE).
©2013 Charles Schwab Investment Management, Inc. All rights reserved. Member SIPC. IAN (1112-7416) MKT70580 (01/13)