Schwab Unveils Performance Results for Schwab Equity Ratings; Major Brokerage Firm Provides Access to Performance Reporting on All its Stock Ratings.

Business Editors

NEW YORK--(BUSINESS WIRE)--May 13, 2003

Charles Schwab & Co., Inc. (NYSE:SCH), one of the nation's leading financial services companies, today announces public disclosure of performance reporting on all its stock ratings.

With one year of performance data available since the Company launched its Schwab Equity Ratings(TM) on May 6th, 2002, the general public can now see how each of Schwab's equity ratings performed during rolling 52-week periods by going to www.schwab.com, and clicking on "Markets & Research," then "Schwab Equity Ratings." Results are benchmarked against both the Wilshire 5000(TM) Total Market Index and the average performance of the more than 3,000 stocks which Schwab rates.

"Investors deserve to know how their broker's stock research performs, in up markets and down, regardless of whether it's good or bad," said Jerry Chafkin, Schwab executive vice president, Investment Advice and Products. "Investors want credible research to help them feel confident about their investment decisions. The only way they'll be able to judge the overall quality of that research is by knowing how it performed."

A survey sponsored by Schwab and conducted by a non-affiliated firm, Opinion Research Corporation, underscores the demand for objective research combined with performance information. The survey found that 76% of those surveyed said that research conducted by independent research firms, that are not financially tied to the companies they evaluate, is more valuable than research conducted by Wall Street firms that are financially tied to the companies they evaluate. Additionally, 66% said they would like to know how well stock analysts' recommendations compare to subsequent stock performance.

"Clearly investors want accountability," said Chafkin. "We knew when we launched Schwab Equity Ratings a year ago that investors would want more than a 'take-it-on-faith' approach to equity research. Our plan from the beginning was to launch a performance reporting mechanism that allows investors to judge the effectiveness of all our ratings. Since then, investors have become even more focused on credibility and accountability. With the necessary one-year data under our belt, Schwab is proud to make this information publicly available."

Schwab Equity Ratings assigns each rated equity a simple A, B, C, D, or F grade. Schwab expects that, on average, A-rated stocks will strongly outperform the overall equities market over the next 12 months, while F-rated stocks will strongly underperform. As noted below, over the past 52 weeks, the ratings have performed as designed with the A-rated stocks averaging less of a decline than the Wilshire 5000 index and the F-rated stocks averaging a significantly greater decline.

On its Web site, Schwab provides two benchmarks (for the period May 6, 2002- May 5, 2003):

-- The Wilshire 5000 Index (with a universe of more than 6,000

stocks) was down by 10.48%

-- The Schwab Equity Ratings benchmark performance of all

equities rated A-F (approximately 3,500 stocks) was down by

13.48%

Compared to the benchmarks (also for the period May 6, 2002- May 5, 2003):

-- The average performance of all A-rated stocks (approximately

350) was down by only 5.93%

-- The average performance of all F-rated stocks (approximately

350) was down by 30.81%

Each month the results for the most recent 52-week periods will be reported on Schwab's Web site. Please see Important Disclosure Information below including limitations of model performance, treatment of transaction and other costs, and the number of rated stocks that advanced and declined during the period indicated.

Schwab Equity Ratings Help Investors Build Better Portfolios

Schwab Equity Ratings were designed for Schwab's individual investor clients and independent investment advisors who do business with Schwab. The ratings, available on Schwab's client Web site or through the firm's Investment Consultants, are based on objective criteria rather than the subjective views on individual companies provided by many brokerage firms. Independent investment advisors working with Schwab can access the ratings through the comprehensive investment research workstation at www.Schwabinstitutional.com. Generally updated weekly, the ratings can help clients easily compare a broad range of stocks from different industries and identify candidates for use in building a diversified portfolio.

Unlike other firms whose ratings are typically dominated by buy recommendations, the number of Schwab-rated stocks with A and B ratings is equal to the number of stocks with D and F ratings. With coverage on more than 3,000 stocks, Schwab provides individual investors with analysis and ratings on more U.S.- headquartered equities than any other major brokerage firm.

Schwab clients have access to a Charles Schwab Equity Snapshot Report(TM) on each covered equity, providing Schwab's rating and underlying component grades--fundamental, valuation, momentum and risk--to provide insight into why a stock earned a particular rating as well as a company summary and financial data.

In addition to its ratings of individual equities, each week Schwab publishes short lists of highly rated stocks sorted by sector and investment style preference. Schwab Equity Ratings are complemented by access to third party research that includes Goldman Sachs PrimeAccess Research(SM), as well as research from Standard & Poor's, Argus and First Call.

In the past year, Charles Schwab Investment Management, an affiliate of Charles Schwab, has created products that use Schwab Equity Ratings in conjunction with other analytical tools to help guide stock selection and offer the convenience of professional management. The Schwab Hedged Equity Fund(1) uses the ratings by taking long positions mostly in A- and B-rated stocks and short selling mostly D- and F-rated stocks. Its goal is to provide long-term capital appreciation through market cycles with potentially less volatility than the broad equity market. The Schwab Core Equity Fund(1) uses the ratings to guide stock selection by investing primarily in A- and B-rated stocks with diversification and risk similar to the S&P 500 Index. Schwab Personal Portfolios is a managed account available to Schwab Private Clients that also uses the ratings.

