UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT
OF
REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-7704
Schwab Capital Trust
(Exact name of registrant as specified in charter)
211 Main Street, San Francisco, California 94105
(Address of principal executive offices) (Zip code)
Marie Chandoha
Schwab Capital Trust
211 Main Street, San Francisco, California 94105
(Name and address of agent for service)
Registrant’s telephone number, including area code: (415) 636-7000
Date of fiscal year end: October 31
Date of reporting period: October 31, 2010
| | |
| Item 1: | | Report(s) to Shareholders. |
Annual report dated October 31, 2010 enclosed.
Schwab MarketTrack Portfolios ®
Schwab MarketTrack
All Equity Portfoliotm
Schwab MarketTrack
Growth Portfoliotm
Schwab MarketTrack
Balanced Portfoliotm
Schwab MarketTrack
Conservative Portfoliotm
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Schwab MarketTrack Portfolios ®
Annual Report
October 31, 2010
Schwab MarketTrack
All Equity Portfoliotm
Schwab MarketTrack
Growth Portfoliotm
Schwab MarketTrack
Balanced Portfoliotm
Schwab MarketTrack
Conservative Portfoliotm
This page is intentionally left blank.
Four portfolios that combine the power of
indexing with the benefits of asset allocation.
In This Report
Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor: Charles Schwab & Co., Inc. (Schwab).
The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS) which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. (MSCI) and Standard & Poor’s (S&P). GICS is a service mark of MSCI and S&P and has been licensed for use by Charles Schwab & Co., Inc. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.
Performance at a Glance
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
| | | | | |
| Total Return for the Report Period | |
| |
| |
| Schwab MarketTrack All Equity Portfoliotm (Ticker Symbol: SWEGX) | | | 16.62% | |
|
| All Equity Composite Index | | | 15.64% | |
| Fund Category: Morningstar Large-Cap Blend | | | 15.53% | |
|
| Performance Details | | | pages 6-7 | |
|
| |
|
| Schwab MarketTrack Growth Portfoliotm | | | | |
|
| Investor Shares (Ticker Symbol: SWHGX) | | | 14.86% | |
| P Shares (Ticker Symbol: SWPGX) | | | 15.00% | |
| Growth Composite Index | | | 14.41% | |
| Fund Category: Morningstar Large-Cap Blend | | | 15.53% | |
|
| Performance Details | | | pages 8-9 | |
|
| |
|
| Schwab MarketTrack Balanced Portfoliotm (Ticker Symbol: SWBGX) | | | 12.92% | |
|
| Balanced Composite Index | | | 12.94% | |
| Fund Category: Morningstar Moderate Allocation | | | 13.46% | |
|
| Performance Details | | | pages 10-11 | |
|
| |
|
| Schwab MarketTrack Conservative Portfoliotm (Ticker Symbol: SWCGX) | | | 10.98% | |
|
| Conservative Composite Index | | | 11.32% | |
| Fund Category: Morningstar Conservative Allocation | | | 11.92% | |
|
| Performance Details | | | pages 12-13 | |
|
| |
|
| Minimum Initial Investment1 | | | | |
|
| Investor Shares | | | $ 100 | |
| P Shares | | | $100,000 | |
|
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
Portfolio expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the portfolio’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares.
The All Equity Composite Index is a custom blended index developed by CSIM based on a comparable portfolio asset allocation and calculated using the following portion allocations: 70% Dow Jones U.S. Total Stock Market Index and 30% MSCI EAFE Index. The index is maintained by Charles Schwab Investment Management, Inc.
The Growth Composite Index is a custom blended index developed by CSIM based on a comparable portfolio asset allocation and calculated using the following portion allocations: 60% Dow Jones U.S. Total Stock Market Index, 20% MSCI EAFE Index, 15% Barclays Capital U.S. Aggregate Bond Index, and 5% Barclays Capital U.S. Treasury Bills: 1-3 Months Index. The index is maintained by Charles Schwab Investment Management, Inc.
The Balanced Composite Index is a custom blended index developed by CSIM based on a comparable portfolio asset allocation and calculated using the following portion allocations: 45% Dow Jones U.S. Total Stock Market Index, 15% MSCI EAFE Index, 35% Barclays Capital U.S. Aggregate Bond Index, and 5% Barclays Capital U.S. Treasury Bills: 1-3 Months Index. The index is maintained by Charles Schwab Investment Management, Inc.
The Conservative Composite Index is a custom blended index developed by CSIM based on a comparable portfolio asset allocation and calculated using the following portion allocations: 30% Dow Jones U.S. Total Stock Market Index, 10% MSCI EAFE Index, 55% Barclays Capital U.S. Aggregate Bond Index, and 5% Barclays Capital U.S. Treasury Bills: 1-3 Months Index. The index is maintained by Charles Schwab Investment Management, Inc.
Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date.
| |
| 1 | Please see prospectus for further details and eligibility requirements. |
2 Schwab MarketTrack Portfolios
From the President
Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report.
Dear Shareholder,
During the year that ended October 31, 2010, many investors wrestled with news that was mostly negative—the recovery of the U.S. economy remained tepid, unemployment stayed stubbornly high, and the housing market remained weak. In spite of these events, nearly all stock and bond markets produced positive returns, both in the United States and abroad.
The bellwether S&P 500 Index gained 16.52% during the year and international stock markets also rewarded investors as indicated by a return of 8.82% in the MSCI EAFE Index. Growth stocks generally fared better than value stocks in large-, mid-, and small-cap sectors. In fixed income markets, the Barclays Capital U.S. Aggregate Bond Index returned 8.01%.
For the year ending October 31, 2010, the Schwab MarketTrack Portfolios produced positive total returns comparable to their composite indices, aided by the strong rebound in equities in the latter part of the period and solid continuing performance from the bond markets. The Schwab MarketTrack All Equity Portfolio and Schwab MarketTrack Growth Portfolio slightly outperformed their benchmark indices while the Schwab MarketTrack Balanced Portfolio and the Schwab MarketTrack Conservative Portfolio modestly underperformed them.
Each Schwab MarketTrack Portfolio allocates its investments across several asset classes, according to a specific investment goal. Please read the fund manager’s discussion and analysis on the following pages to learn more about each fund’s approach.
At Schwab, we encourage investors to review their investment strategy periodically in the context of their tolerance for risk, timeline, and established investment plan.
If you have any questions about the Schwab MarketTrack Portfolios or any other Schwab Funds, please call us at 1-800-435-4000. Please also see www.schwabfunds.com for details on each fund including performance results, investment strategy, and prospectus.
Thank you for investing with us.
Sincerely,
Schwab MarketTrack Portfolios 3
The Investment Environment
The past 12 months produced significant positive returns in nearly all major equity and fixed income markets, despite various economic indicators falling short of expectations here in the United States and abroad. Domestic equity markets fared better than international, and growth stocks outperformed value stocks in large-, mid-, and small-cap categories. In the credit markets, inflation-protected bonds were the best performers and U.S. Treasuries had the poorest returns, though they also had solid performance for the 12 months under review.
The return for the S&P 500 Index, which is usually seen as a bellwether for U.S. financial markets, was positive at 16.52%. The international stock markets also had solid overall returns, and the MSCI EAFE Index (Gross) returned 8.82%. In fixed-income, the Barclays Capital U.S. Aggregate Bond Index returned 8.01%, while the Barclays Capital U.S. TIPS Index returned 10.42%, and the Barclays Capital U.S. Treasury Index returned 7.20% for the reporting period.
In a press release dated November 3, 2010, the Federal Reserve (the Fed) described information it had received since its meeting in September 2010, and noted that the pace of recovery in output and employment remained slow. Moreover, persistent high unemployment, coupled with depressed housing prices and a rise in foreclosures, continued to work against the U.S. economic recovery process. In the U.S. fixed income markets, accommodative Fed policy in the form of a near-zero federal funds rate remained intact, and several recent statements from the Fed affirmed that rates will remain low for an extended period of time. Also in November’s press release, the Fed stated that it intended to purchase up to $600 billion of longer-term U.S. Treasuries by the end of the second quarter in 2011.
At the international level, financial markets fluctuated during the reporting period. Ongoing concerns regarding the debt obligations of Greece, Spain, Ireland, and other European countries continued to capture the attention of central banks and resulted in the progressive downgrading of debt in those countries. The news caused temporary turmoil in the U.S. and global financial markets in early May 2010. While there has been some rebounding to pre-May levels in the markets, central banks remain attentive to debt ratios, monetary exchange rates, interest rates, and inflation measurements.
During the reporting period, two economic events caused volatility in the equity and fixed income markets. First, was the Deepwater Horizon oil spill in the Gulf of Mexico on April 20, 2010. The costs—in terms of environmental impact and loss of oil—affected energy-related stocks, which declined on the news. For the reporting period, the Energy Sector was the weakest performing sector in the S&P 500 Index. Second, investor confidence in the United States and abroad was further shaken on May 6, 2010, when the Dow Jones Industrial Average dropped 999 points, within a 30-minute timeframe, before partially regaining some of the decline. The equity market event was subsequently named the “flash crash.” As a result of the flash crash, more than 16,000 trades were cancelled by the major U.S. stock exchanges.
On a more general note in the United States, real Gross Domestic Product (GDP) growth remained lower than hoped for during the reporting period, with the Bureau of Economic Analysis estimating that GDP grew at a rate of 2.0% for the third quarter of 2010. Likewise, the national unemployment rate—as reported by the Bureau of Labor Statistics—was an ongoing concern and hovered just below 10% throughout the 12-month period. Finally, high delinquencies, foreclosures, and stalled foreclosures weighed heavily on the housing sector. The discovery that some institutions had improper or incomplete paperwork on original loan documents brought at least a temporary halt to some foreclosures.
Asset Class Performance Comparison % returns during the report period
This graph compares the performance of various asset classes during the report period. Final performance figures for the period are in the key below.
| | | | | |
| | | | | |
 | | 16.52% | | S&P 500® Index: measures U.S. large-cap stocks |
| | | | | |
 | | 26.58% | | Russell 2000® Index: measures U.S. small-cap stocks |
| | | | | |
 | | 8.82% | | MSCI EAFE® Index (Gross): measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East |
| | | | | |
 | | 8.01% | | Barclays Capital U.S. Aggregate Bond Index: measures the U.S. bond market |
| | | | | |
 | | 0.11% | | Three-Month U.S. Treasury Bills (T-bills): measures short-term U.S. Treasury obligations |
These figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and you cannot invest in them directly. Remember that past performance is not an indication of future results.
Data source: Charles Schwab & Co., Inc.
Nothing in this report represents a recommendation of a security by the investment adviser.
Manager views and portfolio holdings may have changed since the report date.
4 Schwab MarketTrack Portfolios
Portfolio Management
| | | |
| | | |
 | | Daniel Kern, CFA, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day management of the funds. He has been the portfolio manager of the funds since 2008. From 2003, until his appointment, he held vice president level positions in product development, investment operations and audit at the firm. Prior to joining the firm in 2003, he worked for more than 13 years in the investment management industry, with more than 6 of those years spent in portfolio management. |
Schwab MarketTrack Portfolios 5
Schwab MarketTrack All Equity Portfolio™
The Schwab MarketTrack All Equity Portfolio (the portfolio) seeks high capital growth through an all-stock portfolio. To pursue its goal, the portfolio maintains a defined asset allocation. The portfolio’s target allocation is 100% in stock investments, with certain percentages for different segments of the stock market. It is the portfolio’s policy that, under normal circumstances, it will invest at least 80% of its net assets in stock investments; typically the actual percentage is considerably higher.
The portfolio’s allocation focuses on stock investments for long-term growth. The portfolio seeks to remain close to the target allocations of 45% in large-cap, 30% in international and 25% in small-cap stocks, and typically does not change its target allocation.
The portfolio invests mainly in other Schwab Funds, particularly three of the Equity Index Funds. These underlying funds seek to track the total returns of various stock market indices. They typically invest in the stocks included in the index they are tracking, and generally give each stock the same weight as the index does. Each underlying fund focuses on a different segment of the stock market. For more information on the portfolio’s objective and strategy, please see the portfolio’s prospectus.
The portfolio returned 16.62% for the period. Its comparative index, the All Equity Composite Index, returned 15.64%. The portfolio was overweight U.S. small-cap stocks, compared to the composite index, and this contributed to both absolute and relative fund performance. (For current allocations of the All Equity Composite Index, please refer to footnote 3 on the following page.)
U.S. equities, as measured by the Dow Jones U.S. Total Stock Market Index, returned 18.76%, while international stocks, as measured by the MSCI EAFE Index, returned 8.82% for the reporting period. Within the U.S. equity market, small-cap stocks outperformed large-cap stocks. The Russell 2000 Index, which measures small-cap stocks, returned 26.58% for the reporting period, while the Russell 1000 Large Cap Index, which measures large-cap stocks, returned 17.67%.
The Schwab Small-Cap Index Fund was the top contributor to the portfolio’s outperformance. The fund returned 27.85%, underperforming the Schwab Small-Cap Index, which returned 28.08%. The Schwab S&P 500 Index Fund returned 16.50%, underperforming the S&P 500 Index, which returned 16.52%. On the international side, the Schwab International Index Fund returned 9.31%, outperforming the Schwab International Index, which returned 8.05%.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 4 |
| Portfolio Turnover Rate | | 8% |
Asset Class Weightings % of Investments
| | | |
| Large-Cap Stocks | | 45.0% |
| International Stocks | | 29.8% |
| Small-Cap Stocks | | 24.9% |
| Short-Term Investments | | 0.3% |
Total | | 100.0% |
Top Holdings % Net Assets1
| | | |
| Schwab S&P 500 Index Fund | | 45.0% |
| Schwab International Index Fund | | 29.8% |
| Schwab Small-Cap Index Fund | | 24.9% |
Total | | 99.7% |
Manager views and portfolio holdings may have changed since the report date.
Small-company stocks are subject to greater volatility than other asset categories. Foreign securities can involve risks such as political and economic instability and currency risk.
| | |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
6 Schwab MarketTrack Portfolios
Schwab MarketTrack All Equity Portfoliotm
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
October 31, 2000 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,3
Average Annual Total Returns1,2
| | | | | | | | | | | | | | | | |
| Portfolio and Inception Date | | 1 Year | | 5 Years | | 10 Years |
| |
Portfolio: Schwab MarketTrack All Equity Portfoliotm (5/19/98) | | | 16.62 | % | | | | 2.53 | % | | | | 1.58 | % | |
All Equity Composite Index3 | | | 15.64 | % | | | | 2.72 | % | | | | 1.68 | % | |
S&P 500® Index | | | 16.52 | % | | | | 1.73 | % | | | | -0.02 | % | |
| Fund Category: Morningstar Large-Cap Blend | | | 15.53 | % | | | | 1.57 | % | | | | 0.69 | % | |
Portfolio Expense Ratios4: Net 0.65%; Gross 0.69%
Style Assessment5
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Portfolio expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the portfolio’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | The All Equity Composite Index is a custom blended index developed by CSIM based on a comparable portfolio asset allocation and calculated using the following portion allocations: 70% Dow Jones U.S. Total Stock Market Index and 30% MSCI EAFE Index. The index is maintained by Charles Schwab Investment Management, Inc. |
| 4 | | As stated in the prospectus. Includes expenses of the underlying funds in which the portfolio invests. The annualized weighted average expense ratio of the underlying funds was 0.15%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 5 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the portfolio based on a ten-factor model for value and growth characteristics. The portfolio’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the portfolio’s holdings as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
Schwab MarketTrack Portfolios 7
Schwab MarketTrack Growth Portfolio™
The Schwab MarketTrack Growth Portfolio (the portfolio) seeks high capital growth with less volatility than an all-stock portfolio. To pursue its goal, the portfolio maintains a defined asset allocation. The portfolio’s target allocation includes stock, bond, and cash investments. The portfolio’s allocation focuses on stock investments, while including some bonds and cash investments in seeking to reduce the portfolio’s volatility.
The portfolio seeks to remain close to the target allocations of 80% stocks, 15% bonds, 5% cash, and typically does not change its target allocation. The stock allocation is further divided into three segments: 40% of assets for large-cap, 20% for small-cap, and 20% for international.
The portfolio invests mainly in other Schwab Funds, including index funds, which seek to track the total returns of various market indices. Index funds typically invest in the securities included in the index they are tracking, and give each security the same weight as the index does. Each underlying fund focuses on a different market segment. For more information on the portfolio’s objective and strategy, please see the portfolio’s prospectus.
The portfolio returned 14.86% for the 12-month period. Its comparative index, the Growth Composite Index, returned 14.41%. The portfolio was overweight U.S. small-cap stocks, compared to the composite index, and this contributed to both absolute and relative fund performance. (For current allocations of the Growth Composite Index, please refer to footnote 3 on the following page.)
Stocks outperformed fixed income securities for the period under review. For example, U.S. equities, as measured by the Dow Jones U.S. Total Stock Market Index, returned 18.76%, while international stocks, as measured by the MSCI EAFE Index, returned 8.82%. Within the U.S. equity market, small-cap stocks outperformed large-cap stocks. The Russell 2000 Index, which measures small-cap stocks, returned 26.58% for the reporting period, while the Russell 1000 Index, which measures large-cap stocks, returned 17.67%. By comparison, the Barclays Capital U.S. Aggregate Bond Index returned 8.01%, and the Barclays Capital U.S. Treasury Bill Index returned 0.11%.
Within the equity portion of the portfolio, the Schwab Small-Cap Index Fund contributed to the portfolio’s outperformance. The fund returned 27.85%, underperforming the Schwab Small-Cap Index, which returned 28.08%. The Schwab S&P 500 Index Fund returned 16.50%, underperforming the S&P 500 Index, which returned 16.52%. On the international side, the Schwab International Index Fund returned 9.31%, outperforming the Schwab International Index, which returned 8.05%.
As for the fixed income portion of the portfolio, the Schwab Total Bond Market Fund detracted from relative portfolio performance. The underlying fund returned 7.46%, underperforming the Barclays Capital U.S. Aggregate Index, which returned 8.01%.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 6 |
| Portfolio Turnover Rate | | 14% |
Asset Class Weightings % of Investments
| | | |
| Large-Cap Stocks | | 40.2% |
| Small-Cap Stocks | | 20.1% |
| International Stocks | | 20.1% |
| Bonds | | 14.8% |
| Short-Term Investments | | 4.8% |
Total | | 100.0% |
Top Holdings % Net Assets1
| | | |
| Schwab S&P 500 Index Fund | | 40.3% |
| Schwab Small-Cap Index Fund | | 20.1% |
| Schwab International Index Fund | | 20.1% |
| Schwab Total Bond Market Fund | | 14.8% |
| Schwab Value Advantage Money Fund, Institutional Shares | | 3.6% |
Total | | 98.9% |
Manager views and portfolio holdings may have changed since the report date.
Small-company stocks are subject to greater volatility than other asset categories. Foreign securities can involve risks such as political and economic instability and currency risk.
| | |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
8 Schwab MarketTrack Portfolios
Schwab MarketTrack Growth Portfoliotm
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
October 31, 2000 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment in Investor Shares1,3
April 6, 2006 – April 30, 2010
Performance of a Hypothetical
$100,000 Investment in P Shares1
Average Annual Total Returns1,2
| | | | | | | | | | | | | | | | | | | | | |
| Portfolio Class and Inception Date | | 1 Year | | 5 Years | | 10 Years | | Since Inception |
| |
| Investor Shares (11/20/95) | | | 14.86 | % | | | | 2.96 | % | | | | 2.29 | % | | | | 6.08 | % | |
| P Shares (4/6/06) | | | 15.00 | % | | | | n/a | | | | | n/a | | | | | 1.11 | % | |
Growth Composite Index3 | | | 14.41 | % | | | | 3.50 | % | | | | 2.57 | % | | | | (11/20/95) 6.47% | | |
| | | | | | | | | | | | | | | | | | | (4/6/06) 1.56% | | |
S&P 500® Index | | | 16.52 | % | | | | 1.73 | % | | | | -0.02 | % | | | | (11/20/95) 6.54% | | |
| | | | | | | | | | | | | | | | | | | (4/6/06) -0.13% | | |
| Barclays Capital U.S. Aggregate Bond Index | | | 8.01 | % | | | | 6.45 | % | | | | 6.38 | % | | | | (11/20/95) 6.34% | | |
| | | | | | | | | | | | | | | | | | | (4/6/06) 6.87% | | |
| Fund Category: Morningstar Large-Cap Blend | | | 15.53 | % | | | | 1.57 | % | | | | 0.69 | % | | | | (11/20/95) 6.36% | | |
| | | | | | | | | | | | | | | | | | | (4/6/06) -0.51% | | |
Portfolio Expense Ratios4: Investor Shares: Net 0.70%; Gross 0.72% / P Shares: Net 0.55%; Gross 0.58%
Style Assessment5
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Portfolio expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the portfolio’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | The Growth Composite Index is a custom blended index developed by CSIM based on a comparable portfolio asset allocation and calculated using the following portion allocations: 60% Dow Jones U.S. Total Stock Market Index, 20% MSCI EAFE Index, 15% Barclays Capital U.S. Aggregate Bond Index, and 5% Barclays Capital U.S. Treasury Bills: 1-3 Months Index. The index is maintained by Charles Schwab Investment Management, Inc. |
| 4 | | As stated in the prospectus. Includes expenses of the underlying funds in which the portfolio invests. The annualized weighted average expense ratio of the underlying funds was 0.20%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 5 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the portfolio based on a ten-factor model for value and growth characteristics. The portfolio’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the portfolio’s holdings as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
Schwab MarketTrack Portfolios 9
Schwab MarketTrack Balanced Portfolio™
The Schwab MarketTrack Balanced Portfolio (the portfolio) seeks both capital growth and income. To pursue its goal, the portfolio maintains a defined asset allocation. The portfolio’s target allocation includes bond, stock, and cash investments. The portfolio’s allocation is weighted toward stock investments, while including substantial bond investments in seeking to add income and reduce the portfolio’s volatility.
The portfolio seeks to remain close to the target allocations of 60% stocks, 35% bonds, 5% cash, and typically does not change its target allocation. The stock allocation is further divided into three segments: 30% of assets for large-cap, 15% for small-cap, and 15% for international.
The portfolio invests mainly in other Schwab Funds, including index funds, which seek to track the total returns of various market indices. Index funds typically invest in the securities included in the index they are tracking, and give each security the same weight as the index does. Each underlying fund focuses on a different market segment. For more information on the portfolio’s objective and strategy, please see the portfolio’s prospectus.
The portfolio returned 12.92% for the 12-month period. Its comparative index, the Balanced Composite Index, returned 12.94%. The portfolio was overweight U.S. small-cap stocks, compared to the composite index, and this contributed to absolute and relative fund performance. (For current allocations of the Balanced Composite Index, please refer to footnote 3 on the following page.)
Stocks outperformed fixed income securities for the period under review. For example, U.S. equities, as measured by the Dow Jones U.S. Total Stock Market Index, returned 18.76%, while international stocks, as measured by the MSCI EAFE Index, returned 8.82%. Within the U.S. equity market, small-cap stocks outperformed large-cap stocks. The Russell 2000 Index, which measures small-cap stocks, returned 26.58% for the reporting period, while the Russell 1000 Index, which measures large-cap stocks, returned 17.67%. By comparison, the Barclays Capital U.S. Aggregate Bond Index returned 8.01%, and the Barclays Capital U.S. Treasury Bill Index returned 0.11%.
Within the equity portion of the portfolio, the Schwab Small-Cap Index Fund was the best performing equity holding. The fund returned 27.85%, underperforming the Schwab Small-Cap Index, which returned 28.08%. The Schwab S&P 500 Index returned 16.50%, underperforming the S&P 500 Index, which returned 16.52%. On the international side, the Schwab International Index Fund returned 9.31%, outperforming the Schwab International Index, which returned 8.05%.
As for the fixed income portion of the portfolio, the Schwab Total Bond Market Fund detracted from relative portfolio performance. It returned 7.46%, underperforming the Barclays Capital U.S. Aggregate Bond Index, which returned 8.01%.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 6 |
| Portfolio Turnover Rate | | 22% |
Asset Class Weightings % of Investments
| | | |
| Bonds | | 35.0% |
| Large-Cap Stocks | | 30.0% |
| Small-Cap Stocks | | 15.1% |
| International Stocks | | 15.1% |
| Short-Term Investments | | 4.8% |
Total | | 100.0% |
Top Holdings % Net Assets1
| | | |
| Schwab Total Bond Market Fund | | 34.9% |
| Schwab S&P 500 Index Fund | | 30.0% |
| Schwab Small-Cap Index Fund | | 15.1% |
| Schwab International Index Fund | | 15.1% |
| Schwab Value Advantage Money Fund, Institutional Shares | | 3.3% |
Total | | 98.4% |
Manager views and portfolio holdings may have changed since the report date.
Small-company stocks are subject to greater volatility than other asset categories. Foreign securities can involve risks such as political and economic instability and currency risk.
| | |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
10 Schwab MarketTrack Portfolios
Schwab MarketTrack Balanced Portfoliotm
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
October 31, 2000 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,3
Average Annual Total Returns1,2
| | | | | | | | | | | | | | | | |
| Portfolio and Inception Date | | 1 Year | | 5 Years | | 10 Years |
| |
Portfolio: Schwab MarketTrack Balanced Portfoliotm (11/20/95) | | | 12.92 | % | | | | 3.23 | % | | | | 3.00 | % | |
Balanced Composite Index3 | | | 12.94 | % | | | | 4.40 | % | | | | 3.66 | % | |
S&P 500® Index | | | 16.52 | % | | | | 1.73 | % | | | | -0.02 | % | |
| Barclays Capital U.S. Aggregate Bond Index | | | 8.01 | % | | | | 6.45 | % | | | | 6.38 | % | |
| Fund Category: Morningstar Moderate Allocation | | | 13.46 | % | | | | 3.44 | % | | | | 3.21 | % | |
Portfolio Expense Ratios4: Net 0.78%; Gross 0.80%
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Portfolio expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the portfolio’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | The Balanced Composite Index is a custom blended index developed by CSIM based on a comparable portfolio asset allocation and calculated using the following portion allocations: 45% Dow Jones U.S. Total Stock Market Index, 15% MSCI EAFE Index, 35% Barclays Capital U.S. Aggregate Bond Index, and 5% Barclays Capital U.S. Treasury Bills: 1-3 Months Index. The index is maintained by Charles Schwab Investment Management, Inc. |
| 4 | | As stated in the prospectus. Includes expenses of the underlying funds in which the Portfolio invests. The annualized weighted average expense ratio of the underlying funds was 0.28%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab MarketTrack Portfolios 11
Schwab MarketTrack Conservative Portfolio™
The Schwab MarketTrack Conservative Portfolio (the portfolio) seeks income and more growth potential than an all-bond portfolio. To pursue its goal, the portfolio maintains a defined asset allocation. The portfolio’s target allocation includes bond, stock, and cash investments. The portfolio’s allocation is weighted toward bond investments, while including substantial stock investments in seeking to obtain long-term growth.
The portfolio seeks to remain close to the target allocations of 55% bonds, 40% stocks, 5% cash, and typically does not change its target allocation. The stock allocation is further divided into three segments: 20% of assets for large-cap, 10% for small-cap, and 10% for international.
The portfolio invests mainly in other Schwab Funds, including index funds, which seek to track the total returns of various market indices. Index funds typically invest in the securities included in the index they are tracking, and give each security the same weight as the index does. Each underlying fund focuses on a different market segment. For more information on the portfolio’s objective and strategy, please see the portfolio’s prospectus.
The portfolio returned 10.98% for the 12-month period. Its comparative index, the Conservative Composite Index, returned 11.32%. The portfolio was overweight U.S. small-cap stocks, compared to the composite index, and this contributed to absolute and relative fund performance. (For current allocations of the Conservative Composite Index, please refer to footnote 3 on the following page.)
Stocks outperformed fixed income securities for the period under review. For example, U.S. equities, as measured by the Dow Jones U.S. Total Stock Market Index, returned 18.76%, while international stocks, as measured by the MSCI EAFE Index, returned 8.82%. Within the U.S. equity market, small-cap stocks outperformed large-cap stocks. The Russell 2000 Index, which measures small-cap stocks, returned 26.58% for the reporting period, while the Russell 1000 Index, which measures large-cap stocks, returned 17.67%. By comparison, the Barclays Capital U.S. Aggregate Bond Index returned 8.01%, and the Barclays Capital U.S. Treasury Bill Index returned 0.11%.
Within the fixed income portion of the portfolio, the Schwab Total Bond Market Fund detracted from relative portfolio performance. It returned 7.46%, underperforming the Barclays Capital U.S. Aggregate Index, which returned 8.01%.
As for the equity portion of the portfolio, the Schwab Small-Cap Index Fund was the best performing equity holding. The fund returned 27.85%, underperforming the Schwab Small-Cap Index, which returned 28.08%. The Schwab S&P 500 Index Fund returned 16.50%, underperforming the S&P 500 Index, which returned 16.52%. On the international side, the Schwab International Index Fund returned 9.31%, outperforming the Schwab International Index, which returned 8.05%.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 6 |
| Portfolio Turnover Rate | | 25% |
Asset Class Weightings % of Investments
| | | |
| Bonds | | 54.9% |
| Large-Cap Stocks | | 20.2% |
| Small-Cap Stocks | | 10.1% |
| International Stocks | | 10.0% |
| Short-Term Investments | | 4.8% |
Total | | 100.0% |
Top Holdings % Net Assets1
| | | |
| Schwab Total Bond Market Fund | | 54.9% |
| Schwab S&P 500 Index Fund | | 20.2% |
| Schwab Small-Cap Index Fund | | 10.1% |
| Schwab International Index Fund | | 10.0% |
| Schwab Value Advantage Money Fund, Institutional Shares | | 3.8% |
Total | | 99.0% |
Manager views and portfolio holdings may have changed since the report date.
Small-company stocks are subject to greater volatility than other asset categories. Foreign securities can involve risks such as political and economic instability and currency risk.
| | |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
12 Schwab MarketTrack Portfolios
Schwab MarketTrack Conservative Portfoliotm
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
October 31, 2000 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,3
Average Annual Total Returns1,2
| | | | | | | | | | | | | | | | |
| Portfolio and Inception Date | | 1 Year | | 5 Years | | 10 Years |
| |
Portfolio: Schwab MarketTrack Conservative Portfoliotm (11/20/95) | | | 10.98 | % | | | | 3.42 | % | | | | 3.61 | % | |
Conservative Composite Index3 | | | 11.32 | % | | | | 5.15 | % | | | | 4.62 | % | |
S&P 500® Index | | | 16.52 | % | | | | 1.73 | % | | | | -0.02 | % | |
| Barclays Capital U.S. Aggregate Bond Index | | | 8.01 | % | | | | 6.45 | % | | | | 6.38 | % | |
| Fund Category: Morningstar Conservative Allocation | | | 11.92 | % | | | | 4.11 | % | | | | 3.96 | % | |
Portfolio Expense Ratios4: Net 0.87%; Gross 0.90%
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Portfolio expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the portfolio’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on portfolio distributions or the redemption of portfolio shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | The Conservative Composite Index is a custom blended index developed by CSIM based on a comparable portfolio asset allocation and calculated using the following portion allocations: 30% Dow Jones U.S. Total Stock Market Index, 10% MSCI EAFE Index, 55% Barclays Capital U.S. Aggregate Bond Index, and 5% Barclays Capital U.S. Treasury Bills: 1-3 Months Index. The index is maintained by Charles Schwab Investment Management, Inc. |
| 4 | | As stated in the prospectus. Includes expenses of the underlying funds in which the Portfolio invests. The annualized weighted average expense ratio of the underlying funds was 0.37%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab MarketTrack Portfolios 13
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you incur two types of costs: transaction costs, such as redemption fees, and ongoing costs, such as management fees, transfer agent and shareholder services fees, and other fund expenses.
The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning May 1, 2010 and held through October 31, 2010.
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period.”
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s or share class’ actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.
| | | | | | | | | | | | | | | | | |
| | | | | | | Ending
| | |
| | | | | Beginning
| | Account Value
| | Expenses Paid
|
| | | Expense Ratio1
| | Account Value
| | (Net of Expenses)
| | During Period2
|
| | | (Annualized) | | at 5/1/10 | | at 10/31/10 | | 5/1/10–10/31/10 |
| |
| Schwab MarketTrack All Equity Portfoliotm | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.50% | | | $ | 1,000 | | | $ | 1,016.20 | | | $ | 2.54 | |
| Hypothetical 5% Return | | | 0.50% | | | $ | 1,000 | | | $ | 1,022.68 | | | $ | 2.55 | |
| |
|
| Schwab MarketTrack Growth Portfoliotm | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.50% | | | $ | 1,000 | | | $ | 1,019.30 | | | $ | 2.54 | |
| Hypothetical 5% Return | | | 0.50% | | | $ | 1,000 | | | $ | 1,022.68 | | | $ | 2.55 | |
| P Shares | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.35% | | | $ | 1,000 | | | $ | 1,020.00 | | | $ | 1.78 | |
| Hypothetical 5% Return | | | 0.35% | | | $ | 1,000 | | | $ | 1,023.44 | | | $ | 1.79 | |
| |
|
| Schwab MarketTrack Balanced Portfoliotm | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.50% | | | $ | 1,000 | | | $ | 1,027.50 | | | $ | 2.56 | |
| Hypothetical 5% Return | | | 0.50% | | | $ | 1,000 | | | $ | 1,022.68 | | | $ | 2.55 | |
| |
|
| Schwab MarketTrack Conservative Portfoliotm | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.50% | | | $ | 1,000 | | | $ | 1,035.40 | | | $ | 2.57 | |
| Hypothetical 5% Return | | | 0.50% | | | $ | 1,000 | | | $ | 1,022.68 | | | $ | 2.55 | |
| | |
| 1 | | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights, which covers a 12-month period. The expenses incurred by the underlying funds in which the funds invest are not included in this ratio. |
| 2 | | Expenses for each fund or share class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 184 days of the period, and divided by the 365 days of the fiscal year. |
14 Schwab MarketTrack Portfolios
Schwab MarketTrack All Equity Portfolio™
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/09 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 9.82 | | | | 9.44 | | | | 15.58 | | | | 13.63 | | | | 11.55 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.12 | | | | 0.30 | | | | 0.20 | | | | 0.21 | | | | 0.11 | | | |
| Net realized and unrealized gains (losses) | | | 1.50 | | | | 0.83 | | | | (6.11 | ) | | | 2.01 | | | | 2.10 | | | |
| | | |
| Total from investment operations | | | 1.62 | | | | 1.13 | | | | (5.91 | ) | | | 2.22 | | | | 2.21 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.14 | ) | | | (0.23 | ) | | | (0.22 | ) | | | (0.27 | ) | | | (0.13 | ) | | |
| Distributions from net realized gains | | | — | | | | (0.52 | ) | | | (0.01 | ) | | | — | | | | — | | | |
| | | |
| Total distributions | | | (0.14 | ) | | | (0.75 | ) | | | (0.23 | ) | | | (0.27 | ) | | | (0.13 | ) | | |
| | | |
| Net asset value at end of period | | | 11.30 | | | | 9.82 | | | | 9.44 | | | | 15.58 | | | | 13.63 | | | |
| | | |
| Total return (%) | | | 16.62 | | | | 13.54 | | | | (38.46 | ) | | | 16.55 | | | | 19.31 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
Net operating expenses1 | | | 0.50 | | | | 0.50 | | | | 0.50 | | | | 0.50 | | | | 0.50 | | | |
Gross operating expenses1 | | | 0.54 | | | | 0.67 | | | | 0.73 | | | | 0.72 | | | | 0.74 | | | |
| Net investment income (loss) | | | 1.14 | | | | 3.46 | | | | 1.46 | | | | 1.24 | | | | 0.89 | | | |
| Portfolio turnover rate | | | 8 | | | | 10 | | | | 10 | | | | 0 | 2 | | | 8 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 489 | | | | 461 | | | | 429 | | | | 682 | | | | 527 | | | |
1 The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
2 Less than 1%.
See financial notes 15
Schwab MarketTrack All Equity Portfolio
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .7% | | Other Investment Companies | | | 441,511,369 | | | | 487,525,024 | |
| | 0 | .3% | | Short-Term Investment | | | 1,291,385 | | | | 1,291,385 | |
| |
| |
| | 100 | .0% | | Total Investments | | | 442,802,754 | | | | 488,816,409 | |
| | 0 | .0% | | Other Assets and Liabilities, Net | | | | | | | 28,415 | |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 488,844,824 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Other Investment Companies 99.7% of net assets |
| |
Equity Funds 99.7%
|
Schwab International Index Fund (a) | | | 8,401,452 | | | | 145,429,142 | |
Schwab S&P 500 Index Fund (a) | | | 11,775,575 | | | | 220,203,255 | |
Schwab Small-Cap Index Fund (a) | | | 6,355,194 | | | | 121,892,627 | |
| | | | | | | | | |
| Total Other Investment Companies |
| (Cost $441,511,369) | | | 487,525,024 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Date | | ($) | | ($) |
| |
Short-Term Investment 0.3% of net assets |
| |
Time Deposit 0.3%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 1,291,385 | | | | 1,291,385 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $1,291,385) | | | 1,291,385 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $464,518,643 and the unrealized appreciation and depreciation were $24,297,766 and ($0), respectively, with a net unrealized appreciation of $24,297,766.
| | |
| (a) | | Issuer is affiliated with the fund’s adviser. |
16 See financial notes
Schwab MarketTrack All Equity Portfolio
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments in affiliated underlying funds, at value (cost $441,511,369) | | | | | $487,525,024 | |
| Investments in unaffiliated issuers, at value (cost $1,291,385) | | + | | | 1,291,385 | |
| | | |
| Total investments, at value (cost $442,802,754) | | | | | 488,816,409 | |
| Cash | | | | | 14 | |
| Receivables: | | | | | | |
| Fund shares sold | | | | | 271,659 | |
| Interest | | | | | 3 | |
| Prepaid expenses | | + | | | 13,540 | |
| | | |
Total assets | | | | | 489,101,625 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Investment adviser and administrator fees | | | | | 7,049 | |
| Shareholder service fees | | | | | 10,777 | |
| Fund shares redeemed | | | | | 159,654 | |
| Trustees’ fees | | | | | 1 | |
| Accrued expenses | | + | | | 79,320 | |
| | | |
Total liabilities | | | | | 256,801 | |
| |
Net Assets |
|
Total assets | | | | | 489,101,625 | |
Total liabilities | | − | | | 256,801 | |
| | | |
Net assets | | | | | $488,844,824 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 517,584,222 | |
| Net investment income not yet distributed | | | | | 80,791 | |
| Net realized capital losses | | | | | (74,833,844 | ) |
| Net unrealized capital gains | | | | | 46,013,655 | |
| |
Net Asset Value (NAV) |
| | | �� | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $488,844,824 | | | | 43,269,513 | | | | | $11.30 | | | |
See financial notes 17
Schwab MarketTrack All Equity Portfolio
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends received from affiliated underlying funds | | | | | $7,826,702 | |
| Interest | | + | | | 442 | |
| | | |
Total investment income | | | | | 7,827,144 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 1,094,062 | |
| Shareholder service fees | | | | | 1,168,653 | |
| Shareholder reports | | | | | 102,039 | |
| Professional fees | | | | | 39,431 | |
| Transfer agent fees | | | | | 36,936 | |
| Registration fees | | | | | 29,741 | |
| Portfolio accounting fees | | | | | 25,067 | |
| Custodian fees | | | | | 11,628 | |
| Trustees’ fees | | | | | 8,464 | |
| Interest expense | | | | | 3 | |
| Other expenses | | + | | | 44,687 | |
| | | |
| Total expenses | | | | | 2,560,711 | |
| Expense reduction by adviser and Schwab | | − | | | 160,639 | |
| | | |
Net expenses | | − | | | 2,400,072 | |
| | | |
Net investment income | | | | | 5,427,072 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized losses on sales of affiliated underlying funds | | | | | (12,137,982 | ) |
| Net realized gains on unaffiliated investments | | + | | | 344 | |
| | | |
Net realized losses | | | | | (12,137,638 | ) |
Net unrealized gains on affiliated underlying funds | | + | | | 79,404,855 | |
| | | |
Net realized and unrealized gains | | | | | 67,267,217 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $72,694,289 | |
18 See financial notes
Schwab MarketTrack All Equity Portfolio
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $5,427,072 | | | | $13,923,424 | |
| Net realized losses | | | | | (12,137,638 | ) | | | (28,943,419 | ) |
| Net unrealized gains | | + | | | 79,404,855 | | | | 67,086,206 | |
| | | |
Increase in net assets from operations | | | | | 72,694,289 | | | | 52,066,211 | |
| |
Distributions to Shareholders |
|
| Distributions from net investment income | | | | | 6,503,913 | | | | 10,447,556 | |
| Distributions from net realized gains | | + | | | — | | | | 23,861,871 | |
| | | |
Total distributions | | | | | $6,503,913 | | | | $34,309,427 | |
Transactions in Fund Shares
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
| Shares sold | | | | | 4,882,516 | | | | $51,641,399 | | | | 8,708,360 | | | | $74,118,956 | |
| Shares reinvested | | | | | 582,150 | | | | 6,141,683 | | | | 3,933,902 | | | | 32,336,678 | |
| Shares redeemed | | + | | | (9,135,207 | ) | | | (96,082,498 | ) | | | (11,183,572 | ) | | | (92,388,572 | ) |
| | | |
Net transactions in fund shares | | | | | (3,670,541 | ) | | | ($38,299,416 | ) | | | 1,458,690 | | | | $14,067,062 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 46,940,054 | | | | $460,953,864 | | | | 45,481,364 | | | | $429,130,018 | |
| Total increase or decrease | | + | | | (3,670,541 | ) | | | 27,890,960 | | | | 1,458,690 | | | | 31,823,846 | |
| | | |
End of period | | | | | 43,269,513 | | | | $488,844,824 | | | | 46,940,054 | | | | $460,953,864 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $80,791 | | | | | | | | $566,615 | |
See financial notes 19
Schwab MarketTrack Growth Portfolio™
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| Investor Shares | | 10/31/10 | | 10/31/09 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 14.51 | | | | 13.71 | | | | 21.09 | | | | 19.16 | | | | 16.81 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.19 | | | | 0.39 | | | | 0.37 | | | | 0.40 | | | | 0.30 | | | |
| Net realized and unrealized gains (losses) | | | 1.95 | | | | 1.25 | | | | (6.94 | ) | | | 2.16 | | | | 2.33 | | | |
| | | |
| Total from investment operations | | | 2.14 | | | | 1.64 | | | | (6.57 | ) | | | 2.56 | | | | 2.63 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.30 | ) | | | (0.40 | ) | | | (0.41 | ) | | | (0.46 | ) | | | (0.28 | ) | | |
| Distributions from net realized gains | | | — | | | | (0.44 | ) | | | (0.40 | ) | | | (0.17 | ) | | | — | | | |
| | | |
| Total distributions | | | (0.30 | ) | | | (0.84 | ) | | | (0.81 | ) | | | (0.63 | ) | | | (0.28 | ) | | |
| | | |
| Net asset value at end of period | | | 16.35 | | | | 14.51 | | | | 13.71 | | | | 21.09 | | | | 19.16 | | | |
| | | |
| Total return (%) | | | 14.86 | | | | 12.95 | | | | (32.27 | ) | | | 13.69 | | | | 15.83 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
Net operating expenses1 | | | 0.50 | | | | 0.50 | | | | 0.50 | | | | 0.50 | | | | 0.50 | | | |
Gross operating expenses1 | | | 0.52 | | | | 0.66 | | | | 0.71 | | | | 0.70 | | | | 0.71 | | | |
| Net investment income (loss) | | | 1.25 | | | | 3.03 | | | | 1.99 | | | | 1.94 | | | | 1.74 | | | |
| Portfolio turnover rate | | | 14 | | | | 23 | | | | 10 | | | | 4 | | | | 7 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 549 | | | | 507 | | | | 454 | | | | 686 | | | | 602 | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 4/6/062–
| | |
| P Shares | | 10/31/10 | | 10/31/09 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 14.51 | | | | 13.72 | | | | 21.10 | | | | 19.18 | | | | 18.32 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.21 | | | | 0.43 | | | | 0.37 | | | | 0.42 | | | | 0.10 | | | |
| Net realized and unrealized gains (losses) | | | 1.94 | | | | 1.22 | | | | (6.91 | ) | | | 2.16 | | | | 0.76 | | | |
| | | |
| Total from investment operations | | | 2.15 | | | | 1.65 | | | | (6.54 | ) | | | 2.58 | | | | 0.86 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.31 | ) | | | (0.42 | ) | | | (0.44 | ) | | | (0.49 | ) | | | — | | | |
| Distributions from net realized gains | | | — | | | | (0.44 | ) | | | (0.40 | ) | | | (0.17 | ) | | | — | | | |
| | | |
| Total distributions | | | (0.31 | ) | | | (0.86 | ) | | | (0.84 | ) | | | (0.66 | ) | | | — | | | |
| | | |
| Net asset value at end of period | | | 16.35 | | | | 14.51 | | | | 13.72 | | | | 21.10 | | | | 19.18 | | | |
| | | |
| Total return (%) | | | 15.00 | | | | 13.09 | | | | (32.14 | ) | | | 13.83 | | | | 4.69 | 3 | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
Net operating expenses1 | | | 0.35 | | | | 0.35 | | | | 0.35 | | | | 0.35 | | | | 0.35 | 4 | | |
Gross operating expenses1 | | | 0.37 | | | | 0.51 | | | | 0.56 | | | | 0.55 | | | | 0.56 | 4 | | |
| Net investment income (loss) | | | 1.43 | | | | 3.31 | | | | 2.10 | | | | 2.07 | | | | 0.95 | 4 | | |
| Portfolio turnover rate | | | 14 | | | | 23 | | | | 10 | | | | 4 | | | | 7 | 3 | | |
| Net assets, end of period ($ x 1,000,000) | | | 88 | | | | 84 | | | | 94 | | | | 138 | | | | 119 | | | |
1 The expenses incurred by the underlying funds in which the portfolio invests are not included in this ratio.
2 Commencement of operations.
3 Not annualized.
4 Annualized.
20 See financial notes
Schwab MarketTrack Growth Portfolio
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 98 | .9% | | Other Investment Companies | | | 509,699,804 | | | | 630,187,670 | |
| | 1 | .2% | | Short-Term Investment | | | 7,701,947 | | | | 7,701,947 | |
| |
| |
| | 100 | .1% | | Total Investments | | | 517,401,751 | | | | 637,889,617 | |
| | (0 | .1)% | | Other Assets and Liabilities, Net | | | | | | | (595,718 | ) |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 637,293,899 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Other Investment Companies 98.9% of net assets |
| |
Equity Funds 80.5%
|
Schwab International Index Fund (a) | | | 7,394,953 | | | | 128,006,630 | |
Schwab S&P 500 Index Fund (a) | | | 13,732,839 | | | | 256,804,086 | |
Schwab Small-Cap Index Fund (a) | | | 6,678,878 | | | | 128,100,889 | |
| | | | | | | | | |
| | | | | | | | 512,911,605 | |
| |
Fixed-Income Funds 14.8%
|
Schwab Total Bond Market Fund (a) | | | 10,027,378 | | | | 94,257,354 | |
| |
Money Fund 3.6%
|
Schwab Value Advantage Money Fund, Institutional Prime Shares (a) | | | 23,018,711 | | | | 23,018,711 | |
| | | | | | | | | |
| Total Other Investment Companies |
| (Cost $509,699,804) | | | 630,187,670 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Date | | ($) | | ($) |
| |
Short-Term Investment 1.2% of net assets |
| |
Time Deposit 1.2%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 7,701,947 | | | | 7,701,947 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $7,701,947) | | | 7,701,947 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $523,409,702 and the unrealized appreciation and depreciation were $114,479,915 and ($0), respectively, with a net unrealized appreciation of $114,479,915.
| | |
| (a) | | Issuer is affiliated with the fund’s adviser. |
See financial notes 21
Schwab MarketTrack Growth Portfolio
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments in affiliated underlying funds, at value (cost $509,699,804) | | | | | $630,187,670 | |
| Investments in unaffiliated issuers, at value (cost $7,701,947) | | + | | | 7,701,947 | |
| | | |
| Total investments, at value (cost $517,401,751) | | | | | 637,889,617 | |
| Cash | | | | | 19 | |
| Receivables: | | | | | | |
| Fund shares sold | | | | | 672,815 | |
| Dividends | | | | | 232,989 | |
| Interest | | | | | 19 | |
| Prepaid expenses | | + | | | 17,647 | |
| | | |
Total assets | | | | | 638,813,106 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Investments bought | | | | | 230,865 | |
| Investment adviser and administrator fees | | | | | 10,003 | |
| Shareholder service fees | | | | | 12,599 | |
| Fund shares redeemed | | | | | 1,195,569 | |
| Accrued expenses | | + | | | 70,171 | |
| | | |
Total liabilities | | | | | 1,519,207 | |
| |
Net Assets |
|
Total assets | | | | | 638,813,106 | |
Total liabilities | | − | | | 1,519,207 | |
| | | |
Net assets | | | | | $637,293,899 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 557,775,810 | |
| Net investment income not yet distributed | | | | | 45,521 | |
| Net realized capital losses | | | | | (41,015,298 | ) |
| Net unrealized capital gains | | | | | 120,487,866 | |
| |
Net Asset Value (NAV) by Shares Class |
| | | | | | | | | | | | | | | |
| | | | | | | Shares
| | | | | | | |
| Share Class | | Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| Investor Shares | | $548,855,529 | | | | 33,571,891 | | | | | $16.35 | | | |
| P Shares | | $88,438,370 | | | | 5,408,003 | | | | | $16.35 | | | |
22 See financial notes
Schwab MarketTrack Growth Portfolio
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends received from affiliated underlying funds | | | | | $10,856,673 | |
| Interest | | + | | | 1,883 | |
| | | |
Total investment income | | | | | 10,858,556 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 1,418,650 | |
| Shareholder service fees: | | | | | | |
| Investor Shares | | | | | 1,310,834 | |
| P Shares | | | | | 86,202 | |
| Shareholder reports | | | | | 84,160 | |
| Transfer agent fees | | | | | 41,876 | |
| Professional fees | | | | | 41,759 | |
| Registration fees | | | | | 28,303 | |
| Portfolio accounting fees | | | | | 28,017 | |
| Custodian fees | | | | | 15,410 | |
| Trustees’ fees | | | | | 9,431 | |
| Other expenses | | + | | | 45,958 | |
| | | |
| Total expenses | | | | | 3,110,600 | |
| Expense reduction by adviser and Schwab | | − | | | 136,683 | |
| | | |
Net expenses | | − | | | 2,973,917 | |
| | | |
Net investment income | | | | | 7,884,639 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized losses on sales of affiliated underlying funds | | | | | (2,710,235 | ) |
| Net realized gains on unaffiliated investments | | + | | | 11,972 | |
| | | |
Net realized losses | | | | | (2,698,263 | ) |
Net unrealized gains on affiliated underlying funds | | + | | | 79,865,539 | |
| | | |
Net realized and unrealized gains | | | | | 77,167,276 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $85,051,915 | |
See financial notes 23
Schwab MarketTrack Growth Portfolio
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $7,884,639 | | | | $16,063,334 | |
| Net realized losses | | | | | (2,698,263 | ) | | | (31,086,835 | ) |
| Net unrealized gains | | + | | | 79,865,539 | | | | 78,311,394 | |
| | | |
Increase in net assets from operations | | | | | 85,051,915 | | | | 63,287,893 | |
| |
Distributions to Shareholders |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | 10,262,889 | | | | 13,232,317 | |
| P Shares | | + | | | 1,818,947 | | | | 2,791,634 | |
| | | |
Total distributions from net investment income | | | | | 12,081,836 | | | | 16,023,951 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Distributions from net realized gains | | | | | | | | | | |
| Investor Shares | | | | | — | | | | 14,725,965 | |
| P Shares | | + | | | — | | | | 2,923,653 | |
| | | |
Total distributions from net realized gains | | | | | — | | | | 17,649,618 | |
| | | | | | | | | | | |
Total distributions | | | | | $12,081,836 | | | | $33,673,569 | |
Transactions in Fund Shares
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | 4,875,569 | | | | $75,097,555 | | | | 6,664,962 | | | | $86,067,902 | |
| P Shares | | | | | 588,557 | | | | 9,064,298 | | | | 673,603 | | | | 8,706,594 | |
| | | |
Total shares sold | | | | | 5,464,126 | | | | $84,161,853 | | | | 7,338,565 | | | | $94,774,496 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | 642,346 | | | | $9,802,192 | | | | 2,157,157 | | | | $26,856,610 | |
| P Shares | | + | | | 119,275 | | | | 1,818,947 | | | | 459,798 | | | | 5,715,288 | |
| | | |
Total shares reinvested | | | | | 761,621 | | | | $11,621,139 | | | | 2,616,955 | | | | $32,571,898 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | (6,890,543 | ) | | | ($105,976,752 | ) | | | (6,983,306 | ) | | | ($86,229,576 | ) |
| P Shares | | + | | | (1,063,878 | ) | | | (16,337,229 | ) | | | (2,239,609 | ) | | | (28,121,336 | ) |
| | | |
Total shares redeemed | | | | | (7,954,421 | ) | | | ($122,313,981 | ) | | | (9,222,915 | ) | | | ($114,350,912 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | (1,728,674 | ) | | | ($26,530,989 | ) | | | 732,605 | | | | $12,995,482 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 40,708,568 | | | | $590,854,809 | | | | 39,975,963 | | | | $548,245,003 | |
| Total increase or decrease | | + | | | (1,728,674 | ) | | | 46,439,090 | | | | 732,605 | | | | 42,609,806 | |
| | | |
End of period | | | | | 38,979,894 | | | | $637,293,899 | | | | 40,708,568 | | | | $590,854,809 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $45,521 | | | | | | | | $4,242,580 | |
24 See financial notes
Schwab MarketTrack Balanced Portfolio™
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/09 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 13.54 | | | | 12.74 | | | | 18.13 | | | | 17.04 | | | | 15.46 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.23 | | | | 0.38 | | | | 0.42 | | | | 0.47 | | | | 0.38 | | | |
| Net realized and unrealized gains (losses) | | | 1.50 | | | | 1.11 | | | | (5.06 | ) | | | 1.41 | | | | 1.58 | | | |
| | | |
| Total from investment operations | | | 1.73 | | | | 1.49 | | | | (4.64 | ) | | | 1.88 | | | | 1.96 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.31 | ) | | | (0.44 | ) | | | (0.48 | ) | | | (0.50 | ) | | | (0.34 | ) | | |
| Distributions from net realized gains | | | — | | | | (0.25 | ) | | | (0.27 | ) | | | (0.29 | ) | | | (0.04 | ) | | |
| | | |
| Total distributions | | | (0.31 | ) | | | (0.69 | ) | | | (0.75 | ) | | | (0.79 | ) | | | (0.38 | ) | | |
| | | |
| Net asset value at end of period | | | 14.96 | | | | 13.54 | | | | 12.74 | | | | 18.13 | | | | 17.04 | | | |
| | | |
| Total return (%) | | | 12.92 | | | | 12.41 | | | | (26.59 | ) | | | 11.38 | | | | 12.92 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
Net operating expenses1 | | | 0.50 | | | | 0.50 | | | | 0.50 | | | | 0.50 | | | | 0.50 | | | |
Gross operating expenses1 | | | 0.52 | | | | 0.66 | | | | 0.72 | | | | 0.72 | | | | 0.73 | | | |
| Net investment income (loss) | | | 1.59 | | | | 3.09 | | | | 2.57 | | | | 2.65 | | | | 2.35 | | | |
| Portfolio turnover rate | | | 22 | | | | 30 | | | | 17 | | | | 6 | | | | 8 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 450 | | | | 434 | | | | 405 | | | | 598 | | | | 534 | | | |
1 The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
See financial notes 25
Schwab MarketTrack Balanced Portfolio
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 98 | .4% | | Other Investment Companies | | | 360,039,482 | | | | 442,982,091 | |
| | 1 | .5% | | Short-Term Investment | | | 6,693,317 | | | | 6,693,317 | |
| |
| |
| | 99 | .9% | | Total Investments | | | 366,732,799 | | | | 449,675,408 | |
| | 0 | .1% | | Other Assets and Liabilities, Net | | | | | | | 237,930 | |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 449,913,338 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Other Investment Companies 98.4% of net assets |
| |
Equity Funds 60.2%
|
Schwab International Index Fund (a) | | | 3,918,369 | | | | 67,826,961 | |
Schwab S&P 500 Index Fund (a) | | | 7,219,661 | | | | 135,007,664 | |
Schwab Small-Cap Index Fund (a) | | | 3,537,995 | | | | 67,858,741 | |
| | | | | | | | | |
| | | | | | | | 270,693,366 | |
| |
Fixed-Income Funds 34.9%
|
Schwab Total Bond Market Fund (a) | | | 16,731,545 | | | | 157,276,522 | |
| |
Money Fund 3.3%
|
Schwab Value Advantage Money Fund, Institutional Prime Shares (a) | | | 15,012,203 | | | | 15,012,203 | |
| | | | | | | | | |
| Total Other Investment Companies |
| (Cost $360,039,482) | | | 442,982,091 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Date | | ($) | | ($) |
| |
Short-Term Investment 1.5% of net assets |
| |
Time Deposit 1.5%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 6,693,317 | | | | 6,693,317 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $6,693,317) | | | 6,693,317 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $376,164,949 and the unrealized appreciation and depreciation were $73,510,459 and ($0), respectively, with a net unrealized appreciation of $73,510,459.
| | |
| (a) | | Issuer is affiliated with the fund’s adviser. |
26 See financial notes
Schwab MarketTrack Balanced Portfolio
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments in affiliated underlying funds, at value (cost $360,039,482) | | | | | $442,982,091 | |
| Investments in unaffiliated issuers, at value (cost $6,693,317) | | + | | | 6,693,317 | |
| | | |
| Total investments, at value (cost $366,732,799) | | | | | 449,675,408 | |
| Cash | | | | | 14 | |
| Receivables: | | | | | | |
| Investments sold | | | | | 1,800,000 | |
| Dividends | | | | | 389,729 | |
| Fund shares sold | | | | | 224,245 | |
| Interest | | | | | 17 | |
| Prepaid expenses | | + | | | 12,905 | |
| | | |
Total assets | | | | | 452,102,318 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Investments bought | | | | | 637,771 | |
| Investment adviser and administrator fees | | | | | 7,183 | |
| Shareholder service fees | | | | | 9,496 | |
| Fund shares redeemed | | | | | 1,484,422 | |
| Trustees’ fees | | | | | 47 | |
| Accrued expenses | | + | | | 50,061 | |
| | | |
Total liabilities | | | | | 2,188,980 | |
| |
Net Assets |
|
Total assets | | | | | 452,102,318 | |
Total liabilities | | − | | | 2,188,980 | |
| | | |
Net assets | | | | | $449,913,338 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 393,171,268 | |
| Net investment income not yet distributed | | | | | 2,367,182 | |
| Net realized capital losses | | | | | (28,567,721 | ) |
| Net unrealized capital gains | | | | | 82,942,609 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $449,913,338 | | | | 30,067,198 | | | | | $14.96 | | | |
See financial notes 27
Schwab MarketTrack Balanced Portfolio
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends received from affiliated underlying funds | | | | | $9,378,823 | |
| Interest | | + | | | 2,346 | |
| | | |
Total investment income | | | | | 9,381,169 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 1,029,410 | |
| Shareholder service fees | | | | | 1,104,237 | |
| Shareholder reports | | | | | 44,916 | |
| Professional fees | | | | | 39,218 | |
| Registration fees | | | | | 24,443 | |
| Portfolio accounting fees | | | | | 24,369 | |
| Transfer agent fees | | | | | 23,775 | |
| Custodian fees | | | | | 12,390 | |
| Trustees’ fees | | | | | 8,270 | |
| Other expenses | | + | | | 31,121 | |
| | | |
| Total expenses | | | | | 2,342,149 | |
| Expense reduction by adviser and Schwab | | − | | | 94,190 | |
| | | |
Net expenses | | − | | | 2,247,959 | |
| | | |
Net investment income | | | | | 7,133,210 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized losses on sales of affiliated underlying funds | | | | | (135,456 | ) |
| Net realized gains on unaffiliated investments | | + | | | 7,348 | |
| | | |
Net realized losses | | | | | (128,108 | ) |
Net unrealized gains on affiliated underlying funds | | + | | | 47,433,595 | |
| | | |
Net realized and unrealized gains | | | | | 47,305,487 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $54,438,697 | |
28 See financial notes
Schwab MarketTrack Balanced Portfolio
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $7,133,210 | | | | $12,157,550 | |
| Net realized losses | | | | | (128,108 | ) | | | (24,139,690 | ) |
| Net unrealized gains | | + | | | 47,433,595 | | | | 57,965,744 | |
| | | |
Increase in net assets from operations | | | | | 54,438,697 | | | | 45,983,604 | |
| |
Distributions to Shareholders |
|
| Distributions from net investment income | | | | | 9,784,254 | | | | 14,076,018 | |
| Distributions from net realized gains | | + | | | — | | | | 7,743,717 | |
| | | |
Total distributions | | | | | $9,784,254 | | | | $21,819,735 | |
Transactions in Fund Shares
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
| Shares sold | | | | | 5,532,474 | | | | $78,152,749 | | | | 5,527,528 | | | | $67,634,861 | |
| Shares reinvested | | | | | 663,279 | | | | 9,246,104 | | | | 1,742,428 | | | | 20,734,893 | |
| Shares redeemed | | + | | | (8,151,500 | ) | | | (115,669,242 | ) | | | (7,035,012 | ) | | | (84,003,348 | ) |
| | | |
Net transactions in fund shares | | | | | (1,955,747 | ) | | | ($28,270,389 | ) | | | 234,944 | | | | $4,366,406 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 32,022,945 | | | | $433,529,284 | | | | 31,788,001 | | | | $404,999,009 | |
| Total increase or decrease | | + | | | (1,955,747 | ) | | | 16,384,054 | | | | 234,944 | | | | 28,530,275 | |
| | | |
End of period | | | | | 30,067,198 | | | | $449,913,338 | | | | 32,022,945 | | | | $433,529,284 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $2,367,182 | | | | | | | | $5,018,117 | |
See financial notes 29
Schwab MarketTrack Conservative Portfolio™
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/09 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 12.15 | | | | 11.34 | | | | 14.90 | | | | 14.33 | | | | 13.42 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.24 | | | | 0.37 | | | | 0.43 | | | | 0.49 | | | | 0.42 | | | |
| Net realized and unrealized gains (losses) | | | 1.08 | | | | 0.91 | | | | (3.40 | ) | | | 0.78 | | | | 0.92 | | | |
| | | |
| Total from investment operations | | | 1.32 | | | | 1.28 | | | | (2.97 | ) | | | 1.27 | | | | 1.34 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.25 | ) | | | (0.38 | ) | | | (0.46 | ) | | | (0.51 | ) | | | (0.42 | ) | | |
| Distributions from net realized gains | | | — | | | | (0.09 | ) | | | (0.13 | ) | | | (0.19 | ) | | | (0.01 | ) | | |
| | | |
| Total distributions | | | (0.25 | ) | | | (0.47 | ) | | | (0.59 | ) | | | (0.70 | ) | | | (0.43 | ) | | |
| | | |
| Net asset value at end of period | | | 13.22 | | | | 12.15 | | | | 11.34 | | | | 14.90 | | | | 14.33 | | | |
| | | |
| Total return (%) | | | 10.98 | | | | 11.72 | | | | (20.59 | ) | | | 9.12 | | | | 10.13 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
Net operating expenses1 | | | 0.50 | | | | 0.50 | | | | 0.50 | | | | 0.50 | | | | 0.50 | | | |
Gross operating expenses1 | | | 0.56 | | | | 0.68 | | | | 0.74 | | | | 0.73 | | | | 0.74 | | | |
| Net investment income (loss) | | | 1.93 | | | | 3.31 | | | | 3.12 | | | | 3.37 | | | | 3.12 | | | |
| Portfolio turnover rate | | | 25 | | | | 25 | | | | 16 | | | | 4 | | | | 11 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 194 | | | | 181 | | | | 182 | | | | 252 | | | | 232 | | | |
1 The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
30 See financial notes
Schwab MarketTrack Conservative Portfolio
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .0% | | Other Investment Companies | | | 163,447,586 | | | | 191,848,704 | |
| | 1 | .0% | | Short-Term Investment | | | 1,964,637 | | | | 1,964,637 | |
| |
| |
| | 100 | .0% | | Total Investments | | | 165,412,223 | | | | 193,813,341 | |
| | 0 | .0% | | Other Assets and Liabilities, Net | | | | | | | 94,679 | |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 193,908,020 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Other Investment Companies 99.0% of net assets |
| |
Equity Funds 40.3%
|
Schwab International Index Fund (a) | | | 1,123,022 | | | | 19,439,513 | |
Schwab S&P 500 Index Fund (a) | | | 2,098,017 | | | | 39,232,921 | |
Schwab Small-Cap Index Fund (a) | | | 1,015,787 | | | | 19,482,791 | |
| | | | | | | | | |
| | | | | | | | 78,155,225 | |
| |
Fixed-Income Funds 54.9%
|
Schwab Total Bond Market Fund (a) | | | 11,315,522 | | | | 106,365,907 | |
| |
Money Fund 3.8%
|
Schwab Value Advantage Money Fund, Institutional Prime Shares (a) | | | 7,327,572 | | | | 7,327,572 | |
| | | | | | | | | |
| Total Other Investment Companies |
| (Cost $163,447,586) | | | 191,848,704 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Date | | ($) | | ($) |
| |
Short-Term Investment 1.0% of net assets |
| |
Time Deposit 1.0%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 1,964,637 | | | | 1,964,637 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $1,964,637) | | | 1,964,637 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10 the tax basis cost of the fund’s investments was $173,709,317 and the unrealized appreciation and depreciation were $20,104,024 and ($0), respectively, with a net unrealized appreciation of $20,104,024.
| | |
| (a) | | Issuer is affiliated with the fund’s adviser. |
See financial notes 31
Schwab MarketTrack Conservative Portfolio
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments in affiliated underlying funds, at value (cost $163,447,586) | | | | | $191,848,704 | |
| Investments in unaffiliated issuers, at value (cost $1,964,637) | | + | | | 1,964,637 | |
| | | |
| Total investments, at value (cost $165,412,223) | | | | | 193,813,341 | |
| Cash | | | | | 6 | |
| Receivables: | | | | | | |
| Investments sold | | | | | 250,000 | |
| Dividends | | | | | 263,689 | |
| Fund shares sold | | | | | 165,089 | |
| Interest | | | | | 5 | |
| Prepaid expenses | | + | | | 5,472 | |
| | | |
Total assets | | | | | 194,497,602 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Investments bought | | | | | 262,556 | |
| Investment adviser and administrator fees | | | | | 2,432 | |
| Shareholder service fees | | | | | 4,067 | |
| Fund shares redeemed | | | | | 279,349 | |
| Accrued expenses | | + | | | 41,178 | |
| | | |
Total liabilities | | | | | 589,582 | |
| |
Net Assets |
|
Total assets | | | | | 194,497,602 | |
Total liabilities | | − | | | 589,582 | |
| | | |
Net assets | | | | | $193,908,020 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 186,414,894 | |
| Net investment income not yet distributed | | | | | 164,159 | |
| Net realized capital losses | | | | | (21,072,151 | ) |
| Net unrealized capital gains | | | | | 28,401,118 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $193,908,020 | | | | 14,667,430 | | | | | $13.22 | | | |
32 See financial notes
Schwab MarketTrack Conservative Portfolio
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends received from affiliated underlying funds | | | | | $4,556,431 | |
| Interest | | + | | | 71 | |
| | | |
Total investment income | | | | | 4,556,502 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 429,959 | |
| Shareholder service fees | | | | | 459,307 | |
| Professional fees | | | | | 37,870 | |
| Registration fees | | | | | 23,097 | |
| Shareholder reports | | | | | 19,156 | |
| Transfer agent fees | | | | | 18,897 | |
| Portfolio accounting fees | | | | | 18,437 | |
| Custodian fees | | | | | 6,837 | |
| Trustees’ fees | | | | | 6,368 | |
| Other expenses | | + | | | 20,271 | |
| | | |
| Total expenses | | | | | 1,040,199 | |
| Expense reduction by adviser and Schwab | | − | | | 101,022 | |
| | | |
Net expenses | | − | | | 939,177 | |
| | | |
Net investment income | | | | | 3,617,325 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on sales of affiliated underlying funds | | | | | 575,811 | |
| Net realized gains on unaffiliated investments | | + | | | 1,181 | |
| | | |
Net realized gains | | | | | 576,992 | |
Net unrealized gains on affiliated underlying funds | | + | | | 15,393,384 | |
| | | |
Net realized and unrealized gains | | | | | 15,970,376 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $19,587,701 | |
See financial notes 33
Schwab MarketTrack Conservative Portfolio
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $3,617,325 | | | | $7,989,293 | |
| Net realized gains (losses) | | | | | 576,992 | | | | (19,678,353 | ) |
| Net unrealized gains | | + | | | 15,393,384 | | | | 37,078,717 | |
| | | |
Increase in net assets from operations | | | | | 19,587,701 | | | | 25,389,657 | |
| |
Distributions to Shareholders1 |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | 3,682,697 | | | | 5,882,453 | |
| P Shares | | + | | | — | | | | 2,530,771 | |
| | | |
Total distributions from net investment income | | | | | 3,682,697 | | | | 8,413,224 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Distributions from net realized gains | | | | | | | | | | |
| Investor Shares | | | | | — | | | | 1,450,219 | |
| P Shares | | + | | | — | | | | 713,644 | |
| | | |
Total distributions from net realized gains | | | | | — | | | | 2,163,863 | |
| | | | | | | | | | | |
Total distributions | | | | | $3,682,697 | | | | $10,577,087 | |
Transactions in Fund Shares1
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | 2,981,834 | | | | $37,612,079 | | | | 3,062,687 | | | | $34,493,000 | |
| P Shares | | | | | — | | | | — | | | | 860,699 | | | | 9,543,340 | |
| | | |
Total shares sold | | | | | 2,981,834 | | | | $37,612,079 | | | | 3,923,386 | | | | $44,036,340 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | 274,287 | | | | $3,440,538 | | | | 611,891 | | | | $6,892,611 | |
| P Shares | | + | | | — | | | | — | | | | 294,579 | | | | 3,244,416 | |
| | | |
Total shares reinvested | | | | | 274,287 | | | | $3,440,538 | | | | 906,470 | | | | $10,137,027 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | (3,459,761 | ) | | | ($43,727,266 | ) | | | (4,893,066 | ) | | | ($53,978,206 | ) |
| P Shares | | + | | | — | | | | — | | | | (8,763,549 | ) | | | (102,700,469 | ) |
| | | |
Total shares redeemed | | | | | (3,459,761 | ) | | | ($43,727,266 | ) | | | (13,656,615 | ) | | | ($156,678,675 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | (203,640 | ) | | | ($2,674,649 | ) | | | (8,826,759 | ) | | | ($102,505,308 | ) |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 14,871,070 | | | | $180,677,665 | | | | 23,697,829 | | | | $268,370,403 | |
| Total increase or decrease | | + | | | (203,640 | ) | | | 13,230,355 | | | | (8,826,759 | ) | | | (87,692,738 | ) |
| | | |
End of period | | | | | 14,667,430 | | | | $193,908,020 | | | | 14,871,070 | | | | $180,677,665 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $164,159 | | | | | | | | $229,538 | |
| | | |
1 | | Effective August 4, 2009, all outstanding P shares were redeemed. The Board of Trustees voted that effective December 10, 2009 the fund would no longer offer P shares. |
34 See financial notes
Schwab MarketTrack Portfolios
Financial Notes
1. Business Structure of the Funds:
Each of the funds discussed in this report is a series of Schwab Capital Trust (the “trust”), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trust including the funds discussed in this report, which are highlighted:
| | | |
| |
Schwab Capital Trust (organized May 7, 1993)
Schwab MarketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
Schwab S&P 500 Index Fund
Schwab Small-Cap Index Fund
Schwab Total Stock Market Index Fund
Schwab International Index Fund
Laudus Small-Cap MarketMasters Fund
Laudus International MarketMasters Fund
Schwab Balanced Fund
Schwab Premier Equity Fund
Schwab Core Equity Fund
Schwab Dividend Equity Fund
Schwab Large-Cap Growth Fund
Schwab Small-Cap Equity Fund
Schwab Hedged Equity Fund | | Schwab Financial Services Fund
Schwab Health Care Fund
Schwab International Core Equity Fund
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small-Mid Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets Index Fund
Schwab Monthly Income Fund-Moderate Payout
Schwab Monthly Income Fund-Enhanced Payout
Schwab Monthly Income Fund-Maximum Payout |
| | | |
The Schwab MarketTrack Portfolios are primarily “fund of funds”. Each of the funds seeks to achieve its investment objective by investing mainly in a combination of other Schwab Funds (underlying funds) in accordance with its target portfolio allocation. The funds may also invest directly in equity or fixed income securities, cash equivalents and futures to achieve their investment objectives. Each fund bears its share of the allocable expenses of the underlying funds in which they invest.
Schwab MarketTrack Growth Portfolio offers two share classes: Investor Shares and P Shares. Shares of each class represented an interest in the same portfolio, but each class has different expenses and investment minimums. Schwab MarketTrack All Equity Portfolio, Schwab MarketTrack Balanced Portfolio and Schwab MarketTrack Conservative Portfolio, each offer one share class.
Shares are bought and sold (subject to a redemption fee, see financial note 8) at closing net asset value(“NAV”), which is the price for all outstanding shares of a fund or share class, as applicable. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.
Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund may also keep certain assets in segregated accounts, as required by securities law.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies the funds use in their preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). For more information about the underlying funds’ operations and policies, please refer to those funds’ semiannual and annual reports, which are filed with the Securities Exchange Commission (“SEC”).
(a) Security Valuation:
The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:
| | |
| | • | Securities traded on an exchange or over-the-counter: valued at the closing value for the day, or, on days when no closing value has been reported, halfway between the most recent bid and asked quotes. Securities that are primarily traded on foreign exchanges are valued at the closing values of such securities on their respective exchanges with these values then translated into U.S. dollars at the valuation date exchange rate. |
35
Schwab MarketTrack Portfolios
Financial Notes (continued)
2. Significant Accounting Policies (continued):
| | |
| | • | Securities for which no quoted value is available: The Board of Trustees has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, the fund may fair value a security when a security is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Board of Trustees regularly reviews fair value determinations made by the funds pursuant to the procedures. |
| |
| | • | Underlying funds: valued at their respective net asset values as determined by the underlying fund in accordance with the 1940 Act for a given day. |
| |
| | • | Futures and forwards contracts: valued at their settlement prices as of the close of their exchanges (for futures) or at a value based on that day’s exchange rates (for forwards). |
| |
| | • | Short-term securities (60 days or less to maturity): valued at amortized cost, which approximates market value. |
In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the funds disclose the fair value of their investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (level 3 measurements). If the funds determine that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
The three levels of the fair value hierarchy are as follows:
| | |
| | • | Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. The funds do not adjust the quoted price for such investments, even in situations where the funds hold a large position and a sale could reasonably impact the quoted prices. |
| |
| | • | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include certain U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. In addition, international securities whose markets close hours before the funds value their holdings may require fair valuations due to significant movement in the U.S. markets occurring after the daily close of the foreign markets. The Board of Trustees has approved a vendor that would calculate fair valuations of international equity securities based on a number of factors that appear to correlate to the movements in the U.S. markets. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. |
| |
| | • | Level 3 — significant unobservable inputs (including the funds’ own assumptions in determining the fair value of investments). — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the funds use one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds’ results of operations. |
36
Schwab MarketTrack Portfolios
Financial Notes (continued)
2. Significant Accounting Policies (continued):
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the funds’ investments as of October 31, 2010:
Schwab MarketTrack All Equity Portfolio
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total* |
| |
| Other Investment Companies(a) | | | $487,525,024 | | | | $— | | | | $— | | | | $487,525,024 | |
| Short-Term Investment(a) | | | — | | | | 1,291,385 | | | | — | | | | 1,291,385 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $487,525,024 | | | | $1,291,385 | | | | $— | | | | $488,816,409 | |
| | | | | | | | | | | | | | | | | |
Schwab MarketTrack Growth Portfolio
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total* |
| |
| Other Investment Companies(a) | | | $630,187,670 | | | | $— | | | | $— | | | | $630,187,670 | |
| Short-Term Investment(a) | | | — | | | | 7,701,947 | | | | — | | | | 7,701,947 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $630,187,670 | | | | $7,701,947 | | | | $— | | | | $637,889,617 | |
| | | | | | | | | | | | | | | | | |
Schwab MarketTrack Balanced Portfolio
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total* |
| |
| Other Investment Companies(a) | | | $442,982,091 | | | | $— | | | | $— | | | | $442,982,091 | |
| Short-Term Investment(a) | | | — | | | | 6,693,317 | | | | — | | | | 6,693,317 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $442,982,091 | | | | $6,693,317 | | | | $— | | | | $449,675,408 | |
| | | | | | | | | | | | | | | | | |
Schwab MarketTrack Conservative Portfolio
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total* |
| |
| Other Investment Companies(a) | | | $191,848,704 | | | | $— | | | | $— | | | | $191,848,704 | |
| Short-Term Investment(a) | | | — | | | | 1,964,637 | | | | — | | | | 1,964,637 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $191,848,704 | | | | $1,964,637 | | | | $— | | | | $193,813,341 | |
| | | | | | | | | | | | | | | | | |
| | | |
| * | | The fund had no Other Financial Instruments. |
| (a) | | As categorized in Portfolio Holdings. |
In January 2010, the Financial Accounting Standards Board issued new guidance requiring reporting entities to make new disclosures about amounts and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements as well as inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances and settlements of Level 3 securities on a gross basis. The new and revised disclosures are required to be implemented for annual and interim periods beginning after December 15, 2009, except for the disclosures surrounding purchases, sales, issuances and settlements of Level 3 fair value measurements on a gross basis, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years.
37
Schwab MarketTrack Portfolios
Financial Notes (continued)
2. Significant Accounting Policies (continued):
The funds have adopted the new guidance for the period ended October 31, 2010. There were no significant transfers between Level 1 and Level 2 for the period ended October 31, 2010. Management is currently evaluating the impact of the adoption of the other provisions of the new guidance on the funds’ financial statements.
(b) Security Transactions:
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
(c) Investment Income:
Interest income is recorded as it accrues. Dividends and distributions from underlying funds and portfolio securities are recorded on the date they are effective (the ex-dividend date), although the funds may record certain foreign security dividends on the day they learn of the ex-dividend date. Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds.
(d) Expenses:
Expenses that are specific to a fund are charged directly to the fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets.
For funds offering multiple share classes, net investment income, other than class specific expenses, and the realized and unrealized gains or losses, are allocated daily to each class in proportion to their average daily net assets.
(e) Distributions to Shareholders:
The funds make distributions from net investment income and net realized capital gains, if any, once a year, except for the Schwab MarketTrack Conservative Portfolio, which makes distributions from net investment income quarterly.
(f) Accounting Estimates:
The accounting policies described in this report conform to accounting principles generally accepted in the United States of America. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It is possible that once the results are known, they may turn out to be different from these estimates and these differences may be material.
(g) Federal Income Taxes:
The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains, if any, to their respective shareholders each year except for the Schwab MarketTrack Conservative Portfolio, which typically makes distributions at the end of every calendar quarter. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
(h) Indemnification:
Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications.
The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss to be remote.
3. Risk factors:
Investing in the funds may involve certain risks, as discussed in the funds’ prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
38
Schwab MarketTrack Portfolios
Financial Notes (continued)
3. Risk factors (continued):
Asset Allocation Risk. The funds are subject to asset allocation risk, which is the risk that the selection of the underlying funds and the allocation of a fund’s assets among the various asset classes and market segments will cause the fund to underperform other funds with a similar investment objective.
Market Risk. Stock markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of an investment in the funds will fluctuate, which means that an investor could lose money.
Underlying Fund Investment Risk. The value of your investment in the funds is based primarily on the prices of the underlying funds that the fund purchases. In turn, the price of each underlying fund is based on the value of its securities. Before investing in the funds, investors should assess the risks associated with the underlying funds in which the funds may invest and the types of investments made by those underlying funds. These risks include any combination of the risks described below, although a fund’s exposure to a particular risk will be proportionate to the fund’s overall asset allocation and underlying fund allocation.
| | |
| | • | Investment Risk. An investment in an underlying fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The funds may experience losses with respect to its investment in an underlying fund. Further, there is no guarantee that an underlying fund will be able to achieve its objective. |
| |
| | • | Investment Style Risk. The underlying funds seek to track the performance of various segments of the stock market, as measured by their respective indices. Each underlying fund follows these stocks during upturns as well as downturns. Because of their indexing strategy, the underlying funds do not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of an underlying fund’s expenses, the underlying fund’s performance is normally below that of the index. |
| |
| | • | Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, the equity market tends to move in cycles, which may cause stock prices to fall over short or extended periods of time. |
| |
| | • | Tracking Error Risk. As an index fund, each underlying fund seeks to track the performance of its benchmark indices, although it may not be successful in doing so. The divergence between the performance of a fund and its benchmark index, positive or negative, is called “tracking error.” Tracking error can be caused by many factors and it may be significant. |
| |
| | • | Large-Cap Risk. Many of the risks of the underlying funds are associated with its investment in the large-cap segments of the stock market. Large-cap stocks tend to go in and out of favor based on market and economic conditions. During a period when large-cap stocks fall behind other types of investments — bonds or mid- or small- cap stocks, for instance — an underlying fund’s large-cap holdings could reduce performance. |
| |
| | • | Small-Cap Risk. Historically, small-cap stocks have been riskier than large- and mid-cap stocks, and their prices may move sharply, especially during market upturns and downturns. Small-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments — bonds or large-cap stocks, for instance — an underlying fund’s small-cap holdings could reduce performance. |
| |
| | • | Foreign Investment Risk. An underlying fund’s investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may be heightened in connection with investments in emerging markets. |
| |
| | • | Currency Risk. As a result of an underlying fund’s investments in securities denominated in, and/or receiving revenues in, foreign currencies, the fund will be subject to currency risk. This is the risk that those currencies will decline in value relative to the U.S. dollar, or, in the case of hedging positions, that the U.S. dollar will decline in value relative to the currency hedged. In either event, the dollar value of an investment in a fund would be adversely affected. |
39
Schwab MarketTrack Portfolios
Financial Notes (continued)
3. Risk factors (continued):
| | |
| | • | Derivatives Risk. An underlying fund’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments and could cause the fund to lose more than the principal amount invested. |
| |
| | • | Debt Securities Risk. Bond prices generally fall when interest rates rise. Bonds with longer maturities tend to be more sensitive to this risk. Underlying fund performance also could be affected if an issuer or guarantor of a bond held by a fund fails to make timely principal or interest payments or otherwise honor its obligations. Lower-quality bonds are considered speculative with respect to its issuer’s ability to make timely payments or otherwise honor its obligations. In addition, prices of lower-quality bonds tend to be more volatile than those of investment-grade bonds, and may fall based on bad news about the issuer, an industry or the overall economy. |
| |
| | • | Liquidity Risk. A particular investment may be difficult to purchase or sell. An underlying fund may be unable to sell illiquid securities at an advantageous time or price. |
| |
| | • | Securities Lending Risk. Securities lending involves the risk of loss of rights in the collateral or delay in recovery of the collateral if the borrower fails to return the security loaned or becomes insolvent. |
Direct Investment Risk. A fund may invest directly in individual securities to maintain its allocations. A fund’s direct investment in these securities is subject to the same or similar risks as an underlying fund’s investment in the same security.
Please refer to the funds’ prospectus for a more complete description of the principal risks of investing in the funds.
4. Affiliates and Affiliated Transactions:
Charles Schwab Investment Management, Inc. (“CSIM” or the “investment adviser”), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund’s investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (“Advisory Agreement”) between it and the trust.
For its advisory and administrative services to each fund, CSIM is entitled to receive an annual fee of 0.23% payable monthly based on each fund’s average daily net assets.
The Board of Trustees has adopted a Shareholder Servicing Plan (the “Plan”) on behalf of the funds. The Plan enables each fund to bear expenses relating to the provision by service providers, including Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, “Schwab”), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the funds. Schwab serves as the funds’ paying agent under the Plan for making payments of the shareholder service fee due to the service providers (other than Schwab) under the Plan. All shareholder service fees paid by the funds to Schwab in its capacity as the funds’ paying agent will be passed through to the service providers, and Schwab will not retain any portion of such fees.
Pursuant to the Plan, each fund’s shares are subject to an annual shareholder servicing fee up to 0.25% except for the Schwab MarketTrack Growth Portfolio’s P Shares, which is subject to such annual fee up to 0.10%. The shareholder servicing fee paid to a particular service provider is made pursuant to its written agreement with Schwab (or, in the case of payments made to Schwab, pursuant to Schwab’s written agreement with the funds). Payments under the Plan are made as described above regardless of Schwab’s or the service provider’s actual cost of providing the services. If the cost of providing the services under the Plan is less than the payments received, the unexpended portion of the fees may be retained as profit by Schwab or the service provider.
Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements (“expense limitation”) with the funds to limit the total annual fund operating expenses, excluding interest, taxes and certain non-routine
40
Schwab MarketTrack Portfolios
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
expenses for so long as CSIM serves as the investment adviser to the funds, which may only be amended or terminated with the approval of the funds’ Board of Trustees. The expense limitation as a percentage of average daily net assets is as follows:
| | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
|
| | | MarketTrack
| | MarketTrack
| | MarketTrack
| | MarketTrack
|
| | | All Equity
| | Growth
| | Balanced
| | Conservative
|
| | Portfolio | | Portfolio | | Portfolio | | Portfolio |
| |
| Investor Shares | | | 0.50% | | | | 0.50% | | | | 0.50% | | | | 0.50% | |
| P Shares* | | | n/a | | | | 0.35% | | | | n/a | | | | n/a | |
| | | |
| * | | P Shares are currently only offered by Schwab MarketTrack Growth Portfolio |
The agreement to limit the funds’ total expenses charged is limited to each fund’s direct operating expenses and, therefore, does not apply to underlying fund fees and expenses, which are indirect expenses incurred by a fund through its investments in the underlying funds.
The funds may engage in certain transactions involving related parties. Pursuant to an exemptive order issued by the SEC, the funds may invest in other related funds. As of October 31, 2010, the percentages of shares of other related funds owned by each Schwab MarketTrack Portfolio are:
| | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
|
| | | MarketTrack
| | MarketTrack
| | MarketTrack
| | MarketTrack
|
| | | All Equity
| | Growth
| | Balanced
| | Conservative
|
| | Portfolio | | Portfolio | | Portfolio | | Portfolio |
| |
Equity Funds: | | | | | | | | | | | | | | | | |
| Schwab International Index Fund | | | 9.9% | | | | 8.7% | | | | 4.6% | | | | 1.3% | |
| Schwab S&P 500 Index Fund | | | 2.2% | | | | 2.6% | | | | 1.3% | | | | 0.4% | |
| Schwab Small-Cap Index Fund | | | 8.7% | | | | 9.1% | | | | 4.8% | | | | 1.4% | |
Fixed-Income Funds: | | | | | | | | | | | | | | | | |
| Schwab Total Bond Market Fund | | | —% | | | | 10.1% | | | | 16.8% | | | | 11.4% | |
Money Funds: | | | | | | | | | | | | | | | | |
| Schwab Value Advantage Money Fund | | | —% | | | | 0.1% | | | | 0.1% | | | | 0.0% | * |
Below is a summary of the funds’ transactions with their affiliated underlying funds during the period ended October 31, 2010:
Schwab MarketTrack All Equity Portfolio
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Balance
| | | | Realized
| | Distribution
|
| | | of Shares
| | | | | | of Shares
| | Market
| | Gain (Loss)
| | Received*
|
| | | Held at
| | Gross
| | Gross
| | Held at
| | Value at
| | 11/01/2009
| | 11/01/2009
|
Underlying Fund | | 10/31/09 | | Additions | | Sales | | 10/31/10 | | 10/31/10 | | to 10/31/10 | | to 10/31/10 |
| |
Schwab Equity Index Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Schwab International Index Fund | | | 8,562,505 | | | | 1,245,326 | | | | (1,406,379 | ) | | | 8,401,452 | | | | $145,429,142 | | | | ($1,620,914 | ) | | | $3,702,411 | |
| Schwab S&P 500 Index Fund | | | 12,790,339 | | | | 413,916 | | | | (1,428,680 | ) | | | 11,775,575 | | | | 220,203,255 | | | | (6,834,378 | ) | | | 3,028,785 | |
| Schwab Small-Cap Index Fund | | | 7,488,666 | | | | 582,684 | | | | (1,716,156 | ) | | | 6,355,194 | | | | 121,892,627 | | | | (3,682,690 | ) | | | 1,095,506 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | �� | | | | | | | | | | | | | | | | | $487,525,024 | | | | ($12,137,982 | ) | | | $7,826,702 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
41
Schwab MarketTrack Portfolios
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab MarketTrack Growth Portfolio
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Balance
| | | | Realized
| | Distribution
|
| | | of Shares
| | | | | | of Shares
| | Market
| | Gain (Loss)
| | Received*
|
| | | Held at
| | Gross
| | Gross
| | Held at
| | Value at
| | 11/01/2009
| | 11/01/2009
|
Underlying Fund | | 10/31/09 | | Additions | | Sales | | 10/31/10 | | 10/31/10 | | to 10/31/10 | | to 10/31/10 |
| |
Schwab Equity Index Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Schwab International Index Fund | | | 7,252,275 | | | | 1,322,597 | | | | (1,179,919 | ) | | | 7,394,953 | | | | $128,006,630 | | | | $270,836 | | | | $3,171,513 | |
| Schwab S&P 500 Index Fund | | | 14,588,652 | | | | 519,795 | | | | (1,375,608 | ) | | | 13,732,839 | | | | 256,804,086 | | | | (2,117,583 | ) | | | 3,491,923 | |
| Schwab Small-Cap Index Fund | | | 7,630,640 | | | | 795,375 | | | | (1,747,137 | ) | | | 6,678,878 | | | | 128,100,889 | | | | 440,323 | | | | 1,141,836 | |
Schwab Bond Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Schwab Total Bond Market Fund | | | 10,103,612 | | | | 2,307,331 | | | | (2,383,565 | ) | | | 10,027,378 | | | | 94,257,354 | | | | (1,303,811 | ) | | | 3,023,009 | |
Schwab Money Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Schwab Value Advantage Money Fund, Institutional Shares | | | 23,260,416 | | | | 8,851 | | | | (23,269,267 | ) | | | — | | | | — | | | | — | | | | 8,120 | |
| Schwab Value Advantage Money Fund, Institutional Prime Shares | | | — | | | | 23,018,711 | | | | — | | | | 23,018,711 | | | | 23,018,711 | | | | — | | | | 20,272 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | | $630,187,670 | | | | ($2,710,235 | ) | | | $10,856,673 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Schwab MarketTrack Balanced Portfolio
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Balance
| | | | Realized
| | Distribution
|
| | | of Shares
| | | | | | of Shares
| | Market
| | Gain (Loss)
| | Received*
|
| | | Held at
| | Gross
| | Gross
| | Held at
| | Value at
| | 11/01/2009
| | 11/01/2009
|
Underlying Fund | | 10/31/09 | | Additions | | Sales | | 10/31/10 | | 10/31/10 | | to 10/31/10 | | to 10/31/10 |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Schwab Equity Index Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Schwab International Index Fund | | | 3,947,359 | | | | 918,226 | | | | (947,216 | ) | | | 3,918,369 | | | | $67,826,961 | | | | $1,090,329 | | | | $1,721,029 | |
| Schwab S&P 500 Index Fund | | | 7,893,746 | | | | 907,105 | | | | (1,581,190 | ) | | | 7,219,661 | | | | 135,007,664 | | | | (1,692,439 | ) | | | 1,890,987 | |
| Schwab Small-Cap Index Fund | | | 4,244,673 | | | | 666,656 | | | | (1,373,334 | ) | | | 3,537,995 | | | | 67,858,741 | | | | 2,884,136 | | | | 612,165 | |
Schwab Bond Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Schwab Total Bond Market Fund | | | 17,171,458 | | | | 4,396,933 | | | | (4,836,846 | ) | | | 16,731,545 | | | | 157,276,522 | | | | (2,417,482 | ) | | | 5,136,280 | |
Schwab Money Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Schwab Value Advantage Money Fund, Institutional Shares | | | 14,732,411 | | | | 5,649 | | | | (14,738,060 | ) | | | — | | | | — | | | | — | | | | 5,141 | |
| Schwab Value Advantage Money Fund, Institutional Prime Shares | | | — | | | | 15,012,203 | | | | — | | | | 15,012,203 | | | | 15,012,203 | | | | — | | | | 13,221 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | | $442,982,091 | | | | ($135,456 | ) | | | $9,378,823 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
42
Schwab MarketTrack Portfolios
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab MarketTrack Conservative Portfolio
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Balance
| | | | Realized
| | Distribution
|
| | | of Shares
| | | | | | of Shares
| | Market
| | Gain (Loss)
| | Received*
|
| | | Held
| | Gross
| | Gross
| | Held at
| | Value at
| | 11/01/2009
| | 11/01/2009
|
Underlying Fund | | at 10/31/09 | | Additions | | Sales | | 10/31/10 | | 10/31/10 | | to 10/31/10 | | to 10/31/10 |
| |
Schwab Equity Index Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Schwab International Index Fund | | | 1,099,466 | | | | 326,524 | | | | (302,968 | ) | | | 1,123,022 | | | | $19,439,513 | | | | $483,693 | | | | $479,587 | |
| Schwab S&P 500 Index Fund | | | 2,190,907 | | | | 406,172 | | | | (499,062 | ) | | | 2,098,017 | | | | 39,232,921 | | | | 440,154 | | | | 525,273 | |
| Schwab Small-Cap Index Fund | | | 1,166,848 | | | | 286,424 | | | | (437,485 | ) | | | 1,015,787 | | | | 19,482,791 | | | | 1,071,771 | | | | 168,278 | |
Schwab Bond Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Schwab Total Bond Market Fund | | | 11,171,182 | | | | 2,451,888 | | | | (2,307,548 | ) | | | 11,315,522 | | | | 106,365,907 | | | | (1,419,807 | ) | | | 3,374,743 | |
Schwab Money Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Schwab Value Advantage Money Fund, Institutional Shares | | | 7,721,069 | | | | 4,412 | | | | (7,725,481 | ) | | | — | | | | — | | | | — | | | | 4,161 | |
| Schwab Value Advantage Money Fund, Institutional Prime Shares | | | — | | | | 7,327,572 | | | | — | | | | 7,327,572 | | | | 7,327,572 | | | | — | | | | 4,389 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | | $191,848,704 | | | | $575,811 | | | | $4,556,431 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| * | | Distributions received include distributions from net investment income and from capital gains from the underlying funds. |
The funds may also let a related party own shares of the funds. As of October 31, 2010, the shares owned by Schwab Charitable Giving Trust (an affiliate of Schwab) as a percentage of the total shares of the Schwab MarketTrack Growth Portfolio is 13.9%.
The funds may engage in direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. For the year ended October 31, 2010, there were no such security transactions with other Schwab Funds.
Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions with other Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. The funds had no interfund borrowing or lending activity during the period.
5. Board of Trustees:
Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their services as trustees, but it did pay non-interested persons (independent trustees), as noted in each fund’s Statement of Operations.
6. Borrowing from Banks:
The funds may borrow money from banks and custodians. The funds have custodian overdraft facilities, a committed line of credit of $150 million with State Street Bank and Trust Company, an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The funds pay interest on the amounts they borrow at rates that are negotiated periodically. The funds also pay an annual fee to State Street Bank and Trust Company for the committed line of credit.
There were no borrowings from the lines of credit during the period. However, the funds utilized their overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.
43
Schwab MarketTrack Portfolios
Financial Notes (continued)
7. Purchases and Sales/Maturities of Investment Securities:
For the period ended October 31, 2010, purchases and sales/maturities of securities (excluding short-term obligations) were as follows:
| | | | | | | | | |
| | | Purchases
| | Sales/Maturities
|
| | of Securities | | of Securities |
| |
Schwab MarketTrack All Equity Portfolio | | | $36,976,702 | | | | $77,550,000 | |
Schwab MarketTrack Growth Portfolio | | | 87,101,440 | | | | 119,619,273 | |
Schwab MarketTrack Balanced Portfolio | | | 96,171,028 | | | | 127,408,068 | |
Schwab MarketTrack Conservative Portfolio | | | 46,450,074 | | | | 50,490,492 | |
8. Redemption Fee:
The funds charge a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior periods are:
| | | | | | | | | |
| | | Current Period
| | Prior Period
|
| | (11/01/09-10/31/10) | | (11/01/08-10/31/09) |
| |
Schwab MarketTrack All Equity Portfolio | | | $9,734 | | | | $17,889 | |
Schwab MarketTrack Growth Portfolio | | | 14,346 | | | | 19,356 | |
Schwab MarketTrack Balance Portfolio | | | 4,075 | | | | 7,512 | |
Schwab MarketTrack Conservative Portfolio | | | 3,235 | | | | 7,195 | |
9. Federal Income Taxes:
As of October 31, 2010, the components of distributable earnings on a tax-basis were as follows:
| | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
|
| | | MarketTrack
| | MarketTrack
| | MarketTrack
| | MarketTrack
|
| | | All Equity
| | Growth
| | Balanced
| | Conservative
|
| | Portfolio | | Portfolio | | Portfolio | | Portfolio |
| |
| Undistributed ordinary income | | | $2,054,307 | * | | | $45,521 | | | | $2,367,183 | | | | $164,160 | |
| Undistributed long-term capital gains | | | — | | | | — | | | | — | | | | — | |
| Unrealized appreciation | | | 24,297,766 | | | | 114,479,915 | | | | 73,510,459 | | | | 20,104,024 | |
| Unrealized depreciation | | | — | | | | — | | | | — | | | | — | |
Other unrealized appreciation/
(depreciation) | | | — | | | | — | | | | (2 | ) | | | — | |
| | | | | | | | | | | | | | | | | |
| Net unrealized appreciation/(depreciation) | | | $24,297,766 | | | | $114,479,915 | | | | $73,510,457 | | | | $20,104,024 | |
| | | | | | | | | | | | | | | | | |
The primary differences between book-basis and tax-basis unrealized appreciation or unrealized depreciation of investments are the tax deferral of losses on wash sales.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2010, the following funds had capital loss carryforwards available to offset net capital gains before the expiration dates:
| | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
|
| | | MarketTrack
| | MarketTrack
| | MarketTrack
| | MarketTrack
|
| | | All Equity
| | Growth
| | Balanced
| | Conservative
|
Expiration Date | | Portfolio* | | Portfolio | | Portfolio | | Portfolio |
| |
| December 31, 2016 | | | $12,514,459 | | | | — | | | | — | | | | — | |
| October 31, 2017 | | | — | | | | $34,088,913 | | | | $19,135,570 | | | | $12,775,059 | |
| December 31, 2017 | | | 31,279,738 | | | | — | | | | — | | | | — | |
| October 31, 2018 | | | — | | | | 918,434 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
| Total | | | $43,794,197 | | | | $35,007,347 | | | | $19,135,570 | | | | $12,775,059 | |
44
Schwab MarketTrack Portfolios
Financial Notes (continued)
9. Federal Income Taxes (continued):
For tax purposes, realized net capital losses, occurring after October 31, may be deferred and treated as occurring on the first day of the following year. As of December 31, 2009, the Schwab MarketTrack All Equity Portfolio had deferred realized capital losses of $2,538,506 and did not utilize any capital losses to offset capital gains.
As of October 31, 2010, the funds had capital losses utilized as follows:
| | | | | | | | | |
| | | Schwab
| | Schwab
|
| | | MarketTrack
| | MarketTrack
|
| | | Balanced
| | Conservative
|
| | | Portfolio | | Portfolio |
| |
| Capital losses utilized | | | $2,176,003 | | | | $1,528,665 | |
The tax-basis components of distributions paid during the current and prior periods were:
| | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
|
| | | MarketTrack
| | MarketTrack
| | MarketTrack
| | MarketTrack
|
| | | All Equity
| | Growth
| | Balanced
| | Conservative
|
| | Portfolio* | | Portfolio | | Portfolio | | Portfolio |
| |
Current period distributions | | | | | | | | | | | | | | | | |
| Ordinary income | | | $6,503,913 | | | | $12,081,836 | | | | $9,784,254 | | | | $3,682,697 | |
| Long-term capital gains | | | — | | | | — | | | | — | | | | — | |
| Return of Capital | | | — | | | | — | | | | — | | | | — | |
Prior period distributions | | | | | | | | | | | | | | | | |
| Ordinary income | | | 10,482,210 | | | | 16,024,915 | | | | 14,078,570 | | | | 8,413,678 | |
| Long-term capital gains | | | 23,827,217 | | | | 17,648,654 | | | | 7,741,165 | | | | 2,163,429 | |
| Return of Capital | | | — | | | | — | | | | — | | | | — | |
Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as non-U.S. currency gains and losses, short-term capital gains and losses; capital losses related to wash sales, unrealized appreciation of certain investments in non-U.S. securities; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the funds for financial reporting purposes. The funds may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.
The permanent book and tax basis differences may result in reclassifications between capital account and other accounts as required. The adjustments will have no impact on net assets or the results of operations. As of October 31, 2010, the funds made the following reclassifications:
| | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
|
| | | MarketTrack
| | MarketTrack
| | MarketTrack
| | MarketTrack
|
| | | All Equity
| | Growth
| | Balanced
| | Conservative
|
| | Portfolio* | | Portfolio | | Portfolio | | Portfolio |
| |
| Capital Shares | | | $— | | | | $— | | | | $— | | | | $— | |
| Undistributed net investment income | | | — | | | | 138 | | | | 109 | | | | (7 | ) |
| Net realized capital gains and losses | | | — | | | | (138 | ) | | | (109 | ) | | | 7 | |
| | | |
| * | | Tax information for Schwab MarketTrack All Equity Portfolio is as of December 31, 2009, the tax year end of the fund. |
As of October 31, 2010, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and state purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year ended October 31, 2010, the fund did not incur any interest or penalties.
45
Schwab MarketTrack Portfolios
Financial Notes (continued)
10. Subsequent Events:
Management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
46
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of:
Schwab MarketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
In our opinion, the accompanying statements of assets and liabilities, including the portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schwab MarketTrack All Equity Portfolio, Schwab MarketTrack Growth Portfolio, Schwab MarketTrack Balanced Portfolio, and Schwab MarketTrack Conservative Portfolio (four of the portfolios constituting Schwab Capital Trust, hereafter referred to as the “Funds”) at October 31, 2010, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities and investments in the underlying funds at October 31, 2010 by correspondence with the custodian and transfer agent of the underlying funds, respectively, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 15, 2010
47
Other Federal Tax Information (unaudited)
For corporate shareholders, the following percentage of the funds dividend distributions paid during the fiscal year ended October 31, 2010, qualify for the corporate dividends received deduction:
| | | | | |
| | | Percentage |
| |
| Schwab MarketTrack All Equity Portfolio* | | | 100.00 | |
| Schwab MarketTrack Growth Portfolio | | | 59.18 | |
| Schwab MarketTrack Balanced Portfolio | | | 37.16 | |
| Schwab MarketTrack Conservative Portfolio | | | 19.64 | |
For the fiscal year ended October 31, 2010, the funds designate the following amounts of the dividend distributions as qualified dividends for the purpose of the maximum rate under section 1(h)(ii) of the Internal Revenue Code. Shareholders will be notified in January 2011 via IRS form 1099 of the amounts for use in preparing their 2010 income tax return.
| | | | | |
| Schwab MarketTrack All Equity Portfolio* | | | $10,643,524 | |
| Schwab MarketTrack Growth Portfolio | | | 11,282,586 | |
| Schwab MarketTrack Balanced Portfolio | | | 5,956,215 | |
| Schwab MarketTrack Conservative Portfolio | | | 1,192,083 | |
| | | |
| * | | Tax information for MarketTrack All Equity Portfolio is as of December 31, 2009. |
48
Investment Advisory Agreement Approval
The Investment Company Act of 1940 (the “1940 Act”) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the “Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the investment advisory agreement.
The Board of Trustees (the “Board” or the “Trustees”, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement between Schwab Capital Trust (the “Trust”) and Charles Schwab Investment Management, Inc. (“CSIM”) (the “Agreement”) with respect to the existing funds in the Trust, including Schwab MarketTrack All Equity Portfolio, Schwab MarketTrack Growth Portfolio, Schwab MarketTrack Balanced Portfolio and Schwab MarketTrack Conservative Portfolio (the “Funds”), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM.
The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreement with respect to the Funds at meetings held on April 28, 2010, and June 3, 2010, and approved the renewal of the Agreement with respect to the Funds for an additional one year term at the meeting held on June 3, 2010. The Board’s approval of the Agreement with respect to the Funds was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
| |
| 1. | the nature, extent and quality of the services provided to the Funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the Funds; |
| |
| 2. | each Fund’s investment performance and how it compared to that of certain other comparable mutual funds; |
| |
| 3. | each Fund’s expenses and how those expenses compared to those of certain other comparable mutual funds; |
| |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (“Schwab”), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
| |
| 5. | the extent to which economies of scale would be realized as the Funds grow and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The Trustees also considered investments in CSIM’s mutual fund infrastructure, Schwab’s wide range of products, services, and channel alternatives such as free advice, investment and research tools, Internet access, and an array of account features that benefit the Funds and their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that the vast majority of the Funds’ shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds supported renewal of the Agreement with respect to the Funds.
Fund Performance. The Board considered Fund performance in determining whether to renew the Agreement with respect to the Funds. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and appropriate indices/ benchmarks, in light of total return, yield, if applicable, and market trends. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the third party who prepared the peer category analysis. In evaluating the performance of each Fund, the Trustees
49
considered both risk and shareholder risk expectations for such Fund and the appropriateness of the benchmark used to compare the performance of each Fund. The Trustees further considered the level of Fund performance in the context of its review of Fund expenses and adviser profitability discussed below. Following such evaluation the Board concluded, within the context of its full deliberations, that the performance of the Funds supported renewal of the Agreement with respect to the Funds.
Fund Expenses. With respect to the Funds’ expenses, the Trustees considered the rate of compensation called for by the Agreement, and each Fund’s net operating expense ratio, in each case, in comparison to those of a peer group of mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total Fund expenses from exceeding a specified cap. The Trustees also considered CSIM’s contractual commitment to keep each Fund’s expense cap for so long as CSIM serves as the adviser to such Fund. The Trustees also considered fees charged by CSIM to other mutual funds and exchange-traded funds. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the Funds are reasonable and supported renewal of the Agreement with respect to the Funds.
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered any other benefits derived by CSIM from its relationship with the Funds, such as whether, by virtue of its management of the Funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability under the Agreement and other service agreements were reasonable and justified in light of the quality of all services rendered to each Fund by CSIM and its affiliates. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement with respect to the Funds.
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to a Fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of Fund expenses, the Trustees considered that CSIM and Schwab have committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. The Trustees also considered existing contractual investment advisory fee schedules relating to the Funds that, in each case, include lower fees at higher graduated asset levels. Based on this evaluation the Board concluded, within the context of its full deliberations, that the Funds obtain reasonable benefit from economies of scale.
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, approved the continuation of the Agreement with respect to the Funds and concluded that the compensation under the Agreement with respect to the Funds is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
50
Trustees and Officers
The tables below give information about the trustees and officers for Schwab Capital Trust which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 84 funds.
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.
Independent Trustees
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served1) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Mariann Byerwalter
1960
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Chairman of JDN Corporate Advisory LLC. | | 73 | | Director, Redwood Trust, Inc. (1998 – present)
Director, PMI Group Inc. (2001 – 2009)
Director, Excelsior Funds (2006 – 2007) |
| |
|
John F. Cogan
1947
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | Senior Fellow: The Hoover Institution at Stanford University (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University (Sept. 1994 – present). | | 73 | | Director, Gilead Sciences, Inc. (2005 – present)
Director, Monaco Coach Corporation (2005 – 2009) |
| |
|
William A. Hasler
1941
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Dean Emeritus, Haas School of Business, University of California, Berkeley (July 1998 – present). | | 73 | | Director, Ditech Networks Corporation (1997 – present)
Director, TOUSA (1998 – present)
Director, Mission West Properties (1998 – present)
Director, Globalstar, Inc. (2009 – present)
Director, Harris-Stratex Networks (2001 – present)
Director, Aphton Corp. (1991 – 2007)
Director, Solectron Corporation (1998 – 2007)
Director, Genitope Corporation (2000 – 2009)
Director, Excelsior Funds (2006 – 2007) |
| |
|
Gerald B. Smith
1950
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (1990 – present). | | 73 | | Lead Independent Director, Board of Cooper Industries (2002 – present)
Director and Chairman of the Audit Committee, Oneok Partners LP (2003 – present)
Director, Oneok, Inc (2009 – present) |
| |
|
Donald R. Stephens
1938
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Managing Partner, D.R. Stephens & Company (investments) (1973 – present). | | 73 | | None |
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51
Independent Trustees (continued)
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Name, Year of Birth,
| | | | Number of
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and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served1) | | During the Past Five Years | | the Trustee | | Other Directorships |
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Joseph H. Wender
1944
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | Senior Consultant, Goldman Sachs & Co., Inc. (Jan. 2008- present); Partner, Colgin Partners, LLC (vineyards) (February 1998 – present); Senior Director, Chairman of the Finance Committee, GSC Group (July 2005 – Dec. 2007); General Partner, Goldman Sachs & Co., Inc. (Oct. 1982 – June 2005). | | 73 | | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present) |
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|
Michael W. Wilsey
1943
Trustee
(Trustee of Schwab Capital Trust since 1993.) | | Chairman and Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments). | | 73 | | None |
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|
Interested Trustees
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Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served ) | | During the Past Five Years | | the Trustee | | Other Directorships |
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Charles R. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of Schwab Capital Trust since 1993.) | | Chairman and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc. | | 73 | | None |
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|
Walter W. Bettinger II2
1960
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. | | 84 | | None |
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|
52
Officers of the Trust
| | | |
Name, Year of Birth, and Position(s)
| | |
with the trust; (Terms of office, and
| | |
| length of Time Served3) | | Principal Occupations During the Past Five Years |
| |
Marie Chandoha
1961
President and Chief Executive Officer
(Officer of Schwab Capital Trust since 2010.) | | Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 – present); Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer, (Sept. 2010 – present), Charles Schwab Investment Management, Inc.; President and Chief Executive Officer, Schwab Funds, Laudus Funds and Schwab ETFs (Dec. 2010 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010); Co-Head and Senior Portfolio Manager, Wells Capital Management (June 1999 – March 2007). |
| |
|
George Pereira
1964
Treasurer and Principal Financial Officer
(Officer of Schwab Capital Trust since 2004.) | | Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc. (November 2004 – present); Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present); Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds (June 2006 – June 2007). |
| |
|
Koji E. Felton
1961
Secretary and Chief Legal Officer
(Officer of Schwab Capital Trust since 1998.) | | Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc. (July 2000 – present); Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. (June 1998 – present); Vice President and Assistant Clerk, Laudus Funds (Jan. 2010 – present); Chief Legal Officer and Secretary, Schwab Funds (Nov. 1998 – present) and Schwab ETFs (Oct. 2009 – present); Chief Legal Officer and Secretary, Excelsior Funds (June 2006 – June 2007). |
| |
|
Catherine MacGregor
1964
Vice President
(Officer of Schwab Capital Trust since 2005.) | | Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk, Laudus Funds (March 2007 – present); Vice President and Assistant Clerk, Schwab Funds (Dec. 2005 – present) and Schwab ETFs (Oct. 2009 – present). |
| |
|
Michael Haydel
1972
Vice President
(Officer of Schwab Capital Trust since 2006.) | | Vice President, Asset Management Client Services, Charles Schwab & Co., Inc. (2004 – present); Vice President (Sept. 2005 – present), Anti-Money Laundering Officer (Oct. 2005 – Feb. 2009), Laudus Funds; Vice President, Schwab Funds (June 2007 – present) and Schwab ETFs (Oct. 2009 – present). |
| |
|
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| 1 | | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds® retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first, provided that any trustee who serves on both Schwab Funds and Laudus Funds retires from both boards when first required to retire by either board. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010. |
| 2 | | Mr. Schwab and Mr. Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation. |
| 3 | | The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board. |
53
Glossary
asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.
asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.
beta A historical measure of an investment’s volatility relative to a market index (usually the S&P 500®). The index is defined as having a beta of 1.00. Investments with a beta higher than 1.00 have been more volatile than the index; those with a beta of less than 1.00 have been less volatile.
bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”
An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.
bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.
cap, capitalization See “market cap.”
capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the gain or loss is still “on paper” and is considered unrealized.
earnings growth rate For a mutual fund, the average yearly rate at which the earnings of the companies in the fund’s portfolio have grown, measured over the past five years.
earnings per share (EPS) A company’s earnings, or net income, for the past 12 months, divided by the number of shares outstanding.
expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.
gross domestic product (GDP) The output of goods and services produced by labor and property located in the United States.
market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.
median market cap The midpoint of the range of market caps of the stocks held by a fund. There are different ways of calculating median market cap. With a simple median, half of the stocks in the fund’s portfolio would be larger than the median, and half would be smaller. With a weighted median (the type that is calculated for these funds), half of the fund’s assets are invested in stocks that are larger than the median market cap, and half in stocks that are smaller.
net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.
price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.
return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.
stock A share of ownership, or equity, in the issuing company.
total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.
weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.
yield The income paid out by an investment, expressed as a percentage of the investment’s market value.
54
PRIVACY NOTICE
THIS IS NOT PART OF THE SHAREHOLDER REPORT
A Commitment to Your Privacy
Your Privacy Is Not for Sale
We do not and will not sell your personal information to anyone, for any reason.
We are committed to protecting the privacy of information we maintain about you. Below are details about our commitment, including the types of information we collect and how we use and share that information. This Privacy Notice applies to you only if you are an individual who invests directly in the funds by placing orders through the funds’ transfer agent. If you place orders through your brokerage account at Charles Schwab & Co., Inc. or an account with another broker-dealer, investment advisor, 401(k) plan, employee benefit plan, administrator, bank or other financial intermediary, you are covered by the privacy policies of that financial institution and should consult those policies.
How We Collect Information About You
We collect personal information about you in a number of ways.
| |
| • | APPLICATION AND REGISTRATION INFORMATION. |
We collect personal information from you when you open an account or utilize one of our services. We may also collect information about you from third parties such as consumer reporting agencies to verify your identity. The information we collect may include personal information, including your Social Security number, as well as details about your interests, investments and investment experience.
| |
| • | TRANSACTION AND EXPERIENCE INFORMATION. |
Once your account has been opened, we collect and maintain personal information about your account activity, including your transactions, balances, positions and history. This information allows us to administer your account and provide the services you have requested.
When you visit our websites, we may use devices known as “cookies,” graphic interchange format files (GIFs), or other similar web tools to enhance your web experience. These tools help us to recognize you, maintain your web session, and provide a more personalized experience. To learn more, please click the Privacy link on our website.
How We Share and Use Your Information
We provide access to information about you to our affiliated companies, outside companies and other third parties in certain limited circumstances, including:
| |
| • | to help us process transactions for your account; |
| |
| • | when we use other companies to provide services for us, such as printing and mailing your account statements; |
| |
| • | when we believe that disclosure is required or permitted under law (for example, to cooperate with regulators or law enforcement, resolve consumer disputes, perform credit/authentication checks, or for risk control). |
State Laws
We will comply with state laws that apply to the disclosure or use of information about you.
Safeguarding Your Information — Security Is a Partnership
We take precautions to ensure the information we collect about you is protected and is accessed only by authorized individuals or organizations.
Companies we use to provide support services are not allowed to use information about our shareholders for their own purposes and are contractually obligated to maintain strict confidentiality. We limit their use of information to the performance of the specific services we have requested.
We restrict access to personal information by our employees and agents. Our employees are trained about privacy and are required to safeguard personal information.
We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
Contact Us
To provide us with updated information, report suspected fraud or identity theft, or for any other questions, please call one of the numbers below.
Schwab Funds® direct investors: 1-800-407-0256
© 2010 Schwab Funds. All rights reserved.
Schwab Funds® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.
Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.
Proxy Voting Policies, Procedures and Results
A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting Schwab’s website at www.schwabfunds.com/prospectus, the SEC’s website at http://www.sec.gov, or by contacting Schwab Funds at 1-800-435-4000.
Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting Schwab’s website at www.schwabfunds.com/prospectus or the SEC’s website at http://www.sec.gov.
The Schwab Funds Family®
Stock Funds
Schwab Premier Equity Fund®
Schwab Core Equity Fundtm
Schwab Dividend Equity Fundtm
Schwab Large-Cap Growth Fundtm
Schwab Small-Cap Equity Fundtm
Schwab Hedged Equity Fundtm
Schwab Financial Services Fundtm
Schwab Health Care Fundtm
Schwab® International Core Equity Fund
Schwab Fundamental US Large* Company Index Fund
Schwab Fundamental US Small-Mid* Company Index Fund
Schwab Fundamental International* Large Company Index Fund
Schwab Fundamental International* Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets* Index Fund
Schwab Global Real Estate Fundtm
Schwab S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market Index Fund®
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fundtm
Schwab MarketTrack All Equity Portfoliotm
Schwab MarketTrack Growth Portfoliotm
Schwab MarketTrack Balanced Portfoliotm
Schwab MarketTrack Conservative Portfoliotm
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab® Monthly Income Fund – Moderate Payout
Schwab® Monthly Income Fund – Enhanced Payout
Schwab® Monthly Income Fund – Maximum Payout
Bond Funds
Schwab YieldPlus Fund®
Schwab Short-Term Bond Market Fundtm
Schwab® Premier Income Fund
Schwab Total Bond Market Fundtm
Schwab GNMA Fundtm
Schwab Inflation Protected Fundtm
Schwab Tax-Free YieldPlus Fundtm
Schwab Tax-Free Bond Fundtm
Schwab California Tax-Free YieldPlus Fundtm
Schwab California Tax-Free Bond Fundtm
Schwab Money Funds
Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity1. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments®.
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| * | | SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL AND FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC. |
| |
| 1 | | Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money. |
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds®
P.O. Box 3812, Englewood, CO 80155–3812
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
© 2010 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
MFR13813-13
Annual report dated October 31, 2010 enclosed.
Schwab Balanced Fundtm
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Schwab Balanced Fundtm
Annual Report
October 31, 2010
This page is intentionally left blank.
Schwab Balanced Fundtm
In This Report
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Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor: Charles Schwab & Co., Inc. (Schwab).
The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS) which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. (MSCI) and Standard & Poor’s (S&P). GICS is a service mark of MSCI and S&P and has been licensed for use by Charles Schwab & Co., Inc. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.
Performance at a Glance
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
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| Total Return for the Report Period | |
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| Schwab Balanced Fundtm (Ticker Symbol: SWOBX) | | | 12.08% | |
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| Balanced Blended Index | | | 13.56% | |
| Fund Category: Morningstar Moderate Allocation | | | 13.46% | |
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| Performance Details | | | pages 6-7 | |
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| Minimum Initial Investment1 | | | $ 100 | |
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All fund and index figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
Fund expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date.
The Balanced Blended Index is a custom blended index developed by CSIM composed of 60% S&P 500® Index and 40% Barclays Capital U.S. Aggregate Bond Index.
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| 1 | Please see prospectus for further details and eligibility requirements. |
2 Schwab Balanced Fund
From the President
Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the fund covered in this report.
Dear Shareholder,
During the year that ended October 31, 2010, many investors wrestled with news that was mostly negative—the recovery of the U.S. economy remained tepid, unemployment stayed stubbornly high, and the housing market remained weak. In spite of these events, nearly all stock and bond markets produced positive returns, both in the United States and abroad.
The bellwether S&P 500 Index gained 16.52% during the year and international stock markets also rewarded investors as indicated by a return of 8.82% in the MSCI EAFE Index. Growth stocks generally fared better than value stocks in large-, mid-, and small-cap sectors. In fixed income markets, the Barclays Capital U.S. Aggregate Bond Index returned 8.01%.
For the year ended October 31, 2010, the Schwab Balanced Fund generated a positive absolute return, but underperformed its blended benchmark. The fund kept its asset allocation close to that of its benchmark, with approximately 60% in stocks and 40% in investment grade bonds. Please read the fund manager’s discussion and analysis on the following pages for more details.
At Schwab, we encourage investors to review their investment strategy periodically in the context of their tolerance for risk, timeline, and established investment plan.
If you have any questions about the Schwab Balanced Fund or any other Schwab Funds, please call us at 1-800-435-4000. Please also see www.schwabfunds.com for details on each fund including performance results, investment strategy, and prospectus.
Thank you for investing with us.
Sincerely,
Schwab Balanced Fund 3
The Investment Environment
The past 12 months produced significant positive returns in nearly all major equity and fixed income markets, despite various economic indicators falling short of expectations here in the United States and abroad. Domestic equity markets fared better than international, and growth stocks outperformed value stocks in large-, mid-, and small-cap categories. In the credit markets, inflation-protected bonds were the best performers and U.S. Treasuries had the poorest returns, though they also had solid performance for the 12 months under review.
The return for the S&P 500 Index, which is usually seen as a bellwether for U.S. financial markets, was positive at 16.52%. The international stock markets also had solid overall returns, and the MSCI EAFE Index (Gross) returned 8.82%. In fixed-income, the Barclays Capital U.S. Aggregate Bond Index returned 8.01%, while the Barclays Capital U.S. TIPS Index returned 10.42%, and the Barclays Capital U.S. Treasury Index returned 7.20% for the reporting period.
In a press release dated November 3, 2010, the Federal Reserve (the Fed) described information it had received since its meeting in September 2010, and noted that the pace of recovery in output and employment remained slow. Moreover, persistent high unemployment, coupled with depressed housing prices and a rise in foreclosures, continued to work against the U.S. economic recovery process. In the U.S. fixed income markets, accommodative Fed policy in the form of a near-zero federal funds rate remained intact, and several recent statements from the Fed affirmed that rates will remain low for an extended period of time. Also in November’s press release, the Fed stated that it intended to purchase up to $600 billion of longer-term U.S. Treasuries by the end of the second quarter in 2011.
At the international level, financial markets fluctuated during the reporting period. Ongoing concerns regarding the debt obligations of Greece, Spain, Ireland, and other European countries continued to capture the attention of central banks and resulted in the progressive downgrading of debt in those countries. The news caused temporary turmoil in the U.S. and global financial markets in early May 2010. While there has been some rebounding to pre-May levels in the markets, central banks remain attentive to debt ratios, monetary exchange rates, interest rates, and inflation measurements.
During the reporting period, two economic events caused volatility in the equity and fixed income markets. First, was the Deepwater Horizon oil spill in the Gulf of Mexico on April 20, 2010. The costs—in terms of environmental impact and loss of oil—affected energy-related stocks, which declined on the news. For the reporting period, the Energy Sector was the weakest performing sector in the S&P 500 Index. Second, investor confidence in the United States and abroad was further shaken on May 6, 2010, when the Dow Jones Industrial Average dropped 999 points, within a 30-minute timeframe, before partially regaining some of the decline. The equity market event was subsequently named the “flash crash.” As a result of the flash crash, more than 16,000 trades were cancelled by the major U.S. stock exchanges.
On a more general note in the United States, real Gross Domestic Product (GDP) growth remained lower than hoped for during the reporting period, with the Bureau of Economic Analysis estimating that GDP grew at a rate of 2.0% for the third quarter of 2010. Likewise, the national unemployment rate—as reported by the Bureau of Labor Statistics—was an ongoing concern and hovered just below 10% throughout the 12-month period. Finally, high delinquencies, foreclosures, and stalled foreclosures weighed heavily on the housing sector. The discovery that some institutions had improper or incomplete paperwork on original loan documents brought at least a temporary halt to some foreclosures.
Asset Class Performance Comparison % returns during the report period
This graph compares the performance of various asset classes during the report period. Final performance figures for the period are in the key below.
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| | 16.52% | | S&P 500® Index: measures U.S. large-cap stocks |
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| | 26.58% | | Russell 2000® Index: measures U.S. small-cap stocks |
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| | 8.82% | | MSCI EAFE® Index (Gross): measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East |
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| | 8.01% | | Barclays Capital U.S. Aggregate Bond Index: measures the U.S. bond market |
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| | 0.11% | | Three-Month U.S. Treasury Bills (T-bills): measures short-term U.S. Treasury obligations |
These figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and you cannot invest in them directly. Remember that past performance is not an indication of future results.
Data source: Charles Schwab & Co., Inc.
Nothing in this report represents a recommendation of a security by the investment adviser.
Manager views and portfolio holdings may have changed since the report date.
4 Schwab Balanced Fund
Fund Management
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| | Daniel Kern, CFA, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day management of the fund. He has been the portfolio manager of the fund since 2008. From 2003, until his appointment, he held vice president level positions in product development, investment operations and audit at the firm. Prior to joining the firm in 2003, he worked for more than 13 years in the investment management industry, with more than 6 of those years spent in portfolio management. |
Schwab Balanced Fund 5
Schwab Balanced Fund™
Schwab Balanced Fund (the fund) seeks capital growth and income. To pursue its goal, the fund generally invests in a diversified group of other Schwab and/or Laudus Funds (the underlying funds), in accordance with its target portfolio allocation. For more information on the fund’s objective and strategy, please see the fund’s prospectus.
The fund returned 12.08% for the 12-month period, while its comparative index, the Balanced Blended Index, returned 13.56%. The S&P 500 Index makes up 60% of the Balanced Blended Index, and it returned 16.52% for the reporting period, while the Barclays Capital U.S. Aggregate Bond Index comprises the other 40%, and it returned 8.01%.
Looking at the fund’s equity allocation, the Schwab Core Equity Fund (Core Equity) was the largest detractor from the fund’s relative performance. Core Equity returned 11.77% for the 12-month period, underperforming its comparative index, the S&P 500 Index, which returned 16.52%. On the other hand, the Laudus Small-Cap MarketMasters Fund, Select Shares, which returned 22.66%, was the best performer for the fund and contributed positively to relative return. Within the fund’s fixed-income component, the Schwab Total Bond Market Fund, which underperformed its comparative index by 35 basis points, was a relative detractor.
As of 10/31/10:
Statistics
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| Number of Holdings | | 4 |
| Portfolio Turnover Rate | | 8% |
Asset Class Weightings % of Investments
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| Equity Funds - Domestic | | 62.4% |
| Fixed - Income Funds | | 35.4% |
| Short-Term Investments | | 2.2% |
Total | | 100.0% |
Top Holdings % of Net Assets1
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| Schwab Core Equity Fund | | 51.4% |
| Schwab Total Bond Market Fund | | 35.3% |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | 11.1% |
| State Street Institutional Liquid Reserves Fund - Institutional Class | | 2.2% |
Total | | 100.0% |
Manager views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
Small company stocks are subject to greater volatility than other asset classes.
Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
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| 1 | | This list is not a recommendation of any security by the investment adviser. |
6 Schwab Balanced Fund
Schwab Balanced Fundtm
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
October 31, 2000 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 5 Years | | 10 Years |
| |
Fund: Schwab Balanced Fundtm (11/18/96) | | | 12.08 | % | | | | 2.34 | % | | | | 2.64 | % | |
| Balanced Blended Index* | | | 13.56 | % | | | | 3.98 | % | | | | 2.87 | % | |
S&P 500® Index | | | 16.52 | % | | | | 1.73 | % | | | | -0.02 | % | |
| Barclays Capital U.S. Aggregate Bond Index | | | 8.01 | % | | | | 6.45 | % | | | | 6.38 | % | |
| Fund Category: Morningstar Moderate Allocation | | | 13.46 | % | | | | 3.44 | % | | | | 3.21 | % | |
Fund Expense Ratios3: Net 0.75%; Gross 0.91%
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
Because the fund originally used a different asset allocation strategy and a multi-fund strategy, its performance prior to June 3, 2002 does not reflect the current strategy and may have been different if it did. From June 3, 2002 to February 28, 2008, the fund used a manager of managers strategy, and therefore its performance during this time does not reflect the fund’s current multi-fund strategy and may have been different if it did.
| | |
| * | | The Balanced Blended Index is a custom blended index developed by CSIM composed of 60% S&P 500® Index and 40% Barclays Capital U.S. Aggregate Bond Index. |
| 1 | | Fund expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.75%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Balanced Fund 7
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you incur two types of costs: transaction costs, such as redemption fees, and ongoing costs, such as management fees, transfer agent and shareholder services fees, and other fund expenses.
The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning May 1, 2010 and held through October 31, 2010.
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period.”
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s or share class’ actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.
| | | | | | | | | | | | | | | | | |
| | | | | | | Ending
| | |
| | | | | Beginning
| | Account Value
| | Expenses Paid
|
| | | Expense Ratio1
| | Account Value
| | (Net of Expenses)
| | During Period2
|
| | | (Annualized) | | at 5/1/10 | | at 10/31/10 | | 5/1/10–10/31/10 |
| |
| Schwab Balanced Fundtm | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.00 | | | $ | 1,000 | | | $ | 1,010.10 | | | $ | 0.00 | |
| Hypothetical 5% Return | | | 0.00 | | | $ | 1,000 | | | $ | 1,025.21 | | | $ | 0.00 | |
| | |
| 1 | | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights, which covers a 12-month period. The expenses incurred by the underlying funds in which the fund invests are not included in this ratio. |
| 2 | | Expenses for each share class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 184 days of the period, and divided by the 365 days of the fiscal year. |
8 Schwab Balanced Fund
Schwab Balanced Fund™
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/09 | | 10/31/081 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 9.99 | | | | 9.82 | | | | 13.86 | | | | 13.39 | | | | 12.85 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.17 | 2 | | | 0.22 | 2 | | | 0.20 | 2 | | | 0.25 | 2 | | | 0.25 | 2 | | |
| Net realized and unrealized gains (losses) | | | 1.03 | | | | 0.64 | | | | (3.26 | ) | | | 1.06 | | | | 0.83 | | | |
| | | |
| Total from investment operations | | | 1.20 | | | | 0.86 | | | | (3.06 | ) | | | 1.31 | | | | 1.08 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.19 | ) | | | (0.37 | ) | | | (0.29 | ) | | | (0.24 | ) | | | (0.16 | ) | | |
| Distributions from net realized gains | | | — | | | | (0.32 | ) | | | (0.69 | ) | | | (0.60 | ) | | | (0.38 | ) | | |
| | | |
| Total distributions | | | (0.19 | ) | | | (0.69 | ) | | | (0.98 | ) | | | (0.84 | ) | | | (0.54 | ) | | |
| | | |
| Net asset value at end of period | | | 11.00 | | | | 9.99 | | | | 9.82 | | | | 13.86 | | | | 13.39 | | | |
| | | |
| Total return (%) | | | 12.08 | | | | 9.45 | | | | (23.56 | ) | | | 10.24 | | | | 8.59 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
Net operating expenses3 | | | 0.00 | 4 | | | 0.00 | | | | 0.36 | | | | 1.02 | 5 | | | 1.03 | 5 | | |
Gross operating expenses3 | | | 0.20 | | | | 0.17 | | | | 0.53 | | | | 1.27 | | | | 1.26 | | | |
| Net investment income (loss) | | | 1.67 | | | | 2.41 | | | | 1.81 | | | | 1.84 | | | | 1.90 | | | |
| Portfolio turnover rate | | | 8 | | | | 21 | | | | 267 | | | | 244 | | | | 244 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 88 | | | | 86 | | | | 85 | | | | 112 | | | | 122 | | | |
1 Effective February 28, 2008, the Investor Share class and the Select Share class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Investor Shares.
2 Calculated based on the average shares outstanding during the period.
3 The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
4 Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
5 The ratio of net operating expenses would have been 1.10% for periods ended 10/31/06 and 10/31/07, respectively, if custody credits and dividend and interest expenses on short sales had not been incurred.
See financial notes 9
Schwab Balanced Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 100 | .0% | | Other Investment Companies | | | 89,687,113 | | | | 88,197,924 | |
| |
| |
| | 100 | .0% | | Total Investments | | | 89,687,113 | | | | 88,197,924 | |
| | 0 | .0% | | Other Assets and Liabilities | | | | | | | 23,638 | |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 88,221,562 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Other Investment Companies 100.0% of net assets |
| |
Equity Funds 62.4%
|
Laudus Small-Cap MarketMasters Fund, Select Shares (a)* | | | 838,005 | | | | 9,754,373 | |
Schwab Core Equity Fund (a) | | | 2,871,209 | | | | 45,307,683 | |
| | | | | | | | | |
| | | | | | | | 55,062,056 | |
| |
Fixed-Income Funds 35.4%
|
Schwab Total Bond Market Fund (a) | | | 3,317,269 | | | | 31,182,325 | |
| |
Money Funds 2.2%
|
| State Street Institutional Liquid Reserves Fund - Institutional Class | | | 1,953,543 | | | | 1,953,543 | |
| | | | | | | | | |
| Total Other Investment Companies |
| (Cost $89,687,113) | | | 88,197,924 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $90,960,869 and the unrealized appreciation and depreciation were $3,144,886 and ($5,907,831), respectively, with a net unrealized depreciation of ($2,762,945).
| | |
| * | | Non-income producing security. |
| (a) | | Issuer is affiliated with the fund’s adviser. |
10 See financial notes
Schwab Balanced Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments in affiliated underlying funds, at value (cost $87,733,570) | | | | | $86,244,381 | |
| Investments in unaffiliated issuers, at value (cost $1,953,543) | | + | | | 1,953,543 | |
| | | |
| Total investments, at value (cost $89,687,113) | | | | | 88,197,924 | |
| Receivables: | | | | | | |
| Dividends | | | | | 76,877 | |
| Fund shares sold | | | | | 10,865 | |
| Interest | | | | | 414 | |
| Due from investment adviser | | | | | 340 | |
| Prepaid expenses | | + | | | 2,877 | |
| | | |
Total assets | | | | | 88,289,297 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Fund shares redeemed | | | | | 14,677 | |
| Accrued expenses | | + | | | 53,058 | |
| | | |
Total liabilities | | | | | 67,735 | |
| |
Net Assets |
|
Total assets | | | | | 88,289,297 | |
Total liabilities | | − | | | 67,735 | |
| | | |
Net assets | | | | | $88,221,562 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 94,518,826 | |
| Net investment income not yet distributed | | | | | 756,596 | |
| Net realized capital losses | | | | | (5,564,671 | ) |
| Net unrealized capital losses | | | | | (1,489,189 | ) |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $88,221,562 | | | | 8,021,057 | | | | | $11.00 | | | |
See financial notes 11
Schwab Balanced Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends received from affiliated underlying funds | | | | | $1,463,325 | |
| Interest | | + | | | 2,707 | |
| | | |
Total investment income | | | | | 1,466,032 | |
| |
Expenses |
|
| Shareholder reports | | | | | 50,059 | |
| Professional fees | | | | | 38,482 | |
| Registration fees | | | | | 29,582 | |
| Transfer agent fees | | | | | 25,476 | |
| Portfolio accounting fees | | | | | 16,986 | |
| Trustees’ fees | | | | | 5,677 | |
| Custodian fees | | | | | 1,259 | |
| Interest expense | | | | | 8 | |
| Other expenses | | + | | | 6,992 | |
| | | |
| Total expenses | | | | | 174,521 | |
| Expense reduction by adviser and Schwab | | − | | | 171,476 | |
| Custody credits | | − | | | 6 | |
| | | |
Net expenses | | − | | | 3,039 | |
| | | |
Net investment income | | | | | 1,462,993 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on sales of affiliated underlying funds | | | | | 816,038 | |
| Net realized gains on unaffiliated investments | | + | | | 44,533 | |
| | | |
Net realized gains | | | | | 860,571 | |
Net unrealized gains on affiliated underlying funds | | + | | | 7,632,908 | |
| | | |
Net realized and unrealized gains | | | | | 8,493,479 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $9,956,472 | |
12 See financial notes
Schwab Balanced Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $1,462,993 | | | | $1,941,574 | |
| Net realized gains (losses) | | | | | 860,571 | | | | (5,972,403 | ) |
| Net unrealized gains | | + | | | 7,632,908 | | | | 11,205,277 | |
| | | |
Increase in net assets from operations | | | | | 9,956,472 | | | | 7,174,448 | |
| |
Distributions to Shareholders |
|
| Distributions from net investment income | | | | | 1,576,121 | | | | 3,132,669 | |
| Distributions from net realized gains | | + | | | — | | | | 2,727,245 | |
| | | |
Total distributions | | | | | $1,576,121 | | | | $5,859,914 | |
Transactions in Fund Shares
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
| Shares sold | | | | | 1,058,742 | | | | $11,123,536 | | | | 898,966 | | | | $8,337,904 | |
| Shares reinvested | | | | | 142,826 | | | | 1,479,682 | | | | 607,671 | | | | 5,511,579 | |
| Shares redeemed | | + | | | (1,739,721 | ) | | | (18,264,502 | ) | | | (1,583,828 | ) | | | (14,502,159 | ) |
| | | |
Net transactions in fund shares | | | | | (538,153 | ) | | | ($5,661,284 | ) | | | (77,191 | ) | | | ($652,676 | ) |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 8,559,210 | | | | $85,502,495 | | | | 8,636,401 | | | | $84,840,637 | |
| Total increase or decrease | | + | | | (538,153 | ) | | | 2,719,067 | | | | (77,191 | ) | | | 661,858 | |
| | | |
End of period | | | | | 8,021,057 | | | | $88,221,562 | | | | 8,559,210 | | | | $85,502,495 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $756,596 | | | | | | | | $869,724 | |
See financial notes 13
Schwab Balanced Fund
Financial Notes
1. Business Structure of the Fund:
Schwab Balanced Fund is a series of Schwab Capital Trust (the “trust”), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trust including the fund discussed in this report, which is highlighted:
| | | |
| |
Schwab Capital Trust (organized May 7, 1993)
Schwab Balanced Fund
Schwab S&P 500 Index Fund
Schwab Small-Cap Index Fund
Schwab Total Stock Market Index Fund
Schwab International Index Fund
Schwab MarketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
Laudus Small-Cap MarketMasters Fund
Laudus International MarketMasters Fund
Schwab Premier Equity Fund
Schwab Core Equity Fund
Schwab Dividend Equity Fund
Schwab Large-Cap Growth Fund
Schwab Small-Cap Equity Fund
Schwab Hedged Equity Fund | | Schwab Financial Services Fund
Schwab Health Care Fund
Schwab International Core Equity Fund
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small-Mid Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets Index Fund
Schwab Monthly Income Fund-Moderate Payout
Schwab Monthly Income Fund-Enhanced Payout
Schwab Monthly Income Fund-Maximum Payout |
| | | |
The Schwab Balanced Fund is a single class “fund of funds” which seeks to achieve its investment objective by investing in a diversified group of other Schwab and/or Laudus Funds, but also may invest in other unaffiliated, third party mutual funds, including exchange traded funds (“ETFs”). In addition, the fund may purchase individual securities to maintain its allocations. The fund bears its share of allocable expenses of the underlying funds in which it invests. The financial statements of the fund should be read in conjunction with the underlying funds’ financial statements.
The fund offers one share class. Shares are bought and sold (subject to a redemption fee, see financial note 8) at closing net asset value (“NAV”), which is the price for all outstanding shares of a fund, as applicable. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.
The fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, the fund may also keep certain assets in segregated accounts, as required by securities law.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies the fund uses in its preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
For more information about the underlying funds’ operations and policies, please refer to those funds’ semiannual and annual reports, which are filed with the Securities Exchange Commission (“SEC”).
(a) Security Valuation:
The fund values the securities in its portfolio every business day. The fund uses the following policies to value various types of securities:
| | |
| | • | Short-term securities (60 days or less to maturity): valued at amortized cost, which approximates market value. |
| |
| | • | Underlying funds: valued at their respective net asset values as determined by the underlying fund in accordance with the 1940 Act for a given day. |
In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the fund discloses the fair value of its investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the
14
Schwab Balanced Fund
Financial Notes (continued)
2. Significant Accounting Policies (continued):
valuation (level 3 measurements). If the fund determines that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
The three levels of the fair value hierarchy are as follows:
| | |
| | • | Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. The fund does not adjust the quoted price for such investments, even in situations where the fund holds a large position and a sale could reasonably impact the quoted price. |
| |
| | • | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 Prices. These generally include certain U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. In addition, international securities whose markets close hours before the fund values its holdings may require fair valuations due to significant movement in the U.S. markets occurring after the daily close of the foreign markets. The Board of Trustees has approved a vendor that would calculate fair valuations of international equity securities based on a number of factors that appear to correlate to the movements in the U.S. markets. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. |
| |
| | • | Level 3 — significant unobservable inputs (including the fund’s own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the fund uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the fund in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the fund in the absence of market information. Assumptions used by the fund due to the lack of observable inputs may significantly impact the resulting fair value and therefore the fund’s results of operations. |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the fund’s investments as of October 31, 2010:
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total* |
| |
| Other Investment Companies(a) | | | $88,197,924 | | | | $— | | | | $— | | | | $88,197,924 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $88,197,924 | | | | $— | | | | $— | | | | $88,197,924 | |
| | | | | | | | | | | | | | | | | |
| | | |
| * | | The fund had no Other Financial Instruments. |
| (a) | | As categorized in Portfolio Holdings. |
In January 2010, the Financial Accounting Standards Board issued new guidance requiring reporting entities to make new disclosures about amounts and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements as well as inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances and settlements of Level 3 securities on a gross basis. The new and revised disclosures are required to be implemented for annual and interim periods beginning after December 15, 2009, except for the disclosures surrounding purchases, sales, issuances and settlements of Level 3 fair value
15
Schwab Balanced Fund
Financial Notes (continued)
2. Significant Accounting Policies (continued):
measurements on a gross basis, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years.
The fund has adopted the new guidance for the period ended October 31, 2010. There were no significant transfers between Level 1 and Level 2 for the period ended October 31, 2010. Management is currently evaluating the impact of the adoption of the other provisions of the new guidance on the fund’s financial statements.
(b) Accounting Policies for certain Portfolio Investments (if held):
Repurchase Agreements: In a repurchase agreement, a fund buys a security from another party (usually a financial institution) with the agreement that it be sold back in the future. The funds’ repurchase agreements are fully collateralized by cash, U.S. government securities, U.S. government agency securities or other securities. All collateral is held by the funds’ custodian (or, with tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement.
(c) Security Transactions:
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
(d) Investment Income:
Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the fund may record certain foreign security dividends on the day it learns of the ex-dividend date. Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underling funds.
(e) Expenses:
Expenses that are specific to the fund are charged directly to the fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets.
(f) Distributions to Shareholders:
The fund makes distributions from net investment income and net realized capital gains, if any, once a year.
(g) Custody Credit:
The fund has an arrangement with its custodian bank, State Street Bank and Trust Company, under which the fund receives a credit for its uninvested cash balance to offset its custody fees and accounting fees. The credit amounts, if any, are disclosed in the Statement of Operations as a reduction to the fund’s operating expenses.
(h) Accounting Estimates:
The accounting policies described in this report conform to accounting principles generally accepted in the United States of America. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates and these differences may be material.
(i) Federal Income Taxes:
The fund intends to meet federal income and excise tax requirements for regulated investment companies.
Accordingly, the fund distributes substantially all of its net investment income and realized net capital gains, if any, to its respective shareholders each year. As long as the fund meets the tax requirements, it is not required to pay federal income tax.
16
Schwab Balanced Fund
Financial Notes (continued)
2. Significant Accounting Policies (continued):
(j) Indemnification:
Under the fund’s organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business the fund enters into contracts with its vendors and others that provide general indemnifications. The fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the fund. However, based on experience, the fund expects the risk of loss to be remote.
3. Risk Factors
Investing in the fund may involve certain risks, as discussed in the fund’s prospectus, including, but not limited to, those described below. Any of these risks could cause an investor to lose money.
Asset Allocation Risk. The fund is subject to asset allocation risk, which is the risk that the selection of the underlying funds and the allocation of the fund’s assets among the various asset classes and market segments will cause the fund to underperform other funds with a similar investment objective.
Market Risk. Stock and bond markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of an investment in the fund will fluctuate, which means that an investor could lose money.
Underlying Fund Investment Risk. The value of your investment in the fund is based primarily on the prices of the underlying funds that the fund purchases. In turn, the price of each underlying fund is based on the value of its securities. Before investing in the fund, investors should assess the risks associated with the underlying funds in which the fund may invest and the types of investments made by those underlying funds. These risks include any combination of the risks described below, although the fund’s exposure to a particular risk will be proportionate to the fund’s overall asset allocation and underlying fund allocation.
| | |
| | • | Investment Risk. An investment in an underlying fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund may experience losses with respect to its investment in an underlying fund. Further, there is no guarantee that an underlying fund will be able to achieve its objective. |
| |
| | • | Management Risk. The underlying funds are actively managed mutual funds. Any actively managed mutual fund is subject to the risk that its investment adviser (or sub-adviser) will make poor security selections. An underlying fund’s adviser applies its own investment techniques and risk analyses in making investment decisions for the fund, but there can be no guarantee that they will produce the desired results. |
| |
| | • | Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time. |
| |
| | • | Large- and Mid-Cap Risk. Both large- and mid-cap stocks tend to go in and out of favor based on market and economic conditions. However, stocks of mid-cap companies tend to be more vulnerable to adverse business or economic events than larger more established companies. During a period when large- and mid-cap U.S. stocks fall behind other types of investments — small-cap stocks, for instance — an underlying fund’s large- and mid-cap holdings could reduce performance. |
| |
| | • | Small-Cap Risk. Historically, small-cap stocks have been riskier than large- and mid-cap stocks, and their prices may move sharply, especially during market upturns and downturns. Small-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments — large-cap and mid-cap stocks, for instance — an underlying fund’s small-cap holdings could reduce performance. |
| |
| | • | Fixed Income Risk. Interest rates rise and fall over time, which will affect an underlying fund’s yield and share price. The credit quality of a portfolio investment could also cause a fund’s share price to fall. A fund could lose money if the issuer or guarantor of a portfolio investment or the counterparty to a derivatives contract fails to make timely principal or interest payments or otherwise honor its obligations. Fixed income securities may be paid off earlier or later than expected. |
17
Schwab Balanced Fund
Financial Notes (continued)
3. Risk Factors (continued)
| | |
| | | Either situation could cause a fund to hold securities paying lower than-market rates of interest, which could hurt the fund’s yield or share price. Below investment-grade bonds (junk bonds) involve greater credit risk, are more volatile, involve greater risk of price declines and may be more susceptible to economic downturns than investment-grade securities. |
| | |
| | • | ETF Risk. An underlying fund may purchase shares of ETFs to gain exposure to a particular portion of the market while awaiting an opportunity to purchase securities directly. When an underlying fund invests in an ETF, it will bear a proportionate share of the ETF’s expenses. In addition, lack of liquidity in an ETF can result in its value being more volatile than the underlying portfolio of securities. |
| |
| | • | Derivatives Risk. An underlying fund’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments and could cause the fund to lose more than the principal amount invested. |
| |
| | • | Leverage Risk. Certain underlying fund transactions, such as derivatives, short sales, reverse repurchase agreements, and mortgage dollar rolls, may give rise to a form of leverage and may expose a fund to greater risk. Leverage tends to magnify the effect of any decrease or increase in the value of a fund’s portfolio securities, which means even a small amount of leverage can have a disproportionately larger impact on the fund. |
| |
| | • | Liquidity Risk. A particular investment may be difficult to purchase or sell. An underlying fund may be unable to sell illiquid securities at an advantageous time or price. |
| |
| | • | Portfolio turnover risk. Certain of the underlying funds may buy and sell portfolio securities actively. If they do, their portfolio turnover rate and transaction costs will rise, which may lower the underlying fund’s performance and may increase the likelihood of capital gain distributions. |
Direct Investment Risk. The fund may invest a portion of its assets directly in equity and fixed income securities, as well as other mutual funds or ETFs, to maintain its asset allocations. The fund’s direct investment in these securities is subject to the same or similar risks as an underlying fund’s investment in the same security.
Please refer to the fund’s prospectus for a more complete description of the principal risks of investing in the fund.
4. Affiliates and Affiliated Transactions:
Charles Schwab Investment Management, Inc. (“CSIM” or “investment adviser”), a wholly owned subsidiary of The Charles Schwab Corporation, serves as the fund’s investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (“Advisory Agreement”) between it and the trust.
The Board of Trustees has adopted a Shareholder Servicing Plan (the “Plan”) on behalf of the fund. The Plan enables the fund to bear expenses relating to the provision by service providers, including Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, “Schwab”), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the fund. The fund is not subject to any fee under the Plan.
CSIM and Schwab have agreed with the fund to limit (“expense limitation”) the total expenses charged, excluding interest, taxes and certain non-routine expenses of the fund to 0.00% for so long as CSIM serves as the investment adviser to the fund, which may only be amended or terminated with the approval of the fund’s Board of Trustees.
The agreement to limit the fund’s total expenses charged is limited to the fund’s direct operating expenses and, therefore, does not apply to acquired fund fees and expense, which are indirect expenses incurred by a fund through its investments in the underlying funds.
The fund may engage in direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. During the year ended October 31, 2010, the fund had no security transactions with other Schwab Funds.
18
Schwab Balanced Fund
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
The fund may engage in certain transactions involving related parties. Pursuant to an exemptive order issued by the SEC, the fund may invest in other related funds. As of October 31, 2010, the percentages of shares of other related funds owned by the Schwab Balanced Fund are:
| | | | | |
Equity Funds: | | | | |
| Laudus Small-Cap MarketMasters Fund | | | 2.4% | |
| Schwab Core Equity Fund | | | 2.5% | |
Fixed-Income Funds: | | | | |
| Schwab Total Bond Market Fund | | | 3.3% | |
Below is a summary of the fund’s transactions with its affiliated underlying funds during the period ended October 31, 2010:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Balance
| | Market
| | Realized
| | Distribution
|
| | | of Shares
| | | | | | of Shares
| | Value
| | Gain (Loss)
| | Received*
|
| | | Held at
| | Gross
| | Gross
| | Held at
| | at
| | 11/01/09
| | 11/01/09
|
Underlying Fund | | 10/31/09 | | Additions | | Sales | | 10/31/10 | | 10/31/10 | | to 10/31/10 | | to 10/31/10 |
| |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | | 1,528,130 | | | | — | | | | (690,125 | ) | | | 838,005 | | | | $9,754,373 | | | | $1,257,499 | | | | $— | |
| Schwab Core Equity Fund | | | 2,771,812 | | | | 164,315 | | | | (64,918 | ) | | | 2,871,209 | | | | 45,307,683 | | | | (160,082 | ) | | | 424,642 | |
| Schwab Total Bond Market Fund | | | 3,447,725 | | | | 477,549 | | | | (608,005 | ) | | | 3,317,269 | | | | 31,182,325 | | | | (281,379 | ) | | | 1,038,683 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | | | | | | | | | | | | | | | | | $86,244,381 | | | | $816,038 | | | | $1,463,325 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| * | | Distributions received include distributions from net investment income and capital gains from the underlying funds. |
Pursuant to an exemptive order issued by the SEC, the fund may enter into interfund borrowing and lending transactions within the Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. The fund had no interfund borrowing or lending activity during the period.
