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Charles Schwab Launches New Mutual Fund Inspired by Award-Winning Schwab Equity Ratings' Model Portfolio New Fund Utilizes Same Stock-Rating Expertise Behind Schwab's #1 Ranked Model Equity Portfolio SAN FRANCISCO, Feb. 23 /PRNewswire-FirstCall/ -- Charles Schwab Investment Management, Inc. today announced the launch of the Schwab Premier Equity Fund(TM), a new addition to the Schwab Funds(R) suite of actively-managed equity funds. This new Fund provides investors the opportunity to invest in a mutual fund that uses the same stock screening expertise that helped Schwab's model equity portfolio achieve a #1 ranking in Barron's 2004 annual stock selection competition. The Fund utilizes Schwab Equity Ratings(R), a proprietary stock screening methodology behind Schwab's model equity portfolio, which this year took first place for best three-year performance for the second consecutive year. The existing line-up of funds that use Schwab Equity Ratings has already captured broad-scale investor attention with performance numbers that have more than held their own against the competition. Visit Schwab.com for Schwab Funds performance information. The Schwab Premier Equity Fund is unique because it seeks to deliver capital appreciation by selecting only stocks rated A or B by Schwab Equity Ratings. With its multi-cap strategy, the Fund is free to invest in stocks of any size and can shift between growth and value in order to seek strong returns through different market conditions. "Last year's #1 rating from Barron's generated investor interest in a fund that would use Schwab Equity Ratings to capture strongly-rated stocks in one investment," said Evelyn Dilsaver, president and CEO of Charles Schwab Investment Management, Inc. "This year's win reinforces our decision to offer the Premier Equity Fund." The Fund is currently in subscription through March 18, 2005, commencing operations on March 21, 2005*. During the subscription period, Schwab clients can invest in the fund at an offering price of $10 per share with all fund expenses waived through June 30, 2005. The Fund is offered in two share classes. Investor Shares require an initial investment of $2,500. Select Shares, which offer a lower operating expense ratio (OER) in return for a higher investment minimum, have an initial investment of $50,000. Effective July 1, 2005, the fund's operating expense ratios (1.30 percent for Investor Shares and 1.15 percent for Select Shares) will apply. They are guaranteed through February 27, 2006, excluding interest, taxes and certain non-routine expenses. Portfolio Management The new actively-managed fund will be co-managed by Jeffrey Mortimer, CFA, senior vice president and senior portfolio manager; Vivienne Hsu, CFA, vice president and senior portfolio manager; and Larry Mano, director and portfolio manager. The team oversees the eight SchwabFunds that tap into Schwab Equity Ratings. These include the Schwab Core Equity Fund, Schwab Dividend Equity Fund, Schwab Hedged Equity Fund, Schwab Small-Cap Equity Fund, Schwab Financial Services Fund, Schwab Health Care Fund, Schwab Technology Fund and the new Schwab Premier Equity Fund. See end of press release for regulation analyst certification and how to obtain important required disclosures. About Charles Schwab Investment Management Founded in 1991, Charles Schwab Investment Management, Inc. (CSIM) is an affiliate of Charles Schwab & Co. Inc. and an adviser to Schwab Funds. As of December 31, 2004, CSIM ranked as the nation's 12th-largest mutual fund group, based on assets under management, currently totaling $136 billion. It is the country's fourth-largest money market fund manager and third-largest provider of retail index funds. With the addition of the new fund, CSIM currently manages 51 including 22 actively managed equity funds, taxable and tax-free bond funds, and taxable and tax-free money market funds. About Schwab Equity Ratings Schwab Equity Ratings offer an objective and disciplined assessment of approximately 3,000 U.S. equities, more than any other major brokerage firm. Stocks are assigned grades of A, B, C, D, or F, reflecting performance potential over the next 12 months. Schwab's outlook is that "A"-rated stocks, on average, will strongly outperform, and "F"-rated stocks, on average, will strongly underperform the equities market over the next 12 months. The ratings assess four broad categories: fundamentals, valuation, momentum, and risk. They are updated each week to reflect new financial data and other information. 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. About Charles Schwab The Charles Schwab Corporation (NYSE:SCH) Nasdaq, 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. Its subsidiary Charles Schwab Bank, N.A. (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/. Past performance is no guarantee of future results. 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. The fund could have a high portfolio turnover rate, which may result in increased transaction costs and capital gain distributions. The fund's focus on a limited number of securities may result in increased volatility. The performance of Schwab Equity Ratings or the model equity portfolio is not an indication of future performance of the Schwab Premier Equity Fund. Performance of the model portfolios submitted to the Barron's competition was calculated using an equal-weighted return methodology that is administered by Zack's. It is not actual performance and does not reflect actual trading. Each brokerage firm had its own methodologies in picking its stock lists, which differed in many respects, including the numbers of issues held, frequency of trading and changes of selection criteria over time. Barron's is a registered trademark of Dow Jones & Company, Inc. All rights reserved. * Subscription orders must be received in good form by 4 p.m. Eastern Time on March 18, 2005. Orders received after that time will be invested at the next determined net asset value (NAV) after receipt and acceptance of the order by Schwab. Sufficient assets must be in your account by 9 a.m. Eastern time on March 17, 2005. If you do not have sufficient assets to meet the minimum initial investment requirement by this time, your order will be canceled. You may reinstate your order by bringing a check to your local Schwab branch by 4 p.m. Eastern Time on March 18, 2005. Share price will fluctuate once operations commence on March 21, 2005. (0205-7175) DATASOURCE: Charles Schwab CONTACT: Sondra Harris of Charles Schwab, +1-415-636-3292, or Web site: http://www.schwab.com/

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