|
Summary Prospectus March 18, 2011 |
Schwab
U.S. Small-Cap
ETFtm
Ticker
Symbol: SCHA
Before you invest, you may want to review the fund’s
prospectus, which contains more information about the fund and
its risks. You can find the fund’s prospectus, Statement of
Additional Information (SAI) and other information about the
fund online at www.schwabetfs.com/prospectus. You can
also obtain this information at no cost by calling
1-866-414-6349
or by sending an email request to
orders@mysummaryprospectus.com. If you purchase or hold
fund shares through a financial intermediary, the fund’s
prospectus, SAI, and other information about the fund are
available from your financial intermediary.
The fund’s prospectus and SAI, both dated December 17,
2010, as amended December 23, 2010, as supplemented
March 18, 2011, include a more detailed discussion of fund
investment policies and the risks associated with various fund
investments. The prospectus and SAI are incorporated by
reference into the summary prospectus, making them legally a
part of the summary prospectus.
Investment
objective
The fund’s goal is to track as closely as possible, before
fees and expenses, the total return of the Dow Jones
U.S. Small-Cap Total Stock Market
Indexsm.1
Fund fees
and expenses
This table describes the fees and expenses you may pay if you
buy and hold shares of the fund. The table does not reflect
brokerage commissions you may incur when buying or selling fund
shares.
| Shareholder fees (fees paid directly from your investment) | ||
| None | ||
|
Annual
fund operating expenses |
||
| (expenses that you pay each year as a % of the value of your investment) | ||
| Management fees | 0.13 | |
| Other expenses | None | |
| Total annual operating expenses | 0.13 | |
Example
This example is intended to help you compare the cost of
investing in the fund with the cost of investing in other funds.
The example assumes that you invest $10,000 in the fund for the
time periods indicated and then redeem all of your shares at the
end of those time periods. The example also assumes that your
investment has a 5% return each year and that the fund’s
operating expenses remain the same. This example does not
reflect any brokerage commissions you may incur when buying or
selling fund shares. Your actual costs may be higher or lower.
Expenses on
a $10,000 investment
| 1 year | 3 years | 5 years | 10 years | |||
|
$13
|
$42 | $73 | $166 |
Portfolio
turnover
The fund pays transaction costs, such as commissions, when it
buys and sells securities (or “turns over” its
portfolio). A higher portfolio turnover may indicate higher
transaction costs and may result in higher taxes when fund
shares are held in a taxable account. These costs, which are not
reflected in the annual fund operating expenses or in the
example, affect the fund’s performance. For the period of
November 3, 2009 (the date on which the fund commenced
operations) to the end of the fund’s most recent fiscal
year, the fund’s portfolio turnover rate was 8% of the
average value of its portfolio.
Principal
investment strategies
To pursue its goal, the fund generally invests in stocks that
are included in the index. The index includes the
small-cap portion of the Dow Jones U.S. Total Stock Market
Indexsm
actually available to investors in the marketplace. The
Dow Jones U.S. Small-Cap Total Stock Market
Indexsm
includes the components ranked
751-2500 by
full market capitalization. The index is a float-adjusted market
capitalization weighted index. As of August 31, 2010, the
index was composed of 1,750 stocks.
It is the fund’s policy that under normal circumstances it
will invest at least 90% of its net assets in these stocks. The
fund will notify its shareholders at least 60 days before
changing this policy. The fund will generally give the same
weight to a given stock as the index does. However, when the
Adviser believes it is appropriate to do so, such as to avoid
purchasing odd-lots (i.e., purchasing less than the usual
number of shares traded for a security), for tax considerations,
or to address liquidity considerations with respect to a stock,
the Adviser may cause the fund’s weighting of a stock to be
more or less than the index’s weighting of the stock. The
fund may sell securities that are represented in the index in
anticipation of their removal from the index, or buy securities
that are not yet represented in the index in anticipation of
their addition to the index.