5. Board of Trustees:
Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their services as trustees, but it did pay non-interested persons (independent trustees), as noted in the fund’s Statement of Operations.
6. Borrowing from Banks:
The fund may borrow money from banks and custodians. The fund has custodian overdraft facilities, a committed line of credit of $150 million with State Street Bank and Trust Company, an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The fund pays interest on the amounts they borrow at rates that are negotiated periodically. The fund also pays an annual fee to State Street Bank and Trust Company for the committed line of credit.
There were no borrowings from the lines of credit during the period. However, the fund utilized its overdraft facility and incurred interest expense, which is included in other expenses in the Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.
7. Purchases and Sales/Maturities of Investment Securities:
For the period ended October 31, 2010, purchases and sales/maturities of securities (excluding short-term obligations) were as follows:
| | | | | | | |
Purchase of Securities | | Sales/Maturities of Securities |
| |
| | $6,650,000 | | | | $14,050,000 | |
19
Schwab Balanced Fund
Financial Notes (continued)
8. Redemption Fee:
The fund charges a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior periods are $674 and $2,343, respectively.
9. Federal Income Taxes:
As of October 31, 2010, the components of distributable earnings on a tax-basis were as follows:
| | | | | |
| Undistributed ordinary income | | | $756,596 | |
| Undistributed long-term capital gains | | | — | |
| Unrealized appreciation | | | 3,144,886 | |
| Unrealized depreciation | | | (5,907,831 | ) |
| | | | | |
| Net unrealized appreciation/(depreciation) | | | ($2,762,945 | ) |
| | | | | |
The primary differences between book-basis and tax-basis unrealized appreciation or unrealized depreciation of investments are the tax deferral of losses on wash sales.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2010, the fund had capital loss carryforwards $4,290,915 available to offset future net capital gains before October 31, 2017.
As of October 31, 2010, the fund had capital losses utilized as follows:
| | | | | |
| Capital losses utilized | | | $908,551 | |
The tax-basis components of distributions paid during the current and prior periods were:
| | | | | | | | | |
| | Current Period | | Prior Period |
| |
| Ordinary income | | | $1,576,121 | | | | $3,133,313 | |
| Long-term capital gains | | | — | | | | 2,726,601 | |
| Return of capital | | | — | | | | — | |
Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as non-U.S. currency gains and losses, short-term capital gains and losses; capital losses related to wash sales, unrealized appreciation of certain investments in non-U.S. securities; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund for financial reporting purposes. The fund may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.
The permanent book and tax basis differences may result in reclassifications between capital account and other accounts as required. The adjustments will have no impact on net assets or the results of operations. As of October 31, 2010, no such reclassifications were required.
As of October 31, 2010, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the fund and has determined that no provision for income tax is required in the fund’s financial statements. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year ended October 31, 2010, the fund did not incur any interest or penalties.
10. Subsequent Events:
Management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
20
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of:
Schwab Balanced Fund
In our opinion, the accompanying statement of assets and liabilities, including the portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schwab Balanced Fund (one of the portfolios constituting Schwab Capital Trust, hereafter referred to as the “Fund”) at October 31, 2010, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Fund’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities and investments in the underlying funds at October 31, 2010 by correspondence with the custodian and transfer agent of the underlying funds, respectively, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 15, 2010
21
Other Federal Tax Information: (unaudited)
For corporate shareholders, 33.99% of the fund’s dividend distributions paid during the fiscal year ended October 31, 2010, qualify for the corporate dividends received deduction.
For the fiscal year ended October 31, 2010, the fund designates $535,743 of the dividend distributions as qualified dividends for the purpose of the maximum rate under section 1(h)(ii) of the Internal Revenue Code. Shareholders will be notified in January 2011 via IRS form 1099 of the amounts for use in preparing their 2010 income tax return.
22
Investment Advisory Agreement Approval
The Investment Company Act of 1940 (the “1940 Act”) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the “Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the investment advisory agreement.
The Board of Trustees (the “Board” or the “Trustees”, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement between Schwab Capital Trust (the “Trust”) and Charles Schwab Investment Management, Inc. (“CSIM”) (the “Agreement”) with respect to the existing funds in the Trust, including the Schwab Balanced Fund (the “Fund”), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Fund that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM.
The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreement with respect to the Fund at meetings held on April 28, 2010, and June 3, 2010, and approved the renewal of the Agreement with respect to the Fund for an additional one year term at the meeting held on June 3, 2010. The Board’s approval of the Agreement with respect to the Fund was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
| |
| 1. | the nature, extent and quality of the services provided to the Fund under the Agreement, including the resources of CSIM and its affiliates dedicated to the Fund; |
| |
| 2. | the Fund’s investment performance and how it compared to that of certain other comparable mutual funds; |
| |
| 3. | the Fund’s expenses and how those expenses compared to those of certain other comparable mutual funds; |
| |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (“Schwab”), with respect to the Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
| |
| 5. | the extent to which economies of scale would be realized as the Fund grows and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Fund and the resources of CSIM and its affiliates dedicated to the Fund. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The Trustees also considered investments in CSIM’s mutual fund infrastructure, Schwab’s wide range of products, services, and channel alternatives such as free advice, investment and research tools, Internet access, and an array of account features that benefit the Fund and its shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that many of the Fund’s shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the Fund and the resources of CSIM, and its affiliates dedicated to the Fund supported renewal of the Agreement with respect to the Fund.
Fund Performance. The Board considered Fund performance in determining whether to renew the Agreement with respect to the Fund. Specifically, the Trustees considered the Fund’s performance relative to a peer category of other mutual funds and appropriate indices/ benchmarks, in light of total return, yield, if applicable, and market trends. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the third party who prepared the peer category analysis. In evaluating the performance of the Fund, the Trustees considered both risk and shareholder risk expectations for the Fund and the appropriateness of the benchmark used to
23
compare the performance of the Fund. The Trustees further considered the level of Fund performance in the context of its review of Fund expenses and adviser profitability discussed below. Following such evaluation the Board concluded, within the context of its full deliberations, that the performance of the Fund supported renewal of the Agreement with respect to the Fund.
Fund Expenses. With respect to the Fund’s expenses, the Trustees considered the rate of compensation called for by the Agreement, and the Fund’s net operating expense ratio, in each case, in comparison to those of a peer group of mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total Fund expenses from exceeding a specified cap. The Trustees also considered CSIM’s contractual commitment to keep the Fund’s expense cap for so long as CSIM serves as the adviser to the Fund. The Trustees also considered fees charged by CSIM to other mutual funds and exchange-traded funds. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the Fund are reasonable and supported renewal of the Agreement with respect to the Fund.
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered any other benefits derived by CSIM from its relationship with the Fund, such as whether, by virtue of its management of the Fund, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability under the Agreement and other service agreements were reasonable and justified in light of the quality of all services rendered to the Fund by CSIM and its affiliates. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement with respect to the Fund.
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to the Fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of Fund expenses, the Trustees considered that CSIM and Schwab have committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. Based on this evaluation the Board concluded, within the context of its full deliberations, that the Fund obtains reasonable benefit from economies of scale.
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, approved the continuation of the Agreement with respect to the Fund and concluded that the compensation under the Agreement with respect to the Fund is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
24
Trustees and Officers
The tables below give information about the trustees and officers for Schwab Capital Trust which includes the fund covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 84 funds.
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.
Independent Trustees
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served1) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Mariann Byerwalter
1960
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Chairman of JDN Corporate Advisory LLC. | | 73 | | Director, Redwood Trust, Inc. (1998 – present)
Director, PMI Group Inc. (2001 – 2009)
Director, Excelsior Funds (2006 – 2007) |
| |
|
John F. Cogan
1947
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | Senior Fellow: The Hoover Institution at Stanford University (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University (Sept. 1994 – present). | | 73 | | Director, Gilead Sciences, Inc. (2005 – present)
Director, Monaco Coach Corporation (2005 – 2009) |
| |
|
William A. Hasler
1941
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Dean Emeritus, Haas School of Business, University of California, Berkeley (July 1998 – present). | | 73 | | Director, Ditech Networks Corporation (1997 – present)
Director, TOUSA (1998 – present)
Director, Mission West Properties (1998 – present)
Director, Globalstar, Inc. (2009 – present)
Director, Harris-Stratex Networks (2001 – present)
Director, Aphton Corp. (1991 – 2007)
Director, Solectron Corporation (1998 – 2007)
Director, Genitope Corporation (2000 – 2009)
Director, Excelsior Funds (2006 – 2007) |
| |
|
Gerald B. Smith
1950
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (1990 – present). | | 73 | | Lead Independent Director, Board of Cooper Industries (2002 – present)
Director and Chairman of the Audit Committee, Oneok Partners LP (2003 – present)
Director, Oneok, Inc (2009 – present) |
| |
|
Donald R. Stephens
1938
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Managing Partner, D.R. Stephens & Company (investments) (1973 – present). | | 73 | | None |
| |
|
25
Independent Trustees (continued)
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served1) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Joseph H. Wender
1944
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | Senior Consultant, Goldman Sachs & Co., Inc. (Jan. 2008- present); Partner, Colgin Partners, LLC (vineyards) (February 1998 – present); Senior Director, Chairman of the Finance Committee, GSC Group (July 2005 – Dec. 2007); General Partner, Goldman Sachs & Co., Inc. (Oct. 1982 – June 2005). | | 73 | | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present) |
| |
|
Michael W. Wilsey
1943
Trustee
(Trustee of Schwab Capital Trust since 1993.) | | Chairman and Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments). | | 73 | | None |
| |
|
Interested Trustees
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served ) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Charles R. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of Schwab Capital Trust since 1993.) | | Chairman and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc. | | 73 | | None |
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Walter W. Bettinger II2
1960
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. | | 84 | | None |
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26
Officers of the Trust
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Name, Year of Birth, and Position(s)
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with the trust; (Terms of office, and
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| length of Time Served3) | | Principal Occupations During the Past Five Years |
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Marie Chandoha
1961
President and Chief Executive Officer
(Officer of Schwab Capital Trust since 2010.) | | Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 – present); Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer, (Sept. 2010 – present), Charles Schwab Investment Management, Inc.; President and Chief Executive Officer, Schwab Funds, Laudus Funds and Schwab ETFs (Dec. 2010 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010); Co-Head and Senior Portfolio Manager, Wells Capital Management (June 1999 – March 2007). |
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George Pereira
1964
Treasurer and Principal Financial Officer
(Officer of Schwab Capital Trust since 2004.) | | Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc. (November 2004 – present); Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present); Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds (June 2006 – June 2007). |
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Koji E. Felton
1961
Secretary and Chief Legal Officer
(Officer of Schwab Capital Trust since 1998.) | | Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc. (July 2000 – present); Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. (June 1998 – present); Vice President and Assistant Clerk, Laudus Funds (Jan. 2010 – present); Chief Legal Officer and Secretary, Schwab Funds (Nov. 1998 – present) and Schwab ETFs (Oct. 2009 – present); Chief Legal Officer and Secretary, Excelsior Funds (June 2006 – June 2007). |
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Catherine MacGregor
1964
Vice President
(Officer of Schwab Capital Trust since 2005.) | | Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk, Laudus Funds (March 2007 – present); Vice President and Assistant Clerk, Schwab Funds (Dec. 2005 – present) and Schwab ETFs (Oct. 2009 – present). |
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Michael Haydel
1972
Vice President
(Officer of Schwab Capital Trust since 2006.) | | Vice President, Asset Management Client Services, Charles Schwab & Co., Inc. (2004 – present); Vice President (Sept. 2005 – present), Anti-Money Laundering Officer (Oct. 2005 – Feb. 2009), Laudus Funds; Vice President, Schwab Funds (June 2007 – present) and Schwab ETFs (Oct. 2009 – present). |
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| 1 | | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds® retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first, provided that any trustee who serves on both Schwab Funds and Laudus Funds retires from both boards when first required to retire by either board. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010. |
| 2 | | Mr. Schwab and Mr. Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation. |
| 3 | | The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board. |
27
Glossary
asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.
asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.
beta A historical measure of an investment’s volatility relative to a market index (usually the S&P 500®). The index is defined as having a beta of 1.00. Investments with a beta higher than 1.00 have been more volatile than the index; those with a beta of less than 1.00 have been less volatile.
bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”
An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.
bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.
cap, capitalization See “market cap.”
capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the gain or loss is still “on paper” and is considered unrealized.
earnings growth rate For a mutual fund, the average yearly rate at which the earnings of the companies in the fund’s portfolio have grown, measured over the past five years.
earnings per share (EPS) A company’s earnings, or net income, for the past 12 months, divided by the number of shares outstanding.
expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.
gross domestic product (GDP) The output of goods and services produced by labor and property located in the United States.
market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.
median market cap The midpoint of the range of market caps of the stocks held by a fund. There are different ways of calculating median market cap. With a simple median, half of the stocks in the fund’s portfolio would be larger than the median, and half would be smaller. With a weighted median (the type that is calculated for these funds), half of the fund’s assets are invested in stocks that are larger than the median market cap, and half in stocks that are smaller.
net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.
price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.
return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.
stock A share of ownership, or equity, in the issuing company.
total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.
weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.
yield The income paid out by an investment, expressed as a percentage of the investment’s market value.
28
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We are committed to protecting the privacy of information we maintain about you. Below are details about our commitment, including the types of information we collect and how we use and share that information. This Privacy Notice applies to you only if you are an individual who invests directly in the funds by placing orders through the funds’ transfer agent. If you place orders through your brokerage account at Charles Schwab & Co., Inc. or an account with another broker-dealer, investment advisor, 401(k) plan, employee benefit plan, administrator, bank or other financial intermediary, you are covered by the privacy policies of that financial institution and should consult those policies.
How We Collect Information About You
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| • | to help us process transactions for your account; |
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| • | when we use other companies to provide services for us, such as printing and mailing your account statements; |
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Contact Us
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Schwab Funds® direct investors: 1-800-407-0256
© 2010 Schwab Funds. All rights reserved.
Schwab Funds® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.
Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.
Proxy Voting Policies, Procedures and Results
A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting Schwab’s website at www.schwabfunds.com/prospectus, the SEC’s website at http://www.sec.gov, or by contacting Schwab Funds at 1-800-435-4000.
Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting Schwab’s website at www.schwabfunds.com/prospectus or the SEC’s website at http://www.sec.gov.
The Schwab Funds Family®
Stock Funds
Schwab Premier Equity Fund®
Schwab Core Equity Fundtm
Schwab Dividend Equity Fundtm
Schwab Large-Cap Growth Fundtm
Schwab Small-Cap Equity Fundtm
Schwab Hedged Equity Fundtm
Schwab Financial Services Fundtm
Schwab Health Care Fundtm
Schwab® International Core Equity Fund
Schwab Fundamental US Large* Company Index Fund
Schwab Fundamental US Small-Mid* Company Index Fund
Schwab Fundamental International* Large Company Index Fund
Schwab Fundamental International* Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets* Index Fund
Schwab Global Real Estate Fundtm
Schwab S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market Index Fund®
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fundtm
Schwab MarketTrack All Equity Portfoliotm
Schwab MarketTrack Growth Portfoliotm
Schwab MarketTrack Balanced Portfoliotm
Schwab MarketTrack Conservative Portfoliotm
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab® Monthly Income Fund – Moderate Payout
Schwab® Monthly Income Fund – Enhanced Payout
Schwab® Monthly Income Fund – Maximum Payout
Bond Funds
Schwab YieldPlus Fund®
Schwab Short-Term Bond Market Fundtm
Schwab® Premier Income Fund
Schwab Total Bond Market Fundtm
Schwab GNMA Fundtm
Schwab Inflation Protected Fundtm
Schwab Tax-Free YieldPlus Fundtm
Schwab Tax-Free Bond Fundtm
Schwab California Tax-Free YieldPlus Fundtm
Schwab California Tax-Free Bond Fundtm
Schwab Money Funds
Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity1. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments®.
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| * | | SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL AND FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC. |
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| 1 | | Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money. |
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds®
P.O. Box 3812, Englewood, CO 80155–3812
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
© 2010 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
MFR36112-04
Annual report dated October 31, 2010 enclosed.
Schwab Target Funds
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
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Schwab Target Funds
Annual Report
October 31, 2010
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
A suite of seven mutual funds to help keep your retirement
investments properly allocated over your lifetime.
In This Report
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Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor: Charles Schwab & Co., Inc. (Schwab).
The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS) which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. (MSCI) and Standard & Poor’s (S&P). GICS is a service mark of MSCI and S&P and has been licensed for use by Charles Schwab & Co., Inc. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.
Performance at a Glance
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
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| Total Return for the Report Period | |
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| Schwab Target 2010 Fund (Ticker Symbol: SWBRX) | | | 11.99% | |
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| Target 2010 Composite Index | | | 12.07% | |
| Fund Category: Morningstar Target-Date 2000-2010 | | | 12.47% | |
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| Performance Details | | | pages 6-7 | |
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| Schwab Target 2015 Fund (Ticker Symbol: SWGRX) | | | 13.55% | |
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| Target 2015 Composite Index | | | 13.38% | |
| Fund Category: Morningstar Target-Date 2011-2015 | | | 13.67% | |
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| Performance Details | | | pages 8-9 | |
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| Schwab Target 2020 Fund (Ticker Symbol: SWCRX) | | | 14.47% | |
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| Target 2020 Composite Index | | | 14.07% | |
| Fund Category: Morningstar Target-Date 2016-2020 | | | 14.13% | |
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| Performance Details | | | pages 10-11 | |
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| Schwab Target 2025 Fund (Ticker Symbol: SWHRX) | | | 15.34% | |
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| Target 2025 Composite Index | | | 14.48% | |
| Fund Category: Morningstar Target-Date 2021-2025 | | | 15.30% | |
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| Performance Details | | | pages 12-13 | |
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All fund and index figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results for less than one year are not annualized.
Fund expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the funds’ returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date.
The Target 2010 Composite Index is a custom blended index developed by CSIM based on the 2010 fund’s asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 28.1% Dow Jones U.S. Total Stock Market Index, 8.7% MSCI EAFE (Gross) Index, 29.9% Barclays Capital U.S. Aggregate Bond Index, 1.9% FTSE EPRA/NAREIT Global Index, 5.6% Barclays Capital U.S. Aggregate Intermediate Bond Index, 1.3% MSCI Emerging Markets (Gross) Index, 3.0% Barclays Capital U.S. TIPS Index, 2.5% Citigroup Non-U.S. Dollar World Government Bond Index, 12.0% Barclays Capital U.S. Government/Credit: 1-5 Years, and 7.0% Barclays Capital U.S. Treasury Bills: 1-3 Months.
The Target 2015 Composite Index is a custom blended index developed by CSIM based on the 2015 fund’s asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 37.7% Dow Jones U.S. Total Stock Market Index, 11.1% MSCI EAFE (Gross) Index, 25.0% Barclays Capital U.S. Aggregate Bond Index, 3.3% FTSE EPRA/NAREIT Global Index, 3.5% Barclays Capital U.S. Aggregate Intermediate Bond Index, 1.9% MSCI Emerging Markets (Gross) Index, 3.0% Barclays Capital U.S. TIPS Index, 2.5% Citigroup Non-U.S. Dollar World Government Bond Index, 7.0% Barclays Capital U.S. Government/Credit: 1-5 Years, and 5.0% Barclays Capital U.S. Treasury Bills: 1-3 Months.
The Target 2020 Composite Index is a custom blended index developed by CSIM based on the 2020 fund’s asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 45.4% Dow Jones U.S. Total Stock Market Index, 13.6% MSCI EAFE (Gross) Index, 23.5% Barclays Capital U.S. Aggregate Bond Index, 3.6% FTSE EPRA/NAREIT Global Index, 2.0% Barclays Capital U.S. Aggregate Intermediate Bond Index, 2.4% MSCI Emerging Markets (Gross) Index, 2.5% Barclays Capital U.S. TIPS Index, 2.5% Citigroup Non-U.S. Dollar World Government Bond Index, 2.5% Barclays Capital U.S. Government/Credit: 1-5 Years, and 2.0% Barclays Capital U.S. Treasury Bills: 1-3 Months.
The Target 2025 Composite Index is a custom blended index developed by CSIM based on the 2025 fund’s asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 51.0% Dow Jones U.S. Total Stock Market Index, 15.4% MSCI EAFE (Gross) Index, 19.5% Barclays Capital U.S. Aggregate Bond Index, 4.0% FTSE EPRA/NAREIT Global Index, 1.5% Barclays Capital U.S. Aggregate Intermediate Bond Index, 2.6% MSCI Emerging Markets (Gross) Index, 2.0% Barclays Capital U.S. TIPS Index, 2.0% Citigroup Non-U.S. Dollar World Government Bond Index, and 2.0% Barclays Capital U.S. Treasury Bills: 1-3 Months.
Schwab Target Funds 1
Performance at a Glance continued
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
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| Total Return for the Report Period | |
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| Schwab Target 2030 Fund (Ticker Symbol: SWDRX) | | | 15.97% | |
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| Target 2030 Composite Index | | | 14.69% | |
| Fund Category: Morningstar Target-Date 2026-2030 | | | 15.42% | |
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| Performance Details | | | pages 14-15 | |
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| Schwab Target 2035 Fund (Ticker Symbol: SWIRX) | | | 16.29% | |
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| Target 2035 Composite Index | | | 14.98% | |
| Fund Category: Morningstar Target-Date 2031-2035 | | | 16.12% | |
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| Performance Details | | | pages 16-17 | |
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| Schwab Target 2040 Fund (Ticker Symbol: SWERX) | | | 16.71% | |
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| Target 2040 Composite Index | | | 15.30% | |
| Fund Category: Morningstar Target-Date 2036-2040 | | | 16.26% | |
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| Performance Details | | | pages 18-19 | |
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| Minimum Initial Investment1 | | | $ 100 | |
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The Target 2030 Composite Index is a custom blended index developed by CSIM based on the 2030 fund’s asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 55.7% Dow Jones U.S. Total Stock Market Index, 16.9% MSCI EAFE (Gross) Index, 14.6% Barclays Capital U.S. Aggregate Bond Index, 4.3% FTSE EPRA/NAREIT Global Index, 1.0% Barclays Capital U.S. Aggregate Intermediate Bond Index, 3.1% MSCI Emerging Markets (Gross) Index, 1.2% Barclays Capital U.S. TIPS Index, 1.2% Citigroup Non-U.S. Dollar World Government Bond Index, and 2.0% Barclays Capital U.S. Treasury Bills: 1-3 Months.
The Target 2035 Composite Index is a custom blended index developed by CSIM based on the 2035 fund’s asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 59.4% Dow Jones U.S. Total Stock Market Index, 18.6% MSCI EAFE (Gross) Index, 9.5% Barclays Capital U.S. Aggregate Bond Index, 4.6% FTSE EPRA/NAREIT Global Index, 0.9% Barclays Capital U.S. Aggregate Intermediate Bond Index, 3.4% MSCI Emerging Markets (Gross) Index, 0.8% Barclays Capital U.S.TIPS Index, 0.8% Citigroup Non-U.S. Dollar World Government Bond Index, and 2.0% Barclays Capital U.S. Treasury Bills: 1-3 Months.
The Target 2040 Composite Index is a custom blended index developed by CSIM based on the 2040 fund’s asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 62.0% Dow Jones U.S. Total Stock Market Index, 19.4% MSCI EAFE (Gross) Index, 6.1% Barclays Capital U.S. Aggregate Bond Index, 5.0% FTSE EPRA/NAREIT Global Index, 0.9% Barclays Capital U.S. Aggregate Intermediate Bond Index, 3.6% MSCI Emerging Markets (Gross) Index, 0.5% Barclays Capital U.S. TIPS Index, 0.5% Citigroup Non-U.S. Dollar World Government Bond Index, and 2.0% Barclays Capital U.S. Treasury Bills: 1-3 Months.
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| 1 | Please see prospectus for further details and eligibility requirements. |
2 Schwab Target Funds
From the President
Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report.
Dear Shareholder,
During the year that ended October 31, 2010, many investors wrestled with news that was mostly negative—the recovery of the U.S. economy remained tepid, unemployment stayed stubbornly high, and the housing market remained weak. In spite of these events, nearly all stock and bond markets produced positive returns, both in the United States and abroad.
The bellwether S&P 500 Index gained 16.52% during the year and international stock markets also rewarded investors as indicated by a return of 8.82% in the MSCI EAFE Index. Growth stocks generally fared better than value stocks in large-, mid-, and small-cap sectors. In fixed income markets, the Barclays Capital U.S. Aggregate Bond Index returned 8.01%.
For the year ending October 31, 2010, all seven Schwab Target Funds generated positive returns for investors, aided by the strong rebound in equities during the latter part of the period and continuing solid performance in the bond markets. Six of the seven funds performed better than their relevant composite indices (benchmarks).
The Schwab Target Funds invest in diversified asset classes and are managed based on the assumption that the investor will retire at about age 65 in approximately the year that is included in the fund’s name. Please read the fund manager’s discussion and analysis on the following pages to learn more about each fund’s approach.
At Schwab, we encourage investors to review their investment strategy periodically in the context of their tolerance for risk, timeline, and established investment plan.
If you have any questions about the Schwab Target Funds or any other Schwab Funds, please call us at 1-800-435-4000. Please also see www.schwabfunds.com for details on each fund including performance results, investment strategy, and prospectus.
Thank you for investing with us.
Sincerely,
Schwab Target Funds 3
The Investment Environment
The past 12 months produced significant positive returns in nearly all major equity and fixed income markets, despite various economic indicators falling short of expectations here in the United States and abroad. Domestic equity markets fared better than international, and growth stocks outperformed value stocks in large-, mid-, and small-cap categories. In the credit markets, inflation-protected bonds were the best performers and U.S. Treasuries had the poorest returns, though they also had solid performance for the 12 months under review.
The return for the S&P 500 Index, which is usually seen as a bellwether for U.S. financial markets, was positive at 16.52%. The international stock markets also had solid overall returns, and the MSCI EAFE Index (Gross) returned 8.82%. In fixed-income, the Barclays Capital U.S. Aggregate Bond Index returned 8.01%, while the Barclays Capital U.S. TIPS Index returned 10.42%, and the Barclays Capital U.S. Treasury Index returned 7.20% for the reporting period.
In a press release dated November 3, 2010, the Federal Reserve (the Fed) described information it had received since its meeting in September 2010, and noted that the pace of recovery in output and employment remained slow. Moreover, persistent high unemployment, coupled with depressed housing prices and a rise in foreclosures, continued to work against the U.S. economic recovery process. In the U.S. fixed income markets, accommodative Fed policy in the form of a near-zero federal funds rate remained intact, and several recent statements from the Fed affirmed that rates will remain low for an extended period of time. Also in November’s press release, the Fed stated that it intended to purchase up to $600 billion of longer-term U.S. Treasuries by the end of the second quarter in 2011.
At the international level, financial markets fluctuated during the reporting period. Ongoing concerns regarding the debt obligations of Greece, Spain, Ireland, and other European countries continued to capture the attention of central banks and resulted in the progressive downgrading of debt in those countries. The news caused temporary turmoil in the U.S. and global financial markets in early May 2010. While there has been some rebounding to pre-May levels in the markets, central banks remain attentive to debt ratios, monetary exchange rates, interest rates, and inflation measurements.
During the reporting period, two economic events caused volatility in the equity and fixed income markets. First, was the Deepwater Horizon oil spill in the Gulf of Mexico on April 20, 2010. The costs—in terms of environmental impact and loss of oil—affected energy-related stocks, which declined on the news. For the reporting period, the Energy Sector was the weakest performing sector in the S&P 500 Index. Second, investor confidence in the United States and abroad was further shaken on May 6, 2010, when the Dow Jones Industrial Average dropped 999 points, within a 30-minute timeframe, before partially regaining some of the decline. The equity market event was subsequently named the “flash crash.” As a result of the flash crash, more than 16,000 trades were cancelled by the major U.S. stock exchanges.
On a more general note in the United States, real Gross Domestic Product (GDP) growth remained lower than hoped for during the reporting period, with the Bureau of Economic Analysis estimating that GDP grew at a rate of 2.0% for the third quarter of 2010. Likewise, the national unemployment rate—as reported by the Bureau of Labor Statistics—was an ongoing concern and hovered just below 10% throughout the 12-month period. Finally, high delinquencies, foreclosures, and stalled foreclosures weighed heavily on the housing sector. The discovery that some institutions had improper or incomplete paperwork on original loan documents brought at least a temporary halt to some foreclosures.
Asset Class Performance Comparison % returns during the report period
This graph compares the performance of various asset classes during the report period. Final performance figures for the period are in the key below.
| | | | | |
| | | | | |
| | 16.52% | | S&P 500® Index: measures U.S. large-cap stocks |
| | | | | |
| | 26.58% | | Russell 2000® Index: measures U.S. small-cap stocks |
| | | | | |
| | 8.82% | | MSCI EAFE® Index (Gross): measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East |
| | | | | |
| | 8.01% | | Barclays Capital U.S. Aggregate Bond Index: measures the U.S. bond market |
| | | | | |
| | 0.11% | | Three-Month U.S. Treasury Bills (T-bills): measures short-term U.S. Treasury obligations |
These figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and you cannot invest in them directly. Remember that past performance is not an indication of future results.
Data source: Charles Schwab & Co., Inc.
Nothing in this report represents a recommendation of a security by the investment adviser.
Manager views and portfolio holdings may have changed since the report date.
4 Schwab Target Funds
Fund Management
| | | |
| | | |
| | Daniel Kern, CFA, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day management of the funds. He has been the portfolio manager of the funds since 2008. From 2003, until his appointment, he held vice president level positions in product development, investment operations and audit at the firm. Prior to joining the firm in 2003, he worked for more than 13 years in the investment management industry, with more than 6 of those years spent in portfolio management. |
Schwab Target Funds 5
Schwab Target 2010 Fund
The Schwab Target 2010 Fund (the 2010 fund) seeks to provide capital appreciation and income consistent with its current asset allocation. The 2010 fund’s asset allocation as of January 4, 2010 was approximately 40% equity securities, 53% fixed income securities, and 7% money market funds.
The 2010 fund returned 11.99% for the 12-month period, while its comparative index, the Target 2010 Composite Index (the 2010 composite index), returned 12.07%. (For current allocations of the 2010 composite index, please refer to footnote 3 on the following page.)
U.S. equities outpaced international stocks for the reporting period as demonstrated by the Dow Jones U.S. Total Stock Market Index, which returned 18.76%, and the MSCI EAFE Index, which returned 8.82%. Within the U.S. equity market, small-cap stocks outperformed large-cap stocks. The Russell 2000 Index, which measures small-cap stocks, returned 26.58% for the reporting period, while the Russell 1000 Index, which measures large-cap stocks, returned 17.67%. Emerging markets and Global Real Estate, though representing smaller components of the 2010 composite index, were among the best performers. The MSCI Emerging Markets (Gross) Index returned 23.89% and the FTSE EPRA/NAREIT Global (Gross) Index returned 24.75% for the period.
Fixed income securities had positive returns, though they did not perform as well as equities. The best performing component of the fixed income portion of the 2010 composite index was the Barclays Capital U.S. TIPS Index, which returned 9.84%. The Barclays Capital U.S. Aggregate Bond Index was the next best performer and returned 8.01%, while the Barclays Capital U.S. Treasury Bill Index was the worst performer, returning only 0.11%.
Within the equity portion of the 2010 fund, the Laudus International MarketMasters Fund, Select Shares contributed to relative performance by returning 23.68%, outperforming the MSCI EAFE (Gross) Index, which returned 8.82%. In addition, the fund’s exposure to U.S. small-cap stocks contributed to relative performance. On the other hand, the Schwab Core Equity Fund detracted from relative performance, returning 11.77%, while its comparative index, the S&P 500 Index, returned 16.52%.
Within the fixed income portion of the 2010 fund, the PIMCO Total Return Fund was the best performer, returning 11.77%. The Schwab Total Bond Market Fund returned 7.46%, underperforming the Barclays Capital U.S. Aggregate Bond Index, which returned 8.01%. The Schwab Short-Term Bond Market Fund returned 4.63%, below its comparative index, the Barclays Capital U.S. Government/Credit: 1-5 Years Index, which returned 5.21%.
While no significant changes were made to the asset allocation of the 2010 fund, some changes were made to the underlying funds. The Laudus Rosenberg International Small Cap and Discovery Funds were eliminated, and the William Blair International Small Cap Growth Fund, TCW Relative Value Large Cap Fund, and Natixis Loomis Sayles Investment Grade Bond Fund were added.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 22 |
| Portfolio Turnover Rate | | 24% |
Asset Class Weightings % of Investments*
| | | |
| Fixed-Income Funds | | 52.6% |
| Equity Funds - Domestic | | 28.1% |
| Equity Funds - International | | 12.2% |
| Short-Term Investments | | 7.1% |
Total | | 100.0% |
Top Holdings % of Net Assets1
| | | |
| Schwab Total Bond Market Fund | | 19.4% |
| Schwab Short-Term Bond Market Fund | | 11.8% |
| Schwab Core Equity Fund | | 8.5% |
| Schwab S&P 500 Index Fund | | 7.4% |
| PIMCO Total Return Fund, Institutional Shares | | 5.9% |
| Schwab Premier Income Fund | | 5.5% |
| Schwab Value Advantage Money Fund, Institutional Prime Shares | | 4.7% |
| Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares | | 4.2% |
| Laudus Growth Investors U.S. Large Cap Growth Fund | | 4.2% |
| Laudus International MarketMasters Fund, Select Shares | | 3.9% |
Total | | 75.5% |
Manager views and portfolio holdings may have changed since the report date.
The Laudus Mondrian Funds and Laudus Growth Investors U.S. Large Cap Growth Fund are part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| | |
| * | | The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, cash equivalents, including money market securities, and futures. |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
6 Schwab Target Funds
Schwab Target 2010 Fund
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
July 1, 2005 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,3
Average Annual Total Returns1,2
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 5 Years | | Since Inception |
| |
| Fund: Schwab Target 2010 Fund (7/1/05) | | | 11.99 | % | | | | 3.05 | % | | | | 3.31 | % | |
Target 2010 Composite Index3 | | | 12.07 | % | | | | 4.87 | % | | | | 4.88 | % | |
| Dow Jones U.S. Total Stock Market Index | | | 18.76 | % | | | | 2.36 | % | | | | 2.61 | % | |
| Barclays Capital U.S. Aggregate Bond Index | | | 8.01 | % | | | | 6.45 | % | | | | 5.73 | % | |
| Fund Category: Morningstar Target-Date 2000-2010 | | | 12.47 | % | | | | 3.84 | % | | | | 3.87 | % | |
Fund Expense Ratios4: Net 0.70%; Gross 0.85%
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly.
| | |
| 1 | | Fund expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | The Target 2010 Composite Index is a custom blended index developed by CSIM based on the 2010 fund’s asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 28.1% Dow Jones U.S. Total Stock Market Index, 8.7% MSCI EAFE (Gross) Index, 29.9% Barclays Capital U.S. Aggregate Bond Index, 1.9% FTSE EPRA/NAREIT Global Index, 5.6% Barclays Capital U.S. Aggregate Intermediate Bond Index, 1.3% MSCI Emerging Markets (Gross) Index, 3.0% Barclays Capital U.S. TIPS Index, 2.5% Citigroup Non-U.S. Dollar World Government Bond Index, 12.0% Barclays Capital U.S. Government/Credit: 1-5 Years, and 7.0% Barclays Capital U.S. Treasury Bills: 1-3 Months. |
| 4 | | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.70%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Target Funds 7
Schwab Target 2015 Fund
The Schwab Target 2015 Fund (the 2015 fund) seeks to provide capital appreciation and income consistent with its current asset allocation. The 2015 fund’s asset allocation as of January 4, 2010 was approximately 54% equity securities, 41% fixed income securities, and 5% money market funds.
The 2015 fund returned 13.55% for the 12-month period, while its comparative index, the Target 2015 Composite Index (the 2015 composite index), returned 13.38%. (For current allocations of the 2015 composite index, please refer to footnote 3 on the following page.)
U.S. equities outpaced international stocks for the reporting period as demonstrated by the Dow Jones U.S. Total Stock Market Index, which returned 18.76%, and the MSCI EAFE Index, which returned 8.82%. Within the U.S. equity market, small-cap stocks outperformed large-cap stocks. The Russell 2000 Index, which measures small-cap stocks, returned 26.58% for the reporting period, while the Russell 1000 Index, which measures large-cap stocks, returned 17.67%. Emerging markets and Global Real Estate, though representing smaller components of the 2015 composite index, were among the best performers. The MSCI Emerging Markets (Gross) Index returned 23.89% and the FTSE EPRA/NAREIT Global (Gross) Index returned 24.75% for the period.
Fixed income securities had positive returns for the period under review, though they did not perform as well as equities. The best performing component of the fixed income portion of the 2015 composite index was the Barclays Capital U.S. TIPS Index, which returned 9.84%. The Barclays Capital U.S. Aggregate Bond Index was the next best performer and returned 8.01%, while the Barclays Capital U.S. Treasury Bill Index was the worst performer, returning only 0.11%.
Within the equity portion of the 2015 fund, the Laudus International MarketMasters Fund, Select Shares contributed to relative performance by returning 23.68%, far above its benchmark, the MSCI EAFE (Gross) Index, which returned 8.82%. In addition, the fund’s exposure to U.S. small-cap stocks contributed to relative performance. On the other hand, the Schwab Core Equity Fund detracted from relative performance, returning 11.77%, while its benchmark, the S&P 500 Index, returned 16.52%.
Within the fixed income portion of the 2015 fund, the PIMCO Total Return Fund was the best performer, returning 11.77%. The Schwab Total Bond Market Fund returned 7.46%, underperforming its comparative index, the Barclays Capital U.S. Aggregate Bond Index, which returned 8.01%. The Schwab Short-Term Bond Market Fund returned 4.63%, below its comparative index, the Barclays Capital U.S. Government/Credit: 1-5 Years Index, which returned 5.21%.
While no significant changes were made to the asset allocation of the 2015 fund, some changes were made to the underlying funds. The Laudus Rosenberg International Small Cap and Discovery Funds were eliminated, and the William Blair International Small Cap Growth Fund, TCW Relative Value Large Cap Fund, and Natixis Loomis Sayles Investment Grade Bond Fund were added.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 22 |
| Portfolio Turnover Rate | | 13% |
Asset Class Weightings % of Investments*
| | | |
| Fixed-Income Funds | | 40.9% |
| Equity Funds - Domestic | | 37.9% |
| Equity Funds - International | | 16.4% |
| Short-Term Investments | | 4.8% |
Total | | 100.0% |
Top Holdings % of Net Assets1
| | | |
| Schwab Total Bond Market Fund | | 17.1% |
| Schwab Core Equity Fund | | 11.0% |
| Schwab S&P 500 Index Fund | | 9.5% |
| Schwab Short-Term Bond Market Fund | | 7.0% |
| Laudus Growth Investors U.S. Large Cap Growth Fund | | 5.2% |
| Laudus International MarketMasters Fund, Select Shares | | 4.6% |
| PIMCO Total Return Fund, Institutional Shares | | 4.5% |
| Schwab Small-Cap Equity Fund | | 4.4% |
| Schwab Premier Income Fund | | 3.5% |
| Schwab Global Real Estate Fund | | 3.3% |
Total | | 70.1% |
Manager views and portfolio holdings may have changed since the report date.
The Laudus Mondrian Funds and Laudus Growth Investors U.S. Large Cap Growth Fund are part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| | |
| * | | The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, cash equivalents, including money market securities, and futures. |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
8 Schwab Target Funds
Schwab Target 2015 Fund
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
March 12, 2008 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,3
Average Annual Total Returns1,2
| | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | Since Inception |
| |
| Fund: Schwab Target 2015 Fund (3/12/08) | | | 13.55 | % | | | | 1.99 | % | |
Target 2015 Composite Index3 | | | 13.38 | % | | | | 2.13 | % | |
| Dow Jones U.S. Total Stock Market Index | | | 18.76 | % | | | | -0.79 | % | |
| Barclays Capital U.S. Aggregate Bond Index | | | 8.01 | % | | | | 7.20 | % | |
| Fund Category: Morningstar Target-Date 2011-2015 | | | 13.67 | % | | | | 0.78 | % | |
Fund Expense Ratios4: Net 0.78%; Gross 1.61%
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | The Target 2015 Composite Index is a custom blended index developed by CSIM based on the 2015 fund’s asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 37.7% Dow Jones U.S. Total Stock Market Index, 11.1% MSCI EAFE (Gross) Index, 25.0% Barclays Capital U.S. Aggregate Bond Index, 3.3% FTSE EPRA/NAREIT Global Index, 3.5% Barclays Capital U.S. Aggregate Intermediate Bond Index, 1.9% MSCI Emerging Markets (Gross) Index, 3.0% Barclays Capital U.S. TIPS Index, 2.5% Citigroup Non-U.S. Dollar World Government Bond Index, 7.0% Barclays Capital U.S. Government/Credit: 1-5 Years, and 5.0% Barclays Capital U.S. Treasury Bills: 1-3 Months. |
| 4 | | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.78%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Target Funds 9
Schwab Target 2020 Fund
The Schwab Target 2020 Fund (the 2020 fund) seeks to provide capital appreciation and income consistent with its current asset allocation. The 2020 fund’s asset allocation as of January 4, 2010 was approximately 65% equity securities, 33% fixed income securities, and 2% money market funds.
The 2020 fund returned 14.47% for the period, while its comparative index, the Target 2020 Composite Index (the 2020 composite index), returned 14.07%. (For current allocations of the 2020 composite index, please refer to footnote 3 on the following page.)
U.S. equities outpaced international stocks for the reporting period as demonstrated by the Dow Jones U.S. Total Stock Market Index, which returned 18.76%, and the MSCI EAFE Index, which returned 8.82%. Within the U.S. equity market, small-cap stocks outperformed large-cap stocks. The Russell 2000 Index, which measures small-cap stocks, returned 26.58% for the reporting period, while the Russell 1000 Index, which measures large-cap stocks, returned 17.67%. Emerging markets and Global Real Estate, though representing smaller components of the 2020 composite index, were among the best performers. The MSCI Emerging Markets (Gross) Index returned 23.89% and the FTSE EPRA/NAREIT Global (Gross) Index returned 24.75% for the period.
Fixed income securities had positive returns for the period under review, though they did not perform as well as equities. The best performing component of the fixed income portion of the 2020 composite index was the Barclays Capital U.S. TIPS Index, which returned 9.84%. The Barclays Capital U.S. Aggregate Bond Index was the next best performer and returned 8.01%, while the Barclays Capital U.S. Treasury Bill Index was the worst performer, returning only 0.11%.
Within the equity portion of the 2020 fund, the Laudus International MarketMasters Fund, Select Shares contributed to performance by returning 23.68%, far above its comparative index, the MSCI EAFE (Gross) Index, which returned 8.82%. The Schwab Small Cap Equity Fund returned 25.31%, which though below the returns of the Russell 2000 Index, still contributed, as did the fund’s overall exposure to U.S. small-cap stocks. The Laudus Growth Investors U.S. Large Cap Growth Fund also made a positive contribution, returning 20.87%. Detractors included the Schwab Core Equity Fund and the Schwab Dividend Equity Fund, which returned 11.77% and 12.42%, respectively. Both funds underperformed the S&P 500 Index, which returned 16.52%.
Within the fixed income portion of the 2020 fund, the PIMCO Total Return Fund was the best performer, returning 11.77%. The Schwab Total Bond Market Fund returned 7.46%, underperforming the Barclays Capital U.S. Aggregate Bond Index, which returned 8.01%.
While no significant changes were made to the asset allocation of the 2020 fund, some changes were made to the underlying funds. The Laudus Rosenberg International Small Cap and Discovery Funds were eliminated, and the William Blair International Small Cap Growth Fund, TCW Relative Value Large Cap Fund, and Natixis Loomis Sayles Investment Grade Bond Fund were added.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 22 |
| Portfolio Turnover Rate | | 15% |
Asset Class Weightings % of Investments*
| | | |
| Equity Funds - Domestic | | 45.6% |
| Fixed-Income Funds | | 32.6% |
| Equity Funds - International | | 19.9% |
| Short-Term Investments | | 1.9% |
Total | | 100.0% |
Top Holdings % of Net Assets1
| | | |
| Schwab Total Bond Market Fund | | 18.5% |
| Schwab Core Equity Fund | | 13.8% |
| Schwab S&P 500 Index Fund | | 12.0% |
| Laudus Growth Investors U.S. Large Cap Growth Fund | | 6.7% |
| Laudus International MarketMasters Fund, Select Shares | | 5.7% |
| Schwab Small-Cap Equity Fund | | 4.8% |
| Schwab Global Real Estate Fund | | 3.9% |
| PIMCO Total Return Fund, Institutional Shares | | 3.3% |
| Schwab Dividend Equity Fund | | 3.1% |
| Laudus Mondrian International Equity Fund, Institutional Shares | | 3.0% |
Total | | 74.8% |
Manager views and portfolio holdings may have changed since the report date.
The Laudus Mondrian Funds and Laudus Growth Investors U.S. Large Cap Growth Fund are part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| | |
| * | | The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, cash equivalents, including money market securities, and futures. |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
10 Schwab Target Funds
Schwab Target 2020 Fund
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
July 1, 2005 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,3
Average Annual Total Returns1,2
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 5 Years | | Since Inception |
| |
| Fund: Schwab Target 2020 Fund (7/1/05) | | | 14.47 | % | | | | 3.60 | % | | | | 3.93 | % | |
Target 2020 Composite Index3 | | | 14.07 | % | | | | 4.56 | % | | | | 4.67 | % | |
| Dow Jones U.S. Total Stock Market Index | | | 18.76 | % | | | | 2.36 | % | | | | 2.61 | % | |
| Barclays Capital U.S. Aggregate Bond Index | | | 8.01 | % | | | | 6.45 | % | | | | 5.73 | % | |
| Fund Category: Morningstar Target-Date 2016-2020 | | | 14.13 | % | | | | 3.12 | % | | | | 3.17 | % | |
Fund Expense Ratios4: Net 0.80%; Gross 0.89%
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | The Target 2020 Composite Index is a custom blended index developed by CSIM based on the 2020 fund’s asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 45.4% Dow Jones U.S. Total Stock Market Index, 13.6% MSCI EAFE (Gross) Index, 23.5% Barclays Capital U.S. Aggregate Bond Index, 3.6% FTSE EPRA/NAREIT Global Index, 2.0% Barclays Capital U.S. Aggregate Intermediate Bond Index, 2.4% MSCI Emerging Markets (Gross) Index, 2.5% Barclays Capital U.S. TIPS Index, 2.5% Citigroup Non-U.S. Dollar World Government Bond Index, 2.5% Barclays Capital U.S. Government/Credit: 1-5 Years, and 2.0% Barclays Capital U.S. Treasury Bills: 1-3 Months. |
| 4 | | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.80%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Target Funds 11
Schwab Target 2025 Fund
The Schwab Target 2025 Fund (the 2025 fund) seeks to provide capital appreciation and income consistent with its current asset allocation. The 2025 fund’s asset allocation as of January 4, 2010 was approximately 73% equity securities, 25% fixed income securities, and 2% money market funds.
The 2025 fund returned 15.34% for the 12-month period, while its comparative index, the Target 2025 Composite Index (the 2025 composite index), returned 14.48%. (For current allocations of the 2025 composite index, please refer to footnote 3 on the following page.)
U.S. equities outpaced international stocks for the reporting period as demonstrated by the Dow Jones U.S. Total Stock Market Index, which returned 18.76%, and the MSCI EAFE Index, which returned 8.82%. Within the U.S. equity market, small-cap stocks outperformed large-cap stocks. The Russell 2000 Index, which measures small-cap stocks, returned 26.58% for the reporting period, while the Russell 1000 Index, which measures large-cap stocks, returned 17.67%. Emerging markets and Global Real Estate, though representing smaller components of the 2025 composite index, were among the best performers. The MSCI Emerging Markets (Gross) Index returned 23.89% and the FTSE EPRA/NAREIT Global (Gross) Index returned 24.75% for the period.
Fixed income securities had positive returns for the period under review, though they did not perform as well as equities. The best performing component of the fixed income portion of the 2025 composite index was the Barclays Capital U.S. TIPS Index, which returned 9.84%. The Barclays Capital U.S. Aggregate Bond Index was the next best performer and returned 8.01%, while the Barclays Capital U.S. Treasury Bill Index was the worst performer, returning only 0.11%.
Within the equity portion of the 2025 fund, the Laudus International MarketMasters Fund, Select Shares contributed to performance by returning 23.68%, far above its comparative index, the MSCI EAFE (Gross) Index, which returned 8.82%. The Schwab Small Cap Equity Fund returned 25.31%, which though below the returns of the Russell 2000 Index, still contributed, as did the fund’s overall exposure to U.S. small-cap stocks. The Laudus Growth Investors U.S. Large Cap Growth Fund also made a positive contribution, returning 20.87%. Detractors included the Schwab Core Equity Fund and the Schwab Dividend Equity Fund, which returned 11.77% and 12.42%, respectively. Both funds underperformed the S&P 500 Index, which returned 16.52%.
Within the fixed income portion of the 2025 fund, the PIMCO Total Return Fund was the best performer, returning 11.77%. The Schwab Total Bond Market Fund returned 7.46%, underperforming the Barclays Capital U.S. Aggregate Bond Index, which returned 8.01%.
While no significant changes were made to the asset allocation of the 2025 fund, some changes were made to the underlying funds. The Laudus Rosenberg International Small Cap and Discovery Funds were eliminated and the William Blair International Small Cap Growth Fund, TCW Relative Value Large Cap Fund, and Natixis Loomis Sayles Investment Grade Bond Fund were added.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 21 |
| Portfolio Turnover Rate | | 13% |
Asset Class Weightings % of Investments*
| | | |
| Equity Funds - Domestic | | 51.3% |
| Fixed-Income Funds | | 24.7% |
| Equity Funds - International | | 21.9% |
| Short-Term Investments | | 2.1% |
Total | | 100.0% |
Top Holdings % of Net Assets1
| | | |
| Schwab Core Equity Fund | | 15.3% |
| Schwab Total Bond Market Fund | | 15.2% |
| Schwab S&P 500 Index Fund | | 12.5% |
| Laudus Growth Investors U.S. Large Cap Growth Fund | | 7.1% |
| Laudus International MarketMasters Fund, Select Shares | | 6.5% |
| Schwab Small-Cap Equity Fund | | 6.1% |
| Schwab Global Real Estate Fund | | 3.9% |
| Schwab Dividend Equity Fund | | 3.7% |
| TCW Relative Value Large Cap Fund | | 3.5% |
| American Century International Growth Fund, Institutional Shares | | 3.2% |
Total | | 77.0% |
Manager views and portfolio holdings may have changed since the report date.
The Laudus Mondrian Funds and Laudus Growth Investors U.S. Large Cap Growth Fund are part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| | |
| * | | The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, cash equivalents, including money market securities, and futures. |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
12 Schwab Target Funds
Schwab Target 2025 Fund
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
March 12, 2008 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,3
Average Annual Total Returns1,2
| | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | Since Inception |
| |
| Fund: Schwab Target 2025 Fund (3/12/08) | | | 15.34 | % | | | | 3.09 | % | |
Target 2025 Composite Index3 | | | 14.48 | % | | | | 1.58 | % | |
| Dow Jones U.S. Total Stock Market Index | | | 18.76 | % | | | | -0.79 | % | |
| Barclays Capital U.S. Aggregate Bond Index | | | 8.01 | % | | | | 7.20 | % | |
| Fund Category: Morningstar Target-Date 2021-2025 | | | 15.30 | % | | | | 0.02 | % | |
Fund Expense Ratios4: Net 0.84%; Gross 1.39%
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | The Target 2025 Composite Index is a custom blended index developed by CSIM based on the 2025 fund’s asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 51.0% Dow Jones U.S. Total Stock Market Index, 15.4% MSCI EAFE (Gross) Index, 19.5% Barclays Capital U.S. Aggregate Bond Index, 4.0% FTSE EPRA/NAREIT Global Index, 1.5% Barclays Capital U.S. Aggregate Intermediate Bond Index, 2.6% MSCI Emerging Markets (Gross) Index, 2.0% Barclays Capital U.S. TIPS Index, 2.0% Citigroup Non-U.S. Dollar World Government Bond Index, and 2.0% Barclays Capital U.S. Treasury Bills: 1-3 Months. |
| 4 | | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.84%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Target Funds 13
Schwab Target 2030 Fund
The Schwab 2030 Fund (the 2030 fund) seeks to provide capital appreciation and income consistent with its current asset allocation. The 2030 fund’s asset allocation as of January 4, 2010 was approximately 80% equity securities, 18% fixed income securities, and 2% money market funds.
The 2030 fund returned 15.97%, for the 12-month period, while its comparative index, the Target 2030 Composite Index (the 2030 composite index), returned 14.69% (For current allocations of the 2030 composite index, please refer to footnote 3 on the following page.)
U.S. equities outpaced international stocks for the reporting period as demonstrated by the Dow Jones U.S. Total Stock Market Index, which returned 18.76%, and the MSCI EAFE Index, which returned 8.82%. Within the U.S. equity market, small-cap stocks outperformed large-cap stocks. The Russell 2000 Index, which measures small-cap stocks, returned 26.58% for the reporting period, while the Russell 1000 Index, which measures large-cap stocks, returned 17.67%. Emerging markets and Global Real Estate, though representing smaller components of the 2030 composite index, were among the best performers. The MSCI Emerging Markets (Gross) Index returned 23.89% and the FTSE EPRA/NAREIT Global (Gross) Index returned 24.75% for the period.
Fixed income securities had positive returns for the period under review, though they did not perform as well as equities. The best performing component of the fixed income portion of the 2030 composite index was the Barclays Capital U.S. TIPS Index, which returned 9.84%. The Barclays Capital U.S. Aggregate Bond Index was the next best performer and returned 8.01%, while the Barclays Capital U.S. Treasury Bill Index was the worst performer, returning only 0.11%.
Within the equity portion of the 2030 fund, the Laudus International MarketMasters Fund, Select Shares contributed to performance by returning 23.68%, far above its comparative index, the MSCI EAFE (Gross) Index, which returned 8.82%. The Schwab Small Cap Equity Fund returned 25.31%, which though below the returns of the Russell 2000 Index, still contributed, as did the fund’s overall exposure to U.S. small-cap stocks. The Laudus Growth Investors U.S. Large Cap Growth Fund also made a positive contribution, returning 20.87%. Detractors included the Schwab Core Equity Fund and the Schwab Dividend Equity Fund, which returned 11.77% and 12.42%, respectively. Both funds underperformed the S&P 500 Index, which returned 16.52%.
Within the fixed income portion of the 2030 fund, the Schwab Total Bond Market Fund returned 7.46%, underperforming the Barclays Capital U.S. Aggregate Bond Index, which returned 8.01%.
While no significant changes were made to the asset allocation of the 2030 fund, some changes were made to the underlying funds. The Laudus Rosenberg International Small Cap and Discovery Funds were eliminated, and the William Blair International Small Cap Growth Fund and TCW Relative Value Large Cap Fund were added.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 20 |
| Portfolio Turnover Rate | | 14% |
Asset Class Weightings % of Investments*
| | | |
| Equity Funds - Domestic | | 55.9% |
| Equity Funds - International | | 24.4% |
| Fixed Income | | 17.6% |
| Short-Term Investments | | 2.1% |
Total | | 100.0% |
Top Holdings % of Net Assets1
| | | |
| Schwab Core Equity Fund | | 16.9% |
| Schwab S&P 500 Index Fund | | 12.6% |
| Schwab Total Bond Market Fund | | 12.3% |
| Laudus Growth Investors U.S. Large Cap Growth Fund | | 7.7% |
| Schwab Small-Cap Equity Fund | | 6.9% |
| Laudus International MarketMasters Fund, Select Shares | | 6.9% |
| Schwab Global Real Estate Fund | | 4.3% |
| Schwab Dividend Equity Fund | | 4.2% |
| TCW Relative Value Large Cap Fund | | 3.8% |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | 3.7% |
Total | | 79.3% |
Manager views and portfolio holdings may have changed since the report date.
The Laudus Mondrian Funds and Laudus Growth Investors U.S. Large Cap Growth Fund are part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| | |
| * | | The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, cash equivalents, including money market securities, and futures. |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
14 Schwab Target Funds
Schwab Target 2030 Fund
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
July 1, 2005 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,3
Average Annual Total Returns1,2
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 5 Years | | Since Inception |
| |
| Fund: Schwab Target 2030 Fund (7/1/05) | | | 15.97 | % | | | | 3.76 | % | | | | 4.11 | % | |
Target 2030 Composite Index3 | | | 14.69 | % | | | | 4.24 | % | | | | 4.42 | % | |
| Dow Jones U.S. Total Stock Market Index | | | 18.76 | % | | | | 2.36 | % | | | | 2.61 | % | |
| Barclays Capital U.S. Aggregate Bond Index | | | 8.01 | % | | | | 6.45 | % | | | | 5.73 | % | |
| Fund Category: Morningstar Target-Date 2026-2030 | | | 15.42 | % | | | | 2.41 | % | | | | 2.67 | % | |
Fund Expense Ratios4: Net 0.85%; Gross 0.95%
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | The Target 2030 Composite Index is a custom blended index developed by CSIM based on the 2030 fund’s asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 55.7% Dow Jones U.S. Total Stock Market Index, 16.9% MSCI EAFE (Gross) Index, 14.6% Barclays Capital U.S. Aggregate Bond Index, 4.3% FTSE EPRA/NAREIT Global Index, 1.0% Barclays Capital U.S. Aggregate Intermediate Bond Index, 3.1% MSCI Emerging Markets (Gross) Index, 1.2% Barclays Capital U.S. TIPS Index, 1.2% Citigroup Non-U.S. Dollar World Government Bond Index, and 2.0% Barclays Capital U.S. Treasury Bills: 1-3 Months. |
| 4 | | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.85%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Target Funds 15
Schwab Target 2035 Fund
The Schwab 2035 Fund (the 2035 fund) seeks to provide capital appreciation and income consistent with its current asset allocation. The 2035 fund’s asset allocation as of January 4, 2010 was approximately 86% equity securities, 12% fixed income securities, and 2% money market funds.
The 2035 fund returned 16.29% for the 12-month period, while its comparative index, the Target 2035 Composite Index (the 2035 composite index), returned 14.98%. (For current allocations of the 2035 composite index, please refer to footnote 3 on the following page.)
U.S. equities outpaced international stocks for the reporting period as demonstrated by the Dow Jones U.S. Total Stock Market Index, which returned 18.76%, and the MSCI EAFE Index, which returned 8.82%. Within the U.S. equity market, small-cap stocks outperformed large-cap stocks. The Russell 2000 Index, which measures small-cap stocks, returned 26.58% for the reporting period, while the Russell 1000 Index, which measures large-cap stocks, returned 17.67%. Emerging markets and Global Real Estate, though representing smaller components of the 2035 composite index, were among the best performers. The MSCI Emerging Markets (Gross) Index returned 23.89% and the FTSE EPRA/NAREIT Global (Gross) Index returned 24.75% for the period.
Fixed income securities had positive returns for the period under review, though they did not perform as well as equities. The best performing component of the fixed income portion of the 2035 composite index was the Barclays Capital U.S. TIPS Index, which returned 9.84%. The Barclays Capital U.S. Aggregate Bond Index was the next best performer and returned 8.01%, while the Barclays Capital U.S. Treasury Bill Index was the worst performer, returning only 0.11%.
Within the equity portion of the 2035 fund, the Laudus International MarketMasters Fund, Select Shares contributed to performance by returning 23.68%, far above its comparative index, the MSCI EAFE (Gross) Index, which returned 8.82%. The Schwab Small Cap Equity Fund returned 25.31%, which though below the returns of the Russell 2000 Index, still contributed, as did the fund’s overall exposure to U.S. small-cap stocks. The Laudus Growth Investors U.S. Large Cap Growth Fund also made a positive contribution, returning 20.87%. Detractors included the Schwab Core Equity Fund and the Schwab Dividend Equity Fund, which returned 11.77% and 12.42%, respectively. Both funds underperformed the S&P 500 Index, which returned 16.52%.
Within the fixed income portion of the 2035 fund, the Schwab Total Bond Market Fund returned 7.46%, underperforming the Barclays Capital U.S. Aggregate Bond Index, which returned 8.01%.
While no significant changes were made to the asset allocation of the 2035 fund, some changes were made to the underlying funds. The Laudus Rosenberg International Small Cap and Discovery Funds were eliminated, and the William Blair International Small Cap Growth Fund and TCW Relative Value Large Cap Fund were added.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 20 |
| Portfolio Turnover Rate | | 14% |
Asset Class Weightings % of Investments*
| | | |
| Equity Funds - Domestic | | 59.3% |
| Equity Funds - International | | 26.6% |
| Fixed Income Funds | | 11.8% |
| Short-Term Investments | | 2.3% |
Total | | 100.0% |
Top Holdings % of Net Assets1
| | | |
| Schwab Core Equity Fund | | 19.0% |
| Schwab S&P 500 Index Fund | | 12.4% |
| Schwab Total Bond Market Fund | | 8.4% |
| Laudus Growth Investors U.S. Large Cap Growth Fund | | 8.1% |
| Laudus International MarketMasters Fund, Select Shares | | 7.6% |
| Schwab Small-Cap Equity Fund | | 7.3% |
| Schwab Global Real Estate Fund | | 4.6% |
| Schwab Dividend Equity Fund | | 4.5% |
| TCW Relative Value Large Cap Fund | | 4.0% |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | 4.0% |
Total | | 79.9% |
Manager views and portfolio holdings may have changed since the report date.
The Laudus Mondrian Funds and Laudus Growth Investors U.S. Large Cap Growth Fund are part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| | |
| * | | The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, cash equivalents, including money market securities, and futures. |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
16 Schwab Target Funds
Schwab Target 2035 Fund
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
March 12, 2008 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,3
Average Annual Total Returns1,2
| | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | Since Inception |
| |
| Fund: Schwab Target 2035 Fund (3/12/08) | | | 16.29 | % | | | | 2.48 | % | |
Target 2035 Composite Index3 | | | 14.98 | % | | | | 0.90 | % | |
| Dow Jones U.S. Total Stock Market Index | | | 18.76 | % | | | | -0.79 | % | |
| Barclays Capital U.S. Aggregate Bond Index | | | 8.01 | % | | | | 7.20 | % | |
| Fund Category: Morningstar Target-Date 2031-2035 | | | 16.12 | % | | | | -0.51 | % | |
Fund Expense Ratios4: Net 0.89%; Gross 1.53%
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | The Target 2035 Composite Index is a custom blended index developed by CSIM based on the 2035 fund’s asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 59.4% Dow Jones U.S. Total Stock Market Index, 18.6% MSCI EAFE (Gross) Index, 9.5% Barclays Capital U.S. Aggregate Bond Index, 4.6% FTSE EPRA/NAREIT Global Index, 0.9% Barclays Capital U.S. Aggregate Intermediate Bond Index, 3.4% MSCI Emerging Markets (Gross) Index, 0.8% Barclays Capital U.S. TIPS Index, 0.8% Citigroup Non-U.S. Dollar World Government Bond Index, and 2.0% Barclays Capital U.S. Treasury Bills: 1-3 Months. |
| 4 | | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.89%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Target Funds 17
Schwab Target 2040 Fund
The Schwab Target 2040 Fund (the 2040 fund) seeks to provide capital appreciation and income consistent with its current asset allocation. The 2040 fund’s asset allocation as of January 4, 2010 was approximately 90% equity securities, 8% fixed income securities, and 2% money market funds.
The 2040 fund returned 16.71% for the 12-month period, while its comparative index, the Target 2040 Composite Index (the 2040 composite index), returned 15.30%. (For current allocations of the 2040 composite index, please refer to footnote 3 on the following page.)
U.S. equities outpaced international stocks for the reporting period as demonstrated by the Dow Jones U.S. Total Stock Market Index, which returned 18.76%, and the MSCI EAFE Index, which returned 8.82%. Within the U.S. equity market, small-cap stocks outperformed large-cap stocks. The Russell 2000 Index, which measures small-cap stocks, returned 26.58% for the reporting period, while the Russell 1000 Index, which measures large-cap stocks, returned 17.67%. Emerging markets and Global Real Estate, though representing smaller components of the 2040 composite index, were among the best performers. The MSCI Emerging Markets (Gross) Index returned 23.89% and the FTSE EPRA/NAREIT Global (Gross) Index returned 24.75% for the period.
Fixed income securities had positive returns for the period under review, though they did not perform as well as equities. The best performing component of the fixed income portion of the 2040 composite index was the Barclays Capital U.S. TIPS Index, which returned 9.84%. The Barclays Capital U.S. Aggregate Bond Index was the next best performer and returned 8.01%, while the Barclays Capital U.S. Treasury Bill Index was the worst performer, returning only 0.11%.
Within the equity portion of the 2040 fund, the Laudus International MarketMasters Fund, Select Shares contributed to performance by returning 23.68%, far above its comparative index, the MSCI EAFE (Gross) Index, which returned 8.82%. The Schwab Small Cap Equity Fund returned 25.31%, which though below the returns of the Russell 2000 Index, still contributed, as did the fund’s overall exposure to U.S. small-cap stocks. The Laudus Growth Investors U.S. Large Cap Growth Fund also made a positive contribution, returning 20.87%. Detractors included the Schwab Core Equity Fund and the Schwab Dividend Equity Fund, which returned 11.77% and 12.42%, respectively. Both funds underperformed the S&P 500 Index, which returned 16.52%.
Within the fixed income portion of the 2040 fund, the Schwab Total Bond Market Fund returned 7.46%, underperforming the Barclays Capital U.S. Aggregate Bond Index, which returned 8.01%.
While no significant changes were made to the asset allocation of the 2040 fund, some changes were made to the underlying funds. The Laudus Rosenberg International Small Cap and Discovery Funds were eliminated, and the William Blair International Small Cap Growth Fund and TCW Relative Value Large Cap Fund were added.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 20 |
| Portfolio Turnover Rate | | 15% |
Asset Class Weightings % of Investments*
| | | |
| Equity Funds - Domestic | | 61.9% |
| Equity Funds - International | | 27.8% |
| Fixed-Income Funds | | 7.8% |
| Short-Term Investments | | 2.5% |
Total | | 100.0% |
Top Holdings % of Net Assets1
| | | |
| Schwab Core Equity Fund | | 19.9% |
| Schwab S&P 500 Index Fund | | 12.6% |
| Laudus Growth Investors U.S. Large Cap Growth Fund | | 8.5% |
| Laudus International MarketMasters Fund, Select Shares | | 7.8% |
| Schwab Small-Cap Equity Fund | | 7.7% |
| Schwab Total Bond Market Fund | | 5.2% |
| Schwab Global Real Estate Fund | | 4.9% |
| Schwab Dividend Equity Fund | | 4.6% |
| TCW Relative Value Large Cap Fund | | 4.4% |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | 4.2% |
Total | | 79.8% |
Manager views and portfolio holdings may have changed since the report date.
The Laudus Mondrian Funds and Laudus Growth Investors U.S. Large Cap Growth Fund are part of Laudus Trust and distributed by ALPS Distributors, Inc. The Laudus MarketMasters Funds are part of Schwab Capital Trust and distributed by Charles Schwab & Co., Inc.
| | |
| * | | The fund intends to invest in a combination of the underlying funds; however, the fund may also invest directly in equity and fixed income securities, exchange traded funds, cash equivalents, including money market securities, and futures. |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
18 Schwab Target Funds
Schwab Target 2040 Fund
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
July 1, 2005 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,3
Average Annual Total Returns1,2
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 5 Years | | Since Inception |
| |
| Fund: Schwab Target 2040 Fund (7/1/05) | | | 16.71 | % | | | | 3.75 | % | | | | 4.20 | % | |
Target 2040 Composite Index3 | | | 15.30 | % | | | | 3.99 | % | | | | 4.25 | % | |
| Dow Jones U.S. Total Stock Market Index | | | 18.76 | % | | | | 2.36 | % | | | | 2.61 | % | |
| Barclays Capital U.S. Aggregate Bond Index | | | 8.01 | % | | | | 6.45 | % | | | | 5.73 | % | |
| Fund Category: Morningstar Target-Date 2036-2040 | | | 16.26 | % | | | | 2.17 | % | | | | 2.53 | % | |
Fund Expense Ratios4: Net 0.88%; Gross 1.02%
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | The Target 2040 Composite Index is a custom blended index developed by CSIM based on the 2040 fund’s asset allocation glide schedule and will become more conservative as time elapses. The current composite is derived using the following portion allocations: 62.0% Dow Jones U.S. Total Stock Market Index, 19.4% MSCI EAFE (Gross) Index, 6.1% Barclays Capital U.S. Aggregate Bond Index, 5.0% FTSE EPRA/NAREIT Global Index, 0.9% Barclays Capital U.S. Aggregate Intermediate Bond Index, 3.6% MSCI Emerging Markets (Gross) Index, 0.5% Barclays Capital U.S. TIPS Index, 0.5% Citigroup Non-U.S. Dollar World Government Bond Index, and 2.0% Barclays Capital U.S. Treasury Bills: 1-3 Months. |
| 4 | | As stated in the prospectus. Includes expenses of the underlying funds in which the fund invests. The annualized weighted average expense ratio of the underlying funds was 0.88%. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Target Funds 19
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you incur two types of costs: transaction costs, such as redemption fees, and ongoing costs, such as management fees, transfer agent and shareholder services fees, and other fund expenses.
The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning May 1, 2010 and held through October 31, 2010.
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period.”
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.
| | | | | | | | | | | | | | | | | |
| | | | | | | Ending
| | |
| | | | | Beginning
| | Account Value
| | Expenses Paid
|
| | | Expense Ratio1
| | Account Value
| | (Net of Expenses)
| | During Period2
|
| | | (Annualized) | | at 5/1/10 | | at 10/31/10 | | 5/1/10–10/31/10 |
| |
| Schwab Target 2010 Fund | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.00% | | | $ | 1,000 | | | $ | 1,042.30 | | | $ | 0.00 | |
| Hypothetical 5% Return | | | 0.00% | | | $ | 1,000 | | | $ | 1,025.21 | | | $ | 0.00 | |
| |
|
| Schwab Target 2015 Fund | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.00% | | | $ | 1,000 | | | $ | 1,041.00 | | | $ | 0.00 | |
| Hypothetical 5% Return | | | 0.00% | | | $ | 1,000 | | | $ | 1,025.21 | | | $ | 0.00 | |
| |
|
| Schwab Target 2020 Fund | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.00% | | | $ | 1,000 | | | $ | 1,039.50 | | | $ | 0.00 | |
| Hypothetical 5% Return | | | 0.00% | | | $ | 1,000 | | | $ | 1,025.21 | | | $ | 0.00 | |
| |
|
| Schwab Target 2025 Fund | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.00% | | | $ | 1,000 | | | $ | 1,036.70 | | | $ | 0.00 | |
| Hypothetical 5% Return | | | 0.00% | | | $ | 1,000 | | | $ | 1,025.21 | | | $ | 0.00 | |
| |
|
| Schwab Target 2030 Fund | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.00% | | | $ | 1,000 | | | $ | 1,033.70 | | | $ | 0.00 | |
| Hypothetical 5% Return | | | 0.00% | | | $ | 1,000 | | | $ | 1,025.21 | | | $ | 0.00 | |
| |
|
| Schwab Target 2035 Fund | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.00% | | | $ | 1,000 | | | $ | 1,031.00 | | | $ | 0.00 | |
| Hypothetical 5% Return | | | 0.00% | | | $ | 1,000 | | | $ | 1,025.21 | | | $ | 0.00 | |
| |
|
| Schwab Target 2040 Fund | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.00% | | | $ | 1,000 | | | $ | 1,030.50 | | | $ | 0.00 | |
| Hypothetical 5% Return | | | 0.00% | | | $ | 1,000 | | | $ | 1,025.21 | | | $ | 0.00 | |
| | |
| 1 | | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights, which covers a 12-month period. The expenses incurred by the underlying funds in which the funds invest are not included in this ratio. |
| 2 | | Expenses for each fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 184 days of the period, and divided by the 365 days of the fiscal year. |
20 Schwab Target Funds
Schwab Target 2010 Fund
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/09 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 9.46 | | | | 8.76 | | | | 12.65 | | | | 11.42 | | | | 10.24 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.23 | | | | 0.28 | | | | 0.32 | | | | 0.23 | | | | 0.22 | | | |
| Net realized and unrealized gains (losses) | | | 0.89 | | | | 0.75 | | | | (3.73 | ) | | | 1.24 | | | | 1.13 | | | |
| | | |
| Total from investment operations | | | 1.12 | | | | 1.03 | | | | (3.41 | ) | | | 1.47 | | | | 1.35 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.24 | ) | | | (0.33 | ) | | | (0.38 | ) | | | (0.21 | ) | | | (0.17 | ) | | |
| Distributions from net realized gains | | | — | | | | — | | | | (0.10 | ) | | | (0.03 | ) | | | — | | | |
| | | |
| Total distributions | | | (0.24 | ) | | | (0.33 | ) | | | (0.48 | ) | | | (0.24 | ) | | | (0.17 | ) | | |
| | | |
| Net asset value at end of period | | | 10.34 | | | | 9.46 | | | | 8.76 | | | | 12.65 | | | | 11.42 | | | |
| | | |
| Total return (%) | | | 11.99 | | | | 12.24 | | | | (27.87 | ) | | | 13.02 | | | | 13.39 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
Net operating expenses1 | | | 0.00 | 2 | | | 0.03 | 3 | | | 0.06 | | | | 0.06 | | | | 0.06 | | | |
Gross operating expenses1 | | | 0.16 | | | | 0.16 | | | | 0.11 | | | | 0.09 | | | | 0.27 | | | |
| Net investment income (loss) | | | 2.21 | | | | 3.04 | | | | 2.89 | | | | 2.10 | | | | 2.12 | | | |
| Portfolio turnover rate | | | 24 | | | | 47 | | | | 50 | 4 | | | 1 | | | | 0 | 5 | | |
| Net assets, end of period ($ x 1,000,000) | | | 73 | | | | 75 | | | | 80 | | | | 138 | | | | 62 | | | |
1 The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
2 Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
3 Effective April 20, 2009 the net operating expense limitation was lowered. The ratio presented for period ended 10/31/09 is a blended rate.
4 The portfolio turnover ratio increased due to additional rebalancing activity of the underlying funds during the period.
5 Less than 1%.
See financial notes 21
Schwab Target 2010 Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 97 | .4% | | Other Investment Companies | | | 64,120,533 | | | | 71,547,942 | |
| | 2 | .3% | | Short-Term Investment | | | 1,711,924 | | | | 1,711,924 | |
| |
| |
| | 99 | .7% | | Total Investments | | | 65,832,457 | | | | 73,259,866 | |
| | 0 | .3% | | Other Assets and Liabilities, Net | | | | | | | 196,984 | |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 73,456,850 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Other Investment Companies 97.4% of net assets |
| |
Equity Funds 40.3%
|
| American Century International Growth Fund, Institutional Shares | | | 128,228 | | | | 1,375,889 | |
Laudus Growth Investors U.S. Large Cap Growth Fund (a) | | | 257,141 | | | | 3,059,982 | |
Laudus International MarketMasters Fund, Select Shares (a) | | | 154,217 | | | | 2,834,514 | |
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a) | | | 104,490 | | | | 1,007,287 | |
Laudus Mondrian International Equity Fund, Institutional Shares (a) | | | 180,223 | | | | 1,405,739 | |
Laudus Small-Cap MarketMasters Fund, Select Shares (a)* | | | 92,390 | | | | 1,075,421 | |
Schwab Core Equity Fund (a) | | | 395,651 | | | | 6,243,368 | |
Schwab Dividend Equity Fund (a) | | | 120,811 | | | | 1,459,400 | |
Schwab Global Real Estate Fund (a) | | | 218,000 | | | | 1,438,798 | |
Schwab S&P 500 Index Fund (a) | | | 288,821 | | | | 5,400,956 | |
Schwab Small-Cap Equity Fund (a)* | | | 141,510 | | | | 1,975,479 | |
| TCW Relative Value Large Cap Fund | | | 110,047 | | | | 1,366,787 | |
| William Blair International Small Cap Growth Fund, Institutional Shares | | | 72,810 | | | | 922,499 | |
| | | | | | | | | |
| | | | | | | | 29,566,119 | |
| |
Fixed-Income Funds 52.4%
|
Laudus Mondrian International Fixed Income Fund (a) | | | 158,494 | | | | 1,943,142 | |
| Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares | | | 242,331 | | | | 3,070,337 | |
| PIMCO Total Return Fund, Institutional Shares | | | 367,372 | | | | 4,294,581 | |
Schwab Inflation Protected Fund (a) | | | 202,424 | | | | 2,265,121 | |
Schwab Premier Income Fund (a) | | | 383,902 | | | | 4,027,134 | |
Schwab Short-Term Bond Market Fund (a) | | | 936,176 | | | | 8,640,907 | |
Schwab Total Bond Market Fund (a) | | | 1,518,316 | | | | 14,272,170 | |
| | | | | | | | | |
| | | | | | | | 38,513,392 | |
| |
Money Fund 4.7%
|
Schwab Value Advantage Money Fund, Institutional Prime Shares (a) | | | 3,468,431 | | | | 3,468,431 | |
| | | | | | | | | |
| Total Other Investment Companies |
| (Cost $64,120,533) | | | 71,547,942 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Date | | ($) | | ($) |
| |
Short-Term Investment 2.3% of net assets |
| |
Time Deposit 2.3%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 1,711,924 | | | | 1,711,924 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $1,711,924) | | | 1,711,924 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $66,711,772 and the unrealized appreciation and depreciation were $6,885,068 and ($336,974), respectively, with a net unrealized appreciation of $6,548,094.
| | |
| * | | Non-income producing security. |
| (a) | | Issuer is affiliated with the fund’s adviser. |
22 See financial notes
Schwab Target 2010 Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments in affiliated underlying funds, at value (cost $54,473,126) | | | | | $60,517,849 | |
| Investments in unaffiliated issuers, at value (cost $11,359,331) | | + | | | 12,742,017 | |
| | | |
| Total investments, at value (cost $65,832,457) | | | | | 73,259,866 | |
| Cash | | | | | 2 | |
| Receivables: | | | | | | |
| Fund shares sold | | | | | 196,413 | |
| Dividends | | | | | 73,229 | |
| Due from investment adviser | | | | | 1,159 | |
| Interest | | | | | 4 | |
| Prepaid expenses | | + | | | 2,129 | |
| | | |
Total assets | | | | | 73,532,802 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Fund shares redeemed | | | | | 38,623 | |
| Accrued expenses | | + | | | 37,329 | |
| | | |
Total liabilities | | | | | 75,952 | |
| |
Net Assets |
|
Total assets | | | | | 73,532,802 | |
Total liabilities | | − | | | 75,952 | |
| | | |
Net assets | | | | | $73,456,850 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 87,083,283 | |
| Net investment income not yet distributed | | | | | 1,051,515 | |
| Net realized capital losses | | | | | (22,105,357 | ) |
| Net unrealized capital gains | | | | | 7,427,409 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $73,456,850 | | | | 7,103,845 | | | | | $10.34 | | | |
See financial notes 23
Schwab Target 2010 Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends received from affiliated underlying funds | | | | | $1,400,155 | |
| Dividends received from unaffiliated underlying funds | | | | | 240,959 | |
| Interest | | + | | | 455 | |
| | | |
Total investment income | | | | | 1,641,569 | |
| |
Expenses |
|
| Professional fees | | | | | 36,249 | |
| Registration fees | | | | | 25,082 | |
| Portfolio accounting fees | | | | | 16,552 | |
| Shareholder reports | | | | | 13,037 | |
| Transfer agent fees | | | | | 12,548 | |
| Trustees’ fees | | | | | 5,580 | |
| Custodian fees | | | | | 3,729 | |
| Other expenses | | + | | | 5,330 | |
| | | |
| Total expenses | | | | | 118,107 | |
| Expense reduction by adviser and Schwab | | − | | | 116,142 | |
| | | |
Net expenses | | − | | | 1,965 | |
| | | |
Net investment income | | | | | 1,639,604 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Realized capital gain distributions received from affiliated underlying funds | | | | | 4,203 | |
| Realized capital gain distributions received from unaffiliated underlying funds | | | | | 36,897 | |
| Net realized losses on sales of affiliated underlying funds | | | | | (63,065 | ) |
| Net realized gains on sales of unaffiliated underlying funds | | + | | | 136,383 | |
| | | |
Net realized gains | | | | | 114,418 | |
| Net unrealized gains on affiliated underlying funds | | | | | 5,770,382 | |
| Net unrealized gains on unaffiliated underlying funds | | + | | | 827,640 | |
| | | |
Net unrealized gains | | + | | | 6,598,022 | |
| | | |
Net realized and unrealized gains | | | | | 6,712,440 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $8,352,044 | |
24 See financial notes
Schwab Target 2010 Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $1,639,604 | | | | $2,222,155 | |
| Net realized gains (losses) | | | | | 114,418 | | | | (13,258,150 | ) |
| Net unrealized gains | | + | | | 6,598,022 | | | | 18,996,939 | |
| | | |
Increase in net assets from operations | | | | | 8,352,044 | | | | 7,960,944 | |
| |
Distributions to Shareholders |
|
Distributions from net investment income | | | | | $1,828,001 | | | | $2,874,831 | |
Transactions in Fund Shares
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
| Shares sold | | | | | 1,959,676 | | | | $19,167,886 | | | | 1,552,353 | | | | $13,458,671 | |
| Shares reinvested | | | | | 179,646 | | | | 1,724,602 | | | | 316,983 | | | | 2,678,503 | |
| Shares redeemed | | + | | | (2,950,024 | ) | | | (28,824,889 | ) | | | (3,065,299 | ) | | | (26,187,225 | ) |
| | | |
Net transactions in fund shares | | | | | (810,702 | ) | | | ($7,932,401 | ) | | | (1,195,963 | ) | | | ($10,050,051 | ) |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 7,914,547 | | | | $74,865,208 | | | | 9,110,510 | | | | $79,829,146 | |
| Total decrease | | + | | | (810,702 | ) | | | (1,408,358 | ) | | | (1,195,963 | ) | | | (4,963,938 | ) |
| | | |
End of period | | | | | 7,103,845 | | | | $73,456,850 | | | | 7,914,547 | | | | $74,865,208 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $1,051,515 | | | | | | | | $1,210,457 | |
See financial notes 25
Schwab Target 2015 Fund
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 3/12/081–
| | |
| | | 10/31/10 | | 10/31/09 | | 10/31/08 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 9.09 | | | | 8.15 | | | | 10.00 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.16 | | | | 0.19 | | | | 0.06 | | | |
| Net realized and unrealized gains (losses) | | | 1.06 | | | | 0.91 | | | | (1.91 | ) | | |
| | | |
| Total from investment operations | | | 1.22 | | | | 1.10 | | | | (1.85 | ) | | |
| Less distributions: | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.15 | ) | | | (0.16 | ) | | | — | | | |
| Distributions from net realized gains | | | — | | | | (0.00 | )2 | | | — | | | |
| | | |
| Total distributions | | | (0.15 | ) | | | (0.16 | ) | | | — | | | |
| | | |
| Net asset value at end of period | | | 10.16 | | | | 9.09 | | | | 8.15 | | | |
| | | |
| Total return (%) | | | 13.55 | | | | 13.82 | | | | (18.50 | )3 | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | |
Net operating expenses4 | | | 0.00 | 5 | | | 0.02 | 6 | | | 0.05 | 7 | | |
Gross operating expenses4 | | | 0.39 | | | | 0.85 | | | | 1.90 | 7 | | |
| Net investment income (loss) | | | 1.91 | | | | 2.57 | | | | 1.87 | 7 | | |
| Portfolio turnover rate | | | 13 | | | | 39 | | | | 35 | 3 | | |
| Net assets, end of period ($ x 1,000,000) | | | 37 | | | | 17 | | | | 6 | | | |
1 Commencement of operations.
2 Amount less than $0.01.
3 Not annualized.
4 The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
5 Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
6 Effective April 20, 2009 the net operating expense limitation was lowered. The ratio presented for period ended 10/31/09 is a blended rate.
7 Annualized.
26 See financial notes
Schwab Target 2015 Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 96 | .8% | | Other Investment Companies | | | 32,378,399 | | | | 36,261,782 | |
| | 2 | .7% | | Short-Term Investment | | | 986,073 | | | | 986,073 | |
| |
| |
| | 99 | .5% | | Total Investments | | | 33,364,472 | | | | 37,247,855 | |
| | 0 | .5% | | Other Assets and Liabilities, Net | | | | | | | 201,165 | |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 37,449,020 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Other Investment Companies 96.8% of net assets |
| |
Equity Funds 54.0%
|
| American Century International Growth Fund, Institutional Shares | | | 80,646 | | | | 865,331 | |
Laudus Growth Investors U.S. Large Cap Growth Fund (a) | | | 162,470 | | | | 1,933,395 | |
Laudus International MarketMasters Fund, Select Shares (a) | | | 94,163 | | | | 1,730,716 | |
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a) | | | 74,160 | | | | 714,902 | |
Laudus Mondrian International Equity Fund, Institutional Shares (a) | | | 111,523 | | | | 869,878 | |
Laudus Small-Cap MarketMasters Fund, Select Shares (a)* | | | 73,572 | | | | 856,382 | |
Schwab Core Equity Fund (a) | | | 260,145 | | | | 4,105,094 | |
Schwab Dividend Equity Fund (a) | | | 86,312 | | | | 1,042,651 | |
Schwab Global Real Estate Fund (a) | | | 186,744 | | | | 1,232,511 | |
Schwab S&P 500 Index Fund (a) | | | 190,498 | | | | 3,562,305 | |
Schwab Small-Cap Equity Fund (a)* | | | 116,778 | | | | 1,630,224 | |
| TCW Relative Value Large Cap Fund | | | 78,393 | | | | 973,636 | |
| William Blair International Small Cap Growth Fund, Institutional Shares | | | 56,294 | | | | 713,241 | |
| | | | | | | | | |
| | | | | | | | 20,230,266 | |
| |
Fixed-Income Funds 40.7%
|
Laudus Mondrian International Fixed Income Fund (a) | | | 76,464 | | | | 937,448 | |
| Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares | | | 94,463 | | | | 1,196,847 | |
| PIMCO Total Return Fund, Institutional Shares | | | 143,455 | | | | 1,676,989 | |
Schwab Inflation Protected Fund (a) | | | 99,573 | | | | 1,114,217 | |
Schwab Premier Income Fund (a) | | | 123,981 | | | | 1,300,563 | |
Schwab Short-Term Bond Market Fund (a) | | | 281,960 | | | | 2,602,491 | |
Schwab Total Bond Market Fund (a) | | | 682,054 | | | | 6,411,310 | |
| | | | | | | | | |
| | | | | | | | 15,239,865 | |
| |
Money Fund 2.1%
|
Schwab Value Advantage Money Fund, Institutional Prime Shares (a) | | | 791,651 | | | | 791,651 | |
| | | | | | | | | |
| Total Other Investment Companies |
| (Cost $32,378,399) | | | 36,261,782 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Date | | ($) | | ($) |
| |
Short-Term Investment 2.7% of net assets |
| |
Time Deposits 2.7%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 986,073 | | | | 986,073 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $986,073) | | | 986,073 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $33,582,131 and the unrealized appreciation and depreciation were $3,665,724 and ($0), respectively, with a net unrealized appreciation of $3,665,724.
| | |
| * | | Non-income producing security. |
| (a) | | Issuer is affiliated with the fund’s adviser. |
See financial notes 27
Schwab Target 2015 Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments in affiliated underlying funds, at value (cost $27,446,846) | | | | | $30,835,738 | |
| Investments in unaffiliated issuers, at value (cost $5,917,626) | | + | | | 6,412,117 | |
| | | |
| Total investments, at value (cost $33,364,472) | | | | | 37,247,855 | |
| Cash | | | | | 1 | |
| Receivables: | | | | | | |
| Fund shares sold | | | | | 230,083 | |
| Dividends | | | | | 27,553 | |
| Due from investment adviser | | | | | 1,123 | |
| Interest | | | | | 2 | |
| Prepaid expenses | | + | | | 699 | |
| | | |
Total assets | | | | | 37,507,316 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Fund shares redeemed | | | | | 32,045 | |
| Trustees’ fees | | | | | 1 | |
| Accrued expenses | | + | | | 26,250 | |
| | | |
Total liabilities | | | | | 58,296 | |
| |
Net Assets |
|
Total assets | | | | | 37,507,316 | |
Total liabilities | | − | | | 58,296 | |
| | | |
Net assets | | | | | $37,449,020 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 34,153,159 | |
| Net investment income not yet distributed | | | | | 356,829 | |
| Net realized capital losses | | | | | (944,351 | ) |
| Net unrealized capital gains | | | | | 3,883,383 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $37,449,020 | | | | 3,686,212 | | | | | $10.16 | | | |
28 See financial notes
Schwab Target 2015 Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends received from affiliated underlying funds | | | | | $445,320 | |
| Dividends received from unaffiliated underlying funds | | | | | 77,051 | |
| Interest | | + | | | 351 | |
| | | |
Total investment income | | | | | 522,722 | |
| |
Expenses |
|
| Professional fees | | | | | 31,045 | |
| Registration fees | | | | | 21,887 | |
| Portfolio accounting fees | | | | | 15,516 | |
| Transfer agent fees | | | | | 14,940 | |
| Shareholder reports | | | | | 7,973 | |
| Custodian fees | | | | | 6,256 | |
| Trustees’ fees | | | | | 5,224 | |
| Tax expenses | | | | | 110 | |
| Other expenses | | + | | | 3,168 | |
| | | |
| Total expenses | | | | | 106,119 | |
| Expense reduction by adviser and Schwab | | − | | | 105,451 | |
| | | |
Net expenses | | − | | | 668 | |
| | | |
Net investment income | | | | | 522,054 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Realized capital gain distributions received from affiliated underlying funds | | | | | 1,013 | |
| Realized capital gain distributions received from unaffiliated underlying funds | | | | | 7,900 | |
| Net realized gains on sales of affiliated underlying funds | | | | | 49,658 | |
| Net realized losses on sales of unaffiliated underlying funds | | + | | | (28,252 | ) |
| | | |
Net realized gains | | | | | 30,319 | |
| Net unrealized gains on affiliated underlying funds | | | | | 2,396,314 | |
| Net unrealized gains on unaffiliated underlying funds | | + | | | 405,916 | |
| | | |
Net unrealized gains | | + | | | 2,802,230 | |
| | | |
Net realized and unrealized gains | | | | | 2,832,549 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $3,354,603 | |
See financial notes 29
Schwab Target 2015 Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $522,054 | | | | $242,784 | |
| Net realized gains (losses) | | | | | 30,319 | | | | (901,988 | ) |
| Net unrealized gains | | + | | | 2,802,230 | | | | 2,218,470 | |
| | | |
Increase in net assets from operations | | | | | 3,354,603 | | | | 1,559,266 | |
| |
Distributions to Shareholders |
|
| Distributions from net investment income | | | | | 331,163 | | | | 124,285 | |
| Distributions from net realized gains | | + | | | — | | | | 1,857 | |
| | | |
Total distributions | | | | | $331,163 | | | | $126,142 | |
Transactions in Fund Shares
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
| Shares sold | | | | | 2,556,420 | | | | $24,483,229 | | | | 1,490,156 | | | | $12,410,226 | |
| Shares reinvested | | | | | 33,989 | | | | 319,494 | | | | 15,572 | | | | 123,796 | |
| Shares redeemed | | + | | | (787,229 | ) | | | (7,498,561 | ) | | | (348,651 | ) | | | (2,764,888 | ) |
| | | |
Net transactions in fund shares | | | | | 1,803,180 | | | | $17,304,162 | | | | 1,157,077 | | | | $9,769,134 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 1,883,032 | | | | $17,121,418 | | | | 725,955 | | | | $5,919,160 | |
| Total increase | | + | | | 1,803,180 | | | | 20,327,602 | | | | 1,157,077 | | | | 11,202,258 | |
| | | |
End of period | | | | | 3,686,212 | | | | $37,449,020 | | | | 1,883,032 | | | | $17,121,418 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $356,829 | | | | | | | | $159,304 | |
30 See financial notes
Schwab Target 2020 Fund
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/09 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 9.63 | | | | 8.59 | | | | 12.88 | | | | 11.56 | | | | 10.28 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.20 | | | | 0.24 | | | | 0.30 | | | | 0.21 | | | | 0.21 | | | |
| Net realized and unrealized gains (losses) | | | 1.18 | | | | 1.08 | | | | (4.11 | ) | | | 1.33 | | | | 1.25 | | | |
| | | |
| Total from investment operations | | | 1.38 | | | | 1.32 | | | | (3.81 | ) | | | 1.54 | | | | 1.46 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.21 | ) | | | (0.28 | ) | | | (0.38 | ) | | | (0.19 | ) | | | (0.18 | ) | | |
| Distributions from net realized gains | | | — | | | | — | | | | (0.10 | ) | | | (0.03 | ) | | | — | | | |
| | | |
| Total distributions | | | (0.21 | ) | | | (0.28 | ) | | | (0.48 | ) | | | (0.22 | ) | | | (0.18 | ) | | |
| | | |
| Net asset value at end of period | | | 10.80 | | | | 9.63 | | | | 8.59 | | | | 12.88 | | | | 11.56 | | | |
| | | |
| Total return (%) | | | 14.47 | | | | 15.89 | | | | (30.59 | ) | | | 13.47 | | | | 14.36 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
Net operating expenses1 | | | 0.00 | 2 | | | 0.02 | 3 | | | 0.04 | | | | 0.04 | | | | 0.04 | | | |
Gross operating expenses1 | | | 0.07 | | | | 0.09 | | | | 0.08 | | | | 0.07 | | | | 0.22 | | | |
| Net investment income (loss) | | | 2.01 | | | | 2.75 | | | | 2.67 | | | | 1.84 | | | | 1.84 | | | |
| Portfolio turnover rate | | | 15 | | | | 48 | | | | 34 | 4 | | | — | | | | — | | | |
| Net assets, end of period ($ x 1,000,000) | | | 240 | | | | 198 | | | | 163 | | | | 225 | | | | 84 | | | |
1 The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
2 Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
3 Effective April 20, 2009 the net operating expense limitation was lowered. The ratio presented for period ended 10/31/09 is a blended rate.
4 The portfolio turnover ratio increased due to additional rebalancing activity of the underlying funds during the period.
See financial notes 31
Schwab Target 2020 Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .1% | | Other Investment Companies | | | 210,601,088 | | | | 237,750,790 | |
| | 0 | .8% | | Short-Term Investment | | | 1,891,147 | | | | 1,891,147 | |
| |
| |
| | 99 | .9% | | Total Investments | | | 212,492,235 | | | | 239,641,937 | |
| | 0 | .1% | | Other Assets and Liabilities, Net | | | | | | | 183,843 | |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 239,825,780 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Other Investment Companies 99.1% of net assets |
| |
Equity Funds 65.4%
|
| American Century International Growth Fund, Institutional Shares | | | 650,437 | | | | 6,979,188 | |
Laudus Growth Investors U.S. Large Cap Growth Fund (a) | | | 1,343,079 | | | | 15,982,639 | |
Laudus International MarketMasters Fund, Select Shares (a) | | | 741,436 | | | | 13,627,585 | |
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a) | | | 608,927 | | | | 5,870,053 | |
Laudus Mondrian International Equity Fund, Institutional Shares (a) | | | 907,144 | | | | 7,075,724 | |
Laudus Small-Cap MarketMasters Fund, Select Shares (a)* | | | 507,262 | | | | 5,904,532 | |
Schwab Core Equity Fund (a) | | | 2,097,168 | | | | 33,093,309 | |
Schwab Dividend Equity Fund (a) | | | 614,539 | | | | 7,423,632 | |
Schwab Global Real Estate Fund (a) | | | 1,409,411 | | | | 9,302,110 | |
Schwab S&P 500 Index Fund (a) | | | 1,537,795 | | | | 28,756,764 | |
Schwab Small-Cap Equity Fund (a)* | | | 815,878 | | | | 11,389,663 | |
| TCW Relative Value Large Cap Fund | | | 537,460 | | | | 6,675,247 | |
| William Blair International Small Cap Growth Fund, Institutional Shares | | | 384,579 | | | | 4,872,617 | |
| | | | | | | | | |
| | | | | | | | 156,953,063 | |
| |
Fixed-Income Funds 32.6%
|
Laudus Mondrian International Fixed Income Fund (a) | | | 505,910 | | | | 6,202,460 | |
| Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares | | | 270,768 | | | | 3,430,634 | |
| PIMCO Total Return Fund, Institutional Shares | | | 683,598 | | | | 7,991,265 | |
Schwab Inflation Protected Fund (a) | | | 517,329 | | | | 5,788,910 | |
Schwab Premier Income Fund (a) | | | 444,878 | | | | 4,666,773 | |
Schwab Short-Term Bond Market Fund (a) | | | 623,976 | | | | 5,759,297 | |
Schwab Total Bond Market Fund (a) | | | 4,709,620 | | | | 44,270,424 | |
| | | | | | | | | |
| | | | | | | | 78,109,763 | |
| |
Money Fund 1.1%
|
Schwab Value Advantage Money Fund, Institutional Prime Shares (a) | | | 2,687,964 | | | | 2,687,964 | |
| | | | | | | | | |
| Total Other Investment Companies |
| (Cost $210,601,088) | | | 237,750,790 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Date | | ($) | | ($) |
| |
Short-Term Investment 0.8% of net assets |
| |
Time Deposit 0.8%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 1,891,147 | | | | 1,891,147 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $1,891,147) | | | 1,891,147 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $214,853,934 and the unrealized appreciation and depreciation were $26,590,514 and ($1,802,511), respectively, with a net unrealized appreciation of $24,788,003.
| | |
| * | | Non-income producing security. |
| (a) | | Issuer is affiliated with the fund’s adviser. |
32 See financial notes
Schwab Target 2020 Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments in affiliated underlying funds, at value (cost $185,181,167) | | | | | $207,801,839 | |
| Investments in unaffiliated issuers, at value (cost $27,311,068) | | + | | | 31,840,098 | |
| | | |
| Total investments, at value (cost $212,492,235) | | | | | 239,641,937 | |
| Cash | | | | | 7 | |
| Receivables: | | | | | | |
| Dividends | | | | | 154,880 | |
| Fund shares sold | | | | | 146,090 | |
| Due from investment adviser | | | | | 1,564 | |
| Interest | | | | | 5 | |
| Prepaid expenses | | + | | | 6,024 | |
| | | |
Total assets | | | | | 239,950,507 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Fund shares redeemed | | | | | 81,505 | |
| Accrued expenses | | + | | | 43,222 | |
| | | |
Total liabilities | | | | | 124,727 | |
| |
Net Assets |
|
Total assets | | | | | 239,950,507 | |
Total liabilities | | − | | | 124,727 | |
| | | |
Net assets | | | | | $239,825,780 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 251,425,025 | |
| Net investment income not yet distributed | | | | | 2,414,159 | |
| Net realized capital losses | | | | | (41,163,106 | ) |
| Net unrealized capital gains | | | | | 27,149,702 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $239,825,780 | | | | 22,212,469 | | | | | $10.80 | | | |
See financial notes 33
Schwab Target 2020 Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends received from affiliated underlying funds | | | | | $3,856,241 | |
| Dividends received from unaffiliated underlying funds | | | | | 557,092 | |
| Interest | | + | | | 816 | |
| | | |
Total investment income | | | | | 4,414,149 | |
| |
Expenses |
|
| Professional fees | | | | | 39,003 | |
| Shareholder reports | | | | | 36,317 | |
| Registration fees | | | | | 27,768 | |
| Portfolio accounting fees | | | | | 19,580 | |
| Transfer agent fees | | | | | 16,508 | |
| Custodian fees | | | | | 6,805 | |
| Trustees’ fees | | | | | 6,220 | |
| Interest expense | | | | | 13 | |
| Other expenses | | + | | | 10,633 | |
| | | |
| Total expenses | | | | | 162,847 | |
| Expense reduction by adviser and Schwab | | − | | | 157,268 | |
| | | |
Net expenses | | − | | | 5,579 | |
| | | |
Net investment income | | | | | 4,408,570 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Realized capital gain distributions received from affiliated underlying funds | | | | | 10,550 | |
| Realized capital gain distributions received from unaffiliated underlying funds | | | | | 63,605 | |
| Net realized losses on sales of affiliated underlying funds | | | | | (1,900,648 | ) |
| Net realized losses on sales of unaffiliated underlying funds | | + | | | (26,883 | ) |
| | | |
Net realized losses | | | | | (1,853,376 | ) |
| Net unrealized gains on affiliated underlying funds | | | | | 23,793,636 | |
| Net unrealized gains on unaffiliated underlying funds | | + | | | 2,990,621 | |
| | | |
Net unrealized gains | | + | | | 26,784,257 | |
| | | |
Net realized and unrealized gains | | | | | 24,930,881 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $29,339,451 | |
34 See financial notes
Schwab Target 2020 Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $4,408,570 | | | | $4,597,025 | |
| Net realized losses | | | | | (1,853,376 | ) | | | (25,689,051 | ) |
| Net unrealized gains | | + | | | 26,784,257 | | | | 46,819,324 | |
| | | |
Increase in net assets from operations | | | | | 29,339,451 | | | | 25,727,298 | |
| |
Distributions to Shareholders |
|
Distributions from net investment income | | | | | $4,326,919 | | | | $5,224,288 | |
Transactions in Fund Shares
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
| Shares sold | | | | | 5,496,962 | | | | $55,652,382 | | | | 4,974,805 | | | | $43,181,397 | |
| Shares reinvested | | | | | 420,595 | | | | 4,197,532 | | | | 614,157 | | | | 5,079,079 | |
| Shares redeemed | | + | | | (4,256,785 | ) | | | (42,975,456 | ) | | | (3,982,867 | ) | | | (33,565,014 | ) |
| | | |
Net transactions in fund shares | | | | | 1,660,772 | | | | $16,874,458 | | | | 1,606,095 | | | | $14,695,462 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 20,551,697 | | | | $197,938,790 | | | | 18,945,602 | | | | $162,740,318 | |
| Total increase | | + | | | 1,660,772 | | | | 41,886,990 | | | | 1,606,095 | | | | 35,198,472 | |
| | | |
End of period | | | | | 22,212,469 | | | | $239,825,780 | | | | 20,551,697 | | | | $197,938,790 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $2,414,159 | | | | | | | | $2,280,442 | |
See financial notes 35
Schwab Target 2025 Fund
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 3/12/081–
| | |
| | | 10/31/10 | | 10/31/09 | | 10/31/08 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 9.21 | | | | 7.99 | | | | 10.00 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.16 | | | | 0.17 | | | | 0.05 | | | |
| Net realized and unrealized gains (losses) | | | 1.24 | | | | 1.21 | | | | (2.06 | ) | | |
| | | |
| Total from investment operations | | | 1.40 | | | | 1.38 | | | | (2.01 | ) | | |
| Less distributions: | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.15 | ) | | | (0.16 | ) | | | — | | | |
| | | |
| Net asset value at end of period | | | 10.46 | | | | 9.21 | | | | 7.99 | | | |
| | | |
| Total return (%) | | | 15.34 | | | | 17.61 | | | | (20.10 | )2 | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | |
Net operating expenses3 | | | 0.00 | 4 | | | 0.01 | 5 | | | 0.04 | 6 | | |
Gross operating expenses3 | | | 0.24 | | | | 0.57 | | | | 1.27 | 6 | | |
| Net investment income (loss) | | | 1.62 | | | | 2.15 | | | | 1.60 | 6 | | |
| Portfolio turnover rate | | | 13 | | | | 44 | | | | 3 | 2 | | |
| Net assets, end of period ($ x 1,000,000) | | | 63 | | | | 26 | | | | 8 | | | |
1 Commencement of operations.
2 Not annualized.
3 The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
4 Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
5 Effective April 20, 2009 the net operating expense limitation was lowered. The ratio presented for period ended 10/31/09 is a blended rate.
6 Annualized.
36 See financial notes
Schwab Target 2025 Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 98 | .6% | | Other Investment Companies | | | 54,080,411 | | | | 61,914,148 | |
| | 1 | .1% | | Short-Term Investment | | | 686,503 | | | | 686,503 | |
| |
| |
| | 99 | .7% | | Total Investments | | | 54,766,914 | | | | 62,600,651 | |
| | 0 | .3% | | Other Assets and Liabilities, Net | | | | | | | 168,613 | |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 62,769,264 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Other Investment Companies 98.6% of net assets |
| |
Equity Funds 73.0%
|
| American Century International Growth Fund, Institutional Shares | | | 187,090 | | | | 2,007,471 | |
Laudus Growth Investors U.S. Large Cap Growth Fund (a) | | | 376,304 | | | | 4,478,021 | |
Laudus International MarketMasters Fund, Select Shares (a) | | | 220,596 | | | | 4,054,547 | |
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a) | | | 165,977 | | | | 1,600,020 | |
Laudus Mondrian International Equity Fund, Institutional Shares (a) | | | 255,504 | | | | 1,992,934 | |
Laudus Small-Cap MarketMasters Fund, Select Shares (a)* | | | 161,091 | | | | 1,875,105 | |
Schwab Core Equity Fund (a) | | | 607,999 | | | | 9,594,229 | |
Schwab Dividend Equity Fund (a) | | | 194,177 | | | | 2,345,663 | |
Schwab Global Real Estate Fund (a) | | | 372,729 | | | | 2,460,012 | |
Schwab S&P 500 Index Fund (a) | | | 418,754 | | | | 7,830,703 | |
Schwab Small-Cap Equity Fund (a)* | | | 272,929 | | | | 3,810,089 | |
| TCW Relative Value Large Cap Fund | | | 175,351 | | | | 2,177,854 | |
| William Blair International Small Cap Growth Fund, Institutional Shares | | | 127,660 | | | | 1,617,447 | |
| | | | | | | | | |
| | | | | | | | 45,844,095 | |
| |
Fixed-Income Funds 24.6%
|
Laudus Mondrian International Fixed Income Fund (a) | | | 100,912 | | | | 1,237,176 | |
| Natixis Loomis Sayles Investment Grade Bond Fund, Class Y Shares | | | 63,380 | | | | 803,027 | |
| PIMCO Total Return Fund, Institutional Shares | | | 148,790 | | | | 1,739,356 | |
Schwab Inflation Protected Fund (a) | | | 110,055 | | | | 1,231,521 | |
Schwab Premier Income Fund (a) | | | 88,407 | | | | 927,392 | |
Schwab Total Bond Market Fund (a) | | | 1,014,197 | | | | 9,533,453 | |
| | | | | | | | | |
| | | | | | | | 15,471,925 | |
| |
Money Fund 1.0%
|
Schwab Value Advantage Money Fund, Institutional Prime Shares (a) | | | 598,128 | | | | 598,128 | |
| | | | | | | | | |
| Total Other Investment Companies |
| (Cost $54,080,411) | | | 61,914,148 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Date | | ($) | | ($) |
| |
Short-Term Investment 1.1% of net assets |
| |
Time Deposit 1.1%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 686,503 | | | | 686,503 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $686,503) | | | 686,503 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $55,487,385 and the unrealized appreciation and depreciation were $7,113,266 and ($0), respectively, with a net unrealized appreciation of $7,113,266.
| | |
| * | | Non-income producing security. |
| (a) | | Issuer is affiliated with the fund’s adviser. |
See financial notes 37
Schwab Target 2025 Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments in affiliated underlying funds, at value (cost $46,606,086) | | | | | $53,568,993 | |
| Investments in unaffiliated issuers, at value (cost $8,160,828) | | + | | | 9,031,658 | |
| | | |
| Total investments, at value (cost $54,766,914) | | | | | 62,600,651 | |
| Cash | | | | | 2 | |
| Receivables: | | | | | | |
| Fund shares sold | | | | | 165,306 | |
| Dividends | | | | | 31,433 | |
| Due from investment adviser | | | | | 1,224 | |
| Interest | | | | | 2 | |
| Prepaid expenses | | + | | | 1,182 | |
| | | |
Total assets | | | | | 62,799,800 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Fund shares redeemed | | | | | 2,252 | |
| Trustees’ fees | | | | | 1 | |
| Accrued expenses | | + | | | 28,283 | |
| | | |
Total liabilities | | | | | 30,536 | |
| |
Net Assets |
|
Total assets | | | | | 62,799,800 | |
Total liabilities | | − | | | 30,536 | |
| | | |
Net assets | | | | | $62,769,264 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 55,941,275 | |
| Net investment income not yet distributed | | | | | 447,687 | |
| Net realized capital losses | | | | | (1,453,435 | ) |
| Net unrealized capital gains | | | | | 7,833,737 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $62,769,264 | | | | 5,998,603 | | | | | $10.46 | | | |
38 See financial notes
Schwab Target 2025 Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends received from affiliated underlying funds | | | | | $634,334 | |
| Dividends received from unaffiliated underlying funds | | | | | 93,651 | |
| Interest | | + | | | 275 | |
| | | |
Total investment income | | | | | 728,260 | |
| |
Expenses |
|
| Professional fees | | | | | 31,375 | |
| Registration fees | | | | | 23,630 | |
| Portfolio accounting fees | | | | | 15,874 | |
| Shareholder reports | | | | | 11,277 | |
| Transfer agent fees | | | | | 10,832 | |
| Custodian fees | | | | | 7,906 | |
| Trustees’ fees | | | | | 5,327 | |
| Tax expenses | | | | | 189 | |
| Interest expense | | | | | 10 | |
| Other expenses | | + | | | 3,613 | |
| | | |
| Total expenses | | | | | 110,033 | |
| Expense reduction by adviser and Schwab | | − | | | 108,994 | |
| | | |
Net expenses | | − | | | 1,039 | |
| | | |
Net investment income | | | | | 727,221 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Realized capital gain distributions received from affiliated underlying funds | | | | | 1,228 | |
| Realized capital gain distributions received from unaffiliated underlying funds | | | | | 6,809 | |
| Net realized gains on sales of affiliated underlying funds | | | | | 84,537 | |
| Net realized losses on sales of unaffiliated underlying funds | | + | | | (63,321 | ) |
| | | |
Net realized gains | | | | | 29,253 | |
| Net unrealized gains on affiliated underlying funds | | | | | 4,709,753 | |
| Net unrealized gains on unaffiliated underlying funds | | + | | | 714,642 | |
| | | |
Net unrealized gains | | + | | | 5,424,395 | |
| | | |
Net realized and unrealized gains | | | | | 5,453,648 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $6,180,869 | |
See financial notes 39
Schwab Target 2025 Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $727,221 | | | | $316,294 | |
| Net realized gains (losses) | | | | | 29,253 | | | | (1,459,642 | ) |
| Net unrealized gains | | + | | | 5,424,395 | | | | 4,325,990 | |
| | | |
Increase in net assets from operations | | | | | 6,180,869 | | | | 3,182,642 | |
| |
Distributions to Shareholders |
|
Distributions from net investment income | | | | | $477,680 | | | | $176,067 | |
Transactions in Fund Shares
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
| Shares sold | | | | | 3,957,132 | | | | $38,742,638 | | | | 2,280,389 | | | | $18,714,236 | |
| Shares reinvested | | | | | 48,457 | | | | 468,092 | | | | 22,308 | | | | 173,559 | |
| Shares redeemed | | + | | | (857,464 | ) | | | (8,387,723 | ) | | | (398,454 | ) | | | (3,214,601 | ) |
| | | |
Net transactions in fund shares | | | | | 3,148,125 | | | | $30,823,007 | | | | 1,904,243 | | | | $15,673,194 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 2,850,478 | | | | $26,243,068 | | | | 946,235 | | | | $7,563,299 | |
| Total increase | | + | | | 3,148,125 | | | | 36,526,196 | | | | 1,904,243 | | | | 18,679,769 | |
| | | |
End of period | | | | | 5,998,603 | | | | $62,769,264 | | | | 2,850,478 | | | | $26,243,068 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $447,687 | | | | | | | | $192,214 | |
40 See financial notes
Schwab Target 2030 Fund
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/09 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 9.69 | | | | 8.51 | | | | 13.15 | | | | 11.67 | | | | 10.31 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.17 | | | | 0.20 | | | | 0.28 | | | | 0.18 | | | | 0.19 | | | |
| Net realized and unrealized gains (losses) | | | 1.36 | | | | 1.23 | | | | (4.47 | ) | | | 1.48 | | | | 1.34 | | | |
| | | |
| Total from investment operations | | | 1.53 | | | | 1.43 | | | | (4.19 | ) | | | 1.66 | | | | 1.53 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.17 | ) | | | (0.25 | ) | | | (0.35 | ) | | | (0.16 | ) | | | (0.17 | ) | | |
| Distributions from net realized gains | | | — | | | | — | | | | (0.10 | ) | | | (0.02 | ) | | | — | | | |
| | | |
| Total distributions | | | (0.17 | ) | | | (0.25 | ) | | | (0.45 | ) | | | (0.18 | ) | | | (0.17 | ) | | |
| | | |
| Net asset value at end of period | | | 11.05 | | | | 9.69 | | | | 8.51 | | | | 13.15 | | | | 11.67 | | | |
| | | |
| Total return (%) | | | 15.97 | | | | 17.31 | | | | (32.83 | ) | | | 14.45 | | | | 14.99 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
Net operating expenses1 | | | 0.00 | 2 | | | 0.01 | 3 | | | 0.03 | | | | 0.03 | | | | 0.03 | | | |
Gross operating expenses1 | | | 0.08 | | | | 0.11 | | | | 0.10 | | | | 0.09 | | | | 0.32 | | | |
| Net investment income (loss) | | | 1.64 | | | | 2.37 | | | | 2.35 | | | | 1.50 | | | | 1.54 | | | |
| Portfolio turnover rate | | | 14 | | | | 50 | | | | 31 | 4 | | | — | | | | — | | | |
| Net assets, end of period ($ x 1,000,000) | | | 296 | | | | 200 | | | | 129 | | | | 162 | | | | 56 | | | |
1 The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
2 Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
3 Effective April 20, 2009 the net operating expense limitation was lowered. The ratio presented for period ended 10/31/09 is a blended rate.
4 The portfolio turnover ratio increased due to additional rebalancing activity of the underlying funds during the period.
See financial notes 41
Schwab Target 2030 Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 98 | .9% | | Other Investment Companies | | | 254,925,684 | | | | 293,003,525 | |
| | 0 | .9% | | Short-Term Investment | | | 2,830,172 | | | | 2,830,172 | |
| |
| |
| | 99 | .8% | | Total Investments | | | 257,755,856 | | | | 295,833,697 | |
| | 0 | .2% | | Other Assets and Liabilities, Net | | | | | | | 556,694 | |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 296,390,391 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Other Investment Companies 98.9% of net assets |
| |
Equity Funds 80.1%
|
| American Century International Growth Fund, Institutional Shares | | | 1,001,097 | | | | 10,741,767 | |
Laudus Growth Investors U.S. Large Cap Growth Fund (a) | | | 1,911,350 | | | | 22,745,067 | |
Laudus International MarketMasters Fund, Select Shares (a) | | | 1,112,544 | | | | 20,448,562 | |
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a) | | | 944,933 | | | | 9,109,154 | |
Laudus Mondrian International Equity Fund, Institutional Shares (a) | | | 1,357,165 | | | | 10,585,886 | |
Laudus Small-Cap MarketMasters Fund, Select Shares (a)* | | | 934,411 | | | | 10,876,538 | |
Schwab Core Equity Fund (a) | | | 3,170,535 | | | | 50,031,049 | |
Schwab Dividend Equity Fund (a) | | | 1,036,860 | | | | 12,525,265 | |
Schwab Global Real Estate Fund (a) | | | 1,949,136 | | | | 12,864,297 | |
Schwab S&P 500 Index Fund (a) | | | 1,996,131 | | | | 37,327,658 | |
Schwab Small-Cap Equity Fund (a)* | | | 1,467,529 | | | | 20,486,705 | |
| TCW Relative Value Large Cap Fund | | | 908,259 | | | | 11,280,573 | |
| William Blair International Small Cap Growth Fund, Institutional Shares | | | 659,541 | | | | 8,356,386 | |
| | | | | | | | | |
| | | | | | | | 237,378,907 | |
| |
Fixed-Income Funds 17.6%
|
Laudus Mondrian International Fixed Income Fund (a) | | | 277,969 | | | | 3,407,895 | |
| PIMCO Total Return Fund, Institutional Shares | | | 497,402 | | | | 5,814,632 | |
Schwab Inflation Protected Fund (a) | | | 306,490 | | | | 3,429,623 | |
Schwab Premier Income Fund (a) | | | 271,020 | | | | 2,842,996 | |
Schwab Total Bond Market Fund (a) | | | 3,890,485 | | | | 36,570,562 | |
| | | | | | | | | |
| | | | | | | | 52,065,708 | |
| |
Money Fund 1.2%
|
Schwab Value Advantage Money Fund, Institutional Prime Shares (a) | | | 3,558,910 | | | | 3,558,910 | |
| | | | | | | | | |
| Total Other Investment Companies |
| (Cost $254,925,684) | | | 293,003,525 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Date | | ($) | | ($) |
| |
Short-Term Investment 0.9% of net assets |
| |
Time Deposit 0.9%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 2,830,172 | | | | 2,830,172 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $2,830,172) | | | 2,830,172 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $261,756,591 and the unrealized appreciation and depreciation were $35,177,068 and ($1,099,962), respectively, with a net unrealized appreciation of $34,077,106.
| | |
| * | | Non-income producing security. |
| (a) | | Issuer is affiliated with the fund’s adviser. |
42 See financial notes
Schwab Target 2030 Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments in affiliated underlying funds, at value (cost $223,958,364) | | | | | $256,810,167 | |
| Investments in unaffiliated issuers, at value (cost $33,797,492) | | + | | | 39,023,530 | |
| | | |
| Total investments, at value (cost $257,755,856) | | | | | 295,833,697 | |
| Cash | | | | | 8 | |
| Receivables: | | | | | | |
| Fund shares sold | | | | | 586,950 | |
| Dividends | | | | | 115,810 | |
| Due from investment adviser | | | | | 1,744 | |
| Interest | | | | | 7 | |
| Prepaid expenses | | + | | | 6,716 | |
| | | |
Total assets | | | | | 296,544,932 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Fund shares redeemed | | | | | 102,559 | |
| Accrued expenses | | + | | | 51,982 | |
| | | |
Total liabilities | | | | | 154,541 | |
| |
Net Assets |
|
Total assets | | | | | 296,544,932 | |
Total liabilities | | − | | | 154,541 | |
| | | |
Net assets | | | | | $296,390,391 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 288,957,237 | |
| Net investment income not yet distributed | | | | | 1,997,443 | |
| Net realized capital losses | | | | | (32,642,130 | ) |
| Net unrealized capital gains | | | | | 38,077,841 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $296,390,391 | | | | 26,833,457 | | | | | $11.05 | | | |
See financial notes 43
Schwab Target 2030 Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends received from affiliated underlying funds | | | | | $3,625,654 | |
| Dividends received from unaffiliated underlying funds | | | | | 491,594 | |
| Interest | | + | | | 1,347 | |
| | | |
Total investment income | | | | | 4,118,595 | |
| |
Expenses |
|
| Shareholder reports | | | | | 49,440 | |
| Professional fees | | | | | 39,807 | |
| Registration fees | | | | | 31,702 | |
| Transfer agent fees | | | | | 25,314 | |
| Portfolio accounting fees | | | | | 20,232 | |
| Custodian fees | | | | | 8,792 | |
| Trustees’ fees | | | | | 6,972 | |
| Interest expense | | | | | 14 | |
| Other expenses | | + | | | 11,599 | |
| | | |
| Total expenses | | | | | 193,872 | |
| Expense reduction by adviser and Schwab | | − | | | 187,393 | |
| | | |
Net expenses | | − | | | 6,479 | |
| | | |
Net investment income | | | | | 4,112,116 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Realized capital gain distributions received from affiliated underlying funds | | | | | 5,348 | |
| Realized capital gain distributions received from unaffiliated underlying funds | | | | | 32,660 | |
| Net realized losses on sales of affiliated underlying funds | | | | | (727,846 | ) |
| Net realized losses on sales of unaffiliated underlying funds | | + | | | (231,199 | ) |
| | | |
Net realized losses | | | | | (921,037 | ) |
| Net unrealized gains on affiliated underlying funds | | | | | 29,206,918 | |
| Net unrealized gains on unaffiliated underlying funds | | + | | | 3,791,473 | |
| | | |
Net unrealized gains | | + | | | 32,998,391 | |
| | | |
Net realized and unrealized gains | | | | | 32,077,354 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $36,189,470 | |
44 See financial notes
Schwab Target 2030 Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $4,112,116 | | | | $3,546,519 | |
| Net realized losses | | | | | (921,037 | ) | | | (22,717,978 | ) |
| Net unrealized gains | | + | | | 32,998,391 | | | | 46,239,164 | |
| | | |
Increase in net assets from operations | | | | | 36,189,470 | | | | 27,067,705 | |
| |
Distributions to Shareholders |
|
Distributions from net investment income | | | | | $3,748,936 | | | | $3,827,014 | |
Transactions in Fund Shares
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
| Shares sold | | | | | 9,800,393 | | | | $101,143,105 | | | | 7,905,830 | | | | $68,297,504 | |
| Shares reinvested | | | | | 357,901 | | | | 3,654,170 | | | | 458,356 | | | | 3,740,186 | |
| Shares redeemed | | + | | | (3,977,327 | ) | | | (40,925,461 | ) | | | (2,820,613 | ) | | | (23,796,445 | ) |
| | | |
Net transactions in fund shares | | | | | 6,180,967 | | | | $63,871,814 | | | | 5,543,573 | | | | $48,241,245 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 20,652,490 | | | | $200,078,043 | | | | 15,108,917 | | | | $128,596,107 | |
| Total increase | | + | | | 6,180,967 | | | | 96,312,348 | | | | 5,543,573 | | | | 71,481,936 | |
| | | |
End of period | | | | | 26,833,457 | | | | $296,390,391 | | | | 20,652,490 | | | | $200,078,043 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $1,997,443 | | | | | | | | $1,606,899 | |
See financial notes 45
Schwab Target 2035 Fund
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 3/12/081–
| | |
| | | 10/31/10 | | 10/31/09 | | 10/31/08 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 9.00 | | | | 7.76 | | | | 10.00 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.13 | | | | 0.15 | | | | 0.04 | | | |
| Net realized and unrealized gains (losses) | | | 1.33 | | | | 1.23 | | | | (2.28 | ) | | |
| | | |
| Total from investment operations | | | 1.46 | | | | 1.38 | | | | (2.24 | ) | | |
| Less distributions: | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.14 | ) | | | (0.14 | ) | | | — | | | |
| | | |
| Net asset value at end of period | | | 10.32 | | | | 9.00 | | | | 7.76 | | | |
| | | |
| Total return (%) | | | 16.29 | | | | 18.22 | | | | (22.40 | )2 | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | |
Net operating expenses3 | | | 0.00 | 4 | | | 0.01 | 5 | | | 0.02 | 6 | | |
Gross operating expenses3 | | | 0.30 | | | | 0.67 | | | | 1.57 | 6 | | |
| Net investment income (loss) | | | 1.38 | | | | 1.92 | | | | 1.32 | 6 | | |
| Portfolio turnover rate | | | 14 | | | | 49 | | | | 7 | 2 | | |
| Net assets, end of period ($ x 1,000,000) | | | 49 | | | | 22 | | | | 6 | | | |
1 Commencement of operations.
2 Not annualized.
3 The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
4 Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
5 Effective April 20, 2009 the net operating expense limitation was lowered. The ratio presented for period ended 10/31/09 is a blended rate.
6 Annualized.
46 See financial notes
Schwab Target 2035 Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 98 | .7% | | Other Investment Companies | | | 40,957,487 | | | | 47,974,413 | |
| | 1 | .2% | | Short-Term Investment | | | 564,948 | | | | 564,948 | |
| |
| |
| | 99 | .9% | | Total Investments | | | 41,522,435 | | | | 48,539,361 | |
| | 0 | .1% | | Other Assets and Liabilities, Net | | | | | | | 71,544 | |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 48,610,905 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Other Investment Companies 98.7% of net assets |
| |
Equity Funds 85.8%
|
| American Century International Growth Fund, Institutional Shares | | | 171,166 | | | | 1,836,610 | |
Laudus Growth Investors U.S. Large Cap Growth Fund (a) | | | 329,447 | | | | 3,920,422 | |
Laudus International MarketMasters Fund, Select Shares (a) | | | 200,671 | | | | 3,688,337 | |
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a) | | | 170,500 | | | | 1,643,621 | |
Laudus Mondrian International Equity Fund, Institutional Shares (a) | | | 237,275 | | | | 1,850,748 | |
Laudus Small-Cap MarketMasters Fund, Select Shares (a)* | | | 165,847 | | | | 1,930,464 | |
Schwab Core Equity Fund (a) | | | 585,901 | | | | 9,245,518 | |
Schwab Dividend Equity Fund (a) | | | 181,555 | | | | 2,193,189 | |
Schwab Global Real Estate Fund (a) | | | 336,560 | | | | 2,221,295 | |
Schwab S&P 500 Index Fund (a) | | | 321,333 | | | | 6,008,933 | |
Schwab Small-Cap Equity Fund (a)* | | | 255,757 | | | | 3,570,369 | |
| TCW Relative Value Large Cap Fund | | | 156,358 | | | | 1,941,965 | |
| William Blair International Small Cap Growth Fund, Institutional Shares | | | 130,785 | | | | 1,657,051 | |
| | | | | | | | | |
| | | | | | | | 41,708,522 | |
| |
Fixed-Income Funds 11.8%
|
Laudus Mondrian International Fixed Income Fund (a) | | | 30,422 | | | | 372,972 | |
| PIMCO Total Return Fund, Institutional Shares | | | 41,275 | | | | 482,504 | |
Schwab Inflation Protected Fund (a) | | | 33,211 | | | | 371,626 | |
Schwab Premier Income Fund (a) | | | 41,431 | | | | 434,612 | |
Schwab Total Bond Market Fund (a) | | | 431,673 | | | | 4,057,726 | |
| | | | | | | | | |
| | | | | | | | 5,719,440 | |
| |
Money Fund 1.1%
|
Schwab Value Advantage Money Fund, Institutional Prime Shares (a) | | | 546,451 | | | | 546,451 | |
| | | | | | | | | |
| Total Other Investment Companies |
| (Cost $40,957,487) | | | 47,974,413 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Date | | ($) | | ($) |
| |
Short-Term Investment 1.2% of net assets |
| |
Time Deposit 1.2%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 564,948 | | | | 564,948 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $564,948) | | | 564,948 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $42,310,520 and the unrealized appreciation and depreciation were $6,228,841 and ($0), respectively, with a net unrealized appreciation of $6,228,841.
| | |
| * | | Non-income producing security. |
| (a) | | Issuer is affiliated with the fund’s adviser. |
See financial notes 47
Schwab Target 2035 Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments in affiliated underlying funds, at value (cost $35,747,521) | | | | | $42,056,283 | |
| Investments in unaffiliated issuers, at value (cost $5,774,914) | | + | | | 6,483,078 | |
| | | |
| Total investments, at value (cost $41,522,435) | | | | | 48,539,361 | |
| Cash | | | | | 1 | |
| Receivables: | | | | | | |
| Fund shares sold | | | | | 243,922 | |
| Dividends | | | | | 12,641 | |
| Due from investment adviser | | | | | 1,067 | |
| Interest | | | | | 1 | |
| Prepaid expenses | | + | | | 915 | |
| | | |
Total assets | | | | | 48,797,908 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Investments bought | | | | | 150,000 | |
| Fund shares redeemed | | | | | 7,426 | |
| Accrued expenses | | + | | | 29,577 | |
| | | |
Total liabilities | | | | | 187,003 | |
| |
Net Assets |
|
Total assets | | | | | 48,797,908 | |
Total liabilities | | − | | | 187,003 | |
| | | |
Net assets | | | | | $48,610,905 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 42,647,692 | |
| Net investment income not yet distributed | | | | | 239,022 | |
| Net realized capital losses | | | | | (1,292,735 | ) |
| Net unrealized capital gains | | | | | 7,016,926 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $48,610,905 | | | | 4,708,687 | | | | | $10.32 | | | |
48 See financial notes
Schwab Target 2035 Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends received from affiliated underlying funds | | | | | $437,542 | |
| Dividends received from unaffiliated underlying funds | | | | | 53,578 | |
| Interest | | + | | | 224 | |
| | | |
Total investment income | | | | | 491,344 | |
| |
Expenses |
|
| Professional fees | | | | | 31,244 | |
| Registration fees | | | | | 21,502 | |
| Portfolio accounting fees | | | | | 15,678 | |
| Shareholder reports | | | | | 11,151 | |
| Transfer agent fees | | | | | 10,868 | |
| Custodian fees | | | | | 6,243 | |
| Trustees’ fees | | | | | 5,460 | |
| Tax expenses | | | | | 294 | |
| Interest expense | | | | | 13 | |
| Other expenses | | + | | | 3,547 | |
| | | |
| Total expenses | | | | | 106,000 | |
| Expense reduction by adviser and Schwab | | − | | | 104,837 | |
| | | |
Net expenses | | − | | | 1,163 | |
| | | |
Net investment income | | | | | 490,181 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Realized capital gain distributions received from affiliated underlying funds | | | | | 402 | |
| Realized capital gain distributions received from unaffiliated underlying funds | | | | | 2,398 | |
| Net realized gains on sales of affiliated underlying funds | | | | | 132,876 | |
| Net realized losses on sales of unaffiliated underlying funds | | + | | | (60,613 | ) |
| | | |
Net realized gains | | | | | 75,063 | |
| Net unrealized gains on affiliated underlying funds | | | | | 4,064,591 | |
| Net unrealized gains on unaffiliated underlying funds | | + | | | 577,514 | |
| | | |
Net unrealized gains | | + | | | 4,642,105 | |
| | | |
Net realized and unrealized gains | | | | | 4,717,168 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $5,207,349 | |
See financial notes 49
Schwab Target 2035 Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $490,181 | | | | $239,401 | |
| Net realized gains (losses) | | | | | 75,063 | | | | (1,268,726 | ) |
| Net unrealized gains | | + | | | 4,642,105 | | | | 3,955,961 | |
| | | |
Increase in net assets from operations | | | | | 5,207,349 | | | | 2,926,636 | |
| |
Distributions to Shareholders |
|
Distributions from net investment income | | | | | $384,144 | | | | $142,738 | |
Transactions in Fund Shares
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
| Shares sold | | | | | 2,857,381 | | | | $27,484,922 | | | | 1,878,771 | | | | $14,892,391 | |
| Shares reinvested | | | | | 39,144 | | | | 373,828 | | | | 18,803 | | | | 141,021 | |
| Shares redeemed | | + | | | (643,422 | ) | | | (6,161,530 | ) | | | (235,902 | ) | | | (1,885,798 | ) |
| | | |
Net transactions in fund shares | | | | | 2,253,103 | | | | $21,697,220 | | | | 1,661,672 | | | | $13,147,614 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 2,455,584 | | | | $22,090,480 | | | | 793,912 | | | | $6,158,968 | |
| Total increase | | + | | | 2,253,103 | | | | 26,520,425 | | | | 1,661,672 | | | | 15,931,512 | |
| | | |
End of period | | | | | 4,708,687 | | | | $48,610,905 | | | | 2,455,584 | | | | $22,090,480 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $239,022 | | | | | | | | $130,679 | |
50 See financial notes
Schwab Target 2040 Fund
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/09 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 9.71 | | | | 8.48 | | | | 13.45 | | | | 11.83 | | | | 10.36 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.15 | | | | 0.18 | | | | 0.28 | | | | 0.17 | | | | 0.19 | | | |
| Net realized and unrealized gains (losses) | | | 1.46 | | | | 1.27 | | | | (4.80 | ) | | | 1.62 | | | | 1.45 | | | |
| | | |
| Total from investment operations | | | 1.61 | | | | 1.45 | | | | (4.52 | ) | | | 1.79 | | | | 1.64 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.16 | ) | | | (0.22 | ) | | | (0.36 | ) | | | (0.15 | ) | | | (0.17 | ) | | |
| Distributions from net realized gains | | | — | | | | — | | | | (0.09 | ) | | | (0.02 | ) | | | — | | | |
| | | |
| Total distributions | | | (0.16 | ) | | | (0.22 | ) | | | (0.45 | ) | | | (0.17 | ) | | | (0.17 | ) | | |
| | | |
| Net asset value at end of period | | | 11.16 | | | | 9.71 | | | | 8.48 | | | | 13.45 | | | | 11.83 | | | |
| | | |
| Total return (%) | | | 16.71 | | | | 17.66 | | | | (34.60 | ) | | | 15.32 | | | | 16.06 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
Net operating expenses1 | | | 0.00 | 2 | | | 0.00 | 2,3 | | | 0.01 | | | | 0.01 | | | | 0.01 | | | |
Gross operating expenses1 | | | 0.10 | | | | 0.15 | | | | 0.15 | | | | 0.13 | | | | 0.48 | | | |
| Net investment income (loss) | | | 1.44 | | | | 2.15 | | | | 2.22 | | | | 1.19 | | | | 1.26 | | | |
| Portfolio turnover rate | | | 15 | | | | 51 | | | | 36 | 4 | | | — | | | | 1 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 259 | | | | 163 | | | | 94 | | | | 118 | | | | 34 | | | |
1 The expenses incurred by underlying funds in which the fund invests are not included in this ratio.
2 Less than 0.005%; the ratio of net operating expenses would have been 0.00%, if certain non-routine expenses had not been incurred.
3 Effective April 20, 2009 the net operating expense limitation was lowered. The ratio presented for period ended 10/31/09 is a blended rate.
4 The portfolio turnover ratio increased due to additional rebalancing activity of the underlying funds during the period.
See financial notes 51
Schwab Target 2040 Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 98 | .5% | | Other Investment Companies | | | 220,489,184 | | | | 255,676,492 | |
| | 1 | .4% | | Short-Term Investment | | | 3,583,762 | | | | 3,583,762 | |
| |
| |
| | 99 | .9% | | Total Investments | | | 224,072,946 | | | | 259,260,254 | |
| | 0 | .1% | | Other Assets and Liabilities, Net | | | | | | | 141,113 | |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 259,401,367 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Other Investment Companies 98.5% of net assets |
| |
Equity Funds 89.7%
|
| American Century International Growth Fund, Institutional Shares | | | 980,801 | | | | 10,523,998 | |
Laudus Growth Investors U.S. Large Cap Growth Fund (a) | | | 1,859,075 | | | | 22,122,996 | |
Laudus International MarketMasters Fund, Select Shares (a) | | | 1,097,325 | | | | 20,168,827 | |
Laudus Mondrian Emerging Markets Fund, Institutional Shares (a) | | | 953,039 | | | | 9,187,299 | |
Laudus Mondrian International Equity Fund, Institutional Shares (a) | | | 1,314,689 | | | | 10,254,571 | |
Laudus Small-Cap MarketMasters Fund, Select Shares (a)* | | | 923,948 | | | | 10,754,760 | |
Schwab Core Equity Fund (a) | | | 3,272,657 | | | | 51,642,520 | |
Schwab Dividend Equity Fund (a) | | | 988,816 | | | | 11,944,901 | |
Schwab Global Real Estate Fund (a) | | | 1,934,150 | | | | 12,765,388 | |
Schwab S&P 500 Index Fund (a) | | | 1,746,209 | | | | 32,654,107 | |
Schwab Small-Cap Equity Fund (a)* | | | 1,433,525 | | | | 20,012,003 | |
| TCW Relative Value Large Cap Fund | | | 909,112 | | | | 11,291,167 | |
| William Blair International Small Cap Growth Fund, Institutional Shares | | | 736,174 | | | | 9,327,327 | |
| | | | | | | | | |
| | | | | | | | 232,649,864 | |
| |
Fixed-Income Funds 7.8%
|
Laudus Mondrian International Fixed Income Fund (a) | | | 100,395 | | | | 1,230,843 | |
| PIMCO Total Return Fund, Institutional Shares | | | 172,965 | | | | 2,021,962 | |
Schwab Inflation Protected Fund (a) | | | 104,760 | | | | 1,172,264 | |
Schwab Premier Income Fund (a) | | | 217,552 | | | | 2,282,117 | |
Schwab Total Bond Market Fund (a) | | | 1,439,236 | | | | 13,528,823 | |
| | | | | | | | | |
| | | | | | | | 20,236,009 | |
| |
Money Fund 1.0%
|
Schwab Value Advantage Money Fund, Institutional Prime Shares (a) | | | 2,790,619 | | | | 2,790,619 | |
| | | | | | | | | |
| Total Other Investment Companies |
| (Cost $220,489,184) | | | 255,676,492 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Date | | ($) | | ($) |
| |
Short-Term Investment 1.4% of net assets |
| |
Time Deposit 1.4%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 3,583,762 | | | | 3,583,762 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $3,583,762) | | | 3,583,762 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $228,249,789 and the unrealized appreciation and depreciation were $31,154,562 and ($144,097), respectively, with a net unrealized appreciation of $31,010,465.
| | |
| * | | Non-income producing security. |
| (a) | | Issuer is affiliated with the fund’s adviser. |
52 See financial notes
Schwab Target 2040 Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments in affiliated underlying funds, at value (cost $192,049,442) | | | | | $222,512,038 | |
| Investments in unaffiliated issuers, at value (cost $32,023,504) | | + | | | 36,748,216 | |
| | | |
| Total investments, at value (cost $224,072,946) | | | | | 259,260,254 | |
| Cash | | | | | 7 | |
| Receivables: | | | | | | |
| Fund shares sold | | | | | 686,190 | |
| Dividends | | | | | 46,113 | |
| Due from investment adviser | | | | | 2,215 | |
| Interest | | | | | 9 | |
| Prepaid expenses | | + | | | 5,633 | |
| | | |
Total assets | | | | | 260,000,421 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Investments bought | | | | | 400,000 | |
| Fund shares redeemed | | | | | 134,854 | |
| Accrued expenses | | + | | | 64,200 | |
| | | |
Total liabilities | | | | | 599,054 | |
| |
Net Assets |
|
Total assets | | | | | 260,000,421 | |
Total liabilities | | − | | | 599,054 | |
| | | |
Net assets | | | | | $259,401,367 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 249,001,589 | |
| Net investment income not yet distributed | | | | | 1,238,032 | |
| Net realized capital losses | | | | | (26,025,562 | ) |
| Net unrealized capital gains | | | | | 35,187,308 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $259,401,367 | | | | 23,245,063 | | | | | $11.16 | | | |
See financial notes 53
Schwab Target 2040 Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends received from affiliated underlying funds | | | | | $2,688,295 | |
| Dividends received from unaffiliated underlying funds | | | | | 363,338 | |
| Interest | | + | | | 987 | |
| | | |
Total investment income | | | | | 3,052,620 | |
| |
Expenses |
|
| Shareholder reports | | | | | 74,389 | |
| Professional fees | | | | | 39,344 | |
| Registration fees | | | | | 35,629 | |
| Transfer agent fees | | | | | 22,648 | |
| Portfolio accounting fees | | | | | 19,394 | |
| Custodian fees | | | | | 8,467 | |
| Trustees’ fees | | | | | 6,686 | |
| Tax expenses | | | | | 138 | |
| Interest expense | | | | | 18 | |
| Other expenses | | + | | | 12,708 | |
| | | |
| Total expenses | | | | | 219,421 | |
| Expense reduction by adviser and Schwab | | − | | | 211,202 | |
| | | |
Net expenses | | − | | | 8,219 | |
| | | |
Net investment income | | | | | 3,044,401 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Realized capital gain distributions received from affiliated underlying funds | | | | | 1,666 | |
| Realized capital gain distributions received from unaffiliated underlying funds | | | | | 13,446 | |
| Net realized losses on sales of affiliated underlying funds | | | | | (247,747 | ) |
| Net realized losses on sales of unaffiliated underlying funds | | + | | | (251,399 | ) |
| | | |
Net realized losses | | | | | (484,034 | ) |
| Net unrealized gains on affiliated underlying funds | | | | | 25,838,784 | |
| Net unrealized gains on unaffiliated underlying funds | | + | | | 3,485,551 | |
| | | |
Net unrealized gains | | + | | | 29,324,335 | |
| | | |
Net realized and unrealized gains | | | | | 28,840,301 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $31,884,702 | |
54 See financial notes
Schwab Target 2040 Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $3,044,401 | | | | $2,497,108 | |
| Net realized losses | | | | | (484,034 | ) | | | (17,542,173 | ) |
| Net unrealized gains | | + | | | 29,324,335 | | | | 38,054,415 | |
| | | |
Increase in net assets from operations | | | | | 31,884,702 | | | | 23,009,350 | |
| |
Distributions to Shareholders |
|
Distributions from net investment income | | | | | $2,835,524 | | | | $2,541,003 | |
Transactions in Fund Shares
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
| Shares sold | | | | | 9,574,793 | | | | $99,582,654 | | | | 7,414,862 | | | | $63,321,372 | |
| Shares reinvested | | | | | 268,561 | | | | 2,774,235 | | | | 307,779 | | | | 2,486,854 | |
| Shares redeemed | | + | | | (3,362,169 | ) | | | (34,829,052 | ) | | | (2,002,354 | ) | | | (17,072,127 | ) |
| | | |
Net transactions in fund shares | | | | | 6,481,185 | | | | $67,527,837 | | | | 5,720,287 | | | | $48,736,099 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 16,763,878 | | | | $162,824,352 | | | | 11,043,591 | | | | $93,619,906 | |
| Total increase | | + | | | 6,481,185 | | | | 96,577,015 | | | | 5,720,287 | | | | 69,204,446 | |
| | | |
End of period | | | | | 23,245,063 | | | | $259,401,367 | | | | 16,763,878 | | | | $162,824,352 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $1,238,032 | | | | | | | | $1,017,933 | |
See financial notes 55
Schwab Target Funds
Financial Notes
1. Business Structure of the Funds:
Each of the funds discussed in this report is a series of Schwab Capital Trust (the “trust”), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trust including the funds discussed in this report, which are highlighted:
| | | | | |
| |
Schwab Capital Trust (organized May 7, 1993) | | Laudus International MarketMasters Fund | | |
Schwab Target 2010 Fund | | Schwab Balanced Fund | | |
Schwab Target 2015 Fund | | Schwab Premier Equity Fund | | |
Schwab Target 2020 Fund | | Schwab Core Equity Fund | | |
Schwab Target 2025 Fund | | Schwab Dividend Equity Fund | | |
Schwab Target 2030 Fund | | Schwab Large-Cap Growth Fund | | |
Schwab Target 2035 Fund | | Schwab Small-Cap Equity Fund | | |
Schwab Target 2040 Fund | | Schwab Hedged Equity Fund | | |
| Schwab S&P 500 Index Fund | | Schwab Financial Services Fund | | |
| Schwab Small-Cap Index Fund | | Schwab Health Care Fund | | |
| Schwab Total Stock Market Index Fund | | Schwab International Core Equity Fund | | |
| Schwab International Index Fund | | Schwab Fundamental US Large Company Index Fund | | |
| Schwab MarketTrack All Equity Portfolio | | Schwab Fundamental US Small-Mid Company Index Fund | | |
| Schwab MarketTrack Growth Portfolio | | Schwab Fundamental International Large Company Index Fund | | |
| Schwab MarketTrack Balanced Portfolio | | Schwab Fundamental International Small-Mid-Company Index Fund | | |
| Schwab MarketTrack Conservative Portfolio | | Schwab Fundamental Emerging Markets Index Fund | | |
| Laudus Small-Cap MarketMasters Fund | | Schwab Monthly Income Fund-Moderate Payout
Schwab Monthly Income Fund-Enhanced Payout
Schwab Monthly Income Fund-Maximum Payout | | |
| |
The Schwab Target Funds are “fund of funds”. Each of the funds seeks to achieve its investment objective by investing in a combination of other Schwab and/or Laudus Funds and other unaffiliated, third-party mutual funds, in accordance with its target portfolio allocation. Each fund may also invest directly in equity and fixed income securities, exchange traded funds (“ETFs”), cash equivalents, including money market securities, and futures. Each fund bears its share of the allocable expenses of the underlying funds in which they invest.
The funds offer one share class. Shares are bought and sold (subject to a redemption fee, see financial note 8) at closing net asset value (“NAV”), which is the price for all outstanding shares of a fund, as applicable. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.
Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund may also keep certain assets in segregated accounts, as required by securities law.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies the funds use in their preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). For more information about the underlying funds’ operations and policies, please refer to those funds’ semiannual and annual reports, which are filed with the Securities Exchange Commission (“SEC”).
(a) Security Valuation:
The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:
| | |
| | • | Short-term securities (60 days or less to maturity): valued at amortized cost, which approximates market value. |
| |
| | • | Underlying funds: valued at their respective net asset values as determined by the underlying fund in accordance with the 1940 Act for a given day. |
In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the funds disclose the fair value of their investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (level 3 measurements). If the funds determine that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs
56
Schwab Target Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
The three levels of the fair value hierarchy are as follows:
| | |
| | • | Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. The funds do not adjust the quoted price for such instruments, even in situations where the funds hold a large position and a sale could reasonably impact the quoted prices. |
| |
| | • | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include certain U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. In addition, international securities whose markets close hours before the funds value their holdings may require fair valuations due to significant movement in the U.S. markets occurring after the daily close of the foreign markets. The Board of Trustees has approved a vendor that would calculate fair valuations of international equity securities based on a number of factors that appear to correlate to the movements in the U.S. markets. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. |
| |
| | • | Level 3 — significant unobservable inputs (including the funds’ own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the funds use one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds’ results of operations. |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the funds’ investments as of October 31, 2010:
Schwab Target 2010 Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total* |
| |
| Other Investment Companies(a) | | | $71,547,942 | | | | $— | | | | $— | | | | $71,547,942 | |
| Short-Term Investments(a) | | | — | | | | 1,711,924 | | | | — | | | | 1,711,924 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $71,547,942 | | | | $1,711,924 | | | | $— | | | | $73,259,866 | |
| | | | | | | | | | | | | | | | | |
57
Schwab Target Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
Schwab Target 2015 Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total* |
| |
| Other Investment Companies(a) | | | $36,261,782 | | | | $— | | | | $— | | | | $36,261,782 | |
| Short-Term Investments(a) | | | — | | | | 986,073 | | | | — | | | | 986,073 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $36,261,782 | | | | $986,073 | | | | $— | | | | $37,247,855 | |
| | | | | | | | | | | | | | | | | |
Schwab Target 2020 Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total* |
| |
| Other Investment Companies(a) | | | $237,750,790 | | | | $— | | | | $— | | | | $237,750,790 | |
| Short-Term Investments(a) | | | — | | | | 1,891,147 | | | | — | | | | 1,891,147 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $237,750,790 | | | | $1,891,147 | | | | $— | | | | $239,641,937 | |
| | | | | | | | | | | | | | | | | |
Schwab Target 2025 Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total* |
| |
| Other Investment Companies(a) | | | $61,914,148 | | | | $— | | | | $— | | | | $61,914,148 | |
| Short-Term Investments(a) | | | — | | | | 686,503 | | | | — | | | | 686,503 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $61,914,148 | | | | $686,503 | | | | $— | | | | $62,600,651 | |
| | | | | | | | | | | | | | | | | |
Schwab Target 2030 Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total* |
| |
| Other Investment Companies(a) | | | $293,003,525 | | | | $— | | | | $— | | | | $293,003,525 | |
| Short-Term Investments(a) | | | — | | | | 2,830,172 | | | | — | | | | 2,830,172 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $293,003,525 | | | | $2,830,172 | | | | $— | | | | $295,833,697 | |
| | | | | | | | | | | | | | | | | |
Schwab Target 2035 Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total* |
| |
| Other Investment Companies(a) | | | $47,974,413 | | | | $— | | | | $— | | | | $47,974,413 | |
| Short-Term Investments(a) | | | — | | | | 564,948 | | | | — | | | | 564,948 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $47,974,413 | | | | $564,948 | | | | $— | | | | $48,539,361 | |
| | | | | | | | | | | | | | | | | |
58
Schwab Target Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
Schwab Target 2040 Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total* |
| |
| Other Investment Companies(a) | | | $255,676,492 | | | | $— | | | | $— | | | | $255,676,492 | |
| Short-Term Investments(a) | | | — | | | | 3,583,762 | | | | — | | | | 3,583,762 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $255,676,492 | | | | $3,583,762 | | | | $— | | | | $259,260,254 | |
| | | | | | | | | | | | | | | | | |
| | | |
| * | | The fund had no Other Financial Instruments. |
| (a) | | As categorized in Portfolio Holdings. |
In January 2010, the Financial Accounting Standards Board issued new guidance requiring reporting entities to make new disclosures about amounts and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements as well as inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances and settlements of Level 3 securities on a gross basis. The new and revised disclosures are required to be implemented for annual and interim periods beginning after December 15, 2009, except for the disclosures surrounding purchases, sales, issuances and settlements of Level 3 fair value measurements on a gross basis, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years.
The funds have adopted the new guidance for the period ended October 31, 2010. There were no significant transfers between Level 1 and Level 2 for the period ended October 31, 2010. Management is currently evaluating the impact of the adoption of the other provisions of the new guidance on the funds’ financial statements.
(b) Security Transactions:
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
(c) Investment Income:
Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the funds may record certain foreign security dividends on the day they learn of the ex-dividend date. Any distributions from underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds.
(d) Expenses:
Expenses that are specific to a fund are charged directly to the fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets.
(e) Distributions to Shareholders:
The funds make distributions from net investment income and net realized capital gains, if any, once a year.
(f) Accounting Estimates:
The accounting policies described in this report conform to accounting principles generally accepted in the United States of America. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates and these differences may be material.
(g) Federal Income Taxes:
The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains, if any, to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
59
Schwab Target Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
(h) Indemnification:
Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss to be remote.
3. Risk factors:
Investing in the funds may involve certain risks, as discussed in the funds’ prospectus, including, but not limited to, those described below. Any of these risks could cause the investor to lose money.
Asset Allocation Risk. The funds are subject to asset allocation risk, which is the risk that the selection of the underlying funds and the allocation of a fund’s assets among the various asset classes and market segments will cause the funds to underperform other funds with a similar investment objective.
Market Risk. Stock and bond markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of an investment in the funds will fluctuate, which means that an investor could lose money.
