Fund Description

The fund invests at least 80% of net assets (including borrowings for investment purposes) in small-cap equity securities, generally those within the Russell 2000 Index universe at purchase, and seeks long-term performance exceeding the Index. The fund approaches risk management from the perspective of the Index and seeks volatility similar to it. The fund actively selects portfolio securities and uses Schwab Equity Ratings to aid its stock selection, and the portfolio managers also utilize investment data and other analytics to help manage the fund's portfolio, typically maintaining an overall tilt toward highly rated stocks. The fund uses a portfolio optimization process to assist in constructing the portfolio and seeks an optimal balance between risk and expected return, subject to parameters such as the number of stocks desired in the portfolio, the level of portfolio turnover, industry and sector diversification, and volatility considerations. It may use futures on uninvested cash, invest in ETFs and REITs, lend securities, or temporarily hold up to 100% in cash and short-term instruments.