1 Index
ownership — “Dow Jones” and “The Dow
Jones U.S. Small-Cap Total Stock Market
Indexsm”
are service marks of Dow Jones Trademark Holdings, LLC
(“Dow Jones”), have been licensed to CME Group Index
Services LLC (“CME”), and sublicensed for use for
certain purposes by CSIM, the fund’s investment adviser.
Fees payable under the license are payable by CSIM. The Schwab
U.S. Small-Cap ETF, based on The Dow Jones
U.S. Small-Cap Total Stock Market
Indexsm,
is not sponsored, endorsed, sold or promoted by Dow Jones or CME
and neither makes any representation regarding the advisability
of trading in such product.
1 of
4
Under normal circumstances, the fund may invest up to 10% of its
net assets in securities not included in its index. The
principal types of these investments include those that the
Adviser believes will help the fund track the index, such as
investments in (a) securities that are not represented in
the index but the Adviser anticipates will be added to the index
or as necessary to reflect various corporate actions (such as
mergers and spin-offs), (b) other investment companies, and
(c) derivatives, principally futures contracts. The fund
may use futures contracts and other derivatives primarily to
seek returns on the fund’s otherwise uninvested cash assets
to help it better track the index. The fund may also invest in
cash and cash equivalents, and may lend its securities to
minimize the difference in performance that naturally exists
between an index fund and its corresponding index.
Because it may not be possible or practicable to purchase all of
the stocks in the index, the Adviser seeks to track the total
return of the index by using statistical sampling techniques.
These techniques involve investing in a limited number of index
securities which, when taken together, are expected to perform
similarly to the index as a whole. These techniques are based on
a variety of factors, including performance attributes, tax
considerations, capitalization, dividend yield, price/earnings
ratio, industry factors risk factors and other characteristics.
The fund generally expects that its portfolio will hold less
than the total number of securities in the index, but reserves
the right to hold as many securities as it believes necessary to
achieve the fund’s investment objective. The fund generally
expects that its industry weightings, dividend yield and
price/earnings ratio will be similar to those of the index.
The fund will concentrate its investments (i.e., hold 25%
or more of its total assets) in a particular industry, group of
industries or sector to approximately the same extent that its
index is so concentrated. For purposes of this limitation,
securities of the U.S. government (including its agencies
and instrumentalities), and repurchase agreements collateralized
by U.S. government securities are not considered to be
issued by members of any industry.
The Adviser seeks to achieve, over time, a correlation between
the fund’s performance and that of its index, before fees
and expenses, of 95% or better. However, there can be no
guarantee that the fund will achieve a high degree of
correlation with the index. A number of factors may affect the
fund’s ability to achieve a high correlation with its
index, including the degree to which the fund utilizes a
sampling technique. The correlation between the performance of
the fund and its index may also diverge due to transaction
costs, asset valuations, corporate actions (such as mergers and
spin-offs), timing variances, and differences between the
fund’s portfolio and the index resulting from legal
restrictions (such as diversification requirements) that apply
to the fund but not to the index.
Principal
risks
The fund is subject to risks, any of which could cause an
investor to lose money. The fund’s principal risks include:
Market Risk. Stock markets rise and fall daily. As
with any investment whose performance is tied to these markets,
the value of your investment in the fund will fluctuate, which
means that you could lose money.
Investment Style Risk. The fund is not actively
managed. Therefore, the fund follows the securities included in
the index during upturns as well as downturns. Because of its
indexing strategy, the fund does not take steps to reduce market
exposure or to lessen the effects of a declining market. In
addition, because of the fund’s expenses, the fund’s
performance is normally below that of the index.
Equity Risk. The prices of equity securities rise
and fall daily. These price movements may result from factors
affecting individual companies, industries or the securities
market as a whole. In addition, equity markets tend to move in
cycles, which may cause stock prices to fall over short or
extended periods of time.