Underlying Fund Investment Risk. The value of your investment in the funds is based primarily on the prices of the underlying funds that the fund purchases. In turn, the price of each underlying fund is based on the value of its securities. Before investing in the funds, investors should assess the risks associated with the underlying funds in which the funds may invest and the types of investments made by those underlying funds. These risks include any combination of the risks described below, although a fund’s exposure to a particular risk will be proportionate to the fund’s overall asset allocation and underlying fund allocation.
| | |
| | • | Investment Risk. An investment in an underlying fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The funds may experience losses with respect to its investment in an underlying fund. Further, there is no guarantee that an underlying fund will be able to achieve its objective. |
| |
| | • | Management Risk. Generally, the underlying funds are actively managed mutual funds. Any actively managed mutual fund is subject to the risk that its investment adviser (or sub-adviser) will make poor security selections. An underlying fund’s adviser applies its own investment techniques and risk analyses in making investment decisions for the fund, but there can be no guarantee that they will produce the desired results. |
| |
| | • | Fixed Income Risk. Interest rates rise and fall over time, which will affect an underlying fund’s yield and share price. The credit quality of a portfolio investment could also cause an underlying fund’s share price to fall. An underlying fund could lose money if the issuer or guarantor of a portfolio investment or the counterparty to a derivatives contract fails to make timely principal or interest payments or otherwise honor its obligations. Fixed income securities may be paid off earlier or later than expected. Either situation could cause an underlying fund to hold securities paying lower-than-market rates of interest, which could hurt the fund’s yield or share price. Below investment-grade bonds (junk bonds) involve greater credit risk, are more volatile, involve greater risk of price declines and may be more susceptible to economic downturns than investment-grade securities. |
| |
| | • | Equity Risk. The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time. |
| |
| | • | Large-, Mid- and Small-Cap Risk. Stocks of different market capitalizations tend to go in and out of favor based on market and economic conditions. Historically, small- and mid-cap stocks tend to be more volatile than large-cap stocks, and small-cap stocks have been riskier than large- and mid-cap stocks. During a period when stocks of a particular market capitalization fall behind other types of investments — bonds or stocks of another capitalization range, for instance — an underlying fund’s large-, mid- or small-cap holdings could reduce performance. |
60
Schwab Target Funds
Financial Notes (continued)
3. Risk factors (continued):
| | |
| | • | Money Market Risk. Although an underlying money market fund seeks to maintain a stable $1 net asset value, it is possible to lose money by investing in a money market fund. In addition, a money market fund is not designed to offer capital appreciation. |
| |
| | • | Exchange Traded Funds (ETFs) Risk. An underlying fund may purchase shares of ETFs to gain exposure to a particular portion of the market while awaiting an opportunity to purchase securities directly. When a fund invests in an ETF, it will bear a proportionate share of the ETF’s expenses. In addition, lack of liquidity in an ETF can result in its value being more volatile than the underlying portfolio of securities. |
| |
| | • | Foreign Investment Risk. An underlying fund’s investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may be heightened in connection with investments in emerging markets. |
| |
| | • | Emerging Market Risk. Emerging markets may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Such countries often have less uniformity in accounting and reporting requirements, unreliable securities valuation and greater risk associated with the custody of securities. In addition, the financial stability of issuers (including governments) in emerging market countries may be more precarious than in other countries. As a result, there will tend to be an increased risk of price volatility associated with an underlying fund’s investments in emerging market countries. |
| |
| | • | Derivatives Risk. An underlying fund’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments and could cause the fund to lose more than the principal amount invested. |
| |
| | • | Leverage Risk. Certain underlying fund transactions, such as derivatives, short sales, reverse repurchase agreements, and mortgage dollar rolls, may give rise to a form of leverage and may expose a fund to greater risk. Leverage tends to magnify the effect of any decrease or increase in the value of an underlying fund’s portfolio securities, which means even a small amount of leverage can have a disproportionately large impact on the fund. |
| |
| | • | Liquidity Risk. A particular investment may be difficult to purchase or sell. An underlying fund may be unable to sell illiquid securities at an advantageous time or price. |
| |
| | • | Portfolio Turnover Risk. Certain of the underlying funds may buy and sell portfolio securities actively. If they do, their portfolio turnover rate and transaction costs will rise, which may lower the underlying fund’s performance and may increase the likelihood of capital gain distributions. |
Direct Investment Risk. The funds may invest a portion of its assets directly in equity and fixed income securities, ETFs, cash equivalents, including money market securities, and futures. A fund’s direct investment in these securities is subject to the same or similar risks as an underlying fund’s investment in the same security.
Please refer to the funds’ prospectus for a more complete description of the principal risks of investing in the funds.
4. Affiliates and Affiliated Transactions:
Charles Schwab Investment Management, Inc. (“CSIM” or the “investment adviser”), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund’s investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (“Advisory Agreement”) between it and the trust.
The Board of Trustees has adopted a Shareholder Servicing Plan (the “Plan”) on behalf of the funds. The Plan enables each fund to bear expenses relating to the provision by service providers, including Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, “Schwab”), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the funds. The funds are not subject to any fee under the Plan.
61
Schwab Target Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
CSIM and Schwab have agreed with the funds to limit (“expense limitation”) the total annual fund operating expenses charged, excluding interest, taxes and certain non-routine expenses of the funds to 0.00% for so long as CSIM serves as the investment adviser to the funds, which may only be amended or terminated with the approval of the funds’ Board of Trustees.
The agreement to limit the funds’ total expenses charged is limited to each fund’s direct operating expenses and, therefore, does not apply to acquired fund fees and expenses, which are indirect expenses incurred by a fund through its investments in the underlying funds.
The funds may engage in certain transactions involving related parties. Pursuant to an exemptive order issued by the SEC, the funds may invest in other related funds. As of October 31, 2010, the percentages of shares of other related funds owned by each Schwab Target fund are:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
|
| | | Target
| | Target
| | Target
| | Target
| | Target
| | Target
| | Target
|
| | | 2010
| | 2015
| | 2020
| | 2025
| | 2030
| | 2035
| | 2040
|
| | Fund | | Fund | | Fund | | Fund | | Fund | | Fund | | Fund |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Equity Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Laudus Growth Investors U.S. Large Cap Growth Fund | | | 0.9% | | | | 0.6% | | | | 4.6% | | | | 1.3% | | | | 6.6% | | | | 1.1% | | | | 6.4% | |
| Laudus International MarketMasters Fund | | | 0.2% | | | | 0.1% | | | | 0.8% | | | | 0.2% | | | | 1.1% | | | | 0.2% | | | | 1.1% | |
| Laudus Mondrian Emerging Markets Fund | | | 0.7% | | | | 0.5% | | | | 3.8% | | | | 1.0% | | | | 5.9% | | | | 1.1% | | | | 6.0% | |
| Laudus Mondrian International Equity Fund | | | 1.8% | | | | 1.1% | | | | 8.9% | | | | 2.5% | | | | 13.3% | | | | 2.3% | | | | 12.9% | |
| Laudus Small-Cap MarketMasters Fund | | | 0.3% | | | | 0.2% | | | | 1.5% | | | | 0.5% | | | | 2.7% | | | | 0.5% | | | | 2.7% | |
| Schwab Core Equity Fund | | | 0.3% | | | | 0.2% | | | | 1.8% | | | | 0.5% | | | | 2.8% | | | | 0.5% | | | | 2.9% | |
| Schwab Dividend Equity Fund | | | 0.1% | | | | 0.1% | | | | 0.6% | | | | 0.2% | | | | 0.9% | | | | 0.2% | | | | 0.9% | |
| Schwab Global Real Estate Fund | | | 0.8% | | | | 0.7% | | | | 5.2% | | | | 1.4% | | | | 7.2% | | | | 1.2% | | | | 7.1% | |
| Schwab Small-Cap Equity Fund | | | 0.9% | | | | 0.7% | | | | 5.2% | | | | 1.7% | | | | 9.4% | | | | 1.6% | | | | 9.1% | |
| Schwab S&P 500 Index Fund | | | 0.1% | | | | —% | * | | | 0.3% | | | | 0.1% | | | | 0.4% | | | | 0.1% | | | | 0.3% | |
Fixed-Income Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Laudus Mondrian International Fixed Income Fund | | | 0.3% | | | | 0.2% | | | | 1.0% | | | | 0.2% | | | | 0.6% | | | | 0.1% | | | | 0.2% | |
| Schwab Inflation Protected Fund | | | 1.1% | | | | 0.5% | | | | 2.7% | | | | 0.6% | | | | 1.6% | | | | 0.2% | | | | 0.6% | |
| Schwab Premier Income Fund | | | 0.8% | | | | 0.3% | | | | 1.0% | | | | 0.2% | | | | 0.6% | | | | 0.1% | | | | 0.5% | |
| Schwab Short-Term Bond Market Fund | | | 3.4% | | | | 1.0% | | | | 2.3% | | | | —% | | | | —% | | | | —% | | | | —% | |
| Schwab Total Bond Market Fund | | | 1.5% | | | | 0.7% | | | | 4.7% | | | | 1.0% | | | | 3.9% | | | | 0.4% | | | | 1.5% | |
Money Funds: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Schwab Value Advantage Money Fund | | | —% | * | | | —% | * | | | —% | * | | | —% | * | | | —% | * | | | —% | * | | | —% | * |
62
Schwab Target Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Below is a summary of the funds’ transactions with their affiliated underlying funds during the period ended October 31, 2010:
Schwab Target 2010 Fund:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Balance
| | | | Realized
| | Distribution
|
| | | of Shares
| | | | | | of Shares
| | Market
| | Gain (Loss)
| | Received*
|
| | | Held at
| | Gross
| | Gross
| | Held at
| | Value at
| | 11/01/09
| | 11/01/09
|
Underlying Funds | | 10/31/09 | | Additions | | Sales | | 10/31/10 | | 10/31/10 | | to 10/31/10 | | to 10/31/10 |
| |
| Laudus Growth Investors U.S. Large Cap Growth Fund | | | 346,021 | | | | 9,474 | | | | (98,354 | ) | | | 257,141 | | | | $3,059,982 | | | | $229,415 | | | | $1,661 | |
| Laudus International MarketMasters Fund, Select Shares | | | 201,173 | | | | 11,630 | | | | (58,586 | ) | | | 154,217 | | | | 2,834,514 | | | | 170,054 | | | | 38,815 | |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares | | | 144,427 | | | | 2,574 | | | | (42,511 | ) | | | 104,490 | | | | 1,007,287 | | | | (44,826 | ) | | | 15,988 | |
| Laudus Mondrian International Equity Fund, Institutional Shares | | | 208,765 | | | | 11,217 | | | | (39,759 | ) | | | 180,223 | | | | 1,405,739 | | | | 69,310 | | | | 26,325 | |
| Laudus Rosenberg International Small Capitalization Fund, Select Shares | | | 103,026 | | | | — | | | | (103,026 | ) | | | — | | | | — | | | | (412,734 | ) | | | 32,598 | |
| Laudus Rosenberg International Discovery Fund, Select Shares | | | — | | | | 41,026 | | | | (41,026 | ) | | | — | | | | — | | | | (19,316 | ) | | | — | |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | | 107,143 | | | | 5,020 | | | | (19,773 | ) | | | 92,390 | | | | 1,075,421 | | | | 51,077 | | | | — | |
| Schwab Core Equity Fund | | | 525,387 | | | | 32,792 | | | | (162,528 | ) | | | 395,651 | | | | 6,243,368 | | | | (36,380 | ) | | | 73,449 | |
| Schwab Dividend Equity Fund | | | 176,909 | | | | 1,773 | | | | (57,871 | ) | | | 120,811 | | | | 1,459,400 | | | | (63,350 | ) | | | 27,687 | |
| Schwab Global Real Estate Fund | | | 270,543 | | | | 9,175 | | | | (61,718 | ) | | | 218,000 | | | | 1,438,798 | | | | (82,884 | ) | | | 118,325 | |
| Schwab S&P 500 Index Fund | | | 396,981 | | | | 18,091 | | | | (126,251 | ) | | | 288,821 | | | | 5,400,956 | | | | 513,542 | | | | 94,102 | |
| Schwab Small-Cap Equity Fund | | | 200,207 | | | | — | | | | (58,697 | ) | | | 141,510 | | | | 1,975,479 | | | | (134,296 | ) | | | — | |
| Laudus Mondrian International Fixed Income Fund | | | 171,549 | | | | — | | | | (13,055 | ) | | | 158,494 | | | | 1,943,142 | | | | 19,452 | | | | 64,266 | |
| Schwab Inflation Protected Fund | | | 220,926 | | | | — | | | | (18,502 | ) | | | 202,424 | | | | 2,265,121 | | | | 1,844 | | | | 43,402 | |
| Schwab Premier Income Fund | | | 299,328 | | | | 123,401 | | | | (38,827 | ) | | | 383,902 | | | | 4,027,134 | | | | 5,220 | | | | 177,555 | |
| Schwab Short-Term Bond Market Fund | | | 824,209 | | | | 188,817 | | | | (76,850 | ) | | | 936,176 | | | | 8,640,907 | | | | (15,273 | ) | | | 147,652 | |
| Schwab Total Bond Market Fund | | | 1,951,399 | | | | 90,135 | | | | (523,218 | ) | | | 1,518,316 | | | | 14,272,170 | | | | (313,920 | ) | | | 538,527 | |
| Schwab Value Advantage Money Fund, Institutional Shares | | | 3,468,431 | | | | — | | | | (3,468,431 | ) | | | — | | | | — | | | | — | | | | 1,929 | |
| Schwab Value Advantage Money Fund, Institutional Prime Shares | | | — | | | | 3,468,431 | | | | — | | | | 3,468,431 | | | | 3,468,431 | | | | — | | | | 2,077 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | | | | | | | | | | | | | | | | $60,517,849 | | | | $(63,065 | ) | | | $1,404,358 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
63
Schwab Target Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab Target 2015 Fund:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Balance
| | | | Realized
| | Distribution
|
| | | of Shares
| | | | | | of Shares
| | Market
| | Gain (Loss)
| | Received*
|
| | | Held at
| | Gross
| | Gross
| | Held at
| | Value at
| | 11/01/09
| | 11/01/09
|
Underlying Funds | | 10/31/09 | | Additions | | Sales | | 10/31/10 | | 10/31/10 | | to 10/31/10 | | to 10/31/10 |
| |
| Laudus Growth Investors U.S. Large Cap Growth Fund | | | 93,806 | | | | 68,664 | | | | — | | | | 162,470 | | | | $1,933,395 | | | | $— | | | | $492 | |
| Laudus International MarketMasters Fund, Select Shares | | | 53,663 | | | | 40,500 | | | | — | | | | 94,163 | | | | 1,730,716 | | | | — | | | | 11,882 | |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares | | | 42,945 | | | | 31,215 | | | | — | | | | 74,160 | | | | 714,902 | | | | — | | | | 5,207 | |
| Laudus Mondrian International Equity Fund, Institutional Shares | | | 54,576 | | | | 56,947 | | | | — | | | | 111,523 | | | | 869,878 | | | | — | | | | 7,537 | |
| Laudus Rosenberg International Discovery Fund, Select Shares | | | 39,879 | | | | 13,529 | | | | (53,408 | ) | | | — | | | | — | | | | 64,399 | | | | 6,849 | |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | | 39,964 | | | | 33,608 | | | | — | | | | 73,572 | | | | 856,382 | | | | — | | | | — | |
| Schwab Core Equity Fund | | | 142,007 | | | | 118,138 | | | | — | | | | 260,145 | | | | 4,105,094 | | | | — | | | | 24,522 | |
| Schwab Dividend Equity Fund | | | 53,194 | | | | 43,622 | | | | (10,504 | ) | | | 86,312 | | | | 1,042,651 | | | | (22,723 | ) | | | 15,968 | |
| Schwab Global Real Estate Fund | | | 96,946 | | | | 89,798 | | | | — | | | | 186,744 | | | | 1,232,511 | | | | — | | | | 64,103 | |
| Schwab S&P 500 Index Fund | | | 103,285 | | | | 87,213 | | | | — | | | | 190,498 | | | | 3,562,305 | | | | — | | | | 27,727 | |
| Schwab Small-Cap Equity Fund | | | 65,403 | | | | 51,375 | | | | — | | | | 116,778 | | | | 1,630,224 | | | | — | | | | — | |
| Laudus Mondrian International Fixed Income Fund | | | 36,468 | | | | 39,996 | | | | — | | | | 76,464 | | | | 937,448 | | | | — | | | | 20,054 | |
| Schwab Inflation Protected Fund | | | 49,754 | | | | 49,819 | | | | — | | | | 99,573 | | | | 1,114,217 | | | | (2 | ) | | | 18,578 | |
| Schwab Premier Income Fund | | | 51,813 | | | | 72,168 | | | | — | | | | 123,981 | | | | 1,300,563 | | | | — | | | | 42,685 | |
| Schwab Short- Term Bond Market Fund | | | 115,136 | | | | 166,824 | | | | — | | | | 281,960 | | | | 2,602,491 | | | | — | | | | 32,375 | |
| Schwab Total Bond Market Fund | | | 394,160 | | | | 418,644 | | | | (130,750 | ) | | | 682,054 | | | | 6,411,310 | | | | 7,984 | | | | 167,984 | |
| Schwab Value Advantage Money Fund, Institutional Shares | | | 291,651 | | | | — | | | | (291,651 | ) | | | — | | | | — | | | | — | | | | 162 | |
| Schwab Value Advantage Money Fund, Institutional Prime Shares | | | — | | | | 791,651 | | | | — | | | | 791,651 | | | | 791,651 | | | | — | | | | 208 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | | | | | | | | | | | | | | | | $30,835,738 | | | | $49,658 | | | | $446,333 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
64
Schwab Target Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab Target 2020 Fund:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Balance
| | | | Realized
| | Distribution
|
| | | of Shares
| | | | | | of Shares
| | Market
| | Gain (Loss)
| | Received*
|
| | | Held at
| | Gross
| | Gross
| | Held at
| | Value at
| | 11/01/09
| | 11/01/09
|
Underlying Funds | | 10/31/09 | | Additions | | Sales | | 10/31/10 | | 10/31/10 | | to 10/31/10 | | to 10/31/10 |
| |
| Laudus Growth Investors U.S. Large Cap Growth Fund | | | 1,268,743 | | | | 74,336 | | | | — | | | | 1,343,079 | | | | $15,982,639 | | | | $— | | | | $6,234 | |
| Laudus International MarketMasters Fund, Select Shares | | | 853,416 | | | | 29,881 | | | | (141,861 | ) | | | 741,436 | | | | 13,627,585 | | | | (123,227 | ) | | | 169,830 | |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares | | | 699,018 | | | | — | | | | (90,091 | ) | | | 608,927 | | | | 5,870,053 | | | | (100,913 | ) | | | 77,381 | |
| Laudus Mondrian International Equity Fund, Institutional Shares | | | 760,687 | | | | 160,044 | | | | (13,587 | ) | | | 907,144 | | | | 7,075,724 | | | | 24,049 | | | | 95,923 | |
| Laudus Rosenberg International Discovery Fund, Select Shares | | | 158,028 | | | | 102,564 | | | | (260,592 | ) | | | — | | | | — | | | | 180,574 | | | | 24,099 | |
| Laudus Rosenberg International Small Capitalization Fund, Select Shares | | | 349,180 | | | | — | | | | (349,180 | ) | | | — | | | | — | | | | (1,233,363 | ) | | | 110,481 | |
| Laudus Small Cap MarketMasters Fund, Select Shares | | | 482,704 | | | | 24,558 | | | | — | | | | 507,262 | | | | 5,904,532 | | | | — | | | | — | |
| Schwab Core Equity Fund | | | 1,886,906 | | | | 210,262 | | | | — | | | | 2,097,168 | | | | 33,093,309 | | | | — | | | | 292,266 | |
| Schwab Dividend Equity Fund | | | 600,251 | | | | 22,741 | | | | (8,453 | ) | | | 614,539 | | | | 7,423,632 | | | | (14,962 | ) | | | 125,354 | |
| Schwab Global Real Estate Fund | | | 1,461,135 | | | | — | | | | (51,724 | ) | | | 1,409,411 | | | | 9,302,110 | | | | (126,207 | ) | | | 684,827 | |
| Schwab S&P 500 Index Fund | | | 1,424,906 | | | | 112,889 | | | | — | | | | 1,537,795 | | | | 28,756,764 | | | | — | | | | 352,421 | |
| Schwab Small-Cap Equity Fund | | | 823,630 | | | | — | | | | (7,752 | ) | | | 815,878 | | | | 11,389,663 | | | | (40,930 | ) | | | — | |
| Laudus Mondrian International Fixed Income Fund | | | 405,231 | | | | 100,679 | | | | — | | | | 505,910 | | | | 6,202,460 | | | | — | | | | 174,396 | |
| Schwab Inflation Protected Fund | | | 474,164 | | | | 70,866 | | | | (27,701 | ) | | | 517,329 | | | | 5,788,910 | | | | 3,316 | | | | 109,461 | |
| Schwab Premier Income Fund | | | 301,972 | | | | 157,484 | | | | (14,578 | ) | | | 444,878 | | | | 4,666,773 | | | | 1,603 | | | | 189,908 | |
| Schwab Short-Term Bond Market Fund | | | 430,997 | | | | 220,494 | | | | (27,515 | ) | | | 623,976 | | | | 5,759,297 | | | | (6,441 | ) | | | 89,934 | |
| Schwab Total Bond Market Fund | | | 4,155,259 | | | | 1,316,604 | | | | (762,243 | ) | | | 4,709,620 | | | | 44,270,424 | | | | (464,147 | ) | | | 1,361,171 | |
| Schwab Value Advantage Money Fund, Institutional Shares | | | 2,687,964 | | | | — | | | | (2,687,964 | ) | | | — | | | | — | | | | — | | | | 1,495 | |
| Schwab Value Advantage Money Fund, Institutional Prime Shares | | | — | | | | 2,687,964 | | | | — | | | | 2,687,964 | | | | 2,687,964 | | | | — | | | | 1,610 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | | | | | | | | | | | | | | | | $207,801,839 | | | | ($1,900,648 | ) | | | $3,866,791 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
65
Schwab Target Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab Target 2025 Fund:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Balance
| | | | Realized
| | Distribution
|
| | | of Shares
| | | | | | of Shares
| | Market
| | Gain (Loss)
| | Received*
|
| | | Held at
| | Gross
| | Gross
| | Held at
| | Value at
| | 11/01/09
| | 11/01/09
|
Underlying Funds | | 10/31/09 | | Additions | | Sales | | 10/31/10 | | 10/31/10 | | to 10/31/10 | | to 10/31/10 |
| |
| Laudus Growth Investors U.S. Large Cap Growth Fund | | | 189,884 | | | | 186,420 | | | | — | | | | 376,304 | | | | $4,478,021 | | | | $— | | | | $973 | |
| Laudus International MarketMasters Fund, Select Shares | | | 111,683 | | | | 108,913 | | | | — | | | | 220,596 | | | | 4,054,547 | | | | — | | | | 24,186 | |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares | | | 93,626 | | | | 77,969 | | | | (5,618 | ) | | | 165,977 | | | | 1,600,020 | | | | (5,095 | ) | | | 11,336 | |
| Laudus Mondrian International Equity Fund, Institutional Shares | | | 115,287 | | | | 140,217 | | | | — | | | | 255,504 | | | | 1,992,934 | | | | — | | | | 15,768 | |
| Laudus Rosenberg International Discovery Fund, Select Shares | | | 88,615 | | | | 35,299 | | | | (123,914 | ) | | | — | | | | — | | | | 162,980 | | | | 14,870 | |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | | 81,309 | | | | 79,782 | | | | — | | | | 161,091 | | | | 1,875,105 | | | | — | | | | — | |
| Schwab Core Equity Fund | | | 287,758 | | | | 320,241 | | | | — | | | | 607,999 | | | | 9,594,229 | | | | — | | | | 48,478 | |
| Schwab Dividend Equity Fund | | | 101,563 | | | | 139,132 | | | | (46,518 | ) | | | 194,177 | | | | 2,345,663 | | | | (66,921 | ) | | | 37,039 | |
| Schwab Global Real Estate Fund | | | 184,001 | | | | 188,728 | | | | — | | | | 372,729 | | | | 2,460,012 | | | | — | | | | 122,870 | |
| Schwab S&P 500 Index Fund | | | 208,139 | | | | 214,709 | | | | (4,094 | ) | | | 418,754 | | | | 7,830,703 | | | | (2,530 | ) | | | 54,816 | |
| Schwab Small-Cap Equity Fund | | | 139,789 | | | | 133,140 | | | | — | | | | 272,929 | | | | 3,810,089 | | | | — | | | | — | |
| Laudus Mondrian International Fixed Income Fund | | | 45,910 | | | | 55,002 | | | | — | | | | 100,912 | | | | 1,237,176 | | | | — | | | | 26,055 | |
| Schwab Inflation Protected Fund | | | 52,086 | | | | 57,969 | | | | — | | | | 110,055 | | | | 1,231,521 | | | | — | | | | 21,438 | |
| Schwab Premier Income Fund | | | — | | | | 88,407 | | | | — | | | | 88,407 | | | | 927,392 | | | | — | | | | 25,600 | |
| Schwab Total Bond Market Fund | | | 487,276 | | | | 619,367 | | | | (92,446 | ) | | | 1,014,197 | | | | 9,533,453 | | | | (3,897 | ) | | | 231,986 | |
| Schwab Value Advantage Money Fund, Institutional Shares | | | 98,128 | | | | — | | | | (98,128 | ) | | | — | | | | — | | | | — | | | | 55 | |
| Schwab Value Advantage Money Fund, Institutional Prime Shares | | | — | | | | 598,128 | | | | — | | | | 598,128 | | | | 598,128 | | | | — | | | | 92 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | | | | | | | | | | | | | | | | $53,568,993 | | | | $84,537 | | | | $635,562 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
66
Schwab Target Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab Target 2030 Fund:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Balance
| | | | Realized
| | Distribution
|
| | | of Shares
| | | | | | of Shares
| | Market
| | Gain (Loss)
| | Received*
|
| | | Held at
| | Gross
| | Gross
| | Held at
| | Value at
| | 11/01/09
| | 11/01/09
|
Underlying Funds | | 10/31/09 | | Additions | | Sales | | 10/31/10 | | 10/31/10 | | to 10/31/10 | | to 10/31/10 |
| |
| Laudus Growth Investors U.S. Large Cap Growth Fund | | | 1,571,885 | | | | 339,465 | | | | — | | | | 1,911,350 | | | | $22,745,067 | | | | $— | | | | $7,545 | |
| Laudus International MarketMasters Fund, Select Shares | | | 900,944 | | | | 250,596 | | | | (38,996 | ) | | | 1,112,544 | | | | 20,448,562 | | | | (41,739 | ) | | | 184,941 | |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares | | | 746,218 | | | | 218,876 | | | | (20,161 | ) | | | 944,933 | | | | 9,109,154 | | | | (6,265 | ) | | | 84,915 | |
| Laudus Mondrian International Equity Fund, Institutional Shares | | | 941,822 | | | | 415,343 | | | | — | | | | 1,357,165 | | | | 10,585,886 | | | | — | | | | 121,257 | |
| Laudus Rosenberg International Discovery Fund, Select Shares | | | 312,128 | | | | 109,399 | | | | (421,527 | ) | | | — | | | | — | | | | 598,027 | | | | 56,818 | |
| Laudus Rosenberg International Small Capitalization Fund, Select Shares | | | 288,700 | | | | 22,629 | | | | (311,329 | ) | | | — | | | | — | | | | (1,098,399 | ) | | | 91,345 | |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | | 829,617 | | | | 104,794 | | | | — | | | | 934,411 | | | | 10,876,538 | | | | — | | | | — | |
| Schwab Core Equity Fund | | | 2,335,175 | | | | 835,360 | | | | — | | | | 3,170,535 | | | | 50,031,049 | | | | — | | | | 370,966 | |
| Schwab Dividend Equity Fund | | | 756,552 | | | | 280,308 | | | | — | | | | 1,036,860 | | | | 12,525,265 | | | | — | | | | 187,281 | |
| Schwab Global Real Estate Fund | | | 1,609,602 | | | | 339,534 | | | | — | | | | 1,949,136 | | | | 12,864,297 | | | | — | | | | 837,752 | |
| Schwab S&P 500 Index Fund | | | 1,713,949 | | | | 363,882 | | | | (81,699 | ) | | | 1,996,131 | | | | 37,327,658 | | | | (21,049 | ) | | | 429,097 | |
| Schwab Small-Cap Equity Fund | | | 1,310,455 | | | | 157,074 | | | | — | | | | 1,467,529 | | | | 20,486,705 | | | | — | | | | — | |
| Laudus Mondrian International Fixed Income Fund | | | 211,907 | | | | 66,062 | | | | — | | | | 277,969 | | | | 3,407,895 | | | | — | | | | 91,738 | |
| Schwab Inflation Protected Fund | | | 239,361 | | | | 67,129 | | | | — | | | | 306,490 | | | | 3,429,623 | | | | — | | | | 63,608 | |
| Schwab Premier Income Fund | | | — | | | | 271,020 | | | | — | | | | 271,020 | | | | 2,842,996 | | | | — | | | | 88,905 | |
| Schwab Total Bond Market Fund | | | 2,716,062 | | | | 1,474,420 | | | | (299,997 | ) | | | 3,890,485 | | | | 36,570,562 | | | | (158,421 | ) | | | 1,011,810 | |
| Schwab Value Advantage Money Fund, Institutional Shares | | | 2,558,910 | | | | — | | | | (2,558,910 | ) | | | — | | | | — | | | | — | | | | 1,423 | |
| Schwab Value Advantage Money Fund, Institutional Prime Shares | | | — | | | | 3,558,910 | | | | — | | | | 3,558,910 | | | | 3,558,910 | | | | — | | | | 1,601 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | | | | | | | | | | | | | | | | $256,810,167 | | | | ($727,846 | ) | | | $3,631,002 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
67
Schwab Target Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab Target 2035 Fund:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Balance
| | | | Realized
| | Distribution
|
| | | of Shares
| | | | | | of Shares
| | Market
| | Gain (Loss)
| | Received*
|
| | | Held at
| | Gross
| | Gross
| | Held at
| | Value at
| | 11/01/09
| | 11/01/09
|
Underlying Funds | | 10/31/09 | | Additions | | Sales | | 10/31/10 | | 10/31/10 | | to 10/31/10 | | to 10/31/10 |
| |
| Laudus Growth Investors U.S. Large Cap Growth Fund | | | 183,919 | | | | 145,528 | | | | — | | | | 329,447 | | | | $3,920,422 | | | | $— | | | | $949 | |
| Laudus International MarketMasters Fund, Select Shares | | | 108,808 | | | | 91,863 | | | | — | | | | 200,671 | | | | 3,688,337 | | | | — | | | | 23,855 | |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares | | | 90,654 | | | | 79,846 | | | | — | | | | 170,500 | | | | 1,643,621 | | | | — | | | | 11,130 | |
| Laudus Mondrian International Equity Fund, Institutional Shares | | | 112,230 | | | | 125,045 | | | | — | | | | 237,275 | | | | 1,850,748 | | | | — | | | | 15,861 | |
| Laudus Rosenberg International Discovery Fund, Select Shares | | | 86,363 | | | | 38,406 | | | | (124,769 | ) | | | — | | | | — | | | | 165,468 | | | | 14,689 | |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | | 92,278 | | | | 73,569 | | | | — | | | | 165,847 | | | | 1,930,464 | | | | — | | | | — | |
| Schwab Core Equity Fund | | | 272,719 | | | | 313,182 | | | | — | | | | 585,901 | | | | 9,245,518 | | | | — | | | | 47,608 | |
| Schwab Dividend Equity Fund | | | 97,428 | | | | 96,732 | | | | (12,605 | ) | | | 181,555 | | | | 2,193,189 | | | | (26,550 | ) | | | 30,730 | |
| Schwab Global Real Estate Fund | | | 178,902 | | | | 157,658 | | | | — | | | | 336,560 | | | | 2,221,295 | | | | — | | | | 116,527 | |
| Schwab S&P 500 Index Fund | | | 202,672 | | | | 140,447 | | | | (21,786 | ) | | | 321,333 | | | | 6,008,933 | | | | (6,255 | ) | | | 53,554 | |
| Schwab Small-Cap Equity Fund | | | 145,838 | | | | 109,919 | | | | — | | | | 255,757 | | | | 3,570,369 | | | | — | | | | — | |
| Laudus Mondrian International Fixed Income Fund | | | 14,330 | | | | 16,092 | | | | — | | | | 30,422 | | | | 372,972 | | | | — | | | | 7,981 | |
| Schwab Inflation Protected Fund | | | 17,699 | | | | 15,512 | | | | — | | | | 33,211 | | | | 371,626 | | | | — | | | | 6,311 | |
| Schwab Premier Income Fund | | | — | | | | 41,431 | | | | — | | | | 41,431 | | | | 434,612 | | | | — | | | | 11,890 | |
| Schwab Total Bond Market Fund | | | 212,404 | | | | 224,600 | | | | (5,331 | ) | | | 431,673 | | | | 4,057,726 | | | | 213 | | | | 96,760 | |
| Schwab Value Advantage Money Fund, Institutional Shares | | | 246,451 | | | | — | | | | (246,451 | ) | | | — | | | | — | | | | — | | | | 37 | |
| Schwab Value Advantage Money Fund, Institutional Prime Shares | | | — | | | | 546,451 | | | | — | | | | 546,451 | | | | 546,451 | | | | — | | | | 62 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | | | | | | | | | | | | | | | | $42,056,283 | | | | $132,876 | | | | $437,944 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
68
Schwab Target Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
Schwab Target 2040 Fund:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Balance
| | | | Realized
| | Distribution
|
| | | of Shares
| | | | | | of Shares
| | Market
| | Gain (Loss)
| | Received*
|
| | | Held at
| | Gross
| | Gross
| | Held at
| | Value at
| | 11/01/09
| | 11/01/09
|
Underlying Funds | | 10/31/09 | | Additions | | Sales | | 10/31/10 | | 10/31/10 | | to 10/31/10 | | to 10/31/10 |
| |
| Laudus Growth Investors U.S. Large Cap Growth Fund | | | 1,418,425 | | | | 440,650 | | | | — | | | | 1,859,075 | | | | $22,122,996 | | | | $— | | | | $6,831 | |
| Laudus International MarketMasters Fund, Select Shares | | | 823,699 | | | | 295,492 | | | | (21,866 | ) | | | 1,097,325 | | | | 20,168,827 | | | | (2,346 | ) | | | 169,238 | |
| Laudus Mondrian Emerging Markets Fund, Institutional Shares | | | 703,893 | | | | 249,146 | | | | — | | | | 953,039 | | | | 9,187,299 | | | | — | | | | 81,762 | |
| Laudus Mondrian International Equity Fund, Institutional Shares | | | 884,891 | | | | 429,798 | | | | — | | | | 1,314,689 | | | | 10,254,571 | | | | — | | | | 114,805 | |
| Laudus Rosenberg International Discovery Fund, Select Shares | | | 366,462 | | | | 148,454 | | | | (514,916 | ) | | | — | | | | — | | | | 583,756 | | | | 63,427 | |
| Laudus Rosenberg International Small Capitalization Fund, Select Shares | | | 229,358 | | | | — | | | | (229,358 | ) | | | — | | | | — | | | | (816,270 | ) | | | 72,569 | |
| Laudus Small-Cap MarketMasters Fund, Select Shares | | | 712,298 | | | | 211,650 | | | | — | | | | 923,948 | | | | 10,754,760 | | | | — | | | | — | |
| Schwab Core Equity Fund | | | 2,164,533 | | | | 1,108,124 | | | | — | | | | 3,272,657 | | | | 51,642,520 | | | | — | | | | 347,377 | |
| Schwab Dividend Equity Fund | | | 704,722 | | | | 284,094 | | | | — | | | | 988,816 | | | | 11,944,901 | | | | — | | | | 180,499 | |
| Schwab Global Real Estate Fund | | | 1,427,866 | | | | 506,284 | | | | — | | | | 1,934,150 | | | | 12,765,388 | | | | — | | | | 793,936 | |
| Schwab S&P 500 Index Fund | | | 1,495,528 | | | | 386,847 | | | | (136,166 | ) | | | 1,746,209 | | | | 32,654,107 | | | | (12,887 | ) | | | 374,450 | |
| Schwab Small-Cap Equity Fund | | | 1,131,601 | | | | 301,924 | | | | — | | | | 1,433,525 | | | | 20,012,003 | | | | — | | | | — | |
| Laudus Mondrian International Fixed Income Fund | | | 68,032 | | | | 32,363 | | | | — | | | | 100,395 | | | | 1,230,843 | | | | — | | | | 30,726 | |
| Schwab Inflation Protected Fund | | | 78,287 | | | | 26,473 | | | | — | | | | 104,760 | | | | 1,172,264 | | | | — | | | | 21,433 | |
| Schwab Premier Income Fund | | | — | | | | 217,552 | | | | — | | | | 217,552 | | | | 2,282,117 | | | | — | | | | 68,995 | |
| Schwab Total Bond Market Fund | | | 951,841 | | | | 487,395 | | | | — | | | | 1,439,236 | | | | 13,528,823 | | | | — | | | | 361,766 | |
| Schwab Value Advantage Money Fund, Institutional Shares | | | 1,990,619 | | | | — | | | | (1,990,619 | ) | | | — | | | | — | | | | — | | | | 1,007 | |
| Schwab Value Advantage Money Fund, Institutional Prime Shares | | | — | | | | 2,790,619 | | | | — | | | | 2,790,619 | | | | 2,790,619 | | | | — | | | | 1,140 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | | | | | | | | | | | | | | | | | $222,512,038 | | | | $(247,747 | ) | | | $2,689,961 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| * | | Distribution received include distributions from net investment income and capital gains from the underlying funds. |
Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions within the Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. The funds had no interfund borrowing or lending activity during the period.
5. Board of Trustees:
Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their services as trustees, but it did pay non-interested persons (independent trustees), as noted in each fund’s Statement of Operations.
69
Schwab Target Funds
Financial Notes (continued)
6. Borrowing from Banks:
The funds may borrow money from banks and custodians. The funds have custodian overdraft facilities, a committed line of credit of $150 million with State Street Bank and Trust Company, an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The funds pay interest on the amounts they borrow at rates that are negotiated periodically. The funds also pay an annual fee to State Street Bank and Trust Company for the committed line of credit.
There were no borrowings from the lines of credit during the period. However, the funds utilized their overdraft facility and incurred interest expense, which is included in other expenses in the Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.
7. Purchases and Sales/Maturities of Investment Securities:
For the period ended October 31, 2010, purchases and sales/maturities of securities (excluding short-term obligations) were as follows:
| | | | | | | | | |
| | Purchases of Securities | | Sales/Maturities of Securities |
| |
| Schwab Target 2010 Fund | | | $17,106,311 | | | | $25,641,977 | |
| Schwab Target 2015 Fund | | | 20,331,709 | | | | 3,471,080 | |
| Schwab Target 2020 Fund | | | 53,896,910 | | | | 36,460,916 | |
| Schwab Target 2025 Fund | | | 36,428,958 | | | | 5,676,500 | |
| Schwab Target 2030 Fund | | | 98,103,486 | | | | 35,378,757 | |
| Schwab Target 2035 Fund | | | 26,182,335 | | | | 4,789,568 | |
| Schwab Target 2040 Fund | | | 96,594,723 | | | | 30,675,013 | |
8. Redemption Fee:
The funds charge a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior periods are:
| | | | | | | | | |
| | | Current Period
| | Prior Period
|
| | (11/01/09-10/31/10) | | (11/01/08-10/31/09) |
| |
| Schwab Target 2010 Fund | | | $3,791 | | | | $11,064 | |
| Schwab Target 2015 Fund | | | 5,608 | | | | 3,789 | |
| Schwab Target 2020 Fund | | | 12,080 | | | | 8,656 | |
| Schwab Target 2025 Fund | | | 5,393 | | | | 3,394 | |
| Schwab Target 2030 Fund | | | 13,164 | | | | 14,044 | |
| Schwab Target 2035 Fund | | | 8,338 | | | | 3,619 | |
| Schwab Target 2040 Fund | | | 15,078 | | | | 20,739 | |
70
Schwab Target Funds
Financial Notes (continued)
9. Federal Income Taxes:
As of October 31, 2010, the components of distributable earnings on a tax-basis were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
|
| | | Target
| | Target
| | Target
| | Target
| | Target
| | Target
| | Target
|
| | | 2010
| | 2015
| | 2020
| | 2025
| | 2030
| | 2035
| | 2040
|
| | Fund | | Fund | | Fund | | Fund | | Fund | | Fund | | Fund |
| |
| Undistributed Ordinary income | | | $1,042,596 | | | | $356,086 | | | | $2,396,825 | | | | $446,900 | | | | $1,989,272 | | | | $238,919 | | | | $1,235,246 | |
| Undistributed long-term capital gains | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Unrealized appreciation | | | 6,885,068 | | | | 3,665,724 | | | | 26,590,514 | | | | 7,113,266 | | | | 35,177,068 | | | | 6,228,841 | | | | 31,154,562 | |
| Unrealized depreciation | | | (336,974 | ) | | | — | | | | (1,802,511 | ) | | | — | | | | (1,099,962 | ) | | | — | | | | (144,097 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net unrealized appreciation/(depreciation) | | | $6,548,094 | | | | $3,665,724 | | | | $24,788,003 | | | | $7,113,266 | | | | $34,077,106 | | | | $6,228,841 | | | | $31,010,465 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The primary difference between book-basis and tax-basis unrealized appreciation or unrealized depreciation of investments is the tax deferral of losses on wash sales.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2010, the following funds had capital loss carryforwards available to offset net capital gains before the expiration dates:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
|
| | | Target
| | Target
| | Target
| | Target
| | Target
| | Target
| | Target
|
| | | 2010
| | 2015
| | 2020
| | 2025
| | 2030
| | 2035
| | 2040
|
Expiration Date | | Fund | | Fund | | Fund | | Fund | | Fund | | Fund | | Fund |
| |
| October 31, 2016 | | | $7,957,744 | | | | $— | | | | $10,682,406 | | | | $— | | | | $6,715,916 | | | | $— | | | | $6,366,179 | |
| October 31, 2017 | | | 13,259,379 | | | | 725,948 | | | | 26,262,598 | | | | 732,177 | | | | 21,027,180 | | | | 504,547 | | | | 15,004,416 | |
| October 31, 2018 | | | — | | | | — | | | | 1,839,068 | | | | — | | | | 890,126 | | | | — | | | | 475,341 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | $21,217,123 | | | | $725,948 | | | | $38,784,072 | | | | $732,177 | | | | $28,633,222 | | | | $504,547 | | | | $21,845,936 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As of October 31, 2010, the funds had capital losses utilized as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
|
| | | Target
| | Target
| | Target
| | Target
| | Target
| | Target
| | Target
|
| | | 2010
| | 2015
| | 2020
| | 2025
| | 2030
| | 2035
| | 2040
|
| | Fund | | Fund | | Fund | | Fund | | Fund | | Fund | | Fund |
| |
| Capital losses utilized | | | $9,875 | | | | $17,111 | | | | $— | | | | $13,205 | | | | $— | | | | $47,394 | | | | $— | |
The tax-basis components of distributions paid during the current and prior periods were:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
|
| | | Target
| | Target
| | Target
| | Target
| | Target
| | Target
| | Target
|
| | | 2010
| | 2015
| | 2020
| | 2025
| | 2030
| | 2035
| | 2040
|
| | Fund | | Fund | | Fund | | Fund | | Fund | | Fund | | Fund |
| |
Current period distributions | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Ordinary income | | | $1,828,001 | | | | $331,163 | | | | $4,326,919 | | | | $477,680 | | | | $3,748,936 | | | | $384,144 | | | | $2,835,524 | |
| Long-term capital gains | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Return of capital | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Prior period distributions | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Ordinary income | | | $2,874,831 | | | | $126,142 | | | | $5,224,288 | | | | $176,067 | | | | $3,827,014 | | | | $142,738 | | | | $2,541,003 | |
| Long-term capital gains | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Return of capital | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as non-U.S. currency gains and losses, short-term capital gains and losses; capital
71
Schwab Target Funds
Financial Notes (continued)
9. Federal Income Taxes (continued):
losses related to wash sales, unrealized appreciation of certain investments in non-U.S. securities; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the funds for financial reporting purposes. The funds may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.
The permanent book and tax basis differences may result in reclassifications between capital account and other accounts as required. The adjustments will have no impact on net assets or the results of operations. As of October 31, 2010, the funds made the following reclassifications:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
|
| | | Target
| | Target
| | Target
| | Target
| | Target
| | Target
| | Target
|
| | | 2010
| | 2015
| | 2020
| | 2025
| | 2030
| | 2035
| | 2040
|
| | Fund | | Fund | | Fund | | Fund | | Fund | | Fund | | Fund |
| |
| Capital Shares | | | $— | | | | ($110 | ) | | | $— | | | | ($188 | ) | | | $— | | | | ($294 | ) | | | ($138 | ) |
| Undistributed net investment income | | | 29,455 | | | | 6,634 | | | | 52,066 | | | | 5,932 | | | | 27,364 | | | | 2,306 | | | | 11,222 | |
| Net realized capital gains and losses | | | (29,455 | ) | | | (6,524 | ) | | | (52,066 | ) | | | (5,744 | ) | | | (27,364 | ) | | | (2,012 | ) | | | (11,084 | ) |
As of October 31, 2010, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and state purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year ended October 31, 2010, the funds did not incur any interest or penalties.
10. Subsequent Events:
Management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
72
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of:
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
In our opinion, the accompanying statements of assets and liabilities, including the portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schwab Target 2010 Fund, Schwab Target 2015 Fund, Schwab Target 2020 Fund, Schwab Target 2025 Fund, Schwab Target 2030 Fund, Schwab Target 2035 Fund, and Schwab Target 2040 Fund (seven of the portfolios constituting Schwab Capital Trust, hereafter referred to as the “Funds”) at October 31, 2010, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities and investments in the underlying funds at October 31, 2010 by correspondence with the custodian and transfer agent of the underlying funds, respectively, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 15, 2010
73
Other Federal Tax Information (unaudited):
For corporate shareholders, the following percentage of the funds dividend distributions paid during the fiscal year ended October 31, 2010, qualify for the corporate dividends received deduction:
| | | | | |
| | Percentage |
| |
| Schwab Target 2010 Fund | | | 27.40 | |
| Schwab Target 2015 Fund | | | 27.95 | |
| Schwab Target 2020 Fund | | | 31.04 | |
| Schwab Target 2025 Fund | | | 33.36 | |
| Schwab Target 2030 Fund | | | 36.54 | |
| Schwab Target 2035 Fund | | | 37.75 | |
| Schwab Target 2040 Fund | | | 40.95 | |
For the fiscal year ended October 31, 2010, the funds designate the following amounts of the dividend distributions as qualified dividends for the purpose of the maximum rate under section 1(h)(ii) of the Internal Revenue Code. Shareholders will be notified in January 2011 via IRS form 1099 of the amounts for use in preparing their 2010 income tax return.
| | | | | |
| Schwab Target 2010 Fund | | | $762,047 | |
| Schwab Target 2015 Fund | | | 131,798 | |
| Schwab Target 2020 Fund | | | 2,106,954 | |
| Schwab Target 2025 Fund | | | 228,130 | |
| Schwab Target 2030 Fund | | | 2,375,062 | |
| Schwab Target 2035 Fund | | | 219,529 | |
| Schwab Target 2040 Fund | | | 1,824,062 | |
74
Investment Advisory Agreement Approval
The Investment Company Act of 1940 (the “1940 Act”) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the “Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the investment advisory agreement.
The Board of Trustees (the “Board” or the “Trustees”, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement between Schwab Capital Trust (the “Trust”) and Charles Schwab Investment Management, Inc. (“CSIM”) (the “Agreement”) with respect to the existing funds in the Trust, including Schwab Target 2010 Fund, Schwab Target 2015 Fund, Schwab Target 2020 Fund, Schwab Target 2025 Fund, Schwab Target 2030 Fund, Schwab Target 2035 Fund, and Schwab Target 2040 Fund (the “Funds”), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM.
The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreement with respect to the Funds at meetings held on April 28, 2010, and June 3, 2010, and approved the renewal of the Agreement with respect to the Funds for an additional one year term at the meeting held on June 3, 2010. The Board’s approval of the Agreement with respect to the Funds was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
| |
| 1. | the nature, extent and quality of the services provided to the Funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the Funds; |
| |
| 2. | each Fund’s investment performance and how it compared to that of certain other comparable mutual funds; |
| |
| 3. | each Fund’s expenses and how those expenses compared to those of certain other comparable mutual funds; |
| |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (“Schwab”), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
| |
| 5. | the extent to which economies of scale would be realized as the Funds grow and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The Trustees also considered investments in CSIM’s mutual fund infrastructure, Schwab’s wide range of products, services, and channel alternatives such as free advice, investment and research tools, Internet access, and an array of account features that benefit the Funds and their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that the vast majority of the Funds’ shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds supported renewal of the Agreement with respect to the Funds.
Fund Performance. The Board considered Fund performance in determining whether to renew the Agreement with respect to the Funds. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and appropriate indices/benchmarks, in light of total return, yield, if applicable, and market trends. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the third party who prepared the peer category analysis. In evaluating the performance of each Fund, the Trustees
75
considered both risk and shareholder risk expectations for such Fund and the appropriateness of the benchmark used to compare the performance of each Fund. The Trustees further considered the level of Fund performance in the context of its review of Fund expenses and adviser profitability discussed below. Following such evaluation the Board concluded, within the context of its full deliberations, that the performance of the Funds supported renewal of the Agreement with respect to the Funds.
Fund Expenses. With respect to the Funds’ expenses, the Trustees considered the rate of compensation called for by the Agreement, and each Fund’s net operating expense ratio, in each case, in comparison to those of a peer group of mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total Fund expenses from exceeding a specified cap. The Trustees also considered CSIM’s contractual commitment to keep each Fund’s expense cap for so long as CSIM serves as the adviser to such Fund. The Trustees also considered fees charged by CSIM to other mutual funds and exchange-traded funds. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the Funds are reasonable and supported renewal of the Agreement with respect to the Funds.
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered any other benefits derived by CSIM from its relationship with the Funds, such as whether, by virtue of its management of the Funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability under the Agreement and other service agreements were reasonable and justified in light of the quality of all services rendered to each Fund by CSIM and its affiliates. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement with respect to the Funds.
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to a Fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of Fund expenses, the Trustees considered that CSIM and Schwab have committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. Based on this evaluation the Board concluded, within the context of its full deliberations, that the Funds obtain reasonable benefit from economies of scale.
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, approved the continuation of the Agreement with respect to the Funds and concluded that the compensation under the Agreement with respect to the Funds is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
76
Trustees and Officers
The tables below give information about the trustees and officers for Schwab Capital Trust which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 84 funds.
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.
Independent Trustees
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served1) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Mariann Byerwalter
1960
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Chairman of JDN Corporate Advisory LLC. | | 73 | | Director, Redwood Trust, Inc. (1998 – present)
Director, PMI Group Inc. (2001 – 2009)
Director, Excelsior Funds (2006 – 2007) |
| |
|
John F. Cogan
1947
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | Senior Fellow: The Hoover Institution at Stanford University (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University (Sept. 1994 – present). | | 73 | | Director, Gilead Sciences, Inc. (2005 – present)
Director, Monaco Coach Corporation (2005 – 2009) |
| |
|
William A. Hasler
1941
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Dean Emeritus, Haas School of Business, University of California, Berkeley (July 1998 – present). | | 73 | | Director, Ditech Networks Corporation (1997 – present)
Director, TOUSA (1998 – present)
Director, Mission West Properties (1998 – present)
Director, Globalstar, Inc. (2009 – present)
Director, Harris-Stratex Networks (2001 – present)
Director, Aphton Corp. (1991 – 2007)
Director, Solectron Corporation (1998 – 2007)
Director, Genitope Corporation (2000 – 2009)
Director, Excelsior Funds (2006 – 2007) |
| |
|
Gerald B. Smith
1950
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (1990 – present). | | 73 | | Lead Independent Director, Board of Cooper Industries (2002 – present)
Director and Chairman of the Audit Committee, Oneok Partners LP (2003 – present)
Director, Oneok, Inc (2009 – present) |
| |
|
Donald R. Stephens
1938
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Managing Partner, D.R. Stephens & Company (investments) (1973 – present). | | 73 | | None |
| |
|
77
Independent Trustees (continued)
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served1) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Joseph H. Wender
1944
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | Senior Consultant, Goldman Sachs & Co., Inc. (Jan. 2008- present); Partner, Colgin Partners, LLC (vineyards) (February 1998 – present); Senior Director, Chairman of the Finance Committee, GSC Group (July 2005 – Dec. 2007); General Partner, Goldman Sachs & Co., Inc. (Oct. 1982 – June 2005). | | 73 | | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present) |
| |
|
Michael W. Wilsey
1943
Trustee
(Trustee of Schwab Capital Trust since 1993.) | | Chairman and Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments). | | 73 | | None |
| |
|
Interested Trustees
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served ) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Charles R. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of Schwab Capital Trust since 1993.) | | Chairman and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc. | | 73 | | None |
| |
|
Walter W. Bettinger II2
1960
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. | | 84 | | None |
| |
|
78
Officers of the Trust
| | | |
Name, Year of Birth, and Position(s)
| | |
with the trust; (Terms of office, and
| | |
| length of Time Served3) | | Principal Occupations During the Past Five Years |
| |
Marie Chandoha
1961
President and Chief Executive Officer
(Officer of Schwab Capital Trust since 2010.) | | Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 – present); Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer, (Sept. 2010 – present), Charles Schwab Investment Management, Inc.; President and Chief Executive Officer, Schwab Funds, Laudus Funds and Schwab ETFs (Dec. 2010 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010); Co-Head and Senior Portfolio Manager, Wells Capital Management (June 1999 – March 2007). |
| |
|
George Pereira
1964
Treasurer and Principal Financial Officer
(Officer of Schwab Capital Trust since 2004.) | | Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc. (November 2004 – present); Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present); Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds (June 2006 – June 2007). |
| |
|
Koji E. Felton
1961
Secretary and Chief Legal Officer
(Officer of Schwab Capital Trust since 1998.) | | Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc. (July 2000 – present); Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. (June 1998 – present); Vice President and Assistant Clerk, Laudus Funds (Jan. 2010 – present); Chief Legal Officer and Secretary, Schwab Funds (Nov. 1998 – present) and Schwab ETFs (Oct. 2009 – present); Chief Legal Officer and Secretary, Excelsior Funds (June 2006 – June 2007). |
| |
|
Catherine MacGregor
1964
Vice President
(Officer of Schwab Capital Trust since 2005.) | | Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk, Laudus Funds (March 2007 – present); Vice President and Assistant Clerk, Schwab Funds (Dec. 2005 – present) and Schwab ETFs (Oct. 2009 – present). |
| |
|
Michael Haydel
1972
Vice President
(Officer of Schwab Capital Trust since 2006.) | | Vice President, Asset Management Client Services, Charles Schwab & Co., Inc. (2004 – present); Vice President (Sept. 2005 – present), Anti-Money Laundering Officer (Oct. 2005 – Feb. 2009), Laudus Funds; Vice President, Schwab Funds (June 2007 – present) and Schwab ETFs (Oct. 2009 – present). |
| |
|
| | |
| 1 | | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds® retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first, provided that any trustee who serves on both Schwab Funds and Laudus Funds retires from both boards when first required to retire by either board. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010. |
| 2 | | Mr. Schwab and Mr. Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation. |
| 3 | | The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board. |
79
Glossary
asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.
asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.
beta A historical measure of an investment’s volatility relative to a market index (usually the S&P 500®). The index is defined as having a beta of 1.00. Investments with a beta higher than 1.00 have been more volatile than the index; those with a beta of less than 1.00 have been less volatile.
bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”
An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.
bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.
cap, capitalization See “market cap.”
capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the gain or loss is still “on paper” and is considered unrealized.
earnings growth rate For a mutual fund, the average yearly rate at which the earnings of the companies in the fund’s portfolio have grown, measured over the past five years.
earnings per share (EPS) A company’s earnings, or net income, for the past 12 months, divided by the number of shares outstanding.
expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.
gross domestic product (GDP) The output of goods and services produced by labor and property located in the United States.
market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.
median market cap The midpoint of the range of market caps of the stocks held by a fund. There are different ways of calculating median market cap. With a simple median, half of the stocks in the fund’s portfolio would be larger than the median, and half would be smaller. With a weighted median (the type that is calculated for these funds), half of the fund’s assets are invested in stocks that are larger than the median market cap, and half in stocks that are smaller.
net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.
price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.
return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.
stock A share of ownership, or equity, in the issuing company.
total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.
weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.
yield The income paid out by an investment, expressed as a percentage of the investment’s market value.
80
PRIVACY NOTICE
THIS IS NOT PART OF THE SHAREHOLDER REPORT
A Commitment to Your Privacy
Your Privacy Is Not for Sale
We do not and will not sell your personal information to anyone, for any reason.
We are committed to protecting the privacy of information we maintain about you. Below are details about our commitment, including the types of information we collect and how we use and share that information. This Privacy Notice applies to you only if you are an individual who invests directly in the funds by placing orders through the funds’ transfer agent. If you place orders through your brokerage account at Charles Schwab & Co., Inc. or an account with another broker-dealer, investment advisor, 401(k) plan, employee benefit plan, administrator, bank or other financial intermediary, you are covered by the privacy policies of that financial institution and should consult those policies.
How We Collect Information About You
We collect personal information about you in a number of ways.
| |
| • | APPLICATION AND REGISTRATION INFORMATION. |
We collect personal information from you when you open an account or utilize one of our services. We may also collect information about you from third parties such as consumer reporting agencies to verify your identity. The information we collect may include personal information, including your Social Security number, as well as details about your interests, investments and investment experience.
| |
| • | TRANSACTION AND EXPERIENCE INFORMATION. |
Once your account has been opened, we collect and maintain personal information about your account activity, including your transactions, balances, positions and history. This information allows us to administer your account and provide the services you have requested.
When you visit our websites, we may use devices known as “cookies,” graphic interchange format files (GIFs), or other similar web tools to enhance your web experience. These tools help us to recognize you, maintain your web session, and provide a more personalized experience. To learn more, please click the Privacy link on our website.
How We Share and Use Your Information
We provide access to information about you to our affiliated companies, outside companies and other third parties in certain limited circumstances, including:
| |
| • | to help us process transactions for your account; |
| |
| • | when we use other companies to provide services for us, such as printing and mailing your account statements; |
| |
| • | when we believe that disclosure is required or permitted under law (for example, to cooperate with regulators or law enforcement, resolve consumer disputes, perform credit/authentication checks, or for risk control). |
State Laws
We will comply with state laws that apply to the disclosure or use of information about you.
Safeguarding Your Information — Security Is a Partnership
We take precautions to ensure the information we collect about you is protected and is accessed only by authorized individuals or organizations.
Companies we use to provide support services are not allowed to use information about our shareholders for their own purposes and are contractually obligated to maintain strict confidentiality. We limit their use of information to the performance of the specific services we have requested.
We restrict access to personal information by our employees and agents. Our employees are trained about privacy and are required to safeguard personal information.
We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
Contact Us
To provide us with updated information, report suspected fraud or identity theft, or for any other questions, please call one of the numbers below.
Schwab Funds® direct investors: 1-800-407-0256
© 2010 Schwab Funds. All rights reserved.
Schwab Funds® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.
Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.
Proxy Voting Policies, Procedures and Results
A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting Schwab’s website at www.schwabfunds.com/prospectus, the SEC’s website at http://www.sec.gov, or by contacting Schwab Funds at 1-800-435-4000.
Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting Schwab’s website at www.schwabfunds.com/prospectus or the SEC’s website at http://www.sec.gov.
The Schwab Funds Family®
Stock Funds
Schwab Premier Equity Fund®
Schwab Core Equity Fundtm
Schwab Dividend Equity Fundtm
Schwab Large-Cap Growth Fundtm
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Schwab Financial Services Fundtm
Schwab Health Care Fundtm
Schwab® International Core Equity Fund
Schwab Fundamental US Large* Company Index Fund
Schwab Fundamental US Small-Mid* Company Index Fund
Schwab Fundamental International* Large Company Index Fund
Schwab Fundamental International* Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets* Index Fund
Schwab Global Real Estate Fundtm
Schwab S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market Index Fund®
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fundtm
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Schwab MarketTrack Growth Portfoliotm
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Schwab Target 2010 Fund
Schwab Target 2015 Fund
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Schwab® Monthly Income Fund – Enhanced Payout
Schwab® Monthly Income Fund – Maximum Payout
Bond Funds
Schwab YieldPlus Fund®
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Schwab California Tax-Free YieldPlus Fundtm
Schwab California Tax-Free Bond Fundtm
Schwab Money Funds
Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity1. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments®.
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| * | | SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL AND FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC. |
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| 1 | | Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money. |
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds®
P.O. Box 3812, Englewood, CO 80155–3812
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
© 2010 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
MFR33732-05
Annual report dated October 31, 2010 enclosed.
COMMAND PERFORMANCETM
Laudus MarketMasters Fundstm
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| | | |
Annual Report
October 31, 2010 | |  |
COMMAND PERFORMANCETM
Laudus MarketMasters Fundstm
Laudus Small-Cap MarketMasters Fundtm
Laudus International MarketMasters Fundtm
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Two distinct Funds, each combining the expertise of leading
investment managers with Schwab’s overall supervision.
In This Report
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Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor: Charles Schwab & Co., Inc. (Schwab).
The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS) which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. (MSCI) and Standard & Poor’s (S&P). GICS is a service mark of MSCI and S&P and has been licensed for use by Charles Schwab & Co., Inc. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.
Performance at a Glance
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.laudusfunds.com/prospectus.
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| Total Return for the Report Period | |
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| Laudus Small-Cap MarketMasters Fundtm | | | | |
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| Investor Shares (Ticker Symbol: SWOSX) | | | 22.55% | |
Select Shares® (Ticker Symbol: SWMSX) | | | 22.66% | |
| Russell 2000® Index | | | 26.58% | |
| Fund Category: Morningstar Small-Cap Growth | | | 26.63% | |
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| Performance Details | | | pages 6-7 | |
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| Laudus International MarketMasters Fundtm | | | | |
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Investor Shares (Ticker Symbol: SWOIX)1 | | | 23.47% | |
Select Shares® (Ticker Symbol: SWMIX)1 | | | 23.68% | |
| MSCI EAFE® Index (Gross)* | | | 8.82% | |
| Fund Category: Morningstar Foreign Large-Cap Growth | | | 17.30% | |
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| Performance Details | | | pages 8-9 | |
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| Minimum Initial Investment2 | | | | |
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| Investor Shares | | | $ 100 | |
Select Shares® | | | $ 50,000 | |
|
All fund and index figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the funds’ returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Small-company stocks are subject to greater volatility than other asset categories. Foreign securities can involve risks such as political and economic instability and currency risk. These risks may be greater in emerging markets.
Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date.
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| * | The Morgan Stanley Capital International Europe, Australasia, Far East Index (Gross) (MSCI EAFE Index®) is a free float-adjusted market capitalization index that is designed to measure market equity performance in 22 developed market countries, excluding the U.S. and Canada. Investors cannot invest directly in any index and index figures do not include trading and management costs. |
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| 1 | The fund’s performance relative to the index may be affected by fair-value pricing, see financial note 2 for more information. |
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| 2 | Please see prospectus for further details and eligibility requirements. |
2 Laudus MarketMasters Funds
From the President
Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report.
Dear Shareholder,
During the year that ended October 31, 2010, many investors wrestled with news that was mostly negative—the recovery of the U.S. economy remained tepid, unemployment stayed stubbornly high, and the housing market remained weak. In spite of these events, nearly all stock and bond markets produced positive returns, both in the United States and abroad.
The bellwether S&P 500 Index gained 16.52% during the year, small-cap stocks measured by the Russell 2000 Index achieved 26.58%, and international stocks as indicated by the MSCI EAFE Index rewarded investors with a return of 8.82%. Growth stocks generally fared better than value stocks in large-, mid-, and small-cap sectors.
For the year ended October 31, 2010, the Laudus MarketMasters Funds generated strong absolute returns. Relative to its benchmark, the Laudus Small-Cap MarketMasters Fund underperformed, due in part to poor stock selection in the energy and financial sectors of the market. The Laudus International MarketMasters Fund outperformed its benchmark, due to robust security selection, sector allocation decisions, and an overweight to emerging markets.
The funds follow a multi-manager strategy, combining the skills and expertise of leading investment managers with the ongoing oversight of Charles Schwab Investment Management, Inc. Please read the fund managers’ discussion and analysis on the following pages to learn more about each fund’s investment approach.
At Schwab, we encourage investors to review their investment strategy periodically in the context of their tolerance for risk, timeline, and established investment plan.
If you have any questions about the Laudus MarketMasters Funds or any other Schwab Funds, please call us at 1-800-435-4000. Please also see www.schwabfunds.com for details on each fund including performance results, investment strategy, and prospectus.
Thank you for investing with us.
Sincerely,
Laudus MarketMasters Funds 3
The Investment Environment
The past 12 months produced significant positive returns in nearly all major equity and fixed income markets, despite various economic indicators falling short of expectations here in the United States and abroad. Domestic equity markets fared better than international, and growth stocks outperformed value stocks in large-, mid-, and small-cap categories. In the credit markets, inflation-protected bonds were the best performers and U.S. Treasuries had the poorest returns, though they also had solid performance for the 12 months under review.
The return for the S&P 500 Index, which is usually seen as a bellwether for U.S. financial markets, was positive at 16.52%. The international stock markets also had solid overall returns, and the MSCI EAFE Index (Gross) returned 8.82%. In fixed-income, the Barclays Capital U.S. Aggregate Bond Index returned 8.01%, while the Barclays Capital U.S. TIPS Index returned 10.42%, and the Barclays Capital U.S. Treasury Index returned 7.20% for the reporting period.
In a press release dated November 3, 2010, the Federal Reserve (the Fed) described information it had received since its meeting in September 2010, and noted that the pace of recovery in output and employment remained slow. Moreover, persistent high unemployment, coupled with depressed housing prices and a rise in foreclosures, continued to work against the U.S. economic recovery process. In the U.S. fixed income markets, accommodative Fed policy in the form of a near-zero federal funds rate remained intact, and several recent statements from the Fed affirmed that rates will remain low for an extended period of time. Also in November’s press release, the Fed stated that it intended to purchase up to $600 billion of longer-term U.S. Treasuries by the end of the second quarter in 2011.
At the international level, financial markets fluctuated during the reporting period. Ongoing concerns regarding the debt obligations of Greece, Spain, Ireland, and other European countries continued to capture the attention of central banks and resulted in the progressive downgrading of debt in those countries. The news caused temporary turmoil in the U.S. and global financial markets in early May 2010. While there has been some rebounding to pre-May levels in the markets, central banks remain attentive to debt ratios, monetary exchange rates, interest rates, and inflation measurements.
During the reporting period, two economic events caused volatility in the equity and fixed income markets. First, was the Deepwater Horizon oil spill in the Gulf of Mexico on April 20, 2010. The costs—in terms of environmental impact and loss of oil—affected energy-related stocks, which declined on the news. For the reporting period, the Energy Sector was the weakest performing sector in the S&P 500 Index. Second, investor confidence in the United States and abroad was further shaken on May 6, 2010, when the Dow Jones Industrial Average dropped 999 points, within a 30-minute timeframe, before partially regaining some of the decline. The equity market event was subsequently named the “flash crash.” As a result of the flash crash, more than 16,000 trades were cancelled by the major U.S. stock exchanges.
On a more general note in the United States, real Gross Domestic Product (GDP) growth remained lower than hoped for during the reporting period, with the Bureau of Economic Analysis estimating that GDP grew at a rate of 2.0% for the third quarter of 2010. Likewise, the national unemployment rate—as reported by the Bureau of Labor Statistics—was an ongoing concern and hovered just below 10% throughout the 12-month period. Finally, high delinquencies, foreclosures, and stalled foreclosures weighed heavily on the housing sector. The discovery that some institutions had improper or incomplete paperwork on original loan documents brought at least a temporary halt to some foreclosures.
Asset Class Performance Comparison % returns during the report period
This graph compares the performance of various asset classes during the report period. Final performance figures for the period are in the key below.
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 | | 16.52% | | S&P 500® Index: measures U.S. large-cap stocks |
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| | 26.58% | | Russell 2000® Index: measures U.S. small-cap stocks |
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| | 8.82% | | MSCI EAFE® Index (Gross): measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East |
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| | 8.01% | | Barclays Capital U.S. Aggregate Bond Index: measures the U.S. bond market |
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| | 0.11% | | Three-Month U.S. Treasury Bills (T-bills): measures short-term U.S. Treasury obligations |
These figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and you cannot invest in them directly. Remember that past performance is not an indication of future results.
Data source: Charles Schwab & Co., Inc.
Nothing in this report represents a recommendation of a security by the investment adviser.
Manager views and portfolio holdings may have changed since the report date.
4 Laudus MarketMasters Funds
Fund Management
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| | | |
 | | Caroline Lee, a managing director and portfolio manager of the investment adviser, manages the funds. Prior to joining the firm in November 2005, she worked in asset management for over 4 years overseeing subadvisor relationships in the pension group of a major corporation. She has also had 3 years of previous experience in investment management at another financial services firm. |
Laudus MarketMasters Funds 5
Laudus Small-Cap MarketMasters Fund™
The Laudus MarketMasters Funds use a multi-manager strategy. Charles Schwab Investment Management, Inc. (CSIM), the funds’ investment adviser, uses rigorous criteria to select investment managers with proven long-term track records to manage a portion of each fund’s assets. In addition to selecting the investment managers and allocating assets among them, CSIM is responsible for monitoring and coordinating the overall management of the funds. Each sub-adviser manages their respective portfolio to a comparative index that reflects their individual process and philosophy. The sub-adviser indices may differ from the comparative index of the overall fund.
The Laudus Small-Cap MarketMasters Fund Investor Shares (the fund) returned 22.55% for the 12-month period, while its comparative index, the Russell 2000 Index (the index), returned 26.58%. The fund seeks long-term capital appreciation.
Poor stock selection in Energy and Financials was the primary source of negative performance relative to the index. Positions in EnergySolutions, Inc. and TeleCommunications Systems, Inc. detracted the most. This was partially offset by positive stock selection in Information Technology. In terms of weighting, an underweight to Financials and Industrials helped the performance of the fund relative to the index, as did an overweight to Information Technology. However, the overweight to Energy detracted.
In looking at absolute performance, all sectors of the index produced positive returns during the reporting period. Materials, Information Technology, and Consumer Discretionary sectors were the largest sources of return, with each one up more than 30%. Health Care and Telecommunications were up by approximately 19% each.
The fund had solid returns for the reporting period, though it did underperform the index. The fund’s underperformance was attributed to the underperformance of three sub-advisers: TCW returned 21.01% and underperformed the Russell Midcap Value Index, which returned 27.49%. Neuberger Berman returned 21.90%, underperforming the Russell 2000 Growth Index, which returned 28.67%. Tocqueville and TAMRO are both benchmarked against the Russell 2000 Index, which returned 26.58%, but Tocqueville underperformed and returned 18.10%, while TAMRO outperformed, returning 34.05%.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 248 |
| Weighted Average Market Cap ($ x 1,000,000) | | $2,525 |
| Price/Earnings Ratio (P/E) | | 42.5 |
| Price/Book Ratio (P/B) | | 2.0 |
| Portfolio Turnover Rate | | 78% |
Sector Weightings % of Investments
| | | |
| Information Technology | | 18.7% |
| Financials | | 16.1% |
| Industrials | | 13.7% |
| Consumer Discretionary | | 13.4% |
| Health Care | | 12.6% |
| Energy | | 6.6% |
| Materials | | 6.2% |
| Consumer Staples | | 3.2% |
| Utilities | | 1.7% |
| Telecommunication Services | | 0.8% |
| Other | | 7.0% |
Total | | 100.0% |
Top Equity Holdings % of Net Assets1
| | | |
| Bill Barrett Corp. | | 1.4% |
| Ultratech, Inc. | | 1.1% |
| Air Methods Corp. | | 1.0% |
| Brush Engineered Materials, Inc. | | 1.0% |
| NETGEAR, Inc. | | 1.0% |
| RightNow Technologies, Inc. | | 0.9% |
| The Advisory Board Co. | | 0.9% |
| Minerals Technologies, Inc. | | 0.8% |
| The Corporate Executive Board Co. | | 0.8% |
| athenahealth, Inc. | | 0.8% |
Total | | 9.7% |
Manager views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
Small-company stocks are subject to greater volatility than other asset categories.
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| 1 | | This list is not a recommendation of any security by the investment adviser. |
6 Laudus MarketMasters Funds
Laudus Small-Cap MarketMasters Fundtm
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.laudusfunds.com/prospectus.
October 31, 2000 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment in Investor Shares1
June 9, 2004 – October 31, 2010
Performance of a Hypothetical
$50,000 Investment in Select Shares1
Average Annual Total Returns1,2
| | | | | | | | | | | | | | | | | | | | | |
| Fund Class and Inception Date | | 1 Year | | 5 Years | | 10 Years | | Since Inception |
| |
| Investor Shares (9/16/97) | | | 22.55 | % | | | | 2.49 | % | | | | 3.38 | % | | | | 4.72 | % | |
| Select Shares (6/9/04) | | | 22.66 | % | | | | 2.66 | % | | | | n/a | | | | | 3.71 | % | |
Russell 2000® Index | | | 26.58 | % | | | | 3.07 | % | | | | 4.89 | % | | | | (9/16/97) 4.97% | | |
| | | | | | | | | | | | | | | | | | | (6/9/04) 4.47% | | |
| Fund Category: Morningstar Small-Cap Growth | | | 26.63 | % | | | | 3.05 | % | | | | 1.72 | % | | | | (9/16/97) 4.89% | | |
| | | | | | | | | | | | | | | | | | | (6/9/04) 4.15% | | |
Fund Expense Ratios3: Investor Shares: Net 1.46% ; Gross 1.50% / Select Shares: Net 1.31%; Gross 1.45%
Style Assessment4
Investment Managers and Allocations
| | | | | | | |
| | | | | % of
|
| Investment Manager | | Investment Style | | Net Assets |
| |
| |
| TAMRO Capital Partners, LLC | | Small—Cap Blend | | | 31.7% | |
|
| TCW Investment Management Company | | Small/Mid—Cap Value | | | 26.0% | |
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| Tocqueville Asset Management L.P. | | Small—Cap Blend/Value | | | 25.6% | |
|
| Neuberger Berman Management LLC | | Small—Cap Growth | | | 12.6% | |
|
| Cash and other assets | | — | | | 4.1% | |
|
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
Because the fund originally used a multi-fund strategy, performance of the Investor Shares prior to June 3, 2002 does not reflect the current strategy and may have been different if it did.
| | |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 4 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
Laudus MarketMasters Funds 7
Laudus International MarketMasters Fund™
The Laudus MarketMasters Funds use a multi-manager strategy. Charles Schwab Investment Management, Inc. (CSIM), the funds’ investment adviser, uses rigorous criteria to select investment managers with proven long-term track records to manage a portion of each fund’s assets. In addition to selecting the investment managers and allocating assets among them, CSIM is responsible for monitoring and coordinating the overall management of the funds. Each sub-adviser manages their respective portfolio to a comparative index that reflects their individual process and philosophy. The sub-adviser indices may differ from the comparative index of the overall fund. The fund seeks long-term capital appreciation.
The Laudus International MarketMasters Fund Investor Shares (the fund) returned 23.47% for the 12-month period, while its comparative index, the MSCI EAFE (Gross) Index (the index), returned 8.82%. The fund’s significant outperformance was attributed to sector allocation and security selection. Security selection was positive in nine out of ten sectors, with the strongest performers coming from Industrials, Consumer Discretionary, and Materials. Each of these three sectors was up over 17% for the period. Stock selection was negative in Utilities. The underweight to Financials and Utilities helped relative performance, as did the overweight to Industrials and Consumer Discretionary. The underweight to Telecommunications and Consumer Staples detracted.
The fund’s 13% exposure to emerging markets, which is not represented in the fund’s comparative index, contributed to outperformance. Specifically, stock selection in Brazil, China, and South Africa helped fund performance. In developed countries, stock selection in the United Kingdom, Canada, and Germany also had a positive effect. Detracting, was the fund’s 4% weight in companies that were tax-domiciled within the United States, but derived revenues from international markets.
All five sub-advisers outperformed their respective benchmarks. American Century returned 26.45%, and the MSCI AC World ex U.S. Small/Mid Growth (Gross) Index returned 21.25%. Harris returned 19.53%, outperforming the MSCI World ex U.S. (Gross) Index, which returned 10.10%. Mondrian returned 33.18%, while the MSCI World ex U.S. Small (Gross) Index returned 17.60%. Wentworth, Hauser, and Violich returned 18.94%, outperforming the MSCI EAFE (Gross) Index, which returned 8.82%, and William Blair returned 25.54%, while the MSCI AC World IMI Growth (Gross) Index returned 16.88%.
During the period, the fund’s allocations to certain sub-advised portfolios were adjusted. The changes were based on market trends, outlook for a given market capitalization, investment style, and the sub-advisers’ performance under different market conditions. Specifically, the fund reduced its allocation to the Harris portfolio the international large-cap value and increased its allocation to the American Century portfolio in international small-/mid-cap growth.
As of 10/31/10:
Country Weightings % of Investments
| | | | | |
| United Kingdom | | | 18.1% | |
| Japan | | | 11.0% | |
| Switzerland | | | 8.3% | |
| Canada | | | 7.1% | |
| Germany | | | 7.1% | |
| France | | | 6.9% | |
| United States | | | 4.9% | |
| Australia | | | 4.1% | |
| Netherlands | | | 3.4% | |
| Singapore | | | 3.0% | |
| Brazil | | | 2.6% | |
| China | | | 2.5% | |
| Other | | | 21.0% | |
Total | | | 100.0% | |
Statistics
| | | |
| Number of Holdings | | 608 |
| Weighted Average Market Cap ($ x 1,000,000) | | $29,616 |
| Price/Earnings Ratio (P/E) | | 37.9 |
| Price/Book Ratio (P/B) | | 2.1 |
| Portfolio Turnover Rate | | 83% |
Sector Weightings % of Investments
| | | |
| Industrials | | 23.3% |
| Consumer Discretionary | | 15.4% |
| Materials | | 13.3% |
| Financials | | 12.3% |
| Information Technology | | 8.6% |
| Energy | | 8.3% |
| Consumer Staples | | 6.5% |
| Health Care | | 4.9% |
| Telecommunication Services | | 1.6% |
| Utilities | | 0.7% |
| Other | | 5.1% |
Total | | 100.0% |
Top Equity Holdings % of Net Assets1
| | | |
| The Weir Group plc | | 1.3% |
| Potash Corp. of Saskatchewan, Inc. | | 1.0% |
| BHP Billiton Ltd. ADR | | 0.9% |
| Rotork plc | | 0.9% |
| Symrise AG | | 0.9% |
| Croda International plc | | 0.9% |
| Vale S.A. ADR | | 0.8% |
| BNP Paribas | | 0.8% |
| Nestle S.A. - Reg’d ADR | | 0.8% |
| Rio Tinto plc ADR | | 0.8% |
Total | | 9.1% |
The fund’s performance relative to the index may be affected by fair-value pricing, see financial note 2 for more information.
Manager views and portfolio holdings may have changed since the report date.
Source of Sector Classification: S&P and MSCI.
Foreign securities can involve risks such as political and economic instability and currency risk. These risks may be greater in emerging markets.
8 Laudus MarketMasters Funds
Laudus International MarketMasters Fundtm
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.laudusfunds.com/prospectus.
October 31, 2000 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment in Investor Shares1
April 2, 2004 – October 31, 2010
Performance of a Hypothetical
$50,000 Investment in Select Shares1
Average Annual Total Returns1,2
| | | | | | | | | | | | | | | | | | | | | |
| Fund Class and Inception Date | | 1 Year | | 5 Years | | 10 Years | | Since Inception |
| |
| Investor Shares (10/16/96) | | | 23.47 | % | | | | 6.95 | % | | | | 6.10 | % | | | | 9.29 | % | |
| Select Shares (4/2/04) | | | 23.68 | % | | | | 7.11 | % | | | | n/a | | | | | 8.80 | % | |
MSCI EAFE Index® (Gross)* | | | 8.82 | % | | | | 3.79 | % | | | | 3.61 | % | | | | (10/16/96) 4.89% | | |
| | | | | | | | | | | | | | | | | | | (4/2/04) 5.93% | | |
| Fund Category: Morningstar Foreign Large-Cap Growth | | | 17.30 | % | | | | 5.19 | % | | | | 3.24 | % | | | | (10/16/96) 6.04% | | |
| | | | | | | | | | | | | | | | | | | (4/2/04) 6.52% | | |
Fund Expense Ratios3: Investor Shares: 1.63% / Select Shares: Net 1.48%; Gross 1.58%
Style Assessment4
Investment Managers and Allocations
| | | | | | | |
| | | | | % of
|
| Investment Manager | | Investment Style | | Net Assets |
| |
| |
| American Century Global Investment Management, Inc. | | International
Small/Mid—Cap Growth | | | 21.2% | |
|
| Wentworth, Hauser and Violich, Inc./Hirayama Investments, LLC | | International
Large—Cap Growth | | | 11.5% | |
|
| Harris Associates L.P. | | International
Large—Cap Value | | | 17.3% | |
|
| William Blair & Company, LLC | | International
Multi—Cap Growth | | | 21.3% | |
|
| Mondrian Investment Partners Limited | | International
Small—Cap Value | | | 25.4% | |
|
| Cash and other assets | | — | | | 3.3% | |
|
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
Because the fund originally used a multi-fund strategy, performance of the Investor Shares prior to June 3, 2002 does not reflect the current strategy and may have been different if it did.
| | |
| * | | The Morgan Stanley Capital International Europe, Australasia, Far East Index (Gross) (MSCI EAFE Index®) is a free float-adjusted market capitalization index that is designed to measure market equity performance in 22 developed market countries, excluding the U.S. and Canada. Investors cannot invest directly in any index and index figures do not include trading and management costs. |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 4 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
Laudus MarketMasters Funds 9
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you incur two types of costs: transaction costs, such as redemption fees, and ongoing costs, such as management fees, transfer agent and shareholder services fees, and other fund expenses.
The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning May 1, 2010 and held through October 31, 2010.
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period.”
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s or share class’ actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.
| | | | | | | | | | | | | | | | | |
| | | | | | | Ending
| | |
| | | | | Beginning
| | Account Value
| | Expenses Paid
|
| | | Expense Ratio1
| | Account Value
| | (Net of Expenses)
| | During Period2
|
| | | (Annualized) | | at 5/1/10 | | at 10/31/10 | | 5/1/10–10/31/10 |
| |
| Laudus Small-Cap MarketMasters Fundtm | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | | | | | | | | | | | | |
| Actual Return | | | 1.46% | | | $ | 1,000 | | | $ | 993.10 | | | $ | 7.33 | |
| Hypothetical 5% Return | | | 1.46% | | | $ | 1,000 | | | $ | 1,017.85 | | | $ | 7.43 | |
| Select Shares | | | | | | | | | | | | | | | | |
| Actual Return | | | 1.31% | | | $ | 1,000 | | | $ | 993.20 | | | $ | 6.58 | |
| Hypothetical 5% Return | | | 1.31% | | | $ | 1,000 | | | $ | 1,018.60 | | | $ | 6.67 | |
| |
|
| Laudus International MarketMasters Fundtm | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | | | | | | | | | | | | |
| Actual Return | | | 1.60% | | | $ | 1,000 | | | $ | 1,092.20 | | | $ | 8.44 | |
| Hypothetical 5% Return | | | 1.60% | | | $ | 1,000 | | | $ | 1,017.14 | | | $ | 8.13 | |
| Select Shares | | | | | | | | | | | | | | | | |
| Actual Return | | | 1.48% | | | $ | 1,000 | | | $ | 1,092.70 | | | $ | 7.81 | |
| Hypothetical 5% Return | | | 1.48% | | | $ | 1,000 | | | $ | 1,017.74 | | | $ | 7.53 | |
| | |
| 1 | | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights, which covers a 12-month period. |
| 2 | | Expenses for each fund or share class are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 184 days of the period, and divided by the 365 days of the fiscal year. |
10 Laudus MarketMasters Funds
Laudus Small-Cap MarketMasters Fund™
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| Investor Shares | | 10/31/10 | | 10/31/09 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 9.40 | | | | 8.78 | | | | 13.74 | | | | 14.20 | | | | 13.38 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | (0.08 | )1 | | | (0.05 | )1 | | | (0.04 | )1 | | | (0.08 | )1 | | | (0.13 | ) | | |
| Net realized and unrealized gains (losses) | | | 2.20 | | | | 0.67 | | | | (4.59 | ) | | | 1.81 | | | | 2.08 | | | |
| | | |
| Total from investment operations | | | 2.12 | | | | 0.62 | | | | (4.63 | ) | | | 1.73 | | | | 1.95 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | — | | | | (0.00 | )2 | | | — | | | | — | | | | — | | | |
| Distributions from net realized gains | | | — | | | | — | | | | (0.33 | ) | | | (2.19 | ) | | | (1.13 | ) | | |
| | | |
| Total distributions | | | — | | | | (0.00 | )2 | | | (0.33 | ) | | | (2.19 | ) | | | (1.13 | ) | | |
| | | |
| Net asset value at end of period | | | 11.52 | | | | 9.40 | | | | 8.78 | | | | 13.74 | | | | 14.20 | | | |
| | | |
| Total return (%) | | | 22.55 | | | | 7.10 | | | | (34.34 | ) | | | 13.79 | | | | 15.33 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 1.46 | | | | 1.48 | 3 | | | 1.48 | | | | 1.51 | 4 | | | 1.48 | 4 | | |
| Gross operating expenses | | | 1.50 | | | | 1.50 | | | | 1.48 | | | | 1.59 | | | | 1.63 | | | |
| Net investment income (loss) | | | (0.72 | ) | | | (0.64 | ) | | | (0.38 | ) | | | (0.60 | ) | | | (0.82 | ) | | |
| Portfolio turnover rate | | | 78 | | | | 129 | | | | 134 | | | | 83 | | | | 105 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 68 | | | | 64 | | | | 64 | | | | 99 | | | | 95 | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| Select Shares | | 10/31/10 | | 10/31/09 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 9.49 | | | | 8.86 | | | | 13.85 | | | | 14.27 | | | | 13.41 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | (0.06 | )1 | | | (0.04 | )1 | | | (0.04 | )1 | | | (0.04 | )1 | | | (0.02 | ) | | |
| Net realized and unrealized gains (losses) | | | 2.21 | | | | 0.68 | | | | (4.62 | ) | | | 1.81 | | | | 2.01 | | | |
| | | |
| Total from investment operations | | | 2.15 | | | | 0.64 | | | | (4.66 | ) | | | 1.77 | | | | 1.99 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | — | | | | (0.01 | ) | | | — | | | | — | | | | — | | | |
| Distributions from net realized gains | | | — | | | | — | | | | (0.33 | ) | | | (2.19 | ) | | | (1.13 | ) | | |
| | | |
| Total distributions | | | — | | | | (0.01 | ) | | | (0.33 | ) | | | (2.19 | ) | | | (1.13 | ) | | |
| | | |
| Net asset value at end of period | | | 11.64 | | | | 9.49 | | | | 8.86 | | | | 13.85 | | | | 14.27 | | | |
| | | |
| Total return (%) | | | 22.66 | | | | 7.29 | | | | (34.28 | ) | | | 14.04 | | | | 15.61 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 1.32 | 5 | | | 1.33 | 3 | | | 1.37 | | | | 1.36 | 6 | | | 1.16 | 6 | | |
| Gross operating expenses | | | 1.45 | | | | 1.45 | | | | 1.44 | | | | 1.66 | | | | 1.55 | | | |
| Net investment income (loss) | | | (0.58 | ) | | | (0.48 | ) | | | (0.31 | ) | | | (0.29 | ) | | | (0.43 | ) | | |
| Portfolio turnover rate | | | 78 | | | | 129 | | | | 134 | | | | 83 | | | | 105 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 337 | | | | 292 | | | | 260 | | | | 437 | | | | 7 | | | |
1 Calculated based on the average shares outstanding during the period.
2 Per share amount was less than $0.01.
3 Effective February 28, 2009, the operating expense limitation was lowered. The ratio presented for period ended 10/31/09 is a blended rate.
4 The ratio of net operating expenses would have been 1.55% and 1.55% for the periods ended 10/31/06 and 10/31/07, respectively, if custody credits had not been incurred.
5 The ratio of net operating expenses would have been 1.31% if certain non-routine expense had not been incurred.
6 The ratio of net operating expenses would have been 1.36% and 1.37% for the periods ended 10/31/06 and 10/31/07, respectively, if custody credits had not been incurred.
See financial notes 11
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 91 | .0% | | Common Stock | | | 303,168,155 | | | | 368,167,461 | |
| | 0 | .7% | | Foreign Common Stock | | | 3,450,078 | | | | 3,148,933 | |
| | 6 | .5% | | Other Investment Company | | | 26,247,351 | | | | 26,247,351 | |
| | 0 | .4% | | Short-Term Investment | | | 1,543,140 | | | | 1,543,140 | |
| |
| |
| | 98 | .6% | | Total Investments | | | 334,408,724 | | | | 399,106,885 | |
| | 1 | .4% | | Other Assets and Liabilities, Net | | | | | | | 5,564,037 | |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 404,670,922 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 91.0% of net assets |
| |
Automobiles & Components 0.3%
|
Winnebago Industries, Inc. * | | | 127,648 | | | | 1,276,480 | |
| |
Banks 6.3%
|
| Bank of the Ozarks, Inc. | | | 66,934 | | | | 2,544,161 | |
| Comerica, Inc. | | | 49,300 | | | | 1,763,954 | |
| East West Bancorp, Inc. | | | 148,654 | | | | 2,620,770 | |
First Horizon National Corp. * | | | 111,208 | | | | 1,122,089 | |
| Fulton Financial Corp. | | | 175,895 | | | | 1,642,859 | |
| Glacier Bancorp, Inc. | | | 170,424 | | | | 2,215,512 | |
| IBERIABANK Corp. | | | 37,200 | | | | 1,936,260 | |
| KeyCorp | | | 220,200 | | | | 1,803,438 | |
| MB Financial, Inc. | | | 58,100 | | | | 865,109 | |
| New York Community Bancorp, Inc. | | | 82,846 | | | | 1,402,583 | |
Pinnacle Financial Partners, Inc. * | | | 77,500 | | | | 884,275 | |
| Synovus Financial Corp. | | | 852,840 | | | | 1,842,135 | |
| TCF Financial Corp. | | | 119,200 | | | | 1,568,672 | |
| Umpqua Holdings Corp. | | | 214,900 | | | | 2,363,900 | |
| Wilmington Trust Corp. | | | 115,055 | | | | 818,041 | |
| | | | | | | | | |
| | | | | | | | 25,393,758 | |
| |
Capital Goods 8.9%
|
| Actuant Corp., Class A | | | 27,700 | | | | 622,419 | |
BE Aerospace, Inc. * | | | 33,700 | | | | 1,238,812 | |
Ceradyne, Inc. * | | | 87,100 | | | | 2,073,851 | |
Chicago Bridge & Iron Co., N.V., NY Shares * | | | 51,356 | | | | 1,294,685 | |
Colfax Corp. * | | | 103,359 | | | | 1,660,979 | |
DigitalGlobe, Inc. * | | | 17,200 | | | | 561,580 | |
| Dover Corp. | | | 32,400 | | | | 1,720,440 | |
| ESCO Technologies, Inc. | | | 59,242 | | | | 2,030,816 | |
| Franklin Electric Co., Inc. | | | 45,336 | | | | 1,637,083 | |
Global Defense Technology & Systems, Inc. * | | | 46,400 | | | | 635,680 | |
| HEICO Corp. | | | 36,125 | | | | 1,798,302 | |
Hexcel Corp. * | | | 123,200 | | | | 2,189,264 | |
Jacobs Engineering Group, Inc. * | | | 31,607 | | | | 1,220,346 | |
| Joy Global, Inc. | | | 31,500 | | | | 2,234,925 | |
| Kennametal, Inc. | | | 51,600 | | | | 1,761,624 | |
| MSC Industrial Direct Co., Inc., Class A | | | 10,700 | | | | 609,258 | |
| Nordson Corp. | | | 8,400 | | | | 655,368 | |
Polypore International, Inc. * | | | 20,700 | | | | 688,689 | |
| Rockwell Collins, Inc. | | | 27,000 | | | | 1,633,770 | |
| SPX Corp. | | | 31,760 | | | | 2,129,826 | |
Terex Corp. * | | | 97,027 | | | | 2,178,256 | |
WABCO Holdings, Inc. * | | | 53,500 | | | | 2,483,470 | |
| Wabtec Corp. | | | 50,068 | | | | 2,345,185 | |
| Watsco, Inc. | | | 9,200 | | | | 514,924 | |
| | | | | | | | | |
| | | | | | | | 35,919,552 | |
| |
Commercial & Professional Supplies 3.4%
|
| Administaff, Inc. | | | 77,200 | | | | 2,023,412 | |
Clean Harbors, Inc. * | | | 41,500 | | | | 2,925,750 | |
| EnergySolutions, Inc. | | | 487,800 | | | | 2,287,782 | |
The Advisory Board Co. * | | | 73,978 | | | | 3,462,910 | |
| The Corporate Executive Board Co. | | | 105,272 | | | | 3,288,698 | |
| | | | | | | | | |
| | | | | | | | 13,988,552 | |
| |
Consumer Durables & Apparel 2.9%
|
Deckers Outdoor Corp. * | | | 8,800 | | | | 511,280 | |
| Fortune Brands, Inc. | | | 26,600 | | | | 1,437,730 | |
Harman International Industries, Inc. * | | | 90,720 | | | | 3,043,656 | |
| Jarden Corp. | | | 46,800 | | | | 1,500,408 | |
| Lennar Corp., Class A | | | 75,900 | | | | 1,101,309 | |
Liz Claiborne, Inc. * | | | 229,042 | | | | 1,401,737 | |
Maidenform Brands, Inc. * | | | 18,300 | | | | 489,708 | |
Steven Madden Ltd. * | | | 12,250 | | | | 518,175 | |
The Warnaco Group, Inc. * | | | 12,700 | | | | 674,497 | |
Toll Brothers, Inc. * | | | 55,100 | | | | 988,494 | |
Vera Bradley, Inc. * | | | 6,500 | | | | 177,775 | |
| | | | | | | | | |
| | | | | | | | 11,844,769 | |
| |
Consumer Services 3.5%
|
7 Days Group Holdings Ltd. ADR * | | | 29,300 | | | | 588,051 | |
BJ’s Restaurants, Inc. * | | | 93,462 | | | | 3,098,265 | |
Gaylord Entertainment Co. (a)* | | | 24,100 | | | | 803,494 | |
Grand Canyon Education, Inc. * | | | 111,327 | | | | 2,094,061 | |
Home Inns & Hotels Management, Inc. ADR * | | | 10,500 | | | | 537,180 | |
| International Speedway Corp., Class A | | | 59,112 | | | | 1,350,118 | |
| Marriott International, Inc., Class A | | | 29,243 | | | | 1,083,453 | |
Orient-Express Hotels Ltd., Class A * | | | 123,600 | | | | 1,564,776 | |
Steiner Leisure Ltd. * | | | 14,400 | | | | 558,288 | |
Texas Roadhouse, Inc. * | | | 153,996 | | | | 2,365,379 | |
| | | | | | | | | |
| | | | | | | | 14,043,065 | |
12 See financial notes
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Diversified Financials 2.4%
|
| GAMCO Investors, Inc., Class A | | | 46,950 | | | | 2,011,338 | |
Green Dot Corp., Class A * | | | 10,800 | | | | 548,640 | |
HFF, Inc., Class A * | | | 48,900 | | | | 480,687 | |
| Invesco Ltd. | | | 45,905 | | | | 1,055,815 | |
| KBW, Inc. | | | 36,900 | | | | 933,570 | |
Knight Capital Group, Inc., Class A * | | | 150,860 | | | | 1,965,706 | |
Portfolio Recovery Associates, Inc. * | | | 8,800 | | | | 590,040 | |
| Raymond James Financial, Inc. | | | 81,617 | | | | 2,303,232 | |
Teton Advisors, Inc., Class A * | | | 1,198 | | | | 10,183 | |
| | | | | | | | | |
| | | | | | | | 9,899,211 | |
| |
Energy 6.5%
|
Bill Barrett Corp. * | | | 147,824 | | | | 5,580,356 | |
Brigham Exploration Co. * | | | 38,700 | | | | 816,183 | |
Cameron International Corp. * | | | 34,100 | | | | 1,491,875 | |
Concho Resources, Inc. * | | | 10,200 | | | | 700,434 | |
| CONSOL Energy, Inc. | | | 25,900 | | | | 952,084 | |
Denbury Resources, Inc. * | | | 118,000 | | | | 2,008,360 | |
| Murphy Oil Corp. | | | 18,750 | | | | 1,221,750 | |
Oceaneering International, Inc. * | | | 31,900 | | | | 1,973,653 | |
Petrohawk Energy Corp. * | | | 91,800 | | | | 1,561,518 | |
Precision Drilling Corp. * | | | 311,280 | | | | 2,427,984 | |
Rosetta Resources, Inc. * | | | 26,400 | | | | 631,224 | |
TETRA Technologies, Inc. * | | | 175,700 | | | | 1,714,832 | |
Unit Corp. * | | | 65,300 | | | | 2,561,719 | |
VAALCO Energy, Inc. * | | | 241,130 | | | | 1,417,844 | |
Weatherford International Ltd. * | | | 66,500 | | | | 1,117,865 | |
| | | | | | | | | |
| | | | | | | | 26,177,681 | |
| |
Food & Staples Retailing 0.9%
|
BJ’s Wholesale Club, Inc. * | | | 33,900 | | | | 1,414,647 | |
United Natural Foods, Inc. * | | | 60,551 | | | | 2,165,304 | |
| | | | | | | | | |
| | | | | | | | 3,579,951 | |
| |
Food, Beverage & Tobacco 2.1%
|
| Diamond Foods, Inc. | | | 16,400 | | | | 724,880 | |
| Molson Coors Brewing Co., Class B | | | 26,100 | | | | 1,232,703 | |
The Hain Celestial Group, Inc. * | | | 70,300 | | | | 1,738,519 | |
| The JM Smucker Co. | | | 27,900 | | | | 1,793,412 | |
TreeHouse Foods, Inc. * | | | 62,259 | | | | 2,907,495 | |
| | | | | | | | | |
| | | | | | | | 8,397,009 | |
| |
Health Care Equipment & Services 7.6%
|
Air Methods Corp. * | | | 101,200 | | | | 4,139,080 | |
Allscripts Healthcare Solutions, Inc. * | | | 151,000 | | | | 2,882,590 | |
| Analogic Corp. | | | 37,304 | | | | 1,702,181 | |
athenahealth, Inc. * | | | 81,248 | | | | 3,247,483 | |
Cyberonics, Inc. * | | | 25,500 | | | | 701,505 | |
Health Management Associates, Inc., Class A * | | | 310,320 | | | | 2,485,663 | |
HMS Holdings Corp. * | | | 12,800 | | | | 769,408 | |
IPC The Hospitalist Co. * | | | 21,700 | | | | 695,051 | |
Neogen Corp. * | | | 16,200 | | | | 541,404 | |
NuVasive, Inc. * | | | 65,182 | | | | 1,707,768 | |
| Quality Systems, Inc. | | | 40,499 | | | | 2,602,466 | |
Sirona Dental Systems, Inc. * | | | 21,200 | | | | 798,180 | |
SXC Health Solutions Corp. * | | | 16,800 | | | | 654,528 | |
| Teleflex, Inc. | | | 40,313 | | | | 2,247,450 | |
Thoratec Corp. * | | | 58,100 | | | | 1,896,384 | |
Volcano Corp. * | | | 29,200 | | | | 713,064 | |
Wright Medical Group, Inc. * | | | 148,100 | | | | 1,975,654 | |
Zoll Medical Corp. * | | | 36,600 | | | | 1,190,598 | |
| | | | | | | | | |
| | | | | | | | 30,950,457 | |
| |
Household & Personal Products 0.2%
|
WD-40 Co. | | | 24,700 | | | | 911,183 | |
| |
Insurance 1.2%
|
Arch Capital Group Ltd. * | | | 23,354 | | | | 2,017,552 | |
| Assurant, Inc. | | | 39,910 | | | | 1,578,041 | |
| PartnerRe Ltd. | | | 18,000 | | | | 1,427,760 | |
| | | | | | | | | |
| | | | | | | | 5,023,353 | |
| |
Materials 6.1%
|
Brush Engineered Materials, Inc. * | | | 123,400 | | | | 4,090,710 | |
Calgon Carbon Corp. * | | | 126,300 | | | | 1,895,763 | |
| Commercial Metals Co. | | | 137,300 | | | | 1,905,724 | |
| Cytec Industries, Inc. | | | 48,150 | | | | 2,384,388 | |
Ferro Corp. * | | | 53,300 | | | | 731,276 | |
Horsehead Holding Corp. * | | | 113,200 | | | | 1,237,276 | |
| International Flavors & Fragrances, Inc. | | | 43,000 | | | | 2,156,880 | |
Landec Corp. * | | | 122,000 | | | | 767,380 | |
| Minerals Technologies, Inc. | | | 56,900 | | | | 3,338,323 | |
| Royal Gold, Inc. | | | 48,732 | | | | 2,412,721 | |
| Sensient Technologies Corp. | | | 21,300 | | | | 688,203 | |
Solutia, Inc. * | | | 41,400 | | | | 749,754 | |
| Texas Industries, Inc. | | | 69,370 | | | | 2,370,373 | |
| | | | | | | | | |
| | | | | | | | 24,728,771 | |
| |
Media 1.7%
|
DreamWorks Animation SKG, Inc., Class A * | | | 52,300 | | | | 1,846,190 | |
Morningstar, Inc. * | | | 54,260 | | | | 2,648,973 | |
The E.W. Scripps Co., Class A * | | | 273,906 | | | | 2,393,939 | |
| | | | | | | | | |
| | | | | | | | 6,889,102 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 4.8%
|
Alexion Pharmaceuticals, Inc. * | | | 12,000 | | | | 819,600 | |
Alkermes, Inc. * | | | 252,600 | | | | 2,922,582 | |
Covance, Inc. * | | | 42,600 | | | | 2,001,774 | |
eResearch Technology, Inc. * | | | 239,600 | | | | 1,825,752 | |
Inspire Pharmaceuticals, Inc. * | | | 294,700 | | | | 2,062,900 | |
Isis Pharmaceuticals, Inc. * | | | 168,400 | | | | 1,539,176 | |
| Medicis Pharmaceutical Corp., Class A | | | 19,100 | | | | 568,225 | |
Myriad Genetics, Inc. * | | | 110,300 | | | | 2,198,279 | |
| Pharmaceutical Product Development, Inc. | | | 76,900 | | | | 1,984,789 | |
Salix Pharmaceuticals Ltd. * | | | 18,300 | | | | 692,289 | |
Thermo Fisher Scientific, Inc. * | | | 20,800 | | | | 1,069,536 | |
United Therapeutics Corp. * | | | 26,339 | | | | 1,580,340 | |
| | | | | | | | | |
| | | | | | | | 19,265,242 | |
See financial notes 13
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Real Estate 5.5%
|
| BioMed Realty Trust, Inc. | | | 126,885 | | | | 2,328,340 | |
| Boston Properties, Inc. | | | 3,500 | | | | 301,665 | |
| Colonial Properties Trust | | | 141,214 | | | | 2,531,967 | |
| Digital Realty Trust, Inc. | | | 17,760 | | | | 1,060,805 | |
| Federal Realty Investment Trust | | | 18,000 | | | | 1,475,640 | |
| Health Care REIT, Inc. | | | 34,400 | | | | 1,757,840 | |
| Home Properties, Inc. | | | 21,600 | | | | 1,176,120 | |
| Kilroy Realty Corp. | | | 50,360 | | | | 1,720,801 | |
| LaSalle Hotel Properties | | | 100,355 | | | | 2,377,410 | |
| Liberty Property Trust | | | 53,105 | | | | 1,776,893 | |
| Redwood Trust, Inc. | | | 163,552 | | | | 2,319,167 | |
| Regency Centers Corp. | | | 23,960 | | | | 1,010,633 | |
| Washington Real Estate Investment Trust | | | 73,574 | | | | 2,356,575 | |
| | | | | | | | | |
| | | | | | | | 22,193,856 | |
| |
Retailing 4.9%
|
| Aaron’s, Inc. | | | 78,431 | | | | 1,479,209 | |
| Abercrombie & Fitch Co., Class A | | | 52,000 | | | | 2,228,720 | |
| American Eagle Outfitters, Inc. | | | 132,400 | | | | 2,119,724 | |
Blue Nile, Inc. * | | | 32,820 | | | | 1,398,132 | |
DSW, Inc., Class A * | | | 69,904 | | | | 2,325,706 | |
| Foot Locker, Inc. | | | 144,600 | | | | 2,303,478 | |
hhgregg, Inc. * | | | 15,900 | | | | 366,336 | |
Hibbett Sports, Inc. * | | | 21,600 | | | | 582,120 | |
HSN, Inc. * | | | 16,700 | | | | 499,998 | |
Lumber Liquidators Holdings, Inc. * | | | 93,185 | | | | 2,243,895 | |
| Macy’s, Inc. | | | 57,724 | | | | 1,364,595 | |
MakeMyTrip Ltd. * | | | 14,600 | | | | 527,790 | |
| Tractor Supply Co. | | | 41,200 | | | | 1,631,520 | |
Vitamin Shoppe, Inc. * | | | 21,200 | | | | 589,572 | |
| | | | | | | | | |
| | | | | | | | 19,660,795 | |
| |
Semiconductors & Semiconductor Equipment 3.2%
|
Avago Technologies Ltd. * | | | 78,700 | | | | 1,942,316 | |
| Broadcom Corp., Class A | | | 29,100 | | | | 1,185,534 | |
Cavium Networks, Inc. * | | | 19,300 | | | | 615,091 | |
IXYS Corp. * | | | 103,100 | | | | 1,055,744 | |
| Maxim Integrated Products, Inc. | | | 71,675 | | | | 1,552,481 | |
Silicon Image, Inc. * | | | 396,400 | | | | 2,437,860 | |
Ultratech, Inc. * | | | 235,200 | | | | 4,306,512 | |
| | | | | | | | | |
| | | | | | | | 13,095,538 | |
| |
Software & Services 10.3%
|
Blackboard, Inc. * | | | 53,378 | | | | 2,227,998 | |
Camelot Information Systems, Inc. ADS * | | | 29,000 | | | | 464,870 | |
DemandTec, Inc. * | | | 121,220 | | | | 1,282,508 | |
| FactSet Research Systems, Inc. | | | 29,307 | | | | 2,572,568 | |
| Fair Isaac Corp. | | | 123,400 | | | | 2,966,536 | |
Fortinet, Inc. * | | | 18,700 | | | | 561,000 | |
| Global Payments, Inc. | | | 22,400 | | | | 872,704 | |
IAC/InterActiveCorp * | | | 28,000 | | | | 781,200 | |
Lionbridge Technologies, Inc. * | | | 380,400 | | | | 1,902,000 | |
LivePerson, Inc. * | | | 84,100 | | | | 778,766 | |
LogMeIn, Inc. * | | | 21,600 | | | | 858,168 | |
LoopNet, Inc. * | | | 10,500 | | | | 110,775 | |
OpenTable, Inc. * | | | 9,100 | | | | 558,285 | |
Openwave Systems, Inc. * | | | 842,100 | | | | 1,734,726 | |
Parametric Technology Corp. * | | | 122,000 | | | | 2,619,340 | |
Rackspace Hosting, Inc. * | | | 20,100 | | | | 501,696 | |
Radiant Systems, Inc. * | | | 26,000 | | | | 507,260 | |
RightNow Technologies, Inc. * | | | 139,440 | | | | 3,642,173 | |
Rosetta Stone, Inc. * | | | 11,679 | | | | 270,369 | |
Sonic Solutions * | | | 49,100 | | | | 587,727 | |
SS&C Technologies Holdings, Inc. * | | | 46,100 | | | | 797,530 | |
| Syntel, Inc. | | | 15,000 | | | | 732,900 | |
TeleCommunication Systems, Inc., Class A��* | | | 357,200 | | | | 1,932,452 | |
TeleTech Holdings, Inc. * | | | 108,900 | | | | 1,653,102 | |
Terremark Worldwide, Inc. * | | | 231,074 | | | | 2,308,429 | |
The Ultimate Software Group, Inc. * | | | 50,500 | | | | 2,089,690 | |
TIBCO Software, Inc. * | | | 87,600 | | | | 1,683,672 | |
VanceInfo Technologies, Inc. ADR * | | | 17,100 | | | | 621,927 | |
VASCO Data Security International, Inc. * | | | 200,785 | | | | 1,604,272 | |
Websense, Inc. * | | | 113,684 | | | | 2,287,322 | |
| | | | | | | | | |
| | | | | | | | 41,511,965 | |
| |
Technology Hardware & Equipment 4.6%
|
Acme Packet, Inc. * | | | 75,739 | | | | 2,995,477 | |
Agilent Technologies, Inc. * | | | 34,600 | | | | 1,204,080 | |
Aruba Networks, Inc. * | | | 28,500 | | | | 624,435 | |
Avnet, Inc. * | | | 47,100 | | | | 1,402,638 | |
Ciena Corp. * | | | 102,200 | | | | 1,419,558 | |
DTS, Inc. * | | | 19,100 | | | | 760,180 | |
Ixia * | | | 117,350 | | | | 1,836,528 | |
Littelfuse, Inc. * | | | 6,200 | | | | 263,066 | |
NETGEAR, Inc. * | | | 126,701 | | | | 3,903,658 | |
Newport Corp. * | | | 52,400 | | | | 761,372 | |
QLogic Corp. * | | | 73,200 | | | | 1,286,124 | |
Riverbed Technology, Inc. * | | | 11,100 | | | | 638,694 | |
SeaChange International, Inc. * | | | 197,169 | | | | 1,585,239 | |
| | | | | | | | | |
| | | | | | | | 18,681,049 | |
| |
Telecommunication Services 0.8%
|
Cbeyond, Inc. * | | | 160,048 | | | | 2,168,650 | |
Cogent Communications Group, Inc. * | | | 96,000 | | | | 1,041,600 | |
| | | | | | | | | |
| | | | | | | | 3,210,250 | |
| |
Transportation 1.2%
|
| Arkansas Best Corp. | | | 63,900 | | | | 1,618,587 | |
| Forward Air Corp. | | | 90,890 | | | | 2,443,123 | |
Hub Group, Inc., Class A * | | | 22,500 | | | | 730,575 | |
| | | | | | | | | |
| | | | | | | | 4,792,285 | |
| |
Utilities 1.7%
|
| Consolidated Edison, Inc. | | | 22,085 | | | | 1,098,066 | |
| Hawaiian Electric Industries, Inc. | | | 91,635 | | | | 2,065,453 | |
| PG&E Corp. | | | 25,600 | | | | 1,224,192 | |
| Wisconsin Energy Corp. | | | 39,400 | | | | 2,345,876 | |
| | | | | | | | | |
| | | | | | | | 6,733,587 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $303,168,155) | | | 368,167,461 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
14 See financial notes
Laudus Small-Cap MarketMasters Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Foreign Common Stock 0.7% of net assets |
| |
Singapore 0.3%
|
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.3% |
Verigy Ltd. * | | | 136,157 | | | | 1,247,198 | |
| |
United Kingdom 0.4%
|
| | | | | | | | | |
| |
| Insurance 0.4% |
| Willis Group Holdings plc | | | 59,803 | | | | 1,901,735 | |
| | | | | | | | | |
| Total Foreign Common Stock |
| (Cost $3,450,078) | | | 3,148,933 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Other Investment Company 6.5% of net assets |
| |
Money Fund 6.5%
|
| State Street Institutional Liquid Reserves Fund - Institutional Class | | | 26,247,351 | | | | 26,247,351 | |
| | | | | | | | | |
| Total Other Investment Company |
| (Cost $26,247,351) | | | 26,247,351 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Date | | ($) | | ($) |
| |
Short-Term Investment 0.4% of net assets |
| |
U.S. Treasury Obligation 0.4%
|
| U.S. Treasury Bill |
0.14%, 12/16/10 (a) | | | 1,543,400 | | | | 1,543,140 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $1,543,140) | | | 1,543,140 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $341,984,946, and the unrealized appreciation and depreciation were $68,971,416 and ($11,849,477), respectively, with a net appreciation of $57,121,939.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is held as collateral for open futures contracts. |
| | | |
| ADR — | | American Depositary Receipt |
| ADS — | | American Depositary Shares |
| REIT — | | Real Estate Investment Trust |
In addition to the above, the fund held the following at 10/31/10.
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contract |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Russell 2000 Index, mini, Long, expires 12/17/10 | | | 315 | | | | 22,119,300 | | | | 866,701 | |
See financial notes 15
Laudus Small-Cap MarketMasters Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value (cost $334,408,724) | | | | | $399,106,885 | |
| Receivables: | | | | | | |
| Investments sold | | | | | 9,921,955 | |
| Due from broker for futures | | | | | 144,900 | |
| Fund shares sold | | | | | 139,296 | |
| Dividends | | | | | 19,752 | |
| Interest | | | | | 2,524 | |
| Prepaid expenses | | + | | | 11,194 | |
| | | |
Total assets | | | | | 409,346,506 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Investments bought | | | | | 4,252,893 | |
| Investment adviser and administrator fees | | | | | 37,477 | |
| Shareholder service fees | | | | | 21,011 | |
| Fund shares redeemed | | | | | 285,071 | |
| Trustees’ fees | | | | | 1 | |
| Accrued expenses | | + | | | 79,131 | |
| | | |
Total liabilities | | | | | 4,675,584 | |
| |
Net Assets |
|
Total assets | | | | | 409,346,506 | |
Total liabilities | | − | | | 4,675,584 | |
| | | |
Net assets | | | | | $404,670,922 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 466,261,959 | |
| Net investment income not yet distributed | | | | | 5,385 | |
| Net realized capital losses | | | | | (127,161,284 | ) |
| Net unrealized capital gains | | | | | 65,564,862 | |
| |
Net Asset Value (NAV) by Shares Class |
| | | | | | | | | | | | | | | |
| | | | | | | Shares
| | | | | | | |
| Share Class | | Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| Investor Shares | | $67,967,974 | | | | 5,901,035 | | | | | $11.52 | | | |
| Select Shares | | $336,702,948 | | | | 28,917,118 | | | | | $11.64 | | | |
16 See financial notes
Laudus Small-Cap MarketMasters Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends | | | | | $2,878,640 | |
| Interest | | + | | | 22,912 | |
| | | |
Total investment income | | | | | 2,901,552 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 4,609,331 | |
| Shareholder service fees: | | | | | | |
| Investor Shares | | | | | 165,545 | |
| Select Shares | | | | | 642,524 | |
| Shareholder reports | | | | | 86,323 | |
| Portfolio accounting fees | | | | | 70,430 | |
| Transfer agent fees | | | | | 45,324 | |
| Professional fees | | | | | 42,880 | |
| Registration fees | | | | | 35,135 | |
| Custodian fees | | | | | 32,388 | |
| Trustees’ fees | | | | | 7,622 | |
| Interest expense | | | | | 133 | |
| Other expenses | | + | | | 25,012 | |
| | | |
| Total expenses | | | | | 5,762,647 | |
| Expense reduction by adviser and Schwab | | − | | | 476,201 | |
| Custody credits | | − | | | 14 | |
| | | |
Net expenses | | − | | | 5,286,432 | |
| | | |
Net investment loss | | | | | (2,384,880 | ) |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on investments | | | | | 38,485,958 | |
| Net realized gains on futures contracts | | + | | | 585,983 | |
| | | |
Net realized gains | | | | | 39,071,941 | |
| Net unrealized gains on investments | | | | | 41,186,268 | |
| Net unrealized gains on futures contracts | | + | | | 1,200,977 | |
| | | |
Net unrealized gains | | + | | | 42,387,245 | |
| | | |
Net realized and unrealized gains | | | | | 81,459,186 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $79,074,306 | |
See financial notes 17
Laudus Small-Cap MarketMasters Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment loss | | | | | ($2,384,880 | ) | | | ($1,650,424 | ) |
| Net realized gains (losses) | | | | | 39,071,941 | | | | (61,881,323 | ) |
| Net unrealized gains | | + | | | 42,387,245 | | | | 93,296,692 | |
| | | |
Increase in net assets from operations | | | | | 79,074,306 | | | | 29,764,945 | |
| |
Distributions to Shareholders |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | — | | | | 21,752 | |
| Select Shares | | + | | | — | | | | 409,247 | |
| | | |
Total distributions from net investment income | | | | | $— | | | | $430,999 | |
Transactions in Fund Shares
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | 148,721 | | | | $1,584,530 | | | | 911,744 | | | | $7,316,042 | |
| Select Shares | | + | | | 4,204,773 | | | | 44,602,776 | | | | 14,430,748 | | | | 116,038,290 | |
| | | |
Total shares sold | | | | | 4,353,494 | | | | $46,187,306 | | | | 15,342,492 | | | | $123,354,332 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 2,548 | | | | $20,283 | |
| Select Shares | | + | | | — | | | | — | | | | 15,224 | | | | 122,244 | |
| | | |
Total shares reinvested | | | | | — | | | | $— | | | | 17,772 | | | | $142,527 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | (1,098,259 | ) | | | ($11,641,939 | ) | | | (1,374,095 | ) | | | ($11,124,081 | ) |
| Select Shares | | + | | | (6,096,263 | ) | | | (65,834,703 | ) | | | (12,988,847 | ) | | | (109,051,431 | ) |
| | | |
Total shares redeemed | | | | | (7,194,522 | ) | | | ($77,476,642 | ) | | | (14,362,942 | ) | | | ($120,175,512 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | (2,841,028 | ) | | | ($31,289,336 | ) | | | 997,322 | | | | $3,321,347 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 37,659,181 | | | | $356,885,952 | | | | 36,661,859 | | | | $324,230,659 | |
| Total increase or decrease | | + | | | (2,841,028 | ) | | | 47,784,970 | | | | 997,322 | | | | 32,655,293 | |
| | | |
End of period | | | | | 34,818,153 | | | | $404,670,922 | | | | 37,659,181 | | | | $356,885,952 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $5,385 | | | | | | | | $6,433 | |
18 See financial notes
Laudus International MarketMasters Fund™
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| Investor Shares | | 10/31/10 | | 10/31/09 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 15.04 | | | | 11.78 | | | | 25.96 | | | | 20.73 | | | | 16.78 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.09 | | | | 0.14 | | | | 0.20 | | | | 0.14 | | | | 0.13 | | | |
| Net realized and unrealized gains (losses) | | | 3.41 | | | | 3.63 | | | | (12.25 | ) | | | 6.84 | | | | 3.98 | | | |
| | | |
| Total from investment operations | | | 3.50 | | | | 3.77 | | | | (12.05 | ) | | | 6.98 | | | | 4.11 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.18 | ) | | | (0.51 | ) | | | (0.10 | ) | | | (0.16 | ) | | | (0.16 | ) | | |
| Distributions from net realized gains | | | — | | | | — | | | | (2.03 | ) | | | (1.59 | ) | | | — | | | |
| | | |
| Total distributions | | | (0.18 | ) | | | (0.51 | ) | | | (2.13 | ) | | | (1.75 | ) | | | (0.16 | ) | | |
| | | |
| Net asset value at end of period | | | 18.36 | | | | 15.04 | | | | 11.78 | | | | 25.96 | | | | 20.73 | | | |
| | | |
| Total return (%) | | | 23.47 | | | | 33.64 | | | | (49.97 | ) | | | 36.01 | | | | 24.66 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 1.60 | | | | 1.62 | | | | 1.59 | | | | 1.56 | 1 | | | 1.57 | 1 | | |
| Gross operating expenses | | | 1.62 | | | | 1.63 | | | | 1.59 | | | | 1.59 | | | | 1.64 | | | |
| Net investment income (loss) | | | 0.53 | | | | 0.95 | | | | 0.95 | | | | 0.62 | | | | 0.52 | | | |
| Portfolio turnover rate | | | 83 | | | | 96 | | | | 88 | | | | 71 | | | | 90 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 849 | | | | 931 | | | | 918 | | | | 2,297 | | | | 1,320 | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| Select Shares | | 10/31/10 | | 10/31/09 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 15.05 | | | | 11.80 | | | | 26.00 | | | | 20.77 | | | | 16.81 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.10 | | | | 0.15 | | | | 0.23 | | | | 0.15 | | | | 0.19 | | | |
| Net realized and unrealized gains (losses) | | | 3.43 | | | | 3.64 | | | | (12.27 | ) | | | 6.86 | | | | 3.96 | | | |
| | | |
| Total from investment operations | | | 3.53 | | | | 3.79 | | | | (12.04 | ) | | | 7.01 | | | | 4.15 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.20 | ) | | | (0.54 | ) | | | (0.13 | ) | | | (0.19 | ) | | | (0.19 | ) | | |
| Distributions from net realized gains | | | — | | | | — | | | | (2.03 | ) | | | (1.59 | ) | | | — | | | |
| | | |
| Total distributions | | | (0.20 | ) | | | (0.54 | ) | | | (2.16 | ) | | | (1.78 | ) | | | (0.19 | ) | | |
| | | |
| Net asset value at end of period | | | 18.38 | | | | 15.05 | | | | 11.80 | | | | 26.00 | | | | 20.77 | | | |
| | | |
| Total return (%) | | | 23.68 | | | | 33.82 | | | | (49.91 | ) | | | 36.16 | | | | 24.88 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 1.48 | 2 | | | 1.47 | | | | 1.48 | 2 | | | 1.44 | 3 | | | 1.39 | 3 | | |
| Gross operating expenses | | | 1.50 | | | | 1.58 | | | | 1.54 | | | | 1.55 | | | | 1.60 | | | |
| Net investment income (loss) | | | 0.69 | | | | 1.08 | | | | 1.08 | | | | 0.73 | | | | 0.72 | | | |
| Portfolio turnover rate | | | 83 | | | | 96 | | | | 88 | | | | 71 | | | | 90 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 948 | | | | 630 | | | | 540 | | | | 1,255 | | | | 628 | | | |
1 The ratio of net operating expenses would have been 1.64% and 1.59% for the periods ended 10/31/06 and 10/31/07, respectively, if custody credits had not been incurred.
2 The ratio of net operating expenses would have been 1.47% if certain non-routine expenses had not been incurred.
3 The ratio of net operating expenses would have been 1.47% and 1.47% for the periods ended 10/31/06 and 10/31/07, respectively, if custody credits had not been incurred.