About Charles Schwab

The Charles Schwab Corporation (NYSE:SCH), through Charles Schwab & Co., Inc. (member SIPC/NYSE), U.S. Trust Corporation, CyberTrader, Inc. and its other operating subsidiaries, is one of the nation's largest financial services firms serving 8.0 million active accounts with $763 billion in client assets. The Charles Schwab, U.S. Trust and CyberTrader Web sites can be reached at www.schwab.com, www.ustrust.com and www.cybertrader.com, respectively. (0503-7074)

Important Disclosure Information

(1) For complete information, including charges and expenses, please obtain a prospectus by calling 1-800-435-4000. Please read the prospectus carefully before investing.

Note: 3,433 stocks received a Schwab Equity Rating on May 6, 2002. The number of stocks with a positive return from May 6, 2002 to May 5, 2003 is 1077. The number of stocks with a negative return is 2,356.

Please visit schwab.com or contact Schwab Corporate Communications Dept. at 415-636-5454 for a complete record of Schwab Equity Rating performance figures.

How Performance Is Calculated

Schwab follows a straightforward approach to calculating historical performance. First, Schwab creates five cohorts (defined as those stocks that received the same A, B, C, D or F rating on the start date). Schwab calculates the total return for each stock in each A, B, C, D and F rating cohort by dividing the ending price plus dividends paid during the period, if any, by the starting price for a particular holding period, minus one. Returns are calculated based on the market closing prices on the Holding Period Start Date and the market closing prices on the Holding Period End Date. Start Dates and End Dates are the first trading day of the week (generally Mondays).

All stocks within a Schwab Equity Rating cohort are equal-weighted at the beginning of the performance calculation period, meaning each stock has the same value relative to any other stock. Performance is calculated assuming stocks are held for the entire holding period, unless the stock has stopped trading due to acquisition, financial distress, delisting by an exchange, or other similar circumstance. If the stock has stopped trading it is assumed to be liquidated on the close of its last trading day, without transaction costs. Proceeds, if any, are held as non-interest bearing cash. In instances in which a stock continues to trade but its stock symbol changes during a performance calculation period, the symbol reflected will be the stock's symbol as of the start of the applicable performance calculation period.

After individual stock returns are calculated, Schwab averages the total returns for all of the stocks within a cohort during that time period to find the average return.

Transaction costs such as brokerage commissions, fees or other expenses have not been deducted from the total return calculations. Results would have been lower if such costs were deducted.

Limitations of Model Performance

Model performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual investment performance or trading. Also, since the trades have not actually been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as the effect of limited trading liquidity. No representation is being made that any investor will or is likely to achieve profits or losses similar to those shown.

The results presented should not and cannot be viewed as an indicator of future performance, as an indicator of the returns a Schwab client would have realized or will realize in relying on Schwab Equity Ratings, or how individual Schwab Equity Ratings are performing or will perform in the future. Schwab Equity Ratings and other information presented is general information that does not take into account your individual circumstances, investing objectives, financial situation or needs, nor does it represent a personalized recommendation of a particular stock or stocks to you. Stocks can be volatile and entail risk, and individual stocks may not be suitable for you. You should not buy or sell a stock without first considering whether it is appropriate for you and your portfolio. Additionally, you should review and consider any recent market or company news.

Comparison of Performance to Benchmarks

For comparison purposes, Schwab has selected two benchmarks-the Wilshire 5000 Total Market Index and the Average Performance of Stocks Rated A-F. The Wilshire 5000 Total Market Index was selected as a benchmark because it is a widely published, broad-based index that tracks performance of all publicly traded, U.S.-headquartered stocks with readily available price data. The Average Performance of Stocks Rated A-F is the arithmetic mean return of all stocks with Schwab Equity Ratings for each performance period. This benchmark provides a comparison of the relative performance of each cohort against all stocks with Schwab Equity Ratings at the beginning of that time period.

There are three key differences between the Wilshire 5000 Total Market Index and the Average Performance of Stocks Rated A-F:

1. The number of stocks tracked-the Wilshire 5000 Total Market Index tracks over 6,500 stocks versus about 3,500 stocks in the Average Performance of Stocks Rated A-F;

2. How stock returns are weighted-the Wilshire 5000 Total Market Index, like the S&P 500 Index, is market-capitalization weighted, giving larger companies more influence over the Index movements. The Average Performance of Stocks Rated A-F is compiled giving all stocks equal-weight at the beginning of the holding period; and

3. How dividends are reinvested-the Wilshire 5000 Total Market Index reinvests dividends on the ex-dividend date back into the Index; whereas, the Average Performance of Stocks Rated A-F treats dividends as non-interest bearing cash for the remainder of the holding period. In other words, dividends for the latter are not reinvested.