Schwab Funds - Investment Team & Strategy

Schwab Fundamental Index* Funds

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Schwab Fundamental Index Funds are equity index funds with a different orientation: While most equity indices are generally weighted by market capitalization, the Fundamental Index series selects and weights stocks based on fundamental financial measures.

Distinguishing Characteristics & Benefits

The chart below compares the historical back-tested performance of the FTSE RAFI U.S. 1000 Index¹ to two cap-weighted indexes in the U.S. large company segment of the stock market. (Other Fundamental Indexes will have different comparative performances).

Performance data quoted represents past performance and does not indicate future results. Investment return and principal value of an investment will fluctuate: therefore, redemption of shares may result in loss of principal.

Fundamental Index Funds provide access to the innovative fundamental index methodology created by Rob Arnott, chairman of Research Affiliates. The Funds passively track the FTSE RAFI^* Index Series, which ranks stocks by equally weighting four fundamental measures of company scale and success: sales, cash flows, book value and dividends. Market capitalization, price or valuation multiples are not considered.
The basis of the Funds' methodology is this: Cap-weighted indices have a tendency to overweight overpriced stocks and underweight undervalued ones, thereby creating a performance drag. By avoiding this shortcoming, the fundamental index methodology offers the potential for higher returns and lower volatility by offsetting risk associated with cap-weighting.
Schwab Funds is the exclusive equity mutual fund (non-ETF) provider in the United States based on the FTSE RAFI Index series.

Investment Management Team

Charles Schwab Investment Management actively manages the Schwab Fundamental Index Funds along with Fund Managers, Research Affiliates, LLC. Veteran managers oversee the asset management and administration of the Funds, and CSIM portfolio managers bring experience from a variety of backgrounds to support one another through collective judgment. This team approach enhances individual expertise and is designed to produce optimal results.

Research Affiliates Fund Managers

Robert Arnott

Founder and Chairman of Research Affiliates

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Jason Hsu

Fund Manager of Research Affiliates

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Schwab Portfolio Management Team

Jeff Mortimer, CFA

Senior VP and
Chief Investment Officer

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Larry Mano

Managing Director and
Portfolio Manager

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Schwab Fundamental Index Funds

Contact Us

Call your Schwab Funds representative at 877-824-5615

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Investors should consider carefully information contained in the prospectus, including investment objectives, risks, charges and expenses. You can request a prospectus by calling 877-824-5615. Please read the prospectus carefully before investing.

The inception date of the index was 09/30/05. Therefore, performance measurements for the index prior to the inception date are the results of back tested data and represent what the index might have achieved, but does not reflect the actual performance of the index. Index figures do not include trading and management costs, which would lower performance. Indexes are unmanaged, and you cannot invest in them directly. Although the Funds seek to duplicate the methodology and performance of the indexes, expenses taxes, trading costs and any adjustment to the index methodology will cause the funds to have different performance results than their indexes.

The Fund is not in any way sponsored, endorsed, sold or promoted by FTSE Limited ("FTSE") or by the London Stock Exchange Plc ("Exchange") or by the Financial Times Limited ("FT") or by Research Affiliates LLC ("RA"), and neither FTSE nor Exchange nor FT nor RA makes any warranty or representation whatsoever, expressly or implicitly, as to the results to be obtained from the use of the FTSE RAFI U.S. 1000 Index ("Index") and/or the figure at which the said index stands at any particular time on any particular day or otherwise. The Index is compiled and calculated by FTSE in conjunction with RA; however, neither FTSE nor Exchange nor FT nor RA shall be liable (whether in negligence or otherwise) to any person for any error in the index, and neither FTSE nor the Exchange nor FT nor RA shall be under any obligation to advise a person of any error therein.

*Schwab is a registered service mark of Charles Schwab & Co., Inc. Fundamental Index, Fundamental U.S. Large, Fundamental U.S. Small-Mid, Fundamental International Large, Fundamental International Small-Mid, Fundamental Emerging Markets, and RAFI are trademarks of Research Affiliates, LLC. FTSE is a trademark jointly owned by the London Stock Exchange Plc and the Financial Times Limited and is used by FTSE International Limited under license.

¹FTSE™ RAFI^® U.S. 1000 is designed to track the performance of the largest U.S. equities, selected based on the following four fundamental measures of size, book value, income, sales and dividends. The 1000 equities with the highest fundamental strength are weighted by their fundamental scale. The fundamentally weighted portfolio is rebalanced and reconstituted annually.

²S&P 500^® Index is a capitalization-weighted index of the 500 largest companies from leading industries and it treats dividends as reinvested.

³Russell 1000^® Index measures the performance of the 1,000 largest companies in the Russell 3000^® Index, which represents approximately 92% of the total market capitalization of the Russell 3000^® Index.