See financial notes 19
Laudus International MarketMasters Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 94 | .7% | | Common Stock | | | 1,368,617,535 | | | | 1,700,484,802 | |
| | 0 | .2% | | Preferred Stock | | | 4,071,270 | | | | 4,345,995 | |
| | 4 | .8% | | Other Investment Companies | | | 85,972,557 | | | | 86,220,180 | |
| | 0 | .0% | | Rights | | | 152,901 | | | | 314,785 | |
| | 0 | .0% | | Warrants | | | — | | | | 140,285 | |
| | 0 | .2% | | Short-Term Investment | | | 3,472,314 | | | | 3,472,314 | |
| | 0 | .0% | | Corporate Bond | | | 117,822 | | | | 136,224 | |
| |
| |
| | 99 | .9% | | Total Investments | | | 1,462,404,399 | | | | 1,795,114,585 | |
| | 0 | .1% | | Other Assets and Liabilities, Net | | | | | | | 1,596,120 | |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 1,796,710,705 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 94.7% of net assets |
| |
Australia 4.1%
|
| | | | | | | | | |
| |
| Commercial & Professional Supplies 1.3% |
| Brambles Ltd. | | | 1,577,800 | | | | 9,867,064 | |
| Campbell Brothers Ltd. | | | 114,624 | | | | 3,948,396 | |
| Transfield Services Ltd. | | | 2,587,211 | | | | 8,787,012 | |
| | | | | | | | | |
| | | | | | | | 22,602,472 | |
| | | | | | | | | |
| |
| Consumer Services 0.1% |
| Flight Centre Ltd. | | | 113,112 | | | | 2,530,986 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.2% |
| Coca-Cola Amatil Ltd. | | | 85,117 | | | | 1,014,555 | |
| Foster’s Group Ltd. | | | 403,000 | | | | 2,310,587 | |
| | | | | | | | | |
| | | | | | | | 3,325,142 | |
| | | | | | | | | |
| |
| Materials 1.4% |
| Amcor Ltd. | | | 301,400 | | | | 1,986,095 | |
Atlas Iron Ltd. * | | | 103,600 | | | | 255,797 | |
| BHP Billiton Ltd. ADR | | | 204,700 | | | | 16,906,173 | |
Iluka Resources Ltd. * | | | 184,300 | | | | 1,219,830 | |
| Incitec Pivot Ltd. | | | 179,300 | | | | 656,541 | |
Mount Gibson Iron Ltd. * | | | 866,121 | | | | 1,720,779 | |
PanAust Ltd. * | | | 4,633,567 | | | | 3,399,932 | |
| | | | | | | | | |
| | | | | | | | 26,145,147 | |
| | | | | | | | | |
| |
| Real Estate 0.7% |
| Commonwealth Property Office Fund | | | 13,509,592 | | | | 12,128,166 | |
| | | | | | | | | |
| |
| Retailing 0.4% |
| David Jones Ltd. | | | 1,483,267 | | | | 6,908,868 | |
| | | | | | | | | |
| | | | | | | | 73,640,781 | |
| |
Austria 0.0%
|
| | | | | | | | | |
| |
| Capital Goods 0.0% |
| Andritz AG | | | 11,400 | | | | 873,647 | |
| |
Belgium 0.7%
|
| | | | | | | | | |
| |
| Capital Goods 0.1% |
| Bekaert N.V. | | | 5,400 | | | | 1,655,368 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.1% |
| Colruyt S.A. | | | 39,695 | | | | 2,240,543 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| Umicore | | | 31,400 | | | | 1,479,540 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.4% |
Telenet Group Holding N.V. * | | | 157,897 | | | | 6,612,175 | |
| | | | | | | | | |
| | | | | | | | 11,987,626 | |
| |
Bermuda 0.3%
|
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| Bunge Ltd. | | | 37,350 | | | | 2,243,614 | |
| | | | | | | | | |
| |
| Insurance 0.2% |
| PartnerRe Ltd. | | | 32,875 | | | | 2,607,645 | |
| | | | | | | | | |
| | | | | | | | 4,851,259 | |
| |
Brazil 2.4%
|
| | | | | | | | | |
| |
| Capital Goods 0.2% |
| Iochpe-Maxion S.A. | | | 42,500 | | | | 618,641 | |
Mills Estruturas e Servicos de Engenharia S.A. * | | | 281,885 | | | | 3,403,575 | |
| | | | | | | | | |
| | | | | | | | 4,022,216 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.5% |
| Cia. Hering | | | 81,500 | | | | 4,014,365 | |
| Cyrela Brazil Realty S.A. | | | 112,300 | | | | 1,552,108 | |
| MRV Engenharia e Participacoes S.A. | | | 98,535 | | | | 961,996 | |
| PDG Realty S.A. Empreendimentos e Participacoes | | | 130,700 | | | | 1,634,999 | |
| | | | | | | | | |
| | | | | | | | 8,163,468 | |
| | | | | | | | | |
| |
| Diversified Financials 0.1% |
| BM&F BOVESPA S.A. | | | 130,900 | | | | 1,097,056 | |
| | | | | | | | | |
| |
| Energy 0.1% |
OGX Petroleo e Gas Participacoes S.A. * | | | 200,800 | | | | 2,635,921 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.0% |
| Drogasil S.A. | | | 15,100 | | | | 382,140 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.0% |
| SLC Agricola S.A. | | | 49,300 | | | | 637,887 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| Amil Participacoes S.A. | | | 42,600 | | | | 433,441 | |
| Diagnosticos da America S.A. | | | 69,000 | | | | 852,203 | |
20 See financial notes
Laudus International MarketMasters Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| OdontoPrev S.A. | | | 76,400 | | | | 1,123,331 | |
| | | | | | | | | |
| | | | | | | | 2,408,975 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.2% |
| Natura Cosmeticos S.A. | | | 110,300 | | | | 3,159,213 | |
| | | | | | | | | |
| |
| Materials 0.9% |
| Duratex S.A. | | | 46,400 | | | | 534,871 | |
| Vale S.A. ADR | | | 464,066 | | | | 14,915,081 | |
| | | | | | | | | |
| | | | | | | | 15,449,952 | |
| | | | | | | | | |
| |
| Real Estate 0.1% |
| BR Malls Participacoes S.A. | | | 94,800 | | | | 906,016 | |
| BR Properties S.A. | | | 96,509 | | | | 930,864 | |
| | | | | | | | | |
| | | | | | | | 1,836,880 | |
| | | | | | | | | |
| |
| Retailing 0.1% |
| Lojas Renner S.A. | | | 43,400 | | | | 1,715,274 | |
| | | | | | | | | |
| |
| Software & Services 0.0% |
| Totvs S.A. | | | 4,300 | | | | 397,048 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Localiza Rent a Car S.A. | | | 125,000 | | | | 2,069,488 | |
| | | | | | | | | |
| | | | | | | | 43,975,518 | |
| |
Canada 7.2%
|
| | | | | | | | | |
| |
| Banks 0.2% |
| Canadian Western Bank | | | 29,328 | | | | 729,246 | |
| Home Capital Group, Inc. | | | 7,863 | | | | 370,291 | |
| The Toronto-Dominion Bank | | | 39,627 | | | | 2,853,812 | |
| | | | | | | | | |
| | | | | | | | 3,953,349 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
Gildan Activewear, Inc. * | | | 6,500 | | | | 187,525 | |
Gildan Activewear, Inc., Sub Voting, Class A * | | | 41,300 | | | | 1,190,123 | |
| | | | | | | | | |
| | | | | | | | 1,377,648 | |
| | | | | | | | | |
| |
| Consumer Services 0.1% |
| Tim Hortons, Inc. | | | 49,709 | | | | 1,868,657 | |
| | | | | | | | | |
| |
| Energy 1.9% |
| Canadian Natural Resources Ltd. | | | 139,950 | | | | 5,103,977 | |
| Crescent Point Energy Corp. | | | 41,741 | | | | 1,653,433 | |
Legacy Oil + Gas, Inc. * | | | 239,837 | | | | 2,887,733 | |
| Niko Resources Ltd. | | | 13,878 | | | | 1,323,982 | |
Pacific Rubiales Energy Corp. * | | | 118,696 | | | | 3,783,515 | |
| Pason Systems, Inc. | | | 589,100 | | | | 6,885,059 | |
| PetroBakken Energy Ltd., Class A | | | 73,825 | | | | 1,630,100 | |
| Petrominerales Ltd. | | | 21,007 | | | | 538,203 | |
| Suncor Energy, Inc. | | | 218,525 | | | | 6,994,985 | |
| Trican Well Service Ltd. | | | 166,563 | | | | 2,887,375 | |
| | | | | | | | | |
| | | | | | | | 33,688,362 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.0% |
| Saputo, Inc. | | | 14,873 | | | | 568,438 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
SXC Health Solutions Corp. * | | | 61,158 | | | | 2,387,412 | |
| | | | | | | | | |
| |
| Insurance 0.1% |
| Manulife Financial Corp. | | | 63,200 | | | | 802,640 | |
| | | | | | | | | |
| |
| Materials 2.5% |
| Agrium, Inc. | | | 16,100 | | | | 1,425,011 | |
Consolidated Thompson Iron Mines Ltd. * | | | 223,074 | | | | 2,160,968 | |
Detour Gold Corp. * | | | 66,871 | | | | 1,953,218 | |
Eastern Platinum Ltd. * | | | 878,117 | | | | 1,601,429 | |
Equinox Minerals Ltd., CDI * | | | 59,700 | | | | 327,236 | |
| First Quantum Minerals Ltd. | | | 6,100 | | | | 534,161 | |
Grande Cache Coal Corp. * | | | 416,488 | | | | 2,858,531 | |
| Kinross Gold Corp. | | | 183 | | | | 3,292 | |
| Major Drilling Group International, Inc. | | | 88,051 | | | | 3,013,884 | |
| Potash Corp. of Saskatchewan, Inc. | | | 126,100 | | | | 18,295,849 | |
Quadra FNX Mining Ltd. * | | | 183,794 | | | | 2,594,993 | |
SEMAFO, Inc. * | | | 454,314 | | | | 5,452,303 | |
Silver Wheaton Corp. * | | | 33,700 | | | | 968,805 | |
Ventana Gold Corp. * | | | 216,015 | | | | 1,931,618 | |
Western Coal Corp. * | | | 183,510 | | | | 1,241,513 | |
| | | | | | | | | |
| | | | | | | | 44,362,811 | |
| | | | | | | | | |
| |
| Media 0.2% |
| Thomson Reuters Corp. | | | 79,000 | | | | 3,017,011 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| Valeant Pharmaceuticals International, Inc. | | | 24,800 | | | | 684,728 | |
| | | | | | | | | |
| |
| Real Estate 0.8% |
| Brookfield Asset Management, Inc., Class A | | | 193,656 | | | | 5,755,456 | |
| Morguard Real Estate Investment Trust | | | 223,790 | | | | 2,973,188 | |
| Northern Property Real Estate Investment Trust | | | 182,700 | | | | 4,845,608 | |
| | | | | | | | | |
| | | | | | | | 13,574,252 | |
| | | | | | | | | |
| |
| Retailing 0.0% |
Dollarama, Inc. * | | | 15,500 | | | | 408,511 | |
| | | | | | | | | |
| |
| Transportation 1.2% |
| Canadian National Railway Co. | | | 199,200 | | | | 12,903,790 | |
| Canadian Pacific Railway Ltd. | | | 140,150 | | | | 9,129,371 | |
| | | | | | | | | |
| | | | | | | | 22,033,161 | |
| | | | | | | | | |
| | | | | | | | 128,726,980 | |
| |
Cayman Islands 0.2%
|
| | | | | | | | | |
| |
| Capital Goods 0.1% |
| China High Speed Transmission Equipment Group Co., Ltd. | | | 316,000 | | | | 647,176 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| Shenguan Holdings Group Ltd. | | | 1,266,000 | | | | 1,651,038 | |
| | | | | | | | | |
| |
| Materials 0.0% |
| Lee & Man Paper Manufacturing Ltd. | | | 766,000 | | | | 642,725 | |
| | | | | | | | | |
| | | | | | | | 2,940,939 | |
| |
Chile 0.2%
|
| | | | | | | | | |
| |
| Banks 0.1% |
| Banco Santander Chile ADR | | | 21,967 | | | | 2,035,023 | |
See financial notes 21
Laudus International MarketMasters Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Lan Airlines S.A. | | | 49,016 | | | | 1,522,637 | |
| | | | | | | | | |
| | | | | | | | 3,557,660 | |
| |
China 2.5%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.1% |
| Dongfeng Motor Group Co., Ltd., Class H | | | 1,158,000 | | | | 2,518,765 | |
| Minth Group Ltd. | | | 220,000 | | | | 411,634 | |
| | | | | | | | | |
| | | | | | | | 2,930,399 | |
| | | | | | | | | |
| |
| Capital Goods 0.3% |
| Dongfang Electric Co., Ltd., Class H | | | 250,600 | | | | 1,219,537 | |
| Haitian International Holdings Ltd. | | | 33,000 | | | | 33,643 | |
International Mining Machinery Holdings Ltd. * | | | 1,683,000 | | | | 1,469,209 | |
| Lonking Holdings Ltd. | | | 1,338,000 | | | | 718,066 | |
| Shanghai Electric Group Co., Ltd., Class H | | | 1,850,000 | | | | 1,241,782 | |
| Zhuzhou CSR Times Electric Co., Ltd., Class H | | | 120,000 | | | | 366,648 | |
| | | | | | | | | |
| | | | | | | | 5,048,885 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.1% |
51job, Inc. * | | | 32,058 | | | | 1,445,175 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.3% |
| Anta Sports Products Ltd. | | | 602,000 | | | | 1,246,694 | |
| China Lilang Ltd. | | | 880,000 | | | | 1,378,393 | |
Haier Electronics Group Co., Ltd. * | | | 2,615,000 | | | | 2,425,517 | |
| | | | | | | | | |
| | | | | | | | 5,050,604 | |
| | | | | | | | | |
| |
| Consumer Services 0.1% |
| Ajisen China Holdings Ltd. | | | 763,000 | | | | 1,373,799 | |
| | | | | | | | | |
| |
| Energy 0.2% |
| China Shenhua Energy Co., Ltd., Class H | | | 673,500 | | | | 3,006,677 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.2% |
| Hengan International Group Co., Ltd. | | | 90,500 | | | | 853,278 | |
| Vinda International Holdings Ltd. | | | 1,637,000 | | | | 2,130,294 | |
| | | | | | | | | |
| | | | | | | | 2,983,572 | |
| | | | | | | | | |
| |
| Materials 0.7% |
| AMVIG Holdings Ltd. | | | 9,322,000 | | | | 7,565,038 | |
| China National Building Material Co., Ltd., Class H | | | 434,000 | | | | 1,062,820 | |
Mongolian Mining Corp. * | | | 488,100 | | | | 528,323 | |
Winsway Coking Coal Holdings Ltd. * | | | 468,000 | | | | 227,623 | |
| Xingda International Holdings Ltd. | | | 4,195,000 | | | | 4,379,663 | |
| | | | | | | | | |
| | | | | | | | 13,763,467 | |
| | | | | | | | | |
| |
| Media 0.1% |
Focus Media Holding Ltd. ADR * | | | 36,700 | | | | 908,325 | |
| | | | | | | | | |
| |
| Real Estate 0.1% |
| Agile Property Holdings Ltd. | | | 174,000 | | | | 229,510 | |
| KWG Property Holding Ltd. | | | 1,636,500 | | | | 1,300,424 | |
| | | | | | | | | |
| | | | | | | | 1,529,934 | |
| | | | | | | | | |
| |
| Retailing 0.1% |
Mecox Lane Ltd. * | | | 65,091 | | | | 1,062,936 | |
Springland International Holdings Ltd. * | | | 1,499,000 | | | | 1,260,891 | |
| | | | | | | | | |
| | | | | | | | 2,323,827 | |
| | | | | | | | | |
| |
| Software & Services 0.2% |
ChinaCache International Holdings Ltd. ADR * | | | 48,047 | | | | 1,160,335 | |
| Kingdee International Software Group Co., Ltd. | | | 2,756,000 | | | | 1,455,905 | |
SouFun Holdings Ltd. ADR * | | | 20,373 | | | | 1,497,415 | |
| | | | | | | | | |
| | | | | | | | 4,113,655 | |
| | | | | | | | | |
| | | | | | | | 44,478,319 | |
| |
Denmark 1.2%
|
| | | | | | | | | |
| |
| Capital Goods 0.3% |
| FLSmidth & Co. A/S | | | 72,112 | | | | 5,333,447 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.0% |
Pandora A/S * | | | 9,326 | | | | 452,541 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.2% |
| Danisco A/S | | | 28,142 | | | | 2,427,408 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.3% |
| Coloplast A/S, Class B | | | 22,562 | | | | 2,793,846 | |
GN Store Nord A/S * | | | 166,078 | | | | 1,386,807 | |
| | | | | | | | | |
| | | | | | | | 4,180,653 | |
| | | | | | | | | |
| |
| Materials 0.3% |
Christian Hansen Holding A/S * | | | 217,547 | | | | 4,758,498 | |
| Novozymes A/S, Class B | | | 7,827 | | | | 1,042,816 | |
| | | | | | | | | |
| | | | | | | | 5,801,314 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Novo Nordisk A/S, Class B | | | 22,700 | | | | 2,383,542 | |
| | | | | | | | | |
| |
| Software & Services 0.0% |
| SimCorp A/S | | | 3,218 | | | | 559,871 | |
| | | | | | | | | |
| | | | | | | | 21,138,776 | |
| |
Egypt 0.1%
|
| | | | | | | | | |
| |
| Banks 0.1% |
| Commercial International Bank Egypt S.A.E. | | | 111,124 | | | | 833,403 | |
| | | | | | | | | |
| |
| Diversified Financials 0.0% |
| Egyptian Financial Group-Hermes Holding S.A.E. | | | 80,311 | | | | 398,110 | |
| | | | | | | | | |
| | | | | | | | 1,231,513 | |
| |
Finland 0.5%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.1% |
| Nokian Renkaat Oyj | | | 55,291 | | | | 1,916,950 | |
| | | | | | | | | |
| |
| Capital Goods 0.4% |
| Kone Oyj, Class B | | | 91,277 | | | | 4,890,340 | |
| Metso Corp. Oyj | | | 31,700 | | | | 1,502,930 | |
22 See financial notes
Laudus International MarketMasters Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Outotec Oyj | | | 15,205 | | | | 709,980 | |
| | | | | | | | | |
| | | | | | | | 7,103,250 | |
| | | | | | | | | |
| | | | | | | | 9,020,200 | |
| |
France 6.9%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.3% |
| Cie Generale des Etablissements Michelin, Class B | | | 55,832 | | | | 4,461,080 | |
| | | | | | | | | |
| |
| Banks 0.8% |
| BNP Paribas | | | 190,191 | | | | 13,911,607 | |
| | | | | | | | | |
| |
| Capital Goods 1.7% |
Mersen S.A. (c) | | | 220,145 | | | | 9,661,820 | |
| Nexans S.A. | | | 141,664 | | | | 10,104,366 | |
| Safran S.A. | | | 31,200 | | | | 989,827 | |
| Schneider Electric S.A. | | | 31,283 | | | | 4,444,716 | |
| Vallourec S.A. | | | 53,670 | | | | 5,580,283 | |
| | | | | | | | | |
| | | | | | | | 30,781,012 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.1% |
| Bureau Veritas S.A. | | | 14,600 | | | | 1,079,159 | |
Edenred * | | | 15,500 | | | | 324,672 | |
| | | | | | | | | |
| | | | | | | | 1,403,831 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.0% |
| SEB S.A. | | | 3,634 | | | | 348,451 | |
| | | | | | | | | |
| |
| Consumer Services 0.2% |
| Sodexo | | | 57,300 | | | | 3,729,050 | |
| | | | | | | | | |
| |
| Diversified Financials 0.1% |
Financiere Marc de Lacharriere S.A. (c) | | | 49,384 | | | | 2,125,271 | |
| | | | | | | | | |
| |
| Energy 0.1% |
| Technip S.A. | | | 22,700 | | | | 1,912,319 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.4% |
| DANONE S.A. | | | 94,600 | | | | 5,998,139 | |
| DANONE S.A. ADR | | | 74,400 | | | | 949,344 | |
| | | | | | | | | |
| | | | | | | | 6,947,483 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| Essilor International S.A. | | | 32,233 | | | | 2,154,213 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.3% |
| L’Oreal S.A. | | | 42,847 | | | | 5,032,951 | |
| | | | | | | | | |
| |
| Insurance 0.3% |
| AXA S.A. | | | 133,453 | | | | 2,433,771 | |
Euler Hermes S.A. * | | | 35,750 | | | | 3,367,030 | |
| | | | | | | | | |
| | | | | | | | 5,800,801 | |
| | | | | | | | | |
| |
| Materials 0.2% |
| Air Liquide S.A. | | | 31,537 | | | | 4,083,273 | |
| | | | | | | | | |
| |
| Media 1.3% |
| Eutelsat Communications | | | 9,300 | | | | 350,023 | |
| Ipsos | | | 143,650 | | | | 6,925,061 | |
| Publicis Groupe | | | 134,700 | | | | 6,710,103 | |
| Societe Television Francaise 1 | | | 575,000 | | | | 9,424,262 | |
| | | | | | | | | |
| | | | | | | | 23,409,449 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
Boiron S.A. (c) | | | 95,466 | | | | 3,612,724 | |
| | | | | | | | | |
| |
| Software & Services 0.1% |
| Alten | | | 51,589 | | | | 1,725,587 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.6% |
| Neopost S.A. | | | 130,910 | | | | 10,874,452 | |
| | | | | | | | | |
| |
| Utilities 0.1% |
| EDF Energies Nouvelles S.A. | | | 29,468 | | | | 1,279,569 | |
| | | | | | | | | |
| | | | | | | | 123,593,123 | |
| |
Germany 6.9%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.8% |
Daimler AG - Reg’d * | | | 126,887 | | | | 8,356,015 | |
| ElringKlinger AG | | | 206,420 | | | | 6,870,936 | |
| | | | | | | | | |
| | | | | | | | 15,226,951 | |
| | | | | | | | | |
| |
| Capital Goods 1.2% |
| Bilfinger Berger AG | | | 120,972 | | | | 8,805,234 | |
Brenntag AG * | | | 6,137 | | | | 575,269 | |
| Gildemeister AG | | | 81,705 | | | | 1,460,758 | |
| MAN SE | | | 22,212 | | | | 2,439,806 | |
| MTU Aero Engines Holding AG | | | 72,633 | | | | 4,382,932 | |
| Rational AG | | | 19,610 | | | | 4,383,288 | |
| | | | | | | | | |
| | | | | | | | 22,047,287 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.1% |
| Bertrandt AG | | | 25,246 | | | | 1,638,745 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
| Adidas AG | | | 21,400 | | | | 1,393,820 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.2% |
| Asian Bamboo AG | | | 55,175 | | | | 2,832,569 | |
| | | | | | | | | |
| |
| Insurance 0.6% |
| Allianz SE - Reg’d | | | 83,200 | | | | 10,418,892 | |
| | | | | | | | | |
| |
| Materials 1.8% |
| BASF SE | | | 86,252 | | | | 6,271,506 | |
| BASF SE ADR | | | 92,150 | | | | 6,699,305 | |
| Lanxess AG | | | 57,480 | | | | 3,995,074 | |
| Symrise AG | | | 532,614 | | | | 16,175,854 | |
| | | | | | | | | |
| | | | | | | | 33,141,739 | |
| | | | | | | | | |
| |
| Media 0.3% |
GfK SE (c) | | | 107,813 | | | | 4,548,318 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
QIAGEN N.V. * | | | 224,365 | | | | 4,251,534 | |
| | | | | | | | | |
| |
| Retailing 0.3% |
| Fielmann AG | | | 60,840 | | | | 6,143,325 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.2% |
| Aixtron AG | | | 24,872 | | | | 809,910 | |
Dialog Semiconductor plc * | | | 100,183 | | | | 1,825,821 | |
Infineon Technologies AG * | | | 71,952 | | | | 566,057 | |
| | | | | | | | | |
| | | | | | | | 3,201,788 | |
| | | | | | | | | |
| |
| Software & Services 0.6% |
| SAP AG | | | 205,289 | | | | 10,695,322 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.4% |
| Wincor Nixdorf AG | | | 93,920 | | | | 6,870,373 | |
| | | | | | | | | |
| |
| Utilities 0.1% |
| RWE AG ADR | | | 27,450 | | | | 1,961,302 | |
| | | | | | | | | |
| | | | | | | | 124,371,965 | |
See financial notes 23
Laudus International MarketMasters Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Greece 0.1%
|
| | | | | | | | | |
| |
| Banks 0.1% |
National Bank of Greece S.A. * | | | 135,850 | | | | 1,491,131 | |
| |
Hong Kong 1.6%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.1% |
Brilliance China Automotive Holdings Ltd. * | | | 1,058,000 | | | | 929,486 | |
| | | | | | | | | |
| |
| Capital Goods 0.2% |
| Fong’s Industries Co., Ltd. | | | 4,844,000 | | | | 2,732,970 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
Arts Optical International Holdings Ltd. (c) | | | 4,324,000 | | | | 1,852,047 | |
| | | | | | | | | |
| |
| Consumer Services 0.1% |
Galaxy Entertainment Group Ltd. * | | | 2,349,000 | | | | 2,219,145 | |
| | | | | | | | | |
| |
| Energy 0.3% |
| CNOOC Ltd. | | | 2,666,000 | | | | 5,565,857 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| China Yurun Food Group Ltd. | | | 463,000 | | | | 1,806,973 | |
| | | | | | | | | |
| |
| Retailing 0.2% |
| Li & Fung Ltd. | | | 664,000 | | | | 3,515,761 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.3% |
| ASM Pacific Technology Ltd. | | | 698,100 | | | | 6,312,463 | |
| | | | | | | | | |
| |
| Transportation 0.2% |
| Pacific Basin Shipping Ltd. | | | 5,560,000 | | | | 4,063,794 | |
| | | | | | | | | |
| | | | | | | | 28,998,496 | |
| |
India 1.2%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.2% |
| Apollo Tyres Ltd. | | | 565,669 | | | | 916,223 | |
| Bajaj Auto Ltd. | | | 19,400 | | | | 664,374 | |
| Exide Industries Ltd. | | | 42,918 | | | | 150,265 | |
| TVS Motor Co., Ltd. | | | 1,060,480 | | | | 1,752,564 | |
| | | | | | | | | |
| | | | | | | | 3,483,426 | |
| | | | | | | | | |
| |
| Banks 0.3% |
| Axis Bank Ltd. | | | 55,023 | | | | 1,825,434 | |
| Canara Bank Ltd. | | | 29,600 | | | | 481,946 | |
| Corporation Bank | | | 112,451 | | | | 1,890,122 | |
| Yes Bank Ltd. | | | 193,680 | | | | 1,558,665 | |
| | | | | | | | | |
| | | | | | | | 5,756,167 | |
| | | | | | | | | |
| |
| Capital Goods 0.0% |
| Cummins India Ltd. | | | 20,900 | | | | 374,953 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
S. Kumars Nationwide Ltd. * | | | 750,930 | | | | 1,379,082 | |
| | | | | | | | | |
| |
| Diversified Financials 0.1% |
| Infrastructure Development Finance Co., Ltd. | | | 202,901 | | | | 917,998 | |
| Shriram Transport Finance Co., Ltd. | | | 45,253 | | | | 896,779 | |
| | | | | | | | | |
| | | | | | | | 1,814,777 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| Asian Paints Ltd. | | | 19,237 | | | | 1,161,936 | |
| Jindal Steel & Power Ltd. | | | 66,653 | | | | 1,047,232 | |
| | | | | | | | | |
| | | | | | | | 2,209,168 | |
| | | | | | | | | |
| |
| Media 0.0% |
| Sun TV Network Ltd. | | | 44,957 | | | | 506,555 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
| Lupin Ltd. | | | 102,475 | | | | 1,020,613 | |
| Strides Arcolab Ltd. | | | 142,171 | | | | 1,358,490 | |
| | | | | | | | | |
| | | | | | | | 2,379,103 | |
| | | | | | | | | |
| |
| Real Estate 0.0% |
Oberoi Realty Ltd. * | | | 20,758 | | | | 129,665 | |
| | | | | | | | | |
| |
| Software & Services 0.2% |
| Infosys Technologies Ltd. | | | 46,417 | | | | 3,107,857 | |
| | | | | | | | | |
| | | | | | | | 21,140,753 | |
| |
Indonesia 1.0%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.2% |
| PT Astra International Tbk | | | 646,000 | | | | 4,136,086 | |
| | | | | | | | | |
| |
| Banks 0.1% |
| PT Bank Rakyat Indonesia | | | 1,937,000 | | | | 2,479,889 | |
| | | | | | | | | |
| |
| Capital Goods 0.2% |
| PT United Tractors Tbk | | | 1,051,000 | | | | 2,619,655 | |
Tower Bersama Infrastructure Tbk PT * | | | 3,867,500 | | | | 1,103,454 | |
| | | | | | | | | |
| | | | | | | | 3,723,109 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.4% |
| PT Indofood Sukses Makmur Tbk | | | 2,359,000 | | | | 1,375,822 | |
| PT Perusahaan Perkebunan London Sumatra Indonesia Tbk | | | 3,672,500 | | | | 4,826,795 | |
| | | | | | | | | |
| | | | | | | | 6,202,617 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| PT Kalbe Farma Tbk | | | 3,321,500 | | | | 997,663 | |
| | | | | | | | | |
| | | | | | | | 17,539,364 | |
| |
Ireland 1.3%
|
| | | | | | | | | |
| |
| Banks 0.3% |
The Governor & Company of the Bank of Ireland * | | | 6,518,300 | | | | 4,875,566 | |
| | | | | | | | | |
| |
| Capital Goods 0.4% |
| Cooper Industries plc | | | 117,800 | | | | 6,175,076 | |
| Ingersoll-Rand plc | | | 52,725 | | | | 2,072,620 | |
| | | | | | | | | |
| | | | | | | | 8,247,696 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.3% |
| Experian plc | | | 530,600 | | | | 6,165,447 | |
| | | | | | | | | |
| |
| Consumer Services 0.1% |
| Paddy Power plc | | | 27,374 | | | | 1,104,937 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.2% |
| Glanbia plc | | | 673,843 | | | | 3,169,949 | |
| | | | | | | | | |
| | | | | | | | 23,563,595 | |
24 See financial notes
Laudus International MarketMasters Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Israel 0.4%
|
| | | | | | | | | |
| |
| Materials 0.2% |
| Israel Chemicals Ltd. | | | 150,664 | | | | 2,299,428 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.2% |
Mellanox Technologies Ltd. * | | | 172,152 | | | | 3,962,939 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.0% |
Orbotech Ltd. * | | | 25,000 | | | | 243,250 | |
| | | | | | | | | |
| | | | | | | | 6,505,617 | |
| |
Italy 1.0%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.2% |
| Pirelli & C. S.p.A. | | | 414,732 | | | | 3,543,514 | |
| | | | | | | | | |
| |
| Banks 0.2% |
| Intesa Sanpaolo | | | 926,500 | | | | 3,258,631 | |
| | | | | | | | | |
| |
| Capital Goods 0.1% |
Interpump Group S.p.A. * | | | 228,812 | | | | 1,492,340 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.3% |
Safilo Group S.p.A. * | | | 293,402 | | | | 4,629,698 | |
| | | | | | | | | |
| |
| Diversified Financials 0.0% |
| Exor S.p.A. | | | 14,400 | | | | 370,208 | |
| | | | | | | | | |
| |
| Energy 0.2% |
| Saipem S.p.A. | | | 59,655 | | | | 2,650,371 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.0% |
| DiaSorin S.p.A. | | | 20,330 | | | | 835,115 | |
| | | | | | | | | |
| |
| Real Estate 0.0% |
Pirelli & C. Real Estate S.p.A. * | | | 414,732 | | | | 243,578 | |
| | | | | | | | | |
| |
| Transportation 0.0% |
| Ansaldo STS S.p.A. | | | 60,747 | | | | 837,982 | |
| | | | | | | | | |
| | | | | | | | 17,861,437 | |
| |
Japan 10.9%
|
| | | | | | | | | |
| |
| Automobiles & Components 2.3% |
| EXEDY Corp. | | | 24,600 | | | | 767,647 | |
| F.C.C. Co., Ltd. | | | 517,711 | | | | 11,091,066 | |
Fuji Heavy Industries Ltd. * | | | 256,000 | | | | 1,764,221 | |
| Honda Motor Co., Ltd. | | | 161,800 | | | | 5,832,693 | |
| NGK Spark Plug Co., Ltd. | | | 84,000 | | | | 1,168,523 | |
| Nifco, Inc. | | | 421,400 | | | | 10,602,261 | |
| Toyota Motor Corp. | | | 258,000 | | | | 9,138,428 | |
| | | | | | | | | |
| | | | | | | | 40,364,839 | |
| | | | | | | | | |
| |
| Banks 0.7% |
| Sumitomo Mitsui Financial Group, Inc. | | | 416,000 | | | | 12,416,661 | |
| | | | | | | | | |
| |
| Capital Goods 1.2% |
| Fanuc Ltd. | | | 35,100 | | | | 5,081,416 | |
Makino Milling Machine Co., Ltd. * | | | 197,000 | | | | 1,356,037 | |
| Makita Corp. | | | 13,600 | | | | 476,854 | |
| Minebea Co., Ltd. | | | 294,000 | | | | 1,614,486 | |
| Misumi Group, Inc. | | | 41,500 | | | | 886,564 | |
| Miura Co., Ltd. | | | 110,000 | | | | 2,486,158 | |
| Nabtesco Corp. | | | 326,500 | | | | 5,785,144 | |
| Sumitomo Heavy Industries Ltd. | | | 90,000 | | | | 511,537 | |
| Ushio, Inc. | | | 238,700 | | | | 3,967,405 | |
| | | | | | | | | |
| | | | | | | | 22,165,601 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.1% |
Meitec Corp. * | | | 120,000 | | | | 2,394,839 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.2% |
| Shimano, Inc. | | | 41,100 | | | | 2,047,981 | |
| Tamron Co., Ltd. | | | 69,400 | | | | 1,367,876 | |
| | | | | | | | | |
| | | | | | | | 3,415,857 | |
| | | | | | | | | |
| |
| Diversified Financials 0.6% |
| Daiwa Securities Group, Inc. | | | 2,496,900 | | | | 10,180,408 | |
| kabu.com Securities Co., Ltd. | | | 92,800 | | | | 320,891 | |
| Osaka Securities Exchange Co., Ltd. | | | 137 | | | | 688,456 | |
| | | | | | | | | |
| | | | | | | | 11,189,755 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.6% |
| Ariake Japan Co., Ltd. | | | 278,100 | | | | 4,207,267 | |
| Japan Tobacco, Inc. | | | 1,980 | | | | 6,151,235 | |
| | | | | | | | | |
| | | | | | | | 10,358,502 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 1.1% |
| Hogy Medical Co., Ltd. | | | 155,600 | | | | 7,082,784 | |
| Miraca Holdings, Inc. | | | 148,200 | | | | 5,318,017 | |
| Olympus Corp. | | | 230,100 | | | | 6,028,982 | |
| Sysmex Corp. | | | 5,800 | | | | 397,698 | |
| Terumo Corp. | | | 19,700 | | | | 1,000,434 | |
| | | | | | | | | |
| | | | | | | | 19,827,915 | |
| | | | | | | | | |
| |
| Insurance 0.1% |
| Sony Financial Holdings, Inc. | | | 735 | | | | 2,556,055 | |
| | | | | | | | | |
| |
| Materials 0.3% |
| Nippon Shokubai Co., Ltd. | | | 34,000 | | | | 321,079 | |
| Taiyo Holdings Co., Ltd. | | | 117,400 | | | | 3,327,514 | |
| Zeon Corp. | | | 264,000 | | | | 2,177,790 | |
| | | | | | | | | |
| | | | | | | | 5,826,383 | |
| | | | | | | | | |
| |
| Media 0.0% |
| CyberAgent, Inc. | | | 196 | | | | 325,945 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Sawai Pharmaceutical Co., Ltd. | | | 16,200 | | | | 1,415,260 | |
| | | | | | | | | |
| |
| Retailing 0.5% |
| DeNA Co., Ltd. | | | 57,300 | | | | 1,487,488 | |
| K’s Holdings Corp. | | | 33,800 | | | | 839,967 | |
| Nitori Co., Ltd. | | | 19,210 | | | | 1,690,307 | |
| Point, Inc. | | | 17,040 | | | | 711,384 | |
| Start Today Co., Ltd. | | | 567 | | | | 1,763,518 | |
| USS Co., Ltd. | | | 11,890 | | | | 923,667 | |
| Yamada Denki Co., Ltd. | | | 24,250 | | | | 1,573,563 | |
| | | | | | | | | |
| | | | | | | | 8,989,894 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.5% |
| Rohm Co., Ltd. | | | 137,000 | | | | 8,543,727 | |
| | | | | | | | | |
| |
| Software & Services 0.5% |
| Gree, Inc. | | | 149,700 | | | | 1,886,379 | |
| Kakaku.com, Inc. | | | 549 | | | | 2,649,229 | |
| Yahoo! Japan Corp. | | | 13,255 | | | | 4,626,843 | |
| | | | | | | | | |
| | | | | | | | 9,162,451 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 1.8% |
| Canon, Inc. | | | 260,900 | | | | 12,010,082 | |
| Hitachi Kokusai Electric, Inc. | | | 176,000 | | | | 1,598,962 | |
| Horiba Ltd. | | | 314,700 | | | | 7,728,676 | |
See financial notes 25
Laudus International MarketMasters Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Keyence Corp. | | | 10,300 | | | | 2,551,852 | |
| Murata Manufacturing Co., Ltd. | | | 35,500 | | | | 1,994,965 | |
| Nippon Electric Glass Co., Ltd. | | | 34,000 | | | | 437,030 | |
| OMRON Corp. | | | 241,700 | | | | 5,599,320 | |
| | | | | | | | | |
| | | | | | | | 31,920,887 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.3% |
| SOFTBANK Corp. | | | 177,100 | | | | 5,687,567 | |
| | | | | | | | | |
| | | | | | | | 196,562,138 | |
| |
Luxembourg 1.4%
|
| | | | | | | | | |
| |
| Energy 0.9% |
| Acergy S.A. | | | 361,416 | | | | 7,319,584 | |
| Tenaris S.A. ADR | | | 212,425 | | | | 8,800,768 | |
| | | | | | | | | |
| | | | | | | | 16,120,352 | |
| | | | | | | | | |
| |
| Materials 0.3% |
| ArcelorMittal | | | 178,700 | | | | 5,782,441 | |
| | | | | | | | | |
| |
| Retailing 0.2% |
L’Occitane International S.A. * | | | 1,182,550 | | | | 3,487,514 | |
| | | | | | | | | |
| | | | | | | | 25,390,307 | |
| |
Malaysia 0.1%
|
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| Kuala Lumpur Kepong Berhad | | | 197,100 | | | | 1,255,335 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.0% |
| Top Glove Corp. Bhd | | | 242,400 | | | | 428,929 | |
| | | | | | | | | |
| | | | | | | | 1,684,264 | |
| |
Mexico 1.1%
|
| | | | | | | | | |
| |
| Diversified Financials 0.2% |
| Banco Compartamos S.A. de C.V. | | | 430,073 | | | | 3,030,155 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| Fomento Economico Mexicano S.A.B. de C.V. ADR | | | 48,000 | | | | 2,635,680 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| Grupo Mexico S.A.B. de C.V., Series B | | | 499,700 | | | | 1,645,837 | |
| | | | | | | | | |
| |
| Media 0.3% |
| Grupo Televisa S.A. ADR | | | 204,400 | | | | 4,588,780 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
Genomma Lab Internacional S.A., Class B * | | | 1,861,438 | | | | 4,011,408 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.2% |
| America Movil SAB de C.V., Series L ADR | | | 63,357 | | | | 3,627,822 | |
| | | | | | | | | |
| | | | | | | | 19,539,682 | |
| |
Netherlands 3.4%
|
| | | | | | | | | |
| |
| Capital Goods 0.7% |
| Aalberts Industries N.V. | | | 124,420 | | | | 2,282,157 | |
| Koninklijke Boskalis Westminster N.V. | | | 274,759 | | | | 11,162,861 | |
| | | | | | | | | |
| | | | | | | | 13,445,018 | |
| | | | | | | | | |
| |
| Energy 1.6% |
| Core Laboratories N.V. | | | 55,350 | | | | 4,304,569 | |
| Fugro N.V., CVA | | | 119,753 | | | | 8,477,855 | |
| SBM Offshore N.V. | | | 186,846 | | | | 3,813,632 | |
| Schlumberger Ltd. | | | 166,100 | | | | 11,608,729 | |
| | | | | | | | | |
| | | | | | | | 28,204,785 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.3% |
| Heineken Holding N.V. | | | 107,500 | | | | 4,636,784 | |
| Unilever N.V., NY Shares | | | 52,650 | | | | 1,563,178 | |
| | | | | | | | | |
| | | | | | | | 6,199,962 | |
| | | | | | | | | |
| |
| Materials 0.2% |
| Akzo Nobel N.V. | | | 59,700 | | | | 3,546,217 | |
| | | | | | | | | |
| |
| Transportation 0.6% |
| Koninklijke Vopak N.V. | | | 206,912 | | | | 10,351,631 | |
| | | | | | | | | |
| | | | | | | | 61,747,613 | |
| |
New Zealand 0.9%
|
| | | | | | | | | |
| |
| Consumer Services 0.3% |
| Sky City Entertainment Group Ltd. | | | 2,040,209 | | | | 4,705,064 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.4% |
| Fisher & Paykel Healthcare Corp., Ltd. | | | 3,192,049 | | | | 7,890,210 | |
| | | | | | | | | |
| |
| Transportation 0.2% |
| Auckland International Airport Ltd. | | | 2,283,343 | | | | 3,658,818 | |
| | | | | | | | | |
| | | | | | | | 16,254,092 | |
| |
Norway 0.7%
|
| | | | | | | | | |
| |
| Energy 0.4% |
| Farstad Shipping A.S.A. | | | 122,850 | | | | 3,114,985 | |
Petroleum Geo-Services A.S.A. * | | | 383,946 | | | | 4,807,793 | |
| | | | | | | | | |
| | | | | | | | 7,922,778 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| Yara International A.S.A. ADR | | | 17,050 | | | | 899,388 | |
| | | | | | | | | |
| |
| Media 0.2% |
| Schibsted A.S.A. | | | 144,600 | | | | 3,971,674 | |
| | | | | | | | | |
| |
| Transportation 0.0% |
Norwegian Air Shuttle A.S.A. * | | | 32,900 | | | | 505,174 | |
| | | | | | | | | |
| | | | | | | | 13,299,014 | |
| |
Peru 0.1%
|
| | | | | | | | | |
| |
| Banks 0.1% |
| Credicorp Ltd. | | | 18,555 | | | | 2,335,703 | |
| |
Philippines 0.1%
|
| | | | | | | | | |
| |
| Transportation 0.1% |
| International Container Terminal Services, Inc. | | | 1,548,600 | | | | 1,549,463 | |
26 See financial notes
Laudus International MarketMasters Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Republic of Korea 1.4%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.5% |
| Halla Climate Control Corp. | | | 22,519 | | | | 418,526 | |
| Hankook Tire Co., Ltd. | | | 46,650 | | | | 1,215,087 | |
| Hyundai Mobis | | | 8,154 | | | | 2,030,596 | |
| Hyundai Motor Co. | | | 25,759 | | | | 3,899,518 | |
Mando Corp. * | | | 17,210 | | | | 1,992,956 | |
| | | | | | | | | |
| | | | | | | | 9,556,683 | |
| | | | | | | | | |
| |
| Capital Goods 0.2% |
| Sung Kwang Bend Co., Ltd. | | | 130,562 | | | | 3,002,417 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.2% |
| KT&G Corp. | | | 39,110 | | | | 2,404,384 | |
| ORION Corp. | | | 2,164 | | | | 724,354 | |
| | | | | | | | | |
| | | | | | | | 3,128,738 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| INI Steel Co. | | | 8,400 | | | | 815,642 | |
| Lock&Lock Co., Ltd. | | | 10,690 | | | | 353,751 | |
| | | | | | | | | |
| | | | | | | | 1,169,393 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.3% |
| Samsung Electronics Co., Ltd. | | | 8,700 | | | | 5,771,804 | |
| | | | | | | | | |
| |
| Software & Services 0.1% |
Daum Communications Corp. * | | | 21,398 | | | | 1,492,811 | |
| NCsoft Corp. | | | 5,200 | | | | 1,145,451 | |
| | | | | | | | | |
| | | | | | | | 2,638,262 | |
| | | | | | | | | |
| | | | | | | | 25,267,297 | |
| |
Singapore 3.0%
|
| | | | | | | | | |
| |
| Food & Staples Retailing 0.0% |
| Olam International Ltd. | | | 359,000 | | | | 872,641 | |
| | | | | | | | | |
| |
| Materials 0.0% |
Midas Holdings Ltd. * | | | 466,000 | | | | 336,067 | |
| | | | | | | | | |
| |
| Real Estate 1.2% |
| Ascendas Real Estate Investment Trust | | | 3,674,000 | | | | 5,864,386 | |
| Capitaland Ltd. | | | 632,000 | | | | 1,906,417 | |
| CapitaMall Trust | | | 6,287,200 | | | | 9,657,888 | |
| CapitaMalls Asia Ltd. | | | 1,323,000 | | | | 2,195,149 | |
Global Logistic Properties Ltd. * | | | 547,000 | | | | 980,484 | |
| Yanlord Land Group Ltd. | | | 158,000 | | | | 211,215 | |
| | | | | | | | | |
| | | | | | | | 20,815,539 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.4% |
| StarHub Ltd. | | | 3,432,000 | | | | 7,049,561 | |
| | | | | | | | | |
| |
| Transportation 1.1% |
Neptune Orient Lines Ltd. * | | | 339,000 | | | | 563,476 | |
| SATS Ltd. | | | 3,136,000 | | | | 6,914,261 | |
| SIA Engineering Co., Ltd. | | | 2,870,000 | | | | 9,629,651 | |
| SMRT Corp., Ltd. | | | 2,152,553 | | | | 3,416,579 | |
| | | | | | | | | |
| | | | | | | | 20,523,967 | |
| | | | | | | | | |
| |
| Utilities 0.3% |
| Hyflux Ltd. | | | 1,939,000 | | | | 4,732,708 | |
| | | | | | | | | |
| | | | | | | | 54,330,483 | |
| |
South Africa 0.7%
|
| | | | | | | | | |
| |
| Banks 0.0% |
| Standard Bank Group Ltd. | | | 60,284 | | | | 887,126 | |
| | | | | | | | | |
| |
| Capital Goods 0.0% |
| Wilson Bayly Holmes-Ovcon Ltd. | | | 41,734 | | | | 803,031 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.1% |
| Shoprite Holdings Ltd. | | | 66,929 | | | | 946,402 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| Northam Platinum Ltd. | | | 183,753 | | | | 1,270,624 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Adcock Ingram Holdings Ltd. | | | 37,136 | | | | 347,052 | |
Aspen Pharmacare Holdings Ltd. * | | | 94,578 | | | | 1,259,912 | |
| | | | | | | | | |
| | | | | | | | 1,606,964 | |
| | | | | | | | | |
| |
| Retailing 0.4% |
| Clicks Group Ltd. | | | 963,201 | | | | 6,273,369 | |
| Truworths International Ltd. | | | 75,900 | | | | 748,971 | |
| | | | | | | | | |
| | | | | | | | 7,022,340 | |
| | | | | | | | | |
| | | | | | | | 12,536,487 | |
| |
Spain 1.5%
|
| | | | | | | | | |
| |
| Banks 0.6% |
| Banco Santander S.A. | | | 913,009 | | | | 11,718,951 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.4% |
| Prosegur, Compania de Seguridad S.A. - Reg’d | | | 125,432 | | | | 7,508,805 | |
| | | | | | | | | |
| |
| Energy 0.3% |
| Tecnicas Reunidas S.A. | | | 82,373 | | | | 5,124,450 | |
| | | | | | | | | |
| |
| Retailing 0.1% |
| Industria de Diseno Textil S.A. | | | 18,908 | | | | 1,579,204 | |
| | | | | | | | | |
| |
| Software & Services 0.1% |
Amadeus IT Holding S.A., A Shares * | | | 78,886 | | | | 1,609,631 | |
| | | | | | | | | |
| | | | | | | | 27,541,041 | |
| |
Sweden 1.5%
|
| | | | | | | | | |
| |
| Banks 0.1% |
Swedbank AB, A Shares * | | | 99,300 | | | | 1,388,567 | |
| | | | | | | | | |
| |
| Capital Goods 0.8% |
| Assa Abloy AB, B Shares | | | 318,000 | | | | 8,154,230 | |
| Atlas Copco AB, A Shares | | | 149,418 | | | | 3,122,569 | |
Haldex AB * | | | 115,947 | | | | 1,387,856 | |
| Hexagon AB, Class B | | | 92,292 | | | | 1,877,984 | |
| | | | | | | | | |
| | | | | | | | 14,542,639 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.2% |
| AF AB, B Shares | | | 232,385 | | | | 4,047,581 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| Swedish Match AB | | | 43,900 | | | | 1,228,096 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.2% |
| Elekta AB, B Shares | | | 100,757 | | | | 3,811,067 | |
See financial notes 27
Laudus International MarketMasters Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| | | | | | | | | |
| |
| Media 0.1% |
| Modern Times Group, B Shares | | | 23,100 | | | | 1,659,663 | |
| | | | | | | | | |
| | | | | | | | 26,677,613 | |
| |
Switzerland 8.3%
|
| | | | | | | | | |
| |
| Capital Goods 0.5% |
ABB Ltd. - Reg’d * | | | 161,700 | | | | 3,349,406 | |
| Geberit AG - Reg’d | | | 24,499 | | | | 4,695,574 | |
| Sulzer AG - Reg’d | | | 9,700 | | | | 1,181,042 | |
| | | | | | | | | |
| | | | | | | | 9,226,022 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.7% |
| Adecco S.A. - Reg’d | | | 173,500 | | | | 9,707,633 | |
| SGS S.A. - Reg’d | | | 1,936 | | | | 3,096,591 | |
| | | | | | | | | |
| | | | | | | | 12,804,224 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.7% |
| Compagnie Financiere Richemont S.A., Series A | | | 173,365 | | | | 8,647,136 | |
| Swatch Group AG - Bearer Shares | | | 8,200 | | | | 3,134,311 | |
| | | | | | | | | |
| | | | | | | | 11,781,447 | |
| | | | | | | | | |
| |
| Consumer Services 0.1% |
Orascom Development Holding AG * | | | 16,512 | | | | 1,002,583 | |
| | | | | | | | | |
| |
| Diversified Financials 1.3% |
| Credit Suisse Group AG - Reg’d | | | 310,122 | | | | 12,838,616 | |
| Partners Group Holding AG | | | 10,794 | | | | 1,974,678 | |
UBS AG - Reg’d * | | | 528,500 | | | | 8,977,909 | |
| | | | | | | | | |
| | | | | | | | 23,791,203 | |
| | | | | | | | | |
| |
| Energy 1.5% |
| Noble Corp. | | | 329,625 | | | | 11,381,951 | |
Transocean Ltd. * | | | 137,046 | | | | 8,683,235 | |
Weatherford International Ltd. * | | | 434,850 | | | | 7,309,828 | |
| | | | | | | | | |
| | | | | | | | 27,375,014 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 1.2% |
| Nestle S.A. - Reg’d | | | 158,360 | | | | 8,674,084 | |
| Nestle S.A. - Reg’d ADR | | | 249,187 | | | | 13,667,907 | |
| | | | | | | | | |
| | | | | | | | 22,341,991 | |
| | | | | | | | | |
| |
| Insurance 0.3% |
| Zurich Financial Services AG | | | 18,343 | | | | 4,488,848 | |
| | | | | | | | | |
| |
| Materials 0.5% |
Clariant AG - Reg’d * | | | 251,097 | | | | 4,246,585 | |
| Givaudan S.A. - Reg’d | | | 2,900 | | | | 2,988,161 | |
| Holcim Ltd. - Reg’d | | | 9,200 | | | | 573,126 | |
| Sika AG - Bearer Shares | | | 716 | | | | 1,419,765 | |
| | | | | | | | | |
| | | | | | | | 9,227,637 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.8% |
| Novartis AG - Reg’d | | | 122,733 | | | | 7,111,481 | |
| Novartis AG ADR | | | 71,775 | | | | 4,159,361 | |
| Roche Holding AG | | | 17,000 | | | | 2,496,521 | |
| Roche Holding AG - Bearer Shares | | | 2,314 | | | | 353,041 | |
| | | | | | | | | |
| | | | | | | | 14,120,404 | |
| | | | | | | | | |
| |
| Retailing 0.1% |
Dufry Group - Reg’d * | | | 9,998 | | | | 1,163,387 | |
| | | | | | | | | |
| |
| Transportation 0.6% |
| Kuehne & Nagel International AG - Reg’d | | | 42,878 | | | | 5,304,392 | |
Panalpina Welttransport Holding AG - Reg’d * | | | 50,898 | | | | 6,357,841 | |
| | | | | | | | | |
| | | | | | | | 11,662,233 | |
| | | | | | | | | |
| | | | | | | | 148,984,993 | |
| |
Taiwan 0.6%
|
| | | | | | | | | |
| |
| Food & Staples Retailing 0.0% |
| President Chain Store Corp. | | | 82,000 | | | | 325,241 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| St. Shine Optical Co., Ltd. | | | 162,000 | | | | 1,821,776 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.1% |
Chipbond Technology Corp. * | | | 419,000 | | | | 652,044 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.3% |
J Touch Corp. * | | | 371,000 | | | | 1,441,958 | |
| Largan Precision Co., Ltd. | | | 74,000 | | | | 1,468,575 | |
| Synnex Technology International Corp. | | | 187,000 | | | | 458,001 | |
| Unimicron Technology Corp. | | | 112,000 | | | | 190,174 | |
Wintek Corp. * | | | 518,000 | | | | 873,261 | |
| Young Fast Optoelectronics Co., Ltd. | | | 128,816 | | | | 1,516,719 | |
| | | | | | | | | |
| | | | | | | | 5,948,688 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
EVA Airways Corp. * | | | 725,000 | | | | 732,751 | |
Wan Hai Lines Ltd. * | | | 1,956,000 | | | | 1,435,425 | |
| | | | | | | | | |
| | | | | | | | 2,168,176 | |
| | | | | | | | | |
| | | | | | | | 10,915,925 | |
| |
Thailand 0.1%
|
| | | | | | | | | |
| |
| Banks 0.0% |
| Kasikornbank Public Co., Ltd. | | | 93,200 | | | | 392,464 | |
| | | | | | | | | |
| |
| Energy 0.0% |
| Banpu Public Co., Ltd. - Reg’d | | | 18,200 | | | | 474,558 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.1% |
| CP ALL PCL | | | 889,100 | | | | 1,319,712 | |
| | | | | | | | | |
| |
| Materials 0.0% |
| Indorama Ventures PCL | | | 357,600 | | | | 378,712 | |
| | | | | | | | | |
| | | | | | | | 2,565,446 | |
| |
Turkey 0.7%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.0% |
| Tofas Turk Otomobil Fabrikasi A/S | | | 47,733 | | | | 261,058 | |
| | | | | | | | | |
| |
| Banks 0.3% |
| Turk Ekonomi Bankasi A/S | | | 1,646,405 | | | | 2,802,797 | |
| Turkiye Garanti Bankasi A/S | | | 378,415 | | | | 2,284,292 | |
| Turkiye Vakiflar Bankasi T.A.O., Class D | | | 124,900 | | | | 396,473 | |
| | | | | | | | | |
| | | | | | | | 5,483,562 | |
| | | | | | | | | |
| |
| Capital Goods 0.2% |
| Tekfen Holding A/S | | | 816,543 | | | | 3,485,696 | |
28 See financial notes
Laudus International MarketMasters Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.2% |
Turkiye Sise ve Cam Fabrikalari A/S * | | | 1,637,718 | | | | 2,988,081 | |
| | | | | | | | | |
| | | | | | | | 12,218,397 | |
| |
United Kingdom 18.1%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.3% |
| GKN plc | | | 1,735,317 | | | | 4,930,498 | |
| | | | | | | | | |
| |
| Banks 0.5% |
Lloyds Banking Group plc * | | | 3,007,286 | | | | 3,305,377 | |
| Paragon Group Cos. plc | | | 532,543 | | | | 1,296,283 | |
| Standard Chartered plc | | | 155,415 | | | | 4,495,358 | |
| | | | | | | | | |
| | | | | | | | 9,097,018 | |
| | | | | | | | | |
| |
| Capital Goods 4.7% |
| Ashtead Group plc | | | 1,012,599 | | | | 2,038,426 | |
| BAE Systems plc | | | 423,600 | | | | 2,338,283 | |
| BAE Systems plc ADR | | | 30,250 | | | | 667,920 | |
| Bodycote plc | | | 891,244 | | | | 3,776,524 | |
| Chemring Group plc | | | 27,155 | | | | 1,304,464 | |
| Cobham plc | | | 518,285 | | | | 1,923,390 | |
| Interserve plc | | | 1,180,787 | | | | 3,798,465 | |
| Meggitt plc | | | 192,496 | | | | 1,017,629 | |
Rolls-Royce Group plc * | | | 411,814 | | | | 4,272,452 | |
Rolls-Royce Group plc, C Shares (b)(c)* | | | 26,356,096 | | | | 42,232 | |
| Rotork plc | | | 608,890 | | | | 16,327,161 | |
| Spirax-Sarco Engineering plc | | | 189,454 | | | | 5,487,050 | |
| The Weir Group plc | | | 952,920 | | | | 23,783,583 | |
| Ultra Electronics Holdings plc | | | 311,049 | | | | 9,269,894 | |
Wolseley plc * | | | 296,900 | | | | 7,897,401 | |
| | | | | | | | | |
| | | | | | | | 83,944,874 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 1.8% |
| Aggreko plc | | | 106,901 | | | | 2,697,483 | |
| Babcock International Group plc | | | 277,196 | | | | 2,576,079 | |
| De La Rue plc | | | 583,744 | | | | 5,965,645 | |
| G4S plc | | | 1,914,700 | | | | 8,027,002 | |
| Homeserve plc | | | 297,452 | | | | 2,160,298 | |
| Intertek Group plc | | | 59,637 | | | | 1,772,545 | |
| Michael Page International plc | | | 301,079 | | | | 2,272,425 | |
| RPS Group plc | | | 211,087 | | | | 693,979 | |
| Serco Group plc | | | 617,983 | | | | 6,079,572 | |
| | | | | | | | | |
| | | | | | | | 32,245,028 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.2% |
| Burberry Group plc | | | 161,380 | | | | 2,635,337 | |
The Berkeley Group Holdings plc * | | | 85,261 | | | | 1,149,892 | |
| | | | | | | | | |
| | | | | | | | 3,785,229 | |
| | | | | | | | | |
| |
| Consumer Services 0.4% |
| Compass Group plc | | | 243,447 | | | | 1,995,044 | |
| Greene King plc | | | 388,681 | | | | 2,604,930 | |
| InterContinental Hotels Group plc | | | 32,700 | | | | 631,539 | |
| Millennium & Copthorne Hotels plc | | | 260,006 | | | | 2,270,509 | |
| | | | | | | | | |
| | | | | | | | 7,502,022 | |
| | | | | | | | | |
| |
| Diversified Financials 0.5% |
| IG Group Holdings plc | | | 475,625 | | | | 4,023,911 | |
| Schroders plc | | | 184,300 | | | | 4,658,935 | |
| Schroders plc - Non Voting Shares | | | 55,700 | | | | 1,126,721 | |
| | | | | | | | | |
| | | | | | | | 9,809,567 | |
| | | | | | | | | |
| |
| Energy 0.6% |
| AMEC plc | | | 108,523 | | | | 1,887,647 | |
Cairn Energy plc * | | | 210,917 | | | | 1,303,568 | |
Enquest plc * | | | 267,174 | | | | 552,336 | |
| Petrofac Ltd. | | | 165,465 | | | | 3,877,406 | |
Premier Oil plc * | | | 101,923 | | | | 2,745,357 | |
| Tullow Oil plc | | | 43,044 | | | | 817,541 | |
| | | | | | | | | |
| | | | | | | | 11,183,855 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 1.1% |
| British American Tobacco plc ADR | | | 76,850 | | | | 5,858,275 | |
| Britvic plc | | | 128,394 | | | | 992,402 | |
| Diageo plc | | | 483,500 | | | | 8,919,415 | |
| Diageo plc ADR | | | 51,050 | | | | 3,777,700 | |
| | | | | | | | | |
| | | | | | | | 19,547,792 | |
| | | | | | | | | |
| |
| Insurance 0.3% |
| Admiral Group plc | | | 132,390 | | | | 3,454,751 | |
| Amlin plc | | | 217,144 | | | | 1,414,224 | |
| Lancashire Holdings Ltd. | | | 107,746 | | | | 979,597 | |
| | | | | | | | | |
| | | | | | | | 5,848,572 | |
| | | | | | | | | |
| |
| Materials 3.4% |
| Antofagasta plc | | | 75,378 | | | | 1,595,539 | |
| BHP Billiton plc | | | 230,791 | | | | 8,175,767 | |
| Croda International plc | | | 699,003 | | | | 16,105,228 | |
| Johnson Matthey plc | | | 68,487 | | | | 2,100,274 | |
| Rexam plc | | | 2,487,296 | | | | 12,668,836 | |
| Rio Tinto plc ADR | | | 205,800 | | | | 13,401,696 | |
| Victrex plc | | | 327,476 | | | | 6,777,521 | |
| | | | | | | | | |
| | | | | | | | 60,824,861 | |
| | | | | | | | | |
| |
| Media 0.5% |
| Informa plc | | | 165,400 | | | | 1,156,471 | |
| Reed Elsevier plc | | | 521,100 | | | | 4,470,690 | |
| Rightmove plc | | | 213,511 | | | | 2,722,016 | |
| | | | | | | | | |
| | | | | | | | 8,349,177 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.3% |
| Abcam plc | | | 30,177 | | | | 831,691 | |
| GlaxoSmithKline plc | | | 205,800 | | | | 4,018,766 | |
| | | | | | | | | |
| | | | | | | | 4,850,457 | |
| | | | | | | | | |
| |
| Retailing 1.0% |
ASOS plc * | | | 215,057 | | | | 4,875,383 | |
Carphone Warehouse Group plc * | | | 309,832 | | | | 1,511,719 | |
| Dunelm Group plc | | | 80,830 | | | | 624,408 | |
| Next plc | | | 83,246 | | | | 3,047,988 | |
Ocado Group plc * | | | 289,613 | | | | 648,294 | |
Signet Jewelers Ltd. * | | | 197,000 | | | | 6,930,460 | |
| | | | | | | | | |
| | | | | | | | 17,638,252 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.1% |
| ARM Holdings plc | | | 206,800 | | | | 1,207,349 | |
| | | | | | | | | |
| |
| Software & Services 0.3% |
| Aveva Group plc | | | 46,526 | | | | 1,110,294 | |
Blinkx plc * | | | 1,135,730 | | | | 1,591,365 | |
See financial notes 29
Laudus International MarketMasters Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Telecity Group plc * | | | 465,670 | | | | 3,717,300 | |
| | | | | | | | | |
| | | | | | | | 6,418,959 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 1.6% |
| Diploma plc | | | 1,078,077 | | | | 4,482,679 | |
| Halma plc | | | 898,957 | | | | 4,706,275 | |
Imagination Technologies Group plc * | | | 287,515 | | | | 2,000,219 | |
| Laird plc | | | 2,045,516 | | | | 4,883,676 | |
| Spectris plc | | | 529,157 | | | | 9,564,849 | |
| TT electronics plc | | | 1,249,354 | | | | 3,194,171 | |
| | | | | | | | | |
| | | | | | | | 28,831,869 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.3% |
| Vodafone Group plc | | | 1,802,758 | | | | 4,928,024 | |
| | | | | | | | | |
| |
| Utilities 0.2% |
| Centrica plc | | | 654,682 | | | | 3,483,610 | |
| International Power plc | | | 89,200 | | | | 595,161 | |
| | | | | | | | | |
| | | | | | | | 4,078,771 | |
| | | | | | | | | |
| | | | | | | | 325,022,174 | |
| |
United States 0.3%
|
| | | | | | | | | |
| |
| Energy 0.2% |
Gran Tierra Energy, Inc. * | | | 458,191 | | | | 3,418,105 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.1% |
| Herbalife Ltd. | | | 18,100 | | | | 1,155,866 | |
| | | | | | | | | |
| | | | | | | | 4,573,971 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $1,368,617,535) | | | 1,700,484,802 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Preferred Stock 0.2% of net assets |
| |
Brazil 0.1%
|
| Banco do Estado do Rio Grande do Sul | | | 184,800 | | | | 2,031,354 | |
| |
Germany 0.1%
|
| Draegerwerk AG & Co. KGAA | | | 24,161 | | | | 2,023,926 | |
| Hugo Boss AG | | | 4,400 | | | | 290,715 | |
| | | | | | | | | |
| | | | | | | | 2,314,641 | |
| | | | | | | | | |
| Total Preferred Stock |
| (Cost $4,071,270) | | | 4,345,995 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Other Investment Companies 4.8% of net assets |
| |
Equity Funds 0.2%
|
| iShares Asia Trust - iShares FTSE/Xinhua A50 China Index ETF | | | 1,581,700 | | | | 2,795,587 | |
| |
Money Fund 4.6%
|
| State Street Institutional Liquid Reserves Fund - Institutional Class | | | 83,424,593 | | | | 83,424,593 | |
| | | | | | | | | |
| Total Other Investment Companies |
| (Cost $85,972,557) | | | 86,220,180 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Rights 0.0% of net assets |
| |
Spain 0.0%
|
Banco Santander S.A. * | | | 912,976 | | | | 151,211 | |
| |
United Kingdom 0.0%
|
Standard Chartered plc * | | | 19,426 | | | | 163,574 | |
| | | | | | | | | |
| Total Rights |
| (Cost $152,901) | | | 314,785 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Warrants 0.0% of net assets |
| |
France 0.0%
|
Ste Industrielle d’Aviation Latecoere S.A. (c)* | | | 82,618 | | | | 140,285 | |
| | | | | | | | | |
| Total Warrants |
| (Cost $—) | | | 140,285 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Date | | ($) | | ($) |
| |
Short-Term Investment 0.2% of net assets |
| |
U.S. Treasury Obligation 0.2%
|
| U.S. Treasury Bill |
0.14%, 12/16/10 (a) | | | 3,472,900 | | | | 3,472,314 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $3,472,314) | | | 3,472,314 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
Security
| | Face Amount
| | Value
|
| Rate, Maturity Date | | Local Currency
| | ($) |
| |
Corporate Bond 0.0% of net assets |
| |
Brazil 0.0%
|
| Lupatech S.A. |
6.50%, 04/15/18 (b)(c) | | | 226,000 | | | | 136,224 | |
| | | | | | | | | |
| Total Corporate Bond |
| (Cost $117,822) | | | 136,224 | |
| | | | | |
| |
|
End of Investments. |
30 See financial notes
Laudus International MarketMasters Fund
Portfolio Holdings continued
At 10/31/10, the tax basis cost of the fund’s investments was $1,508,305,412 and the unrealized appreciation and depreciation were $329,643,625 and ($42,834,452), respectively, with a net unrealized appreciation of $286,809,173.
At 10/31/10, the values of certain foreign securities held by the fund aggregating $1,302,519,062 were adjusted from their closing market values in accordance with procedures approved by the Board of Trustees.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is held as collateral for open futures contracts. |
| (b) | | Fair-valued by Management in accordance with procedures approved by the Board of Trustees. |
| (c) | | Illiquid security. At the period end, the value of these amounted to $22,118,921 or 1.2% of net assets. |
| | | |
| ADR — | | American Depositary Receipt |
| CDI — | | CHESS Depositary Interest |
| CVA — | | Dutch Certificate |
| Reg’d — | | Registered |
In addition to the above the fund held the following at 10/31/10.
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contracts |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Russell 2000 Index, mini, Long, expires 12/17/10 | | | 440 | | | | 30,896,800 | | | | 3,074,610 | |
S&P 500 Index, e-mini, Long, expires 12/17/10 | | | 295 | | | | 17,400,575 | | | | 1,257,511 | |
| | | | | | | | | | | | | |
Net unrealized gains | | | 4,332,121 | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Amount of
| | | | Amount of
| | Unrealized
|
| | | | | Currency
| | Currency
| | Currency
| | Currency
| | Gains /
|
Expiration
| | | | to be
| | to be
| | to be
| | to be
| | (Losses)
|
| Date | | Counterparty | | Received | | Received | | Delivered | | Delivered | | ($) |
| |
Forward Foreign Currency Contracts |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| 08/12/2011 | | State Street Bank & Trust Co. | | | USD | | | | 1,143,554 | | | | AUD | | | | 1,210,000 | | | | (92,306 | ) |
| 09/12/2011 | | State Street Bank & Trust Co. | | | USD | | | | 644,715 | | | | AUD | | | | 685,000 | | | | (43,169 | ) |
| 09/16/2011 | | State Street Bank & Trust Co. | | | USD | | | | 691,407 | | | | AUD | | | | 735,000 | | | | (29,246 | ) |
| 09/16/2011 | | State Street Bank & Trust Co. | | | USD | | | | 1,084,615 | | | | AUD | | | | 1,153,000 | | | | 3,471 | |
| 09/21/2011 | | State Street Bank & Trust Co. | | | USD | | | | 921,264 | | | | AUD | | | | 980,000 | | | | 4,434 | |
| 12/15/2010 | | Northern Trust Co. | | | USD | | | | 3,722,663 | | | | CHF | | | | 3,662,000 | | | | (153,636 | ) |
| 12/15/2010 | | Northern Trust Co. | | | USD | | | | 2,489,569 | | | | CHF | | | | 2,449,000 | | | | (59,499 | ) |
| 12/15/2010 | | Northern Trust Co. | | | USD | | | | 3,207,264 | | | | CHF | | | | 3,155,000 | | | | 17,717 | |
| 06/06/2011 | | State Street Bank & Trust Co. | | | USD | | | | 2,086,727 | | | | CHF | | | | 2,050,000 | | | | (292,573 | ) |
| 06/15/2011 | | State Street Bank & Trust Co. | | | USD | | | | 508,994 | | | | CHF | | | | 500,000 | | | | (1,111 | ) |
| 06/15/2011 | | State Street Bank & Trust Co. | | | USD | | | | 5,171,376 | | | | CHF | | | | 5,080,000 | | | | 111,321 | |
| 06/15/2011 | | State Street Bank & Trust Co. | | | USD | | | | 8,469,655 | | | | CHF | | | | 8,320,000 | | | | 230,725 | |
| 07/06/2011 | | State Street Bank & Trust Co. | | | USD | | | | 3,919,898 | | | | CHF | | | | 3,850,000 | | | | (274,410 | ) |
| 07/19/2011 | | State Street Bank & Trust Co. | | | USD | | | | 4,103,585 | | | | CHF | | | | 4,030,000 | | | | (215,088 | ) |
| 08/03/2011 | | State Street Bank & Trust Co. | | | USD | | | | 3,666,163 | | | | CHF | | | | 3,600,000 | | | | (203,226 | ) |
| 12/14/2010 | | Morgan Stanley | | | USD | | | | 11,440,252 | | | | EUR | | | | 8,224,000 | | | | (95,409 | ) |
| 12/16/2010 | | Bank of New York Mellon Corp. | | | USD | | | | 10,418,675 | | | | JPY | | | | 838,057,000 | | | | (455,754 | ) |
| 12/16/2010 | | Bank of New York Mellon Corp. | | | USD | | | | 7,426,270 | | | | JPY | | | | 597,354,000 | | | | (254,120 | ) |
| 12/16/2010 | | Bank of New York Mellon Corp. | | | USD | | | | 5,641,615 | | | | JPY | | | | 453,800,000 | | | | (80,272 | ) |
| 03/01/2011 | | State Street Bank & Trust Co. | | | USD | | | | 10,016,332 | | | | JPY | | | | 805,000,000 | | | | (941,615 | ) |
| 07/01/2011 | | State Street Bank & Trust Co. | | | USD | | | | 1,196,511 | | | | JPY | | | | 96,000,000 | | | | (104,621 | ) |
| 07/20/2011 | | State Street Bank & Trust Co. | | | USD | | | | 4,114,170 | | | | JPY | | | | 330,000,000 | | | | (315,871 | ) |
| 08/03/2011 | | State Street Bank & Trust Co. | | | USD | | | | 3,865,640 | | | | JPY | | | | 310,000,000 | | | | (268,643 | ) |
| 08/15/2011 | | State Street Bank & Trust Co. | | | USD | | | | 4,976,461 | | | | JPY | | | | 399,000,000 | | | | (279,580 | ) |
| 09/07/2011 | | State Street Bank & Trust Co. | | | USD | | | | 8,122,640 | | | | JPY | | | | 651,000,000 | | | | (358,313 | ) |
| 09/16/2011 | | State Street Bank & Trust Co. | | | USD | | | | 2,907,623 | | | | JPY | | | | 233,000,000 | | | | (58,586 | ) |
| 09/21/2011 | | State Street Bank & Trust Co. | | | USD | | | | 6,739,267 | | | | JPY | | | | 540,000,000 | | | | (40,013 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
Net unrealized losses on Forward Foreign Currency Contracts | | | (4,249,393 | ) |
| | | | | |
See financial notes 31
Laudus International MarketMasters Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value (cost $1,462,404,399) | | | | | $1,795,114,585 | |
| Foreign currency, at value (cost $2,581,153) | | | | | 2,596,906 | |
| Cash | | | | | 194,880 | |
| Receivables: | | | | | | |
| Investments sold | | | | | 31,294,546 | |
| Dividends | | | | | 2,868,919 | |
| Fund shares sold | | | | | 1,789,256 | |
| Foreign tax reclaims | | | | | 746,793 | |
| Due from broker for futures | | | | | 208,300 | |
| Interest | | | | | 23,988 | |
| Unrealized gains on forward foreign currency contracts | | | | | 367,668 | |
| Prepaid expenses | | + | | | 45,405 | |
| | | |
Total assets | | | | | 1,835,251,246 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Investments bought | | | | | 32,229,874 | |
| Investment adviser and administrator fees | | | | | 188,489 | |
| Shareholder service fees | | | | | 114,358 | |
| Fund shares redeemed | | | | | 893,139 | |
| Foreign capital gains tax | | | | | 302,279 | |
| Unrealized losses on forward foreign currency contracts | | | | | 4,617,061 | |
| Accrued expenses | | + | | | 195,341 | |
| | | |
Total liabilities | | | | | 38,540,541 | |
| |
Net Assets |
|
Total assets | | | | | 1,835,251,246 | |
Total liabilities | | − | | | 38,540,541 | |
| | | |
Net assets | | | | | $1,796,710,705 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 1,969,652,542 | |
| Net investment income not yet distributed | | | | | 16,631,062 | |
| Net realized capital losses | | | | | (522,180,421 | ) |
| Net unrealized capital gains | | | | | 332,607,522 | |
| |
Net Asset Value (NAV) by Shares Class |
| | | | | | | | | | | | | | | |
| | | | | | | Shares
| | | | | | | |
| Share Class | | Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| Investor Shares | | $848,513,515 | | | | 46,204,720 | | | | | $18.36 | | | |
| Select Shares | | $948,197,190 | | | | 51,587,496 | | | | | $18.38 | | | |
32 See financial notes
Laudus International MarketMasters Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends (net of foreign withholding taxes of $2,919,452) | | | | | $34,535,348 | |
| Interest (net of foreign withholding taxes of $3,009) | | + | | | 130,606 | |
| | | |
Total investment income | | | | | 34,665,954 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 20,496,806 | |
| Shareholder service fees: | | | | | | |
| Investor Shares | | | | | 2,192,116 | |
| Select Shares | | | | | 825,946 | |
| Custodian fees | | | | | 941,755 | |
| Transfer agent fees | | | | | 218,029 | |
| Portfolio accounting fees | | | | | 138,774 | |
| Shareholder reports | | | | | 133,064 | |
| Professional fees | | | | | 84,878 | |
| Registration fees | | | | | 69,355 | |
| Tax expenses | | | | | 54,082 | |
| Trustees’ fees | | | | | 16,550 | |
| Interest expense | | | | | 962 | |
| Other expenses | | + | | | 78,600 | |
| | | |
| Total expenses | | | | | 25,250,917 | |
| Expense reduction by adviser and Schwab | | − | | | 273,956 | |
| Custody credits | | − | | | 40 | |
| | | |
Net expenses | | − | | | 24,976,921 | |
| | | |
Net investment income | | | | | 9,689,033 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on investments (net of foreign capital gain tax of $212,543) | | | | | 121,223,052 | |
| Net realized gains on futures contracts | | | | | 3,352,613 | |
| Net realized gains on foreign currency transactions | | + | | | 4,225,918 | |
| | | |
Net realized gains | | | | | 128,801,583 | |
| Net unrealized gains on investments (net of foreign capital gain tax of $139,943) | | | | | 202,225,272 | |
| Net unrealized gains on futures contracts | | | | | 5,675,770 | |
| Net unrealized losses on foreign currency translations | | + | | | (2,521,682 | ) |
| | | |
Net unrealized gains | | + | | | 205,379,360 | |
| | | |
Net realized and unrealized gains | | | | | 334,180,943 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $343,869,976 | |
See financial notes 33
Laudus International MarketMasters Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $9,689,033 | | | | $13,288,211 | |
| Net realized gains (losses) | | | | | 128,801,583 | | | | (354,477,131 | ) |
| Net unrealized gains | | + | | | 205,379,360 | | | | 720,244,336 | |
| | | |
Increase in net assets from operations | | | | | 343,869,976 | | | | 379,055,416 | |
| |
Distributions to Shareholders |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | 10,988,186 | | | | 37,144,919 | |
| Select Shares | | + | | | 8,268,447 | | | | 23,587,535 | |
| | | |
Total distributions from net investment income | | | | | $19,256,633 | | | | $60,732,454 | |
Transactions in Fund Shares
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | 8,143,298 | | | | $137,057,352 | | | | 6,575,117 | | | | $77,667,118 | |
| Select Shares | | + | | | 19,260,215 | | | | 332,599,745 | | | | 10,696,072 | | | | 129,841,801 | |
| | | |
Total shares sold | | | | | 27,403,513 | | | | $469,657,097 | | | | 17,271,189 | | | | $207,508,919 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | 559,839 | | | | $8,767,079 | | | | 2,583,646 | | | | $28,368,429 | |
| Select Shares | | + | | | 363,514 | | | | 5,692,624 | | | | 1,696,311 | | | | 18,608,533 | |
| | | |
Total shares reinvested | | | | | 923,353 | | | | $14,459,703 | | | | 4,279,957 | | | | $46,976,962 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | (24,384,156 | ) | | | ($412,672,886 | ) | | | (25,225,173 | ) | | | ($285,991,828 | ) |
| Select Shares | | + | | | (9,864,402 | ) | | | (159,927,165 | ) | | | (16,356,316 | ) | | | (184,493,954 | ) |
| | | |
Total shares redeemed | | | | | (34,248,558 | ) | | | ($572,600,051 | ) | | | (41,581,489 | ) | | | ($470,485,782 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | (5,921,692 | ) | | | ($88,483,251 | ) | | | (20,030,343 | ) | | | ($215,999,901 | ) |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 103,713,908 | | | | $1,560,580,613 | | | | 123,744,251 | | | | $1,458,257,552 | |
| Total increase or decrease | | + | | | (5,921,692 | ) | | | 236,130,092 | | | | (20,030,343 | ) | | | 102,323,061 | |
| | | |
End of period | | | | | 97,792,216 | | | | $1,796,710,705 | | | | 103,713,908 | | | | $1,560,580,613 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $16,631,062 | | | | | | | | $14,158,527 | |
34 See financial notes
Laudus MarketMasters Funds
Financial Notes
1. Business Structure of the Funds:
Each of the funds discussed in this report is a series of Schwab Capital Trust (the “trust”), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trust including the funds discussed in this report, which are highlighted:
| | | |
| |
Schwab Capital Trust (organized May 7, 1993)
Laudus Small-Cap MarketMasters Fund
Laudus International MarketMasters Fund
Schwab S&P 500 Index Fund
Schwab Small-Cap Index Fund
Schwab Total Stock Market Index Fund
Schwab International Index Fund
Schwab MarketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
Schwab Balanced Fund
Schwab Premier Equity Fund
Schwab Core Equity Fund
Schwab Dividend Equity Fund
Schwab Large-Cap Growth Fund
Schwab Small-Cap Equity Fund
Schwab Hedged Equity Fund | | Schwab Financial Services Fund
Schwab Health Care Fund
Schwab International Core Equity Fund
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small-Mid Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets Index Fund
Schwab Monthly Income Fund-Moderate Payout
Schwab Monthly Income Fund-Enhanced Payout
Schwab Monthly Income Fund-Maximum Payout |
| | | |
Each of the Laudus MarketMasters Funds offers two share classes: Investor Shares and Select Shares®. Shares of each class represented an interest in the same portfolio, but each class has different expenses and investment minimums.
Shares are bought and sold (subject to a redemption fee, see financial note 9) at closing net asset value ( “NAV”), which is the price for all outstanding shares of a fund or share class, as applicable. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.
Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund may also keep certain assets in segregated accounts, as required by securities law.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies the funds use in their preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
(a) Security Valuation:
The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:
| | |
| | • | Securities traded on an exchange or over-the-counter: valued at the closing value for the day, or, on days when no closing value has been reported, halfway between the most recent bid and asked quotes. Securities that are primarily traded on foreign exchanges are valued at the closing values of such securities on their respective exchanges with these values then translated into U.S. dollars at the valuation date exchange rate, unless these securities are fair valued as discussed below. |
| |
| | • | Securities for which no quoted value is available: The Board of Trustees has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, the fund may fair value a security when a security is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Board of Trustees regularly reviews fair value determinations made by the funds pursuant to the procedures. |
| |
| | • | International Fair Valuation: The Board of Trustees has adopted procedures to fair value foreign equity securities that trade in markets that close prior to when the funds value their holdings. By fair valuing securities whose prices may have |
35
Laudus MarketMasters Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
| | |
| | | been affected by events occurring after the close of trading, each fund seeks to establish prices that investors might expect to realize upon the current sales of these securities. This methodology is designed to deter “arbitrage” market timers, who seek to exploit delays between the change in the value of a fund’s portfolio holdings and the net asset value of the fund’s shares, and seeks to help ensure that the prices at which the fund’s shares are purchased and redeemed are fair and do not result in dilution of shareholder interest or other harm to shareholders. When fair value pricing is used at the open or close of a reporting period, it may cause a temporary divergence between the return of a fund and that of its index or benchmark. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board of Trustees regularly reviews fair value determinations made by the funds pursuant to the procedures. |
| | |
| | • | Underlying funds: valued at their respective net asset values as determined by the underlying fund in accordance with the 1940 Act for a given day. |
| |
| | • | Futures and forwards contracts: valued at their settlement prices as of the close of their exchanges (for futures) or at a value based on that day’s exchange rates (for forwards). |
| |
| | • | Short-term securities (60 days or less to maturity): valued at amortized cost, which approximates market value. |
In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the funds disclose the fair value of their investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (level 3 measurements). If the funds determine that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
The three levels of the fair value hierarchy are as follows:
| | |
| | • | Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. The funds do not adjust the quoted price for such instruments, even in situations where the funds hold a large position and a sale could reasonably impact the quoted prices. |
| |
| | • | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include certain U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. In addition, international securities whose markets close hours before the funds value their holdings may require fair valuations due to significant movement in the U.S. markets occurring after the daily close of the foreign markets. The Board of Trustees has approved a vendor that would calculate fair valuations of international equity securities based on a number of factors that appear to correlate to the movements in the U.S. markets. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. |
| |
| | • | Level 3 — significant unobservable inputs (including the funds’ own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the funds use one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the |
36
Laudus MarketMasters Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
| | |
| | | amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds’ results of operations. |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the funds’ investments as of October 31, 2010:
Laudus Small-Cap MarketMasters Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| Common Stock(a) | | | $368,167,461 | | | | $— | | | | $— | | | | $368,167,461 | |
| Foreign Common Stock(a) | | | 3,148,933 | | | | — | | | | — | | | | 3,148,933 | |
| Other Investment Company(a) | | | 26,247,351 | | | | — | | | | — | | | | 26,247,351 | |
| Short-Term Investment(a) | | | — | | | | 1,543,140 | | | | — | | | | 1,543,140 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $397,563,745 | | | | $1,543,140 | | | | $— | | | | $399,106,885 | |
| | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Futures Contract* | | | $866,701 | | | | $— | | | | $— | | | | $866,701 | |
Laudus International MarketMasters Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| Common Stock(a) | | | $— | | | | $180,051,072 | | | | $— | | | | $180,051,072 | |
| Australia(a) | | | — | | | | 47,495,634 | | | | — | | | | 47,495,634 | |
| Materials | | | 16,906,173 | | | | 9,238,974 | | | | — | | | | 26,145,147 | |
| Bermuda(a) | | | 4,851,259 | | | | — | | | | — | | | | 4,851,259 | |
| Brazil(a) | | | 43,975,518 | | | | — | | | | — | | | | 43,975,518 | |
| Canada(a) | | | | | | | | | | | | | | | | |
| Banks | | | 3,953,349 | | | | — | | | | — | | | | 3,953,349 | |
| Consumer Durables & Apparel | | | 1,377,648 | | | | — | | | | — | | | | 1,377,648 | |
| Consumer Services | | | 1,868,657 | | | | — | | | | — | | | | 1,868,657 | |
| Energy | | | 33,688,362 | | | | — | | | | — | | | | 33,688,362 | |
| Food, Beverage & Tobacco | | | 568,438 | | | | — | | | | — | | | | 568,438 | |
| Health Care Equipment & Services | | | 2,387,412 | | | | — | | | | — | | | | 2,387,412 | |
| Insurance | | | 802,640 | | | | — | | | | — | | | | 802,640 | |
| Materials | | | 44,035,575 | | | | 327,236 | | | | — | | | | 44,362,811 | |
| Media | | | 3,017,011 | | | | — | | | | — | | | | 3,017,011 | |
| Pharmaceuticals, Biotechnology & Life Sciences | | | 684,728 | | | | — | | | | — | | | | 684,728 | |
| Real Estate | | | 13,574,252 | | | | — | | | | — | | | | 13,574,252 | |
| Retailing | | | 408,511 | | | | — | | | | — | | | | 408,511 | |
| Transportation | | | 22,033,161 | | | | — | | | | — | | | | 22,033,161 | |
| Chile(a) | | | 3,557,660 | | | | — | | | | — | | | | 3,557,660 | |
37
Laudus MarketMasters Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| China(a) | | | $— | | | | $21,923,870 | | | | $— | | | | $21,923,870 | |
| Commercial & Professional Supplies | | | 1,445,175 | | | | — | | | | — | | | | 1,445,175 | |
| Materials | | | 755,946 | | | | 13,007,521 | | | | — | | | | 13,763,467 | |
| Media | | | 908,325 | | | | — | | | | — | | | | 908,325 | |
| Retailing | | | 2,323,827 | | | | — | | | | — | | | | 2,323,827 | |
| Software & Services | | | 2,657,750 | | | | 1,455,905 | | | | — | | | | 4,113,655 | |
| Denmark(a) | | | | | | | 14,884,921 | | | | — | | | | 14,884,921 | |
| Consumer Durables & Apparel | | | 452,541 | | | | — | | | | — | | | | 452,541 | |
| Materials | | | 4,758,498 | | | | 1,042,816 | | | | — | | | | 5,801,314 | |
| France(a) | | | — | | | | 111,629,085 | | | | — | | | | 111,629,085 | |
| Commercial & Professional Supplies | | | 324,672 | | | | 1,079,159 | | | | — | | | | 1,403,831 | |
| Food, Beverage & Tobacco | | | 949,344 | | | | 5,998,139 | | | | — | | | | 6,947,483 | |
| Pharmaceuticals, Biotechnology & Life Sciences | | | 3,612,724 | | | | — | | | | — | | | | 3,612,724 | |
| Germany(a) | | | — | | | | 61,078,312 | | | | — | | | | 61,078,312 | |
| Capital Goods | | | 4,958,557 | | | | 17,088,730 | | | | — | | | | 22,047,287 | |
| Materials | | | 6,699,305 | | | | 26,442,434 | | | | — | | | | 33,141,739 | |
| Retailing | | | 6,143,325 | | | | — | | | | — | | | | 6,143,325 | |
| Utilities | | | 1,961,302 | | | | — | | | | — | | | | 1,961,302 | |
| Hong Kong(a) | | | — | | | | 27,146,449 | | | | — | | | | 27,146,449 | |
| Consumer Durables & Apparel | | | 1,852,047 | | | | — | | | | — | | | | 1,852,047 | |
| India(a) | | | — | | | | 21,011,088 | | | | — | | | | 21,011,088 | |
| Real Estate | | | 129,665 | | | | — | | | | — | | | | 129,665 | |
| Indonesia(a) | | | — | | | | 13,816,255 | | | | — | | | | 13,816,255 | |
| Capital Goods | | | 1,103,454 | | | | 2,619,655 | | | | — | | | | 3,723,109 | |
| Ireland(a) | | | — | | | | 12,145,950 | | | | — | | | | 12,145,950 | |
| Capital Goods | | | 8,247,696 | | | | — | | | | — | | | | 8,247,696 | |
| Food, Beverage & Tobacco | | | 3,169,949 | | | | — | | | | — | | | | 3,169,949 | |
| Israel(a) | | | — | | | | 2,299,428 | | | | — | | | | 2,299,428 | |
| Semiconductors & Semiconductor Equipment | | | 3,962,939 | | | | — | | | | — | | | | 3,962,939 | |
| Technology Hardware & Equipment | | | 243,250 | | | | — | | | | — | | | | 243,250 | |
| Japan(a) | | | — | | | | 195,146,878 | | | | — | | | | 195,146,878 | |
| Pharmaceuticals, Biotechnology & Life Sciences | | | 1,415,260 | | | | — | | | | — | | | | 1,415,260 | |
| Luxembourg(a) | | | — | | | | 9,269,955 | | | | — | | | | 9,269,955 | |
| Energy | | | 8,800,768 | | | | 7,319,584 | | | | — | | | | 16,120,352 | |
| Mexico(a) | | | 19,539,682 | | | | — | | | | — | | | | 19,539,682 | |
| Netherlands(a) | | | — | | | | 27,342,866 | | | | — | | | | 27,342,866 | |
| Energy | | | 15,913,298 | | | | 12,291,487 | | | | — | | | | 28,204,785 | |
| Food, Beverage & Tobacco | | | 1,563,178 | | | | 4,636,784 | | | | — | | | | 6,199,962 | |
| Norway(a) | | | — | | | | 4,476,848 | | | | — | | | | 4,476,848 | |
| Energy | | | 3,114,985 | | | | 4,807,793 | | | | — | | | | 7,922,778 | |
| Materials | | | 899,388 | | | | — | | | | — | | | | 899,388 | |
| Peru(a) | | | 2,335,703 | | | | — | | | | — | | | | 2,335,703 | |
38
Laudus MarketMasters Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| Singapore(a) | | | $— | | | | $33,178,877 | | | | $— | | | | $33,178,877 | |
| Materials | | | 336,067 | | | | — | | | | — | | | | 336,067 | |
| Real Estate | | | 980,484 | | | | 19,835,055 | | | | — | | | | 20,815,539 | |
| Switzerland(a) | | | — | | | | 84,145,001 | | | | — | | | | 84,145,001 | |
| Consumer Services | | | 1,002,583 | | | | — | | | | — | | | | 1,002,583 | |
| Energy | | | 27,375,014 | | | | — | | | | — | | | | 27,375,014 | |
| Food, Beverage & Tobacco | | | 13,667,907 | | | | 8,674,084 | | | | — | | | | 22,341,991 | |
| Pharmaceuticals, Biotechnology & Life Sciences | | | 4,159,361 | | | | 9,961,043 | | | | — | | | | 14,120,404 | |
| Thailand(a) | | | — | | | | 867,022 | | | | — | | | | 867,022 | |
| Food & Staples Retailing | | | 1,319,712 | | | | — | | | | — | | | | 1,319,712 | |
| Materials | | | 378,712 | | | | — | | | | — | | | | 378,712 | |
| United Kingdom(a) | | | — | | | | 109,384,069 | | | | — | | | | 109,384,069 | |
| Capital Goods | | | 667,920 | | | | 83,234,722 | | | | 42,232 | | | | 83,944,874 | |
| Food, Beverage & Tobacco | | | 9,635,975 | | | | 9,911,817 | | | | — | | | | 19,547,792 | |
| Materials | | | 13,401,696 | | | | 47,423,165 | | | | — | | | | 60,824,861 | |
| Pharmaceuticals, Biotechnology & Life Sciences | | | 831,691 | | | | 4,018,766 | | | | — | | | | 4,850,457 | |
| Retailing | | | 9,090,473 | | | | 8,547,779 | | | | — | | | | 17,638,252 | |
| Technology Hardware & Equipment | | | 4,883,676 | | | | 23,948,193 | | | | — | | | | 28,831,869 | |
| United States(a) | | | 4,573,971 | | | | — | | | | — | | | | 4,573,971 | |
| Preferred Stock(a) | | | — | | | | 2,314,641 | | | | — | | | | 2,314,641 | |
| Brazil | | | 2,031,354 | | | | — | | | | — | | | | 2,031,354 | |
| Other Investment Companies(a) | | | 86,220,180 | | | | — | | | | — | | | | 86,220,180 | |
| Rights(a) | | | 314,785 | | | | — | | | | — | | | | 314,785 | |
| Warrants(a) | | | 140,285 | | | | — | | | | — | | | | 140,285 | |
| Short-Term Investment(a) | | | — | | | | 3,472,314 | | | | — | | | | 3,472,314 | |
| Corporate Bond(a) | | | — | | | | — | | | | 136,224 | | | | 136,224 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $488,944,753 | | | | $1,305,991,376 | | | | $178,456 | | | | $1,795,114,585 | |
| | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Futures Contract* | | | $4,332,121 | | | | $— | | | | $— | | | | $4,332,121 | |
| Forward Foreign Currency Contracts* | | | 367,668 | | | | — | | | | — | | | | 367,668 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Liabilities Valuation Input |
| | | | | | | | | |
| |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Forward Foreign Currency Contracts* | | | ($4,617,061 | ) | | | $— | | | | $— | | | | ($4,617,061 | ) |
39
Laudus MarketMasters Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Change in
| | | | | | | | Balance
|
| | | as of
| | Accrued
| | Realized
| | Unrealized
| | Net
| | Gross
| | Gross
| | as of
|
| | | October 31,
| | Discounts
| | Gain
| | Gains
| | Purchases
| | Transfers
| | Transfers
| | October 31,
|
Investments in Securities | | 2009 | | (Premiums) | | (Loss) | | (Losses) | | (Sales) | | in | | out | | 2010 |
| |
| Common Stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| United Kingdom | | | $55,549 | | | | $— | | | | $259 | | | | $544 | | | | ($14,120 | ) | | | $— | | | | $— | | | | $42,232 | |
| Corporate Bonds | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Brazil | | | 131,484 | | | | (382 | ) | | | — | | | | 5,122 | | | | — | | | | — | | | | — | | | | 136,224 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | $187,033 | | | | ($382 | ) | | | $259 | | | | $5,666 | | | | ($14,120 | ) | | | $— | | | | $— | | | | $178,456 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| * | | Futures contracts and Forward Foreign Currency contracts are not included in Investments and are valued at the unrealized appreciation or depreciation. |
| (a) | | As categorized in Portfolio Holdings. |
All net realized and change in unrealized gains (losses) in the tables above are reflected in the accompanying statements of operations. Changes in net unrealized gains (losses) for Level 3 investments held by the fund at October 31, 2010 are $5,666.
In January 2010, the Financial Accounting Standards Board issued new guidance requiring reporting entities to make new disclosures about amounts and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements as well as inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances and settlements of Level 3 securities on a gross basis. The new and revised disclosures are required to be implemented for annual and interim periods beginning after December 15, 2009, except for the disclosures surrounding purchases, sales, issuances and settlements of Level 3 fair value measurements on a gross basis, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years.
The funds have adopted the new guidance for the period ended October 31, 2010. There were no significant transfers between Level 1 and Level 2 for the period ended October 31, 2010. Management is currently evaluating the impact of the adoption of the other provisions of the new guidance on the funds’ financial statements.
(b) Accounting Policies for certain Portfolio Investments (if held):
Futures Contracts: Futures contracts are instruments that represent an agreement between two parties that obligates one party to buy, and the other party to sell, specific instruments at an agreed upon price on a stipulated future date. A fund must give the broker a deposit of cash and/or securities (the “initial margin”) whenever it enters into the futures contract. The amount of the deposit may vary from one contract to another. Subsequent payments (“variation margin”) are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses until the contract is closed, at which time the gains and losses are realized. Futures are traded publicly on exchanges, and their market value changes daily.
Forward Currency Contracts: “Forwards”, as they are known, are contracts to buy and sell a currency at a set price on a future date. The accounting for forwards is treated similar to that of futures contracts in that gains and losses are accounted for as unrealized gains or losses until the contracts settles and such amounts are accounted for as realized.
Securities Lending: Under the Securities Lending Program, a fund (the “lender”) may make short-term loans of their securities to another party (the “borrower”). When the fund lends securities, the borrower provides cash, U.S. government securities or letters of credit as collateral against the loans in an amount at least equal to 100% of the market value of the loaned securities. The cash collateral of securities loaned is invested in money market portfolios registered under Rule 2a-7 of the 1940 Act. The investments of collateral are mark-to-market daily and the value of the collateral must be at least 100% of the market value of the loan securities each day. If the value of the collateral falls below 100%, it will be adjusted the following day.
Repurchase Agreements: In a repurchase agreement, a fund buys a security from another party (usually a financial institution) with the agreement that it be sold back in the future. The funds’ repurchase agreements are fully collateralized by cash, U.S. government securities, U.S. government agency securities or other securities. All collateral is held by the funds’ custodian
40
Laudus MarketMasters Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
(or, with tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement.
(c) Security Transactions:
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
Assets and liabilities denominated in foreign currencies are reported in U.S. dollars. For assets and liabilities held on a given date, the dollar value is based on market exchange rates in effect on that date. Transactions involving foreign currencies, including purchases, sales, income receipts and expense payments, are calculated using exchange rates in effect on the transaction date. Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period. These realized and unrealized foreign exchange gains and losses are reported in foreign currency transactions and translations on the Statement of Operations. The funds do not isolate the portion of the fluctuations on investment resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
Gains realized by the funds on the sale of securities in certain foreign countries may be subject to non-U.S. taxes. The funds record a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.
When a fund closes out a futures or forward position, it calculates the difference between the value of the position at the beginning and at the end of the contract, and records a realized gain or loss accordingly. A fund records the daily change in market value of futures, and also the change in the amount of margin deposit required (“due to/from broker”).
(d) Investment Income:
Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the funds may record certain foreign security dividends on the day they learn of the ex-dividend date.
(e) Expenses:
Expenses that are specific to a fund are charged directly to the fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets.
For funds offering multiple share classes, the net investment income, other than class specific expenses, and the realized and unrealized gains or losses, are allocated daily to each class in proportion to their average daily net assets.
(f) Distributions to Shareholders:
The funds make distributions from net investment income and net realized capital gains, if any, once a year.
(g) Custody Credit:
Certain funds have an arrangement with their custodian bank, State Street Bank and Trust Company, under which the funds receive a credit for their uninvested cash balance to offset their custody fees and accounting fees. The credit amounts, if any, are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.
(h) Accounting Estimates:
The accounting policies described in this report conform to accounting principles generally accepted in the United States of America. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates and these differences may be material.
41
Laudus MarketMasters Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
(i) Federal Income Taxes:
The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains, if any, to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
(j) Foreign Taxes:
The funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, corporate events, foreign currency exchanges, capital gains on investments on currency repatriation. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in foreign markets in which the funds invest. These foreign taxes, if any, are paid by the funds and are disclosed in the Statement of Operations. Foreign taxes payable as of October 31, 2010, if any, are reflected in the funds’ Statement of Assets and Liabilities.
(k) Indemnification:
Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss to be remote.
3. Risk factors:
Investing in the funds may involve certain risks, as discussed in the funds’ prospectus, including, but not limited to those described below:
Equity markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of an investment in the funds will fluctuate, which means that an investor could lose money.
The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.
Historically, small-cap stocks have been riskier than large- and mid-cap stocks, and may move sharply, especially during market upturns and downturns. Small-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments — large-cap and mid-cap stocks, for instance — a fund’s small-cap holdings could reduce performance.
Both large- and mid-cap stocks tend to go in and out of favor based on market and economic conditions. However, stocks of mid-cap companies tend to be more vulnerable to adverse business or economic events than larger more established companies. During a period when large- and mid-cap U.S. stocks fall behind other types of investments — small-cap stocks, for instance — a fund’s large- and mid-cap holdings could reduce performance.
A fund’s investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may be heightened in connection with investments in emerging markets.
Emerging markets may be more likely to experience political turmoil or rapid changes in market or economic conditions that more developed countries. Such countries often have less uniformity in accounting and reporting requirements, unreliable securities valuation and greater risk associated with the custody of securities. In addition, the financial stability of issuers (including governments) in emerging market countries may be more precarious than in other countries. As a result, there will tend to be an increased risk of price volatility associated with the fund’s investments in emerging market countries.
A fund’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments and could cause the fund to lose more than the principal amount
42
Laudus MarketMasters Funds
Financial Notes (continued)
3. Risk factors (continued):
invested. In addition, investments in derivatives may involve leverage, which means a small percentage of assets invested in derivatives can have a disproportionately large impact on the fund.
Although CSIM monitors and seeks to coordinate the overall management of a fund, each investment manager makes investment decisions independently, and it is possible that the investment styles of the investment managers may not complement one another. As a result, a fund’s exposure to a given stock, industry or investment style could unintentionally be smaller or larger than if a fund had a single manager.
Please refer to the funds’ prospectus for a more complete description of the principal risks of investing in the funds.
4. Affiliates and Affiliated Transactions:
Charles Schwab Investment Management, Inc. (“CSIM” or the “investment adviser”), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund’s investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (“Advisory Agreement”) between it and the trust.
For its advisory and administrative services to each fund, CSIM is entitled to receive an annual fee payable monthly based on each fund’s average daily net assets described as follows:
| | | | | | | | | |
| | | Laudus Small-Cap
| | Laudus International
|
% of Average Daily Net Assets | | MarketMasters Fund | | MarketMasters Fund |
| |
| First $500 million | | | 1.17% | | | | 1.29% | |
| $500 million to $1 billion | | | 1.13% | | | | 1.275% | |
| Over $1 billion | | | 1.07% | | | | 1.25% | |
The Board of Trustees has adopted a Shareholder Servicing Plan (the “Plan”) on behalf of the funds. The Plan enables each fund to bear expenses relating to the provision by service providers, including Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, “Schwab”), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the funds. Schwab serves as the funds’ paying agent under the Plan for making payments of the shareholder service fee due to the service providers (other than Schwab) under the Plan. All shareholder service fees paid by the funds to Schwab in its capacity as the funds’ paying agent will be passed through to the service providers, and Schwab will not retain any portion of such fees.
Pursuant to the Plan, each fund’s shares are subject to an annual shareholder servicing fee up to 0.25% for Investor Shares and 0.20% for Select Shares. The shareholder servicing fee paid to a particular service provider is made pursuant to its written agreement with Schwab (or, in the case of payments made to Schwab, pursuant to Schwab’s written agreement with the funds), and the funds will pay no more than 0.25% for Investor Shares and 0.20% for Select Shares of the average annual daily net asset value of the fund shares owned by shareholders holding shares through such service providers. Payments under the Plan are made as described above regardless of Schwab’s or the service provider’s actual cost of providing the services. If the cost of providing the services under the Plan is less than the payments received, the unexpended portion of the fees may be retained as profit by Schwab or the service provider.
Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements (“expense limitations”) with the funds to limit the total annual fund operating expenses, excluding interest, taxes and certain non-routine expenses for so long as CSIM serves as the investment adviser to the funds, which may only be amended or terminated with the approval of the funds’ Board of Trustees. The expense limitation as a percentage of average daily net assets is as follows:
| | | | | | | | | |
| | | Laudus Small-Cap
| | Laudus International
|
| | MarketMasters Fund | | MarketMasters Fund |
| |
| Investor Shares | | | 1.46% | | | | 1.65% | |
| Select Shares | | | 1.31% | | | | 1.47% | |
Certain Schwab Funds may own shares of other Schwab Funds. The table below reflects the percentage of each Laudus MarketMasters Fund owned by other Schwab Funds as of October 31, 2010.
43
Laudus MarketMasters Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
| | | | | | | | | |
| | | Laudus Small-Cap
| | Laudus International
|
| | MarketMasters Fund | | MarketMasters Fund |
| |
Schwab Target Funds: | | | | | | | | |
| Schwab Target 2010 | | | 0.3% | | | | 0.2% | |
| Schwab Target 2015 | | | 0.2% | | | | 0.1% | |
| Schwab Target 2020 | | | 1.5% | | | | 0.8% | |
| Schwab Target 2025 | | | 0.5% | | | | 0.2% | |
| Schwab Target 2030 | | | 2.7% | | | | 1.1% | |
| Schwab Target 2035 | | | 0.5% | | | | 0.2% | |
| Schwab Target 2040 | | | 2.7% | | | | 1.1% | |
| Schwab Balanced Fund | | | 2.4% | | | | —% | |
The funds may engage in direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. For the year ended October 31, 2010, each fund’s total aggregate security transactions with other Schwab Funds were as follows:
| | | | | |
| Laudus Small-Cap MarketMasters Fund | | | $— | |
| Laudus International MarketMasters Fund | | | 401,837 | |
Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions with other Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. The funds had no interfund borrowing or lending activity during the period.
5. Board of Trustees:
Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their services as trustees, but it did pay non-interested persons (independent trustees), as noted in each fund’s Statement of Operations.
6. Borrowing from Banks:
The funds may borrow money from banks and custodians. The funds have custodian overdraft facilities, a committed line of credit of $150 million with State Street Bank and Trust Company, an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The funds pay interest on the amounts they borrow at rates that are negotiated periodically. The funds also pay an annual fee to State Street Bank and Trust Company for the committed line of credit.
There were no borrowings from the lines of credit during the period. However, the funds utilized their overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.
7. Purchases and Sales/Maturities of Investment Securities:
For the period ended October 31, 2010, purchases and sales/maturities of securities (excluding short-term obligations) were as follows:
| | | | | | | | | |
| | Purchases of Securities | | Sales/Maturities of Securities |
| |
| Laudus Small-Cap MarketMasters Fund | | | $294,753,860 | | | | $346,774,304 | |
| Laudus International MarketMasters Fund | | | 1,267,839,938 | | | | 1,362,369,009 | |
44
Laudus MarketMasters Funds
Financial Notes (continued)
8. Disclosures about Derivative Instruments and Hedging Activities:
During the period ended October 31, 2010, the funds invested in equity index futures contracts and the Laudus International MarketMasters Fund also invested in forward foreign currency exchange contracts. The fair value, variation margin and the realized/unrealized gains (losses) on derivatives contracts held by the funds are presented on the face of each fund’s Portfolio Holdings, Statement of Assets and Liabilities and Statement of Operations. Investments in forward foreign currency contracts subject the Laudus International MarketMasters Fund to foreign currency risk and risk of default by the counterparty. Refer to Financial Note 2(b) for the funds’ accounting policies with respect to derivatives contracts and Financial Note 3 for additional disclosures concerning the risks of investing in derivatives contracts.
The funds invested in futures contracts to gain market exposure while still keeping a small portion of assets in cash for business operations. The Laudus International MarketMasters Fund invested in forward foreign currency contracts in connection with the purchase and sale of portfolio securities to minimize the uncertainty of changes in future foreign currency exchange rates.
During the period ending October 31, 2010, the monthly average contract value of futures contracts and the monthly average number of contracts held by the funds were as follows:
| | | | | | | | | |
| | Contract Values | | Number of Contracts |
| |
| | | | | | | | | |
| Laudus Small-Cap MarketMasters Fund | | | $8,570,008 | | | | 132 | |
| Laudus International MarketMasters Fund | | | 44,667,092 | | | | 735 | |
During the period ending October 31, 2010, the monthly average notional amount and the monthly average unrealized gains (losses) on the Laudus International MarketMasters Fund’s investment in forward foreign currency exchange contracts were $106,104,300 and $783,718, respectively.
As of October 31, 2010, the location on the Statement of Assets and Liabilities of the derivative contracts held by the Laudus International MarketMasters Fund, categorized by primary risk exposure, was:
| | | | | |
Asset Derivatives | | Fair Value |
| |
Equity Index — Futures Contracts1 | | | $4,332,121 | |
Foreign Exchange — Forward Contracts2 | | | 367,668 | |
| | | | | |
| Total | | | $4,699,789 | |
| | | | | |
Liability Derivatives | | Fair Value |
| |
Foreign Exchange — Forward Contracts3 | | | $4,617,061 | |
| | | |
1 | | Includes cumulative unrealized losses of futures contracts as reported in the Schedule of Portfolio Holdings. Only current day’s variation margin is reported within the Statement of Assets & Liabilities. |
2 | | Statement of Assets & Liabilities location: Unrealized gains on forward foreign currency contracts. |
3 | | Statement of Assets & Liabilities location: Unrealized losses on forward foreign currency contracts. |
During the period ending October 31, 2010, the location on the Statement of Operations of the derivatives held by the Laudus International MarketMasters Fund, categorized by primary risk exposure, was:
| | | | | | | | | |
| | | Equity Index
| | Foreign Exchange –
|
| | Futures Contracts | | Forward Contracts |
| |
Realized Gain (Losses)1 | | | $3,352,613 | | | | $5,486,519 | |
Change in Unrealized Gains (Losses)2 | | | 5,675,770 | | | | (2,559,685 | ) |
| | | |
1 | | Statement of Operations location: Net realized gains on futures contracts and net realized gains on foreign currency transactions. |
2 | | Statement of Operations location: Net unrealized gains on futures contracts and net unrealized losses on foreign currency translations. |
45
Laudus MarketMasters Funds
Financial Notes (continued)
9. Redemption Fee:
The funds charge a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior periods are:
| | | | | | | | | |
| | | Current Period
| | Prior Period
|
| | (11/01/09-10/31/2010) | | (11/01/08-10/31/09) |
| |
| Laudus Small-Cap MarketMasters Fund | | | $4,162 | | | | $6,502 | |
| Laudus International MarketMasters Fund | | | 6,103 | | | | 23,838 | |
10. Federal Income Taxes:
As of October 31, 2010, the components of distributable earnings on a tax-basis were as follows:
| | | | | | | | | |
| | | Laudus Small-Cap
| | Laudus International
|
| | MarketMasters Fund | | MarketMasters Fund |
| |
| Undistributed Ordinary income | | | $— | | | | $22,782,417 | |
| Undistributed long-term capital gains | | | — | | | | — | |
| Unrealized appreciation | | | 68,971,416 | | | | 329,643,625 | |
| Unrealized depreciation | | | (11,849,477 | ) | | | (42,834,452 | ) |
| Other unrealized appreciation/(depreciation) | | | — | | | | (155,342 | ) |
| | | | | | | | | |
| Net unrealized appreciation/(depreciation) | | | $57,121,939 | | | | $286,653,831 | |
The primary differences between book-basis and tax-basis unrealized appreciation or unrealized depreciation of investments are Passive Foreign Investment Companies (PFIC), Partnerships and the tax deferral of losses on wash sale.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2010, the following funds had capital loss carryforwards available to offset net capital gains before the expiration dates:
| | | | | | | | | |
| | | Laudus Small-Cap
| | Laudus International
|
Expiration Date | | MarketMasters Fund | | MarketMasters Fund |
| |
| October 31, 2016 | | | $59,045,872 | | | | $115,728,788 | |
| October 31, 2017 | | | 59,667,102 | | | | 366,649,297 | |
| | | | | | | | | |
| Total | | | $118,712,974 | | | | $482,378,085 | |
| | | | | | | | | |
As of October 31, 2010, the funds had capital losses utilized as follows:
| | | | | | | | | |
| | | Laudus Small-Cap
| | Laudus International
|
| | | MarketMasters Fund | | MarketMasters Fund |
| |
| Capital losses utilized | | | $37,136,616 | | | | $107,188,613 | |
The tax-basis components of distributions paid during the current and prior periods were:
| | | | | | | | | |
| | | Laudus Small-Cap
| | Laudus International
|
| | | MarketMasters Fund | | MarketMasters Fund |
| |
Current period distributions | | | | | | | | |
| Ordinary income | | | $— | | | | $19,256,633 | |
| Long-term capital gains | | | — | | | | — | |
| | | | | | | | | |
Prior period distributions | | | | | | | | |
| Ordinary income | | | $430,999 | | | | $60,732,454 | |
| Long-term capital gains | | | — | | | | — | |
Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as PFICs, non-U.S. currency gains and losses, short-term capital gains and losses; capital losses related to wash sales, unrealized appreciation of certain investments in non-U.S. securities; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and
46
Laudus MarketMasters Funds
Financial Notes (continued)
10. Federal Income Taxes (continued):
net realized gains are recorded by the funds for financial reporting purposes. The funds may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.
The permanent book and tax basis differences may result in reclassifications between capital account and other accounts as required. The adjustments will have no impact on net assets or the results of operations. As of October 31, 2010, the funds made the following reclassifications:
| | | | | | | | | |
| | | Laudus Small-Cap
| | Laudus International
|
| | | MarketMasters Fund | | MarketMasters Fund |
| |
| Capital Shares | | | ($2,384,880 | ) | | | $91,389 | |
| Undistributed net investment income | | | 2,383,832 | | | | 12,040,135 | |
| Net realized capital gains and losses | | | 1,048 | | | | (12,131,524 | ) |
As of October 31, 2010, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and state purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year ended October 31, 2010, the funds did not incur any interest or penalties.
11. Subsequent Events:
Management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
47
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of:
Laudus Small-Cap MarketMasters Fund
Laudus International MarketMasters Fund
In our opinion, the accompanying statements of assets and liabilities, including the portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Laudus Small-Cap MarketMasters Fund and Laudus International MarketMasters Fund (two of the portfolios constituting Schwab Capital Trust, hereafter collectively referred to as the “Funds”) at October 31, 2010, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 15, 2010
48
Other Federal Tax Information (unaudited)
For the fiscal year ended October 31, 2010, the funds designate the following amounts of the dividend distributions as qualified dividends for the purpose of the maximum rate under 1(h)(ii) of the Internal Revenue Code. Shareholders will be notified in January 2011 via IRS form 1099 of the amounts for use in preparing their 2010 income tax return.
| | | | | |
| Laudus Small-Cap MarketMasters Fund | | | $— | |
| Laudus International MarketMaster Fund | | | 22,027,539 | |
The Laudus International MarketMaster Fund elects to pass through, under section 853 of the Internal Revenue Code, the foreign tax credit of $2,770,906 to its shareholders for the year ended October 31, 2010. The respective foreign source income on the fund is $37,455,399.
49
Approval of Investment Advisory and Sub-Advisory Agreements
The Investment Company Act of 1940 (the “1940 Act”) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreements must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreements or “interested persons” of any party (the “Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the investment advisory agreements.
The Board of Trustees (the “Board” or the “Trustees”, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreements between Schwab Capital Trust (the “Trust”) and Charles Schwab Investment Management, Inc. (“CSIM”) with respect to the existing funds in the Trust, including Laudus Small-Cap MarketMasters Fund and Laudus International MarketMasters Fund (the “Funds”), and the individual subadvisory agreements between CSIM and Neuberger Berman Management LLC, TAMRO Capital Partners, LLC, TCW Investment Management Company and Tocqueville Asset Management L.P. relating to Laudus Small-Cap MarketMasters Fund; and CSIM and American Century Global Investment Management, Inc., Harris Associates L.P., William Blair & Company, LLC, Mondrian Investment Partners Limited and Wentworth, Hauser & Violich relating to the Laudus International MarketMasters Fund (collectively, the “Sub-Advisers”). Such investment advisory and sub-advisory agreements are collectively referred to herein as the “Agreements”. The Trustees also review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM and the Sub-Advisers, including information about their affiliates, personnel and operations. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM. The Board also discusses with CSIM the Funds’ operations and CSIM’s ability, consistent with the “manager of managers” structure of each of the Funds to (i) identify and recommend to the Trustees sub-advisers for each Fund, (ii) monitor and oversee the performance and investment capabilities of each sub-adviser, and (iii) recommend the replacement of a sub-adviser when appropriate.
As part of the renewal process, Independent Trustees’ legal counsel sends an information request letter to CSIM and CSIM sends an information request letter to each of the Sub-Advisers seeking certain relevant information. The responses by CSIM and the Sub-Advisers are provided to the Trustees for their review prior to their meeting, and the Trustees are provided with the opportunity to request any additional materials.
The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreements with respect to the Funds at meetings held on April 28, 2010, and June 3, 2010, and approved the renewal of the Agreements with respect to the Funds for an additional one year term at the meeting held on June 3, 2010. The Board’s approval of the Agreements with respect to the Funds was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
| |
| 1. | the nature, extent and quality of the services provided to the Funds under the Agreements, including the resources of CSIM and its affiliates, and the Sub-Advisers, dedicated to the Funds; |
| |
| 2. | each Fund’s investment performance and how it compared to that of certain other comparable mutual funds; |
| |
| 3. | each Fund’s expenses and how those expenses compared to those of certain other comparable mutual funds, exchange-traded funds and other types of accounts; |
| |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (“Schwab”), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates, as well as the profitability of the Sub-Advisers; and |
| |
| 5. | the extent to which economies of scale would be realized as the Funds grow and whether fee levels in the Agreements reflect those economies of scale for the benefit of Fund investors. |
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The Trustees also considered investments in CSIM’s mutual fund infrastructure, Schwab’s wide range of products, services, and channel alternatives such as free advice, investment and research tools, Internet access, and an array of account features that benefit the Funds and their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. In addition, the Trustees considered that many of the Funds’ shareholders are also brokerage clients of Schwab. The Board also considered the nature, extent and quality of the sub-advisory services provided by the Sub-Advisers to the Funds and the resources each dedicates to the Funds. In this regard, the Trustees
50
evaluated among other things, each Sub-Adviser’s personnel, experience and compliance program. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM and the Sub-Advisers to the Funds and the resources of CSIM, and its affiliates, and the Sub-Advisers dedicated to the Funds supported renewal of the Agreements with respect to the Funds.
Fund Performance. The Board considered Fund performance in determining whether to renew the Agreements with respect to the Funds. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and appropriate indices/ benchmarks, in light of total return, and market trends. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the third party who prepared the peer category analysis. In evaluating the performance of each Fund, the Trustees considered both risk and shareholder risk expectations for such Fund and the appropriateness of the benchmark used to compare the performance of each Fund. In addition, the Trustees considered whether irrespective of relative performance, each Sub-Adviser’s absolute performance was consistent with expectations for such Sub-Adviser’s unique investment methodology. The Trustees further considered the level of Fund performance in the context of its review of Fund expenses and adviser and Sub-Adviser profitability discussed below. Following such evaluation the Board concluded, within the context of its full deliberations, that the performance of the Funds supported renewal of the Agreements with respect to the Funds.
Fund Expenses. With respect to the Funds’ expenses, the Trustees considered the rate of compensation called for by the Agreements, and each Fund’s net operating expense ratio, in each case, in comparison to those of a peer group of mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total Fund expenses from exceeding a specified cap. The Trustees also considered CSIM’s contractual commitment to keep each Fund’s expense cap for so long as CSIM serves as the adviser to such Fund. The Trustees also considered fees charged by CSIM and the Sub-Advisers to other mutual funds, exchange-traded funds and to other types of accounts, such as separate accounts, pooled vehicles, wrap accounts and offshore funds, but, with respect to such other types of accounts, accorded less weight to such comparisons due to the different legal, regulatory, compliance and operating features of mutual funds as compared to these other types of accounts. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the Funds are reasonable and supported renewal of the Agreements with respect to the Funds.
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly and the compensation flowing to the Sub-Advisers, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered any other benefits derived by CSIM and the Sub-Advisers from their relationship with the Funds, such as whether, by virtue of its management of the Funds, CSIM or any Sub-Adviser obtains investment information or other research resources that aid it in providing advisory services to other clients. With respect to CSIM and the Sub-Advisers, the Trustees considered whether the varied levels of compensation and profitability under the Agreements and other service agreements were reasonable and justified in light of the quality of all services rendered to each Fund by CSIM and the Sub-Advisers, and their respective affiliates. The Board also considered the profitability of the Sub-Advisers with respect to the sub-advisory services they provide to the Funds, although, when doing so, the Board took into account the fact that the Sub-Advisers are compensated by CSIM, and not by the Funds directly, and such compensation with respect to any Sub-Adviser reflects an arms-length negotiation between the Sub-Adviser and CSIM. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM and the Sub-Advisers is reasonable and supported renewal of the Agreements with respect to the Funds.
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to a Fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of Fund expenses, the Trustees considered that CSIM and Schwab have committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. The Trustees also considered the existing contractual investment advisory fee schedules relating to the Funds that, in each case, include lower fees at higher graduated asset levels. Based on this evaluation the Board concluded, within the context of its full deliberations, that the Funds obtain reasonable benefit from economies of scale.
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, approved the continuation of the Agreements with respect to the Funds and concluded that the compensation under the Agreements with respect to the Funds is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
51
Trustees and Officers
The tables below give information about the trustees and officers for Schwab Capital Trust which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 84 funds.
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.
Independent Trustees
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served1) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Mariann Byerwalter
1960
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Chairman of JDN Corporate Advisory LLC. | | 73 | | Director, Redwood Trust, Inc. (1998 – present)
Director, PMI Group Inc. (2001 – 2009)
Director, Excelsior Funds (2006 – 2007) |
| |
|
John F. Cogan
1947
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | Senior Fellow: The Hoover Institution at Stanford University (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University (Sept. 1994 – present). | | 73 | | Director, Gilead Sciences, Inc. (2005 – present)
Director, Monaco Coach Corporation (2005 – 2009) |
| |
|
William A. Hasler
1941
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Dean Emeritus, Haas School of Business, University of California, Berkeley (July 1998 – present). | | 73 | | Director, Ditech Networks Corporation (1997 – present)
Director, TOUSA (1998 – present)
Director, Mission West Properties (1998 – present)
Director, Globalstar, Inc. (2009 – present)
Director, Harris-Stratex Networks (2001 – present)
Director, Aphton Corp. (1991 – 2007)
Director, Solectron Corporation (1998 – 2007)
Director, Genitope Corporation (2000 – 2009)
Director, Excelsior Funds (2006 – 2007) |
| |
|
Gerald B. Smith
1950
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (1990 – present). | | 73 | | Lead Independent Director, Board of Cooper Industries (2002 – present)
Director and Chairman of the Audit Committee, Oneok Partners LP (2003 – present)
Director, Oneok, Inc (2009 – present) |
| |
|
Donald R. Stephens
1938
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Managing Partner, D.R. Stephens & Company (investments) (1973 – present). | | 73 | | None |
| |
|
52
Independent Trustees (continued)
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served1) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Joseph H. Wender
1944
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | Senior Consultant, Goldman Sachs & Co., Inc. (Jan. 2008- present); Partner, Colgin Partners, LLC (vineyards) (February 1998 – present); Senior Director, Chairman of the Finance Committee, GSC Group (July 2005 – Dec. 2007); General Partner, Goldman Sachs & Co., Inc. (Oct. 1982 – June 2005). | | 73 | | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present) |
| |
|
Michael W. Wilsey
1943
Trustee
(Trustee of Schwab Capital Trust since 1993.) | | Chairman and Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments). | | 73 | | None |
| |
|
Interested Trustees
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served ) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Charles R. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of Schwab Capital Trust since 1993.) | | Chairman and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc. | | 73 | | None |
| |
|
Walter W. Bettinger II2
1960
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. | | 84 | | None |
| |
|
53
Officers of the Trust
| | | |
Name, Year of Birth, and Position(s)
| | |
with the trust; (Terms of office, and
| | |
| length of Time Served3) | | Principal Occupations During the Past Five Years |
| |
Marie Chandoha
1961
President and Chief Executive Officer
(Officer of Schwab Capital Trust since 2010.) | | Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 – present); Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer, (Sept. 2010 – present), Charles Schwab Investment Management, Inc.; President and Chief Executive Officer, Schwab Funds, Laudus Funds and Schwab ETFs (Dec. 2010 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010); Co-Head and Senior Portfolio Manager, Wells Capital Management (June 1999 – March 2007). |
| |
|
George Pereira
1964
Treasurer and Principal Financial Officer
(Officer of Schwab Capital Trust since 2004.) | | Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc. (November 2004 – present); Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present); Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds (June 2006 – June 2007). |
| |
|
Koji E. Felton
1961
Secretary and Chief Legal Officer
(Officer of Schwab Capital Trust since 1998.) | | Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc. (July 2000 – present); Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. (June 1998 – present); Vice President and Assistant Clerk, Laudus Funds (Jan. 2010 – present); Chief Legal Officer and Secretary, Schwab Funds (Nov. 1998 – present) and Schwab ETFs (Oct. 2009 – present); Chief Legal Officer and Secretary, Excelsior Funds (June 2006 – June 2007). |
| |
|
Catherine MacGregor
1964
Vice President
(Officer of Schwab Capital Trust since 2005.) | | Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk, Laudus Funds (March 2007 – present); Vice President and Assistant Clerk, Schwab Funds (Dec. 2005 – present) and Schwab ETFs (Oct. 2009 – present). |
| |
|
Michael Haydel
1972
Vice President
(Officer of Schwab Capital Trust since 2006.) | | Vice President, Asset Management Client Services, Charles Schwab & Co., Inc. (2004 – present); Vice President (Sept. 2005 – present), Anti-Money Laundering Officer (Oct. 2005 – Feb. 2009), Laudus Funds; Vice President, Schwab Funds (June 2007 – present) and Schwab ETFs (Oct. 2009 – present). |
| |
|
| | |
| 1 | | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds® retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first, provided that any trustee who serves on both Schwab Funds and Laudus Funds retires from both boards when first required to retire by either board. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010. |
| 2 | | Mr. Schwab and Mr. Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation. |
| 3 | | The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board. |
54
Glossary
asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.
asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.
beta A historical measure of an investment’s volatility relative to a market index (usually the S&P 500®). The index is defined as having a beta of 1.00. Investments with a beta higher than 1.00 have been more volatile than the index; those with a beta of less than 1.00 have been less volatile.
bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”
An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.
bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.
cap, capitalization See “market cap.”
capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the gain or loss is still “on paper” and is considered unrealized.
earnings growth rate For a mutual fund, the average yearly rate at which the earnings of the companies in the fund’s portfolio have grown, measured over the past five years.
earnings per share (EPS) A company’s earnings, or net income, for the past 12 months, divided by the number of shares outstanding.
expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.
gross domestic product (GDP) The output of goods and services produced by labor and property located in the United States.
market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.
median market cap The midpoint of the range of market caps of the stocks held by a fund. There are different ways of calculating median market cap. With a simple median, half of the stocks in the fund’s portfolio would be larger than the median, and half would be smaller. With a weighted median (the type that is calculated for these funds), half of the fund’s assets are invested in stocks that are larger than the median market cap, and half in stocks that are smaller.
net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.
price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.
return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.
stock A share of ownership, or equity, in the issuing company.
total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.
weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.
yield The income paid out by an investment, expressed as a percentage of the investment’s market value.
55
PRIVACY NOTICE
THIS IS NOT PART OF THE SHAREHOLDER REPORT
A Commitment to Your Privacy
Your Privacy Is Not for Sale
We do not and will not sell your personal information to anyone, for any reason.
We are committed to protecting the privacy of information we maintain about you. Below are details about our commitment, including the types of information we collect and how we use and share that information. This Privacy Notice applies to you only if you are an individual who invests directly in the funds by placing orders through the funds’ transfer agent. If you place orders through your brokerage account at Charles Schwab & Co., Inc. or an account with another broker-dealer, investment advisor, 401(k) plan, employee benefit plan, administrator, bank or other financial intermediary, you are covered by the privacy policies of that financial institution and should consult those policies.
How We Collect Information About You
We collect personal information about you in a number of ways.
| |
| • | APPLICATION AND REGISTRATION INFORMATION. |
We collect personal information from you when you open an account or utilize one of our services. We may also collect information about you from third parties such as consumer reporting agencies to verify your identity. The information we collect may include personal information, including your Social Security number, as well as details about your interests, investments and investment experience.
| |
| • | TRANSACTION AND EXPERIENCE INFORMATION. |
Once your account has been opened, we collect and maintain personal information about your account activity, including your transactions, balances, positions and history. This information allows us to administer your account and provide the services you have requested.
When you visit our websites, we may use devices known as “cookies,” graphic interchange format files (GIFs), or other similar web tools to enhance your web experience. These tools help us to recognize you, maintain your web session, and provide a more personalized experience. To learn more, please click the Privacy link on our website.
How We Share and Use Your Information
We provide access to information about you to our affiliated companies, outside companies and other third parties in certain limited circumstances, including:
| |
| • | to help us process transactions for your account; |
| |
| • | when we use other companies to provide services for us, such as printing and mailing your account statements; |
| |
| • | when we believe that disclosure is required or permitted under law (for example, to cooperate with regulators or law enforcement, resolve consumer disputes, perform credit/authentication checks, or for risk control). |
State Laws
We will comply with state laws that apply to the disclosure or use of information about you.
Safeguarding Your Information — Security Is a Partnership
We take precautions to ensure the information we collect about you is protected and is accessed only by authorized individuals or organizations.
Companies we use to provide support services are not allowed to use information about our shareholders for their own purposes and are contractually obligated to maintain strict confidentiality. We limit their use of information to the performance of the specific services we have requested.
We restrict access to personal information by our employees and agents. Our employees are trained about privacy and are required to safeguard personal information.
We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
Contact Us
To provide us with updated information, report suspected fraud or identity theft, or for any other questions, please call one of the numbers below.
Laudus Funds® direct investors: 1-800-447-3332
© 2010 Laudus Funds. All rights reserved.
Proxy Voting Policies, Procedures and Results
A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting the Laudus Funds’ website at www.laudusfunds.com/prospectus, the SEC’s website at http://www.sec.gov, or by contacting Laudus Funds at 1-800-447-3332.
Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting The Laudus Funds’ website at www.laudusfunds.com/prospectus or the SEC’s website at http://www.sec.gov.
The Laudus Fundstm
Laudus Growth Investors
Laudus Growth Investors U.S. Large Cap Growth Fund
Laudus MarketMasters Fundstm
Laudus International MarketMasters Fundtm
Laudus Small-Cap MarketMasters Fundtm
Laudus Mondrian Fundstm
Laudus Mondrian Emerging Markets Fund
Laudus Mondrian Global Equity Fund
Laudus Mondrian International Fixed Income Fund
Laudus Mondrian Institutional Fundstm
Laudus Mondrian Institutional Emerging Markets Fund
Laudus Mondrian Institutional International Equity Fund
The Laudus Funds includes the Laudus Growth Investors U.S. Large Cap Growth Fund and the Laudus Mondrian Funds, which are part of the Laudus Trust and Laudus Institutional Trust and distributed by ALPS Distributors Inc.; and the Laudus MarketMasters Funds, which are part of the Schwab Capital Trust, and distributed by Charles Schwab & Co., Inc. Charles Schwab & Co., Inc. and ALPS Distributors Inc. are unaffiliated entities.
For More Information about the Funds:
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Laudus MarketMasters Funds
P.O. Box 3812, Englewood, CO 80155–3812
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
| |
| © 2010 Charles Schwab & Co., Inc. All rights reserved. Member SIPC®. Printed on recycled paper. | MFR13812-13 |
Annual report dated October 31, 2010 enclosed.
Schwab Fundamental Index* Funds
Schwab Fundamental
US Large* Company Index Fund
Schwab Fundamental
US Small-Mid* Company Index Fund
Schwab Fundamental
International* Large Company
Index Fund
Schwab Fundamental
International* Small-Mid Company Index Fund
Schwab Fundamental
Emerging Markets* Index Fund
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| | |
| * | SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL and FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC. | |
This wrapper is not part of the shareholder report.
Schwab Fundamental Index* Funds
Annual Report
October 31, 2010
Schwab Fundamental
US Large* Company Index Fund
Schwab Fundamental
US Small-Mid* Company Index Fund
Schwab Fundamental
International* Large Company
Index Fund
Schwab Fundamental
International* Small-Mid Company Index Fund
Schwab Fundamental
Emerging Markets* Index Fund
| | |
| * | SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL and FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC. | |
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Schwab Fundamental Index Funds
In This Report
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Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor: Charles Schwab & Co., Inc. (Schwab).
The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS) which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. (MSCI) and Standard & Poor’s (S&P). GICS is a service mark of MSCI and S&P and has been licensed for use by Charles Schwab & Co., Inc. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.
Performance at a Glance
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
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Total Return for
|
| the Report Period |
| |
| |
|
| Schwab Fundamental US Large* Company Index Fund | | |
| (Ticker Symbol: SFLNX) | | 19.95% |
|
| FTSE RAFI US 1000 Index® | | 19.81% |
| Fund Category: Morningstar Large-Cap Value | | 13.99% |
|
| Performance Details | | pages 6-7 |
|
| |
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| Schwab Fundamental US Small-Mid* Company Index Fund | | |
| (Ticker Symbol: SFSNX) | | 29.07% |
|
| FTSE RAFI US Mid Small 1500 Index® | | 28.16% |
| Fund Category: Morningstar Small-Cap Blend | | 25.22% |
|
| Performance Details | | pages 8-9 |
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| Schwab Fundamental International* Large Company Index Fund | | |
| (Ticker Symbol: SFNNX)1 | | 8.27% |
|
| FTSE RAFI Developed ex US 1000 Index® | | 7.58% |
| Fund Category: Morningstar Foreign Large-Cap Value | | 12.54% |
|
| Performance Details | | pages 10-11 |
|
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| Schwab Fundamental International* Small-Mid Company Index Fund | | |
| (Ticker Symbol: SFILX)1 | | 14.32% |
|
| FTSE RAFI Developed ex US Mid Small 1500 Index | | 13.67% |
| Fund Category: Morningstar Foreign Small/Mid Growth | | 22.42% |
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| Performance Details | | pages 12-13 |
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| Schwab Fundamental Emerging Markets* Index Fund | | |
| (Ticker Symbol: SFENX)1 | | 22.36% |
|
| FTSE RAFI Emerging Index® | | 23.08% |
| Fund Category: Morningstar Diversified Emerging Markets | | 25.34% |
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| Performance Details | | pages 14-15 |
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| Minimum Initial Investment2 | | $100 |
|
All fund and index figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
Index ownership—“FTSE®” is trademark of The Financial Times Limited (“FT”) and the London Exchange Plc (the “Exchange”) and is used by the fund under license. “Research Affiliates” and “Fundamental Index” are trademarks of Research Affiliates LLC (“RA”). The Schwab Fundamental Index Funds are not sponsored, endorsed, sold or promoted by FTSE or RA, and FTSE and RA do not make any representation regarding the advisability of investing in shares of the fund.
Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the funds’ returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date.
| |
| * | SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL and FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC. |
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| 1 | The fund’s performance relative to the index may be affected by fair-value pricing, see financial note 2 for more information. |
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| 2 | Please see prospectus for further details and eligibility requirements. |
2 Schwab Fundamental Index Funds
From the President
Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report.
Dear Shareholder,
During the year that ended October 31, 2010, many investors wrestled with news that was mostly negative—the recovery of the U.S. economy remained tepid, unemployment stayed stubbornly high, and the housing market remained weak. In spite of these events, nearly all stock and bond markets produced positive returns, both in the United States and abroad.
The bellwether S&P 500 Index gained 16.52% during the year and international stock markets also rewarded investors as indicated by a return of 8.82% in the MSCI EAFE Index. Growth stocks generally fared better than value stocks in large-, mid-, and small-cap sectors.
For the year ended October 31, 2010, the Schwab Fundamental Index Funds generated positive absolute returns, aided by the strong performance of the equity markets in the latter part of the period. Four of the five funds topped their performance benchmarks by moderate amounts. The Schwab Fundamental Emerging Markets Index Fund underperformed its benchmark. Please read the fund managers’ discussion and analysis on the following pages for more details.
At Schwab, we encourage investors to review their investment strategy periodically in the context of their tolerance for risk, timeline, and established investment plan.
If you have any questions about the Schwab Fundamental Index Funds or any other Schwab Funds, please call us at 1-800-435-4000. Please also see www.schwabfunds.com for details on each fund including performance results, investment strategy, and prospectus.
Thank you for investing with us.
Sincerely,
Schwab Fundamental Index Funds 3
The Investment Environment
The past 12 months produced significant positive returns in nearly all major equity and fixed income markets, despite various economic indicators falling short of expectations here in the United States and abroad. Domestic equity markets fared better than international, and growth stocks outperformed value stocks in large-, mid-, and small-cap categories. In the credit markets, inflation-protected bonds were the best performers and U.S. Treasuries had the poorest returns, though they also had solid performance for the 12 months under review.
The return for the S&P 500 Index, which is usually seen as a bellwether for U.S. financial markets, was positive at 16.52%. The international stock markets also had solid overall returns, and the MSCI EAFE Index (Gross) returned 8.82%. In fixed-income, the Barclays Capital U.S. Aggregate Bond Index returned 8.01%, while the Barclays Capital U.S. TIPS Index returned 10.42%, and the Barclays Capital U.S. Treasury Index returned 7.20% for the reporting period.
In a press release dated November 3, 2010, the Federal Reserve (the Fed) described information it had received since its meeting in September 2010, and noted that the pace of recovery in output and employment remained slow. Moreover, persistent high unemployment, coupled with depressed housing prices and a rise in foreclosures, continued to work against the U.S. economic recovery process. In the U.S. fixed income markets, accommodative Fed policy in the form of a near-zero federal funds rate remained intact, and several recent statements from the Fed affirmed that rates will remain low for an extended period of time. Also in November’s press release, the Fed stated that it intended to purchase up to $600 billion of longer-term U.S. Treasuries by the end of the second quarter in 2011.
At the international level, financial markets fluctuated during the reporting period. Ongoing concerns regarding the debt obligations of Greece, Spain, Ireland, and other European countries continued to capture the attention of central banks and resulted in the progressive downgrading of debt in those countries. The news caused temporary turmoil in the U.S. and global financial markets in early May 2010. While there has been some rebounding to pre-May levels in the markets, central banks remain attentive to debt ratios, monetary exchange rates, interest rates, and inflation measurements.
During the reporting period, two economic events caused volatility in the equity and fixed income markets. First, was the Deepwater Horizon oil spill in the Gulf of Mexico on April 20, 2010. The costs—in terms of environmental impact and loss of oil—affected energy-related stocks, which declined on the news. For the reporting period, the Energy Sector was the weakest performing sector in the S&P 500 Index. Second, investor confidence in the United States and abroad was further shaken on May 6, 2010, when the Dow Jones Industrial Average dropped 999 points, within a 30-minute timeframe, before partially regaining some of the decline. The equity market event was subsequently named the “flash crash.” As a result of the flash crash, more than 16,000 trades were cancelled by the major U.S. stock exchanges.
On a more general note in the United States, real Gross Domestic Product (GDP) growth remained lower than hoped for during the reporting period, with the Bureau of Economic Analysis estimating that GDP grew at a rate of 2.0% for the third quarter of 2010. Likewise, the national unemployment rate—as reported by the Bureau of Labor Statistics—was an ongoing concern and hovered just below 10% throughout the 12-month period. Finally, high delinquencies, foreclosures, and stalled foreclosures weighed heavily on the housing sector. The discovery that some institutions had improper or incomplete paperwork on original loan documents brought at least a temporary halt to some foreclosures.
Asset Class Performance Comparison % returns during the report period
This graph compares the performance of various asset classes during the report period. Final performance figures for the period are in the key below.
| | | | | |
| | | | | |
 | | 16.52% | | S&P 500® Index: measures U.S. large-cap stocks |
| | | | | |
| | 26.58% | | Russell 2000® Index: measures U.S. small-cap stocks |
| | | | | |
| | 8.82% | | MSCI EAFE® Index (Gross): measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East |
| | | | | |
| | 8.01% | | Barclays Capital U.S. Aggregate Bond Index: measures the U.S. bond market |
| | | | | |
| | 0.11% | | Three-Month U.S. Treasury Bills (T-bills): measures short-term U.S. Treasury obligations |
These figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and you cannot invest in them directly. Remember that past performance is not an indication of future results.
Data source: Charles Schwab & Co., Inc.
Nothing in this report represents a recommendation of a security by the investment adviser.
Manager views and portfolio holdings may have changed since the report date.
4 Schwab Fundamental Index Funds
Fund Management
| | | |
| | | |
 | | Larry Mano, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day co-management of each of the funds. Prior to joining the firm in November 1998, he worked for 20 years in equity management. |
| | | |
 | | Ron Toll, a portfolio manager of the investment adviser, is responsible for the day-to-day co-management of each of the funds. He joined the firm in 1998, became Manager, Portfolio Operations in 2000, Manager, Portfolio Operations and Analytics in 2005 and was named to his current position in 2007. |
Schwab Fundamental Index Funds 5
Schwab Fundamental US Large* Company
Index Fund
The Schwab Fundamental US Large Company Index Fund (the fund) seeks investment results that correspond generally (before fees and expenses) to the price and yield of the FTSE RAFI US 1000 Index (the index). The index is composed of the largest 1000 listed companies incorporated in the United States, ranked by four fundamental financial measures of size: sales, cash flows, book value and dividends. An overall weight is calculated for each company by equally weighting each fundamental measure. Each of the companies in the index is assigned a weight equal to its fundamental weight. For more information on the fund’s strategy, please see the fund’s prospectus.
The fund returned 19.95% for the 12-month period, while its comparative index, the FTSE RAFI US 1000 Index, returned 19.81%. Unlike the fund, the index does not bear operational and transactional costs. During the period, the fund utilized a replication approach.
The fund’s tight allocation across all sectors, market capitalization, and valuation measures—compared to the index—kept the fund’s performance close to the index’s. All sectors posted positive returns, but the best absolute performers were Consumer Discretionary and Materials. However, the top contributors for the index were Consumer Discretionary and Industrials, while the top contributors for the fund were Consumer Discretionary and Financials. The weakest absolute performers for the fund and the index were Financials and Energy, while the least positive contributors for both were Utilities and Telecommunication Services.
As a result of regulatory constraints which limit the fund’s ability to invest in certain financial companies, the fund was underweight Citigroup and Bank of America until December 2009. During this time, Citigroup, in particular, lagged the fund’s performance and the underweight resulted in positive fund performance.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 997 |
| Weighted Average Market Cap ($ x 1,000,000) | | $66,507 |
| Price/Earnings Ratio (P/E) | | 19.6 |
| Price/Book Ratio (P/B) | | 1.7 |
| Portfolio Turnover Rate | | 27% |
Sector Weightings % of Investments
| | | |
| Financials | | 20.2% |
| Energy | | 11.9% |
| Industrials | | 11.6% |
| Consumer Discretionary | | 11.4% |
| Information Technology | | 10.8% |
| Consumer Staples | | 9.8% |
| Health Care | | 9.0% |
| Utilities | | 5.8% |
| Telecommunication Services | | 4.9% |
| Materials | | 3.9% |
| Other | | 0.7% |
Total | | 100.0% |
Top Equity Holdings % Net Assets1
| | | |
| Exxon Mobil Corp. | | 3.0% |
| AT&T, Inc. | | 2.3% |
| General Electric Co. | | 2.2% |
| Chevron Corp. | | 1.9% |
| Citigroup, Inc. | | 1.6% |
| Verizon Communications, Inc. | | 1.6% |
| Bank of America Corp. | | 1.5% |
| ConocoPhillips | | 1.5% |
| Microsoft Corp. | | 1.5% |
| JPMorgan Chase & Co. | | 1.4% |
Total | | 18.5% |
| | |
| * | | SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL and FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC. |
Manager views and portfolio holdings may have changed since the report date.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector Classification: S&P and MSCI.
| | |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
6 Schwab Fundamental Index Funds
Schwab Fundamental US Large* Company Index Fund
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
April 2, 2007 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,4
Average Annual Total Returns1,2,4
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 3 Years | | Since Inception |
| |
| Fund: Schwab Fundamental US Large* Company Index Fund (4/2/07) | | | 19.95 | % | | | | -3.82 | % | | | | -1.23 | % | |
FTSE RAFI US 1000 Index® | | | 19.81 | % | | | | -3.78 | % | | | | -1.21 | % | |
| Fund Category: Morningstar Large-Cap Value | | | 13.99 | % | | | | -7.65 | % | | | | -4.82 | % | |
Fund Expense Ratios3: Net 0.36%; Gross 0.52%
Style Assessment5
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 4 | | On October 27, 2009, the Investor Share class, Select Share class and Institutional Share class were combined into a single class of shares of the fund. The performance and financial history of the fund are that of the fund’s former Institutional Shares. Accordingly, the past performance shown is that of the fund’s former Institutional Shares. |
| 5 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
Schwab Fundamental Index Funds 7
Schwab Fundamental US Small-Mid* Company
Index Fund
The Schwab Fundamental US Small-Mid Company Index Fund (the fund) seeks investment results that correspond generally (before fees and expenses) to the price and yield of the FTSE RAFI US Mid Small 1500 Index (the index). The index is composed of approximately 1500 listed small and medium sized companies incorporated in the United States, ranked by four fundamental financial measures of size: sales, cash flows, book value and dividends. An overall weight is calculated for each company by equally weighting each fundamental measure. Each of the companies in the index is assigned a weight equal to its fundamental weight. For more information on the fund’s strategy, please see the fund’s prospectus.
The fund returned 29.07% for the 12-month period, while its comparative index, the FTSE RAFI US Mid Small 1500 Index, returned 28.16%. Unlike the fund, the index does not include operational and transactional costs. During the period, the fund utilized a sampling approach.
The fund’s tight allocation across all sectors, market capitalization, and valuation measures—compared to the index—kept the fund’s performance close to the index’s. All sectors posted positive returns, but the best absolute performers for the fund and the index were Telecommunication Services and Materials. However, the top contributors for the index and fund were Consumer Discretionary and Information Technology. A rights distribution within the fund (for Pacific Capital Bancorp) was the main driver of positive performance relative to the index during the period. The weakest absolute performers for the index were Financials and Health Care, while the least positive performers for the fund were Health Care and Utilities. In terms of the weakest contributors, Telecommunication Services and Utilities came in last for the fund and the index.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 1,454 |
| Weighted Average Market Cap ($ x 1,000,000) | | $1,301 |
| Price/Earnings Ratio (P/E) | | -35.0 |
| Price/Book Ratio (P/B) | | 1.6 |
| Portfolio Turnover Rate | | 41% |
Sector Weightings % of Investments
| | | |
| Financials | | 20.9% |
| Industrials | | 19.1% |
| Information Technology | | 17.3% |
| Consumer Discretionary | | 17.3% |
| Health Care | | 6.4% |
| Energy | | 5.9% |
| Materials | | 5.8% |
| Consumer Staples | | 3.0% |
| Utilities | | 2.0% |
| Telecommunication Services | | 1.4% |
| Other | | 0.9% |
Total | | 100.0% |
Top Equity Holdings % Net Assets1
| | | |
| NCI Building Systems, Inc. | | 0.5% |
| Atmel Corp. | | 0.3% |
| FelCor Lodging Trust, Inc. | | 0.3% |
| Netflix, Inc. | | 0.3% |
| Pacific Capital Bancorp | | 0.3% |
| NACCO Industries, Inc., Class A | | 0.3% |
| Ashford Hospitality Trust | | 0.3% |
| WABCO Holding, Inc. | | 0.3% |
| Chipotle Mexican Grill, Inc. | | 0.3% |
| Post Properties, Inc. | | 0.3% |
Total | | 3.2% |
| | |
| * | | SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL and FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC. |
Manager views and portfolio holdings may have changed since the report date.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector Classification: S&P and MSCI.
Small-company stocks are subject to greater volatility than other asset classes.
| | |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
8 Schwab Fundamental Index Funds
Schwab Fundamental US Small-Mid* Company Index Fund
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
April 2, 2007 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,4
Average Annual Total Returns1,2,4
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 3 Years | | Since Inception |
| |
| Fund: Schwab Fundamental US Small-Mid* Company Index Fund (4/2/07) | | | 29.07 | % | | | | 0.06 | % | | | | 1.04 | % | |
FTSE RAFI US Mid Small 1500 Index® | | | 28.16 | % | | | | 0.75 | % | | | | 1.77 | % | |
| Fund Category: Morningstar Small-Cap Blend | | | 25.22 | % | | | | -3.83 | % | | | | -2.24 | % | |
Fund Expense Ratios3: Net 0.35%; Gross 0.59%
Style Assessment5
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 4 | | On October 27, 2009, the Investor Share class, Select Share class and Institutional Share class were combined into a single class of shares of the fund. The performance and financial history of the fund are that of the fund’s former Institutional Shares. Accordingly, the past performance shown is that of the fund’s former Institutional Shares. |
| 5 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
Schwab Fundamental Index Funds 9
Schwab Fundamental International* Large Company Index Fund
The Schwab Fundamental International Large Company Index Fund (the fund) seeks investment results that correspond generally (before fees and expenses) to the price and yield of the FTSE RAFI Developed ex US 1000 Index (the index). The index is composed of the largest 1000 listed companies incorporated outside the United States, ranked by four fundamental financial measures of size: sales, cash flows, book value and dividends. An overall weight is calculated for each company by equally weighting each fundamental measure. Each of the companies in the index is assigned a weight equal to its fundamental weight. For more information on the fund’s strategy, please see the fund’s prospectus.
The fund returned 8.27% for the 12-month period, while its comparative index, the FTSE RAFI Developed ex US 1000 Index, returned 7.58%. A part of the fund’s outperformance was attributed to timing differences in foreign exchange calculations.** Fair valuation of the fund’s holdings on the last trading day of the current period also had a positive impact on the fund’s return relative to the index (see financial note 2 for more information). Unlike the fund, the index does not include operational or transactional costs. During the period, the fund utilized a replication approach.
The fund’s tight allocation across all regions and countries benefitted the fund in a way that was similar to the index. From a country standpoint, Singapore and South Korea were the top performers on an absolute basis, while Greece was the worst, for the index and the fund. The United Kingdom and Germany contributed the most to the index’s and fund’s return.
All sectors reported positive returns, except for Financials. The best contributors and absolute performers for the fund and index were Industrials and Materials. The two weakest contributors and absolute performers for the fund and index were Financials and Energy.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 1,025 |
| Weighted Average Market Cap ($ x 1,000,000) | | $46,457 |
| Price/Earnings Ratio (P/E) | | 24.4 |
| Price/Book Ratio (P/B) | | 1.2 |
| Portfolio Turnover Rate | | 65% |
Sector Weightings % of Investments
| | | |
| Financials | | 27.7% |
| Industrials | | 11.7% |
| Consumer Discretionary | | 11.6% |
| Materials | | 9.9% |
| Energy | | 9.7% |
| Telecommunication Services | | 7.7% |
| Consumer Staples | | 7.1% |
| Utilities | | 5.4% |
| Health Care | | 4.4% |
| Information Technology | | 3.9% |
| Other | | 0.9% |
Total | | 100.0% |
Top Equity Holdings % Net Assets1
| | | |
| ING Groep N.V. CVA | | 1.8% |
| Vodafone Group plc | | 1.7% |
| Royal Dutch Shell plc, A Share | | 1.5% |
| BP plc | | 1.4% |
| Total S.A. | | 1.4% |
| HSBC Holdings plc | | 1.3% |
| Daimler AG - Reg’d | | 1.2% |
| Banco Santander S.A. | | 1.1% |
| Royal Dutch Shell plc, B Share | | 1.1% |
| Telefonica S.A. | | 0.9% |
Total | | 13.4% |
| | |
| * | | SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL and FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC. |
| ** | | Typically, the securities in the index are valued using foreign exchange rates obtained at the close of the London foreign currency exchange (11:00 AM EST), using exchange rates in place at that time. Securities in the fund, however, are valued using foreign exchange rates obtained at the close of the New York foreign currency exchange (4:00 PM EST). This difference in closing times can result in different foreign currency exchange rates between the two exchanges, and thus different foreign currency exchange rates used in the valuation of the index’s and fund’s securities. |
The fund’s performance relative to the index may be affected by fair-value pricing, see financial note 2 for more information.
Foreign securities can involve risks such as political and economic instability and currency risk.
Manager views and portfolio holdings may have changed since the report date.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector Classification: S&P and MSCI.
| | |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
10 Schwab Fundamental Index Funds
Schwab Fundamental International* Large Company Index Fund
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
April 2, 2007 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,4
Average Annual Total Returns1,2,4
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 3 Years | | Since Inception |
| |
| Fund: Schwab Fundamental International* Large Company Index Fund (4/2/07) | | | 8.27 | % | | | | -8.01 | % | | | | -3.27 | % | |
FTSE RAFI Developed ex US 1000 Index® | | | 7.58 | % | | | | -7.06 | % | | | | -2.09 | % | |
| Fund Category: Morningstar Foreign Large-Cap Value | | | 12.54 | % | | | | -9.83 | % | | | | -5.21 | % | |
Fund Expense Ratios3: Net 0.35%; Gross 0.76%
Style Assessment5
Country Weightings % of Equity Investments
| | | | | |
| United Kingdom | | | 20.1% | |
| Japan | | | 15.0% | |
| France | | | 10.8% | |
| Germany | | | 9.4% | |
| Canada | | | 5.3% | |
| Australia | | | 5.0% | |
| Italy | | | 4.9% | |
| Spain | | | 4.3% | |
| Swizerland | | | 4.3% | |
| Republic of Korea | | | 4.1% | |
| Netherlands | | | 3.9% | |
| Sweden | | | 2.7% | |
| Other Countries | | | 10.2% | |
Total | | | 100.0% | |
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 4 | | On October 19, 2009, the Investor Share class, Select Share class and Institutional Share class were combined into a single class of shares of the fund. The performance and financial history of the fund are that of the fund’s former Institutional Shares. Accordingly, the past performance shown is that of the fund’s former Institutional Shares. |
| 5 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
Schwab Fundamental Index Funds 11
Schwab Fundamental International* Small-Mid Company Index Fund
The Schwab Fundamental International Small-Mid Company Index Fund (the fund) seeks investment results that correspond generally (before fees and expenses) to the price and yield of the FTSE RAFI Developed ex US Mid Small 1500 Index (the index). The index is composed of approximately 1500 small and medium sized non US listed companies ranked by four fundamental financial measures of size: sales, cash flows, book value and dividends. An overall weight is calculated for each company by equally weighting each fundamental measure. Each of the companies in the index is assigned a weight equal to its fundamental weight. For more information on the fund’s strategy, please see the fund’s prospectus.
The fund returned 14.32% for the 12-month period, while its comparative index, the FTSE RAFI Developed ex US Mid Small 1500 Index, returned 13.67%. A part of the fund’s outperformance was attributed to timing differences in foreign exchange calculations.** Fair valuation of the fund’s holdings on the last trading day of the current period also had a positive impact on the fund’s return relative to the index (see financial note 2 for more information). Unlike the fund, the index does not include operational or transactional costs. During the period, the fund utilized a replication approach.
The fund’s tight allocation across all regions and countries benefitted the fund in a way that was similar to the index. All economic regions posted positive returns. The best absolute return for the fund and the index came from North America (specifically, Canada). However, the largest contributor to the index and fund returns came from the European region, where the index had the second largest weighting. From a country perspective, Canada was the best absolute performer and contributor to returns for the fund and the index. Greece was the least positive absolute performer for the fund and index, while Japan was the weakest contributor to the fund and Greece was the weakest contributor to the index.
On a sector level, the best absolute performer for the fund and the index was Materials, whereas, the weakest performer for the fund was Utilities and the weakest performer for the index was Consumer Staples. The top contributor for the fund and index was Industrials, while the weakest contributor for both was Utilities.
In terms of valuation for both the fund and the index, all price-to-earnings and price-to-book groups had positive returns.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 1,493 |
| Weighted Average Market Cap ($ x 1,000,000) | | $2,318 |
| Price/Earnings Ratio (P/E) | | -55.5 |
| Price/Book Ratio (P/B) | | 1.2 |
| Portfolio Turnover Rate | | 63% |
Sector Weightings % of Investments
| | | |
| Industrials | | 25.7% |
| Financials | | 19.6% |
| Consumer Discretionary | | 18.4% |
| Materials | | 12.1% |
| Consumer Staples | | 7.2% |
| Information Technology | | 7.0% |
| Health Care | | 4.2% |
| Energy | | 3.8% |
| Utilities | | 1.2% |
| Telecommunication Services | | 0.6% |
| Other | | 0.2% |
Total | | 100.0% |
Top Equity Holdings % Net Assets1
| | | |
| Valeant Pharmaceuticals International, Inc. | | 0.6% |
| Immofinanz AG | | 0.4% |
| OC Oerlikon Corp. AG - Reg’d | | 0.3% |
| Hanjin Shipping Holdings Co., Ltd. | | 0.2% |
| Heidelberger Druckmaschinen AG | | 0.2% |
| IMI plc | | 0.2% |
| Rhodia S.A. | | 0.2% |
| The Weir Group plc | | 0.2% |
| Trelleborg AB, B Shares | | 0.2% |
| Bekaert N.V. | | 0.2% |
Total | | 2.7% |
| | |
| * | | SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL and FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC. |
| ** | | Typically, the securities in the index are valued using foreign exchange rates obtained at the close of the London foreign currency exchange (11:00 AM EST), using exchange rates in place at that time. Securities in the fund, however, are valued using foreign exchange rates obtained at the close of the New York foreign currency exchange (4:00 PM EST). This difference in closing times can result in different foreign currency exchange rates between the two exchanges, and thus different foreign currency exchange rates used in the valuation of the index’s and fund’s securities. |
The fund’s performance relative to the index may be affected by fair-value pricing, see financial note 2 for more information.
Foreign securities can involve risks such as political and economic instability and currency risk.
Small-company stocks are subject to greater volatility than other asset classes.
Manager views and portfolio holdings may have changed since the report date.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector Classification: S&P and MSCI.
| | |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
12 Schwab Fundamental Index Funds
Schwab Fundamental International* Small-Mid Company Index Fund
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
January 31, 2008 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,4
Average Annual Total Returns1,2,4
| | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | Since Inception |
| |
| Fund: Schwab Fundamental International* Small-Mid Company Index Fund (1/31/08) | | | 14.32 | % | | | | 2.66 | % | |
FTSE RAFI Developed ex US Mid Small 1500 Index® | | | 13.67 | % | | | | 5.24 | % | |
| Fund Category: Morningstar Foreign Small/Mid Growth | | | 22.42 | % | | | | -1.19 | % | |
Fund Expense Ratios3: Net 0.55%; Gross 3.75%
Style Assessment5
Country Weightings % of Equity Investments
| | | | | |
| Japan | | | 26.2% | |
| United Kingdom | | | 13.5% | |
| Canada | | | 8.3% | |
| Republic of Korea | | | 7.8% | |
| Australia | | | 5.6% | |
| Germany | | | 4.2% | |
| Hong Kong | | | 3.9% | |
| Switzerland | | | 3.8% | |
| France | | | 3.4% | |
| Sweden | | | 2.7% | |
| Netherlands | | | 2.7% | |
| Other Countries | | | 17.9% | |
Total | | | 100.0% | |
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 4 | | On October 19, 2009, the Investor Share class, Select Share class and Institutional Share class were combined into a single class of shares of the fund. The performance and financial history of the fund are that of the fund’s former Institutional Shares. Accordingly, the past performance shown is that of the fund’s former Institutional Shares. |
| 5 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
Schwab Fundamental Index Funds 13
Schwab Fundamental Emerging Markets*
Index Fund
The Schwab Fundamental Emerging Markets Index Fund (the fund) seeks investment results that correspond generally (before fees and expenses) to the price and yield of the FTSE/RAFI Emerging Index (the index). The index is composed of the 350 companies from emerging markets with the largest fundamental values ranked by four fundamental financial measures of size: sales, cash flows, book value and dividends. An overall weight is calculated for each company by equally weighting each fundamental measure. Each of the companies in the index is assigned a weight equal to its fundamental weight. For more information on the fund’s strategy, please see the fund’s prospectus.
The Schwab Fundamental Emerging Markets Index Fund returned 22.36% for the 12-month period, while its comparative index, the FTSE RAFI Emerging Index, returned 23.08%. Fair valuation of the fund’s holdings on the last trading day of the current period had a positive impact on the fund’s return relative to the index (see financial note 2 for more information). Unlike the fund, the index does not include operational or transactional costs. During the period, the fund utilized a replication approach.
The fund’s allocation across all regions and countries benefitted the fund in a way that was similar to the index. All economic regions posted positive returns. The best absolute return for the fund and the index came from the Africa & Middle East region. However, the largest contributor to the index and fund returns came from the Asia & Pacific Basin region, where they both had the largest weighting. On a country level, China and South Korea contributed the most to the index and fund returns. One slight variation was the fund’s exposure to Russia. The fund does not invest in local Russian securities. Instead, it invests in Global Depository Receipts (GDRs). The price differences between the local securities and Russian GDRs detracted from the fund’s performance.
On a sector level, the best absolute performers for the fund and the index were Consumer Discretionary and Industrials. However, the top contributors for the index and the fund were Financials and Materials. The sectors that contributed the least to the fund and the index were Telecommunication Services and Information Technology.
In terms of valuation for both the fund and the index, all price-to-earnings and price-to-book groups had positive returns.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 352 |
| Weighted Average Market Cap ($ x 1,000,000) | | $63,024 |
| Price/Earnings Ratio (P/E) | | 14.9 |
| Price/Book Ratio (P/B) | | 0.7 |
| Portfolio Turnover Rate | | 91% |
Sector Weightings % of Investments
| | | |
| Energy | | 28.6% |
| Financials | | 27.5% |
| Materials | | 12.3% |
| Telecommunication Services | | 9.7% |
| Information Technology | | 6.4% |
| Industrials | | 5.9% |
| Consumer Staples | | 3.6% |
| Utilities | | 3.4% |
| Consumer Discretionary | | 2.2% |
| Other | | 0.4% |
Total | | 100.0% |
Top Equity Holdings % Net Assets1
| | | |
| PetroChina Co., Ltd., Class H | | 8.4% |
| China Petroleum & Chemical Corp., Class H | | 3.9% |
| Industrial & Commercial Bank of China Ltd., Class H | | 3.3% |
| Bank of China Ltd., Class H | | 2.9% |
| Gazprom ADR | | 2.5% |
| America Movil S.A.B. de C.V., Series L | | 2.2% |
| Itau Unibanco Holding S.A. | | 2.2% |
| LUKOIL ADR | | 1.9% |
| Banco Bradesco S.A. | | 1.8% |
| Surgutneftegaz ADR | | 1.6% |
Total | | 30.7% |
| | |
| * | | SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL and FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC. |
The fund’s performance relative to the index may be affected by fair-value pricing, see financial note 2 for more information.
Foreign securities can involve risks such as political and economic instability and currency risk. These risks may be greater in emerging markets.
Manager views and portfolio holdings may have changed since the report date.
Certain securities referenced in the above portfolio managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector Classification: S&P and MSCI.
| | |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
14 Schwab Fundamental Index Funds
Schwab Fundamental Emerging Markets* Index Fund
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
January 31, 2008 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,4
Average Annual Total Returns1,2,4
| | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | Since Inception |
| |
| Fund: Schwab Fundamental Emerging Markets* Index Fund (1/31/08) | | | 22.36 | % | | | | 4.22 | % | |
FTSE RAFI Emerging Index® | | | 23.08 | % | | | | 6.73 | % | |
| Fund Category: Morningstar Diversified Emerging Markets | | | 25.34 | % | | | | 0.51 | % | |
Fund Expense Ratios3: Net 0.61%; Gross 1.72%
Style Assessment5
Country Weightings % of Equity Investments
| | | | | |
| China | | | 30.3% | |
| Brazil | | | 14.3% | |
| Taiwan | | | 12.3% | |
| Russia | | | 8.6% | |
| South Africa | | | 7.6% | |
| Mexico | | | 6.3% | |
| India | | | 5.4% | |
| Hong Kong | | | 2.9% | |
| Malaysia | | | 2.6% | |
| Other Countries | | | 9.7% | |
Total | | | 100.0% | |
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 4 | | On October 19, 2009, the Investor Share class, Select Share class and Institutional Share class were combined into a single class of shares of the fund. The performance and financial history of the fund are that of the fund’s former Institutional Shares. Accordingly, the past performance shown is that of the fund’s former Institutional Shares. |
| 5 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
Schwab Fundamental Index Funds 15
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you incur two types of costs: transaction costs, such as redemption fees, and ongoing costs, such as management fees, transfer agent and shareholder services fees, and other fund expenses.
The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning May 1, 2010 and held through October 31, 2010.
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period.”
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.
| | | | | | | | | | | | | | | | | |
| | | | | | | Ending
| | |
| | | | | Beginning
| | Account Value
| | Expenses Paid
|
| | | Expense Ratio1
| | Account Value
| | (Net of Expenses)
| | During Period2
|
| | | (Annualized) | | at 5/1/10 | | at 10/31/10 | | 5/1/10–10/31/10 |
| |
| Schwab Fundamental US Large Company Index Fund | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.35% | | | $ | 1,000 | | | $ | 990.20 | | | $ | 1.76 | |
| Hypothetical 5% Return | | | 0.35% | | | $ | 1,000 | | | $ | 1,023.44 | | | $ | 1.79 | |
| |
|
| Schwab Fundamental US Small-Mid Company Index Fund | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.35% | | | $ | 1,000 | | | $ | 968.40 | | | $ | 1.74 | |
| Hypothetical 5% Return | | | 0.35% | | | $ | 1,000 | | | $ | 1,023.44 | | | $ | 1.79 | |
| |
|
| Schwab Fundamental International Large Company Index Fund | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.35% | | | $ | 1,000 | | | $ | 1,061.70 | | | $ | 1.82 | |
| Hypothetical 5% Return | | | 0.35% | | | $ | 1,000 | | | $ | 1,023.44 | | | $ | 1.79 | |
| |
|
| Schwab Fundamental International Small-Mid Company Index Fund | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.55% | | | $ | 1,000 | | | $ | 1,056.20 | | | $ | 2.85 | |
| Hypothetical 5% Return | | | 0.55% | | | $ | 1,000 | | | $ | 1,022.43 | | | $ | 2.80 | |
| |
|
| Schwab Fundamental Emerging Markets Index Fund | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.61% | | | $ | 1,000 | | | $ | 1,101.90 | | | $ | 3.23 | |
| Hypothetical 5% Return | | | 0.61% | | | $ | 1,000 | | | $ | 1,022.13 | | | $ | 3.11 | |
| | |
| 1 | | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights, which covers a 12-month period. |
| 2 | | Expenses for each fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 184 days of the period, and divided by the 365 days of the fiscal year. |
16 Schwab Fundamental Index Funds
Schwab Fundamental US Large Company Index Fund
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 4/2/072–
| | |
| | | 10/31/10 | | 10/31/091 | | 10/31/08 | | 10/31/07 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 7.63 | | | | 6.47 | | | | 10.75 | | | | 10.00 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.14 | | | | 0.10 | | | | 0.20 | | | | 0.05 | | | |
| Net realized and unrealized gains (losses) | | | 1.37 | | | | 1.26 | | | | (4.38 | ) | | | 0.70 | | | |
| | | |
| Total from investment operations | | | 1.51 | | | | 1.36 | | | | (4.18 | ) | | | 0.75 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.09 | ) | | | (0.20 | ) | | | (0.09 | ) | | | — | | | |
| Distributions from net realized gains | | | — | | | | — | | | | (0.01 | ) | | | — | | | |
| | | |
| Total distributions | | | (0.09 | ) | | | (0.20 | ) | | | (0.10 | ) | | | — | | | |
| | | |
| Net asset value at end of period | | | 9.05 | | | | 7.63 | | | | 6.47 | | | | 10.75 | | | |
| | | |
| Total return (%) | | | 19.95 | | | | 22.04 | | | | (39.22 | ) | | | 7.50 | 3 | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 0.35 | | | | 0.35 | | | | 0.35 | | | | 0.35 | 4 | | |
| Gross operating expenses | | | 0.45 | | | | 0.53 | | | | 0.52 | | | | 0.60 | 4 | | |
| Net investment income (loss) | | | 1.77 | | | | 1.88 | | | | 2.19 | | | | 1.66 | 4 | | |
| Portfolio turnover rate | | | 27 | | | | 28 | | | | 26 | | | | 2 | 3 | | |
| Net assets, end of period ($ x 1,000,000) | | | 1,019 | | | | 663 | | | | 277 | | | | 345 | | | |
1 Effective October 27, 2009, the Investor Share class, the Select Share class and the Institutional Share class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Institutional Shares.
2 Commencement of operations.
3 Not annualized.
4 Annualized.
See financial notes 17
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings as of October 31, 2010
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .3% | | Common Stock | | | 943,510,516 | | | | 1,012,552,616 | |
| | 0 | .6% | | Other Investment Company | | | 6,235,229 | | | | 6,235,229 | |
| | 0 | .1% | | Short-Term Investment | | | 875,852 | | | | 875,852 | |
| |
| |
| | 100 | .0% | | Total Investments | | | 950,621,597 | | | | 1,019,663,697 | |
| | 1 | .5% | | Collateral Invested for Securities on Loan | | | 15,323,057 | | | | 15,323,057 | |
| | (1 | .5)% | | Other Assets and Liabilities, Net | | | | | | | (15,648,117 | ) |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 1,019,338,637 | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Common Stock 99.3% of net assets |
| |
Automobiles & Components 1.2%
|
Ford Motor Co. * | | | 411,674 | | | | 0.6 | | | | 5,816,954 | |
| Other Securities | | | | | | | 0.6 | | | | 6,517,869 | |
| | | | | | | | | | | | | |
| | | | | | | | 1.2 | | | | 12,334,823 | |
| |
Banks 3.8%
|
| U.S. Bancorp | | | 198,200 | | | | 0.5 | | | | 4,792,476 | |
| Wells Fargo & Co. | | | 477,825 | | | | 1.2 | | | | 12,461,676 | |
| Other Securities | | | | | | | 2.1 | | | | 21,920,739 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.8 | | | | 39,174,891 | |
| |
Capital Goods 8.7%
|
| Caterpillar, Inc. | | | 51,945 | | | | 0.4 | | | | 4,082,877 | |
| General Electric Co. | | | 1,391,525 | | | | 2.2 | | | | 22,292,231 | |
| The Boeing Co. | | | 54,340 | | | | 0.4 | | | | 3,838,578 | |
| United Technologies Corp. | | | 60,515 | | | | 0.4 | | | | 4,524,707 | |
| Other Securities | | | | | | | 5.3 | | | | 53,724,723 | |
| | | | | | | | | | | | | |
| | | | | | | | 8.7 | | | | 88,463,116 | |
| |
Commercial & Professional Supplies 0.8%
|
| Other Securities | | | | | | | 0.8 | | | | 7,683,617 | |
| |
Consumer Durables & Apparel 1.3%
|
| Other Securities | | | | | | | 1.3 | | | | 13,207,618 | |
| |
Consumer Services 1.5%
|
| Other Securities | | | | | | | 1.5 | | | | 15,439,492 | |
| |
Diversified Financials 7.9%
|
| Bank of America Corp. | | | 1,336,660 | | | | 1.5 | | | | 15,291,390 | |
Citigroup, Inc. * | | | 3,986,135 | | | | 1.6 | | | | 16,622,183 | |
| JPMorgan Chase & Co. | | | 392,342 | | | | 1.4 | | | | 14,763,830 | |
| Morgan Stanley | | | 172,135 | | | | 0.4 | | | | 4,280,997 | |
The Charles Schwab Corp. (b) | | | 53,415 | | | | 0.1 | | | | 822,591 | |
| The Goldman Sachs Group, Inc. | | | 33,811 | | | | 0.5 | | | | 5,441,880 | |
| Other Securities | | | | | | | 2.4 | | | | 23,012,096 | |
| | | | | | | | | | | | | |
| | | | | | | | 7.9 | | | | 80,234,967 | |
| |
Energy 11.9%
|
| Chevron Corp. | | | 233,605 | | | | 1.9 | | | | 19,298,109 | |
| ConocoPhillips | | | 256,010 | | | | 1.5 | | | | 15,206,994 | |
| Exxon Mobil Corp. | | | 460,284 | | | | 3.0 | | | | 30,595,077 | |
| Marathon Oil Corp. | | | 126,690 | | | | 0.4 | | | | 4,506,363 | |
| Schlumberger Ltd. | | | 69,300 | | | | 0.5 | | | | 4,843,377 | |
| Valero Energy Corp. | | | 218,225 | | | | 0.4 | | | | 3,917,139 | |
| Other Securities | | | | | | | 4.2 | | | | 42,516,300 | |
| | | | | | | | | | | | | |
| | | | | | | | 11.9 | | | | 120,883,359 | |
| |
Food & Staples Retailing 3.0%
|
| Wal-Mart Stores, Inc. | | | 230,625 | | | | 1.2 | | | | 12,492,956 | |
| Other Securities | | | | | | | 1.8 | | | | 17,717,737 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.0 | | | | 30,210,693 | |
| |
Food, Beverage & Tobacco 5.2%
|
| Altria Group, Inc. | | | 416,780 | | | | 1.0 | | | | 10,594,548 | |
| Kraft Foods, Inc., Class A | | | 142,592 | | | | 0.5 | | | | 4,601,444 | |
| PepsiCo, Inc. | | | 77,008 | | | | 0.5 | | | | 5,028,622 | |
| Philip Morris International, Inc. | | | 67,720 | | | | 0.4 | | | | 3,961,620 | |
| The Coca-Cola Co. | | | 126,165 | | | | 0.8 | | | | 7,736,438 | |
| Other Securities | | | | | | | 2.0 | | | | 20,790,046 | |
| | | | | | | | | | | | | |
| | | | | | | | 5.2 | | | | 52,712,718 | |
| |
Health Care Equipment & Services 3.9%
|
| Other Securities | | | | | | | 3.9 | | | | 39,735,132 | |
| |
Household & Personal Products 1.6%
|
| The Procter & Gamble Co. | | | 158,195 | | | | 1.0 | | | | 10,056,456 | |
| Other Securities | | | | | | | 0.6 | | | | 6,524,481 | |
| | | | | | | | | | | | | |
| | | | | | | | 1.6 | | | | 16,580,937 | |
| |
Insurance 6.1%
|
American International Group, Inc. (c)* | | | 233,380 | | | | 1.0 | | | | 9,804,294 | |
Berkshire Hathaway, Inc., Class A * | | | 51 | | | | 0.6 | | | | 6,084,300 | |
| MetLife, Inc. | | | 104,505 | | | | 0.4 | | | | 4,214,687 | |
| The Travelers Cos., Inc. | | | 73,695 | | | | 0.4 | | | | 4,067,964 | |
| Other Securities | | | | | | | 3.7 | | | | 38,271,002 | |
| | | | | | | | | | | | | |
| | | | | | | | 6.1 | | | | 62,442,247 | |
18 See financial notes
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Materials 3.9%
|
| E.I. du Pont de Nemours & Co. | | | 82,245 | | | | 0.4 | | | | 3,888,543 | |
| The Dow Chemical Co. | | | 140,200 | | | | 0.4 | | | | 4,322,366 | |
| Other Securities | | | | | | | 3.1 | | | | 31,527,020 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.9 | | | | 39,737,929 | |
| |
Media 3.8%
|
| Comcast Corp., Class A | | | 215,140 | | | | 0.4 | | | | 4,427,581 | |
| The Walt Disney Co. | | | 118,950 | | | | 0.4 | | | | 4,295,284 | |
| Time Warner Cable, Inc. | | | 80,009 | | | | 0.5 | | | | 4,630,121 | |
| Time Warner, Inc. | | | 202,188 | | | | 0.6 | | | | 6,573,132 | |
| Other Securities | | | | | | | 1.9 | | | | 18,981,537 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.8 | | | | 38,907,655 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 5.1%
|
| Bristol-Myers Squibb Co. | | | 152,950 | | | | 0.4 | | | | 4,114,355 | |
| Johnson & Johnson | | | 148,395 | | | | 0.9 | | | | 9,448,310 | |
| Merck & Co., Inc. | | | 162,957 | | | | 0.6 | | | | 5,912,080 | |
| Pfizer, Inc. | | | 828,999 | | | | 1.4 | | | | 14,424,583 | |
| Other Securities | | | | | | | 1.8 | | | | 18,525,837 | |
| | | | | | | | | | | | | |
| | | | | | | | 5.1 | | | | 52,425,165 | |
| |
Real Estate 2.3%
|
| Other Securities | | | | | | | 2.3 | | | | 23,894,320 | |
| |
Retailing 3.6%
|
| The Home Depot, Inc. | | | 161,596 | | | | 0.5 | | | | 4,990,084 | |
| Other Securities | | | | | | | 3.1 | | | | 31,527,136 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.6 | | | | 36,517,220 | |
| |
Semiconductors & Semiconductor Equipment 1.7%
|
| Intel Corp. | | | 372,610 | | | | 0.7 | | | | 7,478,283 | |
| Other Securities | | | | | | | 1.0 | | | | 9,652,069 | |
| | | | | | | | | | | | | |
| | | | | | | | 1.7 | | | | 17,130,352 | |
| |
Software & Services 5.0%
|
| International Business Machines Corp. | | | 58,995 | | | | 0.8 | | | | 8,471,682 | |
| Microsoft Corp. | | | 567,415 | | | | 1.5 | | | | 15,115,936 | |
| Other Securities | | | | | | | 2.7 | | | | 27,675,179 | |
| | | | | | | | | | | | | |
| | | | | | | | 5.0 | | | | 51,262,797 | |
| |
Technology Hardware & Equipment 4.1%
|
Apple, Inc. * | | | 18,430 | | | | 0.5 | | | | 5,545,034 | |
Cisco Systems, Inc. * | | | 199,765 | | | | 0.4 | | | | 4,560,635 | |
| Hewlett-Packard Co. | | | 125,275 | | | | 0.5 | | | | 5,269,067 | |
| Other Securities | | | | | | | 2.7 | | | | 26,069,272 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.1 | | | | 41,444,008 | |
| |
Telecommunication Services 4.9%
|
| AT&T, Inc. | | | 821,085 | | | | 2.3 | | | | 23,400,922 | |
| Verizon Communications, Inc. | | | 510,830 | | | | 1.6 | | | | 16,586,650 | |
| Other Securities | | | | | | | 1.0 | | | | 10,117,143 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.9 | | | | 50,104,715 | |
| |
Transportation 2.2%
|
| United Parcel Service, Inc., Class B | | | 65,780 | | | | 0.4 | | | | 4,429,625 | |
| Other Securities | | | | | | | 1.8 | | | | 18,074,017 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.2 | | | | 22,503,642 | |
| |
Utilities 5.8%
|
| Other Securities | | | | | | | 5.8 | | | | 59,521,203 | |
| | | | | | | | | | | | | |
| Total Common Stock |
| (Cost $943,510,516) | | | 1,012,552,616 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Other Investment Company 0.6% of net assets |
| |
Money Funds 0.6%
|
| State Street Institutional Liquid Reserves Fund - Institutional Class | | | 6,235,229 | | | | 0.6 | | | | 6,235,229 | |
| | | | | | | | | | | | | |
| Total Other Investment Company |
| (Cost $6,235,229) | | | 6,235,229 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Face
| | | | |
Security
| | Amount
| | % of Net
| | Value
|
| Rate, Maturity Date | | ($) | | Assets | | ($) |
| |
Short-Term Investment 0.1% of net assets |
| |
U.S. Treasury Obligation 0.1%
|
| Other Securities | | | | | | | 0.1 | | | | 875,852 | |
| | | | | | | | | | | | | |
| Total Short-Term Investment |
| (Cost $875,852) | | | 875,852 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Collateral Invested for Securities on Loan 1.5% of net assets |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| State Street Navigator Security Lending Prime Portfolio | | | 15,323,057 | | | | 1.5 | | | | 15,323,057 | |
| | | | | | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $15,323,057) | | | 15,323,057 | |
| | | | | |
| |
|
End of collateral invested for securities on loan. |
At 10/31/10 the tax basis cost of the fund’s investments was $968,473,431 and the unrealized appreciation and depreciation were $103,007,616 and ($51,817,350), respectively, with a net unrealized appreciation of $51,190,266.