Small-Cap Risk. Historically, small-cap stocks have
been riskier than large- and mid-cap stocks, and their prices
may move sharply, especially during market upturns and
downturns. Small-cap companies may be more vulnerable to adverse
business or economic events than larger, more established
companies. During a period when small-cap stocks fall behind
other types of investments — large-cap and mid-cap
stocks, for instance — the fund’s small-cap
holdings could reduce performance.
Sampling Index Tracking Risk. The fund may not fully
replicate the index and may hold securities not included in the
index. As a result, the fund is subject to the risk that the
adviser’s investment management strategy, the
implementation of which is subject to a number of constraints,
may not produce the intended results. Because the fund utilizes
a sampling approach it may not track the return of the index as
well as it would if the fund purchased all of the securities in
its benchmark index.
Tracking Error Risk. As an index fund, the fund
seeks to track the performance of its benchmark index, although
it may not be successful in doing so. The divergence between the
performance of the fund and its benchmark 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 and could cause the fund to
lose more than the principal amount invested. In addition,
investments in derivatives may involve leverage, which means a
small percentage of assets invested in derivatives can have a
disproportionately larger impact on the fund.
Liquidity Risk. A particular investment may be
difficult to purchase or sell. The fund may be unable to sell
illiquid securities at an advantageous time or price.
Securities Lending Risk. Securities lending involves
the risk of loss of rights in the collateral or delay in
recovery of the collateral 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 susceptible to
adverse economic, market, political or regulatory occurrences
affecting that market, industry, group of industries, sector or
asset class.
| Summary Prospectus March 18, 2011 | 2 of 4 | Schwab U.S. Small-Cap ETFtm |
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. You may pay more
than NAV when you buy shares of the fund in the secondary
market, and you may receive less than NAV when you sell those
shares in the secondary market.
Lack of Governmental Insurance or Guarantee. An
investment in the fund is not a bank deposit and it is not
insured or guaranteed by the Federal Deposit Insurance
Corporation (FDIC) or any other government agency.
For more information on the risks of investing in the fund
please see the “Fund details” section in the
prospectus.
Performance
The fund does not have a full calendar year of performance
history. Once the fund has completed a full calendar year of
operations a bar chart and table will be included that will
provide some indication of the risks of investing in the fund by
showing the variability of the fund’s returns and comparing
the fund’s performance to the index.
Investment
adviser
Charles Schwab Investment Management, Inc.
Portfolio
managers
Agnes Hong, CFA, a managing director and portfolio
manager of the investment adviser, has
day-to-day
responsibility for the co-management of the fund. She has
managed the fund since 2009.
Ferian Juwono, CFA, a managing director and portfolio
manager of the investment adviser, has
day-to-day
responsibility for the co-management of the fund. He has managed
the fund since 2010.
Purchase
and sale of fund shares
The fund issues and redeems shares at its NAV only in large
blocks of shares, typically 50,000 shares or more
(“Creation Units”). These transactions are usually in
exchange for a basket of securities included in the index and an
amount of cash. As a practical matter, only institutions or
large investors purchase or redeem Creation Units. Except when
aggregated in Creation Units, shares of the fund are not
redeemable securities.
Individual shares of the fund trade on national securities
exchanges and elsewhere during the trading day and can only be
bought and sold at market prices throughout the trading day
through a broker-dealer. Because fund shares trade at market
prices rather than NAV, shares may trade at a price greater than
NAV (premium) or less than NAV (discount).
Tax
information
Dividends and capital gains distributions received from the fund
will generally be taxable as ordinary income or capital gains,
unless you are investing through an IRA, 401(k) or other
tax-advantaged account.
| Summary Prospectus March 18, 2011 | 3 of 4 | Schwab U.S. Small-Cap ETFtm |
REG58806FLD-02
Schwab
U.S. Small-Cap
ETFtm;
Ticker Symbol: SCHA
| Summary Prospectus March 18, 2011 | 4 of 4 | Schwab U.S. Small-Cap ETFtm |