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Schwab's Financial and Other Relationships with Mutual Funds

Context
No Transaction Fee Funds
Transaction Fee Funds
Load Funds
Schwab-Affiliated Funds
Share Classes, Investment Minimums, Fees and Expenses
Fund Marketing and Sponsorships
Fund Education
Additional Information

Context


At Charles Schwab & Co., Inc. ("Schwab"), we believe it's important for you to understand how the compensation Schwab receives from mutual funds might affect you. This information can help you identify and evaluate any potential conflicts of interest that Schwab may have when you purchase a mutual fund through your Schwab account. This website provides an ongoing resource through which our clients can learn about Schwab's relationships with the mutual funds we make available through Schwab's Mutual Fund Marketplace®. 

What Does This Website Discuss?


This website primarily focuses on the various forms of compensation Schwab receives from the different kinds of mutual funds Schwab makes available for purchase, including mutual funds that are affiliated with Schwab ("Schwab Affiliated Funds"). The types of compensation that Schwab receives from a fund depends on the manner in which the fund, subject to Schwab's parameters, chooses to be made available to customers at Schwab. For example, Schwab receives different compensation from funds that choose to participate in its Schwab Mutual Fund OneSource® service—Schwab's no-load, no-transaction fee fund platform—than it receives from Schwab Affiliated Funds and other funds available through the Marketplace, such as load mutual funds and funds for which you pay Schwab a transaction fee.

Schwab currently has two affiliated mutual fund families: the Schwab Funds® and the Laudus™ Funds. Charles Schwab Investment Management, Inc. ("CSIM"), a subsidiary of the Charles Schwab Corporation (the "Corporation"), serves as investment advisor to the Schwab Funds and the Laudus Funds. Because CSIM is an affiliate of Schwab, and compensation received by CSIM may also create potential conflicts of interest, this website also discusses the compensation received by CSIM from the Schwab Affiliate Funds.

This website does not discuss how Schwab compensates its financial consultants for recommending or selling mutual funds, which could also create potential conflicts of interest. Schwab's financial consultant compensation policy is discussed in detail in a separate section of www.schwab.com. If you are interested in learning more about the manner in which Schwab compensates its financial consultants for sales of mutual funds, please review Schwab's Representatives' Compensation policy.

What Payments Does Schwab Receive from Mutual Funds?

Schwab receives fees and other remuneration from mutual fund companies or their affiliates for the recordkeeping, shareholder services, and other administrative services that Schwab provides to shareholders of the funds. These services include, among other things, transaction processing, settlement of trades, dividend distribution, record maintenance, and distribution of statements, confirmations, prospectuses and other regulatory shareholder documents ("Shareholder Services"). 

Schwab receives different types of Shareholder Service fees from the funds depending on whether a fund is a (1) OneSource or No Transaction Fee ("NTF") Fund; (2) Transaction Fee Fund; (3) Load Fund; or (4) Schwab-Affiliated Mutual Fund. The following describes the payments Schwab may receive from each of these types of funds.

Fund Payments to Schwab

OneSource and No Transaction Fee (NTF) Funds
Transaction Fee Funds
Load Funds
Schwab-Affiliated Mutual Funds

Additional Payments for Fund Marketing and Sponsorship Opportunities
Additional Payments for Fund Education Opportunities
Additional Information

What Else Should I Know About Buying Mutual Funds Through Schwab?