See financial notes 19
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
For the following notes, please refer to complete schedule of holdings.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is held as collateral for open futures contracts. |
| (b) | | Issuer is affiliated with the fund’s adviser. |
| (c) | | All or a portion of this security is on loan. |
| | | |
| REIT — | | Real Estate Investment Trust. |
In addition to the above, the fund held the following at 10/31/10.
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contract |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
S&P 500 Index, e-mini, Long, expires 12/17/10 | | | 75 | | | | 4,423,875 | | | | 319,706 | |
20 See financial notes
Schwab Fundamental US Large Company Index Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value including securities on loan of $14,950,723 (cost $950,621,597) | | | | | $1,019,663,697 | |
| Collateral invested for securities on loan | | | | | 15,323,057 | |
| Receivables: | | | | | | |
| Fund shares sold | | | | | 1,734,714 | |
| Dividends | | | | | 1,388,388 | |
| Income from securities on loan | | | | | 32,819 | |
| Foreign tax reclaims | | | | | 8,567 | |
| Interest | | | | | 1,784 | |
| Due from broker for futures | | | | | 1,500 | |
| Prepaid expenses | | + | | | 21,657 | |
| | | |
Total assets | | | | | 1,038,176,183 | |
| |
Liabilities |
|
| Collateral held for securities on loan | | | | | 15,323,057 | |
| Payables: | | | | | | |
| Investments bought | | | | | 2,979,600 | |
| Investment adviser and administrator fees | | | | | 10,901 | |
| Shareholder service fees | | | | | 6,906 | |
| Fund shares redeemed | | | | | 383,302 | |
| Accrued expenses | | + | | | 133,780 | |
| | | |
Total liabilities | | | | | 18,837,546 | |
| |
Net Assets |
|
Total assets | | | | | 1,038,176,183 | |
Total liabilities | | − | | | 18,837,546 | |
| | | |
Net assets | | | | | $1,019,338,637 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 1,067,711,852 | |
| Net investment income not yet distributed | | | | | 12,859,600 | |
| Net realized capital losses | | | | | (130,594,621 | ) |
| Net unrealized capital gains | | | | | 69,361,806 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $1,019,338,637 | | | | 112,574,151 | | | | | $9.05 | | | |
See financial notes 21
Schwab Fundamental US Large Company Index Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends (including $11,050 from affiliated issuer and net of foreign withholding taxes of $5,058) | | | | | $17,338,637 | |
| Interest | | | | | 20,716 | |
| Securities on loan | | + | | | 493,154 | |
| | | |
Total investment income | | | | | 17,852,507 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 2,247,660 | |
| Shareholder service fees | | | | | 611,804 | |
| FTSE Index fee | | | | | 514,406 | |
| Registration fees | | | | | 84,614 | |
| Transfer agent fees | | | | | 76,295 | |
| Portfolio accounting fees | | | | | 64,698 | |
| Shareholder reports | | | | | 57,531 | |
| Professional fees | | | | | 45,149 | |
| Custodian fees | | | | | 33,739 | |
| Trustees’ fees | | | | | 10,751 | |
| Interest expense | | | | | 799 | |
| Other expenses | | + | | | 51,360 | |
| | | |
| Total expenses | | | | | 3,798,806 | |
| Expense reduction by adviser and Schwab | | − | | | 837,580 | |
| Custody credits | | − | | | 41 | |
| | | |
Net expenses | | − | | | 2,961,185 | |
| | | |
Net investment income | | | | | 14,891,322 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized losses on investments | | | | | (2,828,329 | ) |
| Net realized losses on affiliated issuer | | | | | (41,680 | ) |
| Net realized gains on futures contracts | | + | | | 802,886 | |
| | | |
Net realized losses | | | | | (2,067,123 | ) |
| Net unrealized gains on investments | | | | | 133,616,784 | |
| Net unrealized losses on affiliated issuer | | | | | (38,021 | ) |
| Net unrealized gains on futures contracts | | + | | | 422,426 | |
| | | |
Net unrealized gains | | + | | | 134,001,189 | |
| | | |
Net realized and unrealized gains | | | | | 131,934,066 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $146,825,388 | |
22 See financial notes
Schwab Fundamental US Large Company Index Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $14,891,322 | | | | $7,893,524 | |
| Net realized losses | | | | | (2,067,123 | ) | | | (73,112,174 | ) |
| Net unrealized gains | | + | | | 134,001,189 | | | | 135,652,151 | |
| | | |
Increase in net assets from operations | | | | | 146,825,388 | | | | 70,433,501 | |
| |
Distributions to Shareholders1 |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | — | | | | 1,138,889 | |
| Select Shares | | | | | — | | | | 1,940,934 | |
| Institutional Shares | | + | | | 8,047,761 | | | | 8,172,183 | |
| | | |
Total distributions from net investment income | | | | | $8,047,761 | | | | $11,252,006 | |
Transactions in Fund Shares1
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 2,963,679 | | | | $18,268,388 | |
| Select Shares | | | | | — | | | | — | | | | 3,317,698 | | | | 20,222,086 | |
| Institutional Shares | | + | | | 46,806,200 | | | | 397,445,530 | | | | 73,380,081 | | | | 519,704,186 | |
| | | |
Total shares sold | | | | | 46,806,200 | | | | $397,445,530 | | | | 79,661,458 | | | | $558,194,660 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 166,331 | | | | $961,392 | |
| Select Shares | | | | | — | | | | — | | | | 283,752 | | | | 1,637,250 | |
| Institutional Shares | | + | | | 441,885 | | | | 3,557,176 | | | | 847,837 | | | | 4,900,500 | |
| | | |
Total shares reinvested | | | | | 441,885 | | | | $3,557,176 | | | | 1,297,920 | | | | $7,499,142 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | (9,805,177 | ) | | | ($67,750,784 | ) |
| Select Shares | | | | | — | | | | — | | | | (14,009,460 | ) | | | (101,386,968 | ) |
| Institutional Shares | | + | | | (21,579,324 | ) | | | (183,344,157 | ) | | | (30,161,040 | ) | | | (180,092,652 | ) |
| | | |
Total shares redeemed | | | | | (21,579,324 | ) | | | ($183,344,157 | ) | | | (53,975,677 | ) | | | ($349,230,404 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | 25,668,761 | | | | $217,658,549 | | | | 26,983,701 | | | | $216,463,398 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 86,905,390 | | | | $662,902,461 | | | | 59,921,689 | | | | $387,257,568 | |
| Total increase | | + | | | 25,668,761 | | | | 356,436,176 | | | | 26,983,701 | | | | 275,644,893 | |
| | | |
End of period | | | | | 112,574,151 | | | | $1,019,338,637 | | | | 86,905,390 | | | | $662,902,461 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $12,859,600 | | | | | | | | $5,965,211 | |
| | | |
1 | | Effective October 27, 2009, all outstanding Investor Shares (5,492,973 shares valued at $43,308,800) and Select Shares (9,593,947 shares valued at $75,687,608) combined with Institutional Shares, resulting in a single class of shares of the fund. |
See financial notes 23
Schwab Fundamental US Small-Mid Company Index Fund
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 4/2/072–
| | |
| | | 10/31/10 | | 10/31/091 | | 10/31/08 | | 10/31/07 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 7.88 | | | | 6.30 | | | | 10.36 | | | | 10.00 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.09 | | | | 0.06 | | | | 0.05 | | | | 0.05 | | | |
| Net realized and unrealized gains (losses) | | | 2.19 | | | | 1.59 | | | | (4.04 | ) | | | 0.31 | | | |
| | | |
| Total from investment operations | | | 2.28 | | | | 1.65 | | | | (3.99 | ) | | | 0.36 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.06 | ) | | | (0.07 | ) | | | (0.06 | ) | | | — | | | |
| Distributions from net realized gains | | | — | | | | — | | | | (0.01 | ) | | | — | | | |
| | | |
| Total distributions | | | (0.06 | ) | | | (0.07 | ) | | | (0.07 | ) | | | — | | | |
| | | |
| Net asset value at end of period | | | 10.10 | | | | 7.88 | | | | 6.30 | | | | 10.36 | | | |
| | | |
| Total return (%) | | | 29.07 | | | | 26.68 | | | | (38.73 | ) | | | 3.60 | 3 | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 0.35 | | | | 0.35 | | | | 0.35 | | | | 0.35 | 4 | | |
| Gross operating expenses | | | 0.53 | | | | 0.60 | | | | 0.71 | | | | 0.89 | 4 | | |
| Net investment income (loss) | | | 1.03 | | | | 1.00 | | | | 1.44 | | | | 1.36 | 4 | | |
| Portfolio turnover rate | | | 41 | | | | 29 | | | | 37 | | | | 4 | 3 | | |
| Net assets, end of period ($ x 1,000,000) | | | 412 | | | | 298 | | | | 131 | | | | 33 | | | |
1 Effective October 27, 2009, the Investor Share class, the Select Share class and the Institutional Share class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Institutional Shares.
2 Commencement of operations.
3 Not annualized.
4 Annualized.
24 See financial notes
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings as of October 31, 2010
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .1% | | Common Stock | | | 339,415,995 | | | | 408,569,785 | |
| | 0 | .3% | | Rights | | | — | | | | 1,287,876 | |
| | 0 | .5% | | Other Investment Company | | | 2,016,466 | | | | 2,016,466 | |
| | 0 | .1% | | Short-Term Investment | | | 346,744 | | | | 346,744 | |
| |
| |
| | 100 | .0% | | Total Investments | | | 341,779,205 | | | | 412,220,871 | |
| | 3 | .7% | | Collateral Invested for Securities on Loan | | | 15,374,683 | | | | 15,374,683 | |
| | (3 | .7)% | | Other Assets and Liabilities, Net | | | | | | | (15,256,332 | ) |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 412,339,222 | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Common Stock 99.1% of net assets |
| |
Automobiles & Components 1.0%
|
| Other Securities | | | | | | | 1.0 | | | | 3,893,463 | |
| |
Banks 7.5%
|
Park National Corp. (b) | | | 11,710 | | | | 0.2 | | | | 765,248 | |
| Other Securities | | | | | | | 7.3 | | | | 30,262,417 | |
| | | | | | | | | | | | | |
| | | | | | | | 7.5 | | | | 31,027,665 | |
| |
Capital Goods 10.9%
|
| Baldor Electric Co. | | | 18,650 | | | | 0.2 | | | | 783,673 | |
Hexcel Corp. * | | | 46,085 | | | | 0.2 | | | | 818,931 | |
| Mueller Industries, Inc. | | | 28,200 | | | | 0.2 | | | | 829,080 | |
| NACCO Industries, Inc., Class A | | | 12,140 | | | | 0.3 | | | | 1,205,016 | |
NCI Building Systems, Inc. * | | | 215,851 | | | | 0.5 | | | | 2,139,083 | |
| Triumph Group, Inc. | | | 10,830 | | | | 0.2 | | | | 905,280 | |
WABCO Holdings, Inc. * | | | 22,800 | | | | 0.3 | | | | 1,058,376 | |
| Other Securities | | | | | | | 9.0 | | | | 37,179,630 | |
| | | | | | | | | | | | | |
| | | | | | | | 10.9 | | | | 44,919,069 | |
| |
Commercial & Professional Supplies 4.4%
|
Stericycle, Inc. * | | | 11,590 | | | | 0.2 | | | | 831,467 | |
The Geo Group, Inc. * | | | 32,080 | | | | 0.2 | | | | 822,852 | |
| Other Securities | | | | | | | 4.0 | | | | 16,361,349 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.4 | | | | 18,015,668 | |
| |
Consumer Durables & Apparel 3.6%
|
The Warnaco Group, Inc. * | | | 15,680 | | | | 0.2 | | | | 832,765 | |
| Other Securities | | | | | | | 3.4 | | | | 14,114,987 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.6 | | | | 14,947,752 | |
| |
Consumer Services 5.0%
|
Chipotle Mexican Grill, Inc. * | | | 4,960 | | | | 0.3 | | | | 1,042,642 | |
Gaylord Entertainment Co. * | | | 24,980 | | | | 0.2 | | | | 832,833 | |
| Other Securities | | | | | | | 4.5 | | | | 18,885,976 | |
| | | | | | | | | | | | | |
| | | | | | | | 5.0 | | | | 20,761,451 | |
| |
Diversified Financials 2.7%
|
| Other Securities | | | | | | | 2.7 | | | | 11,063,175 | |
| |
Energy 5.9%
|
Concho Resources, Inc. * | | | 10,840 | | | | 0.2 | | | | 744,383 | |
International Coal Group, Inc. * | | | 132,955 | | | | 0.2 | | | | 747,207 | |
USEC, Inc. * | | | 146,000 | | | | 0.2 | | | | 784,020 | |
| Other Securities | | | | | | | 5.3 | | | | 22,041,504 | |
| | | | | | | | | | | | | |
| | | | | | | | 5.9 | | | | 24,317,114 | |
| |
Food & Staples Retailing 0.5%
|
| Other Securities | | | | | | | 0.5 | | | | 1,964,587 | |
| |
Food, Beverage & Tobacco 1.7%
|
| Other Securities | | | | | | | 1.7 | | | | 7,102,083 | |
| |
Health Care Equipment & Services 4.7%
|
| The Cooper Cos., Inc. | | | 15,585 | | | | 0.2 | | | | 768,964 | |
| Other Securities | | | | | | | 4.5 | | | | 18,673,083 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.7 | | | | 19,442,047 | |
| |
Household & Personal Products 0.8%
|
| Herbalife Ltd. | | | 14,305 | | | | 0.2 | | | | 913,517 | |
| Other Securities | | | | | | | 0.6 | | | | 2,437,601 | |
| | | | | | | | | | | | | |
| | | | | | | | 0.8 | | | | 3,351,118 | |
| |
Insurance 2.7%
|
| Other Securities | | | | | | | 2.7 | | | | 11,278,332 | |
| |
Materials 5.8%
|
Coeur d’Alene Mines Corp. * | | | 40,800 | | | | 0.2 | | | | 840,888 | |
Ferro Corp. * | | | 73,930 | | | | 0.2 | | | | 1,014,320 | |
PolyOne Corp. * | | | 76,500 | | | | 0.2 | | | | 988,380 | |
| Schnitzer Steel Industries, Inc., Class A | | | 14,510 | | | | 0.2 | | | | 750,022 | |
| Sensient Technologies Corp. | | | 23,345 | | | | 0.2 | | | | 754,277 | |
| Other Securities | | | | | | | 4.8 | | | | 19,499,191 | |
| | | | | | | | | | | | | |
| | | | | | | | 5.8 | | | | 23,847,078 | |
| |
Media 2.1%
|
| Other Securities | | | | | | | 2.1 | | | | 8,608,259 | |
See financial notes 25
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Pharmaceuticals, Biotechnology & Life Sciences 1.7%
|
| Perrigo Co. | | | 12,280 | | | | 0.2 | | | | 809,006 | |
| Other Securities | | | | | | | 1.5 | | | | 6,330,111 | |
| | | | | | | | | | | | | |
| | | | | | | | 1.7 | | | | 7,139,117 | |
| |
Real Estate 8.0%
|
Ashford Hospitality Trust * | | | 113,585 | | | | 0.3 | | | | 1,152,888 | |
| Chimera Investment Corp. | | | 188,500 | | | | 0.2 | | | | 772,850 | |
DiamondRock Hospitality Co. * | | | 74,187 | | | | 0.2 | | | | 784,898 | |
| Entertainment Properties Trust | | | 16,530 | | | | 0.2 | | | | 764,182 | |
FelCor Lodging Trust, Inc. * | | | 222,550 | | | | 0.3 | | | | 1,368,682 | |
| Glimcher Realty Trust | | | 117,225 | | | | 0.2 | | | | 880,360 | |
| Kilroy Realty Corp. | | | 26,015 | | | | 0.2 | | | | 888,933 | |
| Mid-America Apartment Communities, Inc. | | | 12,545 | | | | 0.2 | | | | 765,621 | |
| Post Properties, Inc. | | | 33,920 | | | | 0.3 | | | | 1,032,525 | |
Strategic Hotel & Resorts, Inc. * | | | 175,555 | | | | 0.2 | | | | 798,775 | |
Sunstone Hotel Investors, Inc. * | | | 68,065 | | | | 0.2 | | | | 738,505 | |
| Washington Real Estate Investment Trust | | | 23,155 | | | | 0.2 | | | | 741,655 | |
| Other Securities | | | | | | | 5.3 | | | | 22,290,429 | |
| | | | | | | | | | | | | |
| | | | | | | | 8.0 | | | | 32,980,303 | |
| |
Retailing 5.6%
|
| Lithia Motors, Inc., Class A | | | 78,535 | | | | 0.2 | | | | 856,031 | |
Netflix, Inc. * | | | 7,855 | | | | 0.3 | | | | 1,362,842 | |
Priceline.com, Inc. * | | | 2,620 | | | | 0.2 | | | | 987,242 | |
| Other Securities | | | | | | | 4.9 | | | | 19,767,642 | |
| | | | | | | | | | | | | |
| | | | | | | | 5.6 | | | | 22,973,757 | |
| |
Semiconductors & Semiconductor Equipment 4.1%
|
Atmel Corp. * | | | 155,600 | | | | 0.3 | | | | 1,378,616 | |
Skyworks Solutions, Inc. * | | | 38,310 | | | | 0.2 | | | | 877,682 | |
| Other Securities | | | | | | | 3.6 | | | | 14,742,017 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.1 | | | | 16,998,315 | |
| |
Software & Services 7.3%
|
Compuware Corp. * | | | 84,300 | | | | 0.2 | | | | 843,843 | |
Rovi Corp. * | | | 17,369 | | | | 0.2 | | | | 879,740 | |
TIBCO Software, Inc. * | | | 45,330 | | | | 0.2 | | | | 871,243 | |
| Other Securities | | | | | | | 6.7 | | | | 27,565,717 | |
| | | | | | | | | | | | | |
| | | | | | | | 7.3 | | | | 30,160,543 | |
| |
Technology Hardware & Equipment 5.9%
|
F5 Networks, Inc. * | | | 7,540 | | | | 0.2 | | | | 887,458 | |
| Other Securities | | | | | | | 5.7 | | | | 23,352,005 | |
| | | | | | | | | | | | | |
| | | | | | | | 5.9 | | | | 24,239,463 | |
| |
Telecommunication Services 1.4%
|
| Other Securities | | | | | | | 1.4 | | | | 5,808,142 | |
| |
Transportation 3.8%
|
AirTran Holdings, Inc. * | | | 124,895 | | | | 0.2 | | | | 924,223 | |
Kirby Corp. * | | | 19,620 | | | | 0.2 | | | | 843,464 | |
Old Dominion Freight Line, Inc. * | | | 27,150 | | | | 0.2 | | | | 761,557 | |
| Other Securities | | | | | | | 3.2 | | | | 13,134,288 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.8 | | | | 15,663,532 | |
| |
Utilities 2.0%
|
| Other Securities | | | | | | | 2.0 | | | | 8,067,752 | |
| | | | | | | | | | | | | |
| Total Common Stock |
| (Cost $339,415,995) | | | 408,569,785 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Rights 0.3% of net assets |
| |
Banks 0.3%
|
Pacific Capital Bancorp (b)(c)(d)* | | | 2,926,991 | | | | 0.3 | | | | 1,287,876 | |
| | | | | | | | | | | | | |
| Total Rights |
| (Cost $—) | | | 1,287,876 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Other Investment Company 0.5% of net assets |
| |
Money Fund 0.5%
|
| State Street Institutional Liquid Reserves Fund - Institutional Class | | | 2,016,466 | | | | 0.5 | | | | 2,016,466 | |
| | | | | | | | | | | | | |
| Total Other Investment Company |
| (Cost $2,016,466) | | | 2,016,466 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Face
| | | | |
Security
| | Amount
| | % of Net
| | Value
|
| Rate, Maturity Date | | ($) | | Assets | | ($) |
| |
Short-Term Investment 0.1% of net assets |
| |
U.S. Treasury Obligation 0.1%
|
| Other Securities | | | | | | | 0.1 | | | | 346,744 | |
| | | | | | | | | | | | | |
| Total Short-Term Investment |
| (Cost $346,744) | | | 346,744 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Collateral Invested for Securities on Loan 3.7% of net assets |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| State Street Navigator Security Lending Prime Portfolio | | | 15,374,683 | | | | 3.7 | | | | 15,374,683 | |
| | | | | | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $15,374,683) | | | 15,374,683 | |
| | | | | |
| |
|
End of collateral invested for securities on loan. |
At 10/31/10 the tax basis cost of the fund’s investments was $343,109,916 and the unrealized appreciation and depreciation were $97,982,129 and ($28,871,174), respectively, with a net unrealized appreciation of $69,110,955.
26 See financial notes
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings continued
For the following notes, please refer to complete schedule of holdings.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is held as collateral for open futures contracts. |
| (b) | | All or a portion of this security is on loan. |
| (c) | | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (d) | | Illiquid security. At the period end, the value of these amounted to $1,287,876 or 0.3% of net assets. |
In addition to the above, the fund held the following at 10/31/10.
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contract |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Russell 2000 Index, mini, Long, expires 12/17/10 | | | 25 | | | | 1,755,500 | | | | 174,694 | |
See financial notes 27
Schwab Fundamental US Small-Mid Company Index Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value including securities on loan of $14,493,211 (cost $341,779,205) | | | | | $412,220,871 | |
| Foreign currency, at value (cost $11,655) | | | | | 13,202 | |
| Collateral invested for securities on loan | | | | | 15,374,683 | |
| Receivables: | | | | | | |
| Investments sold | | | | | 87,841 | |
| Fund shares sold | | | | | 585,071 | |
| Dividends | | | | | 157,279 | |
| Income from securities on loan | | | | | 80,475 | |
| Due from broker for futures | | | | | 11,500 | |
| Interest | | | | | 549 | |
| Prepaid expenses | | + | | | 10,176 | |
| | | |
Total assets | | | | | 428,541,647 | |
| |
Liabilities |
|
| Collateral held for securities on loan | | | | | 15,374,683 | |
| Payables: | | | | | | |
| Investments bought | | | | | 433,188 | |
| Investment adviser and administrator fees | | | | | 2,506 | |
| Shareholder service fees | | | | | 4,280 | |
| Fund shares redeemed | | | | | 249,287 | |
| Due to custodian | | | | | 51,898 | |
| Accrued expenses | | + | | | 86,583 | |
| | | |
Total liabilities | | | | | 16,202,425 | |
| |
Net Assets |
|
Total assets | | | | | 428,541,647 | |
Total liabilities | | − | | | 16,202,425 | |
| | | |
Net assets | | | | | $412,339,222 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 317,778,313 | |
| Net investment income not yet distributed | | | | | 3,137,049 | |
| Net realized capital gains | | | | | 20,805,949 | |
| Net unrealized capital gains | | | | | 70,617,911 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $412,339,222 | | | | 40,831,826 | | | | | $10.10 | | | |
28 See financial notes
Schwab Fundamental US Small-Mid Company Index Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends (net of foreign withholding taxes of $1,299) | | | | | $4,205,428 | |
| Interest | | | | | 8,882 | |
| Securities on loan | | + | | | 879,957 | |
| | | |
Total investment income | | | | | 5,094,267 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 1,105,676 | |
| Shareholder service fees | | | | | 323,726 | |
| FTSE Index fee | | | | | 225,743 | |
| Portfolio accounting fees | | | | | 60,473 | |
| Shareholder reports | | | | | 52,120 | |
| Transfer agent fees | | | | | 47,346 | |
| Professional fees | | | | | 42,757 | |
| Registration fees | | | | | 32,643 | |
| Custodian fees | | | | | 21,232 | |
| Trustees’ fees | | | | | 7,611 | |
| Interest expense | | | | | 353 | |
| Other expenses | | + | | | 41,276 | |
| | | |
| Total expenses | | | | | 1,960,956 | |
| Expense reduction by adviser and Schwab | | − | | | 654,848 | |
| Custody credits | | − | | | 70 | |
| | | |
Net expenses | | − | | | 1,306,038 | |
| | | |
Net investment income | | | | | 3,788,229 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on investments | | | | | 45,512,070 | |
| Net realized gains on futures contracts | | | | | 410,156 | |
| Net realized losses on foreign currency transactions | | + | | | (42 | ) |
| | | |
Net realized gains | | | | | 45,922,184 | |
| Net unrealized gains on investments | | | | | 38,825,286 | |
| Net unrealized gains on foreign currency translations | | | | | 1,551 | |
| Net unrealized gains on futures contracts | | + | | | 213,652 | |
| | | |
Net unrealized gains | | + | | | 39,040,489 | |
| | | |
Net realized and unrealized gains | | | | | 84,962,673 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $88,750,902 | |
See financial notes 29
Schwab Fundamental US Small-Mid Company Index Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $3,788,229 | | | | $2,162,201 | |
| Net realized gains (losses) | | | | | 45,922,184 | | | | (19,791,922 | ) |
| Net unrealized gains | | + | | | 39,040,489 | | | | 77,977,265 | |
| | | |
Increase in net assets from operations | | | | | 88,750,902 | | | | 60,347,544 | |
| |
Distributions to Shareholders1 |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | — | | | | 190,348 | |
| Select Shares | | | | | — | | | | 200,242 | |
| Institutional Shares | | + | | | 2,224,324 | | | | 1,399,348 | |
| | | |
Total distributions from net investment income | | | | | $2,224,324 | | | | $1,789,938 | |
Transactions in Fund Shares1
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 1,350,981 | | | | $8,332,835 | |
| Select Shares | | | | | — | | | | — | | | | 1,948,156 | | | | 12,353,498 | |
| Institutional Shares | | + | | | 12,901,533 | | | | 119,705,392 | | | | 29,240,957 | | | | 195,818,317 | |
| | | |
Total shares sold | | | | | 12,901,533 | | | | $119,705,392 | | | | 32,540,094 | | | | $216,504,650 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 27,454 | | | | $151,272 | |
| Select Shares | | | | | — | | | | — | | | | 28,090 | | | | 154,774 | |
| Institutional Shares | | + | | | 77,351 | | | | 639,688 | | | | 63,624 | | | | 350,569 | |
| | | |
Total shares reinvested | | | | | 77,351 | | | | $639,688 | | | | 119,168 | | | | $656,615 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | (5,157,316 | ) | | | ($36,744,926 | ) |
| Select Shares | | | | | — | | | | — | | | | (5,299,082 | ) | | | (39,974,953 | ) |
| Institutional Shares | | + | | | (9,968,970 | ) | | | (92,450,771 | ) | | | (12,299,880 | ) | | | (76,790,222 | ) |
| | | |
Total shares redeemed | | | | | (9,968,970 | ) | | | ($92,450,771 | ) | | | (22,756,278 | ) | | | ($153,510,101 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | 3,009,914 | | | | $27,894,309 | | | | 9,902,984 | | | | $63,651,164 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 37,821,912 | | | | $297,918,335 | | | | 27,918,928 | | | | $175,709,565 | |
| Total increase | | + | | | 3,009,914 | | | | 114,420,887 | | | | 9,902,984 | | | | 122,208,770 | |
| | | |
End of period | | | | | 40,831,826 | | | | $412,339,222 | | | | 37,821,912 | | | | $297,918,335 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $3,137,049 | | | | | | | | $1,533,329 | |
| | | |
1 | | Effective October 27, 2009, all outstanding Investor Shares (3,029,431 shares valued at $25,064,607) and Select Shares (3,786,185 shares valued at $31,355,669) combined with Institutional Shares, resulting in a single class of shares of the fund. |
30 See financial notes
Schwab Fundamental International Large Company Index Fund
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 4/2/072–
| | |
| | | 10/31/10 | | 10/31/091 | | 10/31/08 | | 10/31/07 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 7.69 | | | | 6.01 | | | | 11.40 | | | | 10.00 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.21 | | | | 0.16 | | | | 0.28 | | | | 0.08 | | | |
| Net realized and unrealized gains (losses) | | | 0.41 | | | | 1.81 | | | | (5.56 | ) | | | 1.32 | | | |
| | | |
| Total from investment operations | | | 0.62 | | | | 1.97 | | | | (5.28 | ) | | | 1.40 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.22 | ) | | | (0.29 | ) | | | (0.09 | ) | | | — | | | |
| Distributions from net realized gains | | | — | | | | — | | | | (0.02 | ) | | | — | | | |
| | | |
| Total distributions | | | (0.22 | ) | | | (0.29 | ) | | | (0.11 | ) | | | — | | | |
| | | |
| Net asset value at end of period | | | 8.09 | | | | 7.69 | | | | 6.01 | | | | 11.40 | | | |
| | | |
| Total return (%) | | | 8.27 | | | | 34.89 | | | | (46.70 | ) | | | 14.00 | 3 | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 0.35 | | | | 0.35 | | | | 0.35 | | | | 0.36 | 4,5 | | |
| Gross operating expenses | | | 0.61 | | | | 0.76 | | | | 0.74 | | | | 1.28 | 4 | | |
| Net investment income (loss) | | | 2.70 | | | | 2.80 | | | | 3.41 | | | | 2.30 | 4 | | |
| Portfolio turnover rate | | | 65 | | | | 82 | | | | 74 | | | | 50 | 3 | | |
| Net assets, end of period ($ x 1,000,000) | | | 301 | | | | 253 | | | | 145 | | | | 166 | | | |
1 Effective October 19, 2009, the Investor Share class, the Select Share class and the Institutional Share class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Institutional Shares.
2 Commencement of operations.
3 Not annualized.
4 Annualized.
5 The ratio of net operating expenses would have been 0.35%, if interest expense had not been incurred.
See financial notes 31
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings as of October 31, 2010
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 98 | .7% | | Common Stock | | | 267,360,710 | | | | 296,635,667 | |
| | 0 | .5% | | Preferred Stock | | | 1,206,105 | | | | 1,618,476 | |
| | 0 | .0% | | Rights | | | 44,772 | | | | 71,458 | |
| | 0 | .0% | | Warrants | | | 2,575 | | | | 2,477 | |
| | 0 | .4% | | Other Investment Company | | | 1,105,428 | | | | 1,311,230 | |
| | 0 | .5% | | Short-Term Investment | | | 1,475,084 | | | | 1,475,084 | |
| |
| |
| | 100 | .1% | | Total Investments | | | 271,194,674 | | | | 301,114,392 | |
| | 0 | .2% | | Collateral Invested for Securities on Loan | | | 571,678 | | | | 571,678 | |
| | (0 | .3)% | | Other Assets and Liabilities, Net | | | | | | | (1,010,149 | ) |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 300,675,921 | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Common Stock 98.7% of net assets |
| |
Australia 5.0%
|
| BHP Billiton Ltd. | | | 50,982 | | | | 0.7 | | | | 2,106,641 | |
| National Australia Bank Ltd. | | | 49,193 | | | | 0.4 | | | | 1,231,221 | |
| Other Securities | | | | | | | 3.9 | | | | 11,610,252 | |
| | | | | | | | | | | | | |
| | | | | | | | 5.0 | | | | 14,948,114 | |
| |
Austria 0.5%
|
| Other Securities | | | | | | | 0.5 | | | | 1,403,626 | |
| |
Belgium 1.1%
|
| Other Securities | | | | | | | 1.1 | | | | 3,155,431 | |
| |
Canada 5.3%
|
| Other Securities | | | | | | | 5.3 | | | | 15,957,114 | |
| |
China 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 106,246 | |
| |
Denmark 0.7%
|
| Other Securities | | | | | | | 0.7 | | | | 2,239,377 | |
| |
Finland 1.3%
|
| Other Securities | | | | | | | 1.3 | | | | 3,790,232 | |
| |
France 10.8%
|
| AXA S.A. | | | 98,783 | | | | 0.6 | | | | 1,801,497 | |
| BNP Paribas | | | 25,050 | | | | 0.6 | | | | 1,832,294 | |
| Carrefour S.A. | | | 24,172 | | | | 0.4 | | | | 1,308,751 | |
| France Telecom S.A. | | | 82,618 | | | | 0.7 | | | | 1,982,264 | |
| GDF Suez | | | 32,952 | | | | 0.4 | | | | 1,316,661 | |
| Sanofi-Aventis | | | 20,140 | | | | 0.5 | | | | 1,411,040 | |
| Societe Generale | | | 27,914 | | | | 0.6 | | | | 1,673,850 | |
| Total S.A. | | | 76,238 | | | | 1.4 | | | | 4,149,932 | |
| Other Securities | | | | | | | 5.6 | | | | 17,117,780 | |
| | | | | | | | | | | | | |
| | | | | | | | 10.8 | | | | 32,594,069 | |
| |
Germany 8.9%
|
| Allianz SE - Reg’d | | | 18,383 | | | | 0.8 | | | | 2,302,049 | |
| BASF SE | | | 25,039 | | | | 0.6 | | | | 1,820,621 | |
Daimler AG - Reg’d * | | | 56,656 | | | | 1.2 | | | | 3,731,023 | |
| Deutsche Bank AG - Reg’d | | | 26,560 | | | | 0.5 | | | | 1,530,004 | |
| Deutsche Telekom AG - Reg’d | | | 150,801 | | | | 0.7 | | | | 2,184,554 | |
| E.ON AG | | | 58,209 | | | | 0.6 | | | | 1,821,958 | |
| Siemens AG - Reg’d | | | 18,426 | | | | 0.7 | | | | 2,102,679 | |
| Other Securities | | | | | | | 3.8 | | | | 11,300,327 | |
| | | | | | | | | | | | | |
| | | | | | | | 8.9 | | | | 26,793,215 | |
| |
Greece 0.4%
|
| Other Securities | | | | | | | 0.4 | | | | 1,117,453 | |
| |
Hong Kong 1.9%
|
| Other Securities | | | | | | | 1.9 | | | | 5,716,375 | |
| |
Ireland 0.5%
|
| Other Securities | | | | | | | 0.5 | | | | 1,428,729 | |
| |
Israel 0.3%
|
| Other Securities | | | | | | | 0.3 | | | | 944,680 | |
| |
Italy 4.9%
|
| Enel S.p.A. | | | 270,899 | | | | 0.5 | | | | 1,547,402 | |
| Eni S.p.A. | | | 114,352 | | | | 0.9 | | | | 2,574,902 | |
| Intesa Sanpaolo | | | 376,197 | | | | 0.4 | | | | 1,323,138 | |
| Telecom Italia S.p.A. | | | 921,230 | | | | 0.5 | | | | 1,413,868 | |
| UniCredit S.p.A. | | | 766,752 | | | | 0.7 | | | | 1,998,960 | |
| Other Securities | | | | | | | 1.9 | | | | 5,824,756 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.9 | | | | 14,683,026 | |
| |
Japan 15.0%
|
| Toyota Motor Corp. | | | 69,400 | | | | 0.8 | | | | 2,458,166 | |
| Other Securities | | | | | | | 14.2 | | | | 42,715,868 | |
| | | | | | | | | | | | | |
| | | | | | | | 15.0 | | | | 45,174,034 | |
32 See financial notes
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Luxembourg 0.4%
|
| Other Securities | | | | | | | 0.4 | | | | 1,186,136 | |
| |
Netherlands 3.9%
|
ING Groep N.V. CVA * | | | 504,266 | | | | 1.8 | | | | 5,394,985 | |
| Unilever N.V. | | | 42,190 | | | | 0.4 | | | | 1,252,918 | |
| Other Securities | | | | | | | 1.7 | | | | 5,138,938 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.9 | | | | 11,786,841 | |
| |
New Zealand 0.1%
|
| Other Securities | | | | | | | 0.1 | | | | 301,953 | |
| |
Norway 1.0%
|
| Other Securities | | | | | | | 1.0 | | | | 2,873,316 | |
| |
Portugal 0.4%
|
| Other Securities | | | | | | | 0.4 | | | | 1,157,028 | |
| |
Republic of Korea 4.1%
|
| Samsung Electronics Co., Ltd. | | | 2,580 | | | | 0.6 | | | | 1,711,638 | |
| Other Securities | | | | | | | 3.5 | | | | 10,469,352 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.1 | | | | 12,180,990 | |
| |
Singapore 0.8%
|
| Other Securities | | | | | | | 0.8 | | | | 2,472,137 | |
| |
Spain 4.3%
|
| Banco Bilbao Vizcaya Argentaria S.A. | | | 132,349 | | | | 0.6 | | | | 1,743,621 | |
| Banco Santander S.A. | | | 268,766 | | | | 1.1 | | | | 3,449,753 | |
| Repsol YPF S.A. | | | 54,246 | | | | 0.5 | | | | 1,504,261 | |
| Telefonica S.A. | | | 98,634 | | | | 0.9 | | | | 2,665,337 | |
| Other Securities | | | | | | | 1.2 | | | | 3,578,110 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.3 | | | | 12,941,082 | |
| |
Sweden 2.7%
|
| Other Securities | | | | | | | 2.7 | | | | 8,201,629 | |
| |
Switzerland 4.3%
|
| Nestle S.A. - Reg’d | | | 39,804 | | | | 0.7 | | | | 2,180,242 | |
| Novartis AG - Reg’d | | | 31,917 | | | | 0.6 | | | | 1,849,357 | |
| Roche Holding AG | | | 9,316 | | | | 0.5 | | | | 1,368,093 | |
UBS AG - Reg’d * | | | 83,077 | | | | 0.5 | | | | 1,411,273 | |
| Other Securities | | | | | | | 2.0 | | | | 6,048,844 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.3 | | | | 12,857,809 | |
| |
United Kingdom 20.1%
|
| AstraZeneca plc | | | 30,525 | | | | 0.5 | | | | 1,535,465 | |
| Aviva plc | | | 191,792 | | | | 0.4 | | | | 1,223,118 | |
| Barclays plc | | | 405,609 | | | | 0.6 | | | | 1,782,425 | |
| BHP Billiton plc | | | 62,665 | | | | 0.7 | | | | 2,219,907 | |
| BP plc | | | 634,380 | | | | 1.4 | | | | 4,311,989 | |
| BT Group plc | | | 511,592 | | | | 0.4 | | | | 1,261,462 | |
| GlaxoSmithKline plc | | | 114,148 | | | | 0.7 | | | | 2,229,029 | |
| HSBC Holdings plc | | | 387,751 | | | | 1.3 | | | | 4,035,573 | |
| Rio Tinto plc | | | 26,769 | | | | 0.6 | | | | 1,738,654 | |
| Royal Dutch Shell plc, A Share | | | 135,617 | | | | 1.5 | | | | 4,401,211 | |
| Royal Dutch Shell plc, B Share | | | 102,825 | | | | 1.1 | | | | 3,290,567 | |
| Tesco plc | | | 180,730 | | | | 0.4 | | | | 1,236,848 | |
| Unilever plc | | | 43,327 | | | | 0.4 | | | | 1,249,137 | |
| Vodafone Group plc | | | 1,883,651 | | | | 1.7 | | | | 5,149,153 | |
| Other Securities | | | | | | | 8.4 | | | | 24,907,409 | |
| | | | | | | | | | | | | |
| | | | | | | | 20.1 | | | | 60,571,947 | |
| |
United States 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 53,078 | |
| | | | | | | | | | | | | |
| Total Common Stock |
| (Cost $267,360,710) | | | 296,635,667 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Preferred Stock 0.5% of net assets |
| |
Germany 0.5%
|
| Other Securities | | | | | | | 0.5 | | | | 1,447,739 | |
| |
Italy 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 121,012 | |
| |
Switzerland 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 49,725 | |
| | | | | | | | | | | | | |
| Total Preferred Stock |
| (Cost $1,206,105) | | | 1,618,476 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Rights 0.0% of net assets |
| |
Spain 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 44,277 | |
| |
United Kingdom 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 27,181 | |
| | | | | | | | | | | | | |
| Total Rights |
| (Cost $44,772) | | | 71,458 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Warrants 0.0% of net assets |
| |
China 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 401 | |
| |
France 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 1,653 | |
| |
Italy 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 423 | |
| | | | | | | | | | | | | |
| Total Warrants |
| (Cost $2,575) | | | 2,477 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
See financial notes 33
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Other Investment Company 0.4% of net assets |
| |
United States 0.4%
|
| iShares MSCI EAFE Index Fund | | | 23,000 | | | | 0.4 | | | | 1,311,230 | |
| | | | | | | | | | | | | |
| Total Other Investment Company |
| (Cost $1,105,428) | | | 1,311,230 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Face
| | | | |
Security
| | Amount
| | % of Net
| | Value
|
| Rate, Maturity Date | | ($) | | Assets | | ($) |
| |
Short-Term Investment 0.5% of net assets |
| |
Time Deposit 0.5%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 1,475,084 | | | | 0.5 | | | | 1,475,084 | |
| | | | | | | | | | | | | |
| Total Short-Term Investment |
| (Cost $1,475,084) | | | 1,475,084 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Collateral Invested for Securities on Loan 0.2% of net assets |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Invesco Short Term Investments Trust Government & Agency Portfolio | | | 571,678 | | | | 0.2 | | | | 571,678 | |
| | | | | | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $571,678) | | | 571,678 | |
| | | | | |
| |
|
End of collateral invested for securities on loan. |
At 10/31/10, the tax basis cost of the fund’s investments was $298,281,150 and the unrealized appreciation and depreciation were $21,213,292 and ($18,380,050), respectively, with a net unrealized appreciation of $2,833,242.
At 10/31/10, the values of certain foreign securities held by the fund aggregating $281,503,710 were adjusted from their closing market values in accordance with procedures approved by the Board of Trustees.
For the following notes, please refer to complete schedule of holdings.
| | |
| * | | Non-income producing security. |
| (a) | | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (b) | | Illiquid security. At the period end, the value of these amounted to $6,965 or 0.0% of net assets. |
| (c) | | All or a portion of this security is on loan. |
| | | |
| CVA — | | Dutch Certificate |
| FDR — | | Fiduciary Depositary Receipt. |
| IDB — | | Industrial development board. |
| Reg’d — | | Registered |
| REIT — | | Real Estate Investment Trust. |
34 See financial notes
Schwab Fundamental International Large Company Index Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value including securities on loan of $540,187 (cost $271,194,674) | | | | | $301,114,392 | |
| Foreign currency, at value (cost $16,479) | | | | | 16,525 | |
| Cash | | | | | 9 | |
| Collateral invested for securities on loan | | | | | 571,678 | |
| Receivables: | | | | | | |
| Investments sold | | | | | 8,204 | |
| Dividends | | | | | 600,280 | |
| Fund shares sold | | | | | 568,031 | |
| Foreign tax reclaims | | | | | 88,831 | |
| Income from securities on loan | | | | | 2,659 | |
| Interest | | | | | 4 | |
| Prepaid expenses | | + | | | 7,119 | |
| | | |
Total assets | | | | | 302,977,732 | |
| |
Liabilities |
|
| Collateral held for securities on loan | | | | | 571,678 | |
| Payables: | | | | | | |
| Investments bought | | | | | 1,583,978 | |
| Investment adviser and administrator fees | | | | | 6,755 | |
| Shareholder service fees | | | | | 3,667 | |
| Fund shares redeemed | | | | | 61,646 | |
| Trustees’ fees | | | | | 1 | |
| Accrued expenses | | + | | | 74,086 | |
| | | |
Total liabilities | | | | | 2,301,811 | |
| |
Net Assets |
|
Total assets | | | | | 302,977,732 | |
Total liabilities | | − | | | 2,301,811 | |
| | | |
Net assets | | | | | $300,675,921 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 380,950,656 | |
| Net investment income not yet distributed | | | | | 5,891,081 | |
| Net realized capital losses | | | | | (116,111,679 | ) |
| Net unrealized capital gains | | | | | 29,945,863 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $300,675,921 | | | | 37,185,333 | | | | | $8.09 | | | |
See financial notes 35
Schwab Fundamental International Large Company Index Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends (net of foreign withholding taxes of $794,502) | | | | | $8,080,812 | |
| Interest | | | | | 250 | |
| Securities on loan | | + | | | 289,097 | |
| | | |
Total investment income | | | | | 8,370,159 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 823,264 | |
| Shareholder service fees | | | | | 213,510 | |
| FTSE Index fee | | | | | 167,488 | |
| Custodian fees | | | | | 145,138 | |
| Portfolio accounting fees | | | | | 77,079 | |
| Registration fees | | | | | 71,213 | |
| Professional fees | | | | | 47,484 | |
| Transfer agent fees | | | | | 44,763 | |
| Shareholder reports | | | | | 15,744 | |
| Trustees’ fees | | | | | 7,050 | |
| Interest expense | | | | | 5,556 | |
| Other expenses | | + | | | 42,466 | |
| | | |
| Total expenses | | | | | 1,660,755 | |
| Expense reduction by adviser and Schwab | | − | | | 689,601 | |
| | | |
Net expenses | | − | | | 971,154 | |
| | | |
Net investment income | | | | | 7,399,005 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized losses on investments | | | | | (22,319,605 | ) |
| Net realized gains on foreign currency transactions | | + | | | 81,067 | |
| | | |
Net realized losses | | | | | (22,238,538 | ) |
| Net unrealized gains on investments | | | | | 36,701,058 | |
| Net unrealized gains on foreign currency translations | | + | | | 15,801 | |
| | | |
Net unrealized gains | | + | | | 36,716,859 | |
| | | |
Net realized and unrealized gains | | | | | 14,478,321 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $21,877,326 | |
36 See financial notes
Schwab Fundamental International Large Company Index Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $7,399,005 | | | | $5,910,195 | |
| Net realized losses | | | | | (22,238,538 | ) | | | (75,045,293 | ) |
| Net unrealized gains | | + | | | 36,716,859 | | | | 129,408,619 | |
| | | |
Increase in net assets from operations | | | | | 21,877,326 | | | | 60,273,521 | |
| |
Distributions to Shareholders1 |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | — | | | | 1,141,764 | |
| Select Shares | | | | | — | | | | 1,436,736 | |
| Institutional Shares | | + | | | 7,367,808 | | | | 6,458,832 | |
| | | |
Total distributions from net investment income | | | | | $7,367,808 | | | | $9,037,332 | |
Transactions in Fund Shares1
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 1,454,350 | | | | $8,798,446 | |
| Select Shares | | | | | — | | | | — | | | | 1,789,946 | | | | 10,333,677 | |
| Institutional Shares | | + | | | 20,064,502 | | | | 149,645,007 | | | | 28,920,256 | | | | 196,193,507 | |
| | | |
Total shares sold | | | | | 20,064,502 | | | | $149,645,007 | | | | 32,164,552 | | | | $215,325,630 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 173,263 | | | | $942,552 | |
| Select Shares | | | | | — | | | | — | | | | 222,963 | | | | 1,212,921 | |
| Institutional Shares | | + | | | 672,848 | | | | 5,140,560 | | | | 885,418 | | | | 4,816,671 | |
| | | |
Total shares reinvested | | | | | 672,848 | | | | $5,140,560 | | | | 1,281,644 | | | | $6,972,144 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | (5,676,884 | ) | | | ($43,893,965 | ) |
| Select Shares | | | | | — | | | | — | | | | (6,972,372 | ) | | | (53,379,102 | ) |
| Institutional Shares | | + | | | (16,449,786 | ) | | | (121,700,994 | ) | | | (21,032,180 | ) | | | (122,132,004 | ) |
| | | |
Total shares redeemed | | | | | (16,449,786 | ) | | | ($121,700,994 | ) | | | (33,681,436 | ) | | | ($219,405,071 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | 4,287,564 | | | | $33,084,573 | | | | (235,240 | ) | | | $2,892,703 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 32,897,769 | | | | $253,081,830 | | | | 33,133,009 | | | | $198,952,938 | |
| Total increase or decrease | | + | | | 4,287,564 | | | | 47,594,091 | | | | (235,240 | ) | | | 54,128,892 | |
| | | |
End of period | | | | | 37,185,333 | | | | $300,675,921 | | | | 32,897,769 | | | | $253,081,830 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $5,891,081 | | | | | | | | $5,282,204 | |
| | | |
1 | | Effective October 19, 2009, all outstanding Investor Shares (4,005,407 shares valued at $33,951,027) and Select Shares (4,832,766 shares valued at $40,996,919) combined with Institutional Shares, resulting in a single class of shares of the fund. |
See financial notes 37
Schwab Fundamental International Small-Mid Company Index Fund
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 1/31/082–
| | |
| | | 10/31/10 | | 10/31/091 | | 10/31/08 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 9.00 | | | | 6.22 | | | | 10.00 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.16 | 3 | | | 0.12 | 3 | | | 0.27 | 3 | | |
| Net realized and unrealized gains (losses) | | | 1.09 | | | | 2.92 | | | | (4.05 | ) | | |
| | | |
| Total from investment operations | | | 1.25 | | | | 3.04 | | | | (3.78 | ) | | |
| Less distributions: | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.29 | ) | | | (0.26 | ) | | | — | | | |
| | | |
| Net asset value at end of period | | | 9.96 | | | | 9.00 | | | | 6.22 | | | |
| | | |
| Total return (%) | | | 14.32 | | | | 51.19 | | | | (37.80 | )4 | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | |
| Net operating expenses | | | 0.55 | | | | 0.55 | | | | 0.56 | 5,6 | | |
| Gross operating expenses | | | 1.07 | | | | 3.82 | | | | 5.44 | 5 | | |
| Net investment income (loss) | | | 1.77 | | | | 1.59 | | | | 3.55 | 5 | | |
| Portfolio turnover rate | | | 63 | | | | 81 | | | | 132 | 4 | | |
| Net assets, end of period ($ x 1,000,000) | | | 74 | | | | 47 | | | | 3 | | | |
1 Effective October 19, 2009, the Investor Share class, the Select Share class and the Institutional Share class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Institutional Shares.
2 Commencement of operations.
3 Calculated based on the average shares outstanding during the period.
4 Not annualized.
5 Annualized.
6 The ratio of net operating expenses would have been 0.55%, if interest expenses had not been incurred.
38 See financial notes
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings as of October 31, 2010
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 98 | .7% | | Common Stock | | | 64,704,961 | | | | 72,923,354 | |
| | 0 | .5% | | Preferred Stock | | | 186,195 | | | | 373,024 | |
| | 0 | .0% | | Rights | | | — | | | | 4,354 | |
| | 0 | .0% | | Warrants | | | 662 | | | | 1,505 | |
| | 0 | .1% | | Other Investment Company | | | 83,368 | | | | 92,263 | |
| | 0 | .1% | | Short-Term Investment | | | 70,033 | | | | 70,033 | |
| |
| |
| | 99 | .4% | | Total Investments | | | 65,045,219 | | | | 73,464,533 | |
| | 0 | .7% | | Collateral Invested for Securities on Loan | | | 526,521 | | | | 526,521 | |
| | (0 | .1)% | | Other Assets and Liabilities, Net | | | | | | | (117,282 | ) |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 73,873,772 | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Common Stock 98.7% of net assets |
| |
Australia 5.6%
|
| ASX Ltd. | | | 3,447 | | | | 0.2 | | | | 125,588 | |
| OZ Minerals Ltd. | | | 97,745 | | | | 0.2 | | | | 150,752 | |
| Other Securities | | | | | | | 5.2 | | | | 3,870,012 | |
| | | | | | | | | | | | | |
| | | | | | | | 5.6 | | | | 4,146,352 | |
| |
Austria 1.2%
|
Immofinanz AG * | | | 68,765 | | | | 0.4 | | | | 271,191 | |
| Other Securities | | | | | | | 0.8 | | | | 604,160 | |
| | | | | | | | | | | | | |
| | | | | | | | 1.2 | | | | 875,351 | |
| |
Belgium 1.4%
|
| Bekaert N.V. | | | 529 | | | | 0.2 | | | | 162,165 | |
| Other Securities | | | | | | | 1.2 | | | | 911,626 | |
| | | | | | | | | | | | | |
| | | | | | | | 1.4 | | | | 1,073,791 | |
| |
Canada 8.3%
|
| Emera, Inc. | | | 4,840 | | | | 0.2 | | | | 140,848 | |
| H&R Real Estate Investment Trust | | | 6,231 | | | | 0.2 | | | | 124,754 | |
| Maple Leaf Foods, Inc. | | | 10,714 | | | | 0.2 | | | | 129,946 | |
| Valeant Pharmaceuticals International, Inc. | | | 15,100 | | | | 0.6 | | | | 417,807 | |
| Other Securities | | | | | | | 7.1 | | | | 5,301,703 | |
| | | | | | | | | | | | | |
| | | | | | | | 8.3 | | | | 6,115,058 | |
| |
China 0.2%
|
| Other Securities | | | | | | | 0.2 | | | | 132,353 | |
| |
Cyprus 0.1%
|
| Other Securities | | | | | | | 0.1 | | | | 67,162 | |
| |
Denmark 1.5%
|
Jyske Bank A/S - Reg’d * | | | 3,244 | | | | 0.2 | | | | 145,399 | |
| Other Securities | | | | | | | 1.3 | | | | 967,813 | |
| | | | | | | | | | | | | |
| | | | | | | | 1.5 | | | | 1,113,212 | |
| |
Finland 2.1%
|
| Cargotec Corp., B Shares | | | 2,902 | | | | 0.2 | | | | 131,972 | |
| Nokian Renkaat Oyj | | | 4,495 | | | | 0.2 | | | | 155,843 | |
| Other Securities | | | | | | | 1.7 | | | | 1,237,377 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.1 | | | | 1,525,192 | |
| |
France 3.4%
|
| Bourbon S.A. | | | 2,828 | | | | 0.2 | | | | 128,881 | |
| Rhodia S.A. | | | 5,991 | | | | 0.2 | | | | 167,024 | |
| Zodiac Aerospace | | | 1,907 | | | | 0.2 | | | | 134,848 | |
| Other Securities | | | | | | | 2.8 | | | | 2,049,393 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.4 | | | | 2,480,146 | |
| |
Germany 3.6%
|
Heidelberger Druckmaschinen AG * | | | 38,729 | | | | 0.2 | | | | 178,183 | |
| Other Securities | | | | | | | 3.4 | | | | 2,518,564 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.6 | | | | 2,696,747 | |
| |
Greece 0.5%
|
| Other Securities | | | | | | | 0.5 | | | | 353,801 | |
| |
Hong Kong 3.8%
|
| Hong Kong Exchanges & Clearing Ltd. | | | 6,300 | | | | 0.2 | | | | 139,064 | |
| Other Securities | | | | | | | 3.6 | | | | 2,687,323 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.8 | | | | 2,826,387 | |
| |
Ireland 1.0%
|
| DCC plc | | | 4,595 | | | | 0.2 | | | | 132,794 | |
| Grafton Group plc | | | 33,425 | | | | 0.2 | | | | 142,690 | |
| Other Securities | | | | | | | 0.6 | | | | 486,387 | |
| | | | | | | | | | | | | |
| | | | | | | | 1.0 | | | | 761,871 | |
| |
Israel 0.8%
|
| Other Securities | | | | | | | 0.8 | | | | 559,509 | |
| |
Italy 2.3%
|
| Other Securities | | | | | | | 2.3 | | | | 1,740,420 | |
See financial notes 39
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Japan 26.0%
|
| Mitsui Mining & Smelting Co., Ltd. | | | 42,000 | | | | 0.2 | | | | 128,094 | |
Pioneer Corp. * | | | 36,900 | | | | 0.2 | | | | 127,314 | |
| Other Securities | | | | | | | 25.6 | | | | 18,986,548 | |
| | | | | | | | | | | | | |
| | | | | | | | 26.0 | | | | 19,241,956 | |
| |
Liechtenstein 0.1%
|
| Other Securities | | | | | | | 0.1 | | | | 51,944 | |
| |
Luxembourg 0.1%
|
| Other Securities | | | | | | | 0.1 | | | | 59,318 | |
| |
Netherlands 2.7%
|
Brit Insurance Holdings N.V. * | | | 9,214 | | | | 0.2 | | | | 154,218 | |
| CSM N.V. | | | 4,199 | | | | 0.2 | | | | 133,049 | |
| Fugro N.V., CVA | | | 2,023 | | | | 0.2 | | | | 143,217 | |
| Other Securities | | | | | | | 2.1 | | | | 1,555,458 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.7 | | | | 1,985,942 | |
| |
New Zealand 0.6%
|
| Other Securities | | | | | | | 0.6 | | | | 432,659 | |
| |
Norway 1.5%
|
Norske Skogindustrier A.S.A. * | | | 77,500 | | | | 0.2 | | | | 158,298 | |
| Other Securities | | | | | | | 1.3 | | | | 967,173 | |
| | | | | | | | | | | | | |
| | | | | | | | 1.5 | | | | 1,125,471 | |
| |
Portugal 0.4%
|
| Other Securities | | | | | | | 0.4 | | | | 305,426 | |
| |
Republic of Korea 7.8%
|
| Cheil Industries, Inc. | | | 1,760 | | | | 0.2 | | | | 148,018 | |
| Dongbu Insurance Co., Ltd. | | | 4,060 | | | | 0.2 | | | | 143,496 | |
| Hanjin Heavy Industries & Construction Holdings Co., Ltd. | | | 7,420 | | | | 0.2 | | | | 127,058 | |
Hanjin Shipping Holdings Co., Ltd. * | | | 12,360 | | | | 0.2 | | | | 177,193 | |
| Hyundai Mipo Dockyard Co., Ltd. | | | 750 | | | | 0.2 | | | | 125,444 | |
| Kangwon Land, Inc. | | | 6,060 | | | | 0.2 | | | | 142,710 | |
| OCI Co., Ltd. | | | 486 | | | | 0.2 | | | | 143,138 | |
| Other Securities | | | | | | | 6.4 | | | | 4,734,331 | |
| | | | | | | | | | | | | |
| | | | | | | | 7.8 | | | | 5,741,388 | |
| |
Singapore 2.2%
|
| Other Securities | | | | | | | 2.2 | | | | 1,665,851 | |
| |
Spain 1.5%
|
| Other Securities | | | | | | | 1.5 | | | | 1,112,509 | |
| |
Sweden 2.7%
|
| Kinnevik Investment AB, B Shares | | | 6,047 | | | | 0.2 | | | | 124,835 | |
| Trelleborg AB, B Shares | | | 17,264 | | | | 0.2 | | | | 162,706 | |
| Other Securities | | | | | | | 2.3 | | | | 1,721,031 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.7 | | | | 2,008,572 | |
| |
Switzerland 3.8%
|
| Lonza Group AG - Reg’d | | | 1,454 | | | | 0.2 | | | | 127,287 | |
OC Oerlikon Corp. AG - Reg’d * | | | 37,342 | | | | 0.3 | | | | 195,255 | |
Panalpina Welttransport Holding AG - Reg’d * | | | 1,262 | | | | 0.2 | | | | 157,641 | |
| Sulzer AG - Reg’d | | | 1,067 | | | | 0.2 | | | | 129,915 | |
| Other Securities | | | | | | | 2.9 | | | | 2,173,080 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.8 | | | | 2,783,178 | |
| |
United Kingdom 13.5%
|
| Ashtead Group plc | | | 64,158 | | | | 0.2 | | | | 129,154 | |
| Burberry Group plc | | | 9,626 | | | | 0.2 | | | | 157,193 | |
| Carillion plc | | | 27,488 | | | | 0.2 | | | | 151,647 | |
| Close Brothers Group plc | | | 10,347 | | | | 0.2 | | | | 127,899 | |
Debenhams plc * | | | 103,479 | | | | 0.2 | | | | 126,650 | |
| DS Smith plc | | | 55,225 | | | | 0.2 | | | | 148,973 | |
| Electrocomponents plc | | | 33,978 | | | | 0.2 | | | | 132,928 | |
| IMI plc | | | 13,965 | | | | 0.2 | | | | 176,596 | |
| Informa plc | | | 21,820 | | | | 0.2 | | | | 152,565 | |
| Meggitt plc | | | 25,321 | | | | 0.2 | | | | 133,859 | |
| Rank Group plc | | | 73,839 | | | | 0.2 | | | | 151,072 | |
| The Weir Group plc | | | 6,659 | | | | 0.2 | | | | 166,200 | |
| Other Securities | | | | | | | 11.1 | | | | 8,187,052 | |
| | | | | | | | | | | | | |
| | | | | | | | 13.5 | | | | 9,941,788 | |
| | | | | | | | | | | | | |
| Total Common Stock |
| (Cost $64,704,961) | | | 72,923,354 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Preferred Stock 0.5% of net assets |
| |
Germany 0.5%
|
| Jungheinrich AG | | | 3,498 | | | | 0.2 | | | | 132,422 | |
| Other Securities | | | | | | | 0.3 | | | | 221,351 | |
| | | | | | | | | | | | | |
| | | | | | | | 0.5 | | | | 353,773 | |
| |
Republic of Korea 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 19,251 | |
| | | | | | | | | | | | | |
| Total Preferred Stock |
| (Cost $186,195) | | | 373,024 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Rights 0.0% of net assets |
| |
Belgium 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 4,354 | |
| | | | | | | | | | | | | |
| Total Rights |
| (Cost $—) | | | 4,354 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Warrants 0.0% of net assets |
| |
France 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 1,096 | |
| |
Hong Kong 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 293 | |
40 See financial notes
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Italy 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 116 | |
| | | | | | | | | | | | | |
| Total Warrants |
| (Cost $662) | | | 1,505 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Other Investment Company 0.1% of net assets |
| |
United States 0.1%
|
| Other Securities | | | | | | | 0.1 | | | | 92,263 | |
| | | | | | | | | | | | | |
| Total Other Investment Company |
| (Cost $83,368) | | | 92,263 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Face
| | | | |
Security
| | Amount
| | % of Net
| | Value
|
| Rate, Maturity Date | | ($) | | Assets | | ($) |
| |
Short-Term Investment 0.1% of net assets |
| |
Time Deposit 0.1%
|
| Other Securities | | | | | | | 0.1 | | | | 70,033 | |
| | | | | | | | | | | | | |
| Total Short-Term Investment |
| (Cost $70,033) | | | 70,033 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Collateral Invested for Securities on Loan 0.7% of net assets |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Invesco Short Term Investments Trust Government & Agency Portfolio | | | 526,521 | | | | 0.7 | | | | 526,521 | |
| | | | | | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $526,521) | | | 526,521 | |
| | | | | |
| |
|
End of collateral invested for securities on loan. |
At 10/31/10, the tax basis cost of the fund’s investments was $66,508,390 and the unrealized appreciation and depreciation were $10,708,667 and ($3,752,524), respectively, with a net unrealized appreciation of $6,956,143.
At 10/31/10, the values of certain foreign securities held by the fund aggregating $64,288,986 were adjusted from their closing market values in accordance with procedures approved by the Board of Trustees.
For the following notes, please refer to complete schedule of holdings.
| | |
| * | | Non-income producing security. |
| (a) | | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (b) | | Illiquid security. At the period end, the value of these amounted to $111,212 or 0.2% of net assets. |
| (c) | | All or a portion of this security is on loan. |
| | | |
| CVA — | | Dutch Certificate |
| Reg’d — | | Registered |
| REIT — | | Real Estate Investment Trust. |
See financial notes 41
Schwab Fundamental International Small-Mid Company Index Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value including securities on loan of $489,980 (cost $65,045,219) | | | | | $73,464,533 | |
| Foreign currency, at value (cost $13,556) | | | | | 13,560 | |
| Cash | | | | | 2 | |
| Collateral invested for securities on loan | | | | | 526,521 | |
| Receivables: | | | | | | |
| Investments sold | | | | | 276,163 | |
| Fund shares sold | | | | | 346,929 | |
| Dividends | | | | | 172,088 | |
| Foreign tax reclaims | | | | | 13,666 | |
| Income from securities on loan | | | | | 1,258 | |
| Prepaid expenses | | + | | | 1,462 | |
| | | |
Total assets | | | | | 74,816,182 | |
| |
Liabilities |
|
| Collateral held for securities on loan | | | | | 526,521 | |
| Payables: | | | | | | |
| Investments bought | | | | | 291,242 | |
| Investment adviser and administrator fees | | | | | 56,475 | |
| Shareholder service fees | | | | | 1,521 | |
| Fund shares redeemed | | | | | 22,717 | |
| Trustees’ fees | | | | | 1 | |
| Accrued expenses | | + | | | 43,933 | |
| | | |
Total liabilities | | | | | 942,410 | |
| |
Net Assets |
|
Total assets | | | | | 74,816,182 | |
Total liabilities | | − | | | 942,410 | |
| | | |
Net assets | | | | | $73,873,772 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 65,234,574 | |
| Net investment income not yet distributed | | | | | 914,892 | |
| Net realized capital losses | | | | | (701,631 | ) |
| Net unrealized capital gains | | | | | 8,425,937 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $73,873,772 | | | | 7,418,327 | | | | | $9.96 | | | |
42 See financial notes
Schwab Fundamental International Small-Mid Company Index Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends (net of foreign withholding taxes of $115,922) | | | | | $1,317,997 | |
| Interest | | | | | 89 | |
| Securities on loan | | + | | | 25,713 | |
| | | |
Total investment income | | | | | 1,343,799 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 231,122 | |
| Shareholder service fees | | | | | 37,718 | |
| Custodian fees | | | | | 80,033 | |
| Portfolio accounting fees | | | | | 78,222 | |
| FTSE Index fee | | | | | 43,152 | |
| Professional fees | | | | | 41,274 | |
| Transfer agent fees | | | | | 25,542 | |
| Registration fees | | | | | 23,560 | |
| Shareholder reports | | | | | 8,490 | |
| Trustees’ fees | | | | | 5,436 | |
| Interest expense | | | | | 482 | |
| Other expenses | | + | | | 41,207 | |
| | | |
| Total expenses | | | | | 616,238 | |
| Expense reduction by adviser and Schwab | | − | | | 296,389 | |
| | | |
Net expenses | | − | | | 319,849 | |
| | | |
Net investment income | | | | | 1,023,950 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on investments | | | | | 3,707,294 | |
| Net realized gains on foreign currency transactions | | + | | | 56,484 | |
| | | |
Net realized gains | | | | | 3,763,778 | |
| Net unrealized gains on investments | | | | | 3,686,911 | |
| Net unrealized gains on foreign currency translations | | + | | | 6,478 | |
| | | |
Net unrealized gains | | + | | | 3,693,389 | |
| | | |
Net realized and unrealized gains | | | | | 7,457,167 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $8,481,117 | |
See financial notes 43
Schwab Fundamental International Small-Mid Company Index Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $1,023,950 | | | | $408,500 | |
| Net realized gains (losses) | | | | | 3,763,778 | | | | (2,441,235 | ) |
| Net unrealized gains | | + | | | 3,693,389 | | | | 11,891,785 | |
| | | |
Increase in net assets from operations | | | | | 8,481,117 | | | | 9,859,050 | |
| |
Distributions to Shareholders1 |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | — | | | | 194,197 | |
| Select Shares | | | | | — | | | | 207,380 | |
| Institutional Shares | | + | | | 1,616,483 | | | | 124,693 | |
| | | |
Total distributions from net investment income | | | | | $1,616,483 | | | | $526,270 | |
Transactions in Fund Shares1
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 655,799 | | | | $4,867,984 | |
| Select Shares | | | | | — | | | | — | | | | 761,484 | | | | 5,049,537 | |
| Institutional Shares | | + | | | 4,097,167 | | | | 37,090,973 | | | | 5,153,172 | | | | 44,649,583 | |
| | | |
Total shares sold | | | | | 4,097,167 | | | | $37,090,973 | | | | 6,570,455 | | | | $54,567,104 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 28,316 | | | | $165,932 | |
| Select Shares | | | | | — | | | | — | | | | 20,622 | | | | 120,842 | |
| Institutional Shares | | + | | | 105,785 | | | | 940,433 | | | | 13,875 | | | | 81,305 | |
| | | |
Total shares reinvested | | | | | 105,785 | | | | $940,433 | | | | 62,813 | | | | $368,079 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | (1,393,735 | ) | | | ($12,480,507 | ) |
| Select Shares | | | | | — | | | | — | | | | (1,644,371 | ) | | | (14,405,417 | ) |
| Institutional Shares | | + | | | (1,962,798 | ) | | | (17,631,284 | ) | | | (477,804 | ) | | | (3,573,640 | ) |
| | | |
Total shares redeemed | | | | | (1,962,798 | ) | | | ($17,631,284 | ) | | | (3,515,910 | ) | | | ($30,459,564 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | 2,240,154 | | | | $20,400,122 | | | | 3,117,358 | | | | $24,475,619 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 5,178,173 | | | | $46,609,016 | | | | 2,060,815 | | | | $12,800,617 | |
| Total increase | | + | | | 2,240,154 | | | | 27,264,756 | | | | 3,117,358 | | | | 33,808,399 | |
| | | |
End of period | | | | | 7,418,327 | | | | $73,873,772 | | | | 5,178,173 | | | | $46,609,016 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $914,892 | | | | | | | | $451,044 | |
| | | |
1 | | Effective October 19, 2009, all outstanding Investor Shares (1,058,634 shares valued at $10,259,324) and Select Shares (1,169,658 shares valued at $11,352,235) combined with Institutional Shares, resulting in a single class of shares of the fund. |
44 See financial notes
Schwab Fundamental Emerging Markets Index Fund
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 1/31/082–
| | |
| | | 10/31/10 | | 10/31/091 | | 10/31/08 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 8.91 | | | | 5.74 | | | | 10.00 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.17 | | | | 0.05 | | | | 0.16 | | | |
| Net realized and unrealized gains (losses) | | | 1.81 | | | | 3.27 | | | | (4.42 | ) | | |
| | | |
| Total from investment operations | | | 1.98 | | | | 3.32 | | | | (4.26 | ) | | |
| Less distributions: | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.08 | ) | | | (0.15 | ) | | | — | | | |
| | | |
| Net asset value at end of period | | | 10.81 | | | | 8.91 | | | | 5.74 | | | |
| | | |
| Total return (%) | | | 22.36 | | | | 59.55 | | | | (42.60 | )3 | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | |
| Net operating expenses | | | 0.61 | 4 | | | 0.61 | 4 | | | 0.61 | 4,5 | | |
| Gross operating expenses | | | 0.98 | | | | 1.70 | | | | 4.06 | 5 | | |
| Net investment income (loss) | | | 2.31 | | | | 1.56 | | | | 2.31 | 5 | | |
| Portfolio turnover rate | | | 91 | | | | 103 | | | | 159 | 3 | | |
| Net assets, end of period ($ x 1,000,000) | | | 294 | | | | 119 | | | | 6 | | | |
1 Effective October 19, 2009, the Investor Share class, the Select Share and the Institutional Share class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Institutional Shares.
2 Commencement of operations.
3 Not annualized.
4 The ratio of net operating expenses would have been 0.60%, if interest expenses had not been incurred.
5 Annualized.
See financial notes 45
Schwab Fundamental Emerging Markets Index Fund
Portfolio Holdings as of October 31, 2010
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 89 | .9% | | Common Stock | | | 224,797,906 | | | | 264,442,270 | |
| | 9 | .9% | | Preferred Stock | | | 24,558,267 | | | | 29,080,959 | |
| | 0 | .2% | | Other Investment Company | | | 682,545 | | | | 691,950 | |
| | 0 | .1% | | Short-Term Investment | | | 379,268 | | | | 379,268 | |
| |
| |
| | 100 | .1% | | Total Investments | | | 250,417,986 | | | | 294,594,447 | |
| | 0 | .8% | | Collateral Invested for Securities on Loan | | | 2,267,550 | | | | 2,267,550 | |
| | (0 | .9)% | | Other Assets and Liabilities, Net | | | | | | | (2,526,510 | ) |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 294,335,487 | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Common Stock 89.9% of net assets |
| |
Brazil 4.6%
|
| Banco Santander Brasil S.A. | | | 177,100 | | | | 0.9 | | | | 2,512,293 | |
| Petroleo Brasileiro S.A. - Petrobras | | | 175,900 | | | | 1.0 | | | | 2,953,564 | |
| Vale S.A. | | | 60,200 | | | | 0.6 | | | | 1,897,736 | |
| Other Securities | | | | | | | 2.1 | | | | 6,055,417 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.6 | | | | 13,419,010 | |
| |
Chile 0.9%
|
| Other Securities | | | | | | | 0.9 | | | | 2,675,284 | |
| |
China 30.3%
|
Aluminum Corp. of China Ltd., Class H (a)* | | | 1,173,000 | | | | 0.4 | | | | 1,113,770 | |
| Bank of China Ltd., Class H | | | 14,017,000 | | | | 2.9 | | | | 8,419,054 | |
| China Construction Bank Corp., Class H | | | 3,926,000 | | | | 1.3 | | | | 3,753,268 | |
| China Life Insurance Co., Ltd., Class H | | | 660,000 | | | | 1.0 | | | | 2,901,548 | |
| China Merchants Bank Co., Ltd., Class H | | | 556,850 | | | | 0.5 | | | | 1,586,719 | |
| China Petroleum & Chemical Corp., Class H | | | 11,940,000 | | | | 3.9 | | | | 11,360,470 | |
| China Railway Group Ltd., Class H | | | 1,787,000 | | | | 0.5 | | | | 1,443,283 | |
| China Shenhua Energy Co., Ltd., Class H | | | 840,000 | | | | 1.3 | | | | 3,749,976 | |
| Industrial & Commercial Bank of China Ltd., Class H | | | 11,993,000 | | | | 3.3 | | | | 9,689,064 | |
| PetroChina Co., Ltd., Class H | | | 20,031,000 | | | | 8.4 | | | | 24,656,846 | |
| Ping An Insurance (Group) Co., of China Ltd., Class H | | | 134,000 | | | | 0.5 | | | | 1,448,767 | |
| Other Securities | | | | | | | 6.3 | | | | 19,139,275 | |
| | | | | | | | | | | | | |
| | | | | | | | 30.3 | | | | 89,262,040 | |
| |
Colombia 0.3%
|
| Other Securities | | | | | | | 0.3 | | | | 787,801 | |
| |
Czech Republic 0.5%
|
| Other Securities | | | | | | | 0.5 | | | | 1,536,172 | |
| |
Egypt 0.2%
|
| Other Securities | | | | | | | 0.2 | | | | 476,048 | |
| |
Hong Kong 2.9%
|
| China Mobile Ltd. | | | 334,500 | | | | 1.2 | | | | 3,416,019 | |
| China Unicom Ltd. | | | 820,056 | | | | 0.4 | | | | 1,153,329 | |
| CNOOC Ltd. | | | 927,000 | | | | 0.7 | | | | 1,935,315 | |
| Other Securities | | | | | | | 0.6 | | | | 2,019,334 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.9 | | | | 8,523,997 | |
| |
Hungary 0.7%
|
| Other Securities | | | | | | | 0.7 | | | | 2,112,452 | |
| |
India 5.4%
|
| Reliance Industries Ltd. | | | 65,905 | | | | 0.6 | | | | 1,628,947 | |
| Other Securities | | | | | | | 4.8 | | | | 14,300,103 | |
| | | | | | | | | | | | | |
| | | | | | | | 5.4 | | | | 15,929,050 | |
| |
Indonesia 1.3%
|
| Other Securities | | | | | | | 1.3 | | | | 3,692,099 | |
| |
Malaysia 2.6%
|
| Malayan Banking Berhad | | | 476,100 | | | | 0.5 | | | | 1,379,605 | |
| Other Securities | | | | | | | 2.1 | | | | 6,204,993 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.6 | | | | 7,584,598 | |
| |
Mexico 6.3%
|
| America Movil S.A.B. de C.V., Series L | | | 2,269,800 | | | | 2.2 | | | | 6,505,363 | |
Cemex S.A.B. de C.V. * | | | 2,541,928 | | | | 0.8 | | | | 2,233,554 | |
| Fomento Economico Mexicano S.A.B. de C.V. | | | 224,300 | | | | 0.4 | | | | 1,233,396 | |
| Grupo Mexico S.A.B. de C.V., Series B | | | 467,274 | | | | 0.5 | | | | 1,539,037 | |
| Telefonos de Mexico S.A.B. de C.V. | | | 2,198,500 | | | | 0.6 | | | | 1,703,891 | |
| Other Securities | | | | | | | 1.8 | | | | 5,315,271 | |
| | | | | | | | | | | | | |
| | | | | | | | 6.3 | | | | 18,530,512 | |
| |
Philippines 0.2%
|
| Other Securities | | | | | | | 0.2 | | | | 692,460 | |
46 See financial notes
Schwab Fundamental Emerging Markets Index Fund
Portfolio Holdings continued
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Poland 1.6%
|
Polski Koncern Naftowy Orlen S.A. * | | | 94,525 | | | | 0.5 | | | | 1,332,809 | |
| Other Securities | | | | | | | 1.1 | | | | 3,498,267 | |
| | | | | | | | | | | | | |
| | | | | | | | 1.6 | | | | 4,831,076 | |
| |
Russia 8.6%
|
| Gazprom ADR | | | 332,719 | | | | 2.5 | | | | 7,284,894 | |
| LUKOIL ADR | | | 102,803 | | | | 1.9 | | | | 5,732,799 | |
| Sberbank GDR - Reg’d | | | 4,640 | | | | 0.6 | | | | 1,742,425 | |
| Surgutneftegaz ADR | | | 483,303 | | | | 1.6 | | | | 4,732,623 | |
| Other Securities | | | | | | | 2.0 | | | | 5,897,203 | |
| | | | | | | | | | | | | |
| | | | | | | | 8.6 | | | | 25,389,944 | |
| |
South Africa 7.6%
|
| FirstRand Ltd. | | | 440,334 | | | | 0.4 | | | | 1,290,952 | |
| Impala Platinum Holdings Ltd. | | | 52,837 | | | | 0.5 | | | | 1,491,700 | |
| MTN Group Ltd. | | | 102,306 | | | | 0.6 | | | | 1,840,479 | |
| Sasol | | | 50,436 | | | | 0.8 | | | | 2,271,250 | |
| Standard Bank Group Ltd. | | | 137,902 | | | | 0.7 | | | | 2,029,335 | |
| Other Securities | | | | | | | 4.6 | | | | 13,447,817 | |
| | | | | | | | | | | | | |
| | | | | | | | 7.6 | | | | 22,371,533 | |
| |
Taiwan 12.3%
|
AU Optronics Corp. * | | | 1,231,800 | | | | 0.4 | | | | 1,228,956 | |
| China Steel Corp. | | | 1,524,556 | | | | 0.5 | | | | 1,544,175 | |
| Chunghwa Telecom Co., Ltd. | | | 637,133 | | | | 0.5 | | | | 1,490,336 | |
| Formosa Chemicals & Fibre Corp. | | | 438,420 | | | | 0.4 | | | | 1,253,765 | |
| Formosa Plastics Corp. | | | 984,820 | | | | 1.0 | | | | 2,821,703 | |
| Hon Hai Precision Industry Co., Ltd. | | | 664,311 | | | | 0.9 | | | | 2,512,448 | |
| HTC Corp. | | | 68,070 | | | | 0.5 | | | | 1,543,650 | |
| Nan Ya Plastics Corp. | | | 672,160 | | | | 0.5 | | | | 1,493,162 | |
| Taiwan Semiconductor Manufacturing Co., Ltd. ADR | | | 2,102,689 | | | | 1.5 | | | | 4,325,885 | |
| Other Securities | | | | | | | 6.1 | | | | 17,864,979 | |
| | | | | | | | | | | | | |
| | | | | | | | 12.3 | | | | 36,079,059 | |
| |
Thailand 1.6%
|
| PTT PCL | | | 131,100 | | | | 0.5 | | | | 1,324,994 | |
| Other Securities | | | | | | | 1.1 | | | | 3,244,100 | |
| | | | | | | | | | | | | |
| | | | | | | | 1.6 | | | | 4,569,094 | |
| |
Turkey 2.0%
|
| Other Securities | | | | | | | 2.0 | | | | 5,980,041 | |
| | | | | | | | | | | | | |
| Total Common Stock |
| (Cost $224,797,906) | | | 264,442,270 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Preferred Stock 9.9% of net assets |
| |
Brazil 9.8%
|
| Banco Bradesco S.A. | | | 256,038 | | | | 1.8 | | | | 5,277,970 | |
| Companhia Energetica de Minas Gerais | | | 83,108 | | | | 0.5 | | | | 1,463,420 | |
| Itau Unibanco Holding S.A. | | | 262,665 | | | | 2.2 | | | | 6,410,985 | |
| Metalurgica Gerdau S.A. | | | 80,200 | | | | 0.4 | | | | 1,235,334 | |
| Petroleo Brasileiro S.A. | | | 261,900 | | | | 1.4 | | | | 3,981,718 | |
| Vale S.A., Class A | | | 78,000 | | | | 0.7 | | | | 2,190,496 | |
| Other Securities | | | | | | | 2.8 | | | | 8,235,862 | |
| | | | | | | | | | | | | |
| | | | | | | | 9.8 | | | | 28,795,785 | |
| |
Colombia 0.1%
|
| Other Securities | | | | | | | 0.1 | | | | 285,174 | |
| | | | | | | | | | | | | |
| Total Preferred Stock |
| (Cost $24,558,267) | | | 29,080,959 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Other Investment Company 0.2% of net assets |
| |
United States 0.2%
|
| Other Securities | | | | | | | 0.2 | | | | 691,950 | |
| | | | | | | | | | | | | |
| Total Other Investment Company |
| (Cost $682,545) | | | 691,950 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Face
| | | | |
Security
| | Amount
| | % of Net
| | Value
|
| Rate, Maturity Date | | ($) | | Assets | | ($) |
| |
Short-Term Investment 0.1% of net assets |
| |
Time Deposit 0.1%
|
| Other Securities | | | | | | | 0.1 | | | | 379,268 | |
| | | | | | | | | | | | | |
| Total Short-Term Investment |
| (Cost $379,268) | | | 379,268 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Collateral Invested for Securities on Loan 0.8% of net assets |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Invesco Short Term Investments Trust Government & Agency Portfolio | | | 2,267,550 | | | | 0.8 | | | | 2,267,550 | |
| | | | | | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $2,267,550) | | | 2,267,550 | |
| | | | | |
| |
|
End of collateral invested for securities on loan. |
At 10/31/10, the tax basis cost of the fund’s investments was $255,459,918 and the unrealized appreciation and depreciation were $42,337,339 and ($3,202,810), respectively, with a net unrealized appreciation of $39,134,529.
At 10/31/10, the values of certain foreign securities held by the fund aggregating $222,892,417 were adjusted from their closing market values in accordance with procedures approved by the Board of Trustees.
For the following notes, please refer to complete schedule of holdings.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is on loan. |
See financial notes 47
Schwab Fundamental Emerging Markets Index Fund
Portfolio Holdings continued
| | | |
| ADR — | | American Depositary Receipt |
| GDR — | | Global Depositary Receipt |
| NVDR — | | Non-Voting Depositary Receipt. |
| Reg’d — | | Registered |
| REIT — | | Real Estate Investment Trust. |
48 See financial notes
Schwab Fundamental Emerging Markets Index Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value including securities on loan of $2,101,123 (cost $250,417,986) | | | | | $294,594,447 | |
| Foreign currency, at value (cost $237,285) | | | | | 235,495 | |
| Cash | | | | | 8 | |
| Collateral invested for securities on loan | | | | | 2,267,550 | |
| Receivables: | | | | | | |
| Investments sold | | | | | 460,305 | |
| Fund shares sold | | | | | 1,437,663 | |
| Dividends | | | | | 363,696 | |
| Income from securities on loan | | | | | 5,131 | |
| Foreign tax reclaims | | | | | 1,024 | |
| Interest | | | | | 1 | |
| Prepaid expenses | | + | | | 4,735 | |
| | | |
Total assets | | | | | 299,370,055 | |
| |
Liabilities |
|
| Collateral held for securities on loan | | | | | 2,267,550 | |
| Payables: | | | | | | |
| Investments bought | | | | | 2,190,617 | |
| Investment adviser and administrator fees | | | | | 8,092 | |
| Shareholder service fees | | | | | 6,760 | |
| Foreign capital gains tax | | | | | 308,228 | |
| Fund shares redeemed | | | | | 168,450 | |
| Accrued expenses | | + | | | 84,871 | |
| | | |
Total liabilities | | | | | 5,034,568 | |
| |
Net Assets |
|
Total assets | | | | | 299,370,055 | |
Total liabilities | | − | | | 5,034,568 | |
| | | |
Net assets | | | | | $294,335,487 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 241,666,339 | |
| Net investment income not yet distributed | | | | | 3,385,141 | |
| Net realized capital gains | | | | | 5,407,244 | |
| Net unrealized capital gains | | | | | 43,876,763 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $294,335,487 | | | | 27,216,067 | | | | | $10.81 | | | |
See financial notes 49
Schwab Fundamental Emerging Markets Index Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends (net of foreign withholding taxes of $737,611) | | | | | $5,628,252 | |
| Interest | | | | | 207 | |
| Securities on loan | | + | | | 32,664 | |
| | | |
Total investment income | | | | | 5,661,123 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 969,827 | |
| Shareholder service fees | | | | | 109,757 | |
| Custodian fees | | | | | 283,740 | |
| FTSE Index fee | | | | | 203,664 | |
| Transfer agent fees | | | | | 69,150 | |
| Portfolio accounting fees | | | | | 67,248 | |
| Professional fees | | | | | 44,852 | |
| Registration fees | | | | | 33,078 | |
| Shareholder reports | | | | | 24,169 | |
| Interest expense | | | | | 11,258 | |
| Trustees’ fees | | | | | 6,271 | |
| Other expenses | | + | | | 75,141 | |
| | | |
| Total expenses | | | | | 1,898,155 | |
| Expense reduction by adviser and Schwab | | − | | | 719,189 | |
| | | |
Net expenses | | − | | | 1,178,966 | |
| | | |
Net investment income | | | | | 4,482,157 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on investments (net of foreign capital gain tax of $158,087) | | | | | 16,691,282 | |
| Net realized losses on foreign currency transactions | | + | | | (643,709 | ) |
| | | |
Net realized gains | | | | | 16,047,573 | |
| Net unrealized gains on investments (net of foreign capital gain tax of $14,604) | | | | | 20,256,123 | |
| Net unrealized gains on foreign currency translations | | + | | | 6,271 | |
| | | |
Net unrealized gains | | + | | | 20,262,394 | |
| | | |
Net realized and unrealized gains | | | | | 36,309,967 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $40,792,124 | |
50 See financial notes
Schwab Fundamental Emerging Markets Index Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $4,482,157 | | | | $950,683 | |
| Net realized gains (losses) | | | | | 16,047,573 | | | | (7,740,533 | ) |
| Net unrealized gains | | + | | | 20,262,394 | | | | 35,269,486 | |
| | | |
Increase in net assets from operations | | | | | 40,792,124 | | | | 28,479,636 | |
| |
Distributions to Shareholders1 |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | — | | | | 180,883 | |
| Select Shares | | | | | — | | | | 178,986 | |
| Institutional Shares | | + | | | 1,195,864 | | | | 171,267 | |
| | | |
Total distributions from net investment income | | | | | $1,195,864 | | | | $531,136 | |
Transactions in Fund Shares1
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 1,510,721 | | | | $10,718,492 | |
| Select Shares | | | | | — | | | | — | | | | 2,055,110 | | | | 13,981,789 | |
| Institutional Shares | | + | | | 19,525,248 | | | | 189,738,742 | | | | 14,761,670 | | | | 116,210,643 | |
| | | |
Total shares sold | | | | | 19,525,248 | | | | $189,738,742 | | | | 18,327,501 | | | | $140,910,924 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 29,295 | | | | $162,881 | |
| Select Shares | | | | | — | | | | — | | | | 24,420 | | | | 136,020 | |
| Institutional Shares | | + | | | 68,369 | | | | 648,824 | | | | 18,074 | | | | 100,489 | |
| | | |
Total shares reinvested | | | | | 68,369 | | | | $648,824 | | | | 71,789 | | | | $399,390 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | (2,746,169 | ) | | | ($24,192,086 | ) |
| Select Shares | | | | | — | | | | — | | | | (3,315,400 | ) | | | (28,113,050 | ) |
| Institutional Shares | | + | | | (5,759,702 | ) | | | (54,877,962 | ) | | | (2,431,267 | ) | | | (17,668,123 | ) |
| | | |
Total shares redeemed | | | | | (5,759,702 | ) | | | ($54,877,962 | ) | | | (8,492,836 | ) | | | ($69,973,259 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | 13,833,915 | | | | $135,509,604 | | | | 9,906,454 | | | | $71,337,055 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 13,382,152 | | | | $119,229,623 | | | | 3,475,698 | | | | $19,944,068 | |
| Total increase | | + | | | 13,833,915 | | | | 175,105,864 | | | | 9,906,454 | | | | 99,285,555 | |
| | | |
End of period | | | | | 27,216,067 | | | | $294,335,487 | | | | 13,382,152 | | | | $119,229,623 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $3,385,141 | | | | | | | | $752,760 | |
| | | |
1 | | Effective October 19, 2009, all outstanding Investor Shares (1,999,470 shares valued at $19,419,057) and Select Shares (2,199,181 shares valued at $21,392,090) combined with Institutional Shares, resulting in a single class of shares of the fund. |
See financial notes 51
Schwab Fundamental Index Funds
Financial Notes
1. Business Structure of the Funds
Each of the funds discussed in this report is a series of Schwab Capital Trust (the “trust”), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trust including the funds discussed in this report, which are highlighted:
| | | |
| |
Schwab Capital Trust (organized May 7, 1993)
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small-Mid Company Index Fund
Schwab Fundamental International Large
Company Index Fund
Schwab Fundamental International
Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets Index Fund
Schwab S&P 500 Index Fund
Schwab Small-Cap Index Fund
Schwab Total Stock Market Index Fund
Schwab International Index Fund
Schwab MarketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
Laudus Small-Cap MarketMasters Fund
Laudus International MarketMasters Fund
Schwab Balanced Fund
| | Schwab Premier Equity Fund
Schwab Core Equity Fund
Schwab Dividend Equity Fund
Schwab Large-Cap Growth Fund
Schwab Small-Cap Equity Fund
Schwab Hedged Equity Fund
Schwab Financial Services Fund
Schwab Health Care Fund
Schwab International Core Equity Fund
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab Monthly Income Fund-Moderate Payout
Schwab Monthly Income Fund-Enhanced Payout
Schwab Monthly Income Fund-Maximum Payout
|
| | | |
Each fund in this report offers one share class. Shares are bought and sold (subject to a redemption fee, see financial note 8) at closing net asset value (“NAV”), which is the price for all outstanding shares of a fund. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.
Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund may also keep certain assets in segregated accounts, as required by securities law.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies the funds use in their preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
(a) Security Valuation:
The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:
| | |
| | • | Securities traded on an exchange or over-the-counter: valued at the closing value for the day, or, on days when no closing value has been reported, halfway between the most recent bid and asked quotes. Securities that are primarily traded on foreign exchanges are valued at the closing values of such securities on their respective exchanges with these values then translated into U.S. dollars at the valuation date exchange rate, unless these securities are fair valued as discussed below. |
| |
| | • | Securities for which no quoted value is available: The Board of Trustees has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, the fund may fair value a security when a security is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Board of Trustees regularly reviews fair value determinations made by the funds pursuant to the procedures. |
| |
| | • | International fair valuation: The Board of Trustees has adopted procedures to fair value foreign equity securities that trade in markets that close prior to when the funds value their holdings. By fair valuing securities whose prices may have |
52
Schwab Fundamental Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
| | |
| | | been affected by events occurring after the close of trading, each fund seeks to establish prices that investors might expect to realize upon the current sales of these securities. This methodology is designed to deter “arbitrage” market timers, who seek to exploit delays between the change in the value of a fund’s portfolio holdings and the net asset value of the fund’s shares, and seeks to help ensure that the prices at which the fund’s shares are purchased and redeemed are fair and do not result in dilution of shareholder interest or other harm to shareholders. When fair value pricing is used at the open or close of a reporting period, it may cause a temporary divergence between the return of a fund and that of its index or benchmark. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board of Trustees regularly reviews fair value determinations made by the funds pursuant to these procedures. |
| | |
| | • | Futures and forward contracts: valued at their settlement prices as of the close of their exchanges (for futures) or at a value based on that day’s exchange rates (for forwards). |
| |
| | • | Short-term securities (60 days or less to maturity): valued at amortized cost, which approximates market value. |
| |
| | • | Underlying funds: valued at their respective net asset values as determined by the underlying fund in accordance with the 1940 Act for a given day. |
In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the funds disclose the fair value of their investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (level 3 measurements). If the funds determine that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
The guidance establishes three levels of the fair value hierarchy as follows:
| | |
| | • | Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. The funds do not adjust the quoted price for such investments, even in situations where the funds hold a large position and a sale could reasonably impact the quoted price. |
| |
| | • | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 prices. These generally include certain U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. In addition, international securities whose markets close hours before the funds value their holdings may require fair valuations due to significant movement in the U.S. markets occurring after the daily close of the foreign markets. The Board of Trustees has approved a vendor that would calculate fair valuations of international securities based on a number of factors that appear to correlate to the movements in the U.S. markets. As investments whose values are classified as Level 2 prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. |
| |
| | • | Level 3 — significant unobservable inputs (including the funds’ own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the funds use one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes |
53
Schwab Fundamental Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
| | |
| | | in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds’ results of operations. |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the funds’ investments as of October 31, 2010:
Schwab Fundamental US Large Company Index Fund
| | | | | | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | | | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | | | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | | | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total | | |
| |
| Common Stock(a) | | | $1,012,552,616 | | | | $— | | | | $— | | | | $1,012,552,616 | | | | | |
| Other Investment Company(a) | | | 6,235,229 | | | | — | | | | — | | | | 6,235,229 | | | | | |
| Short-Term Investment(a) | | | — | | | | 875,852 | | | | — | | | | 875,852 | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total | | | $1,018,787,845 | | | | $875,852 | | | | $— | | | | $1,019,663,697 | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | | | | | |
| Collateral Invested for Securities on Loan | | | $15,323,057 | | | | $— | | | | $— | | | | $15,323,057 | | | | | |
| Futures Contract* | | | 319,706 | | | | — | | | | — | | | | 319,706 | �� | | | | |
Schwab Fundamental US Small-Mid Company Index Fund
| | | | | | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | | | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | | | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | | | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total | | |
| |
| Common Stock(a) | | | $408,569,785 | | | | $— | | | | $— | | | | $408,569,785 | | | | | |
| Rights(a) | | | — | | | | — | | | | 1,287,876 | | | | 1,287,876 | | | | | |
| Other Investment Company(a) | | | 2,016,466 | | | | — | | | | — | | | | 2,016,466 | | | | | |
| Short-Term Investments(a) | | | — | | | | 346,744 | | | | — | | | | 346,744 | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total | | | $410,586,251 | | | | $346,744 | | | | $1,287,876 | | | | $412,220,871 | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | | | | | |
| Collateral Invested for Securities on Loan | | | $15,374,683 | | | | $— | | | | $— | | | | $15,374,683 | | | | | |
| Futures Contract* | | | 174,694 | | | | — | | | | — | | | | 174,694 | | | | | |
The following is a reconciliation of Level 3 Investments for which significant unobservable inputs were used to determine fair value:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Change in
| | | | | | | | Balance
|
| | | as of
| | Accrued
| | Realized
| | Unrealized
| | Net
| | Gross
| | Gross
| | as of
|
| | | October 31,
| | Discounts
| | Gain
| | Gains
| | Purchases
| | Transfers
| | Transfers
| | October 31,
|
| Investments in Securities | | 2009 | | (Premiums) | | (Loss) | | (Losses) | | (Sales) | | in | | out | | 2010 |
| |
| Rights | | | $— | | | | $— | | | | $— | | | | $1,287,876 | (b) | | | $— | | | | $— | | | | $— | | | | $1,287,876 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | $— | | | | $— | | | | $— | | | | $1,287,876 | | | | $— | | | | $— | | | | $— | | | | $1,287,876 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| * | | Futures Contracts are not included in Investments and are valued at the unrealized appreciation or depreciation. |
| (a) | | As categorized in Complete Schedule of Holdings. |
| (b) | | This amount represents unrealized gain on rights received during the report period. |
54
Schwab Fundamental Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
Schwab Fundamental International Large Company Index Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| Common Stock(a) | | | $— | | | | $144,342,479 | | | | $— | | | | $144,342,479 | |
| Australia | | | 68,677 | | | | 14,879,437 | | | | — | | | | 14,948,114 | |
| Canada | | | 15,957,114 | | | | — | | | | — | | | | 15,957,114 | |
| France | | | 160,533 | | | | 32,433,536 | | | | — | | | | 32,594,069 | |
| Germany | | | 125,356 | | | | 26,667,859 | | | | — | | | | 26,793,215 | |
| Ireland | | | 133,902 | | | | 1,294,827 | | | | — | | | | 1,428,729 | |
| United Kingdom | | | 155,320 | | | | 60,409,662 | | | | 6,965 | | | | 60,571,947 | |
| Preferred Stock(a) | | | 142,566 | | | | 1,475,910 | | | | — | | | | 1,618,476 | |
| Rights(a) | | | 71,458 | | | | — | | | | — | | | | 71,458 | |
| Warrants(a) | | | 2,477 | | | | — | | | | — | | | | 2,477 | |
| Other Investment Company(a) | | | 1,311,230 | | | | — | | | | — | | | | 1,311,230 | |
| Short-Term Investment(a) | | | — | | | | 1,475,084 | | | | — | | | | 1,475,084 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $18,128,633 | | | | $282,978,794 | | | | $6,965 | | | | $301,114,392 | |
| | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Collateral Invested for Securities on Loan | | | $571,678 | | | | $— | | | | $— | | | | $571,678 | |
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Change in
| | | | | | | | Balance
|
| | | as of
| | Accrued
| | Realized
| | Unrealized
| | Net
| | Gross
| | Gross
| | as of
|
| | | October 31,
| | Discounts
| | Gain
| | Gains
| | Purchases
| | Transfers
| | Transfers
| | October 31,
|
| Investments in Securities | | 2009 | | (Premiums) | | (Loss) | | (Losses) | | (Sales) | | in | | out | | 2010 |
| |
| Common Stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| United Kingdom | | | $2,758 | | | | $— | | | | $(89,520 | ) | | | $89,751 | | | | $3,976 | | | | $— | | | | $— | | | | $6,965 | |
| Rights | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Australia | | | 144,587 | | | | — | | | | 9,402 | | | | (144,587 | ) | | | (9,402 | ) | | | — | | | | — | | | | — | |
| Warrants | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Italy | | | — | | | | — | | | | — | | | | 260 | | | | — | | | | — | | | | (260 | ) | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | $147,345 | | | | $— | | | | ($80,118 | ) | | | ($54,576 | ) | | | ($5,426 | ) | | | $— | | | | ($260 | ) | | | $6,965 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| (a) | | As categorized in Complete Schedule of Holdings. |
55
Schwab Fundamental Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
Schwab Fundamental International Small-Mid Company Index Fund
| | | | | | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | | | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | | | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | | | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total | | |
| |
| Common Stock(a) | | | $— | | | | $6,257,017 | | | | $— | | | | $6,257,017 | | | | | |
| Australia | | | — | | | | 4,064,716 | | | | 81,636 | | | | 4,146,352 | | | | | |
| Austria | | | 21,263 | | | | 854,088 | | | | — | | | | 875,351 | | | | | |
| Canada | | | 6,115,058 | | | | — | | | | — | | | | 6,115,058 | | | | | |
| Finland | | | 50,666 | | | | 1,474,526 | | | | — | | | | 1,525,192 | | | | | |
| France | | | 93,725 | | | | 2,386,421 | | | | — | | | | 2,480,146 | | | | | |
| Germany | | | 564,076 | | | | 2,132,671 | | | | — | | | | 2,696,747 | | | | | |
| Greece | | | 34,659 | | | | 319,142 | | | | — | | | | 353,801 | | | | | |
| Ireland | | | 374,953 | | | | 386,918 | | | | — | | | | 761,871 | | | | | |
| Italy | | | 33,508 | | | | 1,706,912 | | | | — | | | | 1,740,420 | | | | | |
| Japan | | | 41,527 | | | | 19,200,429 | | | | — | | | | 19,241,956 | | | | | |
| Luxembourg | | | 28,916 | | | | 30,402 | | | | — | | | | 59,318 | | | | | |
| Netherlands | | | 35,679 | | | | 1,950,263 | | | | — | | | | 1,985,942 | | | | | |
| Norway | | | 82,097 | | | | 1,043,374 | | | | — | | | | 1,125,471 | | | | | |
| Portugal | | | 30,468 | | | | 274,958 | | | | — | | | | 305,426 | | | | | |
| Republic of Korea | | | 318,326 | | | | 5,358,135 | | | | 64,927 | | | | 5,741,388 | | | | | |
| Singapore | | | — | | | | 1,623,534 | | | | 42,317 | | | | 1,665,851 | | | | | |
| Spain | | | 69,340 | | | | 1,043,169 | | | | — | | | | 1,112,509 | | | | | |
| Sweden | | | 52,119 | | | | 1,956,453 | | | | — | | | | 2,008,572 | | | | | |
| Switzerland | | | 432,547 | | | | 2,350,631 | | | | — | | | | 2,783,178 | | | | | |
| United Kingdom | | | 435,617 | | | | 9,502,203 | | | | 3,968 | | | | 9,941,788 | | | | | |
| Preferred Stock(a) | | | — | | | | 373,024 | | | | — | | | | 373,024 | | | | | |
| Rights(a) | | | 4,354 | | | | — | | | | — | | | | 4,354 | | | | | |
| Warrants(a) | | | 1,505 | | | | — | | | | — | | | | 1,505 | | | | | |
| Other Investment Company(a) | | | 92,263 | | | | — | | | | — | | | | 92,263 | | | | | |
| Short-Term Investment(a) | | | — | | | | 70,033 | | | | — | | | | 70,033 | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total | | | $8,912,666 | | | | $64,359,019 | | | | $192,848 | | | | $73,464,533 | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | | | | | |
| Collateral Invested for Securities on Loan | | | $526,521 | | | | $— | | | | $— | | | | $526,521 | | | | | |
| | | |
| (a) | | As categorized in Complete Schedule of Holdings. |
56
Schwab Fundamental Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Change in
| | | | | | | | Balance
|
| | | as of
| | Accrued
| | Realized
| | Unrealized
| | Net
| | Gross
| | Gross
| | as of
|
| | | October 31,
| | Discounts
| | Gain
| | Gains
| | Purchases
| | Transfers
| | Transfers
| | October 31,
|
| Investments in Securities | | 2009 | | (Premiums) | | (Loss) | | (Losses) | | (Sales) | | in | | out | | 2010 |
| |
| Common Stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Australia | | | $— | | | | $— | | | | ($4,024 | ) | | | $44,048 | | | | $2,116 | | | | $39,496 | | | | $— | | | | $81,636 | |
| Japan | | | — | | | | — | | | | (10,505 | ) | | | 10,505 | | | | — | | | | — | | | | — | | | | — | |
| Republic of Korea | | | — | | | | — | | | | — | | | | 29,896 | | | | 35,031 | | | | — | | | | — | | | | 64,927 | |
| Singapore | | | — | | | | — | | | | — | | | | 16,264 | | | | 8,461 | | | | 17,592 | | | | — | | | | 42,317 | |
| United Kingdom | | | 56,504 | | | | — | | | | (29,642 | ) | | | 20,136 | | | | (43,030 | ) | | | — | | | | — | | | | 3,968 | |
| Rights | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Australia | | | 25,450 | | | | — | | | | — | | | | (25,450 | ) | | | — | | | | — | | | | — | | | | — | |
| Hong Kong | | | 1,873 | | | | — | | | | 1,509 | | | | (1,873 | ) | | | (1,509 | ) | | | — | | | | — | | | | — | |
| Norway | | | 796 | | | | — | | | | — | | | | (796 | ) | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | $84,623 | | | | $— | | | | ($42,662 | ) | | | $92,730 | | | | $1,069 | | | | $57,088 | | | | $— | | | | $192,848 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Schwab Fundamental Emerging Markets Index Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| Common Stock(a) | | | $— | | | | $127,055,394 | | | | $— | | | | $127,055,394 | |
| Brazil | | | 13,419,010 | | | | — | | | | — | | | | 13,419,010 | |
| Chile | | | 2,675,284 | | | | — | | | | — | | | | 2,675,284 | |
| Columbia | | | 787,801 | | | | — | | | | — | | | | 787,801 | |
| Malaysia | | | 1,330,219 | | | | 6,254,379 | | | | — | | | | 7,584,598 | |
| Mexico | | | 18,530,512 | | | | — | | | | — | | | | 18,530,512 | |
| Russia | | | 693,969 | | | | 24,695,975 | | | | — | | | | 25,389,944 | |
| South Africa | | | 276,253 | | | | 22,095,280 | | | | — | | | | 22,371,533 | |
| Taiwan | | | 314,398 | | | | 35,764,661 | | | | — | | | | 36,079,059 | |
| Thailand | | | 3,308,590 | | | | 1,260,504 | | | | — | | | | 4,569,094 | |
| Turkey | | | 213,817 | | | | 5,766,224 | | | | — | | | | 5,980,041 | |
| Preferred Stock(a) | | | 29,080,959 | | | | — | | | | — | | | | 29,080,959 | |
| Other Investment Company(a) | | | 691,950 | | | | — | | | | — | | | | 691,950 | |
| Short-Term Investment(a) | | | — | | | | 379,268 | | | | — | | | | 379,268 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $71,322,762 | | | | $223,271,685 | | | | $— | | | | $294,594,447 | |
| | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Collateral Invested for Securities on Loan | | | $2,267,550 | | | | $— | | | | $— | | | | $2,267,550 | |
| | | |
| (a) | | As categorized in Complete Schedule of Holdings. |
57
Schwab Fundamental Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
All net realized and change in unrealized gains (losses) in the tables above are reflected in the accompanying statements of operations. Changes in net unrealized gains (losses) for Level 3 investment held by the funds at October 31, 2010 are as follows:
| | | | | |
| Schwab Fundamental US Small-Mid Company Index Fund | | | $1,287,876 | |
| Schwab Fundamental International Large Company Index Fund | | | $89,751 | |
| Schwab Fundamental International Small-Mid Company Index Fund | | | $110,344 | |
In January 2010, the Financial Accounting Standards Board issued new guidance requiring reporting entities to make new disclosures about amounts and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements as well as inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances and settlements of Level 3 securities on a gross basis. The new and revised disclosures are required to be implemented for annual and interim periods beginning after December 15, 2009, except for the disclosures surrounding purchases, sales, issuances and settlements of Level 3 fair value measurements on a gross basis, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years.
The funds have adopted the new guidance for the period ended October 31, 2010. There were no significant transfers between Level 1 and Level 2 for the period ended October 31, 2010. Management is currently evaluating the impact of the adoption of the other provisions of the new guidance on the funds’ financial statements.
Some funds entered into equity index futures contracts (“futures”) during the period from November 1, 2009 through October 31, 2010. The funds invested in futures to gain market exposure while still keeping a small portion of assets in cash for business operations. The primary risk associated with investing in futures contracts is market risk. The fair value and variation margin for any futures contracts held at October 31, 2010 and the realized/unrealized gains (losses) on futures contracts held during the period ended October 31, 2010 are presented on the face of the Portfolio Holdings, Statement of Assets and Liabilities and Statement of Operation, respectively. Refer to financial note 2(b) for the funds’ accounting policies with respect to futures contracts and financial note 3 for disclosures concerning the risks of investing in futures contracts. During the period, the monthly average contract value of futures contracts held by the funds and the monthly average number of contracts were as follows:
| | | | | | | | | | | | | |
| | Contract Value | | Number of Contracts | | |
| |
| Schwab Fundamental US Large Company Index Fund | | | $8,540,394 | | | | 156 | | | | | |
| Schwab Fundamental US Small-Mid Company Index Fund | | | 4,419,228 | | | | 70 | | | | | |
| Schwab Fundamental International Large Company Index Fund | | | — | | | | — | | | | | |
| Schwab Fundamental International Small-Mid Company Index Fund | | | — | | | | — | | | | | |
| Schwab Fundamental Emerging Markets Index Fund | | | — | | | | — | | | | | |
(b) Accounting Policies for certain Portfolio Investments (if held):
Futures Contracts: Futures contracts are instruments that represent an agreement between two parties that obligates one party to buy, and the other party to sell, specific instruments at an agreed upon price on a stipulated future date. A fund must give the broker a deposit of cash and/or securities (the “initial margin”) whenever it enters into the futures contract. The amount of the deposit may vary from one contract to another. Subsequent payments (“variation margin”) are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses until the contract is closed, at which time the gains and losses are realized. Futures are traded publicly on exchanges, and their market value changes daily.
Forward Currency Contracts: “Forwards”, as they are known, are contracts to buy and sell a currency at a set price on a future date. The accounting for forwards is treated similar to that of futures contracts in that gains and losses are accounted for as unrealized gains or losses until the contracts settles and such amounts are accounted for as realized.
58
Schwab Fundamental Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
Securities Lending: Under the Securities Lending Program, a fund (the “lender”) may make short-term loans of their securities to another party (the “borrower”). When the fund lends securities, the borrower provides cash, U.S. government securities or letters of credit as collateral against the loans in an amount at least equal to 100% of the market value of the loaned securities. The cash collateral of securities loaned is invested in money market portfolios registered under Rule 2a-7 of the 1940 Act. The investments of collateral are mark-to-market daily and the value of the collateral must be at least 100% of the market value of the loan securities each day. If the value of the collateral falls below 100%, it will be adjusted the following day.
Repurchase Agreements: In a repurchase agreement, a fund buys a security from another party (usually a financial institution) with the agreement that it be sold back in the future. The funds’ repurchase agreements are fully collateralized by cash, U.S. government securities, U.S. government agency securities or other securities. All collateral is held by the funds’ custodian (or, with tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement.
(c) Security Transactions:
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
Assets and liabilities denominated in foreign currencies are reported in U.S. dollars. For assets and liabilities held on a given date, the dollar value is based on market exchange rates in effect on that date. Transactions involving foreign currencies, including purchases, sales, income receipts and expense payments, are calculated using exchange rates in effect on the transaction date. Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting period. These realized and unrealized foreign exchange gains and losses are reported in foreign currency transactions or translations on the Statement of Operations. The funds do not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
Gains realized by the funds on the sale of securities in certain foreign countries may be subject to non-U.S. taxes. The funds record a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.
When a fund closes out a futures or forwards position, it calculates the difference between the value of the position at the beginning and at the end of the contract, and records a realized gain or loss accordingly. A fund records the daily change in market value of futures and also the change in the amount of margin deposit required (“due to/from broker”).
(d) Investment Income:
Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the funds may record certain foreign security dividends on the day they learn of the ex-dividend date.
(e) Expenses:
Expenses that are specific to a fund are charged directly to the fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets.
(f) Distributions to Shareholders:
The funds make distributions from net investment income and net realized capital gains, if any, once a year.
59
Schwab Fundamental Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
(g) Custody Credit:
Certain funds have an arrangement with their custodian bank, State Street Bank and Trust Company, under which the funds receive a credit for their uninvested cash balance to offset their custody fees and accounting fees. The credit amounts, if any, are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.
(h) Accounting Estimates:
The accounting policies described in this report conform to accounting principles generally accepted in the United States of America. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates and these differences may be material.
(i) Federal Income Taxes:
The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains, if any, to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
(j) Foreign Taxes:
The funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, corporate events, foreign currency exchanges, capital gains on investments on currency repatriation. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in foreign markets in which the funds invest. These foreign taxes, if any, are paid by funds and are disclosed in the Statement of Operations. Foreign taxes payable as of October 31, 2010, if any, are reflected in the funds’ Statement of Assets and Liabilities.
(k) Indemnification:
Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss to be remote.
3. Risk factors:
Investing in the funds may involve certain risks, as discussed in the funds’ prospectus, including, but not limited to those described below:
Equity markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of an investment in the funds will fluctuate, which means that an investor could lose money.
The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.
The Schwab Fundamental US Large Company Index Fund primarily follows the large-cap portion of the U.S. stock market, as measured by the index. It follows these stocks during upturns as well as downturns. Because of its indexing strategy, the fund does not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of a fund’s expenses, a fund’s performance is normally below that of the index.
As an index fund, a fund seeks to track the performance of its benchmark index, although it may not be successful in doing so. The divergence between the performance of a fund and its benchmark index, positive or negative, is called “tracking error.” Tracking error can be caused by many factors and it may be significant.
Certain funds do not fully replicate their benchmark index and may hold securities not included in the index. As a result, a fund is subject to the risk that the investment adviser’s investment strategy, the implementation of which is subject to a number of
60
Schwab Fundamental Index Funds
Financial Notes (continued)
3. Risk factors (continued):
constraints, may not produce the intended results. Because the fund utilizes a sampling approach, it may not track the return of the index as well as it would if the fund purchased all of the securities in the benchmark index.
Historically, small-cap stocks have been riskier than large- and mid-cap stocks, and may move sharply, especially during market upturns and downturns. Small-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments — large-cap and mid-cap stocks, for instance — a fund’s small-cap holdings could reduce performance.
Both large- and mid-cap stocks tend to go in and out of favor based on market and economic conditions. However, stocks of mid-cap companies tend to be more vulnerable to adverse business or economic events than larger more established companies. During a period when large- and mid-cap U.S. stocks fall behind other types of investments — small-cap stocks, for instance — a fund’s large- and mid-cap holdings could reduce performance.
A fund’s investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs.
Emerging markets may be more likely to experience political turmoil or rapid changes in market or economic conditions than more developed countries. Emerging market countries often have less uniformity in accounting and reporting requirements and unreliable securities valuation. It is sometimes difficult to obtain and enforce court judgments in such countries and there is often a greater potential for nationalization and/or expropriation of assets by the government of an emerging market country. In addition, the financial stability of issuers (including governments) in emerging market countries may be more precarious than in other countries. As a result, there will tend to be an increased risk of price volatility associated with a fund’s investments in emerging market countries, which may be magnified by currency fluctuations relative to the U.S. dollar.
A fund’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments and could cause the fund to lose more than the principal amount invested. In addition, investments in derivatives may involve leverage, which means a small percentage of assets invested in derivatives can have a disproportionately large impact on the fund.
A particular investment may be difficult to purchase or sell. A fund may be unable to sell illiquid securities at an advantageous time or price.
Securities lending involves the risk of loss of rights in the collateral or delay in recovery of the collateral if the borrower fails to return the security loaned or becomes insolvent.
A fund may purchase shares of ETFs to gain exposure to a particular portion of the market while awaiting an opportunity to purchase securities directly. When a fund invests in an ETF, in addition to directly bearing the expenses associated with its own operations, it will bear a pro rata portion of the ETF’s expenses. Therefore, it may be more costly to own an ETF than to own the underlying securities directly. In addition, while the risks of owning shares of an ETF generally reflect the risks of owning the underlying securities the ETF is designed to track, lack of liquidity in an ETF can result in its value being more volatile than the underlying portfolio securities.
Please refer to the funds’ prospectus for a more complete description of the principal risks of investing in the funds.
4. Affiliates and Affiliated Transactions:
Charles Schwab Investment Management, Inc. (“CSIM” or the “investment adviser”), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund’s investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (“Advisory Agreement”) between it and the trust.
61
Schwab Fundamental Index Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
For its advisory and administrative services to each fund, CSIM is entitled to receive an annual fee payable monthly based on each fund’s average daily net assets described as follows:
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Schwab
| | |
| | | Schwab
| | Schwab
| | Schwab
| | Fundamental
| | Schwab
|
| | | Fundamental
| | Fundamental
| | Fundamental
| | International
| | Fundamental
|
| | | U.S. Large
| | U.S. Small-Mid
| | International
| | Small-Mid
| | Emerging
|
| | | Company
| | Company
| | Large Company
| | Company
| | Markets
|
Average Daily Net Assets | | Index Fund | | Index Fund | | Index Fund | | Index Fund | | Index Fund |
| |
| First $500 million | | | 0.30% | | | | 0.30% | | | | 0.30% | | | | 0.40% | | | | 0.50% | |
| $500 million to $5 billion | | | 0.22% | | | | 0.22% | | | | 0.22% | | | | 0.38% | | | | 0.48% | |
| $5 billion to $10 billion | | | 0.20% | | | | 0.20% | | | | 0.20% | | | | 0.36% | | | | 0.46% | |
| over $10 billion | | | 0.18% | | | | 0.18% | | | | 0.18% | | | | 0.34% | | | | 0.44% | |
The Board of Trustees has adopted a Shareholder Servicing Plan (the “Plan”) on behalf of the funds. The Plan enables each fund to bear expenses relating to the provision by service providers, including Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, “Schwab”), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the funds. Schwab serves as the funds’ paying agent under the Plan for making payments of the shareholder service fee due to the service providers (other than Schwab) under the Plan. All shareholder service fees paid by the funds to Schwab in its capacity as the funds’ paying agent will be passed through to the service providers, and Schwab will not retain any portion of such fees.
Pursuant to the Plan, each fund’s shares are subject to an annual shareholder servicing fee up to 0.10%. The shareholder servicing fee paid to a particular service provider is made pursuant to its written agreement with Schwab (or, in the case of payments made to Schwab, pursuant to Schwab’s written agreement with the funds). Payments under the Plan are made as described above regardless of Schwab’s or the service provider’s actual cost of providing the services. If the cost of providing the services under the Plan is less than the payments received, the unexpended portion of the fees may be retained as profit by Schwab or the service provider.
Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements (“expense limitation”) with the funds to limit the total annual fund operating expenses, excluding interest, taxes and certain non-routine expenses for so long as CSIM serves as the investment adviser to the funds, which may only be amended or terminated with the approval of the Fund’s Board of Trustees. The expense limitation as a percentage of average daily net assets is as follows:
| | | | | | | | | | | | | | | | | | | |
| | | | | | | Schwab
| | |
Schwab
| | Schwab
| | Schwab
| | Fundamental
| | Schwab
|
Fundamental
| | Fundamental
| | Fundamental
| | International
| | Fundamental
|
US Large
| | US Small-Mid
| | International
| | Small-Mid
| | Emerging
|
Company
| | Company
| | Large Company
| | Company
| | Markets
|
Index Fund | | Index Fund | | Index Fund | | Index Fund | | Index Fund |
| |
| | 0.35% | | | | 0.35% | | | | 0.35% | | | | 0.55% | | | | 0.60% | |
CSIM has entered into a license agreement with FTSE to use certain FTSE indexes and trademarks in connection with the offering and operation of certain registered investment companies. The funds have entered into a sub-license agreement with CSIM pursuant to which CSIM has agreed to sub-license certain FTSE indexes and trademarks to the funds. Under the sub-license agreement, each fund pays its pro rata share of licensing fees.
The funds may engage in certain transactions involving affiliates. For instance, a fund may own shares of The Charles Schwab Corporation if that company is included in its index. Below is the summary of investment activities involving The Charles Schwab Corporation shares owned by the Schwab Fundamental US Large Company Index Fund during the report period:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Balance
| | | | Realized
| | Dividends
|
| | | of Shares
| | | | | | of Shares
| | Market
| | Gain (Loss)
| | Received
|
| | | Held at
| | Gross
| | Gross
| | Held at
| | Value at
| | 11/1/09 to
| | 11/1/09 to
|
Fund | | 10/31/09 | | Additions | | Sales | | 10/31/10 | | 10/31/10 | | 10/31/10 | | 10/31/10 |
| |
| Schwab Fundamental US Large Company Index Fund | | | 58,915 | | | | 27,500 | | | | (33,000 | ) | | | 53,415 | | | | $822,591 | | | | ($41,680 | ) | | | $11,050 | |
62
Schwab Fundamental Index Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
The funds may also let a related party own shares of the funds. As of October 31, 2010, the shares owned by Schwab Charitable Giving Trust (an affiliate of Schwab) as a percentage of the total share of the Schwab Fundamental International Large Company Index is 14.9%.
The funds may engage in direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. For the year ended October 31, 2010, each fund’s total aggregate security transactions with other Schwab Funds were as follows:
| | | | | |
| Schwab Fundamental US Large Company Index Fund | | | $41,957,721 | |
| Schwab Fundamental US Small-Mid Company Index Fund | | | 20,992,566 | |
| Schwab Fundamental International Large Company Index Fund | | | — | |
| Schwab Fundamental International Small-Mid Company Index Fund | | | 57,666 | |
| Schwab Fundamental Emerging Markets Index Fund | | | — | |
Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions with other Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. The funds had no interfund borrowing or lending activity during the period.
5. Board of Trustees:
Trustees may include people who are officers and/or directors of the investment adviser or Charles Schwab & Co., Inc. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their services as trustees, but it did pay non-interested persons (independent trustees), as noted in each fund’s Statement of Operations.
6. Borrowing from Banks:
The funds may borrow money from banks and custodians. The funds have custodian overdraft facilities, a committed line of credit of $150 million with State Street Bank and Trust Company, an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The funds pay interest on the amounts they borrow at rates that are negotiated periodically. The funds also pay an annual fee to State Street Bank and Trust Company for the committed line of credit.
There were no borrowings from the lines of credit during the period. However, the funds utilized their overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.
7. Purchases and Sales/Maturities of Investment Securities:
For the period ended October 31, 2010, purchases and sales/maturities of securities (excluding short-term obligations) were as follows:
| | | | | | | | | |
| | | Purchases of Securities | | Sales/Maturities of Securities |
| |
| Schwab Fundamental US Large Company Index Fund | | | $449,296,624 | | | | $219,983,770 | |
| Schwab Fundamental US Small-Mid Company Index Fund | | | 184,085,028 | | | | 146,757,398 | |
| Schwab Fundamental International Large Company Index Fund | | | 210,464,385 | | | | 176,832,962 | |
| Schwab Fundamental International Small-Mid Company Index Fund | | | 56,032,975 | | | | 36,169,960 | |
| Schwab Fundamental Emerging Markets Index Fund | | | 311,295,683 | | | | 174,920,073 | |
63
Schwab Fundamental Index Funds
Financial Notes (continued)
8. Redemption Fee:
The funds charge a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior periods are:
| | | | | | | | | |
| | | Current Period
| | Prior Period
|
| | | (11/01/09-10/31/10) | | (11/01/08-10/31/09) |
| |
| Schwab Fundamental US Large Company Index Fund | | | $21,126 | | | | $40,354 | |
| Schwab Fundamental US Small-Mid Company Index Fund | | | 14,086 | | | | 47,459 | |
| Schwab Fundamental International Large Company Index Fund | | | 10,801 | | | | 66,579 | |
| Schwab Fundamental International Small-Mid Company Index Fund | | | 4,653 | | | | 2,299 | |
| Schwab Fundamental Emerging Markets Index Fund | | | 11,177 | | | | 11,408 | |
9. Federal Income Taxes:
As of October 31, 2010, the components of distributable earnings on a tax-basis were as follows:
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Schwab
| | |
| | | Schwab
| | Schwab
| | Schwab
| | Fundamental
| | Schwab
|
| | | Fundamental
| | Fundamental
| | Fundamental
| | International
| | Fundamental
|
| | | US Large
| | US Small-Mid
| | International
| | Small-Mid
| | Emerging
|
| | | Company
| | Company
| | Large Company
| | Company
| | Markets
|
| | | Index Fund | | Index Fund | | Index Fund | | Index Fund | | Index Fund |
| |
| Undistributed Ordinary income | | | $12,816,751 | | | | $20,367,697 | | | | $7,117,412 | | | | $1,830,661 | | | | $9,668,451 | |
| Undistributed long-term capital gains | | | — | | | | 5,080,706 | | | | — | | | | — | | | | 4,165,818 | |
| Unrealized appreciation | | | 103,007,616 | | | | 97,982,129 | | | | 21,213,292 | | | | 10,708,667 | | | | 42,337,339 | |
| Unrealized depreciation | | | (51,817,350 | ) | | | (28,871,174 | ) | | | (18,380,050 | ) | | | (3,752,524 | ) | | | (3,202,810 | ) |
| Other unrealized appreciation/(depreciation) | | | — | | | | 1,551 | | | | 23,316 | | | | 5,822 | | | | (299,650 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net unrealized appreciation/(depreciation) | | | $51,190,266 | | | | $69,112,506 | | | | $2,856,558 | | | | $6,961,965 | | | | $38,834,879 | |
| | | | | | | | | | | | | | | | | | | | | |
The primary differences between book-basis and tax-basis unrealized appreciation or unrealized depreciation of investments are the tax deferral of losses on wash sales, Passive Foreign Investment Companies (PFIC), Real Estate Investment Trusts (REITS), capital gains tax and futures mark to market.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2010, the following funds had capital loss carryforwards available to offset net capital gains before the expiration dates:
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Schwab
| | |
| | | Schwab
| | Schwab
| | Schwab
| | Fundamental
| | Schwab
|
| | | Fundamental
| | Fundamental
| | Fundamental
| | International
| | Fundamental
|
| | | US Large
| | US Small-Mid
| | International
| | Small-Mid
| | Emerging
|
| | | Company
| | Company
| | Large Company
| | Company
| | Markets
|
Expiration Date | | Index Fund | | Index Fund | | Index Fund | | Index Fund | | Index Fund |
| �� |
| October 31, 2016 | | | $48,768,252 | | | | $— | | | | $10,522,283 | | | | $— | | | | $— | |
| October 31, 2017 | | | 63,611,980 | | | | — | | | | 58,777,944 | | | | 153,428 | | | | — | |
| October 31, 2018 | | | — | | | | — | | | | 20,948,477 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Total | | | $112,380,232 | | | | $— | | | | $90,248,704 | | | | $153,428 | | | | $— | |
| | | | | | | | | | | | | | | | | | | | | |
64
Schwab Fundamental Index Funds
Financial Notes (continued)
9. Federal Income Taxes (continued):
As of October 31, 2010, the funds had capital losses utilized as follows:
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Schwab
| | |
| | | Schwab
| | Schwab
| | Schwab
| | Fundamental
| | Schwab
|
| | | Fundamental
| | Fundamental
| | Fundamental
| | International
| | Fundamental
|
| | | US Large
| | US Small-Mid
| | International
| | Small-Mid
| | Emerging
|
| | | Company
| | Company
| | Large Company
| | Company
| | Markets
|
| | | Index Fund | | Index Fund | | Index Fund | | Index Fund | | Index Fund |
| |
| Capital losses utilized | | | $78,472 | | | | $23,501,343 | | | | $— | | | | $2,680,486 | | | | $5,584,808 | |
The tax-basis components of distributions paid during the current and prior fiscal years were:
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Schwab
| | |
| | | Schwab
| | Schwab
| | Schwab
| | Fundamental
| | Schwab
|
| | | Fundamental
| | Fundamental
| | Fundamental
| | International
| | Fundamental
|
| | | US Large
| | US Small-Mid
| | International
| | Small-Mid
| | Emerging
|
| | | Company
| | Company
| | Large Company
| | Company
| | Markets
|
| | | Index Fund | | Index Fund | | Index Fund | | Index Fund | | Index Fund |
| |
Current period distributions | | | | | | | | | | | | | | | | | | | | |
| Ordinary income | | | $8,047,761 | | | | $2,224,324 | | | | $7,367,808 | | | | $1,616,483 | | | | $1,195,864 | |
| Long-term capital gains | | | — | | | | — | | | | — | | | | — | | | | — | |
| Return of capital | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
Prior period distributions | | | | | | | | | | | | | | | | | | | | |
| Ordinary income | | | $11,252,006 | | | | $1,789,938 | | | | $9,037,332 | | | | $526,270 | | | | $531,136 | |
| Long-term capital gains | | | — | | | | — | | | | — | | | | — | | | | — | |
| Return of capital | | | — | | | | — | | | | — | | | | — | | | | — | |
Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as non-U.S. currency gains and losses, short-term capital gains and losses; capital losses related to wash sales, partnership investments, unrealized appreciation of certain investments in non-U.S. securities; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the funds for financial reporting purposes. The funds may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.
The permanent book and tax basis differences may result in reclassifications between capital account and other accounts as required. The adjustments will have no impact on net assets or the results of operations. As of October 31, 2010, the funds made the following reclassifications:
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Schwab
| | |
| | | Schwab
| | Schwab
| | Schwab
| | Fundamental
| | Schwab
|
| | | Fundamental
| | Fundamental
| | Fundamental
| | International
| | Fundamental
|
| | | US Large
| | US Small-Mid
| | International
| | Small-Mid
| | Emerging
|
| | | Company
| | Company
| | Large Company
| | Company
| | Markets
|
| | | Index Fund | | Index Fund | | Index Fund | | Index Fund | | Index Fund |
| |
| Capital Shares | | | $— | | | | $— | | | | $105 | | | | $— | | | | $— | |
| Undistributed net investment income | | | 50,828 | | | | 39,815 | | | | 577,680 | | | | 1,056,381 | | | | (653,912 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net realized capital gains and losses | | | (50,828 | ) | | | (39,815 | ) | | | (577,785 | ) | | | (1,056,381 | ) | | | 653,912 | |
As of October 31, 2010, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and state purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year ended October 31, 2010, the funds did not incur any interest or penalties.
65
Schwab Fundamental Index Funds
Financial Notes (continued)
10. Subsequent Events:
Management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
66
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of:
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small-Mid Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets Index Fund
In our opinion, the accompanying statements of assets and liabilities, including the summary portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schwab Fundamental US Large Company Index Fund, Schwab Fundamental US Small-Mid Company Index Fund, Schwab Fundamental International Large Company Index Fund, Schwab Fundamental International Small-Mid Company Index Fund, and Schwab Fundamental Emerging Markets Index Fund (five of the portfolios constituting Schwab Capital Trust, hereafter referred to as the “Funds”) at October 31, 2010, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 15, 2010
67
Other Federal Tax Information (unaudited)
The funds elect to pass through under section 853 of the Internal Revenue Code foreign tax credit to its shareholders for the year ended October 31, 2010, and the respective foreign source income on the funds as follows.
| | | | | | | | | |
| | | Foreign Tax Credit | | Foreign Source Income |
| |
| Schwab Fundamental US Large Company Index Fund | | | $— | | | | $— | |
| Schwab Fundamental US Small-Mid Company Index Fund | | | — | | | | — | |
| Schwab Fundamental International Large Company Index Fund | | | 399,276 | | | | 8,858,319 | |
| Schwab Fundamental International Small-Mid Company Index Fund | | | 104,161 | | | | 1,420,992 | |
| Schwab Fundamental Emerging Markets Index Fund | | | 721,618 | | | | 6,321,650 | |
For corporate shareholders, the following percentage of the funds dividend distributions paid during the fiscal year ended October 31, 2010, qualify for the corporate dividends received deduction:
| | | | | |
| | | Percentage |
| |
| Schwab Fundamental US Large Company Index Fund | | | 100.00 | |
| Schwab Fundamental US Small-Mid Company Index Fund | | | 72.06 | |
| Schwab Fundamental International Large Company Index Fund | | | — | |
| Schwab Fundamental International Small-Mid Company Index Fund | | | — | |
| Schwab Fundamental Emerging Markets Index Fund | | | — | |
For the fiscal year ended October 31, 2010, the funds designate the following amounts of the dividend distributions as qualified dividends for the purpose of the maximum rate under section 1(h)(ii) of the Internal Revenue Code. Shareholders will be notified in January 2011 via IRS form 1099 of the amounts for use in preparing their 2010 income tax return.
| | | | | |
| Schwab Fundamental US Large Company Index Fund | | | $8,047,761 | |
| Schwab Fundamental US Small-Mid Company Index Fund | | | 1,694,600 | |
| Schwab Fundamental International Large Company Index Fund | | | 6,642,474 | |
| Schwab Fundamental International Small-Mid Company Index Fund | | | 520,838 | |
| Schwab Fundamental Emerging Markets Index Fund | | | 1,136,834 | |
68
Investment Advisory and Sub-Advisory Agreement Approval
The Investment Company Act of 1940 (the “1940 Act”) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the “Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the investment advisory agreement.
The Board of Trustees (the “Board” or the “Trustees”, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement between Schwab Capital Trust (the “Trust”) and Charles Schwab Investment Management, Inc. (“CSIM”) (the “Agreement”) with respect to the existing funds in the Trust, including Schwab Fundamental US Large Company Index Fund, Schwab Fundamental US Small-Mid Company Index Fund, Schwab Fundamental International Large Company Index Fund, Schwab Fundamental International Small-Mid Company Index Fund and Schwab Fundamental Emerging Markets Index Fund (the “Funds”), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM.
The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreement with respect to the Funds at meetings held on April 28, 2010, and June 3, 2010, and approved the renewal of the Agreement with respect to the Funds for an additional one year term at the meeting held on June 3, 2010. The Board’s approval of the Agreement with respect to the Funds was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
| |
| 1. | the nature, extent and quality of the services provided to the Funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the Funds; |
| |
| 2. | each Fund’s investment performance and how it compared to that of certain other comparable mutual funds; |
| |
| 3. | each Fund’s expenses and how those expenses compared to those of certain other comparable mutual funds; |
| |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (“Schwab”), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
| |
| 5. | the extent to which economies of scale would be realized as the Funds grow and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The Trustees also considered investments in CSIM’s mutual fund infrastructure, Schwab’s wide range of products, services, and channel alternatives such as free advice, investment and research tools, Internet access, and an array of account features that benefit the Funds and their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that many of the Funds’ shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds supported renewal of the Agreement with respect to the Funds.
Fund Performance. The Board considered Fund performance in determining whether to renew the Agreement with respect to the Funds. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and appropriate indices/benchmarks, in light of total return, and market trends. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the third party who prepared the peer category analysis. In evaluating the performance of each Fund, the Trustees considered both risk and shareholder risk expectations for such Fund and the
69
appropriateness of the benchmark used to compare the performance of each Fund. The Trustees further considered the level of Fund performance in the context of its review of Fund expenses and adviser profitability discussed below. Following such evaluation the Board concluded, within the context of its full deliberations, that the performance of the Funds supported renewal of the Agreement with respect to the Funds.
Fund Expenses. With respect to the Funds’ expenses, the Trustees considered the rate of compensation called for by the Agreement, and each Fund’s net operating expense ratio, in each case, in comparison to those of a peer group of mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total Fund expenses from exceeding a specified cap. The Trustees also considered CSIM’s contractual commitment to keep each Fund’s expense cap for so long as CSIM serves as the adviser to such Fund. The Trustees also considered fees charged by CSIM to other mutual funds and exchange-traded funds. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the Funds are reasonable and supported renewal of the Agreement with respect to the Funds.
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered any other benefits derived by CSIM from its relationship with the Funds, such as whether, by virtue of its management of the Funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability under the Agreement and other service agreements were reasonable and justified in light of the quality of all services rendered to each Fund by CSIM and its affiliates. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement with respect to the Funds.
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to a Fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of Fund expenses, the Trustees considered that CSIM and Schwab have committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. The Trustees also considered the existing contractual investment advisory fee schedules relating to the Funds that, in each case, include lower fees at higher graduated asset levels. Based on this evaluation the Board concluded, within the context of its full deliberations, that the Funds obtain reasonable benefit from economies of scale.
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, approved the continuation of the Agreement with respect to the Funds and concluded that the compensation under the Agreement with respect to the Funds is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
70
Trustees and Officers
The tables below give information about the trustees and officers for Schwab Capital Trust which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 84 funds.
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.
Independent Trustees
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served1) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Mariann Byerwalter
1960
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Chairman of JDN Corporate Advisory LLC. | | 73 | | Director, Redwood Trust, Inc. (1998 – present)
Director, PMI Group Inc. (2001 – 2009)
Director, Excelsior Funds (2006 – 2007) |
| |
|
John F. Cogan
1947
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | Senior Fellow: The Hoover Institution at Stanford University (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University (Sept. 1994 – present). | | 73 | | Director, Gilead Sciences, Inc. (2005 – present)
Director, Monaco Coach Corporation (2005 – 2009) |
| |
|
William A. Hasler
1941
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Dean Emeritus, Haas School of Business, University of California, Berkeley (July 1998 – present). | | 73 | | Director, Ditech Networks Corporation (1997 – present)
Director, TOUSA (1998 – present)
Director, Mission West Properties (1998 – present)
Director, Globalstar, Inc. (2009 – present)
Director, Harris-Stratex Networks (2001 – present)
Director, Aphton Corp. (1991 – 2007)
Director, Solectron Corporation (1998 – 2007)
Director, Genitope Corporation (2000 – 2009)
Director, Excelsior Funds (2006 – 2007) |
| |
|
Gerald B. Smith
1950
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (1990 – present). | | 73 | | Lead Independent Director, Board of Cooper Industries (2002 – present)
Director and Chairman of the Audit Committee, Oneok Partners LP (2003 – present)
Director, Oneok, Inc (2009 – present) |
| |
|
Donald R. Stephens
1938
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Managing Partner, D.R. Stephens & Company (investments) (1973 – present). | | 73 | | None |
| |
|
71
Independent Trustees (continued)
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served1) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Joseph H. Wender
1944
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | Senior Consultant, Goldman Sachs & Co., Inc. (Jan. 2008- present); Partner, Colgin Partners, LLC (vineyards) (February 1998 – present); Senior Director, Chairman of the Finance Committee, GSC Group (July 2005 – Dec. 2007); General Partner, Goldman Sachs & Co., Inc. (Oct. 1982 – June 2005). | | 73 | | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present) |
| |
|
Michael W. Wilsey
1943
Trustee
(Trustee of Schwab Capital Trust since 1993.) | | Chairman and Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments). | | 73 | | None |
| |
|
Interested Trustees
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served ) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Charles R. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of Schwab Capital Trust since 1993.) | | Chairman and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc. | | 73 | | None |
| |
|
Walter W. Bettinger II2
1960
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. | | 84 | | None |
| |
|
72
Officers of the Trust
| | | |
Name, Year of Birth, and Position(s)
| | |
with the trust; (Terms of office, and
| | |
| length of Time Served3) | | Principal Occupations During the Past Five Years |
| |
Marie Chandoha
1961
President and Chief Executive Officer
(Officer of Schwab Capital Trust since 2010.) | | Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 – present); Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer, (Sept. 2010 – present), Charles Schwab Investment Management, Inc.; President and Chief Executive Officer, Schwab Funds, Laudus Funds and Schwab ETFs (Dec. 2010 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010); Co-Head and Senior Portfolio Manager, Wells Capital Management (June 1999 – March 2007). |
| |
|
George Pereira
1964
Treasurer and Principal Financial Officer
(Officer of Schwab Capital Trust since 2004.) | | Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc. (November 2004 – present); Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present); Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds (June 2006 – June 2007). |
| |
|
Koji E. Felton
1961
Secretary and Chief Legal Officer
(Officer of Schwab Capital Trust since 1998.) | | Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc. (July 2000 – present); Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. (June 1998 – present); Vice President and Assistant Clerk, Laudus Funds (Jan. 2010 – present); Chief Legal Officer and Secretary, Schwab Funds (Nov. 1998 – present) and Schwab ETFs (Oct. 2009 – present); Chief Legal Officer and Secretary, Excelsior Funds (June 2006 – June 2007). |
| |
|
Catherine MacGregor
1964
Vice President
(Officer of Schwab Capital Trust since 2005.) | | Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk, Laudus Funds (March 2007 – present); Vice President and Assistant Clerk, Schwab Funds (Dec. 2005 – present) and Schwab ETFs (Oct. 2009 – present). |
| |
|
Michael Haydel
1972
Vice President
(Officer of Schwab Capital Trust since 2006.) | | Vice President, Asset Management Client Services, Charles Schwab & Co., Inc. (2004 – present); Vice President (Sept. 2005 – present), Anti-Money Laundering Officer (Oct. 2005 – Feb. 2009), Laudus Funds; Vice President, Schwab Funds (June 2007 – present) and Schwab ETFs (Oct. 2009 – present). |
| |
|
| | |
| 1 | | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds® retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first, provided that any trustee who serves on both Schwab Funds and Laudus Funds retires from both boards when first required to retire by either board. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010. |
| 2 | | Mr. Schwab and Mr. Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation. |
| 3 | | The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board. |
73
Glossary
asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.
asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.
beta A historical measure of an investment’s volatility relative to a market index (usually the S&P 500®). The index is defined as having a beta of 1.00. Investments with a beta higher than 1.00 have been more volatile than the index; those with a beta of less than 1.00 have been less volatile.
bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”
An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.
bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.
cap, capitalization See “market cap.”
capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the gain or loss is still “on paper” and is considered unrealized.
earnings growth rate For a mutual fund, the average yearly rate at which the earnings of the companies in the fund’s portfolio have grown, measured over the past five years.
earnings per share (EPS) A company’s earnings, or net income, for the past 12 months, divided by the number of shares outstanding.
expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.
gross domestic product (GDP) The output of goods and services produced by labor and property located in the United States.
market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.
median market cap The midpoint of the range of market caps of the stocks held by a fund. There are different ways of calculating median market cap. With a simple median, half of the stocks in the fund’s portfolio would be larger than the median, and half would be smaller. With a weighted median (the type that is calculated for these funds), half of the fund’s assets are invested in stocks that are larger than the median market cap, and half in stocks that are smaller.
net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.
price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.
return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.
stock A share of ownership, or equity, in the issuing company.
total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.
weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.
yield The income paid out by an investment, expressed as a percentage of the investment’s market value.
74
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A Commitment to Your Privacy
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We are committed to protecting the privacy of information we maintain about you. Below are details about our commitment, including the types of information we collect and how we use and share that information. This Privacy Notice applies to you only if you are an individual who invests directly in the funds by placing orders through the funds’ transfer agent. If you place orders through your brokerage account at Charles Schwab & Co., Inc. or an account with another broker-dealer, investment advisor, 401(k) plan, employee benefit plan, administrator, bank or other financial intermediary, you are covered by the privacy policies of that financial institution and should consult those policies.
How We Collect Information About You
We collect personal information about you in a number of ways.
| |
| • | APPLICATION AND REGISTRATION INFORMATION. |
We collect personal information from you when you open an account or utilize one of our services. We may also collect information about you from third parties such as consumer reporting agencies to verify your identity. The information we collect may include personal information, including your Social Security number, as well as details about your interests, investments and investment experience.
| |
| • | TRANSACTION AND EXPERIENCE INFORMATION. |
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We provide access to information about you to our affiliated companies, outside companies and other third parties in certain limited circumstances, including:
| |
| • | to help us process transactions for your account; |
| |
| • | when we use other companies to provide services for us, such as printing and mailing your account statements; |
| |
| • | when we believe that disclosure is required or permitted under law (for example, to cooperate with regulators or law enforcement, resolve consumer disputes, perform credit/authentication checks, or for risk control). |
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Contact Us
To provide us with updated information, report suspected fraud or identity theft, or for any other questions, please call one of the numbers below.
Schwab Funds® direct investors: 1-800-407-0256
© 2010 Schwab Funds. All rights reserved.
Schwab Funds® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.
Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.
Proxy Voting Policies, Procedures and Results
A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting Schwab’s website at www.schwabfunds.com/prospectus, the SEC’s website at http://www.sec.gov, or by contacting Schwab Funds at 1-800-435-4000.
Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting Schwab’s website at www.schwabfunds.com/prospectus or the SEC’s website at http://www.sec.gov.
The Schwab Funds Family®
Stock Funds
Schwab Premier Equity Fund®
Schwab Core Equity Fundtm
Schwab Dividend Equity Fundtm
Schwab Large-Cap Growth Fundtm
Schwab Small-Cap Equity Fundtm
Schwab Hedged Equity Fundtm
Schwab Financial Services Fundtm
Schwab Health Care Fundtm
Schwab® International Core Equity Fund
Schwab Fundamental US Large* Company Index Fund
Schwab Fundamental US Small-Mid* Company Index Fund
Schwab Fundamental International* Large Company Index Fund
Schwab Fundamental International* Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets* Index Fund
Schwab Global Real Estate Fundtm
Schwab S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market Index Fund®
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fundtm
Schwab MarketTrack All Equity Portfoliotm
Schwab MarketTrack Growth Portfoliotm
Schwab MarketTrack Balanced Portfoliotm
Schwab MarketTrack Conservative Portfoliotm
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab® Monthly Income Fund – Moderate Payout
Schwab® Monthly Income Fund – Enhanced Payout
Schwab® Monthly Income Fund – Maximum Payout
Bond Funds
Schwab YieldPlus Fund®
Schwab Short-Term Bond Market Fundtm
Schwab® Premier Income Fund
Schwab Total Bond Market Fundtm
Schwab GNMA Fundtm
Schwab Inflation Protected Fundtm
Schwab Tax-Free YieldPlus Fundtm
Schwab Tax-Free Bond Fundtm
Schwab California Tax-Free YieldPlus Fundtm
Schwab California Tax-Free Bond Fundtm
Schwab Money Funds
Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity1. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments®.
| | |
| * | | SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL AND FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC. |
| |
| 1 | | Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money. |
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds®
P.O. Box 3812, Englewood, CO 80155–3812
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
© 2010 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
MFR39592-03
Annual report dated October 31, 2010 enclosed.
Schwab Active Equity Funds
Schwab Premier Equity Fund®
Schwab Core Equity Fundtm
Schwab Dividend Equity Fundtm
Schwab Large-Cap Growth Fundtm
Schwab Small-Cap Equity Fundtm
Schwab Hedged Equity Fundtm
Schwab Financial Services Fundtm
Schwab Health Care Fundtm
Schwab® International Core
Equity Fund
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Schwab Active Equity Funds
Annual Report
October 31, 2010
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Schwab Active Equity Funds
In This Report
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Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor: Charles Schwab & Co., Inc. (Schwab).
The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS) which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. (MSCI) and Standard & Poor’s (S&P). GICS is a service mark of MSCI and S&P and has been licensed for use by Charles Schwab & Co., Inc. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.
Performance at a Glance
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
| | | |
Total Return for
|
| the Report Period |
| |
| |
|
| Schwab Premier Equity Fund® | | |
| (Ticker Symbol: SWPSX) | | 14.96% |
|
| S&P 500® Index | | 16.52% |
| Fund Category: Morningstar Large-Cap Blend | | 15.53% |
|
| Performance Details | | pages 6-7 |
|
| |
|
| Schwab Core Equity Fundtm | | |
| (Ticker Symbol: SWANX) | | 11.77% |
|
| S&P 500® Index | | 16.52% |
| Fund Category: Morningstar Large-Cap Blend | | 15.53% |
|
| Performance Details | | pages 8-9 |
|
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| Schwab Dividend Equity Fundtm | | |
| (Ticker Symbol: SWDSX) | | 12.42% |
|
| S&P 500® Index | | 16.52% |
| Fund Category: Morningstar Large-Cap Value | | 13.99% |
|
| Performance Details | | pages 10-11 |
|
| |
|
| Schwab Large-Cap Growth Fundtm | | |
| (Ticker Symbol: SWLSX) | | 15.83% |
|
| Russell 1000 Growth Index | | 19.65% |
| Fund Category: Morningstar Large-Cap Growth | | 18.17% |
|
| Performance Details | | pages 12-13 |
|
| |
|
| Schwab Small-Cap Equity Fundtm | | |
| (Ticker Symbol: SWSCX) | | 25.31% |
|
| Russell 2000® Index1 | | 26.58% |
| S&P Small-Cap 600 Index2 | | 26.27% |
| Fund Category: Morningstar Small-Cap Blend | | 25.22% |
|
| Performance Details | | pages 14-15 |
|
| |
|
| Schwab Hedged Equity Fundtm | | |
| (Ticker Symbol: SWHEX) | | 9.96% |
|
| S&P 500® Index | | 16.52% |
| Fund Category: Morningstar Long-Short | | 5.15% |
|
| Performance Details | | pages 16-17 |
|
| |
|
| Schwab Financial Services Fundtm | | |
| (Ticker Symbol: SWFFX) | | 11.79% |
|
| S&P 1500 SuperComposite Financials Sector Index | | 7.34% |
| Fund Category: Morningstar Financial Services | | 8.01% |
|
| Performance Details | | pages 18-19 |
|
| |
|
| Schwab Health Care Fundtm | | |
| (Ticker Symbol: SWHFX)3 | | 16.49% |
|
| Dow Jones Global Health Care Index4 | | 12.15% |
| S&P 1500 SuperComposite Health Care Sector Index2 | | 14.53% |
| Fund Category: Morningstar Health Care | | 16.46% |
|
| Performance Details | | pages 20-21 |
|
| |
|
| Schwab® International Core Equity Fund | | |
| (Ticker Symbol: SICNX)3,5 | | 10.09% |
|
| MSCI EAFE Index®(Gross)* | | 8.82% |
| Fund Category: Morningstar Foreign Large-Cap Blend | | 12.54% |
|
| Performance Details | | pages 22-23 |
|
| | | |
| |
|
| Minimum Initial Investment6 | | $100 |
|
All fund and index figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date.
| |
| * | The Morgan Stanley Capital International Europe, Australasia, Far East Index (Gross) (MSCI EAFE Index®) is a free float-adjusted market capitalization index that is designed to measure market equity performance in 22 developed market countries, excluding the U.S. and Canada. Investors cannot invest directly in any index and index figures do not include trading and management costs. |
| 1 | Effective July 1, 2009, the fund uses the Russell 2000 Index as its comparative index. The fund selected this index because the fund’s investment adviser believes that it is a more accurate index for comparing fund performance. |
| 2 | This index was used as the fund’s comparative index until June 30, 2009. |
| 3 | The fund’s performance relative to the index may be affected by fair-value pricing, see financial note 2 for more information. |
| 4 | Effective July 1, 2009, the fund uses the Dow Jones Global Health Care Index as its comparative index. The fund selected this index because the fund’s investment adviser believes that it is a more accurate index for comparing fund performance. |
| 5 | On December 3, 2009, the Laudus Rosenberg International Equity Fund merged into the fund. |
| 6 | Please see prospectus for further details and eligibility requirements. |
2 Schwab Active Equity Funds
From the President
Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report.
Dear Shareholder,
During the year that ended October 31, 2010, many investors wrestled with economic news that was mostly negative—the recovery of the U.S. economy remained tepid, unemployment stayed stubbornly high, and the housing market remained weak. In spite of these events, nearly all stock and bond markets produced positive returns, both in the United States and abroad.
The bellwether S&P 500 Index gained 16.52% during the year and international stock markets also rewarded investors as indicated by a return of 8.82% in the MSCI EAFE Index. Growth stocks generally fared better than value stocks in large-, mid-, and small-cap sectors.
For the year ending October 31, 2010, the nine Schwab Active Equity Funds all posted positive returns, aided by the strong rebound in equities in the latter part of the period. The Schwab Financial Services Fund, Schwab Health Care Fund, and Schwab International Core Equity Fund all posted double-digit total returns and outperformed their benchmarks.
The other Schwab Active Equity Funds delivered solid absolute returns but underperformed their respective benchmarks. Please read the fund managers’ discussion and analysis on the following pages for more details.
At Schwab, we encourage investors to review their investment strategy periodically in the context of their tolerance for risk, timeline, and established investment plan.
If you have any questions about the Schwab Active Equity Funds or any other Schwab Funds, please call us at 1-800-435-4000. Please also see www.schwabfunds.com for details on each fund including performance results, investment strategy, and prospectus.
Thank you for investing with us.
Sincerely,
Schwab Active Equity Funds 3
The Investment Environment
The past 12 months produced significant positive returns in nearly all major equity and fixed income markets, despite various economic indicators falling short of expectations here in the United States and abroad. Domestic equity markets fared better than international, and growth stocks outperformed value stocks in large-, mid-, and small-cap categories. In the credit markets, inflation-protected bonds were the best performers and U.S. Treasuries had the poorest returns, though they also had solid performance for the 12 months under review.
The return for the S&P 500 Index, which is usually seen as a bellwether for U.S. financial markets, was positive at 16.52%. The international stock markets also had solid overall returns, and the MSCI EAFE Index (Gross) returned 8.82%. In fixed-income, the Barclays Capital U.S. Aggregate Bond Index returned 8.01%, while the Barclays Capital U.S. TIPS Index returned 10.42%, and the Barclays Capital U.S. Treasury Index returned 7.20% for the reporting period.
