securities of a particular market capitalization fall behind other types of
investments, the fund’s performance could be impacted.
Small-Cap Company Risk.
Securities issued by small-cap companies may be riskier than those issued by larger companies, and their prices may move sharply, especially during market upturns and downturns.
Tracking Error Risk. As an
index fund, the fund seeks to track the performance of the index, although it may not be successful in doing so. The divergence between the performance of the fund and the index, positive or negative, is called “tracking
error.” Tracking error can be caused by many factors and it may be significant.
Derivatives Risk. The
fund’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. The fund’s use of derivatives could reduce the
fund’s performance, increase the fund’s volatility and could cause the fund to lose more than the initial amount invested. In addition, investments in derivatives may involve leverage, which means a small percentage of assets
invested in derivatives can have a disproportionately large impact on the fund.
Liquidity Risk. The fund may
be unable to sell certain securities, such as illiquid securities, readily at a favorable time or price, or the fund may have to sell them at a loss.
Securities Lending Risk.
Securities lending involves the risk of loss of rights in, or delay in recovery of, the loaned securities if the borrower fails to return the security loaned or becomes insolvent.
Concentration Risk. To the
extent that the fund’s or the index’s portfolio is concentrated in the securities of issuers in a particular market, industry, group of industries, sector or asset class, the fund may be adversely affected by the performance of those
securities, may be subject to increased price volatility and may be more vulnerable to adverse economic, market, political or regulatory occurrences affecting that market, industry, group of industries, sector or asset class.
Market Trading Risk. Although
fund shares are listed on national securities exchanges, there can be no assurance that an active trading market for fund shares will develop or be maintained. If an active market is not maintained, investors may find it difficult to buy or sell
fund shares.
Shares of the Fund May Trade at Prices
Other Than NAV. Fund shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of the shares of the fund will approximate the fund’s net asset value
(NAV), there may be times when the market price and the NAV vary significantly. An investor may pay more than NAV when buying shares of the fund in the secondary market, and an investor may receive less than NAV when selling those shares
in the secondary market. The market price of fund shares may deviate, sometimes significantly, from NAV during periods of market volatility or market disruption.
For more information on the risks of investing in the fund,
please see the “Fund Details” section in the prospectus.
Performance
The bar chart below shows how the fund’s investment
results have varied from year to year, and the following table shows how the fund’s average annual total returns for various periods compared to that of an index. This information provides some indication of the risks of investing in the fund.
All figures assume distributions were reinvested. Keep in mind that future performance (both before and after taxes) may differ from past performance. For current performance information, please see
www.schwabfunds.com/schwabetfs_prospectus.
Annual Total Returns (%) as of
12/31
Best Quarter: 10.12% Q4 2016
Worst Quarter: (18.87%) Q4 2018
Year-to-date performance (before taxes) as of 3/31/19: 13.66%
Average
Annual Total Returns as of 12/31/18
|
|
1
Year
|
5
Years
|
Since
Inception
(8/15/13)
|
Before
taxes
|
(12.10%)
|
4.63%
|
6.64%
|
After
taxes on distributions
|
(12.46%)
|
4.24%
|
6.26%
|
After
taxes on distributions and sale of shares
|
(6.95%)
|
3.53%
|
5.14%
|
Comparative
Index (reflects no deduction for expenses or taxes)
|
|
|
|
Russell
RAFI US Small Company Index
|
(11.93%)
|
4.88%
|
6.91%
|
The after-tax figures reflect the
highest individual federal income tax rates in effect during the period and do not reflect the impact of state and local taxes. Your actual after-tax returns depend on your individual tax situation. In addition, after-tax returns are not relevant if
you hold your fund shares through a tax-deferred arrangement, such as a 401(k) plan, an individual retirement account (IRA) or other tax-advantaged account. In some cases, the return after taxes on distributions and sale of shares may exceed
the fund’s other returns due to an assumed benefit from any losses on a sale of shares at the end of the measurement period.
Investment Adviser
Charles Schwab Investment Management, Inc.
Portfolio Managers
Christopher Bliss, CFA, Vice
President and Head of the Passive Equity Team, is responsible for the day-to-day co-management of the fund. He has managed the fund since 2017.
Jeremy Brown, Portfolio
Manager, is responsible for the day-to-day co-management of the fund. He has managed the fund since 2019.