Schwab Core Bond ETF (SCCR US) – Portfolio Construction Methodology

The investment philosophy governing the actively managed Schwab Core Bond ETF seeks total return with income by investing primarily in U.S. dollar-denominated, investment-grade debt (USD). Under normal circumstances ≥80% of net assets are in debt securities across corporates (including U.S. dollar bonds of non-U.S. issuers), taxable municipals, U.S. Treasuries, government-related bonds, agency mortgage pass-throughs, CMBS, and ABS; the fund has flexibility across maturities and duration. Credit quality at purchase is investment grade or, if unrated, deemed equivalent by the adviser. Derivatives such as futures and other instruments may be used for efficient exposure, duration management, or hedging; cash and money-market instruments may be held defensively. Portfolio construction balances sector, issuer, and structure exposures to manage interest-rate, credit, and prepayment/extension risks. Rebalancing is continuous and research-driven, reflecting changes in fundamentals, relative value, and risk conditions rather than a fixed schedule.

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