In a press release dated November 3, 2010, the Federal Reserve (the Fed) described information it had received since its meeting in September 2010, and noted that the pace of recovery in output and employment remained slow. Moreover, persistent high unemployment, coupled with depressed housing prices and a rise in foreclosures, continued to work against the U.S. economic recovery process. In the U.S. fixed income markets, accommodative Fed policy in the form of a near-zero federal funds rate remained intact, and several recent statements from the Fed affirmed that rates will remain low for an extended period of time. Also in November’s press release, the Fed stated that it intended to purchase up to $600 billion of longer-term U.S. Treasuries by the end of the second quarter in 2011.
At the international level, financial markets fluctuated during the reporting period. Ongoing concerns regarding the debt obligations of Greece, Spain, Ireland, and other European countries continued to capture the attention of central banks and resulted in the progressive downgrading of debt in those countries. The news caused temporary turmoil in the U.S. and global financial markets in early May 2010. While there has been some rebounding to pre-May levels in the markets, central banks remain attentive to debt ratios, monetary exchange rates, interest rates, and inflation measurements.
During the reporting period, two economic events caused volatility in the equity and fixed income markets. First, was the Deepwater Horizon oil spill in the Gulf of Mexico on April 20, 2010. The costs—in terms of environmental impact and loss of oil—affected energy-related stocks, which declined on the news. For the reporting period, the Energy Sector was the weakest performing sector in the S&P 500 Index. Second, investor confidence in the United States and abroad was further shaken on May 6, 2010, when the Dow Jones Industrial Average dropped 999 points, within a 30-minute timeframe, before partially regaining some of the decline. The equity market event was subsequently named the “flash crash.” As a result of the flash crash, more than 16,000 trades were cancelled by the major U.S. stock exchanges.
On a more general note in the United States, real Gross Domestic Product (GDP) growth remained lower than hoped for during the reporting period, with the Bureau of Economic Analysis estimating that GDP grew at a rate of 2.0% for the third quarter of 2010. Likewise, the national unemployment rate—as reported by the Bureau of Labor Statistics—was an ongoing concern and hovered just below 10% throughout the 12-month period. Finally, high delinquencies, foreclosures, and stalled foreclosures weighed heavily on the housing sector. The discovery that some institutions had improper or incomplete paperwork on original loan documents brought at least a temporary halt to some foreclosures.
Asset Class Performance Comparison % returns during the report period
This graph compares the performance of various asset classes during the report period. Final performance figures for the period are in the key below.
| | | | | |
| | | | | |
| | 16.52% | | S&P 500® Index: measures U.S. large-cap stocks |
| | | | | |
| | 26.58% | | Russell 2000® Index: measures U.S. small-cap stocks |
| | | | | |
| | 8.82% | | MSCI EAFE® Index (Gross): measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East |
| | | | | |
| | 8.01% | | Barclays Capital U.S. Aggregate Bond Index: measures the U.S. bond market |
| | | | | |
| | 0.11% | | Three-Month U.S. Treasury Bills (T-bills): measures short-term U.S. Treasury obligations |
These figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and you cannot invest in them directly. Remember that past performance is not an indication of future results.
Data source: Charles Schwab & Co., Inc.
Nothing in this report represents a recommendation of a security by the investment adviser.
Manager views and portfolio holdings may have changed since the report date.
4 Schwab Active Equity Funds
Fund Management
| | | |
| | | |
 | | Vivienne Hsu, CFA, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day co-management of each of the funds. Prior to joining the firm in August 2004, she worked for more than 11 years in asset management and quantitative analysis at other investment firms. |
| | | |
| | Larry Mano, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day co-management of each of the funds, except for the Schwab International Core Equity Fund. Prior to joining the firm in November 1998, he worked for 20 years in equity management. |
| | | |
 | | Paul Alan Davis, CFA, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day co-management of each of the funds. Prior to joining the firm in 2003, he worked for more than 12 years in portfolio management. |
Schwab Active Equity Funds 5
Schwab Premier Equity Fund®
The Schwab Premier Equity Fund (the fund) seeks long-term capital growth. To pursue its investment objective, the fund invests primarily in U.S. common stocks. The fund generally seeks to invest in the stocks of approximately 100 companies, but the fund may hold fewer or more stocks at a particular time. The fund uses Schwab Equity Ratings (SER) to aid its stock selection. For more information on the fund’s objective and strategy, please see the fund’s prospectus.
The fund returned 14.96% during the 12-month period, while its comparative index, the S&P 500 Index (the index), returned 16.52%. By design, the fund is an all-cap fund and it invests a material portion of its assets under management in mid- and small-cap stocks that are not represented in the index.
Consumer Discretionary stocks were the best performers for the index and stocks in the Financials Sector were the worst. Stocks held in the index with higher price-to-book ratios (P/B) outperformed stocks with lower P/B ratios, and smaller market capitalization stocks outperformed larger market capitalization stocks.
In terms of individual stock selection, the fund owned Apple, Inc. for part of the 12-month period, but sold it when Apple was downgraded by SER. The resulting underweight of Apple stock, relative to the index, proved to be a detractor; the stock rose nearly 60% for the period under review. Stock selection in the Consumer Discretionary Sector also detracted, partially due to the fund’s overweight to the retailer, Gap Inc. In the Industrials Sector, the fund’s overweight helped relative performance, but stock selection within the sector detracted. In particular, the fund’s overweight to R.R. Donnelley & Sons Co. and Ryder Systems, Inc. detracted the most within Industrials.
Contributions to the fund’s relative performance came from several sources. Small-cap stocks outperformed large-cap during the reporting period, and the fund’s overweight to small-cap helped relative performance. In addition, the fund’s overweight to Energy contributed. National Oilwell Varco, Inc., excelled as one of the fund’s top-performing holdings within Energy. In the Consumer Discretionary Sector, bakery and cafe shop, Panera Bread, was a non-index holding that also had exceptional returns for the fund. Stock selection in the Health Care Sector was positive, partially due to the holding of Millipore Corp., which was acquired by the German pharmaceutical firm, Merck KGaA. Not owning the largest stock in the index, Exxon Mobil Corp., also contributed to the fund’s relative performance, as the stock declined during the reporting period.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 107 |
| Weighted Average Market Cap ($ x 1,000,000) | | $23,971 |
| Price/Earnings Ratio (P/E) | | 14.6 |
| Price/Book Ratio (P/B) | | 1.7 |
| Portfolio Turnover Rate | | 80% |
Sector Weightings % of Investments
| | | |
| Information Technology | | 17.1% |
| Financials | | 14.6% |
| Energy | | 11.8% |
| Health Care | | 11.5% |
| Consumer Discretionary | | 9.9% |
| Consumer Staples | | 9.3% |
| Industrials | | 9.2% |
| Materials | | 5.7% |
| Utilities | | 4.1% |
| Telecommunication Services | | 2.8% |
| Other | | 4.0% |
Total | | 100.0% |
Top Equity Holdings % Net Assets1
| | | |
| VeriFone Systems, Inc. | | 1.3% |
| International Business Machines Corp. | | 1.3% |
| The Williams Cos., Inc. | | 1.3% |
| National Oilwell Varco, Inc. | | 1.3% |
| The Timken Co. | | 1.3% |
| ConocoPhillips | | 1.3% |
| The Goldman Sachs Group, Inc. | | 1.3% |
| Computer Sciences Corp. | | 1.3% |
| Archer-Daniels-Midland Co. | | 1.3% |
| El Paso Corp. | | 1.2% |
Total | | 12.9% |
Manager views and portfolio holdings may have changed since the report date.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector Classification: S&P and MSCI.
| | |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
6 Schwab Active Equity Funds
Schwab Premier Equity Fund®
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
March 21, 2005 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,5
Average Annual Total Returns1,2,5
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 5 Years | | Since Inception |
| |
Fund: Schwab Premier Equity Fund® (3/21/05) | | | 14.96 | % | | | | -0.22 | % | | | | 1.03 | % | |
S&P 500® Index | | | 16.52 | % | | | | 1.73 | % | | | | 1.98 | % | |
| Fund Category: Morningstar Large-Cap Blend | | | 15.53 | % | | | | 1.57 | % | | | | 1.96 | % | |
Fund Expense Ratio3: 1.02%
Style Assessment4
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | As stated in the prospectus. Reflects the total annual fund operating expenses without contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 4 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
| 5 | | On September 28, 2009, the Investor Share class and Select Share class were combined into a single class of shares of the fund. The performance and financial history of the fund are that of the fund’s former Select Shares. Accordingly, the past performance shown is that of the fund’s former Select Shares. |
Schwab Active Equity Funds 7
Schwab Core Equity Fund™
The Schwab Core Equity Fund (the fund) seeks long-term capital growth. To pursue its investment objective, the fund invests primarily in U.S. stocks. The fund expects to hold the common stocks of U.S. companies that have market capitalizations of approximately $500 million or more. The fund uses Schwab Equity Ratings (SER) to aid its stock selection. For more information on the fund’s objective and strategy, please see the fund’s prospectus.
The fund returned 11.77% for the 12-month period, while its comparative index, the S&P 500 Index (the index), returned 16.52%. All sectors within the index posted positive returns, but the best absolute performing sectors were Consumer Discretionary and Industrials. However, the top contributing sector for the index, because of its 18% weight and 18% return, was Information Technology.
From a valuation perspective, stocks with higher price-to-book ratios outperformed, whereas across price-to-earnings ratios, returns were fairly even. For the reporting period, stocks with smaller market capitalizations outperformed larger market capitalization stocks.
The fund’s use of SER, which emphasizes factors such as strong fundamentals and attractive valuations, provided the fund with solid absolute returns, but led the fund to make some stock selections that were out-of-favor and that detracted from the fund’s relative performance. In particular, stock selection in Industrials and Information Technology hurt performance relative to the index. One notable detractor was Hewlett-Packard. The stock price dropped relative to its peer group during the reporting period on news surrounding the company’s change in executive management.
Moreover, the fund’s overweight to Financials, and stock selection within the sector, were both detractors for the reporting period. Overweights to JPMorgan Chase & Co. and to Wells Fargo & Company were the primary detractors. In addition to Hewlett Packard, other technology names that detracted were Symantec Corporation and Computer Sciences Corporation. The fund added value with stock selection in the Energy Sector. Specifically, an underweight to Exxon Mobil Corporation and an overweight to National Oilwell Varco helped the fund’s relative performance. Likewise, stock selection in Health Care was positive for the fund: Humana, Inc. and Millipore Corporation both excelled during the reporting period.
In aggregate, the fund had a higher weight than the index to small capitalization stocks in the $0–$5 billion range. This position proved to be positive for the fund’s relative performance, as small-cap stocks easily outpaced the index’s return. The fund also overweighted the mid-cap range of $5–$10 billion. These stocks easily outperformed the market average. However, stock selection overshadowed the positive overweight effect in the mid-cap range, in part because of the fund’s holdings in utility stocks NRG Energy, Inc. and AES Corporation.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 150 |
| Weighted Average Market Cap ($ x 1,000,000) | | $59,956 |
| Price/Earnings Ratio (P/E) | | 14.6 |
| Price/Book Ratio (P/B) | | 1.9 |
| Portfolio Turnover Rate | | 49% |
Sector Weightings % of Investments
| | | |
| Information Technology | | 18.3% |
| Financials | | 17.0% |
| Energy | | 12.7% |
| Health Care | | 12.1% |
| Consumer Discretionary | | 10.7% |
| Industrials | | 10.2% |
| Consumer Staples | | 9.5% |
| Materials | | 5.1% |
| Telecommunication Services | | 2.1% |
| Utilities | | 1.9% |
| Other | | 0.4% |
Total | | 100.0% |
Top Equity Holdings % Net Assets1
| | | |
| International Business Machines Corp. | | 3.7% |
| JPMorgan Chase & Co. | | 3.1% |
| Wells Fargo & Co. | | 3.0% |
| Apple, Inc. | | 2.7% |
| Occidental Petroleum Corp. | | 2.0% |
| Starbucks Corp. | | 2.0% |
| Anadarko Petroleum Corp. | | 1.9% |
| Hewlett-Packard Co. | | 1.7% |
| Wal-Mart Stores, Inc. | | 1.7% |
| The Goldman Sachs Group, Inc. | | 1.6% |
Total | | 23.4% |
Manager views and portfolio holdings may have changed since the report date.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector Classification: S&P and MSCI.
| | |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
8 Schwab Active Equity Funds
Schwab Core Equity Fundtm
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
October 31, 2000 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 5 Years | | 10 Years |
| |
Fund: Schwab Core Equity Fundtm (7/1/96) | | | 11.77 | % | | | | 1.32 | % | | | | 0.30 | % | |
S&P 500®Index | | | 16.52 | % | | | | 1.73 | % | | | | -0.02 | % | |
| Fund Category: Morningstar Large-Cap Blend | | | 15.53 | % | | | | 1.57 | % | | | | 0.69 | % | |
Fund Expense Ratios3: Net 0.75%; Gross 0.76%
Style Assessment4
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 4 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
Schwab Active Equity Funds 9
Schwab Dividend Equity Fund™
The Schwab Dividend Equity Fund (the fund) seeks current income and capital appreciation. Under normal circumstances, the fund invests at least 80% of its net assets in dividend paying common and preferred stocks. The fund uses Schwab Equity Ratings (SER) to aid its stock selection. For more information on the fund’s objective and strategy, please see the fund’s prospectus.
The fund returned 12.42% for the period, while its comparative index, the S&P 500 Index (the index), returned 16.52%. As of October 31, 2010, the fund’s dividend yield was 2.60% and the index’s dividend yield was 1.96%.
All sectors within the index posted positive returns, but the best absolute performing sectors were Consumer Discretionary and Industrials. However, the top contributor for the index was Information Technology; this sector had the largest weight along with a strong absolute return.
From a valuation perspective, stocks with higher price-to-book ratios outperformed, whereas across price-to-earnings ratios, returns were fairly even. As is typical in the fund’s search for yield, management favored value-oriented stocks over the growth counterparts found in the index. Given the outperformance of growth stocks, the fund’s tilt toward value stocks detracted.
Stocks with smaller market capitalizations outperformed the larger market capitalization stocks. Initially, the fund’s underweight to mega-cap stocks—those with market capitalizations above $100 billion—proved to be positive from an allocation standpoint, but, by the end of the reporting period, poor stock selection in the mega-cap space erased the positive effect of the underweight. For example, the fund’s zero weight to Apple Computer, Inc. (Apple), which returned 60% for the reporting period, was the biggest detractor from relative performance, as the index allocated more than a 2% weight to the stock. (Read more about Apple below.)
Stock selection was the main detractor from the fund’s performance relative to the index. In particular, stock selection in Financials, Industrials, Consumer Discretionary, and Information Technology detracted. Struggling stocks in Financials included JPMorgan Chase & Co. and BlackRock, Inc. R.R. Donnelley & Sons Company was the largest detracting stock in the Industrials Sector, and not owning Ford Motor Company also detracted, as its return exceeded 100% for the reporting period.
As part of the fund’s objective to seek current income, it invests in dividend-paying stocks. During the period, however, stocks in the index that do not pay dividends were the strongest-performing group. The fund had fewer holdings in non-dividend paying stocks than the index, and given the outperformance of that group of stocks, the fund’s position detracted from relative performance. For example, much of the fund’s underperformance in Information Technology was attributed to not owning Apple, Inc., a non-dividend paying stock making up more than 2% of the index. However, avoiding non-dividend paying stocks can sometimes be positive. For example, the fund’s avoidance of Cisco Systems, Inc. proved to be beneficial, as the stock posted a negative return for the reporting period. On a similar note, the fund’s underweight to Exxon Mobil Corporation was the top positive contributor and the fund’s overweight positions to utility firms DTE Energy Company, NiSource, Inc., and CenterPoint Energy, Inc. also helped performance.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 121 |
| Weighted Average Market Cap ($ x 1,000,000) | | $54,504 |
| Price/Earnings Ratio (P/E) | | 14.1 |
| Price/Book Ratio (P/B) | | 1.9 |
| Portfolio Turnover Rate | | 37% |
Sector Weightings % of Investments
| | | |
| Information Technology | | 16.7% |
| Financials | | 15.0% |
| Health Care | | 11.9% |
| Energy | | 10.8% |
| Consumer Staples | | 10.5% |
| Industrials | | 9.8% |
| Consumer Discretionary | | 9.4% |
| Utilities | | 6.3% |
| Materials | | 5.0% |
| Telecommunication Services | | 3.5% |
| Other | | 1.1% |
Total | | 100.0% |
Top Equity Holdings % Net Assets1
| | | |
| International Business Machines Corp. | | 3.2% |
| JPMorgan Chase & Co. | | 2.6% |
| McDonald’s Corp. | | 2.1% |
| AT&T, Inc. | | 2.0% |
| Bristol-Myers Squibb Co. | | 1.9% |
| Occidental Petroleum Corp. | | 1.8% |
| ConocoPhillips | | 1.8% |
| H.J. Heinz Co. | | 1.8% |
| Eaton Corp. | | 1.8% |
| Intel Corp. | | 1.7% |
Total | | 20.7% |
Manager views and portfolio holdings may have changed since the report date.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector Classification: S&P and MSCI.
| | |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
10 Schwab Active Equity Funds
Schwab Dividend Equity Fundtm
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
September 2, 2003 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,5
Average Annual Total Returns1,2,5
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 5 Years | | Since Inception |
| |
Fund: Schwab Dividend Equity Fundtm (9/2/03) | | | 12.42 | % | | | | 1.72 | % | | | | 5.71 | % | |
S&P 500® Index | | | 16.52 | % | | | | 1.73 | % | | | | 4.32 | % | |
| Fund Category: Morningstar Large-Cap Value | | | 13.99 | % | | | | 0.86 | % | | | | 4.36 | % | |
Fund Expense Ratios3: Net 0.89%; Gross 0.90%
Style Assessment4
Yields1
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 4 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
| 5 | | On October 7, 2009, the Investor Share class and Select Share class were combined into a single class of shares of the fund. The performance and financial history of the fund are that of the fund’s former Select Shares. Accordingly, the past performance shown is that of the fund’s former Select Shares. |
Schwab Active Equity Funds 11
Schwab Large-Cap Growth Fund™
The Schwab Large-Cap Growth Fund (the fund) seeks long-term capital growth. To pursue its investment objective, the fund invests primarily in U.S. common stocks. Under normal circumstances, the fund invests at least 80% of its net assets in large-cap stocks of U.S. companies. The fund uses Schwab Equity Ratings (SER) to aid its stock selection. For more information on the fund’s objective and strategy, please see the fund’s prospectus.
The fund returned 15.83% during the 12-month period, while its comparative index, the Russell 1000 Growth Index (the index) returned 19.65%. All sectors within the index posted positive returns, but the best absolute performance drivers were the Information Technology, Consumer Discretionary and Industrials sectors. The fund’s slight overweight to two other sectors, Energy and Health Care, detracted from relative performance.
More than any sector overweight or underweight, stock selection proved to be the main cause of the fund’s underperformance relative to the index. Holdings in Consumer Discretionary, Financials, and Information Technology detracted the most. Detractors included Consumer Discretionary stocks Gap, Inc. and Target Corporation. The negative returns of large-cap financial holdings such as Goldman Sachs Group, Inc. and BlackRock, Inc. also detracted. In Information Technology, the main detractors were Western Digital Corporation, Hewlett Packard Company, and Computer Sciences Corporation.
On a positive note, holdings in the Health Care and Energy sectors, such as Express Scripts, Inc. and Millipore Corporation excelled for the fund. Finally, the fund’s material underweight to Exxon Mobil Corporation and overweight to Peabody Energy Corporation were both positive, in terms of relative performance.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 106 |
| Weighted Average Market Cap ($ x 1,000,000) | | $57,155 |
| Price/Earnings Ratio (P/E) | | 15.2 |
| Price/Book Ratio (P/B) | | 3.0 |
| Portfolio Turnover Rate | | 57% |
Sector Weightings % of Investments
| | | |
| Information Technology | | 28.9% |
| Industrials | | 14.3% |
| Consumer Discretionary | | 13.0% |
| Health Care | | 11.6% |
| Consumer Staples | | 9.2% |
| Energy | | 9.0% |
| Materials | | 5.6% |
| Financials | | 5.4% |
| Utilities | | 0.5% |
| Other | | 2.5% |
Total | | 100.0% |
Top Equity Holdings % Net Assets1
| | | |
| International Business Machines Corp. | | 4.8% |
| Apple, Inc. | | 4.4% |
| 3M Co. | | 2.5% |
| Wal-Mart Stores, Inc. | | 2.3% |
| United Parcel Service, Inc., Class B | | 2.3% |
| Intuit, Inc. | | 2.2% |
| Allergan, Inc. | | 2.0% |
| Target Corp. | | 2.0% |
| Starbucks Corp. | | 1.9% |
| Peabody Energy Corp. | | 1.9% |
Total | | 26.3% |
Manager views and portfolio holdings may have changed since the report date.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector Classification: S&P and MSCI.
| | |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
12 Schwab Active Equity Funds
Schwab Large-Cap Growth Fundtm
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
October 3, 2005 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,5
Average Annual Total Returns1,2,5
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 5 Years | | Since Inception |
| |
Fund: Schwab Large-Cap Growth Fundtm (10/3/05) | | | 15.83 | % | | | | 1.89 | % | | | | 1.31 | % | |
| Russell 1000 Growth Index | | | 19.65 | % | | | | 3.21 | % | | | | 2.96 | % | |
| Fund Category: Morningstar Large-Cap Growth | | | 18.17 | % | | | | 2.37 | % | | | | 2.07 | % | |
Fund Expense Ratios3: Net 0.99%; Gross 1.03%
Style Assessment4
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 4 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
| 5 | | On October 7, 2009, the Investor Share class and Select Share class were combined into a single class of shares of the fund. The performance and financial history of the fund are that of the fund’s former Select Shares. Accordingly, the past performance shown is that of the fund’s former Select Shares. |
Schwab Active Equity Funds 13
Schwab Small-Cap Equity Fund™
The Schwab Small-Cap Equity Fund (the fund) seeks long-term capital growth. Under normal circumstances, the fund invests at least 80% of its net assets in small-cap equity securities. The fund uses Schwab Equity Ratings (SER) to aid its stock selection. For more information on the fund’s objective and strategy, please see the fund’s prospectus.
The fund returned 25.31% during the 12-month period, while its comparative index, the Russell 2000 Index (the index) returned 26.58%.
The small-cap stock market was especially strong during the reporting period. A dramatic rebound of stocks that began in March 2009 prevailed throughout the first half of the 12-months under review. Many of the leading small-cap stocks were those some investors would consider lower in overall quality. For example, stocks within the index that had negative price-to-earnings ratios outperformed their positive counterparts by more than 5% on average. Also, stocks within the index with prices below $5 per share and those with higher volatility tended to outperform significantly during the first half of the 12-month period. The story changed somewhat during the summer and fall of 2010, when the broad stock market deteriorated, but then recovered some of its losses again in September and October. Within this context, investors found opportunities in sectors such as Information Technology, Consumer Discretionary, and Financials. For the index, the best performing industry was Automobile and Components, which returned 66%.
The fund’s underweighting to Information Technology and Materials—which were among the best-performing sectors—detracted from relative performance. On the other hand, the fund’s stock selection within most sectors contributed positively. For example, the fund’s non-index position in TRW Automotive, which returned 192%, was the top performer for the fund. The one weak area for the fund, in terms of stock selection, was found within the Energy Sector.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 279 |
| Weighted Average Market Cap ($ x 1,000,000) | | $1,091 |
| Price/Earnings Ratio (P/E) | | 18.2 |
| Price/Book Ratio (P/B) | | 1.7 |
| Portfolio Turnover Rate | | 64% |
Sector Weightings % of Investments
| | | |
| Financials | | 18.7% |
| Information Technology | | 16.9% |
| Industrials | | 15.9% |
| Consumer Discretionary | | 15.0% |
| Health Care | | 12.2% |
| Energy | | 6.0% |
| Utilities | | 4.3% |
| Materials | | 3.3% |
| Telecommunication Services | | 2.4% |
| Consumer Staples | | 2.2% |
| Other | | 3.1% |
Total | | 100.0% |
Top Equity Holdings % Net Assets1
| | | |
| VeriFone Systems, Inc. | | 1.1% |
| Southwest Gas Corp. | | 1.0% |
| International Coal Group, Inc. | | 0.9% |
| Valassis Communications, Inc. | | 0.9% |
| Nicor, Inc. | | 0.9% |
| Par Pharmaceutical Cos., Inc. | | 0.9% |
| Vonage Holdings Corp. | | 0.9% |
| Rock-Tenn Co., Class A | | 0.8% |
| Alaska Air Group, Inc. | | 0.8% |
| TRW Automotive Holdings Corp. | | 0.8% |
Total | | 9.0% |
Manager views and portfolio holdings may have changed since the report date.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector Classification: S&P and MSCI.
Small company stocks are subject to greater volatility than the broad market.
| | |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
14 Schwab Active Equity Funds
Schwab Small-Cap Equity Fundtm
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
July 1, 2003 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,5
Average Annual Total Returns1,2,5
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 5 Years | | Since Inception |
| |
Fund: Schwab Small-Cap Equity Fundtm (7/1/03) | | | 25.31 | % | | | | -0.50 | % | | | | 7.84 | % | |
Russell 2000® Index* | | | 26.58 | % | | | | 3.07 | % | | | | 7.69 | % | |
| S&P Small-Cap 600 Index** | | | 26.27 | % | | | | 3.12 | % | | | | 8.56 | % | |
| Fund Category: Morningstar Small-Cap Blend | | | 25.22 | % | | | | 2.78 | % | | | | 7.77 | % | |
Fund Expense Ratios3: Net 1.12%; Gross 1.15%
Style Assessment4
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| * | | Effective July 1, 2009, the fund uses the Russell 2000 Index as its comparative index. The fund selected this index because the fund’s investment adviser believes that it is a more accurate index for comparing fund performance. |
| ** | | This index was used as the fund’s comparative index until June 30, 2009. |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 4 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
| 5 | | On September 28, 2009, the Investor Share class and Select Share class were combined into a single class of shares of the fund. The performance and financial history of the fund are that of the fund’s former Select Shares. Accordingly, the past performance shown is that of the fund’s former Select Shares. |
Schwab Active Equity Funds 15
Schwab Hedged Equity Fund™
The Schwab Hedged Equity Fund (the fund) seeks long-term capital appreciation over market cycles with lower volatility than the broad equity market. To pursue its investment objective, the fund will establish long and short positions in equity securities issued by U.S. companies. The fund typically purchases or sells short stocks of companies that have market capitalizations of $1 billion or more at the time the stock is purchased or sold short. The fund uses Schwab Equity Ratings (SER) to aid its stock selection. For more information on the fund’s objective and strategy, please see the fund’s prospectus.
The fund returned 9.96% for the 12-month period, while its comparative index, the S&P 500 Index (the index) returned 16.52%. All sectors within the index had positive returns for the period under review, but Industrials and Consumer Discretionary were the best performers. Information Technology, which comprised the largest weight in the index (18%), was the top contributor for the index.
The fund achieved its objective of long-term capital appreciation with lower volatility during the period, but its total return was reduced by the fund’s short positions. The fund’s short positions were critical to lowering the fund’s volatility, but came at a cost to fund performance. The short ratio ranged from 20% to 36% during the period; the decision to limit short positioning at these levels was positive because the market rallied in several industries and a higher exposure to short positions would have produced an even lower overall return than that sustained by the fund. In terms of market capitalization, small- to mid-cap stocks outperformed large-cap stocks, and shorting the small-to mid-cap group further extended losses for the fund. As for individual holdings, the fund’s short positions in Boeing Co., Fastenal Co., and Netflix Inc. also detracted.
The fund’s long positions outperformed the index by about 2%. Stock selection in Financials and Information Technology contributed to the fund’s performance, while holdings in Industrials and Consumer Discretionary detracted. Several long positions, such as 3COM, Sybase Inc., Millipore Corp., and Hewitt Associates, helped relative performance, but the fund’s underweighting of Apple Inc. detracted, as the stock rose nearly 60% for the period under review.
In terms of allocation to different sectors, contributions to the fund’s relative performance came from Energy and Health Care, while underweighting Consumer Discretionary and Industrials detracted.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | |
| Long Holdings | | 126 |
| Short Positions | | 72 |
| Weighted Average Market Cap ($ x 1,000,000) | | |
| Long Holdings | | $37,405 |
| Short Positions | | $12,391 |
| Price/Earnings Ratio (P/E) | | |
| Long Holdings | | 14.8 |
| Short Positions | | 172.8 |
| Price/Book Ratio (P/B) | | |
| Long Holdings | | 1.7 |
| Short Positions | | 2.3 |
| Portfolio Turnover Rate | | 115% |
| Portfolio Turnover Rate excluding short sales | | 82% |
Top Equity Long Holdings
% of Net Assets1
| | | |
| International Business Machines Corp. | | 2.6% |
| JPMorgan Chase & Co. | | 2.0% |
| Wells Fargo & Co. | | 1.9% |
| Intel Corp. | | 1.8% |
| National Oilwell Varco, Inc. | | 1.8% |
Total | | 10.1% |
Top Equity Short Holdings
% of Net Assets1
| | | |
| Southern Copper Corp. | | 0.7% |
| AMR Corp. | | 0.7% |
| Harley-Davidson, Inc. | | 0.7% |
| Assured Guaranty Ltd. | | 0.7% |
| Invesco Ltd. | | 0.7% |
Total | | 3.5% |
Manager views and portfolio holdings may have changed since the report date.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector Classification: S&P and MSCI.
| | |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
16 Schwab Active Equity Funds
Schwab Hedged Equity Fundtm
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
September 3, 2002 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,4
Average Annual Total Returns1,2,4
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 5 Years | | Since Inception |
| |
Fund: Schwab Hedged Equity Fundtm (9/3/02) | | | 9.96 | % | | | | 1.20 | % | | | | 6.00 | % | |
S&P 500® Index | | | 16.52 | % | | | | 1.73 | % | | | | 5.25 | % | |
| Fund Category: Morningstar Long-Short | | | 5.15 | % | | | | 1.41 | % | | | | 4.92 | % | |
Fund Expense Ratios3: Net 1.79%; Gross 1.82%
The Hedged Equity Fund’s long positions can decline in value at the same time the value of its shorted stocks increases, thereby increasing the potential for loss. The potential loss associated with short positions is much greater than the original value of the securities sold. The use of borrowing and short sales may cause the fund to have higher expenses than those of equity funds that do not use such techniques.
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | As stated in the prospectus. Includes dividend expense on securities sold short. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 4 | | On September 28, 2009, the Investor Share class and Select Share class were combined into a single class of shares of the fund. The performance and financial history of the fund are that of the fund’s former Select Shares. Accordingly, the past performance shown is that of the fund’s former Select Shares. |
Schwab Active Equity Funds 17
Schwab Financial Services Fund™
The Schwab Financial Services Fund (the fund) seeks long-term capital growth. To pursue its goal, the fund primarily invests in equity securities issued by companies in the financial services sector. The fund uses Schwab Equity Ratings (SER) to aid its stock selection. For more information on the fund’s objective and strategy, please see the fund’s prospectus.
The fund returned 11.79% during the 12-month period, while its comparative index, the S&P 1500 SuperComposite Financials Sector Index (the index), returned 7.34%. Volatility in Financials was markedly high during this reporting period. For example, the index gained 25% during February and March of 2010, only to give up all the gains during April and May.
Within the Financials Sector, the REITs (Real Estate Investment Trusts) and Real Estate Management & Development Industry represented approximately 12% of the index and dominated performance by returning 43%. In a distant second place, the Insurance Industry returned 14%. Diversified Financials, the largest industry group in the sector with an average weighing of 45%, was the only industry group to have a negative return for the index. Mega-cap stocks also reported weak performance within Financials, while small-cap stocks in the sector had healthy gains. The fund’s overweight to small- and mid-cap stocks helped relative performance, as both outperformed the larger-capitalization stocks.
Solid stock selection within different industries helped the fund outperform the index, while industry allocation contributed modestly. The positive stock selection effect was most evident in Commercial Banks and Insurance. Detractors in terms of stock selection were found within the Capital Markets Industry. The decision to overweight Consumer Finance and underweight Diversified Financial Services helped the fund’s relative performance.
The fund’s holdings in Huntington Bancshares added the most to absolute performance, while Bank of America detracted the most in terms of absolute fund performance. However, the fund’s underweight of Bank of America relative to the index was the top contributor in terms of relative performance. Within Consumer Finance, owning top performers Discover Financial Services and AmeriCredit Corp also contributed positively.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 63 |
| Weighted Average Market Cap ($ x 1,000,000) | | $43,997 |
| Price/Earnings Ratio (P/E) | | 21.9 |
| Price/Book Ratio (P/B) | | 1.1 |
| Portfolio Turnover | | 54% |
Industry Weightings % of Investments
| | | |
| Diversified Financials | | 38.8% |
| Insurance | | 26.5% |
| Banks | | 19.2% |
| Real Estate | | 14.5% |
| Short-Term Investments | | 1.0% |
Total | | 100.0% |
Top Equity Holdings % Net Assets1
| | | |
| JPMorgan Chase & Co. | | 7.2% |
| The Goldman Sachs Group, Inc. | | 6.8% |
| Wells Fargo & Co. | | 4.9% |
| Citigroup, Inc. | | 4.6% |
| American Express Co. | | 4.1% |
| Bank of America Corp. | | 3.4% |
| PNC Financial Services Group, Inc. | | 3.1% |
| Fifth Third Bancorp | | 3.0% |
| Discover Financial Services | | 3.0% |
| Aflac, Inc. | | 2.9% |
Total | | 43.0% |
Manager views and portfolio holdings may have changed since the report date.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector and Industry Classification: S&P and MSCI.
| | |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
18 Schwab Active Equity Funds
Schwab Financial Services Fundtm
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
October 31, 2000 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 5 Years | | 10 Years |
| |
Fund: Schwab Financial Services Fundtm (7/3/00) | | | 11.79 | % | | | | -5.45 | % | | | | 0.69 | % | |
| S&P 1500 SuperComposite Financials Sector Index | | | 7.34 | % | | | | -10.34 | % | | | | -3.34 | % | |
| Fund Category: Morningstar Financial Services | | | 8.01 | % | | | | -5.70 | % | | | | 0.63 | % | |
Fund Expense Ratios3: Net 0.94%; Gross 0.96%
Since the Financial Services Fund focuses its investments on companies involved in specific sectors, this fund may involve a greater degree of risk than an investment in mutual funds that do not concentrate their investments.
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Active Equity Funds 19
Schwab Health Care Fund™
The Schwab Health Care Fund (the fund) seeks long-term capital growth. To pursue its goal, the fund primarily invests in equity securities issued by companies in the health care sector. The fund uses Schwab Equity Ratings (SER) to aid its U.S. stock selection, and uses Schwab’s proprietary international stock research to aid its international stock selection. For more information on the fund’s objective and strategy, please see the fund’s prospectus.
The fund returned 16.49% for the period, while its comparative index, the Dow Jones Global Health Care Index (the index), returned 12.15%.
When looking at the different Health Care industries within the index, the best performing stocks were found in Managed Health Care and Health Care Facilities, while the poor performers lodged in Health Care Distributors and Health Care Equipment. For example, blood-specialist Baxter International and implant maker Beckman Coulter were both detractors in the Health Care Equipment area. As for best and worst performers in the area of market capitalization, the small-cap Health Care stocks—especially those with market capitalization up to $5 billion—outperformed their mid- and large-cap counterparts. The fund had approximately 25% of its assets allocated to these small-cap Health Care stocks, and this was a primary contributor to the fund’s outperformance.
Other factors contributing to the fund’s relative performance came from positioning and stock selection in different industries and regions. This was particularly true with the relative underweight to Pharmaceuticals and the overweight to Biotechnology, where both positions contributed. However, even as Pharmaceutical stocks underperformed the index average, the fund’s Pharmaceutical stock holdings outperformed those in the index. One example was Valeant Pharmaceuticals International Inc., which merged with Biovail Corp., and sent Valeant up by more than 100%, making it the fund’s top contributing stock for the reporting period. Additional examples of positive stock selection in the Biotechnology and Pharmaceutical space came from overweights to Biogen Idec Inc., Millipore Corp., and Alexion Pharmaceuticals, Inc. Likewise, an underweight to Roche Holdings, Inc. and GlaxoSmithKline, plc. also contributed. However, the fund’s underweight to pain-specialist Endo Pharmaceuticals proved to be negative as the stock posted market-beating returns.
From a regional perspective, the fund’s overweight and stock selection in the United States helped as index stocks in the United States outperformed those in other regions. However, stock selection in the Asia & Pacific Basin slightly detracted from returns and a position in the Australia-based imaging and scanning firm, Primary Healthcare Ltd., hurt returns.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 97 |
| Weighted Average Market Cap ($ x 1,000,000) | | $43,872 |
| Price/Earnings Ratio (P/E) | | 15.0 |
| Price/Book Ratio (P/B) | | 2.4 |
| Portfolio Turnover | | 37% |
Industry Weightings % of Investments
| | | |
| Pharmaceuticals, Biotechnology& Life Sciences | | 66.4% |
| Healthcare - Services | | 29.1% |
| Materials | | 0.5% |
| Capital Goods | | 0.4% |
| Other | | 3.6% |
Total | | 100.0% |
Top Equity Holdings % Net Assets1
| | | |
| Johnson & Johnson | | 4.6% |
| Pfizer, Inc. | | 3.6% |
| Novartis AG - Reg’d | | 3.4% |
| Bristol-Myers Squibb Co. | | 3.3% |
| Merck & Co., Inc. | | 3.1% |
| Amgen, Inc. | | 2.8% |
| Sanofi-Aventis | | 2.7% |
| Roche Holding AG | | 2.6% |
| Allergan, Inc. | | 2.6% |
| Thermo Fisher Scientific, Inc. | | 2.5% |
Total | | 31.2% |
The fund’s performance relative to the index may be affected by fair-value pricing, see financial note 2 for more information.
Manager views and portfolio holdings may have changed since the report date.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector and Industry Classification: S&P and MSCI.
| | |
| 1 | | This list is not a recommendation of any security by the investment adviser. |
20 Schwab Active Equity Funds
Schwab Health Care Fundtm
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
October 31, 2000 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1
Average Annual Total Returns1,2
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 5 Years | | 10 Years |
| |
Fund: Schwab Health Care Fundtm (7/3/00) | | | 16.49 | % | | | | 2.69 | % | | | | 4.77 | % | |
| Dow Jones Global Health Care Index* | | | 12.15 | % | | | | 3.52 | % | | | | 1.96 | % | |
| S&P 1500 SuperComposite Health Care Sector Index** | | | 14.53 | % | | | | 2.71 | % | | | | 0.94 | % | |
| Fund Category: Morningstar Health Care | | | 16.46 | % | | | | 3.15 | % | | | | 1.76 | % | |
Fund Expense Ratios3: Net 0.82%; Gross 0.84%
Since the Health Care Fund focuses its investments on companies involved in specific sectors, this fund may involve a greater degree of risk than an investment in mutual funds that do not concentrate their investments.
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| * | | Effective July 1, 2009, the fund uses the Dow Jones Global Health Care Index as its comparative index. The fund selected this index because the fund’s investment adviser believes that it is a more accurate index for comparing fund performance. |
| ** | | This index was used as the fund’s comparative index until June 30, 2009. |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
Schwab Active Equity Funds 21
Schwab® International Core Equity Fund
The Schwab International Core Equity Fund (the fund) seeks long-term capital growth. To pursue its investment objective, the fund invests primarily in the stocks of publicly traded companies located in developed countries excluding the United States. The fund uses Schwab’s proprietary international stock research to aid its stock selection. For more information on the fund’s objective and strategy, please see the fund’s prospectus.
The fund returned 10.09% for the 12-month period, while its comparative index, the MSCI EAFE (Gross) Index (the index), returned 8.82%. A part of the fund’s outperformance was attributed to timing differences in foreign exchange calculations.* Fair valuation of the fund’s holdings on the last trading day of the current period also had a positive impact on the fund’s return relative to the index (see financial note 2 for more information).
The best performing sectors for the index were Materials and Consumer Discretionary. The largest sector, Financials, with more than 25% weight in the index, was the weakest contributor to performance, and was the only one that had negative returns. Among the countries represented in the index, Singapore was the best performer, returning 31%, while Greece had the worst performance, returning -52%. The largest country allocation within the index was to Japan, and it returned 5%. For the fund, overall country allocation decisions added to performance while stock selection detracted. Although emerging market exposure represented less than 5% of the portfolio, its performance represented more than half of the fund’s outperformance. Slight allocations to China and South Korea, countries not represented in the index, helped the fund’s relative performance as both countries delivered robust returns. For countries represented in the index, the fund’s underexposure to Greece was the best allocation decision. In terms of regions, stock selection in Europe boosted fund performance, while stock selection in Japan detracted.
On a sector level, stock selection was positive in several areas, including Energy, Health Care, Industrials, Information Technology, and Materials. Stock selection detracted from performance in Consumer Discretionary, Consumer Staples, and Financials. One of the fund’s holdings in Industrials that was not held in the index, Valeo S.A., was a solid contributor to relative performance as was the fund’s avoidance of Toyota Motor Corp., an index stock. Sigma Pharmaceuticals, a small-cap company in Australia, was a notable detractor in Health Care. Likewise, the fund’s overweight to Japan’s Takefuji Corp. also detracted.
In terms of market capitalization, the small- and mid-cap stocks outperformed the mega-cap stocks. Holdings in companies with market capitalizations of $5 billion or less hurt the fund’s relative performance, despite the positive effect of allocation in this market-cap category. In contrast, solid stock selection more than compensated for the negative effect of allocation in companies with market capitalization between $5 billion and $25 billion.
As of 10/31/10:
Statistics
| | | |
| Number of Holdings | | 189 |
| Weighted Average Market Cap ($ x 1,000,000) | | $31,721 |
| Price/Earnings Ratio (P/E) | | 17.3 |
| Price/Book Ratio (P/B) | | 1.2 |
Portfolio Turnover Rate1 | | 91% |
Sector Weightings % of Investments
| | | |
| Financials | | 22.7% |
| Industrials | | 12.6% |
| Materials | | 11.5% |
| Health Care | | 11.3% |
| Consumer Discretionary | | 10.4% |
| Energy | | 7.6% |
| Consumer Staples | | 7.0% |
| Telecommunication Services | | 4.2% |
| Utilities | | 3.8% |
| Information Technology | | 3.6% |
| Other | | 5.3% |
Total | | 100.0% |
Top Equity Holdings % Net Assets2
| | | |
| iShares MSCI EAFE Index Fund | | 2.2% |
| BHP Billiton Ltd. | | 1.9% |
| Vodafone Group plc | | 1.7% |
| Novartis AG - Reg’d | | 1.7% |
| Nestle S.A. - Reg’d | | 1.6% |
| Royal Dutch Shell plc, B Share | | 1.4% |
| Banco Santander S.A. | | 1.3% |
| AstraZeneca plc | | 1.2% |
| Sanofi-Aventis | | 1.2% |
| Valeo S.A. | | 1.2% |
Total | | 15.4% |
Manager views and portfolio holdings may have changed since the report date.
The fund’s performance relative to the index may be affected by fair-value pricing, see financial note 2 for more information.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector Classification: S&P and MSCI.
Foreign securities can involve risks such as political and economic instability and currency risk.
| | |
| * | | Typically, the securities in the index are valued using foreign exchange rates obtained at the close of the London foreign currency exchange (11:00 AM EST), using exchange rates in place at that time. Securities in the fund, however, are valued using foreign exchange rates obtained at the close of the New York foreign currency exchange (4:00 PM EST). This difference in closing times can result in different foreign currency exchange rates between the two exchanges, and thus different foreign currency exchange rates used in the valuation of the index’s and fund’s securities. |
| 1 | | Portfolio turnover excludes the impact of investment activity resulting from a merger with another fund (see financial note 11). |
| 2 | | This list is not a recommendation of any security by the investment adviser. |
22 Schwab Active Equity Funds
Schwab® International Core Equity Fund
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
May 30, 2008 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,5
Total Returns1,2,5
| | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | Since Inception |
| |
Fund: Schwab® International Core Equity Fund (5/30/08) | | | 10.09 | % | | | | -8.25 | % | |
MSCI EAFE Index®(Gross)* | | | 8.82 | % | | | | -7.89 | % | |
| Fund Category: Morningstar Foreign Large-Cap Blend | | | 12.54 | % | | | | -8.52 | % | |
Fund Expense Ratios3: Net 0.86%; Gross 1.46%
Style Assessment4
Country Weightings % of Equity Investments
| | | | | |
| Japan | | | 20.4% | |
| United Kingdom | | | 18.5% | |
| France | | | 8.3% | |
| Australia | | | 8.0% | |
| Germany | | | 5.9% | |
| Hong Kong | | | 5.0% | |
| Switzerland | | | 4.6% | |
| Spain | | | 4.3% | |
| Denmark | | | 3.2% | |
| Netherlands | | | 2.7% | |
| Canada | | | 2.5% | |
| Other Countries | | | 16.6% | |
Total | | | 100.0% | |
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| * | | The Morgan Stanley Capital International Europe, Australasia, Far East Index (Gross) (MSCI EAFE Index®) is a free float-adjusted market capitalization index that is designed to measure market equity performance in 22 developed market countries, excluding the U.S. and Canada. Investors cannot invest directly in any index and index figures do not include trading and management costs. |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. |
| 2 | | Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 3 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 4 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
| 5 | | On October 7, 2009, the Investor Share class, Select Share class and Institutional Share class were combined into a single class of shares of the fund. The performance and financial history of the fund are that of the fund’s former Institutional Shares. Accordingly, the past performance shown is that of the fund’s former Institutional Shares. On December 3, 2009, the Laudus Rosenberg International Equity Fund merged into the fund. |
Schwab Active Equity Funds 23
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you incur two types of costs: transaction costs, such as redemption fees, and ongoing costs, such as management fees, transfer agent and shareholder services fees, and other fund expenses.
The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning May 1, 2010 and held through October 31, 2010.
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period.”
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s or share class’ actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.
| | | | | | | | | | | | | | | | | |
| | | | | | | Ending
| | |
| | | | | Beginning
| | Account Value
| | Expenses Paid
|
| | | Expense Ratio1
| | Account Value
| | (Net of Expenses)
| | During Period2
|
| | | (Annualized) | | at 5/1/10 | | at 10/31/10 | | 5/1/10–10/31/10 |
| |
| Schwab Premier Equity Fund® | | | | | | | | | | | | | | | | |
| Actual Return | | | 1.02% | | | $ | 1,000 | | | $ | 993.80 | | | $ | 5.13 | |
| Hypothetical 5% Return | | | 1.02% | | | $ | 1,000 | | | $ | 1,020.06 | | | $ | 5.19 | |
| |
|
| Schwab Core Equity Fundtm | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.72% | | | $ | 1,000 | | | $ | 981.30 | | | $ | 3.60 | |
| Hypothetical 5% Return | | | 0.72% | | | $ | 1,000 | | | $ | 1,021.58 | | | $ | 3.67 | |
| |
|
| Schwab Dividend Equity Fundtm | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.89% | | | $ | 1,000 | | | $ | 986.30 | | | $ | 4.46 | |
| Hypothetical 5% Return | | | 0.89% | | | $ | 1,000 | | | $ | 1,020.72 | | | $ | 4.53 | |
| |
|
| Schwab Large-Cap Growth Fundtm | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.99% | | | $ | 1,000 | | | $ | 1,015.50 | | | $ | 5.03 | |
| Hypothetical 5% Return | | | 0.99% | | | $ | 1,000 | | | $ | 1,020.21 | | | $ | 5.04 | |
| |
|
| Schwab Small-Cap Equity Fundtm | | | | | | | | | | | | | | | | |
| Actual Return | | | 1.12% | | | $ | 1,000 | | | $ | 987.30 | | | $ | 5.61 | |
| Hypothetical 5% Return | | | 1.12% | | | $ | 1,000 | | | $ | 1,019.56 | | | $ | 5.70 | |
| |
|
| Schwab Hedged Equity Fundtm | | | | | | | | | | | | | | | | |
| Actual Return | | | 2.16% | | | $ | 1,000 | | | $ | 984.70 | | | $ | 10.81 | |
| Hypothetical 5% Return | | | 2.16% | | | $ | 1,000 | | | $ | 1,014.32 | | | $ | 10.97 | |
| |
|
| Schwab Financial Services Fundtm | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.94% | | | $ | 1,000 | | | $ | 930.30 | | | $ | 4.57 | |
| Hypothetical 5% Return | | | 0.94% | | | $ | 1,000 | | | $ | 1,020.47 | | | $ | 4.79 | |
| |
|
| Schwab Health Care Fundtm | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.82% | | | $ | 1,000 | | | $ | 1,047.40 | | | $ | 4.23 | |
| Hypothetical 5% Return | | | 0.82% | | | $ | 1,000 | | | $ | 1,021.07 | | | $ | 4.18 | |
| |
|
| Schwab® International Core Equity Fund | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.86% | | | $ | 1,000 | | | $ | 1,071.40 | | | $ | 4.49 | |
| Hypothetical 5% Return | | | 0.86% | | | $ | 1,000 | | | $ | 1,020.87 | | | $ | 4.38 | |
| | |
| 1 | | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights, which covers a 12-month period. |
| 2 | | Expenses for each fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 184 days of the period, and divided by the 365 days of the fiscal year. |
24 Schwab Active Equity Funds
Schwab Premier Equity Fund®
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/081–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/09 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 8.46 | | | | 8.05 | | | | 14.01 | | | | 12.51 | | | | 10.71 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.04 | | | | 0.04 | | | | 0.06 | | | | 0.04 | | | | 0.02 | | | |
| Net realized and unrealized gains (losses) | | | 1.22 | | | | 0.43 | | | | (5.11 | ) | | | 1.48 | | | | 1.83 | | | |
| | | |
| Total from investment operations | | | 1.26 | | | | 0.47 | | | | (5.05 | ) | | | 1.52 | | | | 1.85 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.05 | ) | | | (0.06 | ) | | | (0.05 | ) | | | (0.02 | ) | | | (0.05 | ) | | |
| Distributions from net realized gains | | | — | | | | — | | | | (0.86 | ) | | | — | | | | — | | | |
| | | |
| Total distributions | | | (0.05 | ) | | | (0.06 | ) | | | (0.91 | ) | | | (0.02 | ) | | | (0.05 | ) | | |
| | | |
| Net asset value at end of period | | | 9.67 | | | | 8.46 | | | | 8.05 | | | | 14.01 | | | | 12.51 | | | |
| | | |
| Total return (%) | | | 14.96 | | | | 6.01 | | | | (38.32 | ) | | | 12.20 | | | | 17.28 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 1.02 | | | | 1.04 | 2 | | | 1.02 | | | | 1.01 | | | | 1.02 | | | |
| Gross operating expenses | | | 1.04 | | | | 1.04 | | | | 1.02 | | | | 1.01 | | | | 1.03 | | | |
| Net investment income (loss) | | | 0.34 | | | | 0.54 | | | | 0.50 | | | | 0.32 | | | | 0.17 | | | |
| Portfolio turnover rate | | | 80 | | | | 98 | | | | 92 | | | | 72 | | | | 73 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 292 | | | | 365 | | | | 441 | | | | 983 | | | | 857 | | | |
1 Effective September 28, 2009, the Investor Shares class and the Select Shares class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Select Shares.
2 Effective May 5, 2009, the net operating expense limitation was lowered. The ratio presented for period ended 10/31/09 is a blended rate.
See financial notes 25
Schwab Premier Equity Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 96 | .1% | | Common Stock | | | 243,386,116 | | | | 280,543,275 | |
| | 3 | .7% | | Other Investment Company | | | 10,763,611 | | | | 10,763,611 | |
| | 0 | .3% | | Short-Term Investment | | | 779,469 | | | | 779,468 | |
| |
| |
| | 100 | .1% | | Total Investments | | | 254,929,196 | | | | 292,086,354 | |
| | (0 | .1)% | | Other Assets and Liabilities, Net | | | | | | | (218,070 | ) |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 291,868,284 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 96.1% of net assets |
| |
Automobiles & Components 1.1%
|
Ford Motor Co. * | | | 125,000 | | | | 1,766,250 | |
The Goodyear Tire & Rubber Co. * | | | 150,000 | | | | 1,533,000 | |
| | | | | | | | | |
| | | | | | | | 3,299,250 | |
| |
Banks 2.1%
|
| PNC Financial Services Group, Inc. | | | 50,000 | | | | 2,695,000 | |
| Wells Fargo & Co. | | | 125,000 | | | | 3,260,000 | |
| | | | | | | | | |
| | | | | | | | 5,955,000 | |
| |
Capital Goods 5.6%
|
| Briggs & Stratton Corp. | | | 125,000 | | | | 2,200,000 | |
| Cubic Corp. | | | 40,000 | | | | 1,742,800 | |
| Eaton Corp. | | | 40,000 | | | | 3,553,200 | |
| General Electric Co. | | | 215,000 | | | | 3,444,300 | |
| The Timken Co. | | | 90,000 | | | | 3,727,800 | |
| Watts Water Technologies, Inc., Class A | | | 50,000 | | | | 1,758,500 | |
| | | | | | | | | |
| | | | | | | | 16,426,600 | |
| |
Commercial & Professional Supplies 1.8%
|
| Avery Dennison Corp. | | | 50,000 | | | | 1,817,500 | |
| R.R. Donnelley & Sons Co. | | | 190,000 | | | | 3,505,500 | |
| | | | | | | | | |
| | | | | | | | 5,323,000 | |
| |
Consumer Durables & Apparel 1.5%
|
| Jarden Corp. | | | 55,000 | | | | 1,763,300 | |
| Whirlpool Corp. | | | 35,000 | | | | 2,654,050 | |
| | | | | | | | | |
| | | | | | | | 4,417,350 | |
| |
Consumer Services 2.3%
|
| Cracker Barrel Old Country Store, Inc. | | | 35,000 | | | | 1,886,150 | |
Hyatt Hotels Corp., Class A * | | | 40,000 | | | | 1,612,000 | |
| Starbucks Corp. | | | 115,000 | | | | 3,275,200 | |
| | | | | | | | | |
| | | | | | | | 6,773,350 | |
| |
Diversified Financials 7.0%
|
| Discover Financial Services | | | 200,000 | | | | 3,530,000 | |
First Cash Financial Services, Inc. * | | | 75,000 | | | | 2,180,250 | |
| JPMorgan Chase & Co. | | | 90,000 | | | | 3,386,700 | |
| Legg Mason, Inc. | | | 75,000 | | | | 2,327,250 | |
| State Street Corp. | | | 75,000 | | | | 3,132,000 | |
| The Goldman Sachs Group, Inc. | | | 23,000 | | | | 3,701,850 | |
UBS AG - Reg’d * | | | 125,000 | | | | 2,127,500 | |
| | | | | | | | | |
| | | | | | | | 20,385,550 | |
| |
Energy 11.8%
|
| Chevron Corp. | | | 35,000 | | | | 2,891,350 | |
| ConocoPhillips | | | 62,500 | | | | 3,712,500 | |
| El Paso Corp. | | | 275,000 | | | | 3,646,500 | |
| Hess Corp. | | | 55,000 | | | | 3,466,650 | |
| Murphy Oil Corp. | | | 55,000 | | | | 3,583,800 | |
| National Oilwell Varco, Inc. | | | 70,000 | | | | 3,763,200 | |
Oil States International, Inc. * | | | 30,000 | | | | 1,533,600 | |
SEACOR Holdings, Inc. * | | | 25,000 | | | | 2,368,750 | |
| Sunoco, Inc. | | | 60,000 | | | | 2,248,200 | |
| The Williams Cos., Inc. | | | 175,000 | | | | 3,766,000 | |
| World Fuel Services Corp. | | | 125,000 | | | | 3,528,750 | |
| | | | | | | | | |
| | | | | | | | 34,509,300 | |
| |
Food & Staples Retailing 4.5%
|
| Costco Wholesale Corp. | | | 32,500 | | | | 2,040,025 | |
| Ruddick Corp. | | | 60,000 | | | | 2,094,000 | |
| The Andersons, Inc. | | | 65,000 | | | | 2,559,050 | |
| The Kroger Co. | | | 132,000 | | | | 2,904,000 | |
Whole Foods Market, Inc. * | | | 90,000 | | | | 3,577,500 | |
| | | | | | | | | |
| | | | | | | | 13,174,575 | |
| |
Food, Beverage & Tobacco 3.9%
|
| Archer-Daniels-Midland Co. | | | 110,000 | | | | 3,665,200 | |
| Corn Products International, Inc. | | | 80,000 | | | | 3,404,000 | |
Smithfield Foods, Inc. * | | | 100,000 | | | | 1,675,000 | |
| Tyson Foods, Inc., Class A | | | 175,000 | | | | 2,721,250 | |
| | | | | | | | | |
| | | | | | | | 11,465,450 | |
| |
Health Care Equipment & Services 6.5%
|
| Cardinal Health, Inc. | | | 85,000 | | | | 2,948,650 | |
DaVita, Inc. * | | | 25,000 | | | | 1,793,750 | |
Hologic, Inc. * | | | 100,000 | | | | 1,602,000 | |
Hospira, Inc. * | | | 50,000 | | | | 2,974,000 | |
Humana, Inc. * | | | 40,000 | | | | 2,331,600 | |
Integra LifeSciences Holdings * | | | 50,000 | | | | 2,151,000 | |
| McKesson Corp. | | | 45,000 | | | | 2,969,100 | |
Sirona Dental Systems, Inc. * | | | 60,000 | | | | 2,259,000 | |
| | | | | | | | | |
| | | | | | | | 19,029,100 | |
26 See financial notes
Schwab Premier Equity Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Household & Personal Products 0.8%
|
Energizer Holdings, Inc. * | | | 32,500 | | | | 2,430,350 | |
| |
Insurance 4.8%
|
| Aflac, Inc. | | | 50,000 | | | | 2,794,500 | |
| American Financial Group, Inc. | | | 100,000 | | | | 3,058,000 | |
| Fidelity National Financial, Inc., Class A | | | 150,000 | | | | 2,008,500 | |
| Prudential Financial, Inc. | | | 65,000 | | | | 3,417,700 | |
| Unum Group | | | 125,000 | | | | 2,802,500 | |
| | | | | | | | | |
| | | | | | | | 14,081,200 | |
| |
Materials 5.8%
|
| Celanese Corp., Series A | | | 75,000 | | | | 2,673,750 | |
| Cytec Industries, Inc. | | | 30,000 | | | | 1,485,600 | |
| International Paper Co. | | | 125,000 | | | | 3,160,000 | |
| MeadWestvaco Corp. | | | 135,000 | | | | 3,473,550 | |
PolyOne Corp. * | | | 160,000 | | | | 2,067,200 | |
| PPG Industries, Inc. | | | 30,000 | | | | 2,301,000 | |
Solutia, Inc. * | | | 90,000 | | | | 1,629,900 | |
| | | | | | | | | |
| | | | | | | | 16,791,000 | |
| |
Media 1.7%
|
The New York Times Co., Class A * | | | 300,000 | | | | 2,301,000 | |
| Time Warner, Inc. | | | 80,000 | | | | 2,600,800 | |
| | | | | | | | | |
| | | | | | | | 4,901,800 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 5.0%
|
| Allergan, Inc. | | | 35,000 | | | | 2,534,350 | |
Bio-Rad Laboratories, Inc., Class A * | | | 30,000 | | | | 2,718,600 | |
Cephalon, Inc. * | | | 45,000 | | | | 2,989,800 | |
Par Pharmaceutical Cos., Inc. * | | | 90,000 | | | | 2,925,900 | |
Watson Pharmaceuticals, Inc. * | | | 75,000 | | | | 3,498,750 | |
| | | | | | | | | |
| | | | | | | | 14,667,400 | |
| |
Real Estate 0.8%
|
| Jones Lang LaSalle, Inc. | | | 27,500 | | | | 2,146,650 | |
| |
Retailing 3.3%
|
| Limited Brands, Inc. | | | 100,000 | | | | 2,939,000 | |
| Macy’s, Inc. | | | 135,000 | | | | 3,191,400 | |
| The Home Depot, Inc. | | | 110,000 | | | | 3,396,800 | |
| | | | | | | | | |
| | | | | | | | 9,527,200 | |
| |
Semiconductors & Semiconductor Equipment 2.1%
|
Diodes, Inc. * | | | 85,000 | | | | 1,868,300 | |
Fairchild Semiconductor International, Inc. * | | | 175,000 | | | | 1,972,250 | |
ON Semiconductor Corp. * | | | 275,000 | | | | 2,109,250 | |
| | | | | | | | | |
| | | | | | | | 5,949,800 | |
| |
Software & Services 7.2%
|
Acxiom Corp. * | | | 100,000 | | | | 1,755,000 | |
| Computer Sciences Corp. | | | 75,000 | | | | 3,678,750 | |
| EarthLink, Inc. | | | 350,000 | | | | 3,146,500 | |
| International Business Machines Corp. | | | 26,500 | | | | 3,805,400 | |
Lawson Software, Inc. * | | | 300,000 | | | | 2,670,000 | |
TeleTech Holdings, Inc. * | | | 135,000 | | | | 2,049,300 | |
VeriFone Systems, Inc. * | | | 115,000 | | | | 3,890,450 | |
| | | | | | | | | |
| | | | | | | | 20,995,400 | |
| |
Technology Hardware & Equipment 7.9%
|
| AVX Corp. | | | 150,000 | | | | 2,151,000 | |
Coherent, Inc. * | | | 50,000 | | | | 2,098,000 | |
CommScope, Inc. * | | | 100,000 | | | | 3,166,000 | |
EMC Corp. * | | | 170,000 | | | | 3,571,700 | |
| Hewlett-Packard Co. | | | 77,500 | | | | 3,259,650 | |
Ingram Micro, Inc., Class A * | | | 190,000 | | | | 3,355,400 | |
NetApp, Inc. * | | | 50,000 | | | | 2,662,500 | |
Tech Data Corp. * | | | 65,000 | | | | 2,794,350 | |
| | | | | | | | | |
| | | | | | | | 23,058,600 | |
| |
Telecommunication Services 2.8%
|
| AT&T, Inc. | | | 100,000 | | | | 2,850,000 | |
| Telephone & Data Systems, Inc. | | | 95,000 | | | | 3,308,850 | |
| Verizon Communications, Inc. | | | 65,000 | | | | 2,110,550 | |
| | | | | | | | | |
| | | | | | | | 8,269,400 | |
| |
Transportation 1.7%
|
Alaska Air Group, Inc. * | | | 65,000 | | | | 3,432,000 | |
Dollar Thrifty Automotive Group, Inc. * | | | 35,000 | | | | 1,624,000 | |
| | | | | | | | | |
| | | | | | | | 5,056,000 | |
| |
Utilities 4.1%
|
| Ameren Corp. | | | 85,000 | | | | 2,463,300 | |
| Integrys Energy Group, Inc. | | | 35,000 | | | | 1,861,650 | |
| Nicor, Inc. | | | 50,000 | | | | 2,381,500 | |
| NiSource, Inc. | | | 150,000 | | | | 2,596,500 | |
| Southwest Gas Corp. | | | 75,000 | | | | 2,607,000 | |
| | | | | | | | | |
| | | | | | | | 11,909,950 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $243,386,116) | | | 280,543,275 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Other Investment Company 3.7% of net assets |
| |
Money Fund 3.7%
|
| State Street Institutional Liquid Reserves Fund - Institutional Class | | | 10,763,611 | | | | 10,763,611 | |
| | | | | | | | | |
| Total Other Investment Company |
| (Cost $10,763,611) | | | 10,763,611 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
See financial notes 27
Schwab Premier Equity Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Dates | | ($) | | ($) |
| |
Short-Term Investment 0.3% of net assets |
| |
U.S. Treasury Obligation 0.3%
|
| U.S. Treasury Bill |
0.14%, 12/16/10 (a) | | | 779,600 | | | | 779,468 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $779,469) | | | 779,468 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $255,409,020 and the unrealized appreciation and depreciation were $44,302,233 and ($7,624,899), respectively, with a net unrealized appreciation of $36,677,334.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is held as collateral for open futures contracts. |
In addition to the above, the fund held the following at 10/31/10.
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contract |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
S&P 500 Index, e-mini, Long, expires 12/17/10 | | | 165 | | | | 9,732,525 | | | | 703,354 | |
28 See financial notes
Schwab Premier Equity Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value (cost $254,929,196) | | | | | $292,086,354 | |
| Receivables: | | | | | | |
| Dividends | | | | | 162,912 | |
| Due from broker for futures | | | | | 3,300 | |
| Fund shares sold | | | | | 2,940 | |
| Interest | | | | | 2,271 | |
| Prepaid expenses | | + | | | 8,599 | |
| | | |
Total assets | | | | | 292,266,376 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Investment adviser and administrator fees | | | | | 17,217 | |
| Shareholder service fees | | | | | 6,039 | |
| Fund shares redeemed | | | | | 326,786 | |
| Accrued expenses | | + | | | 48,050 | |
| | | |
Total liabilities | | | | | 398,092 | |
| |
Net Assets |
|
Total assets | | | | | 292,266,376 | |
Total liabilities | | − | | | 398,092 | |
| | | |
Net assets | | | | | $291,868,284 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 444,427,749 | |
| Net investment income not yet distributed | | | | | 630,576 | |
| Net realized capital losses | | | | | (191,050,553 | ) |
| Net unrealized capital gains | | | | | 37,860,512 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $291,868,284 | | | | 30,174,590 | | | | | $9.67 | | | |
See financial notes 29
Schwab Premier Equity Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends | | | | | $4,373,791 | |
| Interest | | | | | 12,638 | |
| Securities on loan | | + | | | 17,594 | |
| | | |
Total investment income | | | | | 4,404,023 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 2,353,251 | |
| Shareholder service fees | | | | | 789,022 | |
| Portfolio accounting fees | | | | | 42,904 | |
| Professional fees | | | | | 34,160 | |
| Shareholder reports | | | | | 32,562 | |
| Transfer agent fees | | | | | 25,379 | |
| Registration fees | | | | | 24,741 | |
| Custodian fees | | | | | 12,119 | |
| Trustees’ fees | | | | | 7,778 | |
| Interest expense | | | | | 234 | |
| Other expenses | | + | | | 20,959 | |
| | | |
| Total expenses | | | | | 3,343,109 | |
| Expense reduction by adviser and Schwab | | − | | | 42,636 | |
| Custody credits | | − | | | 22 | |
| | | |
Net expenses | | − | | | 3,300,451 | |
| | | |
Net investment income | | | | | 1,103,572 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on investments | | | | | 33,667,603 | |
| Net realized gains on futures contracts | | + | | | 351,532 | |
| | | |
Net realized gains | | | | | 34,019,135 | |
| Net unrealized gains on investments | | | | | 11,290,279 | |
| Net unrealized gains on futures contracts | | + | | | 765,960 | |
| | | |
Net unrealized gains | | + | | | 12,056,239 | |
| | | |
Net realized and unrealized gains | | | | | 46,075,374 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $47,178,946 | |
30 See financial notes
Schwab Premier Equity Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $1,103,572 | | | | $2,940,070 | |
| Net realized gains (losses) | | | | | 34,019,135 | | | | (169,665,558 | ) |
| Net unrealized gains | | + | | | 12,056,239 | | | | 191,228,758 | |
| | | |
Increase in net assets from operations | | | | | 47,178,946 | | | | 24,503,270 | |
| |
Distributions to Shareholders1 |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | — | | | | 1,201,492 | |
| Select Shares | | + | | | 2,109,100 | | | | 3,171,455 | |
| | | |
Total distributions from net investment income | | | | | $2,109,100 | | | | $4,372,947 | |
Transactions in Fund Shares1
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 537,800 | | | | $3,885,575 | |
| Select Shares | | + | | | 653,658 | | | | 5,945,565 | | | | 28,808,115 | | | | 240,889,216 | |
| | | |
Total shares sold | | | | | 653,658 | | | | $5,945,565 | | | | 29,345,915 | | | | $244,774,791 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 154,499 | | | | $1,098,486 | |
| Select Shares | | + | | | 200,408 | | | | 1,815,696 | | | | 256,112 | | | | 1,818,394 | |
| | | |
Total shares reinvested | | | | | 200,408 | | | | $1,815,696 | | | | 410,611 | | | | $2,916,880 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | (33,190,137 | ) | | | ($274,028,187 | ) |
| Select Shares | | + | | | (13,864,989 | ) | | | (126,118,689 | ) | | | (40,598,073 | ) | | | (330,274,329 | ) |
| | | |
Total shares redeemed | | | | | (13,864,989 | ) | | | ($126,118,689 | ) | | | (73,788,210 | ) | | | ($604,302,516 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | (13,010,923 | ) | | | ($118,357,428 | ) | | | (44,031,684 | ) | | | ($356,610,845 | ) |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 43,185,513 | | | | $365,155,866 | | | | 87,217,197 | | | | $701,636,388 | |
| Total decrease | | + | | | (13,010,923 | ) | | | (73,287,582 | ) | | | (44,031,684 | ) | | | (336,480,522 | ) |
| | | |
End of period | | | | | 30,174,590 | | | | $291,868,284 | | | | 43,185,513 | | | | $365,155,866 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $630,576 | | | | | | | | $1,643,312 | |
| | | |
1 | | Effective September 28, 2009, all outstanding Investor Shares (20,838,761 shares valued at $183,647,836) combined with Select Shares, resulting in a single class of shares of the fund. |
See financial notes 31
Schwab Core Equity Fund™
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/09 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 14.26 | | | | 13.43 | | | | 20.49 | | | | 18.40 | | | | 15.81 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.17 | | | | 0.17 | | | | 0.23 | | | | 0.16 | | | | 0.10 | | | |
| Net realized and unrealized gains (losses) | | | 1.50 | | | | 0.88 | | | | (7.06 | ) | | | 2.35 | | | | 2.58 | | | |
| | | |
| Total from investment operations | | | 1.67 | | | | 1.05 | | | | (6.83 | ) | | | 2.51 | | | | 2.68 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.15 | ) | | | (0.22 | ) | | | (0.18 | ) | | | (0.10 | ) | | | (0.09 | ) | | |
| Distributions from net realized gains | | | — | | | | — | | | | (0.05 | ) | | | (0.32 | ) | | | — | | | |
| | | |
| Total distributions | | | (0.15 | ) | | | (0.22 | ) | | | (0.23 | ) | | | (0.42 | ) | | | (0.09 | ) | | |
| | | |
| Net asset value at end of period | | | 15.78 | | | | 14.26 | | | | 13.43 | | | | 20.49 | | | | 18.40 | | | |
| | | |
| Total return (%) | | | 11.77 | | | | 8.11 | | | | (33.71 | ) | | | 13.88 | | | | 17.02 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 0.73 | | | | 0.75 | | | | 0.75 | | | | 0.75 | | | | 0.75 | | | |
| Gross operating expenses | | | 0.74 | | | | 0.78 | | | | 0.78 | | | | 0.78 | | | | 0.81 | | | |
| Net investment income (loss) | | | 1.05 | | | | 1.39 | | | | 1.28 | | | | 0.91 | | | | 0.63 | | | |
| Portfolio turnover rate | | | 49 | | | | 41 | 1 | | | 35 | | | | 18 | | | | 42 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 1,792 | | | | 1,770 | | | | 1,449 | | | | 2,133 | | | | 1,125 | | | |
1 Portfolio turnover excludes the impact of investment activity resulting from a merger with another fund (See financial note 11).
32 See financial notes
Schwab Core Equity Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .6% | | Common Stock | | | 1,609,157,225 | | | | 1,785,760,473 | |
| | 0 | .3% | | Other Investment Company | | | 6,145,316 | | | | 6,145,316 | |
| | 0 | .1% | | Short-Term Investment | | | 1,133,809 | | | | 1,133,809 | |
| |
| |
| | 100 | .0% | | Total Investments | | | 1,616,436,350 | | | | 1,793,039,598 | |
| | 0 | .0% | | Other Assets and Liabilities, Net | | | | | | | (616,342 | ) |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 1,792,423,256 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 99.6% of net assets |
| |
Automobiles & Components 0.4%
|
| Johnson Controls, Inc. | | | 50,000 | | | | 1,756,000 | |
TRW Automotive Holdings Corp. * | | | 100,000 | | | | 4,569,000 | |
| | | | | | | | | |
| | | | | | | | 6,325,000 | |
| |
Banks 4.2%
|
| Fifth Third Bancorp | | | 30,327 | | | | 380,907 | |
| Huntington Bancshares, Inc. | | | 500,000 | | | | 2,835,000 | |
| PNC Financial Services Group, Inc. | | | 350,000 | | | | 18,865,000 | |
| Wells Fargo & Co. | | | 2,070,000 | | | | 53,985,600 | |
| | | | | | | | | |
| | | | | | | | 76,066,507 | |
| |
Capital Goods 6.3%
|
| Caterpillar, Inc. | | | 175,000 | | | | 13,755,000 | |
| Deere & Co. | | | 130,000 | | | | 9,984,000 | |
| Dover Corp. | | | 10,750 | | | | 570,825 | |
| Eaton Corp. | | | 200,000 | | | | 17,766,000 | |
| General Electric Co. | | | 1,600,000 | | | | 25,632,000 | |
| ITT Corp. | | | 130,000 | | | | 6,134,700 | |
| Northrop Grumman Corp. | | | 155,450 | | | | 9,825,994 | |
Oshkosh Corp. * | | | 120,000 | | | | 3,541,200 | |
| Parker Hannifin Corp. | | | 70,000 | | | | 5,358,500 | |
| The Timken Co. | | | 70,000 | | | | 2,899,400 | |
| United Technologies Corp. | | | 200,000 | | | | 14,954,000 | |
URS Corp. * | | | 52,500 | | | | 2,043,825 | |
| | | | | | | | | |
| | | | | | | | 112,465,444 | |
| |
Commercial & Professional Supplies 2.2%
|
| Avery Dennison Corp. | | | 551,000 | | | | 20,028,850 | |
| R.R. Donnelley & Sons Co. | | | 1,015,000 | | | | 18,726,750 | |
| | | | | | | | | |
| | | | | | | | 38,755,600 | |
| |
Consumer Durables & Apparel 0.5%
|
| Jarden Corp. | | | 135,000 | | | | 4,328,100 | |
| Whirlpool Corp. | | | 65,000 | | | | 4,928,950 | |
| | | | | | | | | |
| | | | | | | | 9,257,050 | |
| |
Consumer Services 4.2%
|
Hyatt Hotels Corp., Class A * | | | 65,000 | | | | 2,619,500 | |
| McDonald’s Corp. | | | 275,000 | | | | 21,386,750 | |
| Starbucks Corp. | | | 1,234,600 | | | | 35,161,408 | |
| Wynn Resorts Ltd. | | | 150,000 | | | | 16,075,500 | |
| | | | | | | | | |
| | | | | | | | 75,243,158 | |
| |
Diversified Financials 8.8%
|
| American Express Co. | | | 650,000 | | | | 26,949,000 | |
| Bank of America Corp. | | | 885,000 | | | | 10,124,400 | |
| Capital One Financial Corp. | | | 42,500 | | | | 1,583,975 | |
| Discover Financial Services | | | 802,050 | | | | 14,156,183 | |
| JPMorgan Chase & Co. | | | 1,463,540 | | | | 55,073,010 | |
| Lazard Ltd., Class A | | | 155,000 | | | | 5,719,500 | |
| Legg Mason, Inc. | | | 350,000 | | | | 10,860,500 | |
| State Street Corp. | | | 85,000 | | | | 3,549,600 | |
| The Goldman Sachs Group, Inc. | | | 184,479 | | | | 29,691,895 | |
| | | | | | | | | |
| | | | | | | | 157,708,063 | |
| |
Energy 12.7%
|
| Anadarko Petroleum Corp. | | | 539,600 | | | | 33,223,172 | |
Cameron International Corp. * | | | 10,400 | | | | 455,000 | |
| Chevron Corp. | | | 125,000 | | | | 10,326,250 | |
| ConocoPhillips | | | 445,900 | | | | 26,486,460 | |
| El Paso Corp. | | | 1,140,000 | | | | 15,116,400 | |
| Hess Corp. | | | 50,000 | | | | 3,151,500 | |
| Murphy Oil Corp. | | | 386,365 | | | | 25,175,543 | |
Nabors Industries Ltd. * | | | 200,000 | | | | 4,180,000 | |
| National Oilwell Varco, Inc. | | | 427,950 | | | | 23,006,592 | |
| Occidental Petroleum Corp. | | | 464,490 | | | | 36,522,849 | |
| Peabody Energy Corp. | | | 355,000 | | | | 18,779,500 | |
| The Williams Cos., Inc. | | | 1,010,000 | | | | 21,735,200 | |
| Valero Energy Corp. | | | 550,000 | | | | 9,872,500 | |
| | | | | | | | | |
| | | | | | | | 228,030,966 | |
| |
Food & Staples Retailing 3.0%
|
| Costco Wholesale Corp. | | | 150,000 | | | | 9,415,500 | |
| The Kroger Co. | | | 400,000 | | | | 8,800,000 | |
| Wal-Mart Stores, Inc. | | | 545,000 | | | | 29,522,650 | |
Whole Foods Market, Inc. * | | | 150,000 | | | | 5,962,500 | |
| | | | | | | | | |
| | | | | | | | 53,700,650 | |
| |
Food, Beverage & Tobacco 5.9%
|
| Archer-Daniels-Midland Co. | | | 595,000 | | | | 19,825,400 | |
| ConAgra Foods, Inc. | | | 500,000 | | | | 11,245,000 | |
| Corn Products International, Inc. | | | 45,000 | | | | 1,914,750 | |
| Dr Pepper Snapple Group, Inc. | | | 124,600 | | | | 4,554,130 | |
| H.J. Heinz Co. | | | 118,350 | | | | 5,812,169 | |
| Kraft Foods, Inc., Class A | | | 250,000 | | | | 8,067,500 | |
See financial notes 33
Schwab Core Equity Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Sara Lee Corp. | | | 1,000,000 | | | | 14,330,000 | |
| The Hershey Co. | | | 222,000 | | | | 10,986,780 | |
| The JM Smucker Co. | | | 60,000 | | | | 3,856,800 | |
| Tyson Foods, Inc., Class A | | | 1,650,000 | | | | 25,657,500 | |
| | | | | | | | | |
| | | | | | | | 106,250,029 | |
| |
Health Care Equipment & Services 2.7%
|
| AmerisourceBergen Corp. | | | 150,000 | | | | 4,923,000 | |
| Cardinal Health, Inc. | | | 190,000 | | | | 6,591,100 | |
| CIGNA Corp. | | | 101,760 | | | | 3,580,934 | |
Community Health Systems, Inc. * | | | 11,880 | | | | 357,350 | |
Hologic, Inc. * | | | 125,000 | | | | 2,002,500 | |
Hospira, Inc. * | | | 75,000 | | | | 4,461,000 | |
Humana, Inc. * | | | 287,240 | | | | 16,743,220 | |
| McKesson Corp. | | | 57,150 | | | | 3,770,757 | |
| Teleflex, Inc. | | | 4,265 | | | | 237,774 | |
| UnitedHealth Group, Inc. | | | 175,000 | | | | 6,308,750 | |
| | | | | | | | | |
| | | | | | | | 48,976,385 | |
| |
Household & Personal Products 0.6%
|
Energizer Holdings, Inc. * | | | 135,000 | | | | 10,095,300 | |
| |
Insurance 2.8%
|
| Aflac, Inc. | | | 65,000 | | | | 3,632,850 | |
| American Financial Group, Inc. | | | 79,290 | | | | 2,424,688 | |
Berkshire Hathaway, Inc., Class B * | | | 100,000 | | | | 7,956,000 | |
| Loews Corp. | | | 9,700 | | | | 382,956 | |
| PartnerRe Ltd. | | | 25,000 | | | | 1,983,000 | |
| Prudential Financial, Inc. | | | 241,090 | | | | 12,676,512 | |
| The Progressive Corp. | | | 150,000 | | | | 3,174,000 | |
| The Travelers Cos., Inc. | | | 317,540 | | | | 17,528,208 | |
| | | | | | | | | |
| | | | | | | | 49,758,214 | |
| |
Materials 5.1%
|
| Ashland, Inc. | | | 458,000 | | | | 23,646,540 | |
| Ball Corp. | | | 100,000 | | | | 6,436,000 | |
| Celanese Corp., Series A | | | 220,000 | | | | 7,843,000 | |
Crown Holdings, Inc. * | | | 85,000 | | | | 2,736,150 | |
| International Paper Co. | | | 900,000 | | | | 22,752,000 | |
| PPG Industries, Inc. | | | 267,200 | | | | 20,494,240 | |
| Sonoco Products Co. | | | 200,000 | | | | 6,700,000 | |
| | | | | | | | | |
| | | | | | | | 90,607,930 | |
| |
Media 1.7%
|
| Omnicom Group, Inc. | | | 175,000 | | | | 7,693,000 | |
| Time Warner, Inc. | | | 692,266 | | | | 22,505,568 | |
| | | | | | | | | |
| | | | | | | | 30,198,568 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 9.4%
|
| Allergan, Inc. | | | 100,000 | | | | 7,241,000 | |
Amgen, Inc. * | | | 250,000 | | | | 14,297,500 | |
| Bristol-Myers Squibb Co. | | | 675,000 | | | | 18,157,500 | |
Cephalon, Inc. * | | | 245,000 | | | | 16,277,800 | |
| Eli Lilly & Co. | | | 122,505 | | | | 4,312,176 | |
| Johnson & Johnson | | | 200,000 | | | | 12,734,000 | |
Life Technologies Corp. * | | | 271,637 | | | | 13,630,745 | |
| Merck & Co., Inc. | | | 317,080 | | | | 11,503,662 | |
Mylan, Inc. * | | | 100,000 | | | | 2,032,000 | |
| Pfizer, Inc. | | | 1,000,000 | | | | 17,400,000 | |
Thermo Fisher Scientific, Inc. * | | | 245,400 | | | | 12,618,468 | |
Waters Corp. * | | | 250,000 | | | | 18,532,500 | |
Watson Pharmaceuticals, Inc. * | | | 405,000 | | | | 18,893,250 | |
| | | | | | | | | |
| | | | | | | | 167,630,601 | |
| |
Real Estate 1.2%
|
CB Richard Ellis Group, Inc., Class A * | | | 220,000 | | | | 4,037,000 | |
| Jones Lang LaSalle, Inc. | | | 145,000 | | | | 11,318,700 | |
| Vornado Realty Trust | | | 75,000 | | | | 6,554,250 | |
| | | | | | | | | |
| | | | | | | | 21,909,950 | |
| |
Retailing 4.0%
|
| Advance Auto Parts, Inc. | | | 200,000 | | | | 12,996,000 | |
| Best Buy Co., Inc. | | | 21,715 | | | | 933,311 | |
| Macy’s, Inc. | | | 350,000 | | | | 8,274,000 | |
| Target Corp. | | | 175,000 | | | | 9,089,500 | |
| The Gap, Inc. | | | 834,000 | | | | 15,854,340 | |
| The Home Depot, Inc. | | | 200,000 | | | | 6,176,000 | |
| The TJX Cos., Inc. | | | 385,000 | | | | 17,667,650 | |
| | | | | | | | | |
| | | | | | | | 70,990,801 | |
| |
Semiconductors & Semiconductor Equipment 1.9%
|
| Intel Corp. | | | 754,685 | | | | 15,146,528 | |
Lam Research Corp. * | | | 135,000 | | | | 6,181,650 | |
Marvell Technology Group Ltd. * | | | 425,000 | | | | 8,206,750 | |
Micron Technology, Inc. * | | | 200,000 | | | | 1,654,000 | |
ON Semiconductor Corp. * | | | 391,011 | | | | 2,999,054 | |
| | | | | | | | | |
| | | | | | | | 34,187,982 | |
| |
Software & Services 10.0%
|
BMC Software, Inc. * | | | 400,640 | | | | 18,213,094 | |
| CA, Inc. | | | 650,000 | | | | 15,086,500 | |
| Computer Sciences Corp. | | | 400,000 | | | | 19,620,000 | |
| International Business Machines Corp. | | | 465,000 | | | | 66,774,000 | |
Intuit, Inc. * | | | 150,000 | | | | 7,200,000 | |
| Microsoft Corp. | | | 670,000 | | | | 17,848,800 | |
| Oracle Corp. | | | 689,800 | | | | 20,280,120 | |
Symantec Corp. * | | | 900,000 | | | | 14,562,000 | |
| | | | | | | | | |
| | | | | | | | 179,584,514 | |
| |
Technology Hardware & Equipment 6.3%
|
Agilent Technologies, Inc. * | | | 190,000 | | | | 6,612,000 | |
Apple, Inc. * | | | 159,835 | | | | 48,089,557 | |
EMC Corp. * | | | 400,000 | | | | 8,404,000 | |
| Harris Corp. | | | 50,000 | | | | 2,259,500 | |
| Hewlett-Packard Co. | | | 750,000 | | | | 31,545,000 | |
Western Digital Corp. * | | | 220,000 | | | | 7,044,400 | |
| Xerox Corp. | | | 844,533 | | | | 9,881,036 | |
| | | | | | | | | |
| | | | | | | | 113,835,493 | |
| |
Telecommunication Services 2.1%
|
| AT&T, Inc. | | | 1,000,000 | | | | 28,500,000 | |
| Telephone & Data Systems, Inc. | | | 204,390 | | | | 7,118,904 | |
34 See financial notes
Schwab Core Equity Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Verizon Communications, Inc. | | | 85,000 | | | | 2,759,950 | |
| | | | | | | | | |
| | | | | | | | 38,378,854 | |
| |
Transportation 1.7%
|
| FedEx Corp. | | | 165,000 | | | | 14,473,800 | |
| Ryder System, Inc. | | | 100,000 | | | | 4,375,000 | |
| Union Pacific Corp. | | | 99,800 | | | | 8,750,464 | |
| United Parcel Service, Inc., Class B | | | 55,000 | | | | 3,703,700 | |
| | | | | | | | | |
| | | | | | | | 31,302,964 | |
| |
Utilities 1.9%
|
| CenterPoint Energy, Inc. | | | 50,000 | | | | 828,000 | |
| Constellation Energy Group, Inc. | | | 230,000 | | | | 6,955,200 | |
| DTE Energy Co. | | | 75,000 | | | | 3,507,000 | |
| NiSource, Inc. | | | 275,000 | | | | 4,760,250 | |
NRG Energy, Inc. * | | | 600,000 | | | | 11,946,000 | |
| Pinnacle West Capital Corp. | | | 100,000 | | | | 4,116,000 | |
The AES Corp. * | | | 200,000 | | | | 2,388,000 | |
| | | | | | | | | |
| | | | | | | | 34,500,450 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $1,609,157,225) | | | 1,785,760,473 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Other Investment Company 0.3% of net assets |
| |
Money Fund 0.3%
|
| State Street Institutional Liquid Reserves Fund - Institutional Class | | | 6,145,316 | | | | 6,145,316 | |
| | | | | | | | | |
| Total Other Investment Company |
| (Cost $6,145,316) | | | 6,145,316 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Issuer
| | Amount
| | Value
|
| Rate, Maturity Date | | ($) | | ($) |
| |
Short-Term Investment 0.1% of net assets |
| |
U.S. Treasury Obligation 0.1%
|
| U.S. Treasury Bill |
0.14%, 12/16/10 (a) | | | 1,134,000 | | | | 1,133,809 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $1,133,809) | | | 1,133,809 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $1,620,299,927 and the unrealized appreciation and depreciation were $242,509,885 and ($69,770,214), respectively, with a net unrealized appreciation of $172,739,671.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is held as collateral for open futures contracts. |
In addition to the above, the fund held the following at 10/31/10.
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contract |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
S&P 500 Index, e-mini, Long, expires 12/17/10 | | | 65 | | | | 3,834,025 | | | | 277,079 | |
See financial notes 35
Schwab Core Equity Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value (cost $1,616,436,350) | | | | | $1,793,039,598 | |
| Receivables: | | | | | | |
| Dividends | | | | | 1,494,412 | |
| Fund shares sold | | | | | 544,648 | |
| Foreign tax reclaims | | | | | 7,155 | |
| Interest | | | | | 2,510 | |
| Due from broker for futures | | | | | 2,297 | |
| Prepaid expenses | | + | | | 50,359 | |
| | | |
Total assets | | | | | 1,795,140,979 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Investment adviser and administrator fees | | | | | 66,746 | |
| Shareholder service fees | | | | | 50,366 | |
| Fund shares redeemed | | | | | 2,485,277 | |
| Accrued expenses | | + | | | 115,334 | |
| | | |
Total liabilities | | | | | 2,717,723 | |
| |
Net Assets |
|
Total assets | | | | | 1,795,140,979 | |
Total liabilities | | − | | | 2,717,723 | |
| | | |
Net assets | | | | | $1,792,423,256 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 1,928,781,790 | |
| Net investment income not yet distributed | | | | | 13,724,065 | |
| Net realized capital losses | | | | | (326,962,955 | ) |
| Net unrealized capital gains | | | | | 176,880,356 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $1,792,423,256 | | | | 113,591,739 | | | | | $15.78 | | | |
36 See financial notes
Schwab Core Equity Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends (net of foreign withholding taxes of $102) | | | | | $32,459,093 | |
| Interest | | | | | 41,816 | |
| Securities on loan | | + | | | 121,951 | |
| | | |
Total investment income | | | | | 32,622,860 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 8,596,965 | |
| Shareholder service fees | | | | | 4,364,915 | |
| Shareholder reports | | | | | 151,192 | |
| Transfer agent fees | | | | | 97,941 | |
| Portfolio accounting fees | | | | | 76,355 | |
| Registration fees | | | | | 40,816 | |
| Custodian fees | | | | | 40,291 | |
| Professional fees | | | | | 40,048 | |
| Trustees’ fees | | | | | 18,227 | |
| Interest expense | | | | | 11 | |
| Other expenses | | + | | | 82,654 | |
| | | |
| Total expenses | | | | | 13,509,415 | |
| Expense reduction by adviser and Schwab | | − | | | 97,941 | |
| Custody credits | | − | | | 62 | |
| | | |
Net expenses | | − | | | 13,411,412 | |
| | | |
Net investment income | | | | | 19,211,448 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on investments | | | | | 21,205,603 | |
| Net realized gains on futures contracts | | | | | 4,778,465 | |
| Net realized losses on foreign currency transactions | | + | | | (20 | ) |
| | | |
Net realized gains | | | | | 25,984,048 | |
| Net unrealized gains on investments | | | | | 154,206,067 | |
| Net unrealized gains on futures contracts | | | | | 1,354,254 | |
| Net unrealized gains on foreign currency translations | | + | | | 9 | |
| | | |
Net unrealized gains | | + | | | 155,560,330 | |
| | | |
Net realized and unrealized gains | | | | | 181,544,378 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $200,755,826 | |
See financial notes 37
Schwab Core Equity Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $19,211,448 | | | | $20,173,427 | |
| Net realized gains (losses) | | | | | 25,984,048 | | | | (240,655,967 | ) |
| Net unrealized gains | | + | | | 155,560,330 | | | | 343,278,172 | |
| | | |
Increase in net assets from operations | | | | | 200,755,826 | | | | 122,795,632 | |
| |
Distributions to Shareholders |
|
Distributions from net investment income | | | | | $18,916,913 | | | | $23,929,574 | |
Transactions in Fund Shares1
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
| Shares sold | | | | | 15,179,714 | | | | $229,787,494 | | | | 42,696,626 | | | | $549,399,448 | |
| Issued in connection with merger | | | | | — | | | | — | | | | 5,664,042 | | | | 69,312,019 | |
| Shares reinvested | | | | | 668,254 | | | | 10,164,135 | | | | 1,386,104 | | | | 16,785,719 | |
| Shares redeemed | | + | | | (26,352,231 | ) | | | (399,147,122 | ) | | | (33,561,227 | ) | | | (413,746,879 | ) |
| | | |
Net transactions in fund shares | | | | | (10,504,263 | ) | | | ($159,195,493 | ) | | | 16,185,545 | | | | $221,750,307 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 124,096,002 | | | | $1,769,779,836 | | | | 107,910,457 | | | | $1,449,163,471 | |
| Total increase or decrease | | + | | | (10,504,263 | ) | | | 22,643,420 | | | | 16,185,545 | | | | 320,616,365 | |
| | | |
End of period | | | | | 113,591,739 | | | | $1,792,423,256 | | | | 124,096,002 | | | | $1,769,779,836 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $13,724,065 | | | | | | | | $14,170,403 | |
| | | |
1 | | Effective May 21, 2009, all the assets and liabilities of the Laudus U. S. Market Masters Fund were transferred to the Schwab Core Equity Fund (See financial note 11). |
38 See financial notes
Schwab Dividend Equity Fund™
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/091 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 10.94 | | | | 10.63 | | | | 15.66 | | | | 14.60 | | | | 12.80 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.21 | | | | 0.25 | | | | 0.32 | | | | 0.28 | | | | 0.26 | | | |
| Net realized and unrealized gains (losses) | | | 1.14 | | | | 0.31 | | | | (4.97 | ) | | | 1.37 | | | | 1.98 | | | |
| | | |
| Total from investment operations | | | 1.35 | | | | 0.56 | | | | (4.65 | ) | | | 1.65 | | | | 2.24 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.21 | ) | | | (0.25 | ) | | | (0.33 | ) | | | (0.28 | ) | | | (0.28 | ) | | |
| Distributions from net realized gains | | | — | | | | — | | | | (0.05 | ) | | | (0.31 | ) | | | (0.16 | ) | | |
| | | |
| Total distributions | | | (0.21 | ) | | | (0.25 | ) | | | (0.38 | ) | | | (0.59 | ) | | | (0.44 | ) | | |
| | | |
| Net asset value at end of period | | | 12.08 | | | | 10.94 | | | | 10.63 | | | | 15.66 | | | | 14.60 | | | |
| | | |
| Total return (%) | | | 12.42 | | | | 5.62 | | | | (30.23 | ) | | | 11.55 | | | | 17.86 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 0.89 | | | | 0.90 | 2 | | | 0.89 | | | | 0.89 | | | | 0.90 | | | |
| Gross operating expenses | | | 0.89 | | | | 0.91 | | | | 0.89 | | | | 0.89 | | | | 0.90 | | | |
| Net investment income (loss) | | | 1.74 | | | | 2.40 | | | | 2.33 | | | | 1.83 | | | | 1.92 | | | |
| Portfolio turnover rate | | | 37 | | | | 39 | | | | 22 | | | | 18 | | | | 36 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 1,322 | | | | 1,297 | | | | 824 | | | | 1,340 | | | | 729 | | | |
1 Effective October 7, 2009, the Investor Shares class and the Select Shares class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Select Shares.
2 Effective May 5, 2009, the net operating expense limitation was lowered. The ratio presented for period ended October 31, 2009 is a blended rate.
See financial notes 39
Schwab Dividend Equity Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 98 | .7% | | Common Stock | | | 1,188,919,702 | | | | 1,304,550,815 | |
| | 1 | .2% | | Short-Term Investments | | | 15,292,404 | | | | 15,292,404 | |
| |
| |
| | 99 | .9% | | Total Investments | | | 1,204,212,106 | | | | 1,319,843,219 | |
| | 0 | .1% | | Other Assets and Liabilities, Net | | | | | | | 1,970,748 | |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 1,321,813,967 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 98.7% of net assets |
| |
Automobiles & Components 0.3%
|
| Johnson Controls, Inc. | | | 125,000 | | | | 4,390,000 | |
| |
Banks 3.1%
|
| Commerce Bancshares, Inc. | | | 95,000 | | | | 3,499,800 | |
| Fifth Third Bancorp | | | 225,000 | | | | 2,826,000 | |
| M&T Bank Corp. | | | 50,000 | | | | 3,737,500 | |
| PNC Financial Services Group, Inc. | | | 250,000 | | | | 13,475,000 | |
| Wells Fargo & Co. | | | 650,000 | | | | 16,952,000 | |
| | | | | | | | | |
| | | | | | | | 40,490,300 | |
| |
Capital Goods 6.4%
|
| 3M Co. | | | 120,000 | | | | 10,106,400 | |
| Caterpillar, Inc. | | | 100,000 | | | | 7,860,000 | |
| Eaton Corp. | | | 260,000 | | | | 23,095,800 | |
| General Electric Co. | | | 600,000 | | | | 9,612,000 | |
| Northrop Grumman Corp. | | | 215,400 | | | | 13,615,434 | |
| The Timken Co. | | | 125,000 | | | | 5,177,500 | |
| United Technologies Corp. | | | 200,000 | | | | 14,954,000 | |
| | | | | | | | | |
| | | | | | | | 84,421,134 | |
| |
Commercial & Professional Supplies 2.2%
|
| Avery Dennison Corp. | | | 350,000 | | | | 12,722,500 | |
| R.R. Donnelley & Sons Co. | | | 900,000 | | | | 16,605,000 | |
| | | | | | | | | |
| | | | | | | | 29,327,500 | |
| |
Consumer Durables & Apparel 0.8%
|
| Leggett & Platt, Inc. | | | 250,000 | | | | 5,095,000 | |
| Whirlpool Corp. | | | 75,000 | | | | 5,687,250 | |
| | | | | | | | | |
| | | | | | | | 10,782,250 | |
| |
Consumer Services 3.0%
|
| McDonald’s Corp. | | | 355,000 | | | | 27,608,350 | |
| Starbucks Corp. | | | 405,500 | | | | 11,548,640 | |
| | | | | | | | | |
| | | | | | | | 39,156,990 | |
| |
Diversified Financials 6.4%
|
| American Express Co. | | | 350,000 | | | | 14,511,000 | |
| Bank of America Corp. | | | 850,000 | | | | 9,724,000 | |
| Capital One Financial Corp. | | | 220,000 | | | | 8,199,400 | |
| JPMorgan Chase & Co. | | | 912,084 | | | | 34,321,721 | |
| Legg Mason, Inc. | | | 75,000 | | | | 2,327,250 | |
| The Goldman Sachs Group, Inc. | | | 95,000 | | | | 15,290,250 | |
| | | | | | | | | |
| | | | | | | | 84,373,621 | |
| |
Energy 10.8%
|
| Anadarko Petroleum Corp. | | | 310,000 | | | | 19,086,700 | |
| Apache Corp. | | | 125,000 | | | | 12,627,500 | |
| Chevron Corp. | | | 100,000 | | | | 8,261,000 | |
| ConocoPhillips | | | 400,000 | | | | 23,760,000 | |
| Marathon Oil Corp. | | | 100,000 | | | | 3,557,000 | |
| Murphy Oil Corp. | | | 175,000 | | | | 11,403,000 | |
| National Oilwell Varco, Inc. | | | 50,000 | | | | 2,688,000 | |
| Occidental Petroleum Corp. | | | 309,000 | | | | 24,296,670 | |
| Spectra Energy Corp. | | | 575,000 | | | | 13,667,750 | |
| The Williams Cos., Inc. | | | 500,000 | | | | 10,760,000 | |
| Valero Energy Corp. | | | 675,000 | | | | 12,116,250 | |
| | | | | | | | | |
| | | | | | | | 142,223,870 | |
| |
Food & Staples Retailing 3.1%
|
| Costco Wholesale Corp. | | | 300,000 | | | | 18,831,000 | |
| The Kroger Co. | | | 250,000 | | | | 5,500,000 | |
| Wal-Mart Stores, Inc. | | | 300,000 | | | | 16,251,000 | |
| | | | | | | | | |
| | | | | | | | 40,582,000 | |
| |
Food, Beverage & Tobacco 6.6%
|
| Archer-Daniels-Midland Co. | | | 450,000 | | | | 14,994,000 | |
| ConAgra Foods, Inc. | | | 425,000 | | | | 9,558,250 | |
| H.J. Heinz Co. | | | 480,000 | | | | 23,572,800 | |
| Kraft Foods, Inc., Class A | | | 300,000 | | | | 9,681,000 | |
| Sara Lee Corp. | | | 425,000 | | | | 6,090,250 | |
| The Hershey Co. | | | 200,000 | | | | 9,898,000 | |
| Tyson Foods, Inc., Class A | | | 875,000 | | | | 13,606,250 | |
| | | | | | | | | |
| | | | | | | | 87,400,550 | |
| |
Health Care Equipment & Services 3.9%
|
| AmerisourceBergen Corp. | | | 150,000 | | | | 4,923,000 | |
| Becton, Dickinson & Co. | | | 254,000 | | | | 19,182,080 | |
| Cardinal Health, Inc. | | | 275,000 | | | | 9,539,750 | |
| McKesson Corp. | | | 250,000 | | | | 16,495,000 | |
| UnitedHealth Group, Inc. | | | 50,000 | | | | 1,802,500 | |
| | | | | | | | | |
| | | | | | | | 51,942,330 | |
| |
Household & Personal Products 0.8%
|
| Herbalife Ltd. | | | 60,000 | | | | 3,831,600 | |
| Kimberly-Clark Corp. | | | 75,000 | | | | 4,750,500 | |
40 See financial notes
Schwab Dividend Equity Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Nu Skin Enterprises, Inc., Class A | | | 50,000 | | | | 1,530,000 | |
| | | | | | | | | |
| | | | | | | | 10,112,100 | |
| |
Insurance 4.0%
|
| HCC Insurance Holdings, Inc. | | | 250,000 | | | | 6,620,000 | |
| Marsh & McLennan Cos., Inc. | | | 125,000 | | | | 3,122,500 | |
| Prudential Financial, Inc. | | | 180,000 | | | | 9,464,400 | |
| The Chubb Corp. | | | 251,000 | | | | 14,563,020 | |
| The Travelers Cos., Inc. | | | 358,000 | | | | 19,761,600 | |
| | | | | | | | | |
| | | | | | | | 53,531,520 | |
| |
Materials 5.0%
|
| Ashland, Inc. | | | 25,000 | | | | 1,290,750 | |
| Ball Corp. | | | 75,000 | | | | 4,827,000 | |
| Bemis Co., Inc. | | | 150,000 | | | | 4,764,000 | |
| Celanese Corp., Series A | | | 125,000 | | | | 4,456,250 | |
| Eastman Chemical Co. | | | 75,000 | | | | 5,892,750 | |
| International Paper Co. | | | 500,000 | | | | 12,640,000 | |
| MeadWestvaco Corp. | | | 375,000 | | | | 9,648,750 | |
| PPG Industries, Inc. | | | 256,000 | | | | 19,635,200 | |
| Sonoco Products Co. | | | 100,000 | | | | 3,350,000 | |
| | | | | | | | | |
| | | | | | | | 66,504,700 | |
| |
Media 1.2%
|
| Gannett Co., Inc. | | | 200,000 | | | | 2,370,000 | |
| Omnicom Group, Inc. | | | 50,000 | | | | 2,198,000 | |
| Time Warner, Inc. | | | 365,000 | | | | 11,866,150 | |
| | | | | | | | | |
| | | | | | | | 16,434,150 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 8.0%
|
| Abbott Laboratories | | | 375,000 | | | | 19,245,000 | |
| Bristol-Myers Squibb Co. | | | 935,000 | | | | 25,151,500 | |
| Eli Lilly & Co. | | | 560,000 | | | | 19,712,000 | |
| Johnson & Johnson | | | 230,000 | | | | 14,644,100 | |
| Merck & Co., Inc. | | | 460,000 | | | | 16,688,800 | |
| Pfizer, Inc. | | | 600,000 | | | | 10,440,000 | |
| | | | | | | | | |
| | | | | | | | 105,881,400 | |
| |
Real Estate 1.5%
|
| Jones Lang LaSalle, Inc. | | | 50,000 | | | | 3,903,000 | |
| Mack-Cali Realty Corp. | | | 75,000 | | | | 2,518,500 | |
| Public Storage | | | 130,000 | | | | 12,898,600 | |
| | | | | | | | | |
| | | | | | | | 19,320,100 | |
| |
Retailing 4.0%
|
| Limited Brands, Inc. | | | 200,000 | | | | 5,878,000 | |
| Macy’s, Inc. | | | 300,000 | | | | 7,092,000 | |
| The Gap, Inc. | | | 400,000 | | | | 7,604,000 | |
| The Home Depot, Inc. | | | 450,000 | | | | 13,896,000 | |
| The TJX Cos., Inc. | | | 400,000 | | | | 18,356,000 | |
| | | | | | | | | |
| | | | | | | | 52,826,000 | |
| |
Semiconductors & Semiconductor Equipment 2.6%
|
| Analog Devices, Inc. | | | 100,000 | | | | 3,367,000 | |
| Intel Corp. | | | 1,125,000 | | | | 22,578,750 | |
| Microchip Technology, Inc. | | | 260,000 | | | | 8,366,800 | |
| | | | | | | | | |
| | | | | | | | 34,312,550 | |
| |
Software & Services 8.6%
|
| Automatic Data Processing, Inc. | | | 260,000 | | | | 11,549,200 | |
| CA, Inc. | | | 650,000 | | | | 15,086,500 | |
| Computer Sciences Corp. | | | 225,000 | | | | 11,036,250 | |
| Fidelity National Information Services, Inc. | | | 50,000 | | | | 1,355,000 | |
| International Business Machines Corp. | | | 297,500 | | | | 42,721,000 | |
| Microsoft Corp. | | | 700,000 | | | | 18,648,000 | |
| Oracle Corp. | | | 450,000 | | | | 13,230,000 | |
| | | | | | | | | |
| | | | | | | | 113,625,950 | |
| |
Technology Hardware & Equipment 5.4%
|
| Amphenol Corp., Class A | | | 75,000 | | | | 3,759,750 | |
| Corning, Inc. | | | 275,000 | | | | 5,027,000 | |
| Harris Corp. | | | 100,000 | | | | 4,519,000 | |
| Hewlett-Packard Co. | | | 450,000 | | | | 18,927,000 | |
| Jabil Circuit, Inc. | | | 200,000 | | | | 3,068,000 | |
| Molex, Inc. | | | 300,000 | | | | 6,090,000 | |
| Tellabs, Inc. | | | 625,000 | | | | 4,262,500 | |
| Tyco Electronics Ltd. | | | 400,000 | | | | 12,672,000 | |
| Xerox Corp. | | | 1,175,000 | | | | 13,747,500 | |
| | | | | | | | | |
| | | | | | | | 72,072,750 | |
| |
Telecommunication Services 3.5%
|
| AT&T, Inc. | | | 910,407 | | | | 25,946,600 | |
| Verizon Communications, Inc. | | | 625,000 | | | | 20,293,750 | |
| | | | | | | | | |
| | | | | | | | 46,240,350 | |
| |
Transportation 1.2%
|
| Ryder System, Inc. | | | 75,000 | | | | 3,281,250 | |
| Union Pacific Corp. | | | 25,000 | | | | 2,192,000 | |
| United Parcel Service, Inc., Class B | | | 150,000 | | | | 10,101,000 | |
| | | | | | | | | |
| | | | | | | | 15,574,250 | |
| |
Utilities 6.3%
|
| Ameren Corp. | | | 245,000 | | | | 7,100,100 | |
| CenterPoint Energy, Inc. | | | 1,005,000 | | | | 16,642,800 | |
| Constellation Energy Group, Inc. | | | 50,000 | | | | 1,512,000 | |
| DTE Energy Co. | | | 475,000 | | | | 22,211,000 | |
| Edison International | | | 175,000 | | | | 6,457,500 | |
| NiSource, Inc. | | | 600,000 | | | | 10,386,000 | |
| PG&E Corp. | | | 75,000 | | | | 3,586,500 | |
| Pinnacle West Capital Corp. | | | 225,000 | | | | 9,261,000 | |
| UGI Corp. | | | 195,000 | | | | 5,867,550 | |
| | | | | | | | | |
| | | | | | | | 83,024,450 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $1,188,919,702) | | | 1,304,550,815 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
See financial notes 41
Schwab Dividend Equity Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Face
| | |
Issuer
| | Amount
| | Value
|
| Rate, Maturity Date | | ($) | | ($) |
| |
Short-Term Investments 1.2% of net assets |
| |
Time Deposit 1.1%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 14,583,724 | | | | 14,583,724 | |
| |
U.S. Treasury Obligation 0.1%
|
| U.S. Treasury Bill |
0.14%, 12/16/10 (a) | | | 708,800 | | | | 708,680 | |
| | | | | | | | | |
| Total Short-Term Investments |
| (Cost $15,292,404) | | | 15,292,404 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $1,204,212,106 and the unrealized appreciation and depreciation were $178,814,321 and ($63,183,208), respectively, with a net unrealized appreciation of $115,631,113.
| | |
| (a) | | All or a portion of this security is held as collateral for open futures contracts. |
In addition to the above, the fund held the following at 10/31/10.
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contract |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
S&P 500 Index, e-mini, Long, expires 12/17/10 | | | 125 | | | | 7,373,125 | | | | 532,844 | |
42 See financial notes
Schwab Dividend Equity Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value (cost $1,204,212,106) | | | | | $1,319,843,219 | |
| Cash | | | | | 40 | |
| Receivables: | | | | | | |
| Dividends | | | | | 1,894,725 | |
| Fund shares sold | | | | | 1,106,636 | |
| Due from broker for futures | | | | | 2,500 | |
| Interest | | | | | 36 | |
| Prepaid expenses | | + | | | 39,846 | |
| | | |
Total assets | | | | | 1,322,887,002 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Investment adviser and administrator fees | | | | | 77,113 | |
| Shareholder service fees | | | | | 28,023 | |
| Fund shares redeemed | | | | | 875,948 | |
| Trustees’ fees | | | | | 1 | |
| Accrued expenses | | + | | | 91,950 | |
| | | |
Total liabilities | | | | | 1,073,035 | |
| |
Net Assets |
|
Total assets | | | | | 1,322,887,002 | |
Total liabilities | | − | | | 1,073,035 | |
| | | |
Net assets | | | | | $1,321,813,967 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 1,423,423,511 | |
| Net investment income not yet distributed | | | | | 121,782 | |
| Net realized capital losses | | | | | (217,895,283 | ) |
| Net unrealized capital gains | | | | | 116,163,957 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $1,321,813,967 | | | | 109,439,640 | | | | | $12.08 | | | |
See financial notes 43
Schwab Dividend Equity Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends | | | | | $35,296,243 | |
| Interest | | + | | | 4,488 | |
| | | |
Total investment income | | | | | 35,300,731 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 8,317,259 | |
| Shareholder service fees | | | | | 3,272,020 | |
| Shareholder reports | | | | | 112,312 | |
| Portfolio accounting fees | | | | | 68,265 | |
| Registration fees | | | | | 47,835 | |
| Transfer agent fees | | | | | 43,718 | |
| Professional fees | | | | | 37,833 | |
| Custodian fees | | | | | 31,666 | |
| Trustees’ fees | | | | | 14,649 | |
| Other expenses | | + | | | 60,609 | |
| | | |
| Total expenses | | | | | 12,006,166 | |
| Expense reduction by adviser and Schwab | | − | | | 43,718 | |
| | | |
Net expenses | | − | | | 11,962,448 | |
| | | |
Net investment income | | | | | 23,338,283 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on investments | | | | | 28,432,973 | |
| Net realized gains on futures contracts | | + | | | 1,113,227 | |
| | | |
Net realized gains | | | | | 29,546,200 | |
| Net unrealized gains on investments | | | | | 100,295,761 | |
| Net unrealized gains on futures contracts | | + | | | 609,582 | |
| | | |
Net unrealized gains | | + | | | 100,905,343 | |
| | | |
Net realized and unrealized gains | | | | | 130,451,543 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $153,789,826 | |
44 See financial notes
Schwab Dividend Equity Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $23,338,283 | | | | $28,349,477 | |
| Net realized gains (losses) | | | | | 29,546,200 | | | | (204,417,167 | ) |
| Net unrealized gains | | + | | | 100,905,343 | | | | 246,496,253 | |
| | | |
Increase in net assets from operations | | | | | 153,789,826 | | | | 70,428,563 | |
| |
Distributions to Shareholders1 |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | — | | | | 9,043,024 | |
| Select Shares | | + | | | 23,865,611 | | | | 19,597,389 | |
| | | |
Total distributions from net investment income | | | | | $23,865,611 | | | | $28,640,413 | |
Transactions in Fund Shares1
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 9,578,286 | | | | $92,719,824 | |
| Select Shares | | + | | | 14,952,206 | | | | 175,992,941 | | | | 60,455,844 | | | | 643,136,900 | |
| | | |
Total shares sold | | | | | 14,952,206 | | | | $175,992,941 | | | | 70,034,130 | | | | $735,856,724 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 769,296 | | | | $7,529,354 | |
| Select Shares | | + | | | 1,093,635 | | | | 12,717,783 | | | | 938,135 | | | | 9,089,883 | |
| | | |
Total shares reinvested | | | | | 1,093,635 | | | | $12,717,783 | | | | 1,707,431 | | | | $16,619,237 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | (49,251,896 | ) | | | ($536,476,738 | ) |
| Select Shares | | + | | | (25,189,162 | ) | | | (294,251,289 | ) | | | (20,326,067 | ) | | | (199,823,844 | ) |
| | | |
Total shares redeemed | | | | | (25,189,162 | ) | | | ($294,251,289 | ) | | | (69,577,963 | ) | | | ($736,300,582 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | (9,143,321 | ) | | | ($105,540,565 | ) | | | 2,163,598 | | | | $16,175,379 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 118,582,961 | | | | $1,297,430,317 | | | | 116,419,363 | | | | $1,239,466,788 | |
| Total increase or decrease | | + | | | (9,143,321 | ) | | | 24,383,650 | | | | 2,163,598 | | | | 57,963,529 | |
| | | |
End of period | | | | | 109,439,640 | | | | $1,321,813,967 | | | | 118,582,961 | | | | $1,297,430,317 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $121,782 | | | | | | | | $1,180,226 | |
| | | |
1 | | Effective October 7, 2009, all outstanding Investor Shares (39,738,083 shares valued at $443,834,650) combined with Select Shares, resulting in a single class of shares of the fund. |
See financial notes 45
Schwab Large-Cap Growth Fund™
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/091 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 9.10 | | | | 8.22 | | | | 12.77 | | | | 11.09 | | | | 9.73 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.05 | | | | 0.05 | | | | 0.06 | | | | 0.04 | | | | 0.02 | | | |
| Net realized and unrealized gains (losses) | | | 1.39 | | | | 0.87 | | | | (4.56 | ) | | | 1.67 | | | | 1.35 | | | |
| | | |
| Total from investment operations | | | 1.44 | | | | 0.92 | | | | (4.50 | ) | | | 1.71 | | | | 1.37 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.06 | ) | | | (0.04 | ) | | | (0.05 | ) | | | (0.03 | ) | | | (0.01 | ) | | |
| | | |
| Net asset value at end of period | | | 10.48 | | | | 9.10 | | | | 8.22 | | | | 12.77 | | | | 11.09 | | | |
| | | |
| Total return (%) | | | 15.83 | | | | 11.36 | | | | (35.36 | ) | | | 15.47 | | | | 14.04 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 1.00 | 2 | | | 0.99 | | | | 0.99 | | | | 0.99 | | | | 0.99 | | | |
| Gross operating expenses | | | 1.04 | | | | 1.03 | | | | 1.01 | | | | 1.03 | | | | 1.12 | | | |
| Net investment income (loss) | | | 0.39 | | | | 0.65 | | | | 0.53 | | | | 0.33 | | | | 0.26 | | | |
| Portfolio turnover rate | | | 57 | | | | 63 | | | | 49 | | | | 30 | | | | 53 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 219 | | | | 360 | | | | 332 | | | | 492 | | | | 107 | | | |
1 Effective October 7, 2009, the Investor Shares class and the Select Shares class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Select Shares.
2 The ratio of net operating expenses would have been 0.99%, if certain non-routine expenses had not been incurred.
46 See financial notes
Schwab Large-Cap Growth Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 97 | .5% | | Common Stock | | | 174,877,819 | | | | 213,956,219 | |
| | 2 | .5% | | Short-Term Investments | | | 5,520,946 | | | | 5,520,946 | |
| |
| |
| | 100 | .0% | | Total Investments | | | 180,398,765 | | | | 219,477,165 | |
| | 0 | .0% | | Other Assets and Liabilities, Net | | | | | | | (65,459 | ) |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 219,411,706 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 97.5% of net assets |
| |
Automobiles & Components 0.3%
|
Ford Motor Co. * | | | 50,000 | | | | 706,500 | |
| |
Banks 0.8%
|
| Wells Fargo & Co. | | | 70,000 | | | | 1,825,600 | |
| |
Capital Goods 8.2%
|
| 3M Co. | | | 65,100 | | | | 5,482,722 | |
| Caterpillar, Inc. | | | 30,000 | | | | 2,358,000 | |
| Deere & Co. | | | 30,000 | | | | 2,304,000 | |
| Eaton Corp. | | | 29,700 | | | | 2,638,251 | |
| General Electric Co. | | | 75,000 | | | | 1,201,500 | |
| Honeywell International, Inc. | | | 40,000 | | | | 1,884,400 | |
Oshkosh Corp. * | | | 25,000 | | | | 737,750 | |
| The Timken Co. | | | 35,000 | | | | 1,449,700 | |
| | | | | | | | | |
| | | | | | | | 18,056,323 | |
| |
Commercial & Professional Supplies 2.6%
|
| Avery Dennison Corp. | | | 88,800 | | | | 3,227,880 | |
| R.R. Donnelley & Sons Co. | | | 139,400 | | | | 2,571,930 | |
| | | | | | | | | |
| | | | | | | | 5,799,810 | |
| |
Consumer Durables & Apparel 1.0%
|
| NIKE, Inc., Class B | | | 15,000 | | | | 1,221,600 | |
Tempur-Pedic International, Inc. * | | | 15,000 | | | | 517,500 | |
| Whirlpool Corp. | | | 5,000 | | | | 379,150 | |
| | | | | | | | | |
| | | | | | | | 2,118,250 | |
| |
Consumer Services 4.8%
|
| Darden Restaurants, Inc. | | | 20,000 | | | | 914,200 | |
| Marriott International, Inc., Class A | | | 35,400 | | | | 1,311,570 | |
| McDonald’s Corp. | | | 38,400 | | | | 2,986,368 | |
| Starbucks Corp. | | | 146,700 | | | | 4,178,016 | |
| Wynn Resorts Ltd. | | | 10,000 | | | | 1,071,700 | |
| | | | | | | | | |
| | | | | | | | 10,461,854 | |
| |
Diversified Financials 2.2%
|
| American Express Co. | | | 25,000 | | | | 1,036,500 | |
| JPMorgan Chase & Co. | | | 51,800 | | | | 1,949,234 | |
| State Street Corp. | | | 15,000 | | | | 626,400 | |
| The Goldman Sachs Group, Inc. | | | 7,500 | | | | 1,207,125 | |
| | | | | | | | | |
| | | | | | | | 4,819,259 | |
| |
Energy 9.0%
|
| Anadarko Petroleum Corp. | | | 39,200 | | | | 2,413,544 | |
Cameron International Corp. * | | | 25,000 | | | | 1,093,750 | |
| Chevron Corp. | | | 20,500 | | | | 1,693,505 | |
| ConocoPhillips | | | 10,000 | | | | 594,000 | |
| El Paso Corp. | | | 225,000 | | | | 2,983,500 | |
FMC Technologies, Inc. * | | | 15,000 | | | | 1,081,500 | |
| Halliburton Co. | | | 15,000 | | | | 477,900 | |
| Marathon Oil Corp. | | | 20,000 | | | | 711,400 | |
| Murphy Oil Corp. | | | 38,400 | | | | 2,502,144 | |
| National Oilwell Varco, Inc. | | | 18,400 | | | | 989,184 | |
| Peabody Energy Corp. | | | 78,000 | | | | 4,126,200 | |
Whiting Petroleum Corp. * | | | 10,000 | | | | 1,004,400 | |
| | | | | | | | | |
| | | | | | | | 19,671,027 | |
| |
Food & Staples Retailing 2.8%
|
| Wal-Mart Stores, Inc. | | | 95,000 | | | | 5,146,150 | |
Whole Foods Market, Inc. * | | | 25,000 | | | | 993,750 | |
| | | | | | | | | |
| | | | | | | | 6,139,900 | |
| |
Food, Beverage & Tobacco 5.4%
|
| Archer-Daniels-Midland Co. | | | 85,000 | | | | 2,832,200 | |
| H.J. Heinz Co. | | | 39,300 | | | | 1,930,023 | |
| Sara Lee Corp. | | | 190,000 | | | | 2,722,700 | |
| The Hershey Co. | | | 52,000 | | | | 2,573,480 | |
| Tyson Foods, Inc., Class A | | | 116,700 | | | | 1,814,685 | |
| | | | | | | | | |
| | | | | | | | 11,873,088 | |
| |
Health Care Equipment & Services 4.7%
|
| AmerisourceBergen Corp. | | | 25,000 | | | | 820,500 | |
| Cardinal Health, Inc. | | | 31,900 | | | | 1,106,611 | |
Henry Schein, Inc. * | | | 21,600 | | | | 1,212,840 | |
Hospira, Inc. * | | | 36,300 | | | | 2,159,124 | |
Humana, Inc. * | | | 34,000 | | | | 1,981,860 | |
| McKesson Corp. | | | 39,000 | | | | 2,573,220 | |
Medco Health Solutions, Inc. * | | | 10,000 | | | | 525,300 | |
| | | | | | | | | |
| | | | | | | | 10,379,455 | |
| |
Household & Personal Products 1.0%
|
Energizer Holdings, Inc. * | | | 30,000 | | | | 2,243,400 | |
| |
Insurance 1.2%
|
| Aflac, Inc. | | | 47,500 | | | | 2,654,775 | |
See financial notes 47
Schwab Large-Cap Growth Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Materials 5.6%
|
| Ball Corp. | | | 35,000 | | | | 2,252,600 | |
| Celanese Corp., Series A | | | 101,200 | | | | 3,607,780 | |
| International Paper Co. | | | 88,300 | | | | 2,232,224 | |
| MeadWestvaco Corp. | | | 80,000 | | | | 2,058,400 | |
| PPG Industries, Inc. | | | 20,000 | | | | 1,534,000 | |
| The Lubrizol Corp. | | | 5,000 | | | | 512,450 | |
| | | | | | | | | |
| | | | | | | | 12,197,454 | |
| |
Media 0.2%
|
| Time Warner, Inc. | | | 10,000 | | | | 325,100 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 6.9%
|
| Allergan, Inc. | | | 61,000 | | | | 4,417,010 | |
Cephalon, Inc. * | | | 45,000 | | | | 2,989,800 | |
| Johnson & Johnson | | | 40,000 | | | | 2,546,800 | |
Mylan, Inc. * | | | 55,000 | | | | 1,117,600 | |
| Perrigo Co. | | | 17,500 | | | | 1,152,900 | |
Thermo Fisher Scientific, Inc. * | | | 14,000 | | | | 719,880 | |
Waters Corp. * | | | 30,000 | | | | 2,223,900 | |
| | | | | | | | | |
| | | | | | | | 15,167,890 | |
| |
Real Estate 1.1%
|
CB Richard Ellis Group, Inc., Class A * | | | 50,000 | | | | 917,500 | |
| Jones Lang LaSalle, Inc. | | | 20,000 | | | | 1,561,200 | |
| | | | | | | | | |
| | | | | | | | 2,478,700 | |
| |
Retailing 6.8%
|
| Advance Auto Parts, Inc. | | | 35,000 | | | | 2,274,300 | |
| Best Buy Co., Inc. | | | 18,000 | | | | 773,640 | |
Kohl’s Corp. * | | | 13,000 | | | | 665,600 | |
| Limited Brands, Inc. | | | 75,500 | | | | 2,218,945 | |
| PetSmart, Inc. | | | 15,000 | | | | 561,450 | |
| Target Corp. | | | 84,900 | | | | 4,409,706 | |
| The Gap, Inc. | | | 157,300 | | | | 2,990,273 | |
| The TJX Cos., Inc. | | | 20,000 | | | | 917,800 | |
| | | | | | | | | |
| | | | | | | | 14,811,714 | |
| |
Semiconductors & Semiconductor Equipment 3.5%
|
| Intel Corp. | | | 124,000 | | | | 2,488,680 | |
Lam Research Corp. * | | | 27,000 | | | | 1,236,330 | |
Marvell Technology Group Ltd. * | | | 179,700 | | | | 3,470,007 | |
ON Semiconductor Corp. * | | | 75,000 | | | | 575,250 | |
| | | | | | | | | |
| | | | | | | | 7,770,267 | |
| |
Software & Services 15.1%
|
| Accenture plc, Class A | | | 32,900 | | | | 1,470,959 | |
BMC Software, Inc. * | | | 45,000 | | | | 2,045,700 | |
| CA, Inc. | | | 130,000 | | | | 3,017,300 | |
| Computer Sciences Corp. | | | 41,000 | | | | 2,011,050 | |
Google, Inc., Class A * | | | 1,500 | | | | 919,485 | |
| International Business Machines Corp. | | | 72,600 | | | | 10,425,360 | |
Intuit, Inc. * | | | 98,300 | | | | 4,718,400 | |
| MasterCard, Inc., Class A | | | 10,000 | | | | 2,400,600 | |
| Microsoft Corp. | | | 100,000 | | | | 2,664,000 | |
| Oracle Corp. | | | 77,300 | | | | 2,272,620 | |
Symantec Corp. * | | | 70,000 | | | | 1,132,600 | |
| | | | | | | | | |
| | | | | | | | 33,078,074 | |
| |
Technology Hardware & Equipment 10.3%
|
Agilent Technologies, Inc. * | | | 15,000 | | | | 522,000 | |
Apple, Inc. * | | | 31,900 | | | | 9,597,753 | |
Cisco Systems, Inc. * | | | 50,000 | | | | 1,141,500 | |
EMC Corp. * | | | 173,200 | | | | 3,638,932 | |
| Hewlett-Packard Co. | | | 80,000 | | | | 3,364,800 | |
NetApp, Inc. * | | | 35,000 | | | | 1,863,750 | |
| Tyco Electronics Ltd. | | | 32,000 | | | | 1,013,760 | |
Western Digital Corp. * | | | 46,000 | | | | 1,472,920 | |
| | | | | | | | | |
| | | | | | | | 22,615,415 | |
| |
Transportation 3.5%
|
| Union Pacific Corp. | | | 30,800 | | | | 2,700,544 | |
| United Parcel Service, Inc., Class B | | | 73,000 | | | | 4,915,820 | |
| | | | | | | | | |
| | | | | | | | 7,616,364 | |
| |
Utilities 0.5%
|
| Constellation Energy Group, Inc. | | | 30,000 | | | | 907,200 | |
The AES Corp. * | | | 20,000 | | | | 238,800 | |
| | | | | | | | | |
| | | | | | | | 1,146,000 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $174,877,819) | | | 213,956,219 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Issuer
| | Amount
| | Value
|
| Rate, Maturity Date | | ($) | | ($) |
| |
Short-Term Investments 2.5% of net assets |
| |
Time Deposit 2.3%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 5,048,526 | | | | 5,048,526 | |
| |
U.S. Treasury Obligation 0.2%
|
| U.S. Treasury Bill |
0.14%, 12/16/10 (a) | | | 472,500 | | | | 472,420 | |
| | | | | | | | | |
| Total Short-Term Investments |
| (Cost $5,520,946) | | | 5,520,946 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $180,956,872 and the unrealized appreciation and depreciation were $41,405,859 and ($2,885,566), respectively, with a net unrealized appreciation of $38,520,293.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is held as collateral for open futures contracts. |
48 See financial notes
Schwab Large-Cap Growth Fund
Portfolio Holdings continued
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contract |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
S&P 500 Index, e-mini, Long, expires 12/17/10 | | | 70 | | | | 4,128,950 | | | | 298,393 | |
See financial notes 49
Schwab Large-Cap Growth Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value (cost $180,398,765) | | | | | $219,477,165 | |
| Cash | | | | | 6 | |
| Receivables: | | | | | | |
| Fund shares sold | | | | | 97,592 | |
| Dividends | | | | | 68,295 | |
| Due from broker for futures | | | | | 1,733 | |
| Interest | | | | | 13 | |
| Prepaid expenses | | + | | | 9,847 | |
| | | |
Total assets | | | | | 219,654,651 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Investment adviser and administrator fees | | | | | 11,767 | |
| Shareholder service fees | | | | | 4,845 | |
| Fund shares redeemed | | | | | 164,921 | |
| Accrued expenses | | + | | | 61,412 | |
| | | |
Total liabilities | | | | | 242,945 | |
| |
Net Assets |
|
Total assets | | | | | 219,654,651 | |
Total liabilities | | − | | | 242,945 | |
| | | |
Net assets | | | | | $219,411,706 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 277,332,787 | |
| Net investment income not yet distributed | | | | | 682,704 | |
| Net realized capital losses | | | | | (97,980,578 | ) |
| Net unrealized capital gains | | | | | 39,376,793 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $219,411,706 | | | | 20,935,848 | | | | | $10.48 | | | |
50 See financial notes
Schwab Large-Cap Growth Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends | | | | | $4,368,135 | |
| Interest | | | | | 1,444 | |
| Securities on loan | | + | | | 535 | |
| | | |
Total investment income | | | | | 4,370,114 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 2,275,929 | |
| Shareholder service fees | | | | | 783,633 | |
| Shareholder reports | | | | | 60,305 | |
| Portfolio accounting fees | | | | | 43,231 | |
| Registration fees | | | | | 34,469 | |
| Professional fees | | | | | 33,141 | |
| Transfer agent fees | | | | | 21,927 | |
| Custodian fees | | | | | 12,223 | |
| Trustees’ fees | | | | | 7,466 | |
| Interest expense | | | | | 1,012 | |
| Other expenses | | + | | | 25,832 | |
| | | |
| Total expenses | | | | | 3,299,168 | |
| Expense reduction by adviser and Schwab | | − | | | 151,096 | |
| | | |
Net expenses | | − | | | 3,148,072 | |
| | | |
Net investment income | | | | | 1,222,042 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on investments | | | | | 19,344,611 | |
| Net realized gains on futures contracts | | + | | | 196,865 | |
| | | |
Net realized gains | | | | | 19,541,476 | |
| Net unrealized gains on investments | | | | | 19,725,488 | |
| Net unrealized gains on futures contracts | | + | | | 298,393 | |
| | | |
Net unrealized gains | | + | | | 20,023,881 | |
| | | |
Net realized and unrealized gains | | | | | 39,565,357 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $40,787,399 | |
See financial notes 51
Schwab Large-Cap Growth Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $1,222,042 | | | | $2,516,783 | |
| Net realized gains (losses) | | | | | 19,541,476 | | | | (58,603,537 | ) |
| Net unrealized gains | | + | | | 20,023,881 | | | | 108,651,501 | |
| | | |
Increase in net assets from operations | | | | | 40,787,399 | | | | 52,564,747 | |
| |
Distributions to Shareholders1 |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | — | | | | 175,943 | |
| Select Shares | | + | | | 2,274,429 | | | | 1,819,944 | |
| | | |
Total distributions from net investment income | | | | | $2,274,429 | | | | $1,995,887 | |
Transactions in Fund Shares1
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 1,081,127 | | | | $8,520,638 | |
| Select Shares | | + | | | 5,456,543 | | | | 53,850,747 | | | | 21,522,659 | | | | 180,213,643 | |
| | | |
Total shares sold | | | | | 5,456,543 | | | | $53,850,747 | | | | 22,603,786 | | | | $188,734,281 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 21,117 | | | | $158,587 | |
| Select Shares | | + | | | 67,864 | | | | 671,851 | | | | 35,284 | | | | 264,981 | |
| | | |
Total shares reinvested | | | | | 67,864 | | | | $671,851 | | | | 56,401 | | | | $423,568 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | (8,990,779 | ) | | | ($80,730,410 | ) |
| Select Shares | | + | | | (24,147,177 | ) | | | (233,766,378 | ) | | | (22,328,833 | ) | | | (195,171,365 | ) |
| | | |
Total shares redeemed | | | | | (24,147,177 | ) | | | ($233,766,378 | ) | | | (31,319,612 | ) | | | ($275,901,775 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | (18,622,770 | ) | | | ($179,243,780 | ) | | | (8,659,425 | ) | | | ($86,743,926 | ) |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 39,558,618 | | | | $360,142,516 | | | | 48,218,043 | | | | $396,317,582 | |
| Total decrease | | + | | | (18,622,770 | ) | | | (140,730,810 | ) | | | (8,659,425 | ) | | | (36,175,066 | ) |
| | | |
End of period | | | | | 20,935,848 | | | | $219,411,706 | | | | 39,558,618 | | | | $360,142,516 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $682,704 | | | | | | | | $1,758,744 | |
| | | |
1 | | Effective October 7, 2009, all outstanding Investor Shares (7,267,956 shares valued at $67,209,699) combined with Select Shares, resulting in a single class of shares of the fund. |
52 See financial notes
Schwab Small-Cap Equity Fund™
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/091 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 11.14 | | | | 10.55 | | | | 18.22 | | | | 17.80 | | | | 15.78 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | (0.04 | ) | | | (0.02 | ) | | | (0.01 | ) | | | (0.10 | ) | | | (0.02 | ) | | |
| Net realized and unrealized gains (losses) | | | 2.86 | | | | 0.61 | | | | (6.59 | ) | | | 0.60 | | | | 2.49 | | | |
| | | |
| Total from investment operations | | | 2.82 | | | | 0.59 | | | | (6.60 | ) | | | 0.50 | | | | 2.47 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | — | | | | (0.00 | )2 | | | — | | | | — | | | | (0.02 | ) | | |
| Distributions from net realized gains | | | — | | | | — | | | | (1.07 | ) | | | (0.08 | ) | | | (0.43 | ) | | |
| | | |
| Total distributions | | | — | | | | (0.00 | )2 | | | (1.07 | ) | | | (0.08 | ) | | | (0.45 | ) | | |
| | | |
| Net asset value at end of period | | | 13.96 | | | | 11.14 | | | | 10.55 | | | | 18.22 | | | | 17.80 | | | |
| | | |
| Total return (%) | | | 25.31 | | | | 5.65 | | | | (38.16 | ) | | | 2.80 | | | | 15.89 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 1.12 | | | | 1.12 | | | | 1.11 | | | | 1.09 | | | | 1.12 | | | |
| Gross operating expenses | | | 1.14 | | | | 1.17 | | | | 1.12 | | | | 1.09 | | | | 1.14 | | | |
| Net investment income (loss) | | | (0.26 | ) | | | (0.16 | ) | | | (0.09 | ) | | | (0.28 | ) | | | (0.21 | ) | | |
| Portfolio turnover rate | | | 64 | | | | 85 | | | | 50 | | | | 106 | | | | 82 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 219 | | | | 202 | | | | 79 | | | | 228 | | | | 276 | | | |
1 Effective September 28, 2009, the Investor Shares class and the Select Shares class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Select Shares.
