Mutual Fund Summary Prospectus (497k)
28 Fevereiro 2014 - 3:47PM
Edgar (US Regulatory)
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Summary Prospectus
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February 28, 2014
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Schwab U.S. TIPS
ETF
Ticker
Symbol: SCHP
Before you invest, you may want to review the funds prospectus, which contains more information about the fund and its risks. You can find the
funds 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
funds prospectus, SAI, and other information about the fund are available from your financial intermediary.
The funds prospectus
dated April 30, 2013, and SAI dated April 30, 2013, as supplemented February 28, 2014, 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 funds goal is to track as closely as possible, before fees and expenses, the price and yield performance of the Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index
(Series L)
SM
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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.
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Shareholder fees
(fees paid
directly from your investment)
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None
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Annual fund operating expenses
(expenses that you pay each year
as a % of the value of your investment)
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Management fees
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0.07
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Other expenses
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None
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Total annual fund operating expenses
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0.07
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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 funds 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.
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Expenses on a $10,000 investment
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1 year
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3 years
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5 years
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10 years
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$7
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$23
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$40
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$90
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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 funds performance. During the most recent fiscal year, the
funds portfolio turnover rate was 22% of the average value of its portfolio.
Principal investment strategies
To pursue its goal, the fund generally invests in securities that are included in the Barclays U.S. Treasury Inflation Protected
Securities (TIPS) Index (Series L)
1
.
The index includes all publicly-issued U.S. Treasury
Inflation-Protected Securities (TIPS) that have at least one year remaining to maturity, are rated investment grade and have $250 million or more of outstanding face value. The TIPS in the index must be denominated in U.S. dollars and must
be fixed-rate and
non-convertible.
The index is market capitalization weighted and the TIPS in the index are updated on the last business day of each month. As of March 28, 2013, there were 34 TIPS in the
index. TIPS are publicly issued, dollar denominated U.S. Government securities issued by the U.S. Treasury that have principal and interest payments linked to an official inflation measure (as measured by the Consumer Price Index, or CPI)
and their payments are supported by the full faith and credit of the United States.
It is the funds policy that under normal
circumstances it will invest at least 90% of its net assets in securities included in the index. 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
security as the index does. However, when the adviser believes it is in the best interest of the fund, 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 security, the adviser may cause the funds weighting of a security to be more or less than the indexs weighting of the security.
1
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Index ownership
©
Barclays Inc. 2013. All rights reserved. The Schwab
U.S. TIPS ETF is not sponsored, endorsed, sold or promoted by Barclays. Barclays does not make any representation regarding the advisability of investing in shares of the fund.
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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; (b) high-quality liquid short-term investments, such as securities issued by the U.S. government, its agencies or instrumentalities, including obligations that are not guaranteed by the U.S. Treasury, and
obligations that are issued by private issuers that are guaranteed as to principal or interest by the U.S. government, its agencies or instrumentalities, and (c) investment companies. The fund may also invest in cash, cash equivalents and
money market funds, enter into repurchase agreements, and may lend its securities to minimize the difference in performance that naturally exists between an index fund and its corresponding index.
The adviser typically seeks to track the price and yield performance of the index by replicating the index. This means that the fund generally expects
that it will hold the same securities as those included in the index. However, the adviser may use statistical sampling techniques if the adviser believes such use will best help the fund to track its index or is otherwise in the best interest of
the fund. Statistical sampling techniques involve investing in a limited number of index securities that, when taken together, are expected to perform similarly to the index as a whole. These techniques are based on a variety of factors, including
interest rate and yield curve risk, maturity exposures, and other risk factors and characteristics. The fund generally expects that its yield and maturity will be similar to those of the index. In addition, the fund generally expects that its
weighted average effective duration will closely correspond to the weighted average effective duration of the index, which as of March 28, 2013 was 8.1 years.
The adviser seeks to achieve, over time, a correlation between the funds 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 funds 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, timing variances, and differences between the funds 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 funds principal risks include:
Market Risk.
Bond 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 funds expenses, the funds performance is normally below that of the index.
Interest Rate Risk.
Interest rates will rise and fall over time. During periods when interest
rates are low, the funds yield and total return also may be low. Changes in interest rates also may affect the funds share price: a sharp rise in interest rates could cause the funds share price to fall. The longer the funds
duration, the more sensitive to interest rate movements its share price is likely to be.
Credit Risk.
The fund is subject to the
risk that a decline in the credit quality of a portfolio investment could cause the fund to lose money or underperform. The fund could lose money if the issuer or guarantor of a portfolio investment fails to make timely principal or interest
payments or otherwise honor its obligations.
Inflation Protected Security Risk.
The value of inflation protected securities,
including TIPS, generally will fluctuate in response to changes in real interest rates, generally decreasing when real interest rates rise and increasing when real interest rates fall. Real interest rates represent nominal (or stated)
interest rates reduced by the expected impact of inflation. In addition, interest payments on inflation-indexed securities will generally vary up or down along with the rate of inflation.
Sampling Index Tracking Risk.
To the extent the fund uses statistical sampling techniques, the fund will not fully replicate the index and may hold securities not included in the index. As a
result, the fund will be subject to the risk that the advisers investment management strategy, the implementation of which is subject to a number of constraints, may not produce the intended results. If the fund uses 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 the 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. For example, the fund may not invest in certain securities in its benchmark index or match the securities weighting to the benchmark.
Liquidity Risk.
A particular investment may be difficult to purchase or sell. The fund may be unable to sell a security 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.
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 funds 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 bar chart below shows how the funds investment results have varied from year to year, and the following table shows how the funds 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.schwabetfs.com/prospectus
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Annual total returns
(%) as of
12/31
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Best quarter: 4.49% Q3 2011
Worst quarter: 0.66% Q4 2012
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Average annual total returns
(%) as of 12/31/12
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1 year
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Since
Inception
(8/3/2010)
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Before taxes
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6.83%
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8.94%
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After taxes on distributions
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6.23%
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8.16%
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After taxes on distributions and sale of shares
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4.43%
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7.19%
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Comparative Index (reflects no deduction for expenses or taxes)
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Barclays U.S. Treasury Inflation Protected Securities (TIPS) Index (Series L)
SM
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6.98%
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9.10%
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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, IRA or other
tax-advantaged
account.
Investment adviser
Charles Schwab Investment Management, Inc.
Portfolio managers
Matthew Hastings, CFA,
Managing Director and Head of Taxable Bond Strategies, is responsible for the day-to-day co-management of the fund. He has
managed the fund since 2010.
Steven Chan, CFA,
Managing Director and Portfolio Manager, is responsible for the day-to-day co-management
of the fund. He has managed the fund since 2010.
Brandon Matsui, CFA,
Managing Director and Portfolio Manager, is responsible for the
day-to-day 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/or 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.
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REG56417-12 00112505
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Schwab U.S. TIPS ETF
TM
; Ticker Symbol: SCHP
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