Information about Trades Executed through Broker-Dealers Other than Schwab in the Managed Account Select^® and Managed Account Connection^® Programs

October 1, 2024

Charles Schwab & Co., Inc. ("Schwab") sponsors the Managed Account Select ("Select") and Managed Account Connection ("Connection") programs (each a "program") in which Schwab-affiliated and non-affiliated asset managers ("Managers") have discretionary authority to trade in enrolled accounts. The asset-based fee that you pay for the program ("Program Fee") covers the cost of commissions and other execution charges for trades executed through Schwab, but not any additional cost, such as a commission or markup, associated with trades placed directly by Managers with other broker-dealers (collectively, "Trading Away", "Trades Away", or other variations thereof). 

As set forth in the Charles Schwab & Co., Inc. Disclosure Brochure for: Schwab Managed Account Services™ Wrap Fee Program; Schwab Managed Portfolios™ Wrap Fee Program; Schwab Financial Planning Services, the Program Fee also does not cover mark-ups or mark-downs on fixed income trades, whether they are traded through Schwab or traded away. For fixed income securities, additional costs such as a markup/markdown or spread are generally included in the net price and are not reflected as a separate charge on trade confirmations or account statements.

Some Managers (including without limitation fixed income strategies, Charles Schwab Investment Management, Inc. ("CSIM") for the Windhaven^® Strategies, the ThomasPartners^® Strategies, Wasmer Schroeder™ Strategies, and certain types of USAA Managed Portfolios – UMP^® program strategies, Selective Portfolios,  , and including Managers with certain equity strategies, especially small-cap or preferred strategies) execute most or all of their program trades by Trading Away. Managers may have good reasons for Trading Away, such as to meet their obligation to achieve "best execution" for their clients (including clients outside of the programs) – in other words, the best possible trading result, taking into account such factors as price, extra costs, speed and likelihood of execution. Managers may reasonably believe that they are able to achieve better trading results by Trading Away, including better net pricing even with any additional cost associated with Trading Away. In addition to cost considerations, a Manager may consider various other factors as described in their Form ADV brochure ("Brochure"), including the liquidity of the security, the need for timely execution, and other brokerage and research services they receive from that broker-dealer.

Nevertheless, any additional cost of Trading Away is in addition to the Program Fee and, like all costs, will reduce the total return of your account enrolled in the program.  The more frequently a Manager Trades Away, the greater the potential additional cost and the greater the potential reduction in total return. Please review this disclosure and additional information about Trading Away and other Manager trading practices in the Charles Schwab & Co., Inc. Disclosure Brochure for: Schwab Managed Account Services™ Wrap Fee Program; Schwab Managed Portfolios™ Wrap Fee Program; Schwab Financial Planning Services in deciding whether to enroll in or remain enrolled in the program. If you have any questions, please contact your Schwab Financial Consultant or another Schwab representative.

The table below describes the self-reported frequency with which Managers engaged in Trading Away, and any additional cost associated with such trades, in program investment strategies during the time periods specified.
 
The information was provided by the Managers and has not been verified by Schwab. It is historical data about the Manager's past practice, and the Manager may not follow the same practice with the same frequency or resulting cost in the future. Additional information about your Manager's practices may be contained in your Manager's Brochure. If your Manager is not listed below, it is because they reported no Trading Away during the time period(s) shown.