2 Amount is less than $0.01.
See financial notes 53
Schwab Small-Cap Equity Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 97 | .0% | | Common Stock | | | 182,337,093 | | | | 212,291,889 | |
| | 3 | .0% | | Short-Term Investments | | | 6,703,347 | | | | 6,703,347 | |
| |
| |
| | 100 | .0% | | Total Investments | | | 189,040,440 | | | | 218,995,236 | |
| | 0 | .8% | | Collateral Invested for Securities on Loan | | | 1,809,909 | | | | 1,809,909 | |
| | (0 | .8)% | | Other Assets and Liabilities, Net | | | | | | | (1,881,427 | ) |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 218,923,718 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 97.0% of net assets |
| |
Automobiles & Components 1.0%
|
| Standard Motor Products, Inc. | | | 42,100 | | | | 447,523 | |
TRW Automotive Holdings Corp. * | | | 38,600 | | | | 1,763,634 | |
| | | | | | | | | |
| | | | | | | | 2,211,157 | |
| |
Banks 3.9%
|
| 1st Source Corp. | | | 19,600 | | | | 346,332 | |
| BancFirst Corp. | | | 26,800 | | | | 1,101,480 | |
| Bank of the Ozarks, Inc. | | | 9,500 | | | | 361,095 | |
Capital City Bank Group, Inc. (a) | | | 4,200 | | | | 50,190 | |
| Chemical Financial Corp. | | | 17,400 | | | | 352,872 | |
| Community Trust Bancorp, Inc. | | | 12,500 | | | | 341,375 | |
| First Citizens BancShares, Inc., Class A | | | 7,600 | | | | 1,419,528 | |
| First Interstate BancSystem, Inc. | | | 14,300 | | | | 185,328 | |
| First Merchants Corp. | | | 11,600 | | | | 96,512 | |
| Fulton Financial Corp. | | | 63,700 | | | | 594,958 | |
| Great Southern Bancorp, Inc. | | | 2,200 | | | | 49,478 | |
Greene Bancshares, Inc. (a)* | | | 6,000 | | | | 23,160 | |
| Home Bancshares, Inc. | | | 7,240 | | | | 148,927 | |
| MainSource Financial Group, Inc. | | | 19,800 | | | | 163,746 | |
Metro Bancorp, Inc. * | | | 12,400 | | | | 125,364 | |
| Renasant Corp. | | | 12,500 | | | | 204,375 | |
| Republic Bancorp, Inc., Class A | | | 25,300 | | | | 517,132 | |
| Sandy Spring Bancorp, Inc. | | | 2,500 | | | | 43,500 | |
| Southwest Bancorp, Inc. | | | 38,800 | | | | 384,120 | |
| StellarOne Corp. | | | 11,800 | | | | 150,804 | |
| Territorial Bancorp, Inc. | | | 5,500 | | | | 93,335 | |
The Bancorp, Inc. * | | | 35,600 | | | | 266,644 | |
| Trustmark Corp. | | | 51,400 | | | | 1,135,426 | |
| UMB Financial Corp. | | | 5,400 | | | | 200,124 | |
| Union First Market Bankshares Corp. | | | 4,400 | | | | 56,584 | |
| WesBanco, Inc. | | | 12,600 | | | | 209,286 | |
| | | | | | | | | |
| | | | | | | | 8,621,675 | |
| |
Capital Goods 10.3%
|
| A.O. Smith Corp. | | | 11,000 | | | | 616,330 | |
| Aircastle Ltd. | | | 111,870 | | | | 1,030,323 | |
| Alamo Group, Inc. | | | 43,000 | | | | 1,032,000 | |
Altra Holdings, Inc. * | | | 92,300 | | | | 1,366,040 | |
| Applied Industrial Technologies, Inc. | | | 37,800 | | | | 1,149,498 | |
Blount International, Inc. * | | | 59,100 | | | | 886,500 | |
| Briggs & Stratton Corp. | | | 55,200 | | | | 971,520 | |
| Cubic Corp. | | | 26,700 | | | | 1,163,319 | |
EnerSys * | | | 49,900 | | | | 1,315,364 | |
EnPro Industries, Inc. * | | | 19,100 | | | | 671,174 | |
| Franklin Electric Co., Inc. | | | 25,100 | | | | 906,361 | |
General Cable Corp. * | | | 36,600 | | | | 1,022,604 | |
Griffon Corp. * | | | 46,900 | | | | 552,951 | |
Kadant, Inc. * | | | 11,300 | | | | 222,158 | |
L.B. Foster Co., Class A * | | | 1,400 | | | | 46,228 | |
Layne Christensen Co. * | | | 20,900 | | | | 583,946 | |
| Mueller Industries, Inc. | | | 27,700 | | | | 814,380 | |
| NACCO Industries, Inc., Class A | | | 1,500 | | | | 148,890 | |
Polypore International, Inc. * | | | 32,700 | | | | 1,087,929 | |
Powell Industries, Inc. * | | | 27,700 | | | | 854,822 | |
The Greenbrier Cos., Inc. * | | | 32,400 | | | | 589,680 | |
| Tredegar Corp. | | | 68,000 | | | | 1,311,720 | |
TriMas Corp. * | | | 51,900 | | | | 821,577 | |
| Trinity Industries, Inc. | | | 46,700 | | | | 1,061,491 | |
| Universal Forest Products, Inc. | | | 31,000 | | | | 934,340 | |
| Watts Water Technologies, Inc., Class A | | | 37,900 | | | | 1,332,943 | |
| | | | | | | | | |
| | | | | | | | 22,494,088 | |
| |
Commercial & Professional Supplies 4.1%
|
Acco Brands Corp. * | | | 172,100 | | | | 1,072,183 | |
APAC Customer Services, Inc. * | | | 40,100 | | | | 243,407 | |
Consolidated Graphics, Inc. * | | | 33,000 | | | | 1,536,150 | |
| Ennis, Inc. | | | 31,300 | | | | 564,652 | |
| G & K Services, Inc., Class A | | | 44,400 | | | | 1,097,568 | |
| HNI Corp. | | | 36,700 | | | | 905,022 | |
| Interface, Inc., Class A | | | 12,000 | | | | 172,680 | |
M&F Worldwide Corp. * | | | 20,000 | | | | 537,600 | |
Metalico, Inc. * | | | 73,600 | | | | 319,424 | |
| Multi-Color Corp. | | | 4,800 | | | | 76,560 | |
SFN Group, Inc. * | | | 189,500 | | | | 1,436,410 | |
| UniFirst Corp. | | | 23,300 | | | | 1,072,499 | |
| | | | | | | | | |
| | | | | | | | 9,034,155 | |
| |
Consumer Durables & Apparel 3.8%
|
Arctic Cat, Inc. * | | | 12,500 | | | | 166,375 | |
| Blyth, Inc. | | | 33,525 | | | | 1,345,023 | |
| Jarden Corp. | | | 40,100 | | | | 1,285,606 | |
La-Z-Boy, Inc. * | | | 77,100 | | | | 599,067 | |
Libbey, Inc. * | | | 51,000 | | | | 677,790 | |
Lifetime Brands, Inc. * | | | 3,800 | | | | 48,792 | |
| Oxford Industries, Inc. | | | 19,800 | | | | 455,994 | |
Perry Ellis International, Inc. * | | | 50,200 | | | | 1,128,496 | |
Quiksilver, Inc. * | | | 376,681 | | | | 1,570,759 | |
RC2 Corp. * | | | 36,700 | | | | 774,370 | |
54 See financial notes
Schwab Small-Cap Equity Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Steinway Musical Instruments, Inc. * | | | 3,100 | | | | 52,731 | |
| The Jones Group, Inc. | | | 12,500 | | | | 180,750 | |
Unifi, Inc. * | | | 15,100 | | | | 71,423 | |
| | | | | | | | | |
| | | | | | | | 8,357,176 | |
| |
Consumer Services 5.4%
|
Biglari Holdings, Inc. * | | | 3,200 | | | | 1,066,848 | |
| Cracker Barrel Old Country Store, Inc. | | | 25,900 | | | | 1,395,751 | |
Monarch Casino & Resort, Inc. * | | | 7,500 | | | | 86,625 | |
Multimedia Games, Inc. * | | | 16,300 | | | | 63,896 | |
| P.F. Chang’s China Bistro, Inc. | | | 25,800 | | | | 1,184,736 | |
Panera Bread Co., Class A * | | | 16,500 | | | | 1,476,915 | |
Papa John’s International, Inc. * | | | 44,800 | | | | 1,157,184 | |
Ruby Tuesday, Inc. * | | | 113,000 | | | | 1,367,300 | |
| Service Corp. International | | | 135,000 | | | | 1,117,800 | |
Steiner Leisure Ltd. * | | | 11,600 | | | | 449,732 | |
The Cheesecake Factory, Inc. * | | | 48,100 | | | | 1,400,672 | |
| Universal Technical Institute, Inc. | | | 58,300 | | | | 1,128,105 | |
| | | | | | | | | |
| | | | | | | | 11,895,564 | |
| |
Diversified Financials 6.3%
|
| Advance America Cash Advance Centers, Inc. | | | 105,400 | | | | 525,946 | |
| BGC Partners, Inc., Class A | | | 192,200 | | | | 1,333,868 | |
| Calamos Asset Management, Inc., Class A | | | 104,900 | | | | 1,257,751 | |
Cardtronics, Inc. * | | | 87,600 | | | | 1,484,820 | |
Dollar Financial Corp. * | | | 51,700 | | | | 1,293,534 | |
First Cash Financial Services, Inc. * | | | 53,000 | | | | 1,540,710 | |
HFF, Inc., Class A * | | | 19,300 | | | | 189,719 | |
| MarketAxess Holdings, Inc. | | | 36,300 | | | | 659,571 | |
MF Global Holdings Ltd. * | | | 139,100 | | | | 1,089,153 | |
| Nelnet, Inc., Class A | | | 73,900 | | | | 1,660,533 | |
Penson Worldwide, Inc. * | | | 700 | | | | 3,605 | |
PHH Corp. * | | | 70,000 | | | | 1,348,900 | |
Rewards Network, Inc. * | | | 18,366 | | | | 251,614 | |
World Acceptance Corp. * | | | 23,800 | | | | 1,026,970 | |
| | | | | | | | | |
| | | | | | | | 13,666,694 | |
| |
Energy 6.0%
|
Bill Barrett Corp. * | | | 3,300 | | | | 124,575 | |
Callon Petroleum Co. * | | | 117,800 | | | | 580,754 | |
Crosstex Energy, Inc. * | | | 145,400 | | | | 1,179,194 | |
CVR Energy, Inc. * | | | 87,100 | | | | 829,192 | |
Dawson Geophysical Co. * | | | 15,100 | | | | 375,084 | |
| DHT Holdings, Inc. | | | 42,000 | | | | 180,600 | |
Exterran Holdings, Inc. * | | | 35,400 | | | | 891,018 | |
Green Plains Renewable Energy, Inc. (a)* | | | 57,300 | | | | 637,176 | |
| Gulf Island Fabrication, Inc. | | | 32,100 | | | | 733,164 | |
International Coal Group, Inc. * | | | 359,900 | | | | 2,022,638 | |
Newpark Resources, Inc. * | | | 120,700 | | | | 709,716 | |
OYO Geospace Corp. * | | | 6,600 | | | | 400,026 | |
Parker Drilling Co. * | | | 174,900 | | | | 739,827 | |
SEACOR Holdings, Inc. * | | | 12,000 | | | | 1,137,000 | |
TETRA Technologies, Inc. * | | | 109,800 | | | | 1,071,648 | |
| World Fuel Services Corp. | | | 54,800 | | | | 1,547,004 | |
| | | | | | | | | |
| | | | | | | | 13,158,616 | |
| |
Food, Beverage & Tobacco 1.9%
|
Alliance One International, Inc. * | | | 269,700 | | | | 1,192,074 | |
| Coca-Cola Bottling Co. | | | 14,100 | | | | 751,812 | |
Dole Food Co., Inc. (a)* | | | 29,200 | | | | 269,224 | |
| J & J Snack Foods Corp. | | | 24,700 | | | | 1,058,889 | |
John B. Sanfilippo & Son, Inc. * | | | 12,900 | | | | 173,118 | |
| National Beverage Corp. | | | 3,200 | | | | 45,760 | |
| Sanderson Farms, Inc. | | | 13,400 | | | | 562,532 | |
Seneca Foods Corp., Class A * | | | 5,100 | | | | 117,810 | |
| | | | | | | | | |
| | | | | | | | 4,171,219 | |
| |
Health Care Equipment & Services 4.0%
|
| America Service Group, Inc. | | | 14,100 | | | | 215,730 | |
American Medical Systems Holdings, Inc. * | | | 60,600 | | | | 1,224,120 | |
AMERIGROUP Corp. * | | | 4,400 | | | | 183,612 | |
| Cantel Medical Corp. | | | 36,900 | | | | 683,388 | |
Centene Corp. * | | | 51,800 | | | | 1,156,176 | |
| Chemed Corp. | | | 7,000 | | | | 412,580 | |
Cross Country Healthcare, Inc. * | | | 20,700 | | | | 151,110 | |
CryoLife, Inc. * | | | 46,100 | | | | 297,345 | |
Emergency Medical Services Corp., Class A * | | | 23,300 | | | | 1,267,054 | |
Hanger Orthopedic Group, Inc. * | | | 25,400 | | | | 475,488 | |
Healthspring, Inc. * | | | 19,500 | | | | 569,205 | |
| Invacare Corp. | | | 29,200 | | | | 788,400 | |
Magellan Health Services, Inc. * | | | 23,600 | | | | 1,132,800 | |
| National Healthcare Corp. | | | 1,300 | | | | 47,333 | |
Providence Service Corp. * | | | 11,700 | | | | 192,231 | |
| | | | | | | | | |
| | | | | | | | 8,796,572 | |
| |
Household & Personal Products 0.4%
|
Central Garden & Pet Co., Class A * | | | 73,800 | | | | 771,210 | |
| |
Insurance 1.7%
|
| Allied World Assurance Co. Holdings Ltd. | | | 20,300 | | | | 1,161,363 | |
| American Equity Investment Life Holding Co. | | | 77,400 | | | | 839,790 | |
| American Financial Group, Inc. | | | 39,100 | | | | 1,195,678 | |
| FBL Financial Group, Inc., Class A | | | 6,000 | | | | 156,960 | |
| Meadowbrook Insurance Group, Inc. | | | 20,400 | | | | 176,052 | |
| Platinum Underwriters Holdings Ltd. | | | 5,300 | | | | 228,165 | |
| | | | | | | | | |
| | | | | | | | 3,758,008 | |
| |
Materials 3.3%
|
Ferro Corp. * | | | 79,100 | | | | 1,085,252 | |
| Innophos Holdings, Inc. | | | 22,400 | | | | 822,528 | |
| Minerals Technologies, Inc. | | | 5,700 | | | | 334,419 | |
| Neenah Paper, Inc. | | | 51,300 | | | | 787,455 | |
Omnova Solutions, Inc. * | | | 30,900 | | | | 246,582 | |
PolyOne Corp. * | | | 135,300 | | | | 1,748,076 | |
| Rock-Tenn Co., Class A | | | 32,400 | | | | 1,841,940 | |
Rockwood Holdings, Inc. * | | | 10,300 | | | | 349,376 | |
| | | | | | | | | |
| | | | | | | | 7,215,628 | |
See financial notes 55
Schwab Small-Cap Equity Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Media 2.6%
|
AH Belo Corp., Class A * | | | 25,000 | | | | 181,750 | |
| Cinemark Holdings, Inc. | | | 39,700 | | | | 696,735 | |
Journal Communications, Inc., Class A * | | | 64,100 | | | | 295,501 | |
Media General, Inc., Class A * | | | 14,100 | | | | 77,691 | |
Mediacom Communications Corp., Class A * | | | 78,100 | | | | 538,890 | |
Sinclair Broadcast Group, Inc., Class A * | | | 70,400 | | | | 562,496 | |
The E.W. Scripps Co., Class A * | | | 40,600 | | | | 354,844 | |
The New York Times Co., Class A * | | | 126,100 | | | | 967,187 | |
Valassis Communications, Inc. * | | | 60,800 | | | | 2,006,400 | |
| | | | | | | | | |
| | | | | | | | 5,681,494 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 8.2%
|
Albany Molecular Research, Inc. * | | | 135,100 | | | | 864,640 | |
Bio-Rad Laboratories, Inc., Class A * | | | 12,000 | | | | 1,087,440 | |
Bruker Corp. * | | | 87,000 | | | | 1,304,130 | |
Caliper Life Sciences, Inc. * | | | 78,000 | | | | 351,000 | |
Cambrex Corp. * | | | 93,300 | | | | 422,649 | |
Cubist Pharmaceuticals, Inc. * | | | 50,000 | | | | 1,164,000 | |
Dionex Corp. * | | | 5,500 | | | | 490,765 | |
Enzon Pharmaceuticals, Inc. * | | | 98,900 | | | | 1,112,625 | |
Hi-Tech Pharmacal Co., Inc. * | | | 27,900 | | | | 603,477 | |
Impax Laboratories, Inc. * | | | 21,300 | | | | 401,292 | |
Kendle International, Inc. * | | | 84,500 | | | | 769,795 | |
Martek Biosciences Corp. * | | | 54,200 | | | | 1,189,690 | |
| Medicis Pharmaceutical Corp., Class A | | | 58,900 | | | | 1,752,275 | |
Par Pharmaceutical Cos., Inc. * | | | 58,100 | | | | 1,888,831 | |
PAREXEL International Corp. * | | | 51,500 | | | | 1,107,250 | |
| PerkinElmer, Inc. | | | 19,900 | | | | 466,655 | |
Santarus, Inc. * | | | 23,900 | | | | 74,807 | |
SuperGen, Inc. * | | | 38,400 | | | | 106,752 | |
Synta Pharmaceuticals Corp. * | | | 51,500 | | | | 190,550 | |
The Medicines Co. * | | | 72,700 | | | | 928,379 | |
ViroPharma, Inc. * | | | 84,500 | | | | 1,382,420 | |
Zalicus, Inc. * | | | 161,100 | | | | 209,430 | |
| | | | | | | | | |
| | | | | | | | 17,868,852 | |
| |
Real Estate 6.8%
|
| Acadia Realty Trust | | | 22,900 | | | | 436,932 | |
Ashford Hospitality Trust * | | | 108,500 | | | | 1,101,275 | |
| Colonial Properties Trust | | | 67,900 | | | | 1,217,447 | |
| Cousins Properties, Inc. | | | 70,100 | | | | 519,441 | |
| Equity Lifestyle Properties, Inc. | | | 17,800 | | | | 1,013,176 | |
FelCor Lodging Trust, Inc. * | | | 160,500 | | | | 987,075 | |
First Industrial Realty Trust, Inc. (a)* | | | 120,400 | | | | 882,532 | |
| Healthcare Realty Trust, Inc. | | | 7,700 | | | | 185,878 | |
| Home Properties, Inc. | | | 21,500 | | | | 1,170,675 | |
| LaSalle Hotel Properties | | | 49,600 | | | | 1,175,024 | |
| Potlatch Corp. | | | 25,800 | | | | 878,490 | |
| PS Business Parks, Inc. | | | 17,600 | | | | 1,042,976 | |
| Saul Centers, Inc. | | | 17,500 | | | | 746,900 | |
| Sovran Self Storage, Inc. | | | 12,300 | | | | 480,561 | |
Sunstone Hotel Investors, Inc. * | | | 88,700 | | | | 962,395 | |
| Tanger Factory Outlet Centers, Inc. | | | 24,500 | | | | 1,174,040 | |
U-Store-It Trust | | | 108,400 | | | | 933,324 | |
| | | | | | | | | |
| | | | | | | | 14,908,141 | |
| |
Retailing 2.1%
|
| Dillard’s, Inc., Class A | | | 22,300 | | | | 568,873 | |
Group 1 Automotive, Inc. * | | | 9,300 | | | | 327,918 | |
Jo-Ann Stores, Inc. * | | | 30,000 | | | | 1,297,500 | |
Retail Ventures, Inc. * | | | 15,600 | | | | 212,004 | |
The Children’s Place Retail Stores, Inc. * | | | 25,600 | | | | 1,127,936 | |
| The Finish Line, Inc., Class A | | | 75,200 | | | | 1,150,560 | |
| | | | | | | | | |
| | | | | | | | 4,684,791 | |
| |
Semiconductors & Semiconductor Equipment 5.0%
|
Amkor Technology, Inc. * | | | 175,900 | | | | 1,268,239 | |
ATMI, Inc. * | | | 34,500 | | | | 609,615 | |
Conexant Systems, Inc. * | | | 397,800 | | | | 600,678 | |
Diodes, Inc. * | | | 60,100 | | | | 1,320,998 | |
Fairchild Semiconductor International, Inc. * | | | 111,600 | | | | 1,257,732 | |
GSI Technology, Inc. * | | | 13,200 | | | | 91,740 | |
IXYS Corp. * | | | 16,000 | | | | 163,840 | |
Lattice Semiconductor Corp. * | | | 335,800 | | | | 1,631,988 | |
MKS Instruments, Inc. * | | | 31,400 | | | | 648,410 | |
Photronics, Inc. * | | | 236,700 | | | | 1,486,476 | |
RF Micro Devices, Inc. * | | | 238,600 | | | | 1,739,394 | |
| | | | | | | | | |
| | | | | | | | 10,819,110 | |
| |
Software & Services 7.7%
|
ACI Worldwide, Inc. * | | | 47,900 | | | | 1,167,323 | |
Acxiom Corp. * | | | 75,200 | | | | 1,319,760 | |
CSG Systems International, Inc. * | | | 52,900 | | | | 1,028,376 | |
Deltek, Inc. * | | | 12,000 | | | | 94,320 | |
| DST Systems, Inc. | | | 8,600 | | | | 372,122 | |
| EarthLink, Inc. | | | 128,100 | | | | 1,151,619 | |
Euronet Worldwide, Inc. * | | | 63,000 | | | | 1,137,780 | |
Internap Network Services Corp. * | | | 162,900 | | | | 814,500 | |
Lawson Software, Inc. * | | | 138,700 | | | | 1,234,430 | |
Lionbridge Technologies, Inc. * | | | 23,300 | | | | 116,500 | |
Manhattan Associates, Inc. * | | | 43,300 | | | | 1,332,774 | |
ModusLink Global Solutions, Inc. * | | | 24,200 | | | | 160,446 | |
Monotype Imaging Holdings, Inc. * | | | 12,800 | | | | 121,984 | |
Radiant Systems, Inc. * | | | 47,600 | | | | 928,676 | |
Saba Software, Inc. * | | | 3,700 | | | | 22,052 | |
TeleTech Holdings, Inc. * | | | 76,900 | | | | 1,167,342 | |
TIBCO Software, Inc. * | | | 19,700 | | | | 378,634 | |
Unisys Corp. * | | | 41,240 | | | | 950,582 | |
| United Online, Inc. | | | 32,800 | | | | 202,704 | |
VeriFone Systems, Inc. * | | | 69,800 | | | | 2,361,334 | |
Virtusa Corp. * | | | 39,100 | | | | 557,566 | |
Web.com Group, Inc. * | | | 30,400 | | | | 188,480 | |
| | | | | | | | | |
| | | | | | | | 16,809,304 | |
| |
Technology Hardware & Equipment 4.3%
|
Arris Group, Inc. * | | | 40,800 | | | | 379,848 | |
Benchmark Electronics, Inc. * | | | 33,900 | | | | 556,977 | |
| Black Box Corp. | | | 12,000 | | | | 398,400 | |
Brightpoint, Inc. * | | | 83,400 | | | | 624,666 | |
Checkpoint Systems, Inc. * | | | 14,700 | | | | 323,400 | |
56 See financial notes
Schwab Small-Cap Equity Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Coherent, Inc. * | | | 3,600 | | | | 151,056 | |
| CTS Corp. | | | 59,200 | | | | 600,880 | |
Digi International, Inc. * | | | 15,200 | | | | 146,832 | |
Insight Enterprises, Inc. * | | | 93,800 | | | | 1,418,256 | |
Mercury Computer Systems, Inc. * | | | 22,300 | | | | 353,232 | |
Oplink Communications, Inc. * | | | 64,100 | | | | 1,120,468 | |
OSI Systems, Inc. * | | | 11,600 | | | | 417,600 | |
| Plantronics, Inc. | | | 38,200 | | | | 1,370,616 | |
Symmetricom, Inc. * | | | 74,300 | | | | 462,889 | |
Vishay Intertechnology, Inc. * | | | 92,500 | | | | 1,045,250 | |
| | | | | | | | | |
| | | | | | | | 9,370,370 | |
| |
Telecommunication Services 2.4%
|
Global Crossing Ltd. * | | | 84,000 | | | | 1,142,400 | |
IDT Corp., Class B * | | | 62,800 | | | | 921,904 | |
| USA Mobility, Inc. | | | 74,600 | | | | 1,255,518 | |
Vonage Holdings Corp. * | | | 734,500 | | | | 1,872,975 | |
| | | | | | | | | |
| | | | | | | | 5,192,797 | |
| |
Transportation 1.5%
|
Alaska Air Group, Inc. * | | | 33,600 | | | | 1,774,080 | |
AMERCO * | | | 5,500 | | | | 452,760 | |
Atlas Air Worldwide Holdings, Inc. * | | | 12,900 | | | | 674,154 | |
| International Shipholding Corp. | | | 16,600 | | | | 464,302 | |
| | | | | | | | | |
| | | | | | | | 3,365,296 | |
| |
Utilities 4.3%
|
| Chesapeake Utilities Corp. | | | 8,900 | | | | 326,541 | |
El Paso Electric Co. * | | | 62,200 | | | | 1,530,120 | |
| Nicor, Inc. | | | 41,000 | | | | 1,952,830 | |
| Southwest Gas Corp. | | | 60,500 | | | | 2,102,980 | |
| The Laclede Group, Inc. | | | 28,100 | | | | 986,591 | |
| UGI Corp. | | | 44,700 | | | | 1,345,023 | |
| Unisource Energy Corp. | | | 34,100 | | | | 1,195,887 | |
| | | | | | | | | |
| | | | | | | | 9,439,972 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $182,337,093) | | | 212,291,889 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Dates | | ($) | | ($) |
| |
Short-Term Investments 3.0% of net assets |
| |
Time Deposits 2.8%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 6,207,331 | | | | 6,207,331 | |
| |
U.S. Treasury Obligation 0.2%
|
| U.S. Treasury Bill |
0.14%, 12/16/10 (b) | | | 496,100 | | | | 496,016 | |
| | | | | | | | | |
| Total Short-Term Investments |
| (Cost $6,703,347) | | | 6,703,347 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Collateral Invested for Securities on Loan 0.8% of net assets |
| | | | | | | | | |
| | | | | | | | | |
| Invesco Short Term Investments Trust Government & Agency Portfolio | | | 1,809,909 | | | | 1,809,909 | |
| | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $1,809,909) | | | 1,809,909 | |
| | | | | |
| |
|
End of Collateral Invested for Securities on Loan |
At 10/31/10, the tax basis cost of the fund’s investments was $189,137,913 and the unrealized appreciation and depreciation were $39,443,144 and ($9,585,821), respectively, with a net unrealized appreciation of $29,857,323.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is on loan. |
| (b) | | All or a portion of this security is held as collateral for open futures contracts. |
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contract |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Russell 2000 Index, mini, Long, expires 12/17/10 | | | 75 | | | | 5,266,500 | | | | 524,081 | |
See financial notes 57
Schwab Small-Cap Equity Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value including securities on loan of $1,767,899 (cost $189,040,440) | | | | | $218,995,236 | |
| Cash | | | | | 6 | |
| Collateral invested for securities on loan | | | | | 1,809,909 | |
| Receivables: | | | | | | |
| Investments sold | | | | | 2,657,920 | |
| Dividends | | | | | 65,595 | |
| Fund shares sold | | | | | 56,114 | |
| Due from broker for futures | | | | | 34,500 | |
| Income from securities on loan | | | | | 1,119 | |
| Interest | | | | | 15 | |
| Prepaid expenses | | + | | | 5,429 | |
| | | |
Total assets | | | | | 223,625,843 | |
| |
Liabilities |
|
| Collateral held for securities on loan | | | | | 1,809,909 | |
| Payables: | | | | | | |
| Investments bought | | | | | 2,669,877 | |
| Investment adviser and administrator fees | | | | | 14,308 | |
| Shareholder service fees | | | | | 4,634 | |
| Fund shares redeemed | | | | | 156,347 | |
| Accrued expenses | | + | | | 47,050 | |
| | | |
Total liabilities | | | | | 4,702,125 | |
| |
Net Assets |
|
Total assets | | | | | 223,625,843 | |
Total liabilities | | − | | | 4,702,125 | |
| | | |
Net assets | | | | | $218,923,718 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 280,207,146 | |
| Net realized capital losses | | | | | (91,762,305 | ) |
| Net unrealized capital gains | | | | | 30,478,877 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $218,923,718 | | | | 15,682,105 | | | | | $13.96 | | | |
58 See financial notes
Schwab Small-Cap Equity Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends | | | | | $1,842,487 | |
| Interest | | | | | 2,136 | |
| Securities on loan | | + | | | 25,651 | |
| | | |
Total investment income | | | | | 1,870,274 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 1,746,892 | |
| Shareholder service fees | | | | | 527,028 | |
| Portfolio accounting fees | | | | | 42,833 | |
| Professional fees | | | | | 33,012 | |
| Shareholder reports | | | | | 29,040 | |
| Registration fees | | | | | 22,262 | |
| Transfer agent fees | | | | | 18,423 | |
| Custodian fees | | | | | 13,225 | |
| Trustees’ fees | | | | | 6,601 | |
| Other expenses | | + | | | 14,116 | |
| | | |
| Total expenses | | | | | 2,453,432 | |
| Expense reduction by adviser and Schwab | | − | | | 28,854 | |
| | | |
Net expenses | | − | | | 2,424,578 | |
| | | |
Net investment loss | | | | | (554,304 | ) |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on investments | | | | | 19,495,149 | |
| Net realized gains on futures contracts | | + | | | 467,260 | |
| | | |
Net realized gains | | | | | 19,962,409 | |
| Net unrealized gains on investments | | | | | 28,252,619 | |
| Net unrealized gains on futures contracts | | + | | | 931,026 | |
| | | |
Net unrealized gains | | + | | | 29,183,645 | |
| | | |
Net realized and unrealized gains | | | | | 49,146,054 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $48,591,750 | |
See financial notes 59
Schwab Small-Cap Equity Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment loss | | | | | ($554,304 | ) | | | ($280,891 | ) |
| Net realized gains (losses) | | | | | 19,962,409 | | | | (63,571,031 | ) |
| Net unrealized gains | | + | | | 29,183,645 | | | | 72,547,447 | |
| | | |
Increase in net assets from operations | | | | | 48,591,750 | | | | 8,695,525 | |
| |
Distributions to Shareholders1 |
|
Distributions from net investment income | | | | | | | | | | |
| Select Shares | | + | | | — | | | | 35,897 | |
| | | |
Total distributions from net investment income | | | | | $— | | | | $35,897 | |
Transactions in Fund Shares1
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 599,285 | | | | $5,606,439 | |
| Select Shares | | + | | | 1,457,019 | | | | 18,515,745 | | | | 12,682,353 | | | | 149,287,224 | |
| | | |
Total shares sold | | | | | 1,457,019 | | | | $18,515,745 | | | | 13,281,638 | | | | $154,893,663 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | — | | | | $— | |
| Select Shares | | + | | | — | | | | — | | | | 3,591 | | | | 32,357 | |
| | | |
Total shares reinvested | | | | | — | | | | $— | | | | 3,591 | | | | $32,357 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | (13,557,844 | ) | | | ($156,099,674 | ) |
| Select Shares | | + | | | (3,898,642 | ) | | | (50,114,637 | ) | | | (2,043,591 | ) | | | (19,986,185 | ) |
| | | |
Total shares redeemed | | | | | (3,898,642 | ) | | | ($50,114,637 | ) | | | (15,601,435 | ) | | | ($176,085,859 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | (2,441,623 | ) | | | ($31,598,892 | ) | | | (2,316,206 | ) | | | ($21,159,839 | ) |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 18,123,728 | | | | $201,930,860 | | | | 20,439,934 | | | | $214,431,071 | |
| Total increase or decrease | | + | | | (2,441,623 | ) | | | 16,992,858 | | | | (2,316,206 | ) | | | (12,500,211 | ) |
| | | |
End of period | | | | | 15,682,105 | | | | $218,923,718 | | | | 18,123,728 | | | | $201,930,860 | |
| | | |
1 | | Effective September 28, 2009, all outstanding Investor Shares (10,689,600 shares valued at $129,208,402) combined with Select Shares, resulting in a single class of shares of the fund. |
60 See financial notes
Schwab Hedged Equity Fund™
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/091 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 13.45 | | | | 12.55 | | | | 16.39 | | | | 15.98 | | | | 14.46 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | (0.08 | ) | | | (0.05 | ) | | | (0.05 | ) | | | 0.14 | | | | 0.07 | | | |
| Net realized and unrealized gains (losses) | | | 1.42 | | | | 0.96 | | | | (3.63 | ) | | | 0.36 | | | | 1.76 | | | |
| | | |
| Total from investment operations | | | 1.34 | | | | 0.91 | | | | (3.68 | ) | | | 0.50 | | | | 1.83 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | — | | | | (0.01 | ) | | | (0.16 | ) | | | (0.09 | ) | | | (0.05 | ) | | |
| Distributions from net realized gains | | | — | | | | — | | | | — | | | | — | | | | (0.26 | ) | | |
| | | |
| Total distributions | | | — | | | | (0.01 | ) | | | (0.16 | ) | | | (0.09 | ) | | | (0.31 | ) | | |
| | | |
| Net asset value at end of period | | | 14.79 | | | | 13.45 | | | | 12.55 | | | | 16.39 | | | | 15.98 | | | |
| | | |
| Total return (%) | | | 9.96 | | | | 7.28 | | | | (22.66 | ) | | | 3.11 | | | | 12.82 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
| Net operating expenses (including dividend expense on short sales) | | | 1.97 | | | | 2.07 | 2 | | | 2.17 | 3 | | | 2.03 | 3 | | | 1.90 | | | |
| Net operating expenses (excluding dividend expense on short sales) | | | 1.38 | 4 | | | 1.62 | 2,5 | | | 1.77 | | | | 1.77 | | | | 1.77 | 6 | | |
| Gross operating expenses | | | 1.99 | | | | 2.29 | | | | 2.19 | | | | 2.04 | | | | 1.97 | | | |
| Net investment income (loss) | | | (0.54 | ) | | | (0.41 | ) | | | (0.17 | ) | | | 0.79 | | | | 0.77 | | | |
| Portfolio turnover rate | | | 115 | | | | 169 | | | | 138 | | | | 72 | | | | 100 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 329 | | | | 306 | | | | 343 | | | | 948 | | | | 931 | | | |
1 Effective September 28, 2009, the Investor Shares class and the Select Shares class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Select Shares.
2 Effective May 5, 2009, the net operating expense limitation was lowered. The ratio presented for period ended 10/31/09 is a blended rate.
3 The ratio of net operating expense would have been 2.02% and 2.16% for the periods ended 10/31/07 and 10/31/08, respectively, if interest expense had not been incurred.
4 The ratio of net operating expenses would have been 1.31%, if stock loan fees on short sales had not been incurred.
5 The ratio of net operating expenses would have been 1.47%, if stock loan fees on short sales had not been incurred.
6 The ratio of net operating expenses would have been 1.76%, if interest expense had not been incurred.
See financial notes 61
Schwab Hedged Equity Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 98 | .2% | | Common Stock | | | 286,871,392 | | | | 323,274,187 | |
| | 1 | .9% | | Other Investment Company | | | 6,206,196 | | | | 6,206,196 | |
| | 0 | .2% | | Short-Term Investment | | | 661,389 | | | | 661,388 | |
| |
| |
| | 100 | .3% | | Total Investments | | | 293,738,977 | | | | 330,141,771 | |
| | (32 | .7)% | | Short Sales | | | (98,476,101 | ) | | | (107,692,899 | ) |
| | 32 | .4% | | Other Assets and Liabilities, Net | | | | | | | 106,636,373 | |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 329,085,245 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 98.2% of net assets |
| |
Automobiles & Components 0.9%
|
Ford Motor Co. (a)* | | | 212,400 | | | | 3,001,212 | |
| |
Banks 3.6%
|
| Fifth Third Bancorp | | | 58,800 | | | | 738,528 | |
Huntington Bancshares, Inc. (a) | | | 377,700 | | | | 2,141,559 | |
PNC Financial Services Group, Inc. (a) | | | 55,200 | | | | 2,975,280 | |
Wells Fargo & Co. (a) | | | 233,400 | | | | 6,087,072 | |
| | | | | | | | | |
| | | | | | | | 11,942,439 | |
| |
Capital Goods 5.5%
|
| A.O. Smith Corp. | | | 31,700 | | | | 1,776,151 | |
Cubic Corp. (a) | | | 42,500 | | | | 1,851,725 | |
| Eaton Corp. | | | 17,800 | | | | 1,581,174 | |
EnerSys (a)* | | | 15,500 | | | | 408,580 | |
General Cable Corp. (a)* | | | 109,400 | | | | 3,056,636 | |
| General Electric Co. | | | 95,800 | | | | 1,534,716 | |
| KBR, Inc. | | | 37,300 | | | | 947,420 | |
Oshkosh Corp. * | | | 7,200 | | | | 212,472 | |
| Regal-Beloit Corp. | | | 10,400 | | | | 600,184 | |
| The Timken Co. | | | 43,500 | | | | 1,801,770 | |
| Tyco International Ltd. | | | 111,700 | | | | 4,275,876 | |
| | | | | | | | | |
| | | | | | | | 18,046,704 | |
| |
Commercial & Professional Supplies 2.6%
|
| Avery Dennison Corp. | | | 104,100 | | | | 3,784,035 | |
KAR Auction Services, Inc. * | | | 11,000 | | | | 141,680 | |
| R.R. Donnelley & Sons Co. | | | 248,800 | | | | 4,590,360 | |
| | | | | | | | | |
| | | | | | | | 8,516,075 | |
| |
Consumer Durables & Apparel 1.3%
|
Hanesbrands, Inc. * | | | 66,900 | | | | 1,659,120 | |
| Jarden Corp. | | | 4,300 | | | | 137,858 | |
| The Jones Group, Inc. | | | 41,800 | | | | 604,428 | |
| Whirlpool Corp. | | | 25,700 | | | | 1,948,831 | |
| | | | | | | | | |
| | | | | | | | 4,350,237 | |
| |
Consumer Services 4.6%
|
| Cracker Barrel Old Country Store, Inc. | | | 58,700 | | | | 3,163,343 | |
Panera Bread Co., Class A * | | | 51,600 | | | | 4,618,716 | |
Service Corp. International (a) | | | 384,300 | | | | 3,182,004 | |
Starbucks Corp. (a) | | | 147,100 | | | | 4,189,408 | |
| | | | | | | | | |
| | | | | | | | 15,153,471 | |
| |
Diversified Financials 8.4%
|
| Discover Financial Services | | | 282,200 | | | | 4,980,830 | |
JPMorgan Chase & Co. (a) | | | 176,100 | | | | 6,626,643 | |
| Legg Mason, Inc. | | | 20,900 | | | | 648,527 | |
| State Street Corp. | | | 48,300 | | | | 2,017,008 | |
The Goldman Sachs Group, Inc. (a) | | | 35,300 | | | | 5,681,535 | |
The NASDAQ OMX Group, Inc. (a)* | | | 168,300 | | | | 3,537,666 | |
UBS AG - Reg’d * | | | 242,100 | | | | 4,120,542 | |
| | | | | | | | | |
| | | | | | | | 27,612,751 | |
| |
Energy 14.6%
|
| Anadarko Petroleum Corp. | | | 31,700 | | | | 1,951,769 | |
Cameron International Corp. (a)* | | | 50,000 | | | | 2,187,500 | |
| Chevron Corp. | | | 47,800 | | | | 3,948,758 | |
| ConocoPhillips | | | 88,600 | | | | 5,262,840 | |
El Paso Corp. (a) | | | 227,900 | | | | 3,021,954 | |
| Hess Corp. | | | 63,700 | | | | 4,015,011 | |
Marathon Oil Corp. (a) | | | 119,700 | | | | 4,257,729 | |
| Murphy Oil Corp. | | | 70,300 | | | | 4,580,748 | |
National Oilwell Varco, Inc. (a) | | | 107,900 | | | | 5,800,704 | |
Occidental Petroleum Corp. (a) | | | 15,000 | | | | 1,179,450 | |
Peabody Energy Corp. (a) | | | 18,000 | | | | 952,200 | |
SEACOR Holdings, Inc. * | | | 14,600 | | | | 1,383,350 | |
| Sunoco, Inc. | | | 25,400 | | | | 951,738 | |
The Williams Cos., Inc. (a) | | | 172,700 | | | | 3,716,504 | |
World Fuel Services Corp. (a) | | | 165,100 | | | | 4,660,773 | |
| | | | | | | | | |
| | | | | | | | 47,871,028 | |
| |
Food & Staples Retailing 0.4%
|
| Wal-Mart Stores, Inc. | | | 22,300 | | | | 1,207,991 | |
| |
Food, Beverage & Tobacco 6.9%
|
Archer-Daniels-Midland Co. (a) | | | 153,600 | | | | 5,117,952 | |
Corn Products International, Inc. (a) | | | 106,100 | | | | 4,514,555 | |
| Dr Pepper Snapple Group, Inc. | | | 9,500 | | | | 347,225 | |
| H.J. Heinz Co. | | | 56,200 | | | | 2,759,982 | |
| Hormel Foods Corp. | | | 18,700 | | | | 858,704 | |
Kraft Foods, Inc., Class A (a) | | | 69,700 | | | | 2,249,219 | |
Sanderson Farms, Inc. (a) | | | 65,100 | | | | 2,732,898 | |
62 See financial notes
Schwab Hedged Equity Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Tyson Foods, Inc., Class A (a) | | | 271,500 | | | | 4,221,825 | |
| | | | | | | | | |
| | | | | | | | 22,802,360 | |
| |
Health Care Equipment & Services 1.2%
|
| Cardinal Health, Inc. | | | 36,700 | | | | 1,273,123 | |
McKesson Corp. (a) | | | 41,900 | | | | 2,764,562 | |
| | | | | | | | | |
| | | | | | | | 4,037,685 | |
| |
Household & Personal Products 1.2%
|
Energizer Holdings, Inc. * | | | 53,100 | | | | 3,970,818 | |
| |
Insurance 2.6%
|
American Financial Group, Inc. (a) | | | 150,500 | | | | 4,602,290 | |
| Fidelity National Financial, Inc., Class A | | | 4,800 | | | | 64,272 | |
| PartnerRe Ltd. | | | 20,900 | | | | 1,657,788 | |
Prudential Financial, Inc. (a) | | | 40,000 | | | | 2,103,200 | |
| | | | | | | | | |
| | | | | | | | 8,427,550 | |
| |
Materials 7.0%
|
| Ashland, Inc. | | | 44,100 | | | | 2,276,883 | |
| Ball Corp. | | | 28,900 | | | | 1,860,004 | |
| Bemis Co., Inc. | | | 37,600 | | | | 1,194,176 | |
| Cabot Corp. | | | 2,800 | | | | 95,256 | |
Crown Holdings, Inc. * | | | 29,700 | | | | 956,043 | |
| Cytec Industries, Inc. | | | 30,500 | | | | 1,510,360 | |
International Paper Co. (a) | | | 156,300 | | | | 3,951,264 | |
| MeadWestvaco Corp. | | | 174,100 | | | | 4,479,593 | |
PolyOne Corp. (a)* | | | 186,300 | | | | 2,406,996 | |
| PPG Industries, Inc. | | | 57,500 | | | | 4,410,250 | |
| | | | | | | | | |
| | | | | | | | 23,140,825 | |
| |
Media 2.8%
|
The New York Times Co., Class A * | | | 173,900 | | | | 1,333,813 | |
| The Washington Post Co., Class B | | | 8,100 | | | | 3,257,415 | |
Time Warner, Inc. (a) | | | 136,533 | | | | 4,438,688 | |
| | | | | | | | | |
| | | | | | | | 9,029,916 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 6.6%
|
Bio-Rad Laboratories, Inc., Class A * | | | 37,700 | | | | 3,416,374 | |
| Bristol-Myers Squibb Co. | | | 8,400 | | | | 225,960 | |
Cephalon, Inc. * | | | 67,500 | | | | 4,484,700 | |
| Johnson & Johnson | | | 24,400 | | | | 1,553,548 | |
Mylan, Inc. * | | | 41,600 | | | | 845,312 | |
| PerkinElmer, Inc. | | | 73,800 | | | | 1,730,610 | |
Pfizer, Inc. (a) | | | 268,500 | | | | 4,671,900 | |
Watson Pharmaceuticals, Inc. (a)* | | | 103,900 | | | | 4,846,935 | |
| | | | | | | | | |
| | | | | | | | 21,775,339 | |
| |
Real Estate 1.4%
|
| Jones Lang LaSalle, Inc. | | | 28,900 | | | | 2,255,934 | |
| Rayonier, Inc. | | | 45,600 | | | | 2,380,320 | |
| | | | | | | | | |
| | | | | | | | 4,636,254 | |
| |
Retailing 2.7%
|
Macy’s, Inc. (a) | | | 1,600 | | | | 37,824 | |
| PetSmart, Inc. | | | 76,400 | | | | 2,859,652 | |
The Gap, Inc. (a) | | | 89,600 | | | | 1,703,296 | |
The Home Depot, Inc. (a) | | | 139,200 | | | | 4,298,496 | |
| | | | | | | | | |
| | | | | | | | 8,899,268 | |
| |
Semiconductors & Semiconductor Equipment 3.0%
|
Amkor Technology, Inc. * | | | 168,900 | | | | 1,217,769 | |
Intel Corp. (a) | | | 298,100 | | | | 5,982,867 | |
Marvell Technology Group Ltd. (a)* | | | 53,000 | | | | 1,023,430 | |
Micron Technology, Inc. (a)* | | | 198,600 | | | | 1,642,422 | |
| | | | | | | | | |
| | | | | | | | 9,866,488 | |
| |
Software & Services 8.8%
|
CA, Inc. (a) | | | 114,300 | | | | 2,652,903 | |
Computer Sciences Corp. (a) | | | 101,700 | | | | 4,988,385 | |
| DST Systems, Inc. | | | 80,200 | | | | 3,470,254 | |
| Fidelity National Information Services, Inc. | | | 10,000 | | | | 271,000 | |
International Business Machines Corp. (a) | | | 58,400 | | | | 8,386,240 | |
Intuit, Inc. * | | | 80,300 | | | | 3,854,400 | |
Synopsys, Inc. * | | | 63,100 | | | | 1,614,098 | |
TIBCO Software, Inc. (a)* | | | 105,200 | | | | 2,021,944 | |
VeriFone Systems, Inc. (a)* | | | 50,900 | | | | 1,721,947 | |
| | | | | | | | | |
| | | | | | | | 28,981,171 | |
| |
Technology Hardware & Equipment 3.9%
|
Apple, Inc. (a)* | | | 13,300 | | | | 4,001,571 | |
CommScope, Inc. * | | | 34,000 | | | | 1,076,440 | |
Hewlett-Packard Co. (a) | | | 15,800 | | | | 664,548 | |
Ingram Micro, Inc., Class A * | | | 195,200 | | | | 3,447,232 | |
| Jabil Circuit, Inc. | | | 16,600 | | | | 254,644 | |
Lexmark International, Inc., Class A * | | | 16,000 | | | | 608,480 | |
Tech Data Corp. * | | | 17,000 | | | | 730,830 | |
Tellabs, Inc. (a) | | | 268,700 | | | | 1,832,534 | |
Vishay Intertechnology, Inc. * | | | 11,100 | | | | 125,430 | |
| | | | | | | | | |
| | | | | | | | 12,741,709 | |
| |
Telecommunication Services 3.1%
|
AT&T, Inc. (a) | | | 201,600 | | | | 5,745,600 | |
Telephone & Data Systems, Inc. (a) | | | 129,800 | | | | 4,520,934 | |
| | | | | | | | | |
| | | | | | | | 10,266,534 | |
| |
Transportation 1.1%
|
Alaska Air Group, Inc. (a)* | | | 70,600 | | | | 3,727,680 | |
| |
Utilities 4.0%
|
| Ameren Corp. | | | 92,500 | | | | 2,680,650 | |
| Constellation Energy Group, Inc. | | | 22,200 | | | | 671,328 | |
| Nicor, Inc. | | | 39,500 | | | | 1,881,385 | |
NiSource, Inc. (a) | | | 156,000 | | | | 2,700,360 | |
| Southwest Gas Corp. | | | 62,500 | | | | 2,172,500 | |
See financial notes 63
Schwab Hedged Equity Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
UGI Corp. (a) | | | 105,100 | | | | 3,162,459 | |
| | | | | | | | | |
| | | | | | | | 13,268,682 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $286,871,392) | | | 323,274,187 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Other Investment Company 1.9% of net assets |
| |
Money Fund 1.9%
|
| State Street Institutional Liquid Reserves Fund - Institutional Class | | | 6,206,196 | | | | 6,206,196 | |
| | | | | | | | | |
| Total Other Investment Company |
| (Cost $6,206,196) | | | 6,206,196 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Dates | | ($) | | ($) |
| |
Short-Term Investment 0.2% of net assets |
| |
U.S. Treasury Bill 0.2%
|
| U.S. Treasury Bill |
0.14%, 12/16/10 (b) | | | 661,500 | | | | 661,388 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $661,389) | | | 661,388 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $293,881,098 and the unrealized appreciation and depreciation were $46,728,881 and ($10,468,208), respectively, with a net unrealized appreciation of $36,260,673.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is held as collateral for short sales. |
| (b) | | All or a portion of this security is held as collateral for open futures contracts. |
In addition to the above, the fund held the following at 10/31/10.
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contract |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
S&P 500 Index, e-mini, Long, expires 12/17/10 | | | 70 | | | | 4,128,950 | | | | 298,393 | |
64 See financial notes
Schwab Hedged Equity Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Short Sales 32.7% of net assets |
| |
Automobiles & Components 1.0%
|
| Gentex Corp. | | | 53,500 | | | | 1,068,929 | |
| Harley-Davidson, Inc. | | | 74,100 | | | | 2,273,388 | |
| | | | | | | | | |
| | | | | | | | 3,342,317 | |
| |
Banks 0.5%
|
| People’s United Financial, Inc. | | | 133,000 | | | | 1,637,230 | |
| |
Capital Goods 2.7%
|
| Bucyrus International, Inc. | | | 29,700 | | | | 2,024,352 | |
Foster Wheeler AG * | | | 32,700 | | | | 765,834 | |
| Precision Castparts Corp. | | | 16,200 | | | | 2,212,596 | |
| Roper Industries, Inc. | | | 4,700 | | | | 326,321 | |
Terex Corp. * | | | 92,600 | | | | 2,078,870 | |
TransDigm Group, Inc. * | | | 12,000 | | | | 795,240 | |
USG Corp. * | | | 53,600 | | | | 679,648 | |
| | | | | | | | | |
| | | | | | | | 8,882,861 | |
| |
Commercial & Professional Supplies 0.2%
|
| Robert Half International, Inc. | | | 20,900 | | | | 566,599 | |
| |
Consumer Durables & Apparel 2.6%
|
| D.R. Horton, Inc. | | | 180,700 | | | | 1,886,508 | |
| Lennar Corp., Class A | | | 128,800 | | | | 1,868,888 | |
| M.D.C. Holdings, Inc. | | | 38,900 | | | | 1,001,675 | |
Pulte Group, Inc. * | | | 229,600 | | | | 1,802,360 | |
Toll Brothers, Inc. * | | | 106,800 | | | | 1,915,992 | |
| | | | | | | | | |
| | | | | | | | 8,475,423 | |
| |
Consumer Services 0.3%
|
| International Game Technology | | | 59,300 | | | | 924,487 | |
| |
Diversified Financials 2.0%
|
| Greenhill & Co., Inc. | | | 1,800 | | | | 139,806 | |
| Invesco Ltd. | | | 98,500 | | | | 2,265,500 | |
| Northern Trust Corp. | | | 21,600 | | | | 1,072,008 | |
| T. Rowe Price Group, Inc. | | | 19,500 | | | | 1,077,765 | |
TD Ameritrade Holding Corp. * | | | 117,900 | | | | 2,014,911 | |
| | | | | | | | | |
| | | | | | | | 6,569,990 | |
| |
Energy 5.1%
|
Brigham Exploration Co. * | | | 17,800 | | | | 375,402 | |
Cobalt International Energy, Inc. * | | | 221,800 | | | | 2,051,650 | |
| CONSOL Energy, Inc. | | | 49,600 | | | | 1,823,296 | |
Denbury Resources, Inc. * | | | 124,600 | | | | 2,120,692 | |
| Diamond Offshore Drilling, Inc. | | | 28,600 | | | | 1,892,176 | |
| EOG Resources, Inc. | | | 10,800 | | | | 1,033,776 | |
| EXCO Resources, Inc. | | | 130,800 | | | | 1,939,764 | |
Petrohawk Energy Corp. * | | | 120,000 | | | | 2,041,200 | |
| Schlumberger Ltd. | | | 30,400 | | | | 2,124,656 | |
Ultra Petroleum Corp. * | | | 32,500 | | | | 1,337,375 | |
| | | | | | | | | |
| | | | | | | | 16,739,987 | |
| |
Food & Staples Retailing 0.6%
|
| CVS Caremark Corp. | | | 62,700 | | | | 1,888,524 | |
Rite Aid Corp. * | | | 200,000 | | | | 182,940 | |
| | | | | | | | | |
| | | | | | | | 2,071,464 | |
| |
Food, Beverage & Tobacco 0.6%
|
| Altria Group, Inc. | | | 72,300 | | | | 1,837,866 | |
| |
Health Care Equipment & Services 0.2%
|
Intuitive Surgical, Inc. * | | | 2,200 | | | | 578,490 | |
| |
Insurance 2.2%
|
| Assured Guaranty Ltd. | | | 119,000 | | | | 2,266,950 | |
| Cincinnati Financial Corp. | | | 68,700 | | | | 2,022,528 | |
MBIA, Inc. * | | | 106,700 | | | | 1,196,107 | |
| Old Republic International Corp. | | | 140,400 | | | | 1,853,280 | |
| | | | | | | | | |
| | | | | | | | 7,338,865 | |
| |
Materials 4.1%
|
| Allegheny Technologies, Inc. | | | 10,900 | | | | 574,321 | |
| Cliffs Natural Resources, Inc. | | | 18,100 | | | | 1,180,120 | |
| Martin Marietta Materials, Inc. | | | 2,600 | | | | 209,248 | |
| Monsanto Co. | | | 37,500 | | | | 2,228,250 | |
| Southern Copper Corp. | | | 59,800 | | | | 2,559,440 | |
| The Mosaic Co. | | | 17,900 | | | | 1,309,564 | |
| United States Steel Corp. | | | 41,400 | | | | 1,771,506 | |
| Vulcan Materials Co. | | | 48,700 | | | | 1,778,037 | |
| Walter Energy, Inc. | | | 20,500 | | | | 1,803,180 | |
| | | | | | | | | |
| | | | | | | | 13,413,666 | |
| |
Media 0.9%
|
Central European Media Enterprises, Ltd., Class A * | | | 24,000 | | | | 553,200 | |
DreamWorks Animation SKG, Inc., Class A * | | | 8,900 | | | | 314,170 | |
Liberty Media Corp - Capital, Series A * | | | 38,900 | | | | 2,238,306 | |
| | | | | | | | | |
| | | | | | | | 3,105,676 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 2.1%
|
Auxilium Pharmaceuticals, Inc. * | | | 25,000 | | | | 618,750 | |
Human Genome Sciences, Inc. * | | | 73,100 | | | | 1,964,928 | |
Salix Pharmaceuticals Ltd. * | | | 49,400 | | | | 1,868,802 | |
Seattle Genetics, Inc. * | | | 24,800 | | | | 406,472 | |
Vertex Pharmaceuticals, Inc. * | | | 54,400 | | | | 2,085,152 | |
| | | | | | | | | |
| | | | | | | | 6,944,104 | |
| |
Real Estate 0.2%
|
The St. Joe Co. * | | | 40,314 | | | | 813,940 | |
| |
Retailing 1.9%
|
| Abercrombie & Fitch Co., Class A | | | 48,500 | | | | 2,078,710 | |
Amazon.com, Inc. * | | | 12,000 | | | | 1,981,680 | |
Netflix, Inc. * | | | 12,300 | | | | 2,134,050 | |
| | | | | | | | | |
| | | | | | | | 6,194,440 | |
See financial notes 65
Schwab Hedged Equity Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Semiconductors & Semiconductor Equipment 0.7%
|
MEMC Electronic Materials, Inc. * | | | 176,000 | | | | 2,256,320 | |
| |
Software & Services 1.5%
|
| Paychex, Inc. | | | 69,200 | | | | 1,916,840 | |
Salesforce.com, Inc. * | | | 18,500 | | | | 2,147,295 | |
TiVo, Inc. * | | | 71,100 | | | | 792,054 | |
| | | | | | | | | |
| | | | | | | | 4,856,189 | |
| |
Technology Hardware & Equipment 1.1%
|
Aruba Networks, Inc. * | | | 13,100 | | | | 287,021 | |
Ciena Corp. * | | | 117,500 | | | | 1,632,075 | |
Logitech International S.A. - Reg’d * | | | 95,600 | | | | 1,796,324 | |
| | | | | | | | | |
| | | | | | | | 3,715,420 | |
| |
Telecommunication Services 0.4%
|
Leap Wireless International, Inc. * | | | 110,900 | | | | 1,265,369 | |
| |
Transportation 1.3%
|
AMR Corp. * | | | 288,900 | | | | 2,276,532 | |
| C.H. Robinson Worldwide, Inc. | | | 30,200 | | | | 2,128,496 | |
| | | | | | | | | |
| | | | | | | | 4,405,028 | |
| |
Utilities 0.5%
|
| Southern Co. | | | 46,400 | | | | 1,757,168 | |
| | | | | | | | | |
| Total Short Sales |
| (Proceeds $98,476,101) | | | 107,692,899 | |
| | | | | |
| |
|
End of Short Sale Positions. |
| | |
| * | | Non-income producing security |
66 See financial notes
Schwab Hedged Equity Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value (cost $293,738,977) | | | | | $330,141,771 | |
| Deposits with broker for short sales | | | | | 107,033,444 | |
| Receivables: | | | | | | |
| Dividends | | | | | 294,888 | |
| Fund shares sold | | | | | 111,589 | |
| Foreign tax reclaims | | | | | 4,691 | |
| Due from broker for futures | | | | | 1,400 | |
| Interest | | | | | 1,163 | |
| Prepaid expenses | | + | | | 9,867 | |
| | | |
Total assets | | | | | 437,598,813 | |
| |
Liabilities |
|
| Securities sold short, at value (proceeds $98,476,101) | | | | | 107,692,899 | |
| Payables: | | | | | | |
| Investment adviser and administrator fees | | | | | 37,351 | |
| Shareholder service fees | | | | | 5,804 | |
| Fund shares redeemed | | | | | 607,162 | |
| Dividends on short sales | | | | | 97,574 | |
| Due to custodian | | | | | 23,071 | |
| Trustees’ fees | | | | | 1 | |
| Accrued expenses | | + | | | 49,706 | |
| | | |
Total liabilities | | | | | 108,513,568 | |
| |
Net Assets |
|
Total assets | | | | | 437,598,813 | |
Total liabilities | | − | | | 108,513,568 | |
| | | |
Net assets | | | | | $329,085,245 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 333,178,682 | |
| Net realized capital losses | | | | | (31,577,826 | ) |
| Net unrealized capital gains | | | | | 27,484,389 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $329,085,245 | | | | 22,257,184 | | | | | $14.79 | | | |
See financial notes 67
Schwab Hedged Equity Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
Dividends (net of foreign withholding taxes of $3,444) | | | | | $4,629,220 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 3,390,086 | |
| Shareholder service fees | | | | | 677,271 | |
| Dividends on short sales | | | | | 1,909,415 | |
| Stock loan fees on short sales | | | | | 239,670 | |
| Transfer agent fees | | | | | 49,690 | |
| Professional fees | | | | | 44,469 | |
| Portfolio accounting fees | | | | | 40,797 | |
| Registration fees | | | | | 22,288 | |
| Shareholder reports | | | | | 17,477 | |
| Custodian fees | | | | | 12,153 | |
| Trustees’ fees | | | | | 7,332 | |
| Interest expense | | | | | 676 | |
| Other expenses | | + | | | 14,264 | |
| | | |
| Total expenses | | | | | 6,425,588 | |
| Expense reduction by adviser and Schwab | | − | | | 49,690 | |
| Custody credits | | − | | | 25 | |
| | | |
Net expenses | | − | | | 6,375,873 | |
| | | |
Net investment loss | | | | | (1,746,653 | ) |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on investments | | | | | 37,725,654 | |
| Net realized gains on futures contracts | | | | | 469,247 | |
| Net realized losses on short sales | | + | | | (16,788,049 | ) |
| | | |
Net realized gains | | | | | 21,406,852 | |
| Net unrealized gains on investments | | | | | 13,858,681 | |
| Net unrealized gains on futures contracts | | | | | 632,623 | |
| Net unrealized losses on short sales | | + | | | (2,561,382 | ) |
| | | |
Net unrealized gains | | + | | | 11,929,922 | |
| | | |
Net realized and unrealized gains | | | | | 33,336,774 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $31,590,121 | |
68 See financial notes
Schwab Hedged Equity Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment loss | | | | | ($1,746,653 | ) | | | ($1,554,989 | ) |
| Net realized gains (losses) | | | | | 21,406,852 | | | | (17,350,376 | ) |
| Net unrealized gains | | + | | | 11,929,922 | | | | 40,312,189 | |
| | | |
Increase in net assets from operations | | | | | 31,590,121 | | | | 21,406,824 | |
| |
Distributions to Shareholders |
|
Distributions from net investment income | | | | | $— | | | | $323,723 | |
Transactions in Fund Shares1
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 5,286,537 | | | | $63,441,895 | |
| Select Shares | | + | | | 8,005,470 | | | | 113,763,890 | | | | 11,513,959 | | | | 147,734,804 | |
| | | |
Total shares sold | | | | | 8,005,470 | | | | $113,763,890 | | | | 16,800,496 | | | | $211,176,699 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | — | | | | $— | |
| Select Shares | | + | | | — | | | | — | | | | 20,695 | | | | 249,786 | |
| | | |
Total shares reinvested | | | | | — | | | | $— | | | | 20,695 | | | | $249,786 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | (11,581,462 | ) | | | ($147,840,022 | ) |
| Select Shares | | + | | | (8,465,059 | ) | | | (121,801,322 | ) | | | (16,134,457 | ) | | | (200,712,109 | ) |
| | | |
Total shares redeemed | | | | | (8,465,059 | ) | | | ($121,801,322 | ) | | | (27,715,919 | ) | | | ($348,552,131 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | (459,589 | ) | | | ($8,037,432 | ) | | | (10,894,728 | ) | | | ($137,125,646 | ) |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 22,716,773 | | | | $305,532,556 | | | | 33,611,501 | | | | $421,575,101 | |
| Total increase or decrease | | + | | | (459,589 | ) | | | 23,552,689 | | | | (10,894,728 | ) | | | (116,042,545 | ) |
| | | |
End of period | | | | | 22,257,184 | | | | $329,085,245 | | | | 22,716,773 | | | | $305,532,556 | |
| | | |
1 | | Effective September 28, 2009, all outstanding Investor Shares (4,323,378 shares valued at $59,344,844) combined with Select Shares, resulting in a single class of shares of the fund. |
See financial notes 69
Schwab Financial Services Fund™
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/09 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 8.77 | | | | 9.05 | | | | 15.88 | | | | 15.75 | | | | 14.42 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.04 | | | | 0.08 | | | | 0.18 | | | | 0.18 | | | | 0.10 | | | |
| Net realized and unrealized gains (losses) | | | 0.99 | | | | (0.21 | ) | | | (6.78 | ) | | | 0.25 | | | | 1.98 | | | |
| | | |
| Total from investment operations | | | 1.03 | | | | (0.13 | ) | | | (6.60 | ) | | | 0.43 | | | | 2.08 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.06 | ) | | | (0.15 | ) | | | (0.21 | ) | | | (0.11 | ) | | | (0.11 | ) | | |
| Distributions from net realized gains | | | — | | | | — | | | | (0.02 | ) | | | (0.19 | ) | | | (0.64 | ) | | |
| | | |
| Total distributions | | | (0.06 | ) | | | (0.15 | ) | | | (0.23 | ) | | | (0.30 | ) | | | (0.75 | ) | | |
| | | |
| Net asset value at end of period | | | 9.74 | | | | 8.77 | | | | 9.05 | | | | 15.88 | | | | 15.75 | | | |
| | | |
| Total return (%) | | | 11.79 | | | | (1.10 | ) | | | (42.08 | ) | | | 2.75 | | | | 14.85 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 0.95 | 1 | | | 0.96 | 2 | | | 0.94 | | | | 0.90 | | | | 0.98 | | | |
| Gross operating expenses | | | 1.04 | | | | 0.99 | | | | 0.94 | | | | 0.90 | | | | 0.98 | | | |
| Net investment income (loss) | | | 0.37 | | | | 0.91 | | | | 1.56 | | | | 1.06 | | | | 0.87 | | | |
| Portfolio turnover rate | | | 54 | | | | 47 | | | | 59 | | | | 54 | | | | 57 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 52 | | | | 64 | | | | 84 | | | | 94 | | | | 95 | | | |
1 The ratio of net operating expenses would have been 0.94%, if certain non-routine expenses had not been incurred.
2 Effective July 1, 2009, the net operating expense limitation was lowered. The ratio presented for period ended October 31, 2009 is a blended rate.
70 See financial notes
Schwab Financial Services Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .1% | | Common Stock | | | 49,790,096 | | | | 51,651,089 | |
| | 1 | .0% | | Short-Term Investments | | | 506,915 | | | | 506,915 | |
| |
| |
| | 100 | .1% | | Total Investments | | | 50,297,011 | | | | 52,158,004 | |
| | (0 | .1)% | | Other Assets and Liabilities, Net | | | | | | | (44,761 | ) |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 52,113,243 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 99.1% of net assets |
| |
Banks 19.2%
|
| 1st Source Corp. | | | 3,100 | | | | 54,777 | |
| BancFirst Corp. | | | 10,400 | | | | 427,440 | |
| Fifth Third Bancorp | | | 125,400 | | | | 1,575,024 | |
| First Citizens BancShares, Inc., Class A | | | 6,208 | | | | 1,159,530 | |
| Huntington Bancshares, Inc. | | | 170,200 | | | | 965,034 | |
| PNC Financial Services Group, Inc. | | | 30,100 | | | | 1,622,390 | |
| Southwest Bancorp, Inc. | | | 10,500 | | | | 103,950 | |
| Trustmark Corp. | | | 26,300 | | | | 580,967 | |
| U.S. Bancorp | | | 12,500 | | | | 302,250 | |
| UMB Financial Corp. | | | 17,700 | | | | 655,962 | |
| Wells Fargo & Co. | | | 98,500 | | | | 2,568,880 | |
| | | | | | | | | |
| | | | | | | | 10,016,204 | |
| |
Diversified Financials 38.8%
|
| American Express Co. | | | 52,100 | | | | 2,160,066 | |
| Bank of America Corp. | | | 153,500 | | | | 1,756,040 | |
| BGC Partners, Inc., Class A | | | 52,700 | | | | 365,738 | |
| Capital One Financial Corp. | | | 6,900 | | | | 257,163 | |
Citigroup, Inc. * | | | 577,300 | | | | 2,407,341 | |
| Discover Financial Services | | | 88,400 | | | | 1,560,260 | |
First Cash Financial Services, Inc. * | | | 15,500 | | | | 450,585 | |
| JPMorgan Chase & Co. | | | 100,000 | | | | 3,763,000 | |
| Legg Mason, Inc. | | | 45,400 | | | | 1,408,762 | |
| Nelnet, Inc., Class A | | | 22,400 | | | | 503,328 | |
| State Street Corp. | | | 29,500 | | | | 1,231,920 | |
| The Goldman Sachs Group, Inc. | | | 22,100 | | | | 3,556,995 | |
The NASDAQ OMX Group, Inc. * | | | 11,400 | | | | 239,628 | |
UBS AG - Reg’d * | | | 33,000 | | | | 561,660 | |
| | | | | | | | | |
| | | | | | | | 20,222,486 | |
| |
Insurance 26.6%
|
| Aflac, Inc. | | | 27,500 | | | | 1,536,975 | |
| American Equity Investment Life Holding Co. | | | 50,400 | | | | 546,840 | |
| American Financial Group, Inc. | | | 44,050 | | | | 1,347,049 | |
| Argo Group International Holdings Ltd. | | | 11,600 | | | | 402,404 | |
Berkshire Hathaway, Inc., Class B * | | | 14,000 | | | | 1,113,840 | |
| FBL Financial Group, Inc., Class A | | | 19,100 | | | | 499,656 | |
| Fidelity National Financial, Inc., Class A | | | 72,100 | | | | 965,419 | |
| Horace Mann Educators Corp. | | | 29,400 | | | | 549,486 | |
| Infinity Property & Casualty Corp. | | | 10,500 | | | | 543,375 | |
| MetLife, Inc. | | | 27,100 | | | | 1,092,943 | |
National Financial Partners Corp. * | | | 39,000 | | | | 538,200 | |
| PartnerRe Ltd. | | | 10,300 | | | | 816,996 | |
| Protective Life Corp. | | | 5,200 | | | | 124,644 | |
| Prudential Financial, Inc. | | | 25,500 | | | | 1,340,790 | |
| Reinsurance Group of America, Inc. | | | 16,400 | | | | 821,148 | |
| The Progressive Corp. | | | 12,300 | | | | 260,268 | |
| Transatlantic Holdings, Inc. | | | 5,900 | | | | 310,340 | |
| Unum Group | | | 46,600 | | | | 1,044,772 | |
| | | | | | | | | |
| | | | | | | | 13,855,145 | |
| |
Real Estate 14.5%
|
| Apartment Investment & Management Co., Class A | | | 18,800 | | | | 438,228 | |
Ashford Hospitality Trust * | | | 29,700 | | | | 301,455 | |
| Brandywine Realty Trust | | | 24,000 | | | | 287,280 | |
| Colonial Properties Trust | | | 22,400 | | | | 401,632 | |
| CommonWealth REIT | | | 11,800 | | | | 300,310 | |
| Hospitality Properties Trust | | | 19,000 | | | | 433,390 | |
| Host Hotels & Resorts, Inc. | | | 41,554 | | | | 660,293 | |
| Jones Lang LaSalle, Inc. | | | 2,800 | | | | 218,568 | |
| LaSalle Hotel Properties | | | 14,800 | | | | 350,612 | |
| Mack-Cali Realty Corp. | | | 7,100 | | | | 238,418 | |
| Potlatch Corp. | | | 9,700 | | | | 330,285 | |
| PS Business Parks, Inc. | | | 5,600 | | | | 331,856 | |
| Public Storage | | | 7,000 | | | | 694,540 | |
| Rayonier, Inc. | | | 8,700 | | | | 454,140 | |
| Saul Centers, Inc. | | | 4,800 | | | | 204,864 | |
| Simon Property Group, Inc. | | | 10,959 | | | | 1,052,283 | |
| Sovran Self Storage, Inc. | | | 3,200 | | | | 125,024 | |
| Vornado Realty Trust | | | 8,400 | | | | 734,076 | |
| | | | | | | | | |
| | | | | | | | 7,557,254 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $49,790,096) | | | 51,651,089 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Dates | | ($) | | ($) |
| |
Short-Term Investments 1.0% of net assets |
| |
Time Deposit 0.9%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 464,422 | | | | 464,422 | |
See financial notes 71
Schwab Financial Services Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Dates | | ($) | | ($) |
| |
U.S. Treasury Obligation 0.1%
|
| U.S. Treasury Bill |
0.14%, 12/16/10 | | | 42,500 | | | | 42,493 | |
| | | | | | | | | |
| Total Short-Term Investments |
| (Cost $506,915) | | | 506,915 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $50,297,137 and the unrealized appreciation and depreciation were $5,767,916 and ($3,907,049), respectively, with a net unrealized appreciation of $1,860,867.
| | |
| * | | Non-income producing security. |
| | | |
| Reg’d — | | Registered |
| REIT — | | Real Estate Investment Trust |
72 See financial notes
Schwab Financial Services Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value (cost $50,297,011) | | | | | $52,158,004 | |
| Cash | | | | | 2 | |
| Receivables: | | | | | | |
| Dividends | | | | | 33,138 | |
| Fund shares sold | | | | | 9,425 | |
| Receivable from investment adviser | | | | | 133 | |
| Interest | | | | | 1 | |
| Prepaid expenses | | + | | | 1,790 | |
| | | |
Total assets | | | | | 52,202,493 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Investment adviser and administrator fees | | | | | 1,834 | |
| Shareholder service fees | | | | | 2,607 | |
| Fund shares redeemed | | | | | 49,482 | |
| Accrued expenses | | + | | | 35,327 | |
| | | |
Total liabilities | | | | | 89,250 | |
| |
Net Assets |
|
Total assets | | | | | 52,202,493 | |
Total liabilities | | − | | | 89,250 | |
| | | |
Net assets | | | | | $52,113,243 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 87,800,980 | |
| Net investment income not yet distributed | | | | | 81,681 | |
| Net realized capital losses | | | | | (37,630,411 | ) |
| Net unrealized capital gains | | | | | 1,860,993 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $52,113,243 | | | | 5,350,476 | | | | | $9.74 | | | |
See financial notes 73
Schwab Financial Services Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends | | | | | $775,095 | |
| Interest | | | | | 379 | |
| Securities on loan | | + | | | 32 | |
| | | |
Total investment income | | | | | 775,506 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 318,051 | |
| Shareholder service fees | | | | | 142,033 | |
| Transfer agent fees | | | | | 41,727 | |
| Portfolio accounting fees | | | | | 36,970 | |
| Professional fees | | | | | 28,143 | |
| Registration fees | | | | | 18,169 | |
| Shareholder reports | | | | | 13,302 | |
| Trustees’ fees | | | | | 5,495 | |
| Custodian fees | | | | | 4,949 | |
| Interest expense | | | | | 184 | |
| Other expenses | | + | | | 6,462 | |
| | | |
| Total expenses | | | | | 615,485 | |
| Expense reduction by adviser and Schwab | | − | | | 58,364 | |
| | | |
Net expenses | | − | | | 557,121 | |
| | | |
Net investment income | | | | | 218,385 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized losses on investments | | | | | (232,913 | ) |
| Net realized gains on futures contracts | | + | | | 63,432 | |
| | | |
Net realized losses | | | | | (169,481 | ) |
Net unrealized gains on investments | | + | | | 6,682,214 | |
| | | |
Net realized and unrealized gains | | | | | 6,512,733 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $6,731,118 | |
74 See financial notes
Schwab Financial Services Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $218,385 | | | | $595,868 | |
| Net realized losses | | | | | (169,481 | ) | | | (28,643,163 | ) |
| Net unrealized gains | | + | | | 6,682,214 | | | | 25,526,244 | |
| | | |
Increase (Decrease) in net assets from operations | | | | | 6,731,118 | | | | (2,521,051 | ) |
| |
Distributions to Shareholders |
|
Distributions from net investment income | | | | | $407,141 | | | | $1,346,722 | |
Transactions in Fund Shares
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
| Shares sold | | | | | 829,077 | | | | $8,100,181 | | | | 3,169,841 | | | | $23,403,536 | |
| Shares reinvested | | | | | 40,105 | | | | 363,351 | | | | 166,503 | | | | 1,228,793 | |
| Shares redeemed | | + | | | (2,842,092 | ) | | | (26,876,475 | ) | | | (5,322,653 | ) | | | (40,814,513 | ) |
| | | |
Net transactions in fund shares | | | | | (1,972,910 | ) | | | ($18,412,943 | ) | | | (1,986,309 | ) | | | ($16,182,184 | ) |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 7,323,386 | | | | $64,202,209 | | | | 9,309,695 | | | | $84,252,166 | |
| Total decrease | | + | | | (1,972,910 | ) | | | (12,088,966 | ) | | | (1,986,309 | ) | | | (20,049,957 | ) |
| | | |
End of period | | | | | 5,350,476 | | | | $52,113,243 | | | | 7,323,386 | | | | $64,202,209 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $81,681 | | | | | | | | $280,667 | |
See financial notes 75
Schwab Health Care Fund™
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/09 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 13.41 | | | | 12.55 | | | | 17.08 | | | | 15.05 | | | | 14.03 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.19 | | | | 0.13 | | | | 0.08 | | | | 0.05 | | | | (0.01 | ) | | |
| Net realized and unrealized gains (losses) | | | 2.01 | | | | 0.82 | | | | (4.46 | ) | | | 2.11 | | | | 1.03 | | | |
| | | |
| Total from investment operations | | | 2.20 | | | | 0.95 | | | | (4.38 | ) | | | 2.16 | | | | 1.02 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.13 | ) | | | (0.09 | ) | | | (0.05 | ) | | | — | | | | — | | | |
| Distributions from net realized gains | | | — | | | | — | | | | (0.10 | ) | | | (0.13 | ) | | | — | | | |
| | | |
| Total distributions | | | (0.13 | ) | | | (0.09 | ) | | | (0.15 | ) | | | (0.13 | ) | | | — | | | |
| | | |
| Net asset value at end of period | | | 15.48 | | | | 13.41 | | | | 12.55 | | | | 17.08 | | | | 15.05 | | | |
| | | |
| Total return (%) | | | 16.49 | | | | 7.65 | | | | (25.87 | ) | | | 14.49 | | | | 7.27 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 0.82 | | | | 0.83 | 1 | | | 0.82 | | | | 0.82 | | | | 0.84 | | | |
| Gross operating expenses | | | 0.86 | | | | 0.85 | | | | 0.82 | | | | 0.82 | | | | 0.84 | | | |
| Net investment income (loss) | | | 1.14 | | | | 0.88 | | | | 0.48 | | | | 0.32 | | | | (0.07 | ) | | |
| Portfolio turnover rate | | | 37 | | | | 36 | | | | 50 | | | | 34 | | | | 76 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 410 | | | | 430 | | | | 545 | | | | 834 | | | | 611 | | | |
1 Effective July 1, 2009, the net operating expense limitation was lowered. The ratio presented for period ended 10/31/09 is a blended rate.
76 See financial notes
Schwab Health Care Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 75 | .2% | | Common Stock | | | 264,194,172 | | | | 308,050,500 | |
| | 21 | .1% | | Foreign Common Stock | | | 76,181,211 | | | | 86,430,513 | |
| | 0 | .0% | | Warrants | | | 3,798 | | | | 7,834 | |
| | 3 | .6% | | Short-Term Investments | | | 14,893,086 | | | | 14,893,086 | |
| |
| |
| | 99 | .9% | | Total Investments | | | 355,272,267 | | | | 409,381,933 | |
| | 0 | .2% | | Collateral Invested for Securities on Loan | | | 766,049 | | | | 766,049 | |
| | (0 | .1)% | | Other Assets and Liabilities, Net | | | | | | | (460,420 | ) |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 409,687,562 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 75.2% of net assets |
| |
Health Care Equipment & Services 28.1%
|
American Medical Systems Holdings, Inc. * | | | 50,000 | | | | 1,010,000 | |
| AmerisourceBergen Corp. | | | 200,000 | | | | 6,564,000 | |
| Baxter International, Inc. | | | 125,000 | | | | 6,362,500 | |
| Becton, Dickinson & Co. | | | 40,000 | | | | 3,020,800 | |
| Cardinal Health, Inc. | | | 100,000 | | | | 3,469,000 | |
Cerner Corp. * | | | 50,000 | | | | 4,391,500 | |
| CIGNA Corp. | | | 100,000 | | | | 3,519,000 | |
Coventry Health Care, Inc. * | | | 25,000 | | | | 585,500 | |
DaVita, Inc. * | | | 100,000 | | | | 7,175,000 | |
Emergency Medical Services Corp., Class A * | | | 35,000 | | | | 1,903,300 | |
| Ensign Group, Inc. | | | 10,000 | | | | 187,700 | |
Express Scripts, Inc. * | | | 70,000 | | | | 3,396,400 | |
Greatbatch, Inc. * | | | 35,000 | | | | 761,250 | |
Health Management Associates, Inc., Class A * | | | 100,000 | | | | 801,000 | |
Henry Schein, Inc. * | | | 30,000 | | | | 1,684,500 | |
Hologic, Inc. * | | | 350,000 | | | | 5,607,000 | |
Hospira, Inc. * | | | 75,000 | | | | 4,461,000 | |
Humana, Inc. * | | | 100,000 | | | | 5,829,000 | |
Integra LifeSciences Holdings * | | | 50,000 | | | | 2,151,000 | |
| Invacare Corp. | | | 175,000 | | | | 4,725,000 | |
Kindred Healthcare, Inc. * | | | 50,000 | | | | 686,000 | |
LifePoint Hospitals, Inc. * | | | 75,000 | | | | 2,544,000 | |
| McKesson Corp. | | | 100,000 | | | | 6,598,000 | |
Medco Health Solutions, Inc. * | | | 100,000 | | | | 5,253,000 | |
Medidata Solutions, Inc. * | | | 20,000 | | | | 372,600 | |
Sirona Dental Systems, Inc. * | | | 115,000 | | | | 4,329,750 | |
Symmetry Medical, Inc. * | | | 50,000 | | | | 442,500 | |
| Teleflex, Inc. | | | 30,000 | | | | 1,672,500 | |
Tenet Healthcare Corp. * | | | 200,000 | | | | 872,000 | |
| The Cooper Cos., Inc. | | | 100,000 | | | | 4,934,000 | |
| UnitedHealth Group, Inc. | | | 265,000 | | | | 9,553,250 | |
| Universal Health Services, Inc., Class B | | | 50,000 | | | | 2,063,500 | |
Varian Medical Systems, Inc. * | | | 60,000 | | | | 3,793,200 | |
Wright Medical Group, Inc. * | | | 50,000 | | | | 667,000 | |
Zimmer Holdings, Inc. * | | | 75,000 | | | | 3,558,000 | |
| | | | | | | | | |
| | | | | | | | 114,943,750 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 47.1%
|
| Abbott Laboratories | | | 125,000 | | | | 6,415,000 | |
Alexion Pharmaceuticals, Inc. * | | | 125,000 | | | | 8,537,500 | |
| Allergan, Inc. | | | 150,000 | | | | 10,861,500 | |
Amgen, Inc. * | | | 200,000 | | | | 11,438,000 | |
Bio-Rad Laboratories, Inc., Class A * | | | 30,000 | | | | 2,718,600 | |
Biogen Idec, Inc. * | | | 150,000 | | | | 9,406,500 | |
| Bristol-Myers Squibb Co. | | | 500,000 | | | | 13,450,000 | |
Bruker Corp. * | | | 250,000 | | | | 3,747,500 | |
Celgene Corp. * | | | 50,000 | | | | 3,103,500 | |
Cephalon, Inc. * | | | 125,000 | | | | 8,305,000 | |
Cubist Pharmaceuticals, Inc. * | | | 325,000 | | | | 7,566,000 | |
| Eli Lilly & Co. | | | 150,000 | | | | 5,280,000 | |
Enzon Pharmaceuticals, Inc. * | | | 175,000 | | | | 1,968,750 | |
Genzyme Corp. * | | | 75,000 | | | | 5,409,750 | |
Gilead Sciences, Inc. * | | | 35,000 | | | | 1,388,450 | |
Impax Laboratories, Inc. * | | | 25,000 | | | | 471,000 | |
| Johnson & Johnson | | | 300,000 | | | | 19,101,000 | |
Life Technologies Corp. * | | | 115,000 | | | | 5,770,700 | |
Martek Biosciences Corp. * | | | 175,000 | | | | 3,841,250 | |
| Merck & Co., Inc. | | | 350,000 | | | | 12,698,000 | |
Mylan, Inc. * | | | 200,000 | | | | 4,064,000 | |
Nabi Biopharmaceuticals * | | | 75,000 | | | | 368,250 | |
Osiris Therapeutics, Inc. (b)* | | | 35,000 | | | | 257,250 | |
Par Pharmaceutical Cos., Inc. * | | | 200,000 | | | | 6,502,000 | |
| PerkinElmer, Inc. | | | 85,000 | | | | 1,993,250 | |
| Perrigo Co. | | | 50,000 | | | | 3,294,000 | |
| Pfizer, Inc. | | | 850,000 | | | | 14,790,000 | |
Thermo Fisher Scientific, Inc. * | | | 200,000 | | | | 10,284,000 | |
United Therapeutics Corp. * | | | 25,000 | | | | 1,500,000 | |
ViroPharma, Inc. * | | | 125,000 | | | | 2,045,000 | |
Watson Pharmaceuticals, Inc. * | | | 140,000 | | | | 6,531,000 | |
| | | | | | | | | |
| | | | | | | | 193,106,750 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $264,194,172) | | | 308,050,500 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Foreign Common Stock 21.1% of net assets |
| |
Australia 1.4%
|
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| Ansell Ltd. | | | 40,000 | | | | 531,714 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 1.3% |
| CSL Ltd. | | | 165,000 | | | | 5,321,099 | |
| | | | | | | | | |
| | | | | | | | 5,852,813 | |
See financial notes 77
Schwab Health Care Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Brazil 0.3%
|
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.3% |
| Diagnosticos da America S.A. | | | 107,600 | | | | 1,328,942 | |
| |
Denmark 2.5%
|
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.7% |
| Coloplast A/S, Class B | | | 17,100 | | | | 2,117,488 | |
GN Store Nord A/S * | | | 88,400 | | | | 738,170 | |
| | | | | | | | | |
| | | | | | | | 2,855,658 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 1.8% |
| H. Lundbeck A/S | | | 21,000 | | | | 419,628 | |
| Novo Nordisk A/S, Class B | | | 65,700 | | | | 6,898,620 | |
| | | | | | | | | |
| | | | | | | | 7,318,248 | |
| | | | | | | | | |
| | | | | | | | 10,173,906 | |
| |
France 2.7%
|
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 2.7% |
| Sanofi-Aventis | | | 157,500 | | | | 11,034,697 | |
| |
Germany 1.3%
|
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 1.3% |
| Bayer AG | | | 25,000 | | | | 1,864,674 | |
Gerresheimer AG * | | | 10,000 | | | | 395,420 | |
| Stada Arzneimittel AG | | | 100,000 | | | | 3,074,540 | |
| | | | | | | | | |
| | | | | | | | 5,334,634 | |
| |
Hong Kong 0.2%
|
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
China Pharmaceutical Group Ltd. (b) | | | 1,300,000 | | | | 727,938 | |
| |
Indonesia 0.1%
|
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| PT Kalbe Farma Tbk | | | 2,000,000 | | | | 600,730 | |
| |
Israel 0.6%
|
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.6% |
| Teva Pharmaceutical Industries Ltd. | | | 45,000 | | | | 2,333,753 | |
| |
Italy 0.3%
|
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.3% |
| Recordati S.p.A. | | | 150,000 | | | | 1,477,690 | |
| |
Japan 2.5%
|
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.3% |
Fukuda Denshi Co., Ltd. (b) | | | 19,000 | | | | 473,650 | |
| Nihon Kohden Corp. | | | 20,000 | | | | 380,160 | |
| Sysmex Corp. | | | 5,000 | | | | 342,843 | |
| | | | | | | | | |
| | | | | | | | 1,196,653 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 2.2% |
| Hisamitsu Pharmaceutical Co., Inc. | | | 10,000 | | | | 409,516 | |
| Taisho Pharmaceutical Co., Ltd. | | | 15,000 | | | | 315,857 | |
| Takeda Pharmaceutical Co., Ltd. | | | 176,000 | | | | 8,250,216 | |
| | | | | | | | | |
| | | | | | | | 8,975,589 | |
| | | | | | | | | |
| | | | | | | | 10,172,242 | |
| |
Spain 0.2%
|
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
| Almirall S.A. | | | 73,500 | | | | 696,902 | |
| |
Sweden 0.1%
|
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Meda AB, A Shares | | | 25,000 | | | | 205,589 | |
| |
Switzerland 6.0%
|
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 6.0% |
| Novartis AG - Reg’d | | | 238,800 | | | | 13,836,715 | |
| Roche Holding AG | | | 74,400 | | | | 10,925,951 | |
| | | | | | | | | |
| | | | | | | | 24,762,666 | |
| |
United Kingdom 2.9%
|
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 2.9% |
| AstraZeneca plc | | | 186,500 | | | | 9,381,300 | |
| Shire plc | | | 100,000 | | | | 2,346,711 | |
| | | | | | | | | |
| | | | | | | | 11,728,011 | |
| | | | | | | | | |
| Total Foreign Common Stock |
| (Cost $76,181,211) | | | 86,430,513 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Warrants 0.0% of net assets |
| |
Malaysia 0.0%
|
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.0% |
KPJ Healthcare Bhd * | | | 12,500 | | | | 7,834 | |
| | | | | | | | | |
| Total Warrants |
| (Cost $3,798) | | | 7,834 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Dates | | ($) | | ($) |
| |
Short-Term Investments 3.6% of net assets |
| |
Time Deposits 3.5%
|
| Bank of America |
0.03%, 11/01/10 | | | 2,022,667 | | | | 2,022,667 | |
| HSBC Bank USA |
0.03%, 11/01/10 | | | 12,279,918 | | | | 12,279,918 | |
| | | | | | | | | |
| | | | | | | | 14,302,585 | |
78 See financial notes
Schwab Health Care Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Dates | | ($) | | ($) |
| |
U.S. Treasury Obligation 0.1%
|
| U.S. Treasury Bill |
0.14%, 12/16/10 (a) | | | 590,600 | | | | 590,501 | |
| | | | | | | | | |
| Total Short-Term Investments |
| (Cost $14,893,086) | | | 14,893,086 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Collateral Invested for Securities on Loan 0.2% of net assets |
| | | | | | | | | |
| | | | | | | | | |
| Invesco Short Term Investments Trust Government & Agency Portfolio | | | 766,049 | | | | 766,049 | |
| | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $766,049) | | | 766,049 | |
| | | | | |
| |
|
End of Collateral Invested for Securities on Loan |
At 10/31/10, the tax basis cost of the fund’s investments was $355,395,286 and the unrealized appreciation and depreciation were $64,662,652 and ($10,676,005), respectively, with a net unrealized appreciation of $53,986,647.
At 10/31/10, the values of certain foreign securities held by the fund aggregating $85,101,571 were adjusted from their closing market values in accordance with procedures approved by the Board of Trustees.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is held as collateral for open futures contracts. |
| (b) | | All or a portion of this security is on loan. |
In addition to the above, the fund held the following at 10/31/10.
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contract |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
S&P 500 Index, e-mini, Long, expires 12/17/10 | | | 125 | | | | 7,373,125 | | | | 532,844 | |
See financial notes 79
Schwab Health Care Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value including securities on loan of $725,471 (cost $355,272,267) | | | | | $409,381,933 | |
| Cash | | | | | 12 | |
| Collateral invested for securities on loan | | | | | 766,049 | |
| Receivables: | | | | | | |
| Dividends | | | | | 428,690 | |
| Foreign tax reclaims | | | | | 172,880 | |
| Fund shares sold | | | | | 154,372 | |
| Due from broker for futures | | | | | 2,500 | |
| Income from securities on loan | | | | | 1,605 | |
| Interest | | | | | 36 | |
| Prepaid expenses | | + | | | 12,334 | |
| | | |
Total assets | | | | | 410,920,411 | |
| |
Liabilities |
|
| Collateral held for securities on loan | | | | | 766,049 | |
| Payables: | | | | | | |
| Investment adviser and administrator fees | | | | | 17,360 | |
| Shareholder service fees | | | | | 17,990 | |
| Fund shares redeemed | | | | | 364,865 | |
| Accrued expenses | | + | | | 66,585 | |
| | | |
Total liabilities | | | | | 1,232,849 | |
| |
Net Assets |
|
Total assets | | | | | 410,920,411 | |
Total liabilities | | − | | | 1,232,849 | |
| | | |
Net assets | | | | | $409,687,562 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 394,897,226 | |
| Net investment income not yet distributed | | | | | 4,836,584 | |
| Net realized capital losses | | | | | (44,711,795 | ) |
| Net unrealized capital gains | | | | | 54,665,547 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $409,687,562 | | | | 26,458,099 | | | | | $15.48 | | | |
80 See financial notes
Schwab Health Care Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends (net of foreign withholding taxes of $273,903) | | | | | $8,180,243 | |
| Interest | | | | | 4,528 | |
| Securities on loan | | + | | | 99,524 | |
| | | |
Total investment income | | | | | 8,284,295 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 2,281,473 | |
| Shareholder service fees | | | | | 1,033,142 | |
| Transfer agent fees | | | | | 93,623 | |
| Shareholder reports | | | | | 60,626 | |
| Portfolio accounting fees | | | | | 57,783 | |
| Custodian fees | | | | | 36,214 | |
| Professional fees | | | | | 30,465 | |
| Registration fees | | | | | 25,886 | |
| Trustees’ fees | | | | | 8,431 | |
| Interest expense | | | | | 51 | |
| Other expenses | | + | | | 26,597 | |
| | | |
| Total expenses | | | | | 3,654,291 | |
| Expense reduction by adviser and Schwab | | − | | | 172,192 | |
| | | |
Net expenses | | − | | | 3,482,099 | |
| | | |
Net investment income | | | | | 4,802,196 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on investments | | | | | 3,030,682 | |
| Net realized gains on futures contracts | | | | | 548,673 | |
| Net realized losses on foreign currency transactions | | + | | | (15,701 | ) |
| | | |
Net realized gains | | | | | 3,563,654 | |
| Net unrealized gains on investments | | | | | 55,971,256 | |
| Net unrealized gains on futures contracts | | | | | 560,250 | |
| Net unrealized gains on foreign currency translations | | + | | | 16,876 | |
| | | |
Net unrealized gains | | + | | | 56,548,382 | |
| | | |
Net realized and unrealized gains | | | | | 60,112,036 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $64,914,232 | |
See financial notes 81
Schwab Health Care Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $4,802,196 | | | | $4,139,967 | |
| Net realized gains (losses) | | | | | 3,563,654 | | | | (41,875,735 | ) |
| Net unrealized gains | | + | | | 56,548,382 | | | | 64,465,615 | |
| | | |
Increase in net assets from operations | | | | | 64,914,232 | | | | 26,729,847 | |
| |
Distributions to Shareholders |
|
Distributions from net investment income | | | | | $4,113,182 | | | | $3,759,719 | |
Transactions in Fund Shares
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
| Shares sold | | | | | 2,407,798 | | | | $35,270,249 | | | | 4,545,844 | | | | $55,023,679 | |
| Shares reinvested | | | | | 249,452 | | | | 3,669,445 | | | | 282,139 | | | | 3,365,915 | |
| Shares redeemed | | + | | | (8,283,829 | ) | | | (120,443,252 | ) | | | (16,145,730 | ) | | | (195,653,564 | ) |
| | | |
Net transactions in fund shares | | | | | (5,626,579 | ) | | | ($81,503,558 | ) | | | (11,317,747 | ) | | | ($137,263,970 | ) |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 32,084,678 | | | | $430,390,070 | | | | 43,402,425 | | | | $544,683,912 | |
| Total decrease | | + | | | (5,626,579 | ) | | | (20,702,508 | ) | | | (11,317,747 | ) | | | (114,293,842 | ) |
| | | |
End of period | | | | | 26,458,099 | | | | $409,687,562 | | | | 32,084,678 | | | | $430,390,070 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $4,836,584 | | | | | | | | $4,089,877 | |
82 See financial notes
Schwab® International Core Equity Fund
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 5/30/082–
| | |
| | | 10/31/10 | | 10/31/091 | | 10/31/08 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 7.25 | | | | 5.85 | | | | 10.00 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.16 | | | | 0.03 | | | | 0.06 | | | |
| Net realized and unrealized gains (losses) | | | 0.57 | | | | 1.46 | | | | (4.21 | ) | | |
| | | |
| Total from investment operations | | | 0.73 | | | | 1.49 | | | | (4.15 | ) | | |
| Less distributions: | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.18 | ) | | | (0.09 | ) | | | — | | | |
| | | |
| Net asset value at end of period | | | 7.80 | | | | 7.25 | | | | 5.85 | | | |
| | | |
| Total return (%) | | | 10.09 | | | | 25.98 | | | | (41.50 | )3 | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | |
| Net operating expenses | | | 0.87 | 4 | | | 0.86 | | | | 0.86 | 5 | | |
| Gross operating expenses | | | 1.27 | | | | 1.60 | | | | 1.39 | 5 | | |
| Net investment income (loss) | | | 1.85 | | | | 1.19 | | | | 1.67 | 5 | | |
| Portfolio turnover rate | | | 91 | 6 | | | 94 | | | | 56 | 3 | | |
| Net assets, end of period ($ x 1,000,000) | | | 53 | | | | 37 | | | | 3 | | | |
1 Effective October 7, 2009, the Investor Shares class, the Select Shares class and the Institutional Shares class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Institutional Shares.
2 Commencement of operations.
3 Not annualized.
4 The ratio of net operating expenses would have been 0.86% if certain non-routine expenses had not been incurred.
5 Annualized.
6 Portfolio turnover excludes the impact of investment activity resulting from a merger with another fund. (See Financial Note 11).
See financial notes 83
Schwab® International Core Equity Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 96 | .5% | | Common Stock | | | 44,207,425 | | | | 50,771,310 | |
| | 5 | .4% | | Other Investment Companies | | | 2,693,697 | | | | 2,820,095 | |
| |
| |
| | 101 | .9% | | Total Investments | | | 46,901,122 | | | | 53,591,405 | |
| | (1 | .9)% | | Other Assets and Liabilities, Net | | | | | | | (990,883 | ) |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 52,600,522 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 96.5% of net assets |
| |
Australia 7.9%
|
| | | | | | | | | |
| |
| Banks 0.4% |
| Australia & New Zealand Banking Group Ltd. | | | 9,782 | | | | 238,649 | |
| | | | | | | | | |
| |
| Capital Goods 0.8% |
| UGL Ltd. | | | 28,802 | | | | 416,348 | |
| | | | | | | | | |
| |
| Consumer Services 0.7% |
| Flight Centre Ltd. | | | 15,448 | | | | 345,663 | |
| | | | | | | | | |
| |
| Diversified Financials 0.8% |
| Challenger Financial Services Group Ltd. | | | 99,231 | | | | 447,568 | |
| | | | | | | | | |
| |
| Energy 1.0% |
| Caltex Australia Ltd. | | | 25,211 | | | | 287,198 | |
| Coal & Allied Industries Ltd. | | | 2,000 | | | | 219,211 | |
| | | | | | | | | |
| | | | | | | | 506,409 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.1% |
| Wesfarmers Ltd. | | | 2,255 | | | | 73,370 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.7% |
| Ansell Ltd. | | | 27,437 | | | | 364,716 | |
| | | | | | | | | |
| |
| Materials 3.4% |
| BHP Billiton Ltd. | | | 23,790 | | | | 983,033 | |
| Orica Ltd. | | | 12,314 | | | | 304,275 | |
| Rio Tinto Ltd. | | | 6,037 | | | | 491,305 | |
| | | | | | | | | |
| | | | | | | | 1,778,613 | |
| | | | | | | | | |
| | | | | | | | 4,171,336 | |
| |
Austria 1.1%
|
| | | | | | | | | |
| |
| Banks 0.8% |
| Erste Group Bank AG | | | 6,729 | | | | 304,026 | |
| Raiffeisen International Bank-Holding AG | | | 2,310 | | | | 130,461 | |
| | | | | | | | | |
| | | | | | | | 434,487 | |
| | | | | | | | | |
| |
| Energy 0.3% |
| OMV AG | | | 4,232 | | | | 158,283 | |
| | | | | | | | | |
| | | | | | | | 592,770 | |
| |
Belgium 1.8%
|
| | | | | | | | | |
| |
| Banks 0.3% |
KBC GROEP N.V. * | | | 4,103 | | | | 178,662 | |
| | | | | | | | | |
| |
| Diversified Financials 0.7% |
| Banque Nationale de Belgique | | | 72 | | | | 362,947 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.3% |
Agfa Gevaert N.V. * | | | 25,858 | | | | 151,009 | |
| | | | | | | | | |
| |
| Materials 0.5% |
| Umicore | | | 5,288 | | | | 249,166 | |
| | | | | | | | | |
| | | | | | | | 941,784 | |
| |
Brazil 0.2%
|
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.2% |
| Cia. Hering | | | 2,500 | | | | 123,140 | |
| |
Canada 2.5%
|
| | | | | | | | | |
| |
| Materials 2.2% |
| Agrium, Inc. | | | 1,400 | | | | 123,844 | |
Canfor Corp. * | | | 12,100 | | | | 114,249 | |
| Cascades, Inc. | | | 15,800 | | | | 104,104 | |
| Centerra Gold, Inc. | | | 8,700 | | | | 173,591 | |
| HudBay Minerals, Inc. | | | 8,000 | | | | 126,287 | |
| Labrador Iron Ore Royalty Corp. | | | 2,600 | | | | 156,015 | |
Lundin Mining Corp. * | | | 16,900 | | | | 107,044 | |
| Potash Corp. of Saskatchewan, Inc. | | | 800 | | | | 115,698 | |
| West Fraser Timber Co., Ltd. | | | 3,400 | | | | 147,681 | |
| | | | | | | | | |
| | | | | | | | 1,168,513 | |
| | | | | | | | | |
| |
| Utilities 0.3% |
| ATCO Ltd., Class I | | | 2,400 | | | | 122,718 | |
| Canadian Utilities Ltd., Class A | | | 300 | | | | 14,410 | |
| | | | | | | | | |
| | | | | | | | 137,128 | |
| | | | | | | | | |
| | | | | | | | 1,305,641 | |
| |
China 1.1%
|
| | | | | | | | | |
| |
| Capital Goods 0.5% |
| First Tractor Co., Ltd., Class H | | | 36,000 | | | | 34,695 | |
| Weichai Power Co., Ltd., Class H | | | 16,000 | | | | 211,119 | |
| | | | | | | | | |
| | | | | | | | 245,814 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
| Luthai Textile Co., Ltd., Class B | | | 30,200 | | | | 30,535 | |
| | | | | | | | | |
| |
| Energy 0.5% |
| China Petroleum & Chemical Corp., Class H | | | 156,000 | | | | 148,428 | |
| Inner Mongolia Yitai Coal Co., Ltd., Class B | | | 19,000 | | | | 134,143 | |
| | | | | | | | | |
| | | | | | | | 282,571 | |
| | | | | | | | | |
| | | | | | | | 558,920 | |
84 See financial notes
Schwab® International Core Equity Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Denmark 3.2%
|
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 1.6% |
| Carlsberg A/S, Class B | | | 3,745 | | | | 409,442 | |
| Danisco A/S | | | 5,215 | | | | 449,824 | |
| | | | | | | | | |
| | | | | | | | 859,266 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.5% |
| Coloplast A/S, Class B | | | 1,874 | | | | 232,057 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 1.1% |
| Novo Nordisk A/S, Class B | | | 5,424 | | | | 569,530 | |
| | | | | | | | | |
| | | | | | | | 1,660,853 | |
| |
Finland 0.5%
|
| | | | | | | | | |
| |
| Capital Goods 0.5% |
| Wartsila Corp. Oyj | | | 4,030 | | | | 282,613 | |
| |
France 8.2%
|
| | | | | | | | | |
| |
| Automobiles & Components 1.1% |
Valeo S.A. * | | | 11,266 | | | | 608,973 | |
| | | | | | | | | |
| |
| Banks 1.6% |
| BNP Paribas | | | 7,408 | | | | 541,862 | |
Natixis * | | | 47,340 | | | | 290,809 | |
| | | | | | | | | |
| | | | | | | | 832,671 | |
| | | | | | | | | |
| |
| Capital Goods 1.7% |
| Legrand S.A. | | | 8,794 | | | | 339,568 | |
| Safran S.A. | | | 2,531 | | | | 80,296 | |
| Zodiac Aerospace | | | 6,497 | | | | 459,416 | |
| | | | | | | | | |
| | | | | | | | 879,280 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.5% |
| Societe BIC S.A. | | | 3,053 | | | | 270,994 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.7% |
| Christian Dior S.A. | | | 2,547 | | | | 368,588 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.2% |
| L’Oreal S.A. | | | 861 | | | | 101,136 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 1.2% |
| Sanofi-Aventis | | | 8,881 | | | | 622,217 | |
| | | | | | | | | |
| |
| Retailing 0.6% |
| PPR | | | 1,881 | | | | 309,373 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.6% |
| France Telecom S.A. | | | 13,408 | | | | 321,700 | |
| | | | | | | | | |
| | | | | | | | 4,314,932 | |
| |
Germany 5.8%
|
| | | | | | | | | |
| |
| Banks 1.1% |
Aareal Bank AG * | | | 12,417 | | | | 303,149 | |
Commerzbank AG * | | | 30,790 | | | | 277,290 | |
| | | | | | | | | |
| | | | | | | | 580,439 | |
| | | | | | | | | |
| |
| Capital Goods 0.6% |
| MTU Aero Engines Holding AG | | | 5,595 | | | | 337,622 | |
| | | | | | | | | |
| |
| Insurance 1.3% |
| Allianz SE - Reg’d | | | 4,438 | | | | 555,758 | |
| Muenchener Rueckversicherungs-Gesellschaft AG - Reg’d | | | 902 | | | | 140,982 | |
| | | | | | | | | |
| | | | | | | | 696,740 | |
| | | | | | | | | |
| |
| Materials 1.0% |
| BASF SE | | | 6,876 | | | | 499,964 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.5% |
| Stada Arzneimittel AG | | | 8,954 | | | | 275,294 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.1% |
Infineon Technologies AG * | | | 9,722 | | | | 76,484 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.2% |
| Wincor Nixdorf AG | | | 1,262 | | | | 92,317 | |
| | | | | | | | | |
| |
| Utilities 1.0% |
| E.ON AG | | | 16,435 | | | | 514,420 | |
| | | | | | | | | |
| | | | | | | | 3,073,280 | |
| |
Hong Kong 4.9%
|
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
| Yue Yuen Industrial Holdings Ltd. | | | 21,500 | | | | 77,118 | |
| | | | | | | | | |
| |
| Diversified Financials 1.3% |
| First Pacific Co., Ltd. | | | 314,000 | | | | 290,971 | |
| Guoco Group Ltd. | | | 31,000 | | | | 379,298 | |
| | | | | | | | | |
| | | | | | | | 670,269 | |
| | | | | | | | | |
| |
| Energy 0.7% |
| CNOOC Ltd. | | | 174,000 | | | | 363,263 | |
| | | | | | | | | |
| |
| Real Estate 2.0% |
| Cheung Kong (Holdings) Ltd. | | | 23,000 | | | | 351,306 | |
| Great Eagle Holdings Ltd. | | | 63,000 | | | | 188,782 | |
| Hongkong Land Holdings Ltd. | | | 64,000 | | | | 441,843 | |
| Midland Holdings Ltd. | | | 56,000 | | | | 56,415 | |
| Sun Hung Kai Properties Ltd. | | | 2,000 | | | | 34,404 | |
| | | | | | | | | |
| | | | | | | | 1,072,750 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.2% |
| VTech Holdings Ltd. | | | 11,700 | | | | 122,104 | |
| | | | | | | | | |
| |
| Utilities 0.6% |
| Hongkong Electric Holdings Ltd. | | | 46,500 | | | | 295,614 | |
| | | | | | | | | |
| | | | | | | | 2,601,118 | |
| |
Italy 2.4%
|
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.9% |
| Recordati S.p.A. | | | 47,023 | | | | 463,236 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.7% |
| Telecom Italia S.p.A. | | | 231,155 | | | | 354,768 | |
| | | | | | | | | |
| |
| Transportation 0.2% |
| Autostrada Torino-Milano S.p.A. | | | 7,563 | | | | 108,589 | |
| | | | | | | | | |
| |
| Utilities 0.6% |
| Terna - Rete Elettrica Nationale S.p.A. | | | 67,036 | | | | 309,337 | |
| | | | | | | | | |
| | | | | | | | 1,235,930 | |
| |
Japan 20.1%
|
| | | | | | | | | |
| |
| Automobiles & Components 1.9% |
| Honda Motor Co., Ltd. | | | 7,200 | | | | 259,551 | |
Nissan Motor Co., Ltd. * | | | 42,800 | | | | 376,161 | |
| The Yokohama Rubber Co., Ltd. | | | 69,000 | | | | 344,907 | |
| | | | | | | | | |
| | | | | | | | 980,619 | |
| | | | | | | | | |
| |
| Banks 3.2% |
| Chuo Mitsui Trust Holdings, Inc. | | | 66,000 | | | | 238,098 | |
Shinsei Bank Ltd. * | | | 272,000 | | | | 215,564 | |
See financial notes 85
Schwab® International Core Equity Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| The Chiba Bank Ltd. | | | 46,000 | | | | 283,997 | |
| The Gunma Bank, Ltd. | | | 35,000 | | | | 175,535 | |
| The Hiroshima Bank Ltd. | | | 63,000 | | | | 257,324 | |
| The Nishi-Nippon City Bank Ltd. | | | 96,000 | | | | 261,589 | |
| The Sumitomo Trust & Banking Co., Ltd. | | | 51,000 | | | | 278,450 | |
| | | | | | | | | |
| | | | | | | | 1,710,557 | |
| | | | | | | | | |
| |
| Capital Goods 1.8% |
| Nagase & Co., Ltd. | | | 30,000 | | | | 351,229 | |
| Nippo Corp. | | | 14,000 | | | | 86,682 | |
| Noritz Corp. | | | 5,000 | | | | 91,809 | |
| Sanki Engineering Co., Ltd. | | | 15,000 | | | | 93,510 | |
| Sumitomo Corp. | | | 27,700 | | | | 350,704 | |
| | | | | | | | | |
| | | | | | | | 973,934 | |
| | | | | | | | | |
| |
| Consumer Services 0.5% |
| Oriental Land Co., Ltd. | | | 2,900 | | | | 280,876 | |
| | | | | | | | | |
| |
| Diversified Financials 1.3% |
| Aeon Credit Service Co., Ltd. | | | 23,700 | | | | 272,209 | |
| Century Tokyo Leasing Corp. | | | 29,200 | | | | 421,257 | |
| | | | | | | | | |
| | | | | | | | 693,466 | |
| | | | | | | | | |
| |
| Energy 0.5% |
| Idemitsu Kosan Co., Ltd. | | | 3,000 | | | | 252,720 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.5% |
| Aeon Co., Ltd. | | | 23,400 | | | | 275,587 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 1.1% |
| Kewpie Corp. | | | 26,900 | | | | 342,219 | |
| Nippon Meat Packers, Inc. | | | 21,000 | | | | 244,170 | |
| | | | | | | | | |
| | | | | | | | 586,389 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.8% |
| Nihon Kohden Corp. | | | 8,900 | | | | 169,171 | |
| Sysmex Corp. | | | 3,700 | | | | 253,704 | |
| | | | | | | | | |
| | | | | | | | 422,875 | |
| | | | | | | | | |
| |
| Insurance 0.7% |
| Tokio Marine Holdings, Inc. | | | 12,700 | | | | 357,071 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| Kobe Steel Ltd. | | | 23,000 | | | | 50,549 | |
| | | | | | | | | |
| |
| Media 1.1% |
| Avex Group Holdings, Inc. | | | 8,500 | | | | 122,419 | |
| Nippon Television Network Corp. | | | 2,360 | | | | 311,500 | |
| TV Asahi Corp. | | | 96 | | | | 135,300 | |
| | | | | | | | | |
| | | | | | | | 569,219 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 1.3% |
| Taisho Pharmaceutical Co., Ltd. | | | 13,000 | | | | 273,743 | |
| Takeda Pharmaceutical Co., Ltd. | | | 9,200 | | | | 431,261 | |
| | | | | | | | | |
| | | | | | | | 705,004 | |
| | | | | | | | | |
| |
| Real Estate 0.3% |
| Daito Trust Construction Co., Ltd. | | | 2,200 | | | | 133,035 | |
| | | | | | | | | |
| |
| Retailing 2.6% |
| AOKI Holdings, Inc. | | | 8,300 | | | | 117,240 | |
| Autobacs Seven Co., Ltd. | | | 8,800 | | | | 329,660 | |
| GEO Corp. | | | 310 | | | | 326,379 | |
| K’s Holdings Corp. | | | 13,200 | | | | 328,034 | |
| USS Co., Ltd. | | | 3,300 | | | | 256,358 | |
| | | | | | | | | |
| | | | | | | | 1,357,671 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.8% |
Dainippon Screen Mfg. Co., Ltd. * | | | 70,000 | | | | 398,328 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.7% |
| Fujitsu Ltd. | | | 41,000 | | | | 279,679 | |
Hitachi Ltd. * | | | 14,000 | | | | 63,275 | |
| OMRON Corp. | | | 600 | | | | 13,900 | |
| | | | | | | | | |
| | | | | | | | 356,854 | |
| | | | | | | | | |
| |
| Transportation 0.9% |
| Central Japan Railway Co. | | | 36 | | | | 272,296 | |
| Hitachi Transport System Ltd. | | | 8,700 | | | | 134,687 | |
| Seino Holdings Co., Ltd. | | | 10,000 | | | | 60,886 | |
| | | | | | | | | |
| | | | | | | | 467,869 | |
| | | | | | | | | |
| | | | | | | | 10,572,623 | |
| |
Netherlands 2.7%
|
| | | | | | | | | |
| |
| Capital Goods 1.1% |
CNH Global N.V. * | | | 4,500 | | | | 178,605 | |
| Koninklijke Philips Electronics N.V. | | | 12,691 | | | | 387,105 | |
| | | | | | | | | |
| | | | | | | | 565,710 | |
| | | | | | | | | |
| |
| Materials 0.5% |
| Koninklijke DSM N.V. | | | 4,839 | | | | 258,974 | |
| | | | | | | | | |
| |
| Real Estate 0.7% |
| Eurocommercial Properties N.V. | | | 7,513 | | | | 371,894 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.4% |
| STMicroelectronics N.V. | | | 22,386 | | | | 196,306 | |
| | | | | | | | | |
| | | | | | | | 1,392,884 | |
| |
New Zealand 0.9%
|
| | | | | | | | | |
| |
| Materials 0.5% |
| Fletcher Building Ltd. | | | 43,046 | | | | 269,706 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.4% |
| Telecom Corp. of New Zealand Ltd. | | | 136,001 | | | | 212,271 | |
| | | | | | | | | |
| | | | | | | | 481,977 | |
| |
Norway 1.3%
|
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.4% |
| Tomra Systems A.S.A. | | | 32,136 | | | | 195,827 | |
| | | | | | | | | |
| |
| Energy 0.9% |
| Acergy S.A. | | | 4,600 | | | | 93,161 | |
| TGS Nopec Geophysical Co., A.S.A. | | | 24,009 | | | | 416,067 | |
| | | | | | | | | |
| | | | | | | | 509,228 | |
| | | | | | | | | |
| | | | | | | | 705,055 | |
| |
Portugal 0.6%
|
| | | | | | | | | |
| |
| Utilities 0.6% |
| EDP - Energias de Portugal S.A. | | | 78,556 | | | | 300,524 | |
| |
Republic of Korea 0.6%
|
| | | | | | | | | |
| |
| Capital Goods 0.1% |
| LG Corp. | | | 801 | | | | 57,305 | |
| | | | | | | | | |
| |
| Materials 0.4% |
| LG Chem Ltd. | | | 662 | | | | 204,844 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.1% |
| Samsung Electronics Co., Ltd. | | | 112 | | | | 74,304 | |
| | | | | | | | | |
| | | | | | | | 336,453 | |
86 See financial notes
Schwab® International Core Equity Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Singapore 1.4%
|
| | | | | | | | | |
| |
| Capital Goods 1.1% |
| Keppel Corp., Ltd. | | | 50,000 | | | | 386,726 | |
| SembCorp Industries Ltd. | | | 29,000 | | | | 102,918 | |
| SembCorp Marine Ltd. | | | 17,000 | | | | 60,620 | |
| | | | | | | | | |
| | | | | | | | 550,264 | |
| | | | | | | | | |
| |
| Real Estate 0.3% |
| Ho Bee Investment Ltd. | | | 138,000 | | | | 180,443 | |
| | | | | | | | | |
| | | | | | | | 730,707 | |
| |
South Africa 0.0%
|
| | | | | | | | | |
| |
| Materials 0.0% |
| Mondi Ltd. | | | 1,799 | | | | 14,947 | |
| |
Spain 4.2%
|
| | | | | | | | | |
| |
| Banks 2.8% |
| Banco Bilbao Vizcaya Argentaria S.A. | | | 37,730 | | | | 497,071 | |
| Banco Popular Espanol S.A. | | | 43,224 | | | | 279,926 | |
| Banco Santander S.A. | | | 55,300 | | | | 709,804 | |
| | | | | | | | | |
| | | | | | | | 1,486,801 | |
| | | | | | | | | |
| |
| Diversified Financials 0.6% |
| Criteria Caixacorp S.A. | | | 49,527 | | | | 279,811 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Almirall S.A. | | | 7,156 | | | | 67,851 | |
| | | | | | | | | |
| |
| Utilities 0.7% |
| Endesa S.A. | | | 13,489 | | | | 374,125 | |
| | | | | | | | | |
| | | | | | | | 2,208,588 | |
| |
Sweden 1.5%
|
| | | | | | | | | |
| |
| Food & Staples Retailing 0.9% |
| Axfood AB | | | 12,750 | | | | 447,307 | |
| | | | | | | | | |
| |
| Materials 0.6% |
| Svenska Cellulosa AB, B Shares | | | 20,839 | | | | 323,066 | |
| | | | | | | | | |
| | | | | | | | 770,373 | |
| |
Switzerland 4.6%
|
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 1.6% |
| Nestle S.A. - Reg’d | | | 15,351 | | | | 840,843 | |
| | | | | | | | | |
| |
| Materials 0.2% |
Clariant AG - Reg’d * | | | 5,496 | | | | 92,949 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 2.8% |
| Lonza Group AG - Reg’d | | | 2,649 | | | | 231,900 | |
| Novartis AG - Reg’d | | | 15,450 | | | | 895,215 | |
| Roche Holding AG | | | 2,309 | | | | 339,086 | |
| | | | | | | | | |
| | | | | | | | 1,466,201 | |
| | | | | | | | | |
| |
| Transportation 0.0% |
Swissair Group (a)(b)* | | | 30 | | | | — | |
| | | | | | | | | |
| | | | | | | | 2,399,993 | |
| |
Thailand 0.5%
|
| | | | | | | | | |
| |
| Banks 0.3% |
| Kiatnakin Bank plc | | | 122,600 | | | | 162,553 | |
| | | | | | | | | |
| |
| Diversified Financials 0.2% |
| Thanachart Capital pcl | | | 78,700 | | | | 103,691 | |
| | | | | | | | | |
| | | | | | | | 266,244 | |
| |
Turkey 0.2%
|
| | | | | | | | | |
| |
| Utilities 0.2% |
| Aygaz A.S. | | | 23,505 | | | | 122,863 | |
| |
United Kingdom 18.3%
|
| | | | | | | | | |
| |
| Capital Goods 0.8% |
| IMI plc | | | 34,268 | | | | 433,339 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 1.8% |
| Aggreko plc | | | 10,387 | | | | 262,100 | |
| Experian plc | | | 27,522 | | | | 319,799 | |
| Michael Page International plc | | | 48,140 | | | | 363,342 | |
| WS Atkins plc | | | 1,672 | | | | 20,188 | |
| | | | | | | | | |
| | | | | | | | 965,429 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.6% |
Persimmon plc * | | | 52,308 | | | | 285,737 | |
| | | | | | | | | |
| |
| Consumer Services 0.2% |
| Restaurant Group plc | | | 24,234 | | | | 109,602 | |
| | | | | | | | | |
| |
| Diversified Financials 0.6% |
| Investec plc | | | 15,995 | | | | 127,655 | |
| Tullett Prebon plc | | | 30,285 | | | | 192,610 | |
| | | | | | | | | |
| | | | | | | | 320,265 | |
| | | | | | | | | |
| |
| Energy 3.9% |
| AMEC plc | | | 17,292 | | | | 300,777 | |
| BP plc | | | 83,474 | | | | 567,387 | |
| John Wood Group plc | | | 63,797 | | | | 445,155 | |
| Royal Dutch Shell plc, B Share | | | 22,511 | | | | 720,388 | |
| | | | | | | | | |
| | | | | | | | 2,033,707 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.7% |
| Dairy Crest Group plc | | | 57,477 | | | | 341,836 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| Smith & Nephew plc | | | 7,766 | | | | 68,236 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.4% |
| Reckitt Benckiser Group plc | | | 3,865 | | | | 215,932 | |
| | | | | | | | | |
| |
| Insurance 1.5% |
| Lancashire Holdings Ltd. | | | 49,025 | | | | 445,722 | |
| Legal & General Group plc | | | 221,922 | | | | 356,783 | |
| | | | | | | | | |
| | | | | | | | 802,505 | |
| | | | | | | | | |
| |
| Materials 2.4% |
| Croda International plc | | | 16,562 | | | | 381,593 | |
| Filtrona plc | | | 4,987 | | | | 19,914 | |
| Fresnillo plc | | | 7,957 | | | | 159,328 | |
| Mondi plc | | | 43,161 | | | | 359,376 | |
| Rio Tinto plc | | | 5,128 | | | | 333,065 | |
| | | | | | | | | |
| | | | | | | | 1,253,276 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 1.2% |
| AstraZeneca plc | | | 12,580 | | | | 632,798 | |
| | | | | | | | | |
| |
| Real Estate 0.1% |
| Savills plc | | | 7,969 | | | | 42,003 | |
| | | | | | | | | |
| |
| Retailing 0.2% |
| WH Smith plc | | | 15,382 | | | | 119,323 | |
See financial notes 87
Schwab® International Core Equity Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| | | | | | | | | |
| |
| Software & Services 1.2% |
| Logica plc | | | 175,654 | | | | 364,240 | |
| The Sage Group plc | | | 63,152 | | | | 272,499 | |
| | | | | | | | | |
| | | | | | | | 636,739 | |
| | | | | | | | | |
| |
| Telecommunication Services 2.6% |
| BT Group plc | | | 174,324 | | | | 429,841 | |
| Vodafone Group plc | | | 334,794 | | | | 915,194 | |
| | | | | | | | | |
| | | | | | | | 1,345,035 | |
| | | | | | | | | |
| | | | | | | | 9,605,762 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $44,207,425) | | | 50,771,310 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Other Investment Companies 5.4% of net assets |
| |
United States 5.4%
|
| iShares MSCI EAFE Index Fund | | | 20,000 | | | | 1,140,200 | |
| State Street Institutional Liquid Reserves Fund - Institutional Class | | | 1,679,895 | | | | 1,679,895 | |
| | | | | | | | | |
| Total Other Investment Companies |
| (Cost $2,693,697) | | | 2,820,095 | |
| | | | | |
| |
|
End of Investments. |
At 10/31/10, the tax basis cost of the fund’s investments was $47,210,785 and the unrealized appreciation and depreciation were $7,697,135 and ($1,316,515), respectively, with a net unrealized appreciation of $6,380,620.
At 10/31/10, the values of certain foreign securities held by the fund aggregating $48,986,424 were adjusted from their closing market values in accordance with procedures approved by the Board of Trustees.
| | |
| * | | Non-income producing security. |
| (a) | | Illiquid security. At the period end, the value of these amounted to $0 or 0.0% of net assets. |
| (b) | | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
88 See financial notes
Schwab International Core Equity Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value (cost $46,901,122) | | | | | $53,591,405 | |
| Foreign currency, at value (cost $5,049) | | | | | 5,083 | |
| Receivables: | | | | | | |
| Investments sold | | | | | 149,957 | |
| Fund shares sold | | | | | 120,334 | |
| Dividends | | | | | 89,978 | |
| Foreign tax reclaims | | | | | 71,401 | |
| Interest | | | | | 323 | |
| Prepaid expenses | | + | | | 82 | |
| | | |
Total assets | | | | | 54,028,563 | |
| |
Liabilities |
|
| Payables: | | | | | | |
| Investments bought | | | | | 1,350,666 | |
| Shareholder service fees | | | | | 2,142 | |
| Fund shares redeemed | | | | | 34,949 | |
| Distribution and shareholder services fees | | | | | 695 | |
| Trustees’ fees | | | | | 1 | |
| Accrued expenses | | + | | | 39,588 | |
| | | |
Total liabilities | | | | | 1,428,041 | |
| |
Net Assets |
|
Total assets | | | | | 54,028,563 | |
Total liabilities | | − | | | 1,428,041 | |
| | | |
Net assets | | | | | $52,600,522 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 64,614,085 | |
| Net investment income not yet distributed | | | | | 1,070,626 | |
| Net realized capital losses | | | | | (19,784,971 | ) |
| Net unrealized capital gains | | | | | 6,700,782 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $52,600,522 | | | | 6,745,593 | | | | | $7.80 | | | |
See financial notes 89
Schwab International Core Equity Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends (net of foreign withholding taxes of $141,071) | | | | | $1,499,941 | |
| Interest | | + | | | 2,254 | |
| | | |
Total investment income | | | | | 1,502,195 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 321,008 | |
| Shareholder service fees | | | | | 128,236 | |
| Portfolio accounting fees | | | | | 67,069 | |
| Professional fees | | | | | 49,535 | |
| Custodian fees | | | | | 43,795 | |
| Registration fees | | | | | 28,297 | |
| Transfer agent fees | | | | | 27,572 | |
| Shareholder reports | | | | | 13,251 | |
| Trustees’ fees | | | | | 5,456 | |
| Interest expense | | | | | 1,074 | |
| Other expenses | | + | | | 17,740 | |
| | | |
| Total expenses | | | | | 703,033 | |
| Expense reduction by adviser and Schwab | | − | | | 222,994 | |
| Custody credits | | − | | | 1 | |
| | | |
Net expenses | | − | | | 480,038 | |
| | | |
Net investment income | | | | | 1,022,157 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on investments | | | | | 1,859,456 | |
| Net realized gains on foreign currency transactions | | + | | | 3,277 | |
| | | |
Net realized gains | | | | | 1,862,733 | |
| Net unrealized losses on investments | | | | | (946,835 | ) |
| Net unrealized gains on foreign currency translations | | + | | | 7,688 | |
| | | |
Net unrealized losses | | + | | | (939,147 | ) |
| | | |
Net realized and unrealized gains | | | | | 923,586 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $1,945,743 | |
90 See financial notes
Schwab International Core Equity Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $1,022,157 | | | | $734,186 | |
| Net realized gains (losses) | | | | | 1,862,733 | | | | (14,073,263 | ) |
| Net unrealized gains (losses) | | + | | | (939,147 | ) | | | 21,217,844 | |
| | | |
Increase in net assets from operations | | | | | 1,945,743 | | | | 7,878,767 | |
| |
Distributions to Shareholders1,2 |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | — | | | | 282,728 | |
| Select Shares | | | | | — | | | | 135,197 | |
| Institutional Shares | | + | | | 911,920 | | | | 41,973 | |
| | | |
Total distributions from net investment income | | | | | $911,920 | | | | $459,898 | |
Transactions in Fund Shares1,2
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 321,158 | | | | $1,872,084 | |
| Select Shares | | | | | — | | | | — | | | | 247,317 | | | | 1,343,753 | |
| Institutional Shares | | + | | | 1,771,887 | | | | 12,982,863 | | | | 4,932,858 | | | | 36,215,105 | |
| | | |
Total shares sold | | | | | 1,771,887 | | | | $12,982,863 | | | | 5,501,333 | | | | $39,430,942 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Issued in connection with merger | | | | | | | | | | | | | | | | | | |
| Institutional Shares | | | | | 7,281,464 | | | | 54,649,067 | | | | — | | | | — | |
| | | |
Total shares issued in connection with merger | | | | | 7,281,464 | | | | $54,649,067 | | | | — | | | | $— | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 44,687 | | | | $248,909 | |
| Select Shares | | | | | — | | | | — | | | | 20,012 | | | | 111,470 | |
| Institutional Shares | | + | | | 99,931 | | | | 750,485 | | | | 832 | | | | 4,624 | |
| | | |
Total shares reinvested | | | | | 99,931 | | | | $750,485 | | | | 65,531 | | | | $365,003 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | (4,002,006 | ) | | | ($28,219,563 | ) |
| Select Shares | | | | | — | | | | — | | | | (1,826,611 | ) | | | (12,882,969 | ) |
| Institutional Shares | | + | | | (7,530,761 | ) | | | (53,939,839 | ) | | | (268,310 | ) | | | (2,044,245 | ) |
| | | |
Total shares redeemed | | | | | (7,530,761 | ) | | | ($53,939,839 | ) | | | (6,096,927 | ) | | | ($43,146,777 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | 1,622,521 | | | | $14,442,576 | | | | (530,063 | ) | | | ($3,350,832 | ) |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 5,123,072 | | | | $37,124,123 | | | | 5,653,135 | | | | $33,056,086 | |
| Total increase or decrease | | + | | | 1,622,521 | | | | 15,476,399 | | | | (530,063 | ) | | | 4,068,037 | |
| | | |
End of period | | | | | 6,745,593 | | | | $52,600,522 | | | | 5,123,072 | | | | $37,124,123 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $1,070,626 | | | | | | | | $706,049 | |
| | | |
1 | | Effective October 7, 2009, all outstanding Investor Shares (3,284,474 shares valued at $24,125,448) and Select Shares (1,479,703 shares valued at $10,870,047) combined with Institutional Shares, resulting in a single class of shares of the fund. |
2 | | Effective December 3, 2009 all of the assets and liabilities of the Laudus Rosenberg International Equity Fund were transferred to the Schwab International Core Equity Fund. (See Financial Note 11) |
See financial notes 91
Schwab Active Equity Funds
Financial Notes
1. Business Structure of the Funds:
Each of the funds discussed in this report is a series of Schwab Capital Trust (the “trust”), a no-load, open-end management investment company. The trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trust including the funds discussed in this report, which are highlighted:
| | | |
| |
Schwab Capital Trust (organized May 7, 1993)
Schwab Premier Equity Fund
Schwab Core Equity Fund
Schwab Dividend Equity Fund
Schwab Large-Cap Growth Fund
Schwab Small-Cap Equity Fund
Schwab Hedged Equity Fund
Schwab Financial Services Fund
Schwab Health Care Fund
Schwab International Core Equity Fund
Schwab S&P 500 Index Fund
Schwab Small-Cap Index Fund
Schwab Total Stock Market Index Fund
Schwab International Index Fund
Schwab MarketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
Laudus Small-Cap MarketMasters Fund | | Laudus International MarketMasters Fund
Schwab Balanced Fund
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small-Mid Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets Index Fund
Schwab Monthly Income Fund—Moderate Payout
Schwab Monthly Income Fund—Enhanced Payout
Schwab Monthly Income Fund—Maximum Payout |
| | | |
Each fund in this report offers one share class. Shares are bought and sold (subject to a redemption fee, See financial note 8) at closing net asset value (“NAV”), which is the price for all outstanding shares of a fund. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.
Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund may also keep certain assets in segregated accounts, as required by securities law.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies the funds use in their preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
(a) Security Valuation:
The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:
| | |
| | • | Securities traded on an exchange or over-the-counter: valued at the closing value for the day, or, on days when no closing value has been reported, halfway between the most recent bid and asked quotes. Securities that are primarily traded on foreign exchanges are valued at the closing values of such securities on their respective exchanges with these values then translated into U.S. dollars at the valuation date exchange rate unless these securities are fair valued as discussed below. |
| |
| | • | Securities for which no quoted value is available: The Board of Trustees has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, the fund may fair value a security when a security is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Board of Trustees regularly reviews fair value determinations made by the funds pursuant to the procedures. |
| |
| | • | International fair valuation: The Board of Trustees has adopted procedures to fair value foreign equity securities that trade in markets that close prior to when the funds value their holdings. By fair valuing securities whose prices may have been affected by events occurring after the close of trading, each fund seeks to establish prices that investors might expect to realize upon the current sales of these securities. This methodology is designed to deter “arbitrage” market timers, who |
92
Schwab Active Equity Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
| | |
| | | seek to exploit delays between the change in the value of a fund’s portfolio holdings and the net asset value of the fund’s shares, and seeks to help ensure that the prices at which the fund’s shares are purchased and redeemed are fair and do not result in dilution of shareholder interest or other harm to shareholders. When fair value pricing is used at the open or close of a reporting period, it may cause a temporary divergence between the return of a fund and that of its index or benchmark. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board of Trustees regularly reviews fair value determinations made by the funds pursuant to the procedures. |
| | |
| | • | Futures and forwards contracts: valued at their settlement prices as of the close of their exchanges (for futures) or at a value based on that day’s exchange rates (for forwards). |
| |
| | • | Short-term securities (60 days or less to maturity): valued at amortized cost, which approximates market value. |
| |
| | • | Underlying funds: valued at their respective net asset values as determined by the underlying fund in accordance with the 1940 Act for a given day. |
In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the funds disclose the fair value of their investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (level 3 measurements). If the funds determine that either the volume and/ or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
The three levels of the fair value hierarchy are as follows:
| | |
| | • | Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. The funds do not adjust the quoted price for such investments, even in situations where the funds hold a large position and a sale could reasonably impact the quoted price. |
| |
| | • | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 Prices. These generally include certain U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. In addition, international securities whose markets close hours before the funds value their holdings may require fair valuations due to significant movement in the U.S. markets occurring after the daily close of the foreign markets. The Board of Trustees has approved a vendor that would calculate fair valuations of international equity securities based on a number of factors that appear to correlate to the movements in the U.S. markets. As investments whose values are classified as Level 2 Prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. |
| |
| | • | Level 3 — significant unobservable inputs (including the funds’ own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the funds use one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds |
93
Schwab Active Equity Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
| | |
| | | due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds’ results of operations. |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the funds’ investments as of October 31, 2010:
Schwab Premier Equity Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| Common Stock(a) | | | $280,543,275 | | | | $— | | | | $— | | | | $280,543,275 | |
| Other Investment Company(a) | | | 10,763,611 | | | | — | | | | — | | | | 10,763,611 | |
| Short-Term Investment(a) | | | — | | | | 779,468 | | | | — | | | | 779,468 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $291,306,886 | | | | $779,468 | | | | $— | | | | $292,086,354 | |
| | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Futures Contract* | | | $703,354 | | | | $— | | | | $— | | | | $703,354 | |
Schwab Core Equity Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| Common Stock(a) | | | $1,785,760,473 | | | | $— | | | | $— | | | | $1,785,760,473 | |
| Other Investment Company(a) | | | 6,145,316 | | | | — | | | | — | | | | 6,145,316 | |
| Short-Term Investment(a) | | | — | | | | 1,133,809 | | | | — | | | | 1,133,809 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $1,791,905,789 | | | | $1,133,809 | | | | $— | | | | $1,793,039,598 | |
| | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Futures Contract* | | | $277,079 | | | | $— | | | | $— | | | | $277,079 | |
Schwab Dividend Equity Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| Common Stock(a) | | | $1,304,550,815 | | | | $— | | | | $— | | | | $1,304,550,815 | |
| Short-Term Investments(a) | | | — | | | | 15,292,404 | | | | — | | | | 15,292,404 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $1,304,550,815 | | | | $15,292,404 | | | | $— | | | | $1,319,843,219 | |
| | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Futures Contract* | | | $532,844 | | | | $— | | | | $— | | | | $532,844 | |
94
Schwab Active Equity Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
Schwab Large-Cap Growth Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| Common Stock(a) | | | $213,956,219 | | | | $— | | | | $— | | | | $213,956,219 | |
| Short-Term Investments(a) | | | — | | | | 5,520,946 | | | | — | | | | 5,520,946 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $213,956,219 | | | | $5,520,946 | | | | $— | | | | $219,477,165 | |
| | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Futures Contract* | | | $298,393 | | | | $— | | | | $— | | | | $298,393 | |
Schwab Small-Cap Equity Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| Common Stock(a) | | | $212,291,889 | | | | $— | | | | $— | | | | $212,291,889 | |
| Short-Term Investments(a) | | | — | | | | 6,703,347 | | | | — | | | | 6,703,347 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $212,291,889 | | | | $6,703,347 | | | | $— | | | | $218,995,236 | |
| | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Collateral Invested for Securities on Loan | | | $1,809,909 | | | | $— | | | | $— | | | | $1,809,909 | |
| Futures Contract* | | | 524,081 | | | | — | | | | — | | | | 524,081 | |
Schwab Hedged Equity Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| Common Stock(a) | | | $323,274,187 | | | | $— | | | | $— | | | | $323,274,187 | |
| Other Investment Company(a) | | | 6,206,196 | | | | — | | | | — | | | | 6,206,196 | |
| Short-Term Investment(a) | | | — | | | | 661,388 | | | | — | | | | 661,388 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $329,480,383 | | | | $661,388 | | | | $— | | | | $330,141,771 | |
| | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Futures Contract* | | | $298,393 | | | | $— | | | | $— | | | | $298,393 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Liabilities Valuation Input |
| | | | | | | | | |
| |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Short Sales(a) | | | ($107,692,899 | ) | | | $— | | | | $— | | | | ($107,692,899 | ) |
Schwab Financial Services Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total** |
| |
| Common Stock(a) | | | $51,651,089 | | | | $— | | | | $— | | | | $51,651,089 | |
| Short-Term Investments(a) | | | — | | | | 506,915 | | | | — | | | | 506,915 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $51,651,089 | | | | $506,915 | | | | $— | | | | $52,158,004 | |
| | | | | | | | | | | | | | | | | |
95
Schwab Active Equity Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
Schwab Health Care Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| Common Stock(a) | | | $308,050,500 | | | | $— | | | | $— | | | | $308,050,500 | |
| Foreign Common Stock(a) | | | — | | | | 85,101,571 | | | | — | | | | 85,101,571 | |
| Brazil | | | | | | | | | | | | | | | | |
| Health Care Equipment & Services | | | 1,328,942 | | | | — | | | | — | | | | 1,328,942 | |
| Warrants(a) | | | 7,834 | | | | — | | | | — | | | | 7,834 | |
| Short-Term Investments(a) | | | — | | | | 14,893,086 | | | | — | | | | 14,893,086 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $309,387,276 | | | | $99,994,657 | | | | $— | | | | $409,381,933 | |
| | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Collateral Invested for Securities on Loan | | | $766,049 | | | | $— | | | | $— | | | | $766,049 | |
| Futures Contract* | | | 532,844 | | | | — | | | | — | | | | 532,844 | |
Schwab International Core Equity Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total** |
| |
| Common Stock(a) | | | $— | | | | $47,668,454 | | | | $— | | | | $47,668,454 | |
| Brazil(a) | | | 123,140 | | | | — | | | | — | | | | 123,140 | |
| Canada(a) | | | 1,305,641 | | | | — | | | | — | | | | 1,305,641 | |
| Netherlands(a) | | | — | | | | 827,174 | | | | — | | | | 827,174 | |
| Capital Goods | | | 178,605 | | | | 387,105 | | | | — | | | | 565,710 | |
| South Africa(a) | | | 14,947 | | | | — | | | | — | | | | 14,947 | |
| Thailand(a) | | | 162,553 | | | | 103,691 | | | | — | | | | 266,244 | |
| Other Investment Companies(a) | | | 2,820,095 | | | | — | | | | — | | | | 2,820,095 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $4,604,981 | | | | $48,986,424 | | | | $— | | | | $53,591,405 | |
| | | | | | | | | | | | | | | | | |
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Change in
| | | | | | | | Balance
|
| | | as of
| | Accrued
| | Realized
| | Unrealized
| | Net
| | Gross
| | Gross
| | as of
|
| | | October 31,
| | Discounts
| | Gain
| | Gain
| | Purchases
| | Transfers
| | Transfers
| | October 31,
|
Investments in Securities | | 2009 | | (Premiums) | | (Loss) | | (Loss) | | (Sales) | | in | | out | | 2010 |
| |
| Common Stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Switzerland | | | $— | | | | $— | | | | $— | | | | ($4,378 | ) | | | $4,378 | | | | $— | | | | $— | | | | $— | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | $— | | | | $— | | | | $— | | | | ($4,378 | ) | | | $4,378 | | | | $— | | | | $— | | | | $— | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| * | | Futures contracts are not included in Investments and are valued at the unrealized appreciation or depreciation. |
| ** | | The fund had no Other Financial Instruments. |
| (a) | | As categorized in Portfolio Holdings. |
In January 2010, the Financial Accounting Standards Board issued new guidance requiring reporting entities to make new disclosures about amounts and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements as well as inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances and settlements of Level 3 securities on a gross basis. The new and revised disclosures are required to be implemented for annual and interim periods beginning after
96
Schwab Active Equity Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
December 15, 2009, except for the disclosures surrounding purchases, sales, issuances and settlements of Level 3 fair value measurements on a gross basis, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years.
The funds have adopted the new guidance for the period ended October 31, 2010. There were no significant transfers between Level 1 and Level 2 for the period ended October 31, 2010. Management is currently evaluating the impact of the adoption of the other provisions of the new guidance on the funds’ financial statements.
The funds entered into equity index futures contracts (“futures”) during the period from November 1, 2009 through October 31, 2010. The funds invested in futures contracts to gain market exposure while still keeping a small portion of assets in cash for business operations. The fair value and variation margin for any futures contracts held at October 31, 2010 and the realized/unrealized gains (losses) on futures contracts held during the period ended October 31, 2010 are presented on the face of the Portfolio Holdings, Statement of Assets and Liabilities and Statement of Operations, respectively. Refer to Financial Note 2(b) for the funds’ accounting policies with respect to futures contracts and Financial Note 3 for disclosures concerning the risks of investing in futures contracts. During the period, the monthly average contract value of futures contracts held by the funds and the monthly average number of contracts were as follows:
| | | | | | | | | |
| | Contract Values | | Number of Contracts |
| |
| Schwab Premier Equity Fund | | | $5,295,756 | | | | 96 | |
| Schwab Core Equity Fund | | | 20,233,088 | | | | 367 | |
| Schwab Dividend Equity Fund | | | 9,497,494 | | | | 172 | |
| Schwab Large-Cap Growth Fund | | | 3,193,400 | | | | 58 | |
| Schwab Small-Cap Equity Fund | | | 4,688,554 | | | | 74 | |
| Schwab Hedged Equity Fund | | | 6,924,758 | | | | 125 | |
| Schwab Financial Services Fund | | | 444,078 | | | | 8 | |
| Schwab Health Care Fund | | | 7,883,223 | | | | 143 | |
| Schwab International Core Equity Fund | | | — | | | | — | |
(b) Accounting Policies for certain Portfolio Investments (if held):
Futures Contracts: Futures contracts are instruments that represent an agreement between two parties that obligates one party to buy, and the other party to sell, specific instruments at an agreed upon price on a stipulated future date. A fund must give the broker a deposit of cash and/or securities (the “initial margin”) whenever it enters into the futures contract. The amount of the deposit may vary from one contract to another. Subsequent payments (“variation margin”) are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses until the contract is closed, at which time the gains and losses are realized. Futures are traded publicly on exchanges, and their market value changes daily.
Forward Currency Contracts: “Forwards”, as they are known, are contracts to buy and sell a currency at a set price on a future date. The accounting for forwards is treated similar to that of futures contracts in that gains and losses are accounted for as unrealized gains or losses until the contracts settles and such amounts are accounted for as realized.
Securities Lending: Under the Securities Lending Program, a fund (the “lender”) may make short-term loans of their securities to another party (the “borrower”). When the fund lends securities, the borrower provides cash, U.S. government securities or letters of credit as collateral against the loans in an amount at least equal to 100% of the market value of the loaned securities. The cash collateral of securities loaned is invested in money market portfolios registered under Rule 2a-7 of the 1940 Act. The investments of collateral are mark-to-market daily and the value of the collateral must be at least 100% of the market value of the loan securities each day. If the value of the collateral falls below 100%, it will be adjusted the following day.
Repurchase Agreements: In a repurchase agreement, a fund buys a security from another party (usually a financial institution) with the agreement that it be sold back in the future. The funds’ repurchase agreements are fully collateralized by cash, U.S. government securities, U.S. government agency securities or other securities. All collateral is held by the funds’ custodian (or, with tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement.
97
Schwab Active Equity Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
Short Sales: When a fund sells securities short (sell securities it does not own), the fund identifies assets worth at least 100% of the value of the short securities as collateral. If the market value of the short securities subsequently falls, the fund can realize a gain by closing the short position. However, if the value rises, the fund typically would have to add to its collateral or close out its short position at a loss. The potential for losses associated with short positions is much greater than the original value of the securities sold short and may exceed amounts recorded in the Statement of Assets and Liabilities.
(c) Security Transactions:
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
Assets and liabilities denominated in foreign currencies are reported in U.S. dollars. For assets and liabilities held on a given date, the dollar value is based on market exchange rates in effect on that date. Transactions involving foreign currencies, including purchases, sales, income receipts and expense payments, are calculated using exchange rates in effect on the transaction date. Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than investments in securities held at the end of the reporting. These realized and unrealized foreign exchange gains and losses are reported in foreign currency transactions or translations on the Statement of Operations. The funds do not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
If the fund sells securities short, it records the proceeds received as an asset and the obligation to buy back the securities as a liability. At the time a short sale is initiated, the asset and liability are of equal value and effectively cancel each other out. Subsequently, the fund values the liability side of the transaction according to the market price of the securities sold short, and values the asset side according to the value of the proceeds. When the fund closes out a short position (buys the security), it records the outcome as a realized gain or loss. Dividends accrued on securities sold short are recorded as an expense on the fund’s records and presented in the Statement of Operations. The fund may also incur stock loan fees which represent the cost of borrowing securities used for short sale transactions.
Gains realized by the funds on the sale of securities in certain foreign countries may be subject to non-U.S. taxes. The funds record a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.
When a fund closes out a futures or forwards position, it calculates the difference between the value of the position at the beginning and at the end of the contract, and records a realized gain or loss accordingly. A fund records the daily change in market value of futures, and also the change in the amount of margin deposit required (“due to/from broker”).
(d) Investment Income:
Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the funds may record certain foreign security dividends on the day they learn of the ex-dividend date.
(e) Expenses:
Expenses that are specific to a fund are charged directly to the fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets.
(f) Distributions to Shareholders:
The funds make distributions from net investment income, if any, once a year, with the exception of Schwab Dividend Equity Fund which typically pays quarterly dividends. The funds make distributions from net realized capital gains, if any, once a year.
98
Schwab Active Equity Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
(g) Custody Credit:
Certain funds have an arrangement with their custodian bank, State Street Bank and Trust Company, under which the funds receive a credit for their uninvested cash balance to offset their custody fees and accounting fees. The credit amounts, if any, are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.
(h) Accounting Estimates:
The accounting policies described in this report conform to accounting principles generally accepted in the United States of America. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates and these differences may be material.
(i) Federal Income Taxes:
The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains, if any, to their respective shareholders each year. As long as a fund meets the tax requirements, it is not required to pay federal income tax.
(j) Foreign Taxes:
The funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, corporate events, foreign currency exchanges, capital gains on investments on currency repatriation. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in foreign markets in which the funds invest. These foreign taxes, if any, are paid by funds and are disclosed in the Statement of Operations. Foreign taxes payable as of October 31, 2010, if any, are reflected in the funds’ Statement of Assets and Liabilities.
(k) Indemnification:
Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss to the funds to be remote.
3. Risk factors
Investing in the funds may involve certain risks, as discussed in the funds’ prospectus, including, but not limited to those described below. Any of these risks could cause a shareholder to lose money.
Equity markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of an investment in the funds will fluctuate, which means that an investor could lose money.
The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles, which may cause stock prices to fall over short or extended periods of time.
The funds’ investment adviser makes investment decisions for the funds using a strategy based largely on historical information. There is no guarantee that a strategy based on historical information will produce the desired results in the future.
Historically, small-cap stocks have been riskier than large- and mid-cap stocks, and may move sharply, especially during market upturns and downturns. Small-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments — large-cap and mid-cap stocks, for instance — a fund’s small-cap holdings could reduce performance.
Both large- and mid-cap stocks tend to go in and out of favor based on market and economic conditions. However, stocks of mid-cap companies tend to be more vulnerable to adverse business or economic events than larger more established companies. During a period when large- and mid-cap U.S. stocks fall behind other types of investments — small-cap stocks, for instance — a fund’s large- and mid-cap holdings could reduce performance.
99
Schwab Active Equity Funds
Financial Notes (continued)
3. Risk factors (continued)
A fund’s use of derivative instruments involves risks different from or possibly greater than, the risks associated with investing directly in securities and other traditional investments and could cause a fund to lose more than the principal amount invested. In addition, investments in derivatives may involve leverage, which means a small percentage of assets invested in derivatives can have a disproportionately large impact on a fund.
A fund’s investments in REITs will be subject to the risks associated with the direct ownership of real estate, including fluctuations in the value of underlying properties, defaults by borrowers or tenants, changes in interest rates and risks related to general or local economic conditions. REITs are also subject to certain additional risks; for example, REITs are dependent upon specialized management skills and cash flows, and may have their investments in relatively few properties, a small geographic area or a single property type. Failure of a company to qualify as a REIT under federal tax law may have adverse consequences on a fund. In addition, REITs have their own expenses, and a fund will bear a proportionate share of those expenses.
Certain funds engage in short sales transactions. Short sales are transactions in which a fund sells a security it does not own. To complete a short sale, a fund must borrow the security to deliver to the buyer. A fund is then obligated to replace the borrowed security by purchasing the security at the market price at the time of replacement. This price may be more or less than the price at which the security was sold by a fund, and a fund will incur a loss if the price of the security sold short increases between the time of the short sale and the time a fund replaces the borrowed security. A fund’s use of short selling may reduce the risk of general equity market volatility, but cannot completely eliminate the risk.
A fund’s investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs. These risks may be heightened in connection with investments in emerging markets.
The investments of certain funds are concentrated in issuers doing business in the same sector, and therefore, the companies in which a fund invests will be affected by many of the same factors, such as legislative or regulatory changes, intense competition for market share, and other competitive challenges. In addition, a fund is subject to the risks that stocks of these companies may underperform other segments of the equity market as a whole and are likely to have above-average volatility.
Securities lending involves the risk of loss of rights in the collateral or delay in recovery of the collateral if the borrower fails to return the security loaned or becomes insolvent.
A particular investment may be difficult to purchase or sell. A fund may be unable to sell illiquid securities at an advantageous time or price.
Please refer to the funds’ prospectus for a more complete description of the principal risks of investing in the funds.
4. Affiliates and Affiliated Transactions:
Charles Schwab Investment Management, Inc. (“CSIM” or the “investment adviser”), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund’s investment adviser and administrator pursuant to an Investment Advisory and Administration Agreement (“Advisory Agreement”) between it and the trust.
For its advisory and administrative services to each fund, CSIM is entitled to receive an annual fee payable monthly based on each fund’s average daily net assets described as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | Schwab
|
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | International
|
% of Average
| | Premier
| | Core
| | Dividend
| | Large-Cap
| | Small-Cap
| | Hedged
| | Core
|
Daily net assets | | Equity Fund | | Equity Fund | | Equity Fund | | Growth Fund | | Equity Fund | | Equity Fund | | Equity Fund |
| |
| Flat rate | | | 0.73% | | | | 0.47% | | | | 0.62% | | | | 0.72% | | | | 0.81% | | | | 1.05% | | | | 0.58% | |
100
Schwab Active Equity Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
| | | | | | | | | |
| | | Schwab
| | Schwab
|
% of Average
| | Financial
| | Health Care
|
Daily net assets | | Services Fund | | Fund |
| |
| First $500 million | | | 0.54% | | | | 0.54% | |
| $500 million to $1 billion | | | 0.515% | | | | 0.515% | |
| Over $1 billion | | | 0.49% | | | | 0.49% | |
The Board of Trustees has adopted a Shareholder Servicing Plan (the “Plan”) on behalf of the funds. The Plan enables each fund to bear expenses relating to the provision by service providers, including Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, “Schwab”), of certain account maintenance, customer liaison and shareholder services to the current shareholder of the funds. Schwab serves as the funds’ paying agent under the Plan for making payments of the shareholder service fee due to the service providers (other than Schwab) under the Plan. All shareholder service fees paid by the funds to Schwab in its capacity as the funds’ paying agent will be passed through to the service providers, and Schwab will not retain any portion of such fees.
Pursuant to the Plan, each fund’s shares are subject to an annual shareholder servicing fee up to 0.25%. The shareholder servicing fee paid to a particular service provider is made pursuant to its written agreement with Schwab (or, in the case of payments made to Schwab, pursuant to Schwab’s written agreement with the funds), and the funds will pay no more than 0.25% of the average annual daily net asset value of the fund shares owned by shareholders holding shares through such service providers. Payments under the Plan are made as described above regardless of Schwab’s or the service provider’s actual cost of providing the services. If the cost of providing the services under the Plan is less than the payment received, the unexpended portion of the fees may be retained as profit by Schwab or the service provider.
Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements (“expense limitation”) with the funds to limit the total annual fund operating expenses, excluding interest, taxes and certain non-routine expenses for so long as CSIM serves as the investment adviser to the funds, which may only be amended or terminated with the approval of the funds’ Board of Trustees. The expense limitation as a percentage of average daily net assets is as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
|
Premier
| | Core
| | Dividend
| | Large-Cap
| | Small-Cap
| | Hedged
|
Equity Fund | | Equity Fund | | Equity Fund | | Growth Fund | | Equity Fund | | Equity Fund |
| |
| | 1.02% | | | | 0.75% | | | | 0.89% | | | | 0.99% | | | | 1.12% | | | | 1.33% | * |
| | | | | | | | | | | |
Schwab
| | Schwab
| | Schwab
|
Financial
| | Health Care
| | International
|
Services Fund | | Fund | | Core Equity Fund |
| |
| | 0.94% | | | | 0.82% | | | | 0.86% | |
| | | |
| * | | Excludes dividend and interest paid on securities sold short. |
Certain Schwab Funds may own shares of other Schwab Funds. The table below reflects the percentage of each Schwab Active Equity Fund owned by other Schwab Funds as of October 31, 2010.
| | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
|
| | | Core
| | Dividend
| | Small-Cap
|
| | Equity Fund | | Equity Fund | | Equity Fund |
| |
Schwab Target Funds: | | | | | | | | | | | | |
| Schwab Target 2010 | | | 0.3% | | | | 0.1% | | | | 0.9% | |
| Schwab Target 2015 | | | 0.2% | | | | 0.1% | | | | 0.7% | |
| Schwab Target 2020 | | | 1.8% | | | | 0.6% | | | | 5.2% | |
| Schwab Target 2025 | | | 0.5% | | | | 0.2% | | | | 1.7% | |
| Schwab Target 2030 | | | 2.8% | | | | 0.9% | | | | 9.4% | |
| Schwab Target 2035 | | | 0.5% | | | | 0.2% | | | | 1.6% | |
| Schwab Target 2040 | | | 2.9% | | | | 0.9% | | | | 9.1% | |
| Schwab Balanced Fund | | | 2.5% | | | | —% | | | | —% | |
101
Schwab Active Equity Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
The funds may also let a related party own shares of the funds. As of October 31, 2010, the shares owned by Schwab Charitable Giving Trust (an affiliate of Schwab) as a percentage of the total share of the Schwab Dividend Equity Fund is 4.2%.
The funds may engage in direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. For the year ended October 31, 2010, each fund’s total aggregate security transactions with other Schwab Funds were as follows:
| | | | | |
| Schwab Premier Equity Fund | | | $399,106 | |
| Schwab Core Equity Fund | | | 123,200 | |
| Schwab Dividend Equity Fund | | | — | |
| Schwab Large-Cap Growth Fund | | | 21,241,058 | |
| Schwab Small-Cap Equity Fund | | | — | |
| Schwab Hedged Equity Fund | | | — | |
| Schwab Financial Services Fund | | | — | |
| Schwab Health Care Fund | | | — | |
| Schwab International Core Equity Fund | | | — | |
Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions with other Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. The funds had no interfund borrowing or lending activity during the period.
5. Board of Trustees:
Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trust was in compliance with these limitations throughout the report period. The trust did not pay any of these persons for their services as trustees, but it did pay non-interested persons (independent trustees), as noted in each fund’s Statement of Operations.
6. Borrowing from Banks:
The funds may borrow money from banks and custodians. The funds have custodian overdraft facilities, a committed line of credit of $150 million with State Street Bank and Trust Company, an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The funds pay interest on the amounts they borrow at rates that are negotiated periodically. The funds also pay an annual fee to State Street Bank and Trust Company for the committed line of credit.
There were no borrowings from the lines of credit during the period. However, the funds utilized their overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.
102
Schwab Active Equity Funds
Financial Notes (continued)
7. Purchases and Sales/Maturities of Investment Securities:
For the period ended October 31, 2010, purchases and sales/maturities of securities (excluding short-term obligations) were as follows:
| | | | | | | | | |
| | Purchases of Securities | | Sales/Maturities of Securities |
| |
| Schwab Premier Equity Fund | | | $251,096,822 | | | | $377,877,871 | |
| Schwab Core Equity Fund | | | 871,835,198 | | | | 965,571,419 | |
| Schwab Dividend Equity Fund | | | 486,045,067 | | | | 585,564,886 | |
| Schwab Large-Cap Growth Fund | | | 176,517,845 | | | | 358,684,523 | |
| Schwab Small-Cap Equity Fund | | | 132,061,728 | | | | 157,873,675 | |
| Schwab Hedged Equity Fund* | | | 352,172,537 | | | | 394,034,798 | |
| Schwab Financial Services Fund | | | 31,083,108 | | | | 48,832,958 | |
| Schwab Health Care Fund | | | 150,133,387 | | | | 234,581,384 | |
| Schwab International Core Equity Fund** | | | 45,532,042 | | | | 85,457,452 | |
| | | |
| * | | Including securities sold short. |
| ** | | Purchase of securities excludes the impact of investment activity resulting from a merger with another fund. (See financial note 11) |
8. Redemption Fee:
The funds charge a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current and prior periods are:
| | | | | | | | | |
| | | Current Period
| | Prior Period
|
| | (11/01/09-10/31/10) | | (11/01/08-10/31/09) |
| |
| Schwab Premier Equity Fund | | | $1,206 | | | | $2,857 | |
| Schwab Core Equity Fund | | | 18,637 | | | | 73,895 | |
| Schwab Dividend Equity Fund | | | 48,892 | | | | 34,884 | |
| Schwab Large-Cap Growth Fund | | | 4,942 | | | | 15,393 | |
| Schwab Small-Cap Equity Fund | | | 3,469 | | | | 2,463 | |
| Schwab Hedged Equity Fund | | | 4,954 | | | | 61,799 | |
| Schwab Financial Services Fund | | | 9,664 | | | | 17,772 | |
| Schwab Health Care Fund | | | 5,454 | | | | 19,050 | |
| Schwab International Core Equity Fund | | | 4,244 | | | | 940 | |
9. Federal Income Taxes:
As of October 31, 2010, the components of distributable earnings on a tax-basis were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
|
| | | Premier
| | Core
| | Dividend
| | Large-Cap
| | Small-Cap
| | Hedged
|
| | Equity Fund | | Equity Fund | | Equity Fund | | Growth Fund | | Equity Fund | | Equity Fund |
| |
| Undistributed Ordinary income | | | $630,576 | | | | $13,724,065 | | | | $121,782 | | | | $682,707 | | | | $— | | | | $— | |
| Undistributed long-term capital gains | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Unrealized appreciation | | | 44,302,233 | | | | 242,509,885 | | | | 178,814,321 | | | | 41,405,859 | | | | 39,443,144 | | | | 46,728,881 | |
| Unrealized depreciation | | | (7,624,899 | ) | | | (69,770,214 | ) | | | (63,183,208 | ) | | | (2,885,566 | ) | | | (9,585,821 | ) | | | (10,468,208 | ) |
| Other unrealized appreciation/(depreciation) | | | — | | | | 28 | | | | 2 | | | | — | | | | — | | | | (9,216,798 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net unrealized appreciation/(depreciation) | | | $36,677,334 | | | | $172,739,699 | | | | $115,631,115 | | | | $38,520,293 | | | | $29,857,323 | | | | $27,043,875 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
103
Schwab Active Equity Funds
Financial Notes (continued)
9. Federal Income Taxes (continued):
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | | | | | |
| | | Financial
| | Health Care
| | International Core
| | | | | | |
| | | Services Fund | | Fund | | Equity Fund | | | | | | |
| |
| Undistributed Ordinary income | | | $81,681 | | | | $4,836,584 | | | | $1,197,557 | | | | | | | | | | | | | |
| Undistributed long-term capital gains | | | — | | | | — | | | | — | | | | | | | | | | | | | |
| Unrealized appreciation | | | 5,767,916 | | | | 64,662,652 | | | | 7,697,135 | | | | | | | | | | | | | |
| Unrealized depreciation | | | (3,907,048 | ) | | | (10,676,005 | ) | | | (1,316,515 | ) | | | | | | | | | | | | |
| Other unrealized appreciation/(depreciation) | | | — | | | | 23,036 | | | | 10,090 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net unrealized appreciation/(depreciation) | | | $1,860,868 | | | | $54,009,683 | | | | $6,390,710 | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
The primary differences between book-basis and tax-basis unrealized appreciation or unrealized depreciation of investments are Passive Foreign Investment Companies (PFIC), Partnerships and the tax deferral of losses on wash sales.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2010, the following funds had capital loss carryforwards available to offset net capital gains before the expiration dates:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
|
| | | Premier
| | Core
| | Dividend
| | Large-Cap
| | Small-Cap
| | Hedged
|
Expiration Date | | Equity Fund | | Equity Fund | | Equity Fund | | Growth Fund | | Equity Fund | | Equity Fund |
| |
| October 31, 2015 | | | — | | | | $3,222,454 | | | | — | | | | — | | | | — | | | | $12,496,583 | |
| October 31, 2016 | | | $23,348,889 | | | | 75,023,586 | | | | $12,631,762 | | | | $38,870,382 | | | | $26,969,432 | | | | — | |
| October 31, 2017 | | | 166,518,485 | | | | 244,576,259 | | | | 204,730,679 | | | | 58,253,697 | | | | 64,171,318 | | | | 18,640,727 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | $189,867,374 | | | | $322,822,299 | * | | | $217,362,441 | | | | $97,124,079 | | | | $91,140,750 | | | | $31,137,310 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | | | | | |
| | | Financial
| | Health Care
| | International
| | | | | | |
Expiration Date | | Services Fund | | Fund | | Core Equity Fund | | | | | | |
| |
| October 31, 2016 | | | $8,786,044 | | | | $4,084,263 | | | | — | | | | | | | | | | | | | |
| October 31, 2017 | | | 28,673,848 | | | | 39,971,669 | | | | $19,601,827 | | | | | | | | | | | | | |
| October 31, 2018 | | | 170,394 | | | | — | | | | — | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | $37,630,286 | | | | $44,055,932 | | | | $19,601,827 | * | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| * | | The Schwab Core Equity Fund and Schwab International Core Equity Fund has capital loss carryforwards acquired via merger which are subject to certain annual limitations in regard to availability to offset potential future capital gains. |
As of December 3rd, 2009 the Schwab International Core Equity Fund acquired the Laudus Rosenberg International Equity Fund via a merger transaction (see financial note 11). As of the merger date, the funds had net capital loss carryforwards of $21,106,143 and $38,213,130, respectively. Due to limitations as a result of two subsequent significant redemptions, the net capital loss carryforward on the surviving fund has been permanently reduced by $38,607,799.
As of October 31, 2010, capital losses utilized were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
|
| | | Premier
| | Core
| | Dividend
| | Large-Cap
| | Small-Cap
| | Hedged
|
| | Equity Fund | | Equity Fund | | Equity Fund | | Growth Fund | | Equity Fund | | Equity Fund |
| |
| Capital losses utilized | | | $34,730,606 | | | | $26,032,693 | | | | $31,239,735 | | | | $19,956,098 | | | | $20,921,083 | | | | $22,497,858 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | | | | | |
| | | Financial
| | Health Care
| | International
| | | | | | |
| | | Services Fund | | Fund | | Core Equity Fund | | | | | | |
| |
| Capital losses utilized | | | $— | | | | $4,084,395 | | | | $1,219,943 | | | | | | | | | | | | | |
104
Schwab Active Equity Funds
Financial Notes (continued)
9. Federal Income Taxes (continued):
The tax-basis components of distributions paid during the current and prior periods were:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
|
| | | Premier
| | Core
| | Dividend
| | Large-Cap
| | Small-Cap
| | Hedged
|
| | Equity Fund | | Equity Fund | | Equity Fund | | Growth Fund | | Equity Fund | | Equity Fund |
| |
| | | | | | | | | | | | | | | | | | | | | | | | |
Current period distributions | | | | | | | | | | | | | | | | | | | | | | | | |
| Ordinary income | | | $2,109,100 | | | | $18,916,913 | | | | $23,865,611 | | | | $2,274,429 | | | | $— | | | | $— | |
| Long-term capital gains | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
Prior period distributions | | | | | | | | | | | | | | | | | | | | | | | | |
| Ordinary income | | | $4,372,947 | | | | $23,929,574 | | | | $28,640,413 | | | | $1,995,887 | | | | $35,897 | | | | $323,723 | |
| Long-term capital gains | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | | | | | |
| | | Financial
| | Health Care
| | International Core
| | | | | | |
| | | Services Fund | | Fund | | Equity Fund | | | | | | |
| |
Current period distributions | | | | | | | | | | | | | | | | | | | | | | | | |
| Ordinary income | | | $407,141 | | | | $4,113,182 | | | | $911,920 | | | | | | | | | | | | | |
| Long-term capital gains | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Prior period distributions | | | | | | | | | | | | | | | | | | | | | | | | |
| Ordinary income | | | $1,346,722 | | | | $3,759,719 | | | | $459,898 | | | | | | | | | | | | | |
| Long-term capital gains | | | — | | | | — | | | | — | | | | | | | | | | | | | |
Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as PFICs, REITs, non-U.S. currency gains and losses, short-term capital gains and losses; capital losses related to wash sales, unrealized appreciation of certain investments in non-U.S. securities; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the funds for financial reporting purposes. The funds may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.
The permanent book and tax basis differences may result in reclassifications between capital account and other accounts as required. The adjustments will have no impact on net assets or the results of operations. As of October 31, 2010, the funds made the following reclassifications:
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
| | Schwab
|
| | | Premier
| | Core
| | Dividend
| | Large-Cap
| | Small-Cap
| | Hedged
|
| | Equity Fund | | Equity Fund | | Equity Fund | | Growth Fund | | Equity Fund | | Equity Fund |
| |
| Capital Shares | | | $— | | | | $3,063,540 | | | | $— | | | | $— | | | | ($554,304 | ) | | | ($2,205,036 | ) |
| Undistributed net investment income | | | (7,208 | ) | | | (740,873 | ) | | | (531,116 | ) | | | (23,653 | ) | | | 554,304 | | | | 1,746,653 | |
| Net realized capital gains and (losses) | | | 7,208 | | | | (2,322,667 | ) | | | 531,116 | | | | 23,653 | | | | — | | | | 458,383 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Schwab
| | Schwab
| | Schwab
| | | | | | |
| | | Financial
| | Health Care
| | International Core
| | | | | | |
| | | Services Fund | | Fund | | Equity Fund | | | | | | |
| |
| Capital Shares | | | $— | | | | $— | | | | $108,592 | | | | | | | | | | | | | |
| Undistributed net investment income | | | (10,230 | ) | | | 57,693 | | | | 254,340 | | | | | | | | | | | | | |
| Net realized capital gains and (losses) | | | 10,230 | | | | (57,693 | ) | | | (362,932 | ) | | | | | | | | | | | | |
As of October 31, 2010, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and for state purposes, four years from the date of filing) as applicable to the funds, and has determined that no
105
Schwab Active Equity Funds
Financial Notes (continued)
9. Federal Income Taxes (continued):
provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year ended October 31, 2010, the fund did not incur any interest or penalties.
10. Subsequent Events:
Management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
11. Reorganization:
Under a plan of reorganization adopted by the Trust, all of the assets and liabilities of the Laudus U. S. MarketMasters Fund were transferred to the Schwab Core Equity Fund. The reorganization was completed at the close of business on May 21, 2009. The following is a summary of shares outstanding, net assets, net asset value per share issued and unrealized appreciation/ depreciation immediately before and after the reorganization.
| | | | | | | | | | | | | |
| | | Before Reorganization | | After Reorganization |
| | | Schwab
| | Laudus U.S.
| | Schwab
|
| | Core Equity Fund | | MarketMasters Fund | | Core Equity Fund |
| |
| Shares: | | | | | | | | | | | | |
| Investor Shares | | | 109,541,260 | | | | 7,237,206 | | | | 115,205,413 | |
| Select Shares | | | — | | | | 569,790 | | | | — | |
| Net Assets: | | | | | | | | | | | | |
| Investor Shares | | | $1,340,412,152 | | | | $64,249,702 | | | | $1,409,724,054 | |
| Select Shares | | | — | | | | $5,062,200 | | | | — | |
| Net Asset Value: | | | | | | | | | | | | |
| Investor Shares | | | $12.24 | | | | $8.88 | | | | $12.24 | |
| Select Shares | | | — | | | | $8.88 | | | | — | |
| Net unrealized appreciation/(depreciation) | | | ($266,479,238 | ) | | | ($6,518,334 | ) | | | ($272,997,572 | ) |
Under a plan of reorganization adopted by the Trust, all of the assets and liabilities of the Laudus Rosenberg International Equity Fund were transferred to the Schwab International Core Equity Fund. The reorganization, which qualified as a tax-free exchange for federal income tax purposes, was completed at the close of business on December 3, 2009. The following is a summary of shares outstanding, net assets, net asset value per share issued and unrealized appreciation/ depreciation immediately before and after the reorganization.
106
Schwab Active Equity Funds
Financial Notes (continued)
11. Reorganization (continued):
| | | | | | | | | | | | | |
| | | Before Reorganization | | After Reorganization |
| | | Schwab
| | Laudus Rosenberg
| | Schwab
|
| | | International
| | International
| | International
|
| | Core Equity Fund | | Equity Fund | | Core Equity Fund |
| |
| Shares: | | | | | | | | | | | | |
| Investor Shares | | | — | | | | 1,107,885 | | | | — | |
| Select Shares | | | — | | | | 5,807,283 | | | | — | |
| Institutional Shares | | | 5,312,310 | | | | — | | | | 12,593,773 | |
| Net Assets: | | | | | | | | | | | | |
| Investor Shares | | | $— | | | | $8,781,776 | | | | $— | |
| Select Shares | | | $— | | | | $45,867,291 | | | | $— | |
| Institutional Shares | | | $39,870,120 | | | | $— | | | | $94,519,187 | |
| Net Asset Value: | | | | | | | | | | | | |
| Investor Shares | | | $— | | | | $7.93 | | | | $— | |
| Select Shares | | | $— | | | | $7.90 | | | | $— | |
| Institutional Shares | | | $7.51 | | | | $— | | | | $7.51 | |
| Net unrealized appreciation/(depreciation) | | | $3,421,737 | | | | $6,247,130 | | | | $9,668,867 | |
| Market value of investments | | | $39,729,753 | | | | $54,556,067 | | | | $94,285,820 | |
| Cost of investments | | | $36,308,016 | | | | $48,308,937 | | | | $84,616,953 | |
Assuming the acquisition had been completed on November 1, 2009, the beginning of the current reporting period of Schwab International Core Equity Fund, Schwab International Core Equity Fund’s pro forma results of operations for the period ended October 31, 2010, are as follows:
| | | | | |
| Net investment income | | | $1,076,583 | |
| Net realized/unrealized gain on investments | | | $3,530,168 | |
| Net increase in net assets resulting from operations | | | $4,606,751 | |
Because the combined investment portfolios have been managed as a single integrated portfolio since the acquisition was completed, it is not practicable to separate the amounts of revenue and earnings of Laudus Rosenberg International Equity Fund that have been included in Schwab International Core Equity Fund’s Statement of Operation since December 3, 2009.
107
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of:
Schwab Premier Equity Fund
Schwab Core Equity Fund
Schwab Dividend Equity Fund
Schwab Large-Cap Growth Fund
Schwab Small-Cap Equity Fund
Schwab Hedged Equity Fund
Schwab Financial Services Fund
Schwab Health Care Fund
Schwab International Core Equity Fund
In our opinion, the accompanying statements of assets and liabilities, including the portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schwab Premier Equity Fund, Schwab Core Equity Fund, Schwab Dividend Equity Fund, Schwab Large-Cap Growth Fund, Schwab Small-Cap Equity Fund, Schwab Hedged Equity Fund, Schwab Financial Services Fund, Schwab Health Care Fund, and Schwab International Core Equity Fund (nine of the portfolios constituting Schwab Capital Trust, hereafter referred to as the “Funds”) at October 31, 2010, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 15, 2010
108
Other Federal Tax Information (unaudited)
For corporate shareholders, the following percentage of the funds dividend distributions paid during the fiscal year ended October 31, 2010, qualify for the corporate dividends received deduction:
| | | | | |
| | Percentage |
| |
| | | | | |
| Schwab Premier Equity Fund | | | 100 | |
| Schwab Core Equity Fund | | | 100 | |
| Schwab Dividend Equity Fund | | | 100 | |
| Schwab Large-Cap Growth Fund | | | 100 | |
| Schwab Small-Cap Equity Fund | | | — | |
| Schwab Hedged Equity Fund | | | — | |
| Schwab Financial Services Fund | | | 100 | |
| Schwab Health Care Fund | | | 100 | |
| Schwab International Core Equity Fund | | | — | |
For the fiscal year ended October 31, 2010, the funds designate the following amounts of the dividend distributions as qualified dividends for the purpose of the maximum rate under section 1(h)(ii) of the Internal Revenue Code. Shareholders will be notified in January 2011 via IRS form 1099 of the amounts for use in preparing their 2010 income tax return.
| | | | | |
| Schwab Premier Equity Fund | | | $2,109,100 | |
| Schwab Core Equity Fund | | | 18,916,913 | |
| Schwab Dividend Equity Fund | | | 23,865,611 | |
| Schwab Large-Cap Growth Fund | | | 2,274,429 | |
| Schwab Small-Cap Equity Fund | | | — | |
| Schwab Hedged Equity Fund | | | — | |
| Schwab Financial Services Fund | | | 407,141 | |
| Schwab Health Care Fund | | | 4,113,182 | |
| Schwab International Core Equity Fund | | | 1,046,758 | |
Schwab International Core Equity Fund elects to pass through under section 853 of the Internal Revenue Code foreign tax credit of $134,838 to its shareholders for the year ended October 31, 2010. The respective foreign source income on the fund is $1,618,359.
109
Investment Advisory Agreement Approval
The Investment Company Act of 1940 (the “1940 Act”) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the “Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the investment advisory agreement.
The Board of Trustees (the “Board” or the “Trustees”, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreement between Schwab Capital Trust (the “Trust”) and Charles Schwab Investment Management, Inc. (“CSIM”) (the “Agreement”) with respect to the existing funds in the Trust, including Schwab Premier Equity Fund, Schwab Core Equity Fund, Schwab Dividend Equity Fund, Schwab Large-Cap Growth Fund, Schwab Small-Cap Equity Fund, Schwab Hedged Equity Fund, Schwab Financial Services Fund, Schwab Health Care Fund and Schwab International Core Equity Fund (the “Funds”), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM.
The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreement with respect to the Funds at meetings held on April 28, 2010, and June 3, 2010, and approved the renewal of the Agreement with respect to the Funds for an additional one year term at the meeting held on June 3, 2010. The Board’s approval of the Agreement with respect to the Funds was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
| |
| 1. | the nature, extent and quality of the services provided to the Funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the Funds; |
| |
| 2. | each Fund’s investment performance and how it compared to that of certain other comparable mutual funds; |
| |
| 3. | each Fund’s expenses and how those expenses compared to those of certain other comparable mutual funds, exchange-traded funds and other accounts; |
| |
| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (“Schwab”), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
| |
| 5. | the extent to which economies of scale would be realized as the Funds grow and whether fee levels in the Agreement reflect those economies of scale for the benefit of Fund investors. |
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The Trustees also considered investments in CSIM’s mutual fund infrastructure, Schwab’s wide range of products, services, and channel alternatives such as free advice, investment and research tools, Internet access, and an array of account features that benefit the Funds and their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that the vast majority of the Funds’ shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds supported renewal of the Agreement with respect to the Funds.
Fund Performance. The Board considered Fund performance in determining whether to renew the Agreement with respect to the Funds. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and appropriate indices/benchmarks, in light of total return, and market trends. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the third party who prepared the peer category analysis. In evaluating the
110
performance of each Fund, the Trustees considered both risk and shareholder risk expectations for such Fund and the appropriateness of the benchmark used to compare the performance of each Fund. The Trustees further considered the level of Fund performance in the context of its review of Fund expenses and adviser profitability discussed below. Following such evaluation the Board concluded, within the context of its full deliberations, that the performance of the Funds supported renewal of the Agreement with respect to the Funds.
Fund Expenses. With respect to the Funds’ expenses, the Trustees considered the rate of compensation called for by the Agreement, and each Fund’s net operating expense ratio, in each case, in comparison to those of a peer group of mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total Fund expenses from exceeding a specified cap. The Trustees also considered CSIM’s contractual commitment to keep each Fund’s expense cap for so long as CSIM serves as the adviser to such Fund. The Trustees also considered fees charged by CSIM to other mutual funds, exchange-traded funds and to other types of accounts, such as wrap accounts, but, with respect to such other types of accounts, accorded less weight to such comparisons due to the different legal, regulatory, compliance and operating features of mutual funds as compared to these other types of accounts. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the Funds are reasonable and supported renewal of the Agreement with respect to the Funds.
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered any other benefits derived by CSIM from its relationship with the Funds, such as whether, by virtue of its management of the Funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability under the Agreement and other service agreements were reasonable and justified in light of the quality of all services rendered to each Fund by CSIM and its affiliates. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreement with respect to the Funds.
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to a Fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of Fund expenses, the Trustees considered that CSIM and Schwab have committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. The Trustees also considered the existing contractual investment advisory fee schedules relating to Schwab Financial Services Fund and Schwab Health Care Fund that, in each case, include lower fees at higher graduated asset levels. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the Funds obtain reasonable benefit from economies of scale.
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, approved the continuation of the Agreement with respect to the Funds and concluded that the compensation under the Agreement with respect to the Funds is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
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Trustees and Officers
The tables below give information about the trustees and officers for Schwab Capital Trust which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 84 funds.
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.
Independent Trustees
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served1) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Mariann Byerwalter
1960
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Chairman of JDN Corporate Advisory LLC. | | 73 | | Director, Redwood Trust, Inc. (1998 – present)
Director, PMI Group Inc. (2001 – 2009)
Director, Excelsior Funds (2006 – 2007) |
| |
|
John F. Cogan
1947
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | Senior Fellow: The Hoover Institution at Stanford University (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University (Sept. 1994 – present). | | 73 | | Director, Gilead Sciences, Inc. (2005 – present)
Director, Monaco Coach Corporation (2005 – 2009) |
| |
|
William A. Hasler
1941
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Dean Emeritus, Haas School of Business, University of California, Berkeley (July 1998 – present). | | 73 | | Director, Ditech Networks Corporation (1997 – present)
Director, TOUSA (1998 – present)
Director, Mission West Properties (1998 – present)
Director, Globalstar, Inc. (2009 – present)
Director, Harris-Stratex Networks (2001 – present)
Director, Aphton Corp. (1991 – 2007)
Director, Solectron Corporation (1998 – 2007)
Director, Genitope Corporation (2000 – 2009)
Director, Excelsior Funds (2006 – 2007) |
| |
|
Gerald B. Smith
1950
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (1990 – present). | | 73 | | Lead Independent Director, Board of Cooper Industries (2002 – present)
Director and Chairman of the Audit Committee, Oneok Partners LP (2003 – present)
Director, Oneok, Inc (2009 – present) |
| |
|
Donald R. Stephens
1938
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Managing Partner, D.R. Stephens & Company (investments) (1973 – present). | | 73 | | None |
| |
|
112
Independent Trustees (continued)
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served1) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Joseph H. Wender
1944
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | Senior Consultant, Goldman Sachs & Co., Inc. (Jan. 2008- present); Partner, Colgin Partners, LLC (vineyards) (February 1998 – present); Senior Director, Chairman of the Finance Committee, GSC Group (July 2005 – Dec. 2007); General Partner, Goldman Sachs & Co., Inc. (Oct. 1982 – June 2005). | | 73 | | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present) |
| |
|
Michael W. Wilsey
1943
Trustee
(Trustee of Schwab Capital Trust since 1993.) | | Chairman and Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments). | | 73 | | None |
| |
|
Interested Trustees
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served ) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Charles R. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of Schwab Capital Trust since 1993.) | | Chairman and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc. | | 73 | | None |
| |
|
Walter W. Bettinger II2
1960
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. | | 84 | | None |
| |
|
113
Officers of the Trust
| | | |
Name, Year of Birth, and Position(s)
| | |
with the trust; (Terms of office, and
| | |
| length of Time Served3) | | Principal Occupations During the Past Five Years |
| |
Marie Chandoha
1961
President and Chief Executive Officer
(Officer of Schwab Capital Trust since 2010.) | | Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 – present); Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer, (Sept. 2010 – present), Charles Schwab Investment Management, Inc.; President and Chief Executive Officer, Schwab Funds, Laudus Funds and Schwab ETFs (Dec. 2010 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010); Co-Head and Senior Portfolio Manager, Wells Capital Management (June 1999 – March 2007). |
| |
|
George Pereira
1964
Treasurer and Principal Financial Officer
(Officer of Schwab Capital Trust since 2004.) | | Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc. (November 2004 – present); Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present); Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds (June 2006 – June 2007). |
| |
|
Koji E. Felton
1961
Secretary and Chief Legal Officer
(Officer of Schwab Capital Trust since 1998.) | | Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc. (July 2000 – present); Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. (June 1998 – present); Vice President and Assistant Clerk, Laudus Funds (Jan. 2010 – present); Chief Legal Officer and Secretary, Schwab Funds (Nov. 1998 – present) and Schwab ETFs (Oct. 2009 – present); Chief Legal Officer and Secretary, Excelsior Funds (June 2006 – June 2007). |
| |
|
Catherine MacGregor
1964
Vice President
(Officer of Schwab Capital Trust since 2005.) | | Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk, Laudus Funds (March 2007 – present); Vice President and Assistant Clerk, Schwab Funds (Dec. 2005 – present) and Schwab ETFs (Oct. 2009 – present). |
| |
|
Michael Haydel
1972
Vice President
(Officer of Schwab Capital Trust since 2006.) | | Vice President, Asset Management Client Services, Charles Schwab & Co., Inc. (2004 – present); Vice President (Sept. 2005 – present), Anti-Money Laundering Officer (Oct. 2005 – Feb. 2009), Laudus Funds; Vice President, Schwab Funds (June 2007 – present) and Schwab ETFs (Oct. 2009 – present). |
| |
|
| | |
| 1 | | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds® retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first, provided that any trustee who serves on both Schwab Funds and Laudus Funds retires from both boards when first required to retire by either board. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010. |
| 2 | | Mr. Schwab and Mr. Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation. |
| 3 | | The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board. |
114
Glossary
asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.
asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.
beta A historical measure of an investment’s volatility relative to a market index (usually the S&P 500®). The index is defined as having a beta of 1.00. Investments with a beta higher than 1.00 have been more volatile than the index; those with a beta of less than 1.00 have been less volatile.
bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”
An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.
bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.
cap, capitalization See “market cap.”
capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the gain or loss is still “on paper” and is considered unrealized.
earnings growth rate For a mutual fund, the average yearly rate at which the earnings of the companies in the fund’s portfolio have grown, measured over the past five years.
earnings per share (EPS) A company’s earnings, or net income, for the past 12 months, divided by the number of shares outstanding.
expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.
gross domestic product (GDP) The output of goods and services produced by labor and property located in the United States.
market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.
median market cap The midpoint of the range of market caps of the stocks held by a fund. There are different ways of calculating median market cap. With a simple median, half of the stocks in the fund’s portfolio would be larger than the median, and half would be smaller. With a weighted median (the type that is calculated for these funds), half of the fund’s assets are invested in stocks that are larger than the median market cap, and half in stocks that are smaller.
net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.
price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.
return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.
stock A share of ownership, or equity, in the issuing company.
total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.
weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.
yield The income paid out by an investment, expressed as a percentage of the investment’s market value.
115
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Schwab Funds® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.
Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.
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Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting Schwab’s website at www.schwabfunds.com/prospectus or the SEC’s website at http://www.sec.gov.
The Schwab Funds Family®
Stock Funds
Schwab Premier Equity Fund®
Schwab Core Equity Fundtm
Schwab Dividend Equity Fundtm
Schwab Large-Cap Growth Fundtm
Schwab Small-Cap Equity Fundtm
Schwab Hedged Equity Fundtm
Schwab Financial Services Fundtm
Schwab Health Care Fundtm
Schwab® International Core Equity Fund
Schwab Fundamental US Large* Company Index Fund
Schwab Fundamental US Small-Mid* Company Index Fund
Schwab Fundamental International* Large Company Index Fund
Schwab Fundamental International* Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets* Index Fund
Schwab Global Real Estate Fundtm
Schwab S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market Index Fund®
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fundtm
Schwab MarketTrack All Equity Portfoliotm
Schwab MarketTrack Growth Portfoliotm
Schwab MarketTrack Balanced Portfoliotm
Schwab MarketTrack Conservative Portfoliotm
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab® Monthly Income Fund – Moderate Payout
Schwab® Monthly Income Fund – Enhanced Payout
Schwab® Monthly Income Fund – Maximum Payout
Bond Funds
Schwab YieldPlus Fund®
Schwab Short-Term Bond Market Fundtm
Schwab® Premier Income Fund
Schwab Total Bond Market Fundtm
Schwab GNMA Fundtm
Schwab Inflation Protected Fundtm
Schwab Tax-Free YieldPlus Fundtm
Schwab Tax-Free Bond Fundtm
Schwab California Tax-Free YieldPlus Fundtm
Schwab California Tax-Free Bond Fundtm
Schwab Money Funds
Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity1. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments®.
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| * | | SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL AND FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC. |
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| 1 | | Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money. |
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds®
P.O. Box 3812, Englewood, CO 80155–3812
This report is not authorized for distribution to prospective investors
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© 2010 Charles Schwab & Co., Inc. All rights reserved.
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Printed on recycled paper.
MFR26298-07
Annual report dated October 31, 2010 enclosed.
Schwab Equity Index Funds
Schwab S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market
Index Fund®
Schwab International
Index Fund®
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Schwab Equity Index Funds
Annual Report
October 31, 2010
Schwab S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market
Index Fund®
Schwab International
Index Fund®
This page is intentionally left blank.
Five cost-efficient ways to tap into the power of
the stock market for long-term growth potential.
In This Report
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| Other Federal Tax Information | | 67 |
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Fund investment adviser: Charles Schwab Investment Management, Inc. (CSIM).
Distributor: Charles Schwab & Co., Inc. (Schwab).
The Sector/Industry classifications in this report use the Global Industry Classification Standard (GICS) which was developed by and is the exclusive property of Morgan Stanley Capital International Inc. (MSCI) and Standard & Poor’s (S&P). GICS is a service mark of MSCI and S&P and has been licensed for use by Charles Schwab & Co., Inc. The Industry classifications used in the schedules of Portfolio Holdings are sub-categories of Sector classifications.
Performance at a Glance
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
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| Total Return for the Report Period | |
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| Schwab S&P 500 Index Fund (Ticker Symbol: SWPPX) | | | 16.50% | |
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| S&P 500® Index | | | 16.52% | |
| Fund Category: Morningstar Large-Cap Blend | | | 15.53% | |
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| Performance Details | | | pages 6-7 | |
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| Schwab 1000 Index® Fund (Ticker Symbol: SNXFX) | | | 17.51% | |
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| Schwab 1000 Index® | | | 18.05% | |
| Fund Category: Morningstar Large-Cap Blend | | | 15.53% | |
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| Performance Details | | | pages 8-9 | |
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| Schwab Small-Cap Index Fund® (Ticker Symbol: SWSSX) | | | 27.85% | |
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| Schwab Small-Cap Index® | | | 28.08% | |
| Fund Category: Morningstar Small-Cap Blend | | | 25.22% | |
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| Performance Details | | | pages 10-11 | |
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| Schwab Total Stock Market Index Fund® (Ticker Symbol: SWTSX) | | | 18.53% | |
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| Dow Jones U.S. Total Stock Market IndexSM | | | 18.76% | |
| Fund Category: Morningstar Large-Cap Blend | | | 15.53% | |
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| Performance Details | | | pages 12-13 | |
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| Schwab International Index Fund® (Ticker Symbol: SWISX)1 | | | 9.31% | |
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| Schwab International Index® | | | 8.05% | |
| Fund Category: Morningstar Foreign Large-Cap Blend | | | 12.54% | |
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| Performance Details | | | pages 14-15 | |
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| Minimum Initial Investment2 | | | $ 100 | |
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All fund and index figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the funds’ returns would have been lower. These returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Source for category information: Morningstar, Inc. The Morningstar Category return represents all active and index mutual funds within the category as of the report date.
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| 1 | The fund’s performance relative to the index may be affected by fair-value pricing, see financial note 2 for more information. |
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| 2 | Please see prospectus for further details and eligibility requirements. |
2 Schwab Equity Index Funds
From the President
Marie Chandoha is President and CEO of Charles Schwab Investment Management, Inc. and the funds covered in this report.
Dear Shareholder,
During the year that ended October 31, 2010, many investors wrestled with news that was mostly negative—the recovery of the U.S. economy remained tepid, unemployment stayed stubbornly high, and the housing market remained weak. In spite of these events, nearly all stock and bond markets produced positive returns, both in the United States and abroad.
The bellwether S&P 500 Index gained 16.52% during the year and international stock markets also rewarded investors as indicated by a return of 8.82% in the MSCI EAFE Index. Growth stocks generally fared better than value stocks in large-, mid-, and small-cap sectors.
For the year ending October 31, 2010, the five Schwab Equity Index Funds generated positive total returns that were in line with their respective comparative indices. The funds’ returns reflected the improving investment results of both the U.S. and international stock markets, particularly in the latter part of the period. The Schwab Equity Index Funds seek investment results that correspond to their respective indices. Please read the fund managers’ discussion and analysis on the following pages for more details.
At Schwab, we encourage investors to review their investment strategy periodically in the context of their tolerance for risk, timeline, and established investment plan.
If you have any questions about the Schwab Equity Index Funds or any other Schwab Funds, please call us at 1-800-435-4000. Please also see www.schwabfunds.com for details on each fund including performance results, investment strategy, and prospectus.
Thank you for investing with us.
Sincerely,
Schwab Equity Index Funds 3
The Investment Environment
The past 12 months produced significant positive returns in nearly all major equity and fixed income markets, despite various economic indicators falling short of expectations here in the United States and abroad. Domestic equity markets fared better than international, and growth stocks outperformed value stocks in large-, mid-, and small-cap categories. In the credit markets, inflation-protected bonds were the best performers and U.S. Treasuries had the poorest returns, though they also had solid performance for the 12 months under review.
The return for the S&P 500 Index, which is usually seen as a bellwether for U.S. financial markets, was positive at 16.52%. The international stock markets also had solid overall returns, and the MSCI EAFE Index (Gross) returned 8.82%. In fixed-income, the Barclays Capital U.S. Aggregate Bond Index returned 8.01%, while the Barclays Capital U.S. TIPS Index returned 10.42%, and the Barclays Capital U.S. Treasury Index returned 7.20% for the reporting period.
In a press release dated November 3, 2010, the Federal Reserve (the Fed) described information it had received since its meeting in September 2010, and noted that the pace of recovery in output and employment remained slow. Moreover, persistent high unemployment, coupled with depressed housing prices and a rise in foreclosures, continued to work against the U.S. economic recovery process. In the U.S. fixed income markets, accommodative Fed policy in the form of a near-zero federal funds rate remained intact, and several recent statements from the Fed affirmed that rates will remain low for an extended period of time. Also in November’s press release, the Fed stated that it intended to purchase up to $600 billion of longer-term U.S. Treasuries by the end of the second quarter in 2011.
At the international level, financial markets fluctuated during the reporting period. Ongoing concerns regarding the debt obligations of Greece, Spain, Ireland, and other European countries continued to capture the attention of central banks and resulted in the progressive downgrading of debt in those countries. The news caused temporary turmoil in the U.S. and global financial markets in early May 2010. While there has been some rebounding to pre-May levels in the markets, central banks remain attentive to debt ratios, monetary exchange rates, interest rates, and inflation measurements.
During the reporting period, two economic events caused volatility in the equity and fixed income markets. First, was the Deepwater Horizon oil spill in the Gulf of Mexico on April 20, 2010. The costs—in terms of environmental impact and loss of oil—affected energy-related stocks, which declined on the news. For the reporting period, the Energy Sector was the weakest performing sector in the S&P 500 Index. Second, investor confidence in the United States and abroad was further shaken on May 6, 2010, when the Dow Jones Industrial Average dropped 999 points, within a 30-minute timeframe, before partially regaining some of the decline. The equity market event was subsequently named the “flash crash.” As a result of the flash crash, more than 16,000 trades were cancelled by the major U.S. stock exchanges.
On a more general note in the United States, real Gross Domestic Product (GDP) growth remained lower than hoped for during the reporting period, with the Bureau of Economic Analysis estimating that GDP grew at a rate of 2.0% for the third quarter of 2010. Likewise, the national unemployment rate—as reported by the Bureau of Labor Statistics—was an ongoing concern and hovered just below 10% throughout the 12-month period. Finally, high delinquencies, foreclosures, and stalled foreclosures weighed heavily on the housing sector. The discovery that some institutions had improper or incomplete paperwork on original loan documents brought at least a temporary halt to some foreclosures.
Asset Class Performance Comparison % returns during the report period
This graph compares the performance of various asset classes during the report period. Final performance figures for the period are in the key below.
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| | 16.52% | | S&P 500® Index: measures U.S. large-cap stocks |
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| | 26.58% | | Russell 2000® Index: measures U.S. small-cap stocks |
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| | 8.82% | | MSCI EAFE® Index (Gross): measures (in U.S. dollars) large-cap stocks in Europe, Australasia and the Far East |
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| | 8.01% | | Barclays Capital U.S. Aggregate Bond Index: measures the U.S. bond market |
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| | 0.11% | | Three-Month U.S. Treasury Bills (T-bills): measures short-term U.S. Treasury obligations |
These figures assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged and you cannot invest in them directly. Remember that past performance is not an indication of future results.
Data source: Charles Schwab & Co., Inc.
Nothing in this report represents a recommendation of a security by the investment adviser.
Manager views and portfolio holdings may have changed since the report date.
4 Schwab Equity Index Funds
Fund Management
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| | Larry Mano, a managing director and portfolio manager of the investment adviser, is responsible for the day-to-day management of the Schwab Total Stock Market Index Fund, and the Schwab International Index Fund, and co-management of each of the remaining funds. Prior to joining the firm in November 1998, he worked for 20 years in equity management. |
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| | Ron Toll, a portfolio manager of the investment adviser, is responsible for the day-to-day co-management of each of the funds, except the Schwab Total Stock Market Index Fund and the Schwab International Index Fund. He joined the firm in 1998, became Manager, Portfolio Operations in 2000, Manager, Portfolio Operations and Analytics in 2005 and was named to his current position in 2007. |
Schwab Equity Index Funds 5
Schwab S&P 500 Index Fund
The Schwab S&P 500 Index Fund (the fund) seeks to track the total return of the S&P 500 Index. To pursue its goal, the fund generally invests in stocks that are included in the S&P 500 Index. The fund generally gives the same weight to a given stock as the index does. The S&P 500 Index includes the stocks of 500 leading U.S. publicly traded companies from a broad range of industries. For more information on the fund’s objective and strategy, please see the fund’s prospectus.
The fund returned 16.50% for the 12-month period, while its comparative index, the S&P 500 Index (the index), returned 16.52%. Unlike the fund, the index does not include operational and transactional costs. During the period, the fund utilized a replication approach.
The fund’s tight allocation across all sectors, market capitalization, and valuation measures—compared to the index—kept the fund’s performance close to the index’s. Every sector posted positive returns. The best absolute performers were Consumer Discretionary and Industrials. Information Technology, having the largest weight, contributed the most to index and fund returns. Consumer Discretionary was the next largest contributor to index and fund returns. The least positive absolute performers for the fund and the index were Financials and Energy, whereas, the weakest contributors to both were Utilities and Telecommunication Services.
As of 10/31/10:
Style Assessment1
Statistics
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| Number of Holdings | | 503 |
| Weighted Average Market Cap ($ x 1,000,000) | | $82,040 |
| Price/Earnings Ratio (P/E) | | 16.2 |
| Price/Book Ratio (P/B) | | 2.2 |
| Portfolio Turnover Rate | | 2% |
Sector Weightings % of Investments
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| Information Technology | | 19.3% |
| Financials | | 15.3% |
| Health Care | | 11.5% |
| Consumer Staples | | 11.2% |
| Energy | | 11.1% |
| Industrials | | 10.7% |
| Consumer Discretionary | | 10.6% |
| Materials | | 3.6% |
| Utilities | | 3.5% |
| Telecommunication Services | | 3.1% |
| Other | | 0.1% |
Total | | 100.0% |
Top Equity Holdings % of Net Assets2
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| Exxon Mobil Corp. | | 3.2% |
| Apple, Inc. | | 2.5% |
| Microsoft Corp. | | 1.9% |
| International Business Machines Corp. | | 1.7% |
| The Procter & Gamble Co. | | 1.7% |
| Johnson & Johnson | | 1.6% |
| General Electric Co. | | 1.6% |
| AT&T, Inc. | | 1.6% |
| Chevron Corp. | | 1.5% |
| Google, Inc., Class A | | 1.4% |
Total | | 18.7% |
Manager views and portfolio holdings may have changed since the report date.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector Classification: S&P and MSCI.
Standard & Poor’s®, S&P®, S&P 500®, Standard & Poor’s 500® and 500® are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by the fund. The fund is not sponsored, endorsed, sold or promoted by Standard & Poor’s, and Standard & Poor’s makes no representation regarding the advisability of investing in the fund.
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| 1 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
| 2 | | This list is not a recommendation of any security by the investment adviser. |
6 Schwab Equity Index Funds
Schwab S&P 500 Index Fund
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
October 31, 2000 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,5
Pre-Tax Average Annual Total Returns1,2,3,5
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| Fund and Inception Date | | 1 Year | | 5 Years | | 10 Years |
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| Fund: Schwab S&P 500 Index Fund (5/19/97) | | | 16.50 | % | | | | 1.75 | % | | | | -0.06 | % | |
S&P 500® Index | | | 16.52 | % | | | | 1.73 | % | | | | -0.02 | % | |
| Fund Category: Morningstar Large-Cap Blend | | | 15.53 | % | | | | 1.57 | % | | | | 0.69 | % | |
Fund Expense Ratios4: Net 0.09%; Gross 0.10%
Average Annual Total Returns After Tax1,2,3,5
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| | | 1 Year | | 5 Years | | 10 Years |
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Fund: Schwab S&P 500 Index Fund (5/19/97) | | | | | | | | | | | | |
| Pre-Liquidation (still own shares) | | | 16.26% | | | | 1.46% | | | | -0.46% | |
| Post-Liquidation (shares were sold) | | | 11.01% | | | | 1.48% | | | | -0.23% | |
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Fund Category: Morningstar Large-Cap Blend | | | | | | | | | | | | |
| Pre-Liquidation (still own shares) | | | 13.37% | | | | 0.39% | | | | -0.25% | |
| Post-Liquidation (shares were sold) | | | 9.06% | | | | 0.81% | | | | 0.16% | |
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
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| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. |
| 2 | | The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 10/31/10 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor’s situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. Some funds in this category may not use tax-efficient strategies, including this fund. |
| 3 | | The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 4 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 5 | | On September 9, 2009, the Investor Share class, Select Share class and e.Shares class were combined into a single class of shares of the fund. The performance and financial history of the fund are that of the fund’s former Select Shares. Accordingly, the past performance shown is that of the fund’s former Select Shares. On September 9, 2009, the Schwab Institutional Select S&P 500 Fund merged into the fund. |
Schwab Equity Index Funds 7
Schwab 1000 Index® Fund
The Schwab 1000 Index Fund (the fund) seeks to match the total return of the Schwab 1000 Index. To pursue its goal, the fund generally invests in stocks that are included in the Schwab 1000 Index. The fund generally gives the same weight to a given stock as the index does. The Schwab 1000 Index includes the stocks of the largest 1,000 publicly traded companies in the United States, with size being determined by market capitalization (total market value of all shares outstanding). The index is designed to be a measure of the performance of large- and mid-cap U.S. stocks. For more information on the fund’s objective and strategy, please see the fund’s prospectus.
The fund returned 17.51% for the 12-month period, while its comparative index, the Schwab 1000 Index (the index), returned 18.05%. Unlike the fund, the index does not include operational and transactional costs. During the period, the fund utilized a replication approach. The fund uses certain management techniques in seeking to enhance its after-tax performance. These strategies, while helping the fund reduce capital gain distributions, may result in a variance from the fund’s index.
The fund’s tight allocation across all sectors, market capitalization, and valuation measures—compared to the index—kept the fund’s performance close to the index’s.
Every sector posted positive returns. The best absolute performers were Consumer Discretionary and Industrials. Information Technology, having the largest weight, contributed the most to index and fund returns. Consumer Discretionary was the next largest contributor to index and fund returns. The least positive absolute performers for the fund and the index were Financials and Energy, whereas, the weakest contributors to both were Utilities and Telecommunication Services.
As of 10/31/10:
Style Assessment1
Statistics
| | | |
| Number of Holdings | | 975 |
| Weighted Average Market Cap ($ x 1,000,000) | | $73,605 |
| Price/Earnings Ratio (P/E) | | 16.6 |
| Price/Book Ratio (P/B) | | 2.2 |
| Portfolio Turnover Rate | | 5% |
Sector Weightings % of Investments
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| Information Technology | | 18.9% |
| Financials | | 15.4% |
| Health Care | | 11.5% |
| Consumer Discretionary | | 11.2% |
| Industrials | | 10.9% |
| Energy | | 10.7% |
| Consumer Staples | | 10.5% |
| Materials | | 4.1% |
| Utilities | | 3.7% |
| Telecommunication Services | | 3.0% |
| Other | | 0.1% |
Total | | 100.0% |
Top Equity Holdings % of Net Assets2
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| Exxon Mobil Corp. | | 2.8% |
| Apple, Inc. | | 2.3% |
| Microsoft Corp. | | 1.7% |
| International Business Machines Corp. | | 1.5% |
| The Procter & Gamble Co. | | 1.5% |
| Johnson & Johnson | | 1.4% |
| General Electric Co. | | 1.4% |
| AT&T, Inc. | | 1.4% |
| Chevron Corp. | | 1.4% |
| Google, Inc., Class A | | 1.3% |
Total | | 16.7% |
Manager views and portfolio holdings may have changed since the report date.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector Classification: S&P and MSCI.
| | |
| 1 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
| 2 | | This list is not a recommendation of any security by the investment adviser. |
8 Schwab Equity Index Funds
Schwab 1000 Index® Fund
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
October 31, 2000 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,5
Pre-Tax Average Annual Total Returns1,2,3,5
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 5 Years | | 10 Years |
| |
Fund: Schwab 1000 Index® Fund (4/2/91) | | | 17.51 | % | | | | 1.92 | % | | | | 0.25 | % | |
Schwab 1000 Index® | | | 18.05 | % | | | | 2.20 | % | | | | 0.54 | % | |
| Fund Category: Morningstar Large-Cap Blend | | | 15.53 | % | | | | 1.57 | % | | | | 0.69 | % | |
Fund Expense Ratios4: Net 0.29%; Gross 0.35%
Average Annual Total Returns After Tax1,2,3,5
| | | | | | | | | | | | | |
| | | 1 Year | | 5 Years | | 10 Years |
|
| |
| |
Fund: Schwab 1000 Index® Fund (4/2/91) | | | | | | | | | | | | |
| Pre-Liquidation (still own shares) | | | 17.20% | | | | 1.67% | | | | -0.07% | |
| Post-Liquidation (shares were sold) | | | 11.73% | | | | 1.62% | | | | 0.08% | |
| | | | | | | | | | | | | |
Fund Category: Morningstar Large-Cap Blend | | | | | | | | | | | | |
| Pre-Liquidation (still own shares) | | | 13.37% | | | | 0.39% | | | | -0.25% | |
| Post-Liquidation (shares were sold) | | | 9.06% | | | | 0.81% | | | | 0.16% | |
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. |
| 2 | | The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 10/31/10 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor’s situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. Some funds in this category may not use tax-efficient strategies, including this fund. |
| 3 | | The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 4 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 5 | | On September 18, 2009, the Investor Share class and Select Share class were combined into a single class of shares of the fund. The performance and financial history of the fund are that of the fund’s former Investor Shares. Accordingly, the past performance shown is that of the fund’s former Investor Shares. |
Schwab Equity Index Funds 9
Schwab Small-Cap Index Fund®
The Schwab Small-Cap Index Fund (the fund) seeks to track the total return of the Schwab Small-Cap Index. To pursue its goal, the fund generally invests in stocks that are included in the Schwab Small-Cap Index. The fund generally gives the same weight to a given stock as the index does. The Schwab Small-Cap Index includes the stocks of the second-largest 1,000 publicly traded companies in the United States, with size being determined by market capitalization (total market value of all shares outstanding). The index is designed to be a measure of the performance of small-cap U.S. stocks. For more information on the fund’s objective and strategy, please see the fund’s prospectus.
The fund returned 27.85% while its comparative index, the Schwab Small-Cap Index (the index), returned 28.08%. Unlike the fund, the index does not include operational and transactional costs. During the period, the fund utilized a replication approach.
The fund’s tight allocation across all sectors, market capitalization, and valuation measures—compared to the index—kept the fund’s performance close to the index’s. Every sector posted positive returns. The best absolute performers were Consumer Discretionary and Materials. Information Technology and Financials contributed the most to index performance, while Consumer Discretionary and Information Technology contributed the most to fund performance. The weakest absolute performers for the fund and the index were Financials and Health Care, though both returned over 19%. For the fund, the least positive absolute performers were Financials and Telecommunication Services, though both returned over 16%. In terms of contribution to the fund and the index, Telecommunication Services and Utilities were the weakest.
As of 10/31/10:
Style Assessment1
Statistics
| | | |
| Number of Holdings | | 970 |
| Weighted Average Market Cap ($ x 1,000,000) | | $1,169 |
| Price/Earnings Ratio (P/E) | | 84.9 |
| Price/Book Ratio (P/B) | | 1.8 |
| Portfolio Turnover Rate | | 33% |
Sector Weightings % of Investments
| | | |
| Financials | | 19.7% |
| Information Technology | | 18.6% |
| Industrials | | 16.9% |
| Consumer Discretionary | | 14.8% |
| Health Care | | 11.6% |
| Energy | | 5.9% |
| Materials | | 4.9% |
| Consumer Staples | | 3.2% |
| Utilities | | 3.0% |
| Telecommunication Services | | 1.2% |
| Other | | 0.2% |
Total | | 100.0% |
Top Equity Holdings % of Net Assets2
| | | |
| Ares Capital Corp. | | 0.3% |
| Popular, Inc. | | 0.3% |
| Hill-Rom Holdings, Inc. | | 0.3% |
| American Capital Ltd. | | 0.3% |
| Polaris Industries, Inc. | | 0.3% |
| Brigham Exploration Co. | | 0.3% |
| Deckers Outdoor Corp. | | 0.3% |
| CBL & Associates Properties, Inc. | | 0.3% |
| Alterra Capital Holdings Ltd. | | 0.3% |
| AMERIGROUP Corp. | | 0.3% |
Total | | 3.0% |
Manager views and portfolio holdings may have changed since the report date.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector Classification: S&P and MSCI.
Small-company stocks are subject to greater volatility than other asset classes.
| | |
| 1 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
| 2 | | This list is not a recommendation of any security by the investment adviser. |
10 Schwab Equity Index Funds
Schwab Small-Cap Index Fund®
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
October 31, 2000 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,5
Pre-Tax Average Annual Total Returns1,2,3,5
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 5 Years | | 10 Years |
| |
Fund: Schwab Small-Cap Index Fund® (5/19/97) | | | 27.85 | % | | | | 4.23 | % | | | | 4.73 | % | |
Schwab Small-Cap Index® | | | 28.08 | % | | | | 4.40 | % | | | | 4.80 | % | |
| Fund Category: Morningstar Small-Cap Blend | | | 25.22 | % | | | | 2.78 | % | | | | 6.36 | % | |
Fund Expense Ratios4: Net 0.19%; Gross 0.20%
Average Annual Total Returns After Tax1,2,3,5
| | | | | | | | | | | | | |
| | | 1 Year | | 5 Years | | 10 Years |
|
| |
| |
Fund: Schwab Small-Cap Index Fund® (5/19/97) | | | | | | | | | | | | |
| Pre-Liquidation (still own shares) | | | 27.68% | | | | 2.91% | | | | 3.49% | |
| Post-Liquidation (shares were sold) | | | 18.28% | | | | 3.34% | | | | 3.60% | |
| | | | | | | | | | | | | |
Fund Category: Morningstar Small-Cap Blend | | | | | | | | | | | | |
| Pre-Liquidation (still own shares) | | | 23.41% | | | | 1.13% | | | | 4.85% | |
| Post-Liquidation (shares were sold) | | | 15.40% | | | | 1.72% | | | | 4.89% | |
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. |
| 2 | | The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 10/31/10 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor’s situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. Some funds in this category may not use tax-efficient strategies, including this fund. |
| 3 | | The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 4 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 5 | | On August 21, 2009, the Investor Share class and Select Share class were combined into a single class of shares of the fund. The performance and financial history of the fund are that of the fund’s former Select Shares. Accordingly, the past performance shown is that of the fund’s former Select Shares. |
Schwab Equity Index Funds 11
Schwab Total Stock Market Index Fund®
The Schwab Total Stock Market Index Fund (the fund) seeks to track the total return of the entire U.S. stock market, as measured by the Dow Jones U.S. Total Stock Market Index. To pursue its goal, the fund generally invests in stocks that are included in The Dow Jones U.S. Total Stock Market Index. The fund generally gives the same weight to a given stock as the index does. The Dow Jones U.S. Total Stock Market Index includes all publicly traded stocks of companies headquartered in the United States for which pricing information is readily available—currently more than 6,000 stocks. For more information on the fund’s objective and strategy, please see the fund’s prospectus.
The fund returned 18.53%, for the 12-month reporting period, while its comparative index, the Dow Jones U.S. Total Stock Market Index (the index), returned 18.76%. Unlike the fund, the index does not include operational and transactional costs. During the period, the fund utilized a sampling approach.
The fund’s tight allocation across all sectors, market capitalization, and valuation measures—compared to the index—kept its performance close to the index’s. Every sector posted positive returns. The best absolute performers for the fund and the index were Consumer Discretionary and Industrials, while Information Technology contributed the most to index and fund returns.
Stocks with smaller market capitalization outperformed their larger-cap counterparts, and from a valuation perspective, returns for all price-to-earnings and price-to-book groups had positive, evenly-distributed performance. The least positive absolute performers for the fund and the index were Financials and Energy, whereas, the weakest contributors to both were Utilities and Telecommunication Services.
As of 10/31/10:
Style Assessment1
Statistics
| | | |
| Number of Holdings | | 2,274 |
| Weighted Average Market Cap ($ x 1,000,000) | | $67,060 |
| Price/Earnings Ratio (P/E) | | 17.9 |
| Price/Book Ratio (P/B) | | 2.1 |
| Portfolio Turnover Rate | | 3% |
Sector Weightings % of Investments
| | | |
| Information Technology | | 19.0% |
| Financials | | 16.0% |
| Health Care | | 11.5% |
| Consumer Discretionary | | 11.3% |
| Industrials | | 11.0% |
| Energy | | 10.3% |
| Consumer Staples | | 9.6% |
| Materials | | 4.1% |
| Utilities | | 3.6% |
| Telecommunication Services | | 2.8% |
| Other | | 0.8% |
Total | | 100.0% |
Top Equity Holdings % of Net Assets2
| | | |
| Exxon Mobil Corp. | | 2.6% |
| Apple, Inc. | | 2.1% |
| Microsoft Corp. | | 1.6% |
| International Business Machines Corp. | | 1.4% |
| The Procter & Gamble Co. | | 1.4% |
| Johnson & Johnson | | 1.3% |
| General Electric Co. | | 1.3% |
| AT&T, Inc. | | 1.3% |
| Chevron Corp. | | 1.2% |
| Berkshire Hathaway, Inc., Class B | | 1.2% |
Total | | 15.4% |
Manager views and portfolio holdings may have changed since the report date.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector Classification: S&P and MSCI.
“Dow Jones” and “The Dow Jones U.S. Total Stock Market IndexSM” are service marks of Dow Jones & Company, Inc. and have been licensed for certain purposes by CSIM. The Schwab Total Stock Market Index Fund, based on The Dow Jones U.S. Total Stock Market IndexSM, is not sponsored, endorsed, sold or promoted by Dow Jones and Dow Jones makes no representation regarding the advisability of investing in such a product.
| | |
| 1 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
| 2 | | This list is not a recommendation of any security by the investment adviser. |
12 Schwab Equity Index Funds
Schwab Total Stock Market Index Fund®
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
October 31, 2000 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,5
Pre-Tax Average Annual Total Returns1,2,3,5
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 5 Years | | 10 Years |
| |
Fund: Schwab Total Stock Market Index Fund® (6/1/99) | | | 18.53 | % | | | | 2.39 | % | | | | 0.97 | % | |
Dow Jones U.S. Total Stock Market IndexSM | | | 18.76 | % | | | | 2.36 | % | | | | 0.94 | % | |
| Fund Category: Morningstar Large-Cap Blend | | | 15.53 | % | | | | 1.57 | % | | | | 0.69 | % | |
Fund Expense Ratios4: Net 0.09%; Gross 0.12%
Average Annual Total Returns After Tax1,2,3,5
| | | | | | | | | | | | | |
| | | 1 Year | | 5 Years | | 10 Years |
|
| |
| |
Fund: Schwab Total Stock Market Index Fund® (6/1/99) | | | | | | | | | | | | |
| Pre-Liquidation (still own shares) | | | 18.24% | | | | 2.08% | | | | 0.61% | |
| Post-Liquidation (shares were sold) | | | 12.37% | | | | 1.97% | | | | 0.65% | |
| | | | | | | | | | | | | |
Fund Category: Morningstar Large-Cap Blend | | | | | | | | | | | | |
| Pre-Liquidation (still own shares) | | | 13.37% | | | | 0.39% | | | | -0.25% | |
| Post-Liquidation (shares were sold) | | | 9.06% | | | | 0.81% | | | | 0.16% | |
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. |
| 2 | | The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 10/31/10 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor’s situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. Some funds in this category may not use tax-efficient strategies, including this fund. |
| 3 | | The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 4 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 5 | | On September 18, 2009, the Investor Share class and Select Share class were combined into a single class of shares of the fund. The performance and financial history of the fund are that of the fund’s former Select Shares. Accordingly, the past performance shown is that of the fund’s former Select Shares. |
Schwab Equity Index Funds 13
Schwab International Index Fund®
The Schwab International Index Fund (the fund) seeks to track the total return of the Schwab International Index. To pursue its goal, the fund generally invests in stocks that are included in the Schwab International Index. Schwab International Index includes stocks of 350 of the largest publicly traded companies from selected countries outside the United States. For more information on the fund’s objective and strategy, please see the fund’s prospectus.
The fund returned 9.31% for the 12-month period, while its comparative index, the Schwab International Index (the index), returned 8.05%. Unlike the fund, the index does not include operational and transactional costs. During the period, the fund utilized a replication approach.
The fund’s tight allocation across all sectors, market caps, and valuation measures—compared to the index—kept the fund’s performance close to the index’s performance. However, two elements, beyond the individual stocks the fund held, were important to the fund’s performance. A part of the fund’s outperformance was attributed to timing differences in foreign exchange calculations.* Fair valuation of the fund’s holdings on the last trading day of the current period also had a positive impact on the fund’s return relative to the index (see financial note 2 for more information). While both of these elements contributed positively to fund performance, these effects could be negative during other periods.
Almost all sectors posted positive returns. Materials and Consumer Staples were the best contributors to fund performance, while Consumer Discretionary and Materials were the top contributors to the index. The weakest contributors and absolute performers for the fund and the index were Energy and Financials. From a country standpoint, the top absolute performers were Denmark and Hong Kong. Greece was the worst performer. The countries contributing most to the index return were the United Kingdom and Canada.
As of 10/31/10:
Style Assessment1
Country Weightings % of Equity Investments
| | | | | |
| United Kingdom | | | 21.0% | |
| Japan | | | 14.6% | |
| France | | | 10.4% | |
| Canada | | | 9.4% | |
| Germany | | | 8.5% | |
| Switzerland | | | 8.2% | |
| Australia | | | 7.3% | |
| Spain | | | 3.9% | |
| Italy | | | 3.0% | |
| Hong Kong | | | 2.5% | |
| Other | | | 11.2% | |
Total | | | 100.0% | |
Statistics
| | | |
| Number of Holdings | | 357 |
| Weighted Average Market Cap ($ x 1,000,000) | | $60,686 |
| Price/Earnings Ratio (P/E) | | 18.0 |
| Price/Book Ratio (P/B) | | 1.6 |
| Portfolio Turnover Rate | | 13% |
Sector Weightings % of Investments
| | | |
| Financials | | 26.6% |
| Materials | | 10.8% |
| Energy | | 10.7% |
| Consumer Staples | | 10.5% |
| Industrials | | 8.9% |
| Health Care | | 8.7% |
| Consumer Discretionary | | 7.9% |
| Telecommunication Services | | 6.5% |
| Utilities | | 5.1% |
| Information Technology | | 3.9% |
| Other | | 0.4% |
Total | | 100.0% |
Top Equity Holdings % of Net Assets2
| | | |
| Nestle S.A. - Reg’d | | 2.0% |
| HSBC Holdings plc | | 2.0% |
| Novartis AG - Reg’d | | 1.6% |
| Vodafone Group plc | | 1.5% |
| BHP Billiton Ltd. | | 1.5% |
| Total S.A. | | 1.4% |
| BP plc | | 1.4% |
| Royal Dutch Shell plc, Class A | | 1.3% |
| Telefonica S.A. | | 1.2% |
| Banco Santander S.A. | | 1.1% |
Total | | 15.0% |
Manager views and portfolio holdings may have changed since the report date.
The fund’s performance relative to the index may be affected by fair-value pricing, see financial note 2 for more information.
Certain securities referenced in the above fund managers’ discussion may have been bought or sold during the period, and therefore, may not appear in the Portfolio Holdings.
Source of Sector Classification: S&P and MSCI.
Foreign securities can involve risks such as political and economic instability and currency risk.
| | |
| * | | Typically, the securities in the index are valued using foreign exchange rates obtained at the close of the London foreign currency exchange (11:00 AM EST), using exchange rates in place at that time. Securities in the fund, however, are valued using foreign exchange rates obtained at the close of the New York foreign currency exchange (4:00 PM EST). This difference in closing times can result in different foreign currency exchange rates between the two exchanges, and thus different foreign currency exchange rates used in the valuation of the index’s and fund’s securities. |
| 1 | | Source: Morningstar, Inc. This style assessment is the result of evaluating the fund based on a ten-factor model for value and growth characteristics. The fund’s market capitalization placement is determined by the geometric mean of its holdings’ market capitalizations. The assessment reflects the fund’s portfolio as of 10/31/10, which may have changed since then, and is not a precise indication of risk or performance—past, present, or future. |
| 2 | | This list is not a recommendation of any security by the investment adviser. |
14 Schwab Equity Index Funds
Schwab International Index Fund®
Performance Summary as of 10/31/10
The performance data quoted represents past performance. Past performance does not guarantee future results. Investment returns and principal value will fluctuate so that an investor’s shares may be worth more or less than their original cost. Current performance may be lower or higher than performance data quoted. To obtain performance information current to the most recent month end, please visit www.schwabfunds.com/prospectus.
October 31, 2000 – October 31, 2010
Performance of a Hypothetical
$10,000 Investment1,5
Pre-Tax Average Annual Total Returns1,2,3,5
| | | | | | | | | | | | | | | | |
| Fund and Inception Date | | 1 Year | | 5 Years | | 10 Years |
| |
Fund: Schwab International Index Fund® (5/19/97) | | | 9.31 | % | | | | 3.32 | % | | | | 2.54 | % | |
Schwab International Index® | | | 8.05 | % | | | | 3.54 | % | | | | 2.84 | % | |
| Fund Category: Morningstar Foreign Large-Cap Blend | | | 12.54 | % | | | | 3.71 | % | | | | 3.05 | % | |
Fund Expense Ratios4: Net 0.19%; Gross 0.23%
Average Annual Total Returns After Tax1,2,3,5
| | | | | | | | | | | | | |
| | | 1 Year | | 5 Years | | 10 Years |
|
| |
| |
Fund: Schwab International Index Fund® (5/19/97) | | | | | | | | | | | | |
| Pre-Liquidation (still own shares) | | | 9.14% | | | | 2.95% | | | | 2.01% | |
| Post-Liquidation (shares were sold) | | | 6.84% | | | | 2.90% | | | | 1.98% | |
| | | | | | | | | | | | | |
Fund Category: Morningstar Foreign Large-Cap Blend | | | | | | | | | | | | |
| Pre-Liquidation (still own shares) | | | 9.94% | | | | 2.15% | | | | 1.73% | |
| Post-Liquidation (shares were sold) | | | 6.96% | | | | 2.50% | | | | 1.93% | |
All figures on this page assume dividends and distributions were reinvested. Index figures do not include trading and management costs, which would lower performance. Indices are unmanaged, and you cannot invest in them directly. Performance results less than one year are not annualized.
| | |
| * | | The Morgan Stanley Capital International Europe, Australasia, Far East Index (Net) (MSCI EAFE Index®) is a free float-adjusted market capitalization index that is designed to measure market equity performance in 22 developed market countries, excluding the U.S. and Canada. Investors cannot invest directly in any index and index figures do not include trading and management costs. |
| 1 | | Fund expenses may have been partially absorbed by CSIM and Schwab. Without these reductions, the fund’s returns would have been lower. |
| 2 | | The pre-tax total return and the graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. After-tax returns are calculated using the highest historical individual federal marginal income tax rates in effect as of 10/31/10 and do not reflect the impact of state and local taxes or the alternative minimum tax. Actual returns depend on an investor’s situation and may differ from those shown. After-tax returns may not be relevant to investors who hold their fund shares through tax-deferred arrangements. Pre-liquidation after-tax returns reflect the tax effects of purchases and sales of securities within the fund portfolios and assume investors continue to hold fund shares at the end of the measurement periods. Post-liquidation figures assume investors sold fund shares at the end of the measurement periods and reflect both the effects of taxable distributions and any taxable gains or losses realized upon the sale of shares. Source for category information: Morningstar, Inc. Some funds in this category may not use tax-efficient strategies, including this fund. |
| 3 | | The Morningstar Category return represents all active and index mutual funds within the category as of the report date. |
| 4 | | As stated in the prospectus. Net Expense: Expenses reduced by a contractual fee waiver in effect for so long as CSIM serves as adviser to the fund. Gross Expense: Does not reflect the effect of contractual fee waivers. For actual ratios during the period, refer to the financial highlights section of the financial statements. |
| 5 | | On August 21, 2009, the Investor Share class and Select Share class were combined into a single class of shares of the fund. The performance and financial history of the fund are that of the fund’s former Select Shares. Accordingly, the past performance shown is that of the fund’s former Select Shares. |
Schwab Equity Index Funds 15
Fund Expenses (Unaudited)
Examples for a $1,000 Investment
As a fund shareholder, you incur two types of costs: transaction costs, such as redemption fees, and ongoing costs, such as management fees, transfer agent and shareholder services fees, and other fund expenses.
The expense examples below are intended to help you understand your ongoing cost (in dollars) of investing in a fund and to compare this cost with the ongoing cost of investing in other mutual funds. These examples are based on an investment of $1,000 invested for six months beginning May 1, 2010 and held through October 31, 2010.
Actual Return lines in the table below provide information about actual account values and actual expenses. You may use this information, together with the amount you invested, to estimate the expenses that you paid over the period. To do so, simply divide your account value by $1,000 (for example, an $8,600 account value ¸ $1,000 = 8.6), then multiply the result by the number given for your fund or share class under the heading entitled “Expenses Paid During Period.”
Hypothetical Return lines in the table below provide information about hypothetical account values and hypothetical expenses based on a fund’s or share class’ actual expense ratio and an assumed return of 5% per year before expenses. Because the return used is not an actual return, it may not be used to estimate the actual ending account value or expenses you paid for the period.
You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only, and do not reflect any transactional costs, such as redemption fees. If these transactional costs were included, your costs would have been higher.
| | | | | | | | | | | | | | | | | |
| | | | | | | Ending
| | |
| | | | | Beginning
| | Account Value
| | Expenses Paid
|
| | | Expense Ratio1
| | Account Value
| | (Net of Expenses)
| | During Period2
|
| | | (Annualized) | | at 5/1/10 | | at 10/31/10 | | 5/1/10–10/31/10 |
| |
| Schwab S&P 500 Index Fund | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.09% | | | $ | 1,000 | | | $ | 1,007.50 | | | $ | 0.46 | |
| Hypothetical 5% Return | | | 0.09% | | | $ | 1,000 | | | $ | 1,024.75 | | | $ | 0.46 | |
| |
|
| Schwab 1000 Index® Fund | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.29% | | | $ | 1,000 | | | $ | 1,008.50 | | | $ | 1.47 | |
| Hypothetical 5% Return | | | 0.29% | | | $ | 1,000 | | | $ | 1,023.74 | | | $ | 1.48 | |
| |
|
| Schwab Small-Cap Index Fund® | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.19% | | | $ | 1,000 | | | $ | 983.10 | | | $ | 0.95 | |
| Hypothetical 5% Return | | | 0.19% | | | $ | 1,000 | | | $ | 1,024.25 | | | $ | 0.97 | |
| |
|
| Schwab Total Stock Market Index Fund® | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.09% | | | $ | 1,000 | | | $ | 1,008.90 | | | $ | 0.46 | |
| Hypothetical 5% Return | | | 0.09% | | | $ | 1,000 | | | $ | 1,024.75 | | | $ | 0.46 | |
| |
|
| Schwab International Index Fund® | | | | | | | | | | | | | | | | |
| Actual Return | | | 0.19% | | | $ | 1,000 | | | $ | 1,063.30 | | | $ | 0.99 | |
| Hypothetical 5% Return | | | 0.19% | | | $ | 1,000 | | | $ | 1,024.25 | | | $ | 0.97 | |
| | |
| 1 | | Based on the most recent six-month expense ratio; may differ from the expense ratio provided in the Financial Highlights, which covers a 12-month period. |
| 2 | | Expenses for each fund are equal to its annualized expense ratio, multiplied by the average account value over the period, multiplied by the 184 days of the period, and divided by the 365 days of the fiscal year. |
16 Schwab Equity Index Funds
Schwab S&P 500 Index Fund
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/091 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 16.28 | | | | 15.28 | | | | 24.28 | | | | 21.56 | | | | 18.88 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.35 | | | | 0.20 | | | | 0.44 | | | | 0.41 | | | | 0.37 | | | |
| Net realized and unrealized gains (losses) | | | 2.31 | | | | 1.22 | | | | (9.02 | ) | | | 2.68 | | | | 2.65 | | | |
| | | |
| Total from investment operations | | | 2.66 | | | | 1.42 | | | | (8.58 | ) | | | 3.09 | | | | 3.02 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.24 | ) | | | (0.42 | ) | | | (0.42 | ) | | | (0.37 | ) | | | (0.34 | ) | | |
| | | |
| Net asset value at end of period | | | 18.70 | | | | 16.28 | | | | 15.28 | | | | 24.28 | | | | 21.56 | | | |
| | | |
| Total return (%) | | | 16.50 | | | | 9.81 | | | | (35.92 | ) | | | 14.50 | | | | 16.18 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 0.09 | | | | 0.13 | 2 | | | 0.19 | | | | 0.19 | | | | 0.19 | | | |
| Gross operating expenses | | | 0.10 | | | | 0.16 | | | | 0.21 | | | | 0.20 | | | | 0.21 | | | |
| Net investment income (loss) | | | 1.97 | | | | 2.09 | | | | 2.06 | | | | 1.78 | | | | 1.74 | | | |
| Portfolio turnover rate | | | 2 | | | | 3 | 3 | | | 3 | | | | 2 | | | | 3 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 10,007 | | | | 8,718 | | | | 2,598 | | | | 4,345 | | | | 4,038 | | | |
1 Effective September 9, 2009, the Investor Share class, the e.Share class and the Select Share class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Select Shares.
2 Effective May 5, 2009, the net operating expense limitation was lowered. The ratio presented for period ended 10/31/09 is a blended rate.
3 Portfolio turnover excludes the impact of investment activity resulting from a merger with another fund. (See financial note 11)
See financial notes 17
Schwab S&P 500 Index Fund
Portfolio Holdings as of October 31, 2010
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .9% | | Common Stock | | | 8,564,085,806 | | | | 9,997,803,572 | |
| | 0 | .1% | | Short-Term Investments | | | 9,501,330 | | | | 9,501,330 | |
| |
| |
| | 100 | .0% | | Total Investments | | | 8,573,587,136 | | | | 10,007,304,902 | |
| | 0 | .1% | | Collateral Invested for Securities on Loan | | | 13,300,790 | | | | 13,300,790 | |
| | (0 | .1)% | | Other Assets and Liabilities, Net | | | | | | | (13,679,342 | ) |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 10,006,926,350 | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Common Stock 99.9% of net assets |
| |
Automobiles & Components 0.8%
|
Ford Motor Co. * | | | 3,176,997 | | | | 0.4 | | | | 44,890,968 | |
| Other Securities | | | | | | | 0.4 | | | | 29,872,307 | |
| | | | | | | | | | | | | |
| | | | | | | | 0.8 | | | | 74,763,275 | |
| |
Banks 2.8%
|
| U.S. Bancorp | | | 1,774,328 | | | | 0.4 | | | | 42,903,251 | |
| Wells Fargo & Co. | | | 4,864,309 | | | | 1.3 | | | | 126,861,179 | |
| Other Securities | | | | | | | 1.1 | | | | 108,767,016 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.8 | | | | 278,531,446 | |
| |
Capital Goods 8.0%
|
| 3M Co. | | | 658,619 | | | | 0.6 | | | | 55,468,892 | |
| Caterpillar, Inc. | | | 577,162 | | | | 0.5 | | | | 45,364,933 | |
| General Electric Co. | | | 9,950,352 | | | | 1.6 | | | | 159,404,639 | |
| The Boeing Co. | | | 708,654 | | | | 0.5 | | | | 50,059,319 | |
| United Technologies Corp. | | | 882,035 | | | | 0.7 | | | | 65,949,757 | |
| Other Securities | | | | | | | 4.1 | | | | 427,188,676 | |
| | | | | | | | | | | | | |
| | | | | | | | 8.0 | | | | 803,436,216 | |
| |
Commercial & Professional Supplies 0.6%
|
| Other Securities | | | | | | | 0.6 | | | | 58,461,695 | |
| |
Consumer Durables & Apparel 1.1%
|
| Other Securities | | | | | | | 1.1 | | | | 109,410,996 | |
| |
Consumer Services 1.9%
|
| McDonald’s Corp. | | | 1,009,338 | | | | 0.8 | | | | 78,496,216 | |
| Other Securities | | | | | | | 1.1 | | | | 110,648,290 | |
| | | | | | | | | | | | | |
| | | | | | | | 1.9 | | | | 189,144,506 | |
| |
Diversified Financials 7.1%
|
| Bank of America Corp. | | | 9,367,011 | | | | 1.1 | | | | 107,158,606 | |
Citigroup, Inc. * | | | 23,804,076 | | | | 1.0 | | | | 99,262,997 | |
| JPMorgan Chase & Co. | | | 3,714,631 | | | | 1.4 | | | | 139,781,565 | |
The Charles Schwab Corp. (b) | | | 891,781 | | | | 0.1 | | | | 13,733,427 | |
| The Goldman Sachs Group, Inc. | | | 480,169 | | | | 0.8 | | | | 77,283,201 | |
| Other Securities | | | | | | | 2.7 | | | | 270,254,093 | |
| | | | | | | | | | | | | |
| | | | | | | | 7.1 | | | | 707,473,889 | |
| |
Energy 11.1%
|
| Chevron Corp. | | | 1,871,934 | | | | 1.5 | | | | 154,640,468 | |
| ConocoPhillips | | | 1,388,390 | | | | 0.8 | | | | 82,470,366 | |
| Exxon Mobil Corp. | | | 4,791,041 | | | | 3.2 | | | | 318,460,495 | |
| Occidental Petroleum Corp. | | | 759,350 | | | | 0.6 | | | | 59,707,691 | |
| Schlumberger Ltd. | | | 1,289,615 | | | | 0.9 | | | | 90,131,192 | |
| Other Securities | | | | | | | 4.1 | | | | 407,279,220 | |
| | | | | | | | | | | | | |
| | | | | | | | 11.1 | | | | 1,112,689,432 | |
| |
Food & Staples Retailing 2.4%
|
| Wal-Mart Stores, Inc. | | | 1,867,102 | | | | 1.0 | | | | 101,140,915 | |
| Other Securities | | | | | | | 1.4 | | | | 140,707,448 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.4 | | | | 241,848,363 | |
| |
Food, Beverage & Tobacco 6.2%
|
| Altria Group, Inc. | | | 1,901,291 | | | | 0.5 | | | | 48,330,817 | |
| Kraft Foods, Inc., Class A | | | 1,587,654 | | | | 0.5 | | | | 51,233,594 | |
| PepsiCo, Inc. | | | 1,488,963 | | | | 1.0 | | | | 97,229,284 | |
| Philip Morris International, Inc. | | | 1,735,046 | | | | 1.0 | | | | 101,500,191 | |
| The Coca-Cola Co. | | | 2,170,228 | | | | 1.3 | | | | 133,078,381 | |
| Other Securities | | | | | | | 1.9 | | | | 188,724,307 | |
| | | | | | | | | | | | | |
| | | | | | | | 6.2 | | | | 620,096,574 | |
| |
Health Care Equipment & Services 3.7%
|
| Other Securities | | | | | | | 3.7 | | | | 373,033,773 | |
| |
Household & Personal Products 2.6%
|
| The Procter & Gamble Co. | | | 2,675,090 | | | | 1.7 | | | | 170,055,471 | |
| Other Securities | | | | | | | 0.9 | | | | 87,488,704 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.6 | | | | 257,544,175 | |
| |
Insurance 4.0%
|
Berkshire Hathaway, Inc., Class B * | | | 1,591,030 | | | | 1.3 | | | | 126,582,347 | |
| Other Securities | | | | | | | 2.7 | | | | 271,500,036 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.0 | | | | 398,082,383 | |
18 See financial notes
Schwab S&P 500 Index Fund
Portfolio Holdings continued
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Materials 3.6%
|
| Freeport-McMoRan Copper & Gold, Inc. | | | 431,870 | | | | 0.4 | | | | 40,889,452 | |
| Other Securities | | | | | | | 3.2 | | | | 321,891,123 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.6 | | | | 362,780,575 | |
| |
Media 3.2%
|
| Comcast Corp., Class A | | | 2,616,164 | | | | 0.5 | | | | 53,840,655 | |
| The Walt Disney Co. | | | 1,801,283 | | | | 0.6 | | | | 65,044,329 | |
| Other Securities | | | | | | | 2.1 | | | | 203,951,623 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.2 | | | | 322,836,607 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 7.8%
|
| Abbott Laboratories | | | 1,448,386 | | | | 0.7 | | | | 74,331,169 | |
Amgen, Inc. * | | | 907,459 | | | | 0.5 | | | | 51,897,580 | |
| Bristol-Myers Squibb Co. | | | 1,612,264 | | | | 0.4 | | | | 43,369,902 | |
| Johnson & Johnson | | | 2,577,325 | | | | 1.6 | | | | 164,098,283 | |
| Merck & Co., Inc. | | | 2,880,714 | | | | 1.0 | | | | 104,512,304 | |
| Pfizer, Inc. | | | 7,524,533 | | | | 1.3 | | | | 130,926,874 | |
| Other Securities | | | | | | | 2.3 | | | | 210,733,761 | |
| | | | | | | | | | | | | |
| | | | | | | | 7.8 | | | | 779,869,873 | |
| |
Real Estate 1.5%
|
| Other Securities | | | | | | | 1.5 | | | | 149,145,503 | |
| |
Retailing 3.6%
|
Amazon.com, Inc. * | | | 324,190 | | | | 0.5 | | | | 53,536,736 | |
| The Home Depot, Inc. | | | 1,552,250 | | | | 0.5 | | | | 47,933,480 | |
| Other Securities | | | | | | | 2.6 | | | | 260,398,179 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.6 | | | | 361,868,395 | |
| |
Semiconductors & Semiconductor Equipment 2.5%
|
| Intel Corp. | | | 5,153,905 | | | | 1.0 | | | | 103,438,873 | |
| Other Securities | | | | | | | 1.5 | | | | 143,838,478 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.5 | | | | 247,277,351 | |
| |
Software & Services 9.3%
|
Google, Inc., Class A * | | | 229,758 | | | | 1.4 | | | | 140,839,356 | |
| International Business Machines Corp. | | | 1,190,690 | | | | 1.7 | | | | 170,983,084 | |
| Microsoft Corp. | | | 7,184,631 | | | | 1.9 | | | | 191,398,570 | |
| Oracle Corp. | | | 3,629,986 | | | | 1.1 | | | | 106,721,588 | |
| Other Securities | | | | | | | 3.2 | | | | 324,639,035 | |
| | | | | | | | | | | | | |
| | | | | | | | 9.3 | | | | 934,581,633 | |
| |
Technology Hardware & Equipment 7.5%
|
Apple, Inc. * | | | 847,740 | | | | 2.5 | | | | 255,059,534 | |
Cisco Systems, Inc. * | | | 5,323,628 | | | | 1.2 | | | | 121,538,427 | |
| Hewlett-Packard Co. | | | 2,116,908 | | | | 0.9 | | | | 89,037,151 | |
| QUALCOMM, Inc. | | | 1,496,265 | | | | 0.7 | | | | 67,526,440 | |
| Other Securities | | | | | | | 2.2 | | | | 215,530,513 | |
| | | | | | | | | | | | | |
| | | | | | | | 7.5 | | | | 748,692,065 | |
| |
Telecommunication Services 3.1%
|
| AT&T, Inc. | | | 5,502,536 | | | | 1.6 | | | | 156,822,276 | |
| Verizon Communications, Inc. | | | 2,648,178 | | | | 0.9 | | | | 85,986,340 | |
| Other Securities | | | | | | | 0.6 | | | | 66,942,684 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.1 | | | | 309,751,300 | |
| |
Transportation 2.0%
|
| Union Pacific Corp. | | | 471,475 | | | | 0.4 | | | | 41,338,928 | |
| United Parcel Service, Inc., Class B | | | 932,518 | | | | 0.6 | | | | 62,795,762 | |
| Other Securities | | | | | | | 1.0 | | | | 100,233,643 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.0 | | | | 204,368,333 | |
| |
Utilities 3.5%
|
| Other Securities | | | | | | | 3.5 | | | | 352,115,214 | |
| | | | | | | | | | | | | |
| Total Common Stock |
| (Cost $8,564,085,806) | | | 9,997,803,572 | |
| | | | | |
| | | Face
| | | | |
Security
| | Amount
| | % of Net
| | Value
|
| Rate, Maturity Date | | ($) | | Assets | | ($) |
| |
Short-Term Investments 0.1% of net assets |
| |
Time Deposit 0.1%
|
| Other Securities | | | | | | | 0.1 | | | | 7,139,229 | |
| |
U.S. Treasury Obligation 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 2,362,101 | |
| | | | | | | | | | | | | |
| Total Short-Term Investments |
| (Cost $9,501,330) | | | 9,501,330 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Collateral Invested for Securities on Loan 0.1% of net assets |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Invesco Short Term Investments Trust Government & Agency Portfolio | | | 13,300,790 | | | | 0.1 | | | | 13,300,790 | |
| | | | | | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $13,300,790) | | | 13,300,790 | |
| | | | | |
| |
|
End of Collateral Invested for Securities on Loan |
At 10/31/10 the tax basis cost of the fund’s investments was $8,623,364,927 and the unrealized appreciation and depreciation were $2,713,509,546 and ($1,329,569,571), respectively, with a net unrealized appreciation of $1,383,939,975.
For the following notes, please refer to complete schedule of holdings.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is held as collateral for open futures contracts. |
| (b) | | Issuer is affiliated with the fund’s adviser. |
| (c) | | All or a portion of this security is on loan. |
| | | |
| REIT — | | Real Estate Investment Trust. |
See financial notes 19
Schwab S&P 500 Index Fund
Portfolio Holdings continued
In addition to the above, the fund held the following at 10/31/10.
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contract |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
S&P 500 Index, e-mini, Long, expires 12/17/10 | | | 30 | | | | 1,769,550 | | | | 127,883 | |
20 See financial notes
Schwab S&P 500 Index Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value including securities on loan of $13,140,101 (cost $8,573,587,136) | | | | | $10,007,304,902 | |
| Cash | | | | | 293 | |
| Collateral invested for securities on loan | | | | | 13,300,790 | |
| Receivables: | | | | | | |
| Dividends | | | | | 11,426,903 | |
| Fund shares sold | | | | | 4,566,221 | |
| Income from securities on loan | | | | | 51,144 | |
| Foreign tax reclaims | | | | | 19,950 | |
| Due from broker for futures | | | | | 5,588 | |
| Interest | | | | | 18 | |
| Prepaid expenses | | + | | | 241,861 | |
| | | |
Total assets | | | | | 10,036,917,670 | |
| |
Liabilities |
|
| Collateral held for securities on loan | | | | | 13,300,790 | |
| Payables: | | | | | | |
| Investment adviser and administrator fees | | | | | 45,085 | |
| Shareholder service fees | | | | | 18,879 | |
| Fund shares redeemed | | | | | 16,408,415 | |
| Accrued expenses | | + | | | 218,151 | |
| | | |
Total liabilities | | | | | 29,991,320 | |
| |
Net Assets |
|
Total assets | | | | | 10,036,917,670 | |
Total liabilities | | − | | | 29,991,320 | |
| | | |
Net assets | | | | | $10,006,926,350 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 9,048,751,054 | |
| Net investment income not yet distributed | | | | | 151,724,654 | |
| Net realized capital losses | | | | | (627,395,007 | ) |
| Net unrealized capital gains | | | | | 1,433,845,649 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $10,006,926,350 | | | | 535,269,274 | | | | | $18.70 | | | |
See financial notes 21
Schwab S&P 500 Index Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends (including $214,027 from affiliated issuer and net of foreign withholding taxes of $14,963) | | | | | $194,852,379 | |
| Interest | | | | | 18,994 | |
| Securities on loan | | + | | | 733,506 | |
| | | |
Total investment income | | | | | 195,604,879 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 5,678,669 | |
| Shareholder service fees | | | | | 1,847,326 | |
| Transfer agent fees | | | | | 399,211 | |
| Shareholder reports | | | | | 313,210 | |
| Portfolio accounting fees | | | | | 237,600 | |
| Custodian fees | | | | | 191,033 | |
| Registration fees | | | | | 108,464 | |
| Professional fees | | | | | 72,216 | |
| Trustees’ fees | | | | | 71,903 | |
| Interest expense | | | | | 758 | |
| Other expenses | | + | | | 372,911 | |
| | | |
| Total expenses | | | | | 9,293,301 | |
| Expense reduction by adviser and Schwab | | − | | | 610,252 | |
| | | |
Net expenses | | − | | | 8,683,049 | |
| | | |
Net investment income | | | | | 186,921,830 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on investments | | | | | 38,825,577 | |
| Net realized gains on futures contracts | | + | | | 3,057,781 | |
| | | |
Net realized gains | | | | | 41,883,358 | |
| Net unrealized gains on investments | | | | | 1,201,500,649 | |
| Net unrealized losses on affiliated issuer | | | | | (1,730,055 | ) |
| Net unrealized gains on futures contracts | | + | | | 155,158 | |
| | | |
Net unrealized gains | | + | | | 1,199,925,752 | |
| | | |
Net realized and unrealized gains | | | | | 1,241,809,110 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $1,428,730,940 | |
22 See financial notes
Schwab S&P 500 Index Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $186,921,830 | | | | $119,853,100 | |
| Net realized gains (losses) | | | | | 41,883,358 | | | | (14,387,310 | ) |
| Net unrealized gains | | + | | | 1,199,925,752 | | | | 387,771,569 | |
| | | |
Increase in net assets from operations | | | | | 1,428,730,940 | | | | 493,237,359 | |
| |
Distributions to Shareholders1,2 |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | — | | | | 61,218,780 | |
| Select Shares | | | | | 130,372,304 | | | | 70,328,964 | |
| e.Shares | | + | | | — | | | | 4,259,161 | |
| | | |
Total distributions from net investment income | | | | | $130,372,304 | | | | $135,806,905 | |
Transactions in Fund Shares1,2
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 28,532,699 | | | | $391,743,965 | |
| Select Shares | | | | | 77,474,237 | | | | 1,356,717,395 | | | | 225,656,362 | | | | 3,587,907,956 | |
| e.Shares | | + | | | — | | | | — | | | | 3,771,791 | | | | 52,363,615 | |
| | | |
Total shares sold | | | | | 77,474,237 | | | | $1,356,717,395 | | | | 257,960,852 | | | | $4,032,015,536 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Issued in connection with merger | | | | | | | | | | | | | | | | | | |
| Select Shares | | | | | — | | | | $— | | | | 185,529,982 | | | | $3,008,644,483 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 4,242,106 | | | | $58,541,060 | |
| Select Shares | | | | | 6,889,298 | | | | 118,013,668 | | | | 4,509,670 | | | | 62,413,840 | |
| e.Shares | | + | | | — | | | | — | | | | 272,580 | | | | 3,758,878 | |
| | | |
Total shares reinvested | | | | | 6,889,298 | | | | $118,013,668 | | | | 9,024,356 | | | | $124,713,778 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | (188,488,799 | ) | | | ($2,992,021,162 | ) |
| Select Shares | | | | | (84,582,907 | ) | | | (1,483,749,859 | ) | | | (50,255,160 | ) | | | (720,388,668 | ) |
| e.Shares | | + | | | — | | | | — | | | | (16,279,703 | ) | | | (246,409,582 | ) |
| | | |
Total shares redeemed | | | | | (84,582,907 | ) | | | ($1,483,749,859 | ) | | | (255,023,662 | ) | | | ($3,958,819,412 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | (219,372 | ) | | | ($9,018,796 | ) | | | 197,491,528 | | | | $3,206,554,385 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 535,488,646 | | | | $8,717,586,510 | | | | 337,997,118 | | | | $5,153,601,671 | |
| Total increase or decrease | | + | | | (219,372 | ) | | | 1,289,339,840 | | | | 197,491,528 | | | | 3,563,984,839 | |
| | | |
End of period | | | | | 535,269,274 | | | | $10,006,926,350 | | | | 535,488,646 | | | | $8,717,586,510 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $151,724,654 | | | | | | | | $95,245,212 | |
| | | |
1 | | Effective September 9, 2009, all outstanding Investor Shares (166,917,045 shares valued at $2,696,695,093) and e.Shares (10,428,150 shares valued at $168,446,946) combined with Select Shares, resulting in a single class of shares of the fund. |
2 | | Effective September 9, 2009, all of the assets and liabilities of the Schwab Institutional Select S&P 500 Fund were transferred to the Schwab S&P 500 Index Fund (See financial note 11). |
See financial notes 23
Schwab 1000 Index® Fund
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/091 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 31.00 | | | | 28.69 | | | | 45.81 | | | | 40.40 | | | | 35.31 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.57 | 2 | | | 0.54 | 2 | | | 0.66 | 2 | | | 0.60 | 2 | | | 0.50 | 2 | | |
| Net realized and unrealized gains (losses) | | | 4.80 | | | | 2.41 | | | | (17.13 | ) | | | 5.33 | | | | 5.05 | | | |
| | | |
| Total from investment operations | | | 5.37 | | | | 2.95 | | | | (16.47 | ) | | | 5.93 | | | | 5.55 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.58 | ) | | | (0.64 | ) | | | (0.62 | ) | | | (0.52 | ) | | | (0.46 | ) | | |
| Distributions from net realized gains | | | — | | | | — | | | | (0.03 | ) | | | — | | | | — | | | |
| | | |
| Total distributions | | | (0.58 | ) | | | (0.64 | ) | | | (0.65 | ) | | | (0.52 | ) | | | (0.46 | ) | | |
| | | |
| Net asset value at end of period | | | 35.79 | | | | 31.00 | | | | 28.69 | | | | 45.81 | | | | 40.40 | | | |
| | | |
| Total return (%) | | | 17.51 | | | | 10.72 | | | | (36.43 | ) | | | 14.81 | | | | 15.84 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 0.29 | | | | 0.38 | 3 | | | 0.49 | | | | 0.48 | | | | 0.49 | | | |
| Gross operating expenses | | | 0.35 | | | | 0.44 | | | | 0.49 | | | | 0.48 | | | | 0.49 | | | |
| Net investment income (loss) | | | 1.71 | | | | 1.96 | | | | 1.68 | | | | 1.39 | | | | 1.34 | | | |
| Portfolio turnover rate | | | 5 | | | | 4 | | | | 4 | | | | 6 | | | | 5 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 4,575 | | | | 4,279 | | | | 2,260 | | | | 3,974 | | | | 3,918 | | | |
1 Effective September 18, 2009, the Select Shares class and the Investor Share class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Investor Shares.
2 Calculated based on the average shares outstanding during the period.
3 Effective May 5, 2009, the net operating expense limitation was lowered. The ratio presented for period ended 10/31/09 is a blended rate.
24 See financial notes
Schwab 1000 Index Fund
Portfolio Holdings as of October 31, 2010
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .8% | | Common Stock | | | 2,145,859,470 | | | | 4,568,022,168 | |
| | 0 | .0% | | Other Investment Company | | | 93,843 | | | | 93,843 | |
| | 0 | .1% | | Short-Term Investment | | | 2,078,649 | | | | 2,078,649 | |
| |
| |
| | 99 | .9% | | Total Investments | | | 2,148,031,962 | | | | 4,570,194,660 | |
| | 0 | .4% | | Collateral Invested for Securities on Loan | | | 18,636,837 | | | | 18,636,837 | |
| | (0 | .3)% | | Other Assets and Liabilities, Net | | | | | | | (13,516,608 | ) |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 4,575,314,889 | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Common Stock 99.8% of net assets |
| |
Automobiles & Components 0.8%
|
Ford Motor Co. * | | | 1,296,187 | | | | 0.4 | | | | 18,315,122 | |
| Other Securities | | | | | | | 0.4 | | | | 20,325,385 | |
| | | | | | | | | | | | | |
| | | | | | | | 0.8 | | | | 38,640,507 | |
| |
Banks 2.7%
|
| U.S. Bancorp | | | 749,505 | | | | 0.4 | | | | 18,123,031 | |
| Wells Fargo & Co. | | | 2,003,196 | | | | 1.1 | | | | 52,243,352 | |
| Other Securities | | | | | | | 1.2 | | | | 53,947,538 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.7 | | | | 124,313,921 | |
| |
Capital Goods 8.0%
|
| 3M Co. | | | 273,834 | | | | 0.5 | | | | 23,062,299 | |
| Caterpillar, Inc. | | | 242,576 | | | | 0.4 | | | | 19,066,474 | |
| General Electric Co. | | | 4,000,822 | | | | 1.4 | | | | 64,093,168 | |
| The Boeing Co. | | | 284,789 | | | | 0.4 | | | | 20,117,495 | |
| United Technologies Corp. | | | 355,663 | | | | 0.6 | | | | 26,592,922 | |
| Other Securities | | | | | | | 4.7 | | | | 213,369,656 | |
| | | | | | | | | | | | | |
| | | | | | | | 8.0 | | | | 366,302,014 | |
| |
Commercial & Professional Supplies 0.8%
|
| Other Securities | | | | | | | 0.8 | | | | 34,645,894 | |
| |
Consumer Durables & Apparel 1.3%
|
| Other Securities | | | | | | | 1.3 | | | | 57,902,991 | |
| |
Consumer Services 2.1%
|
| McDonald’s Corp. | | | 415,336 | | | | 0.7 | | | | 32,300,681 | |
| Other Securities | | | | | | | 1.4 | | | | 63,582,967 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.1 | | | | 95,883,648 | |
| |
Diversified Financials 6.5%
|
| American Express Co. | | | 437,977 | | | | 0.4 | | | | 18,158,526 | |
| Bank of America Corp. | | | 3,690,841 | | | | 0.9 | | | | 42,223,221 | |
Citigroup, Inc. * | | | 9,542,762 | | | | 0.9 | | | | 39,793,318 | |
| JPMorgan Chase & Co. | | | 1,496,178 | | | | 1.2 | | | | 56,301,178 | |
The Charles Schwab Corp. (a) | | | 373,465 | | | | 0.1 | | | | 5,751,361 | |
| The Goldman Sachs Group, Inc. | | | 193,632 | | | | 0.7 | | | | 31,165,070 | |
| Other Securities | | | | | | | 2.3 | | | | 106,143,761 | |
| | | | | | | | | | | | | |
| | | | | | | | 6.5 | | | | 299,536,435 | |
| |
Energy 10.7%
|
| Chevron Corp. | | | 763,677 | | | | 1.4 | | | | 63,087,357 | |
| ConocoPhillips | | | 559,666 | | | | 0.7 | | | | 33,244,160 | |
| Exxon Mobil Corp. | | | 1,937,063 | | | | 2.8 | | | | 128,756,578 | |
| Occidental Petroleum Corp. | | | 312,416 | | | | 0.5 | | | | 24,565,270 | |
| Schlumberger Ltd. | | | 524,747 | | | | 0.8 | | | | 36,674,568 | |
| Other Securities | | | | | | | 4.5 | | | | 201,541,399 | |
| | | | | | | | | | | | | |
| | | | | | | | 10.7 | | | | 487,869,332 | |
| |
Food & Staples Retailing 2.2%
|
| Wal-Mart Stores, Inc. | | | 793,827 | | | | 0.9 | | | | 43,001,609 | |
| Other Securities | | | | | | | 1.3 | | | | 58,013,952 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.2 | | | | 101,015,561 | |
| |
Food, Beverage & Tobacco 5.8%
|
| Altria Group, Inc. | | | 812,165 | | | | 0.5 | | | | 20,645,234 | |
| Kraft Foods, Inc., Class A | | | 618,964 | | | | 0.4 | | | | 19,973,968 | |
| PepsiCo, Inc. | | | 611,605 | | | | 0.9 | | | | 39,937,807 | |
| Philip Morris International, Inc. | | | 724,265 | | | | 0.9 | | | | 42,369,503 | |
| The Coca-Cola Co. | | | 867,554 | | | | 1.2 | | | | 53,198,411 | |
| Other Securities | | | | | | | 1.9 | | | | 90,251,799 | |
| | | | | | | | | | | | | |
| | | | | | | | 5.8 | | | | 266,376,722 | |
| |
Health Care Equipment & Services 4.0%
|
| Other Securities | | | | | | | 4.0 | | | | 181,480,661 | |
| |
Household & Personal Products 2.5%
|
| The Procter & Gamble Co. | | | 1,100,119 | | | | 1.5 | | | | 69,934,565 | |
| Other Securities | | | | | | | 1.0 | | | | 42,716,337 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.5 | | | | 112,650,902 | |
| |
Insurance 4.0%
|
Berkshire Hathaway, Inc., Class B * | | | 642,912 | | | | 1.1 | | | | 51,150,079 | |
| Other Securities | | | | | | | 2.9 | | | | 133,082,517 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.0 | | | | 184,232,596 | |
See financial notes 25
Schwab 1000 Index Fund
Portfolio Holdings continued
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Materials 4.1%
|
| Other Securities | | | | | | | 4.1 | | | | 186,125,493 | |
| |
Media 3.2%
|
| Comcast Corp., Class A | | | 1,090,903 | | | | 0.5 | | | | 22,450,784 | |
| The Walt Disney Co. | | | 750,620 | | | | 0.6 | | | | 27,104,888 | |
| Other Securities | | | | | | | 2.1 | | | | 98,855,858 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.2 | | | | 148,411,530 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 7.5%
|
| Abbott Laboratories | | | 580,446 | | | | 0.7 | | | | 29,788,489 | |
Amgen, Inc. * | | | 373,660 | | | | 0.5 | | | | 21,369,615 | |
| Bristol-Myers Squibb Co. | | | 664,139 | | | | 0.4 | | | | 17,865,339 | |
| Johnson & Johnson | | | 1,037,167 | | | | 1.4 | | | | 66,036,423 | |
| Merck & Co., Inc. | | | 1,167,098 | | | | 0.9 | | | | 42,342,316 | |
| Pfizer, Inc. | | | 3,033,211 | | | | 1.2 | | | | 52,777,871 | |
| Other Securities | | | | | | | 2.4 | | | | 112,336,236 | |
| | | | | | | | | | | | | |
| | | | | | | | 7.5 | | | | 342,516,289 | |
| |
Real Estate 2.1%
|
| Other Securities | | | | | | | 2.1 | | | | 97,847,056 | |
| |
Retailing 3.8%
|
Amazon.com, Inc. * | | | 130,141 | | | | 0.5 | | | | 21,491,485 | |
| The Home Depot, Inc. | | | 628,015 | | | | 0.4 | | | | 19,393,103 | |
| Other Securities | | | | | | | 2.9 | | | | 131,569,443 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.8 | | | | 172,454,031 | |
| |
Semiconductors & Semiconductor Equipment 2.6%
|
| Intel Corp. | | | 2,092,280 | | | | 0.9 | | | | 41,992,060 | |
| Other Securities | | | | | | | 1.7 | | | | 77,211,738 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.6 | | | | 119,203,798 | |
| |
Software & Services 9.1%
|
Google, Inc., Class A * | | | 93,311 | | | | 1.3 | | | | 57,198,710 | |
| International Business Machines Corp. | | | 490,340 | | | | 1.5 | | | | 70,412,824 | |
| Microsoft Corp. | | | 2,907,638 | | | | 1.7 | | | | 77,459,476 | |
| Oracle Corp. | | | 1,508,610 | | | | 1.0 | | | | 44,353,134 | |
| Other Securities | | | | | | | 3.6 | | | | 168,236,264 | |
| | | | | | | | | | | | | |
| | | | | | | | 9.1 | | | | 417,660,408 | |
| |
Technology Hardware & Equipment 7.2%
|
Apple, Inc. * | | | 346,814 | | | | 2.3 | | | | 104,345,928 | |
Cisco Systems, Inc. * | | | 2,176,815 | | | | 1.1 | | | | 49,696,686 | |
| Hewlett-Packard Co. | | | 894,668 | | | | 0.8 | | | | 37,629,736 | |
| QUALCOMM, Inc. | | | 639,278 | | | | 0.6 | | | | 28,850,616 | |
| Other Securities | | | | | | | 2.4 | | | | 106,729,141 | |
| | | | | | | | | | | | | |
| | | | | | | | 7.2 | | | | 327,252,107 | |
| |
Telecommunication Services 3.0%
|
| AT&T, Inc. | | | 2,222,077 | | | | 1.4 | | | | 63,329,194 | |
| Verizon Communications, Inc. | | | 1,092,937 | | | | 0.8 | | | | 35,487,664 | |
| Other Securities | | | | | | | 0.8 | | | | 38,139,932 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.0 | | | | 136,956,790 | |
| |
Transportation 2.1%
|
| Union Pacific Corp. | | | 193,582 | | | | 0.4 | | | | 16,973,270 | |
| United Parcel Service, Inc., Class B | | | 372,375 | | | | 0.5 | | | | 25,075,732 | |
| Other Securities | | | | | | | 1.2 | | | | 55,468,628 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.1 | | | | 97,517,630 | |
| |
Utilities 3.7%
|
| Other Securities | | | | | | | 3.7 | | | | 171,225,852 | |
| | | | | | | | | | | | | |
| Total Common Stock |
| (Cost $2,145,859,470) | | | 4,568,022,168 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Other Investment Company 0.0% of net assets |
| |
Money Funds 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 93,843 | |
| | | | | | | | | | | | | |
| Total Other Investment Company |
| (Cost $93,843) | | | 93,843 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Face
| | | | |
Security
| | Amount
| | % of Net
| | Value
|
| Rate, Maturity Date | | ($) | | Assets | | ($) |
| |
Short-Term Investment 0.1% of net assets |
| |
U.S. Treasury Obligation 0.1%
|
| Other Securities | | | | | | | 0.1 | | | | 2,078,649 | |
| | | | | | | | | | | | | |
| Total Short-Term Investment |
| (Cost $2,078,649) | | | 2,078,649 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Collateral Invested for Securities on Loan 0.4% of net assets |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| State Street Navigator Security Lending Prime Portfolio | | | 18,636,837 | | | | 0.4 | | | | 18,636,837 | |
| | | | | | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $18,636,837) | | | 18,636,837 | |
| | | | | |
| |
|
End of collateral invested for securities on loan. |
At 10/31/10 the tax basis cost of the fund’s investments was $2,124,474,809 and the unrealized appreciation and depreciation were $2,546,102,555 and ($100,382,704), respectively, with a net unrealized appreciation of $2,445,719,851.
For the following notes, please refer to complete schedule of holdings.
| | |
| * | | Non-income producing security. |
| (a) | | Issuer is affiliated with the fund’s adviser. |
| (b) | | All or a portion of this security is on loan. |
| (c) | | All or a portion of this security is held as collateral for open futures contracts. |
26 See financial notes
Schwab 1000 Index Fund
Portfolio Holdings continued
| | | |
| REIT — | | Real Estate Investment Trust. |
In addition to the above, the fund held the following at 10/31/10.
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contract |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
S&P 500 Index, e-mini, Long, expires 12/17/10 | | | 30 | | | | 1,769,550 | | | | 8,122 | |
See financial notes 27
Schwab 1000 Index Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value including securities on loan of $18,218,951 (cost $2,148,031,962) | | | | | $4,570,194,660 | |
| Collateral invested for securities on loan | | | | | 18,636,837 | |
| Receivables: | | | | | | |
| Investments sold | | | | | 5,305,094 | |
| Dividends | | | | | 4,875,132 | |
| Fund shares sold | | | | | 701,145 | |
| Income from securities on loan | | | | | 42,245 | |
| Due from broker for futures | | | | | 1,597 | |
| Interest | | | | | 335 | |
| Prepaid expenses | | + | | | 130,028 | |
| | | |
Total assets | | | | | 4,599,887,073 | |
| |
Liabilities |
|
| Collateral held for securities on loan | | | | | 18,636,837 | |
| Payables: | | | | | | |
| Investments bought | | | | | 2,278,100 | |
| Investment adviser and administrator fees | | | | | 65,669 | |
| Shareholder service fees | | | | | 41,887 | |
| Fund shares redeemed | | | | | 3,400,432 | |
| Trustees’ fees | | | | | 1 | |
| Accrued expenses | | + | | | 149,258 | |
| | | |
Total liabilities | | | | | 24,572,184 | |
| |
Net Assets |
|
Total assets | | | | | 4,599,887,073 | |
Total liabilities | | − | | | 24,572,184 | |
| | | |
Net assets | | | | | $4,575,314,889 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 2,014,000,777 | |
| Net investment income not yet distributed | | | | | 56,870,446 | |
| Net realized capital gains | | | | | 82,272,846 | |
| Net unrealized capital gains | | | | | 2,422,170,820 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $4,575,314,889 | | | | 127,823,884 | | | | | $35.79 | | | |
28 See financial notes
Schwab 1000 Index Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends (including $91,726 from affiliated issuer) | | | | | $89,184,925 | |
| Interest | | | | | 20,965 | |
| Securities on loan | | + | | | 512,289 | |
| | | |
Total investment income | | | | | 89,718,179 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 10,231,573 | |
| Shareholder service fees | | | | | 4,369,937 | |
| Shareholder reports | | | | | 230,699 | |
| Portfolio accounting fees | | | | | 141,796 | |
| Transfer agent fees | | | | | 106,746 | |
| Custodian fees | | | | | 97,115 | |
| Trustees’ fees | | | | | 49,423 | |
| Professional fees | | | | | 48,625 | |
| Registration fees | | | | | 44,347 | |
| Interest expense | | | | | 6,590 | |
| Other expenses | | + | | | 170,577 | |
| | | |
| Total expenses | | | | | 15,497,428 | |
| Expense reduction by adviser and Schwab | | − | | | 2,425,839 | |
| Custody credits | | − | | | 81 | |
| | | |
Net expenses | | − | | | 13,071,508 | |
| | | |
Net investment income | | | | | 76,646,671 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on investments | | | | | 54,472,858 | |
| Net realized gains on affiliated issuer | | | | | 363,294 | |
| Net realized gains on futures contracts | | + | | | 3,834,855 | |
| | | |
Net realized gains | | | | | 58,671,007 | |
| Net unrealized gains on investments | | | | | 583,706,747 | |
| Net unrealized losses on affiliated issuer | | | | | (1,045,583 | ) |
| Net unrealized gains on futures contracts | | + | | | 621,378 | |
| | | |
Net unrealized gains | | + | | | 583,282,542 | |
| | | |
Net realized and unrealized gains | | | | | 641,953,549 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $718,600,220 | |
See financial notes 29
Schwab 1000 Index Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $76,646,671 | | | | $83,257,072 | |
| Net realized gains (losses) | | | | | 58,671,007 | | | | (610,801 | ) |
| Net unrealized gains | | + | | | 583,282,542 | | | | 299,066,934 | |
| | | |
Increase in net assets from operations | | | | | 718,600,220 | | | | 381,713,205 | |
| |
Distributions to Shareholders1 |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | 78,998,534 | | | | 50,003,899 | |
| Select Shares | | + | | | — | | | | 49,147,092 | |
| | | |
Total distributions from net investment income | | | | | $78,998,534 | | | | $99,150,991 | |
Transactions in Fund Shares1
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | 7,828,659 | | | | $261,539,915 | | | | 70,861,141 | | | | $2,233,680,772 | |
| Select Shares | | + | | | — | | | | — | | | | 9,718,981 | | | | 249,303,041 | |
| | | |
Total shares sold | | | | | 7,828,659 | | | | $261,539,915 | | | | 80,580,122 | | | | $2,482,983,813 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | 2,124,208 | | | | $69,015,533 | | | | 1,766,430 | | | | $45,997,835 | |
| Select Shares | | + | | | — | | | | — | | | | 1,524,183 | | | | 39,628,767 | |
| | | |
Total shares reinvested | | | | | 2,124,208 | | | | $69,015,533 | | | | 3,290,613 | | | | $85,626,602 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | (20,167,504 | ) | | | ($673,928,250 | ) | | | (13,339,274 | ) | | | ($357,689,838 | ) |
| Select Shares | | + | | | — | | | | — | | | | (81,650,587 | ) | | | (2,495,382,460 | ) |
| | | |
Total shares redeemed | | | | | (20,167,504 | ) | | | ($673,928,250 | ) | | | (94,989,861 | ) | | | ($2,853,072,298 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | (10,214,637 | ) | | | ($343,372,802 | ) | | | (11,119,126 | ) | | | ($284,461,883 | ) |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 138,038,521 | | | | $4,279,086,005 | | | | 149,157,647 | | | | $4,280,985,674 | |
| Total increase or decrease | | + | | | (10,214,637 | ) | | | 296,228,884 | | | | (11,119,126 | ) | | | (1,899,669 | ) |
| | | |
End of period | | | | | 127,823,884 | | | | $4,575,314,889 | | | | 138,038,521 | | | | $4,279,086,005 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $56,870,446 | | | | | | | | $63,268,439 | |
| | | |
1 | | Effective September 18, 2009, all outstanding Select Shares (64,219,222 shares valued at $2,052,041,742) combined with Investor Shares, resulting in a single class of shares of the fund. |
30 See financial notes
Schwab Small-Cap Index Fund®
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/091 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 15.14 | | | | 13.85 | | | | 25.35 | | | | 25.97 | | | | 22.36 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.22 | 2 | | | 0.18 | 2 | | | 0.33 | 2 | | | 0.35 | 2 | | | 0.27 | 2 | | |
| Net realized and unrealized gains (losses) | | | 3.97 | | | | 1.40 | | | | (7.89 | ) | | | 2.36 | | | | 3.67 | | | |
| | | |
| Total from investment operations | | | 4.19 | | | | 1.58 | | | | (7.56 | ) | | | 2.71 | | | | 3.94 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.15 | ) | | | (0.29 | ) | | | (0.32 | ) | | | (0.28 | ) | | | (0.18 | ) | | |
| Distributions from net realized gains | | | — | | | | — | | | | (3.62 | ) | | | (3.05 | ) | | | (0.15 | ) | | |
| | | |
| Total distributions | | | (0.15 | ) | | | (0.29 | ) | | | (3.94 | ) | | | (3.33 | ) | | | (0.33 | ) | | |
| | | |
| Net asset value at end of period | | | 19.18 | | | | 15.14 | | | | 13.85 | | | | 25.35 | | | | 25.97 | | | |
| | | |
| Total return (%) | | | 27.85 | | | | 11.98 | | | | (34.48 | ) | | | 11.35 | | | | 17.78 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 0.19 | | | | 0.28 | 3 | | | 0.42 | | | | 0.42 | | | | 0.42 | | | |
| Gross operating expenses | | | 0.20 | | | | 0.33 | | | | 0.42 | | | | 0.42 | | | | 0.42 | | | |
| Net investment income (loss) | | | 1.23 | | | | 1.41 | | | | 1.78 | | | | 1.43 | | | | 1.10 | | | |
| Portfolio turnover rate | | | 33 | | | | 26 | | | | 64 | | | | 31 | | | | 29 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 1,406 | | | | 1,142 | | | | 628 | | | | 969 | | | | 889 | | | |
1 Effective August 21, 2009, the Investor Share class and the Select Share class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Select Shares.
2 Calculated based on the average shares outstanding during the period.
3 Effective May 5, 2009, the net operating expense limitation was lowered. The ratio presented for period ended 10/31/09 is a blended rate.
See financial notes 31
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2010
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .8% | | Common Stock | | | 1,251,261,679 | | | | 1,403,572,178 | |
| | 0 | .0% | | Rights | | | — | | | | — | |
| | 0 | .2% | | Short-Term Investments | | | 2,709,233 | | | | 2,709,233 | |
| |
| |
| | 100 | .0% | | Total Investments | | | 1,253,970,912 | | | | 1,406,281,411 | |
| | 3 | .0% | | Collateral Invested for Securities on Loan | | | 41,794,683 | | | | 41,794,683 | |
| | (3 | .0)% | | Other Assets and Liabilities, Net | | | | | | | (42,052,321 | ) |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 1,406,023,773 | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Common Stock 99.8% of net assets |
| |
Automobiles & Components 1.1%
|
Dana Holding Corp. * | | | 256,200 | | | | 0.3 | | | | 3,625,230 | |
Tenneco, Inc. * | | | 106,500 | | | | 0.2 | | | | 3,474,030 | |
| Other Securities | | | | | | | 0.6 | | | | 8,159,081 | |
| | | | | | | | | | | | | |
| | | | | | | | 1.1 | | | | 15,258,341 | |
| |
Banks 6.5%
|
Popular, Inc. * | | | 1,661,500 | | | | 0.3 | | | | 4,535,895 | |
Signature Bank * | | | 74,709 | | | | 0.2 | | | | 3,155,708 | |
| Other Securities | | | | | | | 6.0 | | | | 83,659,830 | |
| | | | | | | | | | | | | |
| | | | | | | | 6.5 | | | | 91,351,433 | |
| |
Capital Goods 9.8%
|
| Baldor Electric Co. | | | 77,708 | | | | 0.2 | | | | 3,265,290 | |
Esterline Technologies Corp. * | | | 54,911 | | | | 0.2 | | | | 3,318,821 | |
Hexcel Corp. * | | | 177,783 | | | | 0.2 | | | | 3,159,204 | |
| The Toro Co. | | | 59,535 | | | | 0.2 | | | | 3,379,207 | |
| Trinity Industries, Inc. | | | 145,800 | | | | 0.2 | | | | 3,314,034 | |
WESCO International, Inc. * | | | 80,100 | | | | 0.2 | | | | 3,429,882 | |
| Other Securities | | | | | | | 8.6 | | | | 118,202,662 | |
| | | | | | | | | | | | | |
| | | | | | | | 9.8 | | | | 138,069,100 | |
| |
Commercial & Professional Supplies 3.7%
|
| Other Securities | | | | | | | 3.7 | | | | 52,511,475 | |
| |
Consumer Durables & Apparel 3.4%
|
Deckers Outdoor Corp. * | | | 68,800 | | | | 0.3 | | | | 3,997,280 | |
| Polaris Industries, Inc. | | | 60,123 | | | | 0.3 | | | | 4,274,144 | |
| Other Securities | | | | | | | 2.8 | | | | 40,273,345 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.4 | | | | 48,544,769 | |
| |
Consumer Services 4.5%
|
Coinstar, Inc. * | | | 57,100 | | | | 0.2 | | | | 3,287,818 | |
Gaylord Entertainment Co. * | | | 94,335 | | | | 0.2 | | | | 3,145,129 | |
The Cheesecake Factory, Inc. * | | | 110,800 | | | | 0.2 | | | | 3,226,496 | |
| Other Securities | | | | | | | 3.9 | | | | 53,103,845 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.5 | | | | 62,763,288 | |
| |
Diversified Financials 3.2%
|
American Capital Ltd. * | | | 616,600 | | | | 0.3 | | | | 4,303,868 | |
| Ares Capital Corp. | | | 278,130 | | | | 0.3 | | | | 4,655,896 | |
| Other Securities | | | | | | | 2.6 | | | | 35,761,513 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.2 | | | | 44,721,277 | |
| |
Energy 5.9%
|
Brigham Exploration Co. * | | | 201,000 | | | | 0.3 | | | | 4,239,090 | |
SEACOR Holdings, Inc. * | | | 41,000 | | | | 0.3 | | | | 3,884,750 | |
| World Fuel Services Corp. | | | 115,956 | | | | 0.2 | | | | 3,273,438 | |
| Other Securities | | | | | | | 5.1 | | | | 71,074,688 | |
| | | | | | | | | | | | | |
| | | | | | | | 5.9 | | | �� | 82,471,966 | |
| |
Food & Staples Retailing 0.9%
|
| Other Securities | | | | | | | 0.9 | | | | 12,152,499 | |
| |
Food, Beverage & Tobacco 1.8%
|
| Other Securities | | | | | | | 1.8 | | | | 25,194,763 | |
| |
Health Care Equipment & Services 6.8%
|
AMERIGROUP Corp. * | | | 94,000 | | | | 0.3 | | | | 3,922,620 | |
| Hill-Rom Holdings, Inc. | | | 115,300 | | | | 0.3 | | | | 4,467,875 | |
Psychiatric Solutions, Inc. * | | | 103,500 | | | | 0.2 | | | | 3,487,950 | |
| Other Securities | | | | | | | 6.0 | | | | 84,528,406 | |
| | | | | | | | | | | | | |
| | | | | | | | 6.8 | | | | 96,406,851 | |
| |
Household & Personal Products 0.5%
|
| Other Securities | | | | | | | 0.5 | | | | 7,835,966 | |
| |
Insurance 3.4%
|
| Alterra Capital Holdings Ltd. | | | 194,884 | | | | 0.3 | | | | 3,936,657 | |
MBIA, Inc. * | | | 290,700 | | | | 0.2 | | | | 3,258,747 | |
| Protective Life Corp. | | | 157,400 | | | | 0.3 | | | | 3,772,878 | |
| Other Securities | | | | | | | 2.6 | | | | 37,070,658 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.4 | | | | 48,038,940 | |
| |
Materials 4.9%
|
Coeur d’Alene Mines Corp. * | | | 160,950 | | | | 0.2 | | | | 3,317,179 | |
32 See financial notes
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| Other Securities | | | | | | | 4.7 | | | | 65,884,761 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.9 | | | | 69,201,940 | |
| |
Media 1.1%
|
| Other Securities | | | | | | | 1.1 | | | | 14,994,955 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 4.7%
|
Incyte Corp. * | | | 215,463 | | | | 0.3 | | | | 3,589,614 | |
| Medicis Pharmaceutical Corp., Class A | | | 109,449 | | | | 0.2 | | | | 3,256,108 | |
| Other Securities | | | | | | | 4.2 | | | | 59,289,881 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.7 | | | | 66,135,603 | |
| |
Real Estate 6.6%
|
| American Campus Communities, Inc. | | | 113,000 | | | | 0.3 | | | | 3,574,190 | |
| BioMed Realty Trust, Inc. | | | 207,534 | | | | 0.3 | | | | 3,808,249 | |
| CBL & Associates Properties, Inc. | | | 253,606 | | | | 0.3 | | | | 3,976,542 | |
| Entertainment Properties Trust | | | 84,355 | | | | 0.3 | | | | 3,899,732 | |
| Equity Lifestyle Properties, Inc. | | | 55,859 | | | | 0.2 | | | | 3,179,494 | |
| Home Properties, Inc. | | | 65,765 | | | | 0.3 | | | | 3,580,904 | |
| Kilroy Realty Corp. | | | 95,600 | | | | 0.2 | | | | 3,266,652 | |
| Mid-America Apartment Communities, Inc. | | | 54,452 | | | | 0.2 | | | | 3,323,206 | |
| Other Securities | | | | | | | 4.5 | | | | 63,729,893 | |
| | | | | | | | | | | | | |
| | | | | | | | 6.6 | | | | 92,338,862 | |
| |
Retailing 4.8%
|
Saks, Inc. * | | | 293,500 | | | | 0.2 | | | | 3,269,590 | |
The Gymboree Corp. * | | | 48,660 | | | | 0.2 | | | | 3,165,820 | |
| Other Securities | | | | | | | 4.4 | | | | 60,626,002 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.8 | | | | 67,061,412 | |
| |
Semiconductors & Semiconductor Equipment 4.3%
|
RF Micro Devices, Inc. * | | | 493,304 | | | | 0.3 | | | | 3,596,186 | |
| Other Securities | | | | | | | 4.0 | | | | 56,815,732 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.3 | | | | 60,411,918 | |
| |
Software & Services 7.4%
|
SuccessFactors, Inc. * | | | 119,700 | | | | 0.2 | | | | 3,246,264 | |
| Other Securities | | | | | | | 7.2 | | | | 101,657,250 | |
| | | | | | | | | | | | | |
| | | | | | | | 7.4 | | | | 104,903,514 | |
| |
Technology Hardware & Equipment 6.9%
|
| ADTRAN, Inc. | | | 102,905 | | | | 0.2 | | | | 3,320,744 | |
| Plantronics, Inc. | | | 90,393 | | | | 0.2 | | | | 3,243,301 | |
| Other Securities | | | | | | | 6.5 | | | | 90,018,283 | |
| | | | | | | | | | | | | |
| | | | | | | | 6.9 | | | | 96,582,328 | |
| |
Telecommunication Services 1.2%
|
Syniverse Holdings, Inc. * | | | 127,700 | | | | 0.3 | | | | 3,893,573 | |
| Other Securities | | | | | | | 0.9 | | | | 13,614,608 | |
| | | | | | | | | | | | | |
| | | | | | | | 1.2 | | | | 17,508,181 | |
| |
Transportation 3.4%
|
Alaska Air Group, Inc. * | | | 64,809 | | | | 0.2 | | | | 3,421,915 | |
| Con-way, Inc. | | | 98,400 | | | | 0.2 | | | | 3,248,184 | |
Genesee & Wyoming, Inc., Class A * | | | 75,372 | | | | 0.2 | | | | 3,484,448 | |
US Airways Group, Inc. * | | | 296,400 | | | | 0.2 | | | | 3,494,556 | |
| UTI Worldwide, Inc. | | | 184,400 | | | | 0.3 | | | | 3,544,168 | |
| Other Securities | | | | | | | 2.3 | | | | 30,134,161 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.4 | | | | 47,327,432 | |
| |
Utilities 3.0%
|
| IDACORP, Inc. | | | 87,700 | | | | 0.2 | | | | 3,227,360 | |
| Other Securities | | | | | | | 2.8 | | | | 38,558,005 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.0 | | | | 41,785,365 | |
| | | | | | | | | | | | | |
| Total Common Stock |
| (Cost $1,251,261,679) | | | 1,403,572,178 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Rights 0.0% of net assets |
| |
Pharmaceuticals, Biotechnology & Life Sciences 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | — | |
| | | | | | | | | | | | | |
| Total Rights |
| (Cost $—) | | | — | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Face
| | | | |
Security
| | Amount
| | % of Net
| | Value
|
| Rate, Maturity Date | | ($) | | Assets | | ($) |
| |
Short-Term Investments 0.2% of net assets |
| |
Time Deposit 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 567,594 | |
| |
U.S. Treasury Obligation 0.2%
|
| Other Securities | | | | | | | 0.2 | | | | 2,141,639 | |
| | | | | | | | | | | | | |
| Total Short-Term Investments |
| (Cost $2,709,233) | | | 2,709,233 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Collateral Invested for Securities on Loan 3.0% of net assets |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Invesco Short Term Investments Trust Government & Agency Portfolio | | | 41,794,683 | | | | 3.0 | | | | 41,794,683 | |
| | | | | | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $41,794,683) | | | 41,794,683 | |
| | | | | |
| |
|
End of collateral invested for securities on loan. |
At 10/31/10 the tax basis cost of the fund’s investments was $1,263,630,545 and the unrealized appreciation and depreciation were $294,136,862 and ($151,485,996), respectively, with a net unrealized appreciation of $142,650,866.
See financial notes 33
Schwab Small-Cap Index Fund
Portfolio Holdings continued
For the following notes, please refer to complete schedule of holdings.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is held as collateral for open futures contracts. |
| (b) | | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (c) | | Illiquid security. At the period end, the value of these amounted to $0 or 0.0% of net assets. |
| (d) | | All or a portion of this security is on loan. |
| | | |
| ADR — | | American Depositary Receipt. |
In addition to the above, the fund held the following at 10/31/10.
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contract |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Russell 2000 Index, mini, Long, expires 12/17/10 | | | 25 | | | | 1,755,500 | | | | 9,648 | |
34 See financial notes
Schwab Small-Cap Index Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value including securities on loan of $41,380,696 (cost $1,253,970,912) | | | | | $1,406,281,411 | |
| Cash | | | | | 40 | |
| Collateral invested for securities on loan | | | | | 41,794,683 | |
| Receivables: | | | | | | |
| Dividends | | | | | 461,336 | |
| Fund shares sold | | | | | 413,232 | |
| Income from securities on loan | | | | | 124,329 | |
| Due from broker for futures | | | | | 16,314 | |
| Receivable from investment adviser | | | | | 624 | |
| Interest | | | | | 1 | |
| Prepaid expenses | | + | | | 38,035 | |
| | | |
Total assets | | | | | 1,449,130,005 | |
| |
Liabilities |
|
| Collateral held for securities on loan | | | | | 41,794,683 | |
| Payables: | | | | | | |
| Investment adviser and administrator fees | | | | | 16,380 | |
| Shareholder service fees | | | | | 2,516 | |
| Fund shares redeemed | | | | | 1,216,390 | |
| Accrued expenses | | + | | | 76,263 | |
| | | |
Total liabilities | | | | | 43,106,232 | |
| |
Net Assets |
|
Total assets | | | | | 1,449,130,005 | |
Total liabilities | | − | | | 43,106,232 | |
| | | |
Net assets | | | | | $1,406,023,773 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 1,250,723,381 | |
| Net investment income not yet distributed | | | | | 9,010,974 | |
| Net realized capital losses | | | | | (6,030,729 | ) |
| Net unrealized capital gains | | | | | 152,320,147 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $1,406,023,773 | | | | 73,306,711 | | | | | $19.18 | | | |
See financial notes 35
Schwab Small-Cap Index Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends | | | | | $16,912,564 | |
| Interest | | | | | 5,394 | |
| Securities on loan | | + | | | 1,777,199 | |
| | | |
Total investment income | | | | | 18,695,157 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 1,965,698 | |
| Shareholder service fees | | | | | 259,071 | |
| Shareholder reports | | | | | 80,875 | |
| Portfolio accounting fees | | | | | 74,774 | |
| Transfer agent fees | | | | | 48,159 | |
| Professional fees | | | | | 43,728 | |
| Registration fees | | | | | 42,286 | |
| Custodian fees | | | | | 36,179 | |
| Trustees’ fees | | | | | 14,760 | |
| Interest expense | | | | | 264 | |
| Other expenses | | + | | | 50,553 | |
| | | |
| Total expenses | | | | | 2,616,347 | |
| Expense reduction by adviser and Schwab | | − | | | 96,431 | |
| | | |
Net expenses | | − | | | 2,519,916 | |
| | | |
Net investment income | | | | | 16,175,241 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on investments | | | | | 81,703,275 | |
| Net realized gains on futures contracts | | + | | | 1,799,898 | |
| | | |
Net realized gains | | | | | 83,503,173 | |
| Net unrealized gains on investments | | | | | 213,795,889 | |
| Net unrealized gains on futures contracts | | + | | | 335,660 | |
| | | |
Net unrealized gains | | + | | | 214,131,549 | |
| | | |
Net realized and unrealized gains | | | | | 297,634,722 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $313,809,963 | |
36 See financial notes
Schwab Small-Cap Index Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $16,175,241 | | | | $15,029,205 | |
| Net realized gains (losses) | | | | | 83,503,173 | | | | (52,053,689 | ) |
| Net unrealized gains | | + | | | 214,131,549 | | | | 152,257,472 | |
| | | |
Increase in net assets from operations | | | | | 313,809,963 | | | | 115,232,988 | |
| |
Distributions to Shareholders1 |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | — | | | | 8,183,810 | |
| Select Shares | | + | | | 11,038,239 | | | | 13,636,207 | |
| | | |
Total distributions from net investment income | | | | | $11,038,239 | | | | $21,820,017 | |
Transactions in Fund Shares1
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 4,012,302 | | | | $49,424,353 | |
| Select Shares | | + | | | 12,649,438 | | | | 222,755,641 | | | | 42,295,886 | | | | 621,407,385 | |
| | | |
Total shares sold | | | | | 12,649,438 | | | | $222,755,641 | | | | 46,308,188 | | | | $670,831,738 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 643,639 | | | | $7,678,617 | |
| Select Shares | | + | | | 641,064 | | | | 10,224,972 | | | | 1,059,009 | | | | 12,633,977 | |
| | | |
Total shares reinvested | | | | | 641,064 | | | | $10,224,972 | | | | 1,702,648 | | | | $20,312,594 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | (37,063,698 | ) | | | ($546,937,112 | ) |
| Select Shares | | + | | | (15,417,491 | ) | | | (271,677,060 | ) | | | (13,259,347 | ) | | | (171,312,119 | ) |
| | | |
Total shares redeemed | | | | | (15,417,491 | ) | | | ($271,677,060 | ) | | | (50,323,045 | ) | | | ($718,249,231 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | (2,126,989 | ) | | | ($38,696,447 | ) | | | (2,312,209 | ) | | | ($27,104,899 | ) |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 75,433,700 | | | | $1,141,948,496 | | | | 77,745,909 | | | | $1,075,640,424 | |
| Total increase or decrease | | + | | | (2,126,989 | ) | | | 264,075,277 | | | | (2,312,209 | ) | | | 66,308,072 | |
| | | |
End of period | | | | | 73,306,711 | | | | $1,406,023,773 | | | | 75,433,700 | | | | $1,141,948,496 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $9,010,974 | | | | | | | | $7,671,999 | |
| | | |
1 | | Effective August 21, 2009, all outstanding Investor Shares (31,033,318 shares valued at $477,019,342) combined with Select Shares, resulting in a single class of shares of the fund. |
See financial notes 37
Schwab Total Stock Market Index Fund®
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/091 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 18.50 | | | | 17.08 | | | | 27.04 | | | | 23.90 | | | | 20.83 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.37 | | | | 0.24 | | | | 0.40 | | | | 0.37 | | | | 0.31 | | | |
| Net realized and unrealized gains (losses) | | | 3.02 | | | | 1.55 | | | | (9.93 | ) | | | 3.09 | | | | 3.04 | | | |
| | | |
| Total from investment operations | | | 3.39 | | | | 1.79 | | | | (9.53 | ) | | | 3.46 | | | | 3.35 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.32 | ) | | | (0.37 | ) | | | (0.37 | ) | | | (0.32 | ) | | | (0.28 | ) | | |
| Distributions from net realized gains | | | — | | | | — | | | | (0.06 | ) | | | — | | | | — | | | |
| | | |
| Total distributions | | | (0.32 | ) | | | (0.37 | ) | | | (0.43 | ) | | | (0.32 | ) | | | (0.28 | ) | | |
| | | |
| Net asset value at end of period | | | 21.57 | | | | 18.50 | | | | 17.08 | | | | 27.04 | | | | 23.90 | | | |
| | | |
| Total return (%) | | | 18.53 | | | | 10.92 | | | | (35.76 | ) | | | 14.62 | | | | 16.23 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 0.09 | | | | 0.21 | 2 | | | 0.38 | | | | 0.37 | | | | 0.38 | | | |
| Gross operating expenses | | | 0.11 | | | | 0.28 | | | | 0.38 | | | | 0.37 | | | | 0.38 | | | |
| Net investment income (loss) | | | 1.85 | | | | 2.02 | | | | 1.71 | | | | 1.49 | | | | 1.41 | | | |
| Portfolio turnover rate | | | 3 | | | | 5 | | | | 1 | | | | 0 | 3 | | | 3 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 1,470 | | | | 1,205 | | | | 585 | | | | 906 | | | | 762 | | | |
1 Effective September 18, 2009, the Investor Share class and the Select Share class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Select Shares.
2 Effective May 5, 2009, the net operating expense limitation was lowered. The ratio presented for period ended October 31, 2009 is a blended rate.
3 Less than 1%.
38 See financial notes
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2010
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .0% | | Common Stock | | | 1,225,735,417 | | | | 1,455,937,584 | |
| | 0 | .0% | | Rights | | | — | | | | 46,179 | |
| | 0 | .8% | | Short-Term Investments | | | 11,744,551 | | | | 11,744,551 | |
| |
| |
| | 99 | .8% | | Total Investments | | | 1,237,479,968 | | | | 1,467,728,314 | |
| | 0 | .4% | | Collateral Invested for Securities on Loan | | | 6,043,310 | | | | 6,043,310 | |
| | (0 | .2)% | | Other Assets and Liabilities, Net | | | | | | | (3,379,812 | ) |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 1,470,391,812 | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Common Stock 99.0% of net assets |
| |
Automobiles & Components 0.8%
|
Ford Motor Co. * | | | 375,736 | | | | 0.4 | | | | 5,309,150 | |
| Other Securities | | | | | | | 0.4 | | | | 6,943,206 | |
| | | | | | | | | | | | | |
| | | | | | | | 0.8 | | | | 12,252,356 | |
| |
Banks 3.2%
|
| U.S. Bancorp | | | 210,531 | | | | 0.3 | | | | 5,090,640 | |
| Wells Fargo & Co. | | | 542,906 | | | | 1.0 | | | | 14,158,988 | |
| Other Securities | | | | | | | 1.9 | | | | 27,436,334 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.2 | | | | 46,685,962 | |
| |
Capital Goods 8.0%
|
| 3M Co. | | | 72,000 | | | | 0.4 | | | | 6,063,840 | |
| Caterpillar, Inc. | | | 66,800 | | | | 0.4 | | | | 5,250,480 | |
| General Electric Co. | | | 1,178,766 | | | | 1.3 | | | | 18,883,831 | |
| The Boeing Co. | | | 75,800 | | | | 0.4 | | | | 5,354,512 | |
| United Technologies Corp. | | | 93,068 | | | | 0.5 | | | | 6,958,694 | |
| Other Securities | | | | | | | 5.0 | | | | 75,746,504 | |
| | | | | | | | | | | | | |
| | | | | | | | 8.0 | | | | 118,257,861 | |
| |
Commercial & Professional Supplies 1.0%
|
| Other Securities | | | | | | | 1.0 | | | | 14,398,893 | |
| |
Consumer Durables & Apparel 1.4%
|
| Other Securities | | | | | | | 1.4 | | | | 19,750,925 | |
| |
Consumer Services 2.3%
|
| McDonald’s Corp. | | | 125,709 | | | | 0.7 | | | | 9,776,389 | |
| Other Securities | | | | | | | 1.6 | | | | 23,913,729 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.3 | | | | 33,690,118 | |
| |
Diversified Financials 6.0%
|
| American Express Co. | | | 117,650 | | | | 0.3 | | | | 4,877,769 | |
| Bank of America Corp. | | | 1,087,456 | | | | 0.8 | | | | 12,440,497 | |
Citigroup, Inc. * | | | 2,591,286 | | | | 0.7 | | | | 10,805,663 | |
| JPMorgan Chase & Co. | | | 436,944 | | | | 1.1 | | | | 16,442,203 | |
The Charles Schwab Corp. (b) | | | 111,120 | | | | 0.1 | | | | 1,711,248 | |
| The Goldman Sachs Group, Inc. | | | 47,700 | | | | 0.5 | | | | 7,677,315 | |
| Other Securities | | | | | | | 2.5 | | | | 34,442,461 | |
| | | | | | | | | | | | | |
| | | | | | | | 6.0 | | | | 88,397,156 | |
| |
Energy 10.3%
|
| Chevron Corp. | | | 220,339 | | | | 1.2 | | | | 18,202,205 | |
| ConocoPhillips | | | 152,323 | | | | 0.6 | | | | 9,047,986 | |
| Exxon Mobil Corp. | | | 565,034 | | | | 2.6 | | | | 37,557,810 | |
| Occidental Petroleum Corp. | | | 88,620 | | | | 0.5 | | | | 6,968,191 | |
| Schlumberger Ltd. | | | 150,760 | | | | 0.7 | | | | 10,536,616 | |
| Other Securities | | | | | | | 4.7 | | | | 69,452,539 | |
| | | | | | | | | | | | | |
| | | | | | | | 10.3 | | | | 151,765,347 | |
| |
Food & Staples Retailing 2.1%
|
| Wal-Mart Stores, Inc. | | | 240,600 | | | | 0.9 | | | | 13,033,302 | |
| Other Securities | | | | | | | 1.2 | | | | 17,111,193 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.1 | | | | 30,144,495 | |
| |
Food, Beverage & Tobacco 5.3%
|
| Altria Group, Inc. | | | 228,800 | | | | 0.4 | | | | 5,816,096 | |
| Kraft Foods, Inc., Class A | | | 172,513 | | | | 0.4 | | | | 5,566,995 | |
| PepsiCo, Inc. | | | 174,858 | | | | 0.8 | | | | 11,418,227 | |
| Philip Morris International, Inc. | | | 208,800 | | | | 0.8 | | | | 12,214,800 | |
| The Coca-Cola Co. | | | 231,200 | | | | 1.0 | | | | 14,177,184 | |
| Other Securities | | | | | | | 1.9 | | | | 27,948,336 | |
| | | | | | | | | | | | | |
| | | | | | | | 5.3 | | | | 77,141,638 | |
| |
Health Care Equipment & Services 4.3%
|
| Other Securities | | | | | | | 4.3 | | | | 62,686,517 | |
| |
Household & Personal Products 2.2%
|
| The Procter & Gamble Co. | | | 316,215 | | | | 1.4 | | | | 20,101,788 | |
| Other Securities | | | | | | | 0.8 | | | | 12,755,469 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.2 | | | | 32,857,257 | |
| |
Insurance 4.0%
|
Berkshire Hathaway, Inc., Class B * | | | 214,774 | | | | 1.2 | | | | 17,087,419 | |
| Other Securities | | | | | | | 2.8 | | | | 42,100,154 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.0 | | | | 59,187,573 | |
See financial notes 39
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Materials 4.1%
|
| Freeport-McMoRan Copper & Gold, Inc. | | | 51,622 | | | | 0.3 | | | | 4,887,571 | |
| Other Securities | | | | | | | 3.8 | | | | 55,682,079 | |
| | | | | | | | | | | | | |
| | | | | | | | 4.1 | | | | 60,569,650 | |
| |
Media 3.1%
|
| The Walt Disney Co. | | | 197,893 | | | | 0.5 | | | | 7,145,916 | |
| Other Securities | | | | | | | 2.6 | | | | 37,717,855 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.1 | | | | 44,863,771 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 7.2%
|
| Abbott Laboratories | | | 166,905 | | | | 0.6 | | | | 8,565,565 | |
Amgen, Inc. * | | | 109,268 | | | | 0.4 | | | | 6,249,037 | |
| Bristol-Myers Squibb Co. | | | 209,450 | | | | 0.4 | | | | 5,634,205 | |
| Johnson & Johnson | | | 306,670 | | | | 1.3 | | | | 19,525,679 | |
| Merck & Co., Inc. | | | 340,970 | | | | 0.8 | | | | 12,370,392 | |
| Pfizer, Inc. | | | 883,801 | | | | 1.0 | | | | 15,378,137 | |
| Other Securities | | | | | | | 2.7 | | | | 38,695,914 | |
| | | | | | | | | | | | | |
| | | | | | | | 7.2 | | | | 106,418,929 | |
| |
Real Estate 2.7%
|
| Other Securities | | | | | | | 2.7 | | | | 40,265,841 | |
| |
Retailing 3.7%
|
Amazon.com, Inc. * | | | 38,200 | | | | 0.4 | | | | 6,308,348 | |
| The Home Depot, Inc. | | | 182,070 | | | | 0.4 | | | | 5,622,322 | |
| Other Securities | | | | | | | 2.9 | | | | 42,621,172 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.7 | | | | 54,551,842 | |
| |
Semiconductors & Semiconductor Equipment 2.8%
|
| Intel Corp. | | | 614,332 | | | | 0.8 | | | | 12,329,643 | |
| Other Securities | | | | | | | 2.0 | | | | 28,126,516 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.8 | | | | 40,456,159 | |
| |
Software & Services 9.0%
|
Google, Inc., Class A * | | | 26,150 | | | | 1.1 | | | | 16,029,688 | |
| International Business Machines Corp. | | | 142,510 | | | | 1.4 | | | | 20,464,436 | |
| Microsoft Corp. | | | 865,850 | | | | 1.6 | | | | 23,066,244 | |
| Oracle Corp. | | | 425,449 | | | | 0.9 | | | | 12,508,201 | |
| Other Securities | | | | | | | 4.0 | | | | 60,689,763 | |
| | | | | | | | | | | | | |
| | | | | | | | 9.0 | | | | 132,758,332 | |
| |
Technology Hardware & Equipment 7.1%
|
Apple, Inc. * | | | 102,000 | | | | 2.1 | | | | 30,688,740 | |
Cisco Systems, Inc. * | | | 635,409 | | | | 1.0 | | | | 14,506,387 | |
| Hewlett-Packard Co. | | | 257,636 | | | | 0.7 | | | | 10,836,170 | |
| QUALCOMM, Inc. | | | 182,600 | | | | 0.6 | | | | 8,240,738 | |
| Other Securities | | | | | | | 2.7 | | | | 40,680,223 | |
| | | | | | | | | | | | | |
| | | | | | | | 7.1 | | | | 104,952,258 | |
| |
Telecommunication Services 2.8%
|
| AT&T, Inc. | | | 654,556 | | | | 1.3 | | | | 18,654,846 | |
| Verizon Communications, Inc. | | | 314,072 | | | | 0.7 | | | | 10,197,918 | |
| Other Securities | | | | | | | 0.8 | | | | 12,769,870 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.8 | | | | 41,622,634 | |
| |
Transportation 2.0%
|
| United Parcel Service, Inc., Class B | | | 82,380 | | | | 0.4 | | | | 5,547,469 | |
| Other Securities | | | | | | | 1.6 | | | | 23,882,171 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.0 | | | | 29,429,640 | |
| |
Utilities 3.6%
|
| Other Securities | | | | | | | 3.6 | | | | 52,832,430 | |
| | | | | | | | | | | | | |
| Total Common Stock |
| (Cost $1,225,735,417) | | | 1,455,937,584 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Rights 0.0% of net assets |
| |
Banks 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 46,179 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | — | |
| | | | | | | | | | | | | |
| Total Rights |
| (Cost $—) | | | 46,179 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Face
| | | | |
Security
| | Amount
| | % of Net
| | Value
|
| Rate, Maturity Date | | ($) | | Assets | | ($) |
| |
Short-Term Investments 0.8% of net assets |
| |
Time Deposit 0.7%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 10,421,774 | | | | 0.7 | | | | 10,421,774 | |
| |
U.S. Treasury Obligation 0.1%
|
| Other Securities | | | | | | | 0.1 | | | | 1,322,777 | |
| | | | | | | | | | | | | |
| Total Short-Term Investments |
| (Cost $11,744,551) | | | 11,744,551 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Collateral Invested for Securities on Loan 0.4% of net assets |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Invesco Short Term Investments Trust Government & Agency Portfolio | | | 6,043,310 | | | | 0.4 | | | | 6,043,310 | |
| | | | | | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $6,043,310) | | | 6,043,310 | |
| | | | | |
| |
|
End of collateral invested for securities on loan. |
At 10/31/10 the tax basis cost of the fund’s investments was $1,244,457,327 and the unrealized appreciation and depreciation were $412,059,292 and ($188,788,305), respectively, with a net unrealized appreciation of $223,270,987.
40 See financial notes
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
For the following notes, please refer to complete schedule of holdings.
| | |
| * | | Non-income producing security. |
| (a) | | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (b) | | Issuer is affiliated with the fund’s adviser. |
| (c) | | Illiquid security. At the period end, the value of these amounted to $49,479 or 0.0% of net assets. |
| (d) | | All or a portion of this security is on loan. |
| (e) | | All or a portion of this security is held as collateral for open futures contracts. |
| | | |
| REIT — | | Real Estate Investment Trust. |
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contracts |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Russell 2000 Index, mini, Long, expires 12/17/10 | | | 85 | | | | 5,968,700 | | | | 593,959 | |
S&P 500 Index, e-mini, Long, expires 12/17/10 | | | 85 | | | | 5,013,725 | | | | 362,334 | |
| | | | | | | | | | | | | |
Net unrealized gains | | | 956,293 | |
| | | | | |
See financial notes 41
Schwab Total Stock Market Index Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value including securities on loan of $5,999,780 (cost $1,237,479,968) | | | | | $1,467,728,314 | |
| Cash | | | | | 42 | |
| Collateral invested for securities on loan | | | | | 6,043,310 | |
| Receivables: | | | | | | |
| Investments sold | | | | | 11,588 | |
| Fund shares sold | | | | | 1,822,873 | |
| Dividends | | | | | 1,491,154 | |
| Due from broker for futures | | | | | 40,800 | |
| Income from securities on loan | | | | | 19,035 | |
| Foreign tax reclaims | | | | | 2,278 | |
| Interest | | | | | 26 | |
| Prepaid expenses | | + | | | 38,208 | |
| | | |
Total assets | | | | | 1,477,197,628 | |
| |
Liabilities |
|
| Collateral held for securities on loan | | | | | 6,043,310 | |
| Payables: | | | | | | |
| Investment adviser and administrator fees | | | | | 4,669 | |
| Shareholder service fees | | | | | 2,675 | |
| Fund shares redeemed | | | | | 678,079 | |
| Accrued expenses | | + | | | 77,083 | |
| | | |
Total liabilities | | | | | 6,805,816 | |
| |
Net Assets |
|
Total assets | | | | | 1,477,197,628 | |
Total liabilities | | − | | | 6,805,816 | |
| | | |
Net assets | | | | | $1,470,391,812 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 1,252,919,906 | |
| Net investment income not yet distributed | | | | | 21,644,849 | |
| Net realized capital losses | | | | | (35,377,582 | ) |
| Net unrealized capital gains | | | | | 231,204,639 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $1,470,391,812 | | | | 68,156,510 | | | | | $21.57 | | | |
42 See financial notes
Schwab Total Stock Market Index Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends (including $26,669 from affiliated issuer and net of foreign withholding taxes of $4,877) | | | | | $25,804,169 | |
| Interest | | | | | 5,072 | |
| Securities on loan | | + | | | 273,860 | |
| | | |
Total investment income | | | | | 26,083,101 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 806,668 | |
| Shareholder service fees | | | | | 263,909 | |
| Portfolio accounting fees | | | | | 90,733 | |
| Shareholder reports | | | | | 72,064 | |
| Registration fees | | | | | 56,199 | |
| Transfer agent fees | | | | | 53,767 | |
| Professional fees | | | | | 44,787 | |
| Custodian fees | | | | | 34,941 | |
| Trustees’ fees | | | | | 14,457 | |
| Interest expense | | | | | 217 | |
| Other expenses | | + | | | 49,325 | |
| | | |
| Total expenses | | | | | 1,487,067 | |
| Expense reduction by adviser and Schwab | | − | | | 247,413 | |
| | | |
Net expenses | | − | | | 1,239,654 | |
| | | |
Net investment income | | | | | 24,843,447 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized losses on investments | | | | | (5,016,460 | ) |
| Net realized losses on futures contracts | | | | | (243,038 | ) |
| Net realized losses on foreign currency transactions | | + | | | (371 | ) |
| | | |
Net realized losses | | | | | (5,259,869 | ) |
| Net unrealized gains on investments | | | | | 204,418,937 | |
| Net unrealized losses on affiliated issuer | | | | | (215,573 | ) |
| Net unrealized gains on futures contracts | | + | | | 956,293 | |
| | | |
Net unrealized gains | | + | | | 205,159,657 | |
| | | |
Net realized and unrealized gains | | | | | 199,899,788 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $224,743,235 | |
See financial notes 43
Schwab Total Stock Market Index Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $24,843,447 | | | | $21,146,044 | |
| Net realized losses | | | | | (5,259,869 | ) | | | (5,863,780 | ) |
| Net unrealized gains | | + | | | 205,159,657 | | | | 99,806,504 | |
| | | |
Increase in net assets from operations | | | | | 224,743,235 | | | | 115,088,768 | |
| |
Distributions to Shareholders1 |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | — | | | | 8,379,797 | |
| Select Shares | | + | | | 20,970,578 | | | | 12,960,844 | |
| | | |
Total distributions from net investment income | | | | | $20,970,578 | | | | $21,340,641 | |
Transactions in Fund Shares1
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 7,798,695 | | | | $123,898,670 | |
| Select Shares | | + | | | 15,037,117 | | | | 303,313,169 | | | | 43,580,280 | | | | 785,904,966 | |
| | | |
Total shares sold | | | | | 15,037,117 | | | | $303,313,169 | | | | 51,378,975 | | | | $909,803,636 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 501,832 | | | | $7,748,279 | |
| Select Shares | | + | | | 918,372 | | | | 17,825,608 | | | | 699,255 | | | | 10,803,496 | |
| | | |
Total shares reinvested | | | | | 918,372 | | | | $17,825,608 | | | | 1,201,087 | | | | $18,551,775 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | (33,086,646 | ) | | | ($612,706,960 | ) |
| Select Shares | | + | | | (12,936,100 | ) | | | (259,233,074 | ) | | | (13,394,544 | ) | | | (211,806,564 | ) |
| | | |
Total shares redeemed | | | | | (12,936,100 | ) | | | ($259,233,074 | ) | | | (46,481,190 | ) | | | ($824,513,524 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | 3,019,389 | | | | $61,905,703 | | | | 6,098,872 | | | | $103,841,887 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 65,137,121 | | | | $1,204,713,452 | | | | 59,038,249 | | | | $1,007,123,438 | |
| Total increase | | + | | | 3,019,389 | | | | 265,678,360 | | | | 6,098,872 | | | | 197,590,014 | |
| | | |
End of period | | | | | 68,156,510 | | | | $1,470,391,812 | | | | 65,137,121 | | | | $1,204,713,452 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $21,644,849 | | | | | | | | $16,372,202 | |
| | | |
1 | | Effective September 18, 2009, all outstanding Investor Shares (27,820,506 shares valued at $531,997,632) combined with Select Shares, resulting in a single class of shares of the fund. |
44 See financial notes
Schwab International Index Fund®
Financial Statements
Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| | | 11/1/09–
| | 11/1/08–
| | 11/1/07–
| | 11/1/06–
| | 11/1/05–
| | |
| | | 10/31/10 | | 10/31/091 | | 10/31/08 | | 10/31/07 | | 10/31/06 | | |
| |
| |
Per-Share Data ($) |
|
| Net asset value at beginning of period | | | 16.26 | | | | 13.95 | | | | 25.95 | | | | 21.14 | | | | 17.09 | | | |
| | | |
| Income (loss) from investment operations: | | | | | | | | | | | | | | | | | | | | | | |
| Net investment income (loss) | | | 0.48 | | | | 0.37 | | | | 0.68 | | | | 0.54 | | | | 0.50 | | | |
| Net realized and unrealized gains (losses) | | | 1.01 | | | | 2.58 | | | | (12.13 | ) | | | 4.93 | | | | 3.93 | | | |
| | | |
| Total from investment operations | | | 1.49 | | | | 2.95 | | | | (11.45 | ) | | | 5.47 | | | | 4.43 | | | |
| Less distributions: | | | | | | | | | | | | | | | | | | | | | | |
| Distributions from net investment income | | | (0.44 | ) | | | (0.64 | ) | | | (0.55 | ) | | | (0.66 | ) | | | (0.38 | ) | | |
| | | |
| Net asset value at end of period | | | 17.31 | | | | 16.26 | | | | 13.95 | | | | 25.95 | | | | 21.14 | | | |
| | | |
| Total return (%) | | | 9.31 | | | | 22.55 | | | | (45.02 | ) | | | 26.50 | | | | 26.35 | | | |
| |
Ratios/Supplemental Data (%) |
|
| Ratios to average net assets: | | | | | | | | | | | | | | | | | | | | | | |
| Net operating expenses | | | 0.19 | | | | 0.32 | 2 | | | 0.50 | | | | 0.50 | | | | 0.50 | | | |
| Gross operating expenses | | | 0.22 | | | | 0.41 | | | | 0.54 | | | | 0.54 | | | | 0.55 | | | |
| Net investment income (loss) | | | 2.88 | | | | 2.92 | | | | 3.15 | | | | 2.34 | | | | 2.60 | | | |
| Portfolio turnover rate | | | 13 | | | | 21 | | | | 10 | | | | 5 | | | | 11 | | | |
| Net assets, end of period ($ x 1,000,000) | | | 1,471 | | | | 1,369 | | | | 711 | | | | 1,264 | | | | 954 | | | |
1 Effective August 21, 2009, the Investor Share class and the Select Share class were combined into a single class of shares of the fund. The financial history as shown in the financial highlights is that of the former Select Shares.
2 Effective May 5, 2009, the net operating expense limitation was lowered. The ratio presented for period ended 10/31/09 is a blended rate.
See financial notes 45
Schwab International Index Fund
Portfolio Holdings as of October 31, 2010
This section shows the fund’s 50 largest portfolio holdings in unaffiliated issuers and any holdings exceeding 1% of the fund’s total net assets as of the report date. The remaining securities held by the fund are grouped as “Other Securities” in each category. You can request a complete schedule of portfolio holdings as of the report date, free of charge, by calling Schwab Funds® at 1-800-435-4000. This complete schedule, filed on the fund’s Form N-CSR, is also available on the SEC’s website at http://www.sec.gov.
In addition, the fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. A copy of the fund’s most recently filed quarterly schedule of portfolio holdings, included on the fund’s Form N-CSR (with respect to the fund’s second and fourth fiscal quarters) or Form N-Q (with respect to the fund’s first and third fiscal quarters), is available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .1% | | Common Stock | | | 1,065,367,784 | | | | 1,457,582,563 | |
| | 0 | .2% | | Preferred Stock | | | 2,548,296 | | | | 3,013,548 | |
| | 0 | .0% | | Rights | | | 217,571 | | | | 494,689 | |
| | 0 | .0% | | Warrants | | | 13,912 | | | | 1,023 | |
| | 0 | .4% | | Other Investment Company | | | 5,742,130 | | | | 5,701,000 | |
| |
| |
| | 99 | .7% | | Total Investments | | | 1,073,889,693 | | | | 1,466,792,823 | |
| | 0 | .5% | | Collateral Invested for Securities on Loan | | | 8,024,266 | | | | 8,024,266 | |
| | (0 | .2)% | | Other Assets and Liabilities, Net | | | | | | | (4,162,140 | ) |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 1,470,654,949 | |
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Common Stock 99.1% of net assets |
| |
Australia 7.3%
|
| Australia & New Zealand Banking Group Ltd. | | | 405,912 | | | | 0.7 | | | | 9,902,927 | |
| BHP Billiton Ltd. | | | 529,706 | | | | 1.5 | | | | 21,888,121 | |
| Commonwealth Bank of Australia | | | 244,428 | | | | 0.8 | | | | 11,750,448 | |
| National Australia Bank Ltd. | | | 338,583 | | | | 0.6 | | | | 8,474,182 | |
| Westpac Banking Corp. | | | 476,406 | | | | 0.7 | | | | 10,608,112 | |
| Other Securities | | | | | | | 3.0 | | | | 44,716,734 | |
| | | | | | | | | | | | | |
| | | | | | | | 7.3 | | | | 107,340,524 | |
| |
Austria 0.2%
|
| Other Securities | | | | | | | 0.2 | | | | 3,024,574 | |
| |
Belgium 0.7%
|
| Other Securities | | | | | | | 0.7 | | | | 10,948,340 | |
| |
Canada 9.4%
|
| Bank of Nova Scotia | | | 164,804 | | | | 0.6 | | | | 8,834,037 | |
| Royal Bank of Canada | | | 224,668 | | | | 0.8 | | | | 11,981,265 | |
| Suncor Energy, Inc. | | | 248,999 | | | | 0.5 | | | | 7,978,515 | |
| The Toronto-Dominion Bank | | | 138,132 | | | | 0.7 | | | | 9,947,834 | |
| Other Securities | | | | | | | 6.8 | | | | 99,027,553 | |
| | | | | | | | | | | | | |
| | | | | | | | 9.4 | | | | 137,769,204 | |
| |
China 0.2%
|
| Other Securities | | | | | | | 0.2 | | | | 2,410,911 | |
| |
Denmark 0.8%
|
| Other Securities | | | | | | | 0.8 | | | | 11,902,738 | |
| |
Finland 0.8%
|
| Other Securities | | | | | | | 0.8 | | | | 12,154,538 | |
| |
France 10.4%
|
| BNP Paribas | | | 168,686 | | | | 0.8 | | | | 12,338,614 | |
| GDF Suez | | | 192,011 | | | | 0.5 | | | | 7,672,172 | |
| Sanofi-Aventis | | | 172,031 | | | | 0.8 | | | | 12,052,762 | |
| Total S.A. | | | 370,663 | | | | 1.4 | | | | 20,176,637 | |
| Other Securities | | | | | | | 6.9 | | | | 100,859,881 | |
| | | | | | | | | | | | | |
| | | | | | | | 10.4 | | | | 153,100,066 | |
| |
Germany 8.3%
|
| Allianz SE - Reg’d | | | 72,345 | | | | 0.6 | | | | 9,059,553 | |
| BASF SE | | | 145,851 | | | | 0.7 | | | | 10,605,034 | |
| Bayer AG | | | 131,729 | | | | 0.7 | | | | 9,825,268 | |
Daimler AG - Reg’d * | | | 141,411 | | | | 0.6 | | | | 9,312,478 | |
| Deutsche Bank AG - Reg’d | | | 147,521 | | | | 0.6 | | | | 8,498,033 | |
| E.ON AG | | | 303,065 | | | | 0.6 | | | | 9,486,020 | |
| Siemens AG - Reg’d | | | 128,695 | | | | 1.0 | | | | 14,686,001 | |
| Other Securities | | | | | | | 3.5 | | | | 50,031,295 | |
| | | | | | | | | | | | | |
| | | | | | | | 8.3 | | | | 121,503,682 | |
| |
Hong Kong 2.5%
|
| Other Securities | | | | | | | 2.5 | | | | 37,280,620 | |
| |
Ireland 0.3%
|
| Other Securities | | | | | | | 0.3 | | | | 4,269,368 | |
| |
Israel 0.6%
|
| Other Securities | | | | | | | 0.6 | | | | 8,660,127 | |
| |
Italy 3.0%
|
| Eni S.p.A. | | | 443,295 | | | | 0.7 | | | | 9,981,821 | |
| UniCredit S.p.A. | | | 3,071,213 | | | | 0.5 | | | | 8,006,802 | |
| Other Securities | | | | | | | 1.8 | | | | 26,433,385 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.0 | | | | 44,422,008 | |
| |
Japan 14.6%
|
| Canon, Inc. | | | 174,295 | | | | 0.5 | | | | 8,023,370 | |
| Honda Motor Co., Ltd. | | | 247,439 | | | | 0.6 | | | | 8,919,875 | |
| Mitsubishi UFJ Financial Group, Inc. | | | 2,230,009 | | | | 0.7 | | | | 10,349,475 | |
| Toyota Motor Corp. | | | 420,303 | | | | 1.0 | | | | 14,887,243 | |
| Other Securities | | | | | | | 11.8 | | | | 172,129,334 | |
| | | | | | | | | | | | | |
| | | | | | | | 14.6 | | | | 214,309,297 | |
46 See financial notes
Schwab International Index Fund
Portfolio Holdings continued
| | | | | | | | | | | | | |
| | | Number
| | % of Net
| | Value
|
| Security | | of Shares | | Assets | | ($) |
| |
Netherlands 2.4%
|
| Unilever N.V. | | | 270,644 | | | | 0.5 | | | | 8,037,327 | |
| Other Securities | | | | | | | 1.9 | | | | 27,050,232 | |
| | | | | | | | | | | | | |
| | | | | | | | 2.4 | | | | 35,087,559 | |
| |
Norway 0.7%
|
| Other Securities | | | | | | | 0.7 | | | | 10,498,463 | |
| |
Portugal 0.3%
|
| Other Securities | | | | | | | 0.3 | | | | 4,426,190 | |
| |
Singapore 1.3%
|
| Other Securities | | | | | | | 1.3 | | | | 18,431,249 | |
| |
Spain 3.9%
|
| Banco Bilbao Vizcaya Argentaria S.A. | | | 591,559 | | | | 0.5 | | | | 7,793,448 | |
| Banco Santander S.A. | | | 1,299,125 | | | | 1.1 | | | | 16,674,953 | |
| Telefonica S.A. | | | 631,033 | | | | 1.2 | | | | 17,052,086 | |
| Other Securities | | | | | | | 1.1 | | | | 16,077,570 | |
| | | | | | | | | | | | | |
| | | | | | | | 3.9 | | | | 57,598,057 | |
| |
Sweden 2.2%
|
| Other Securities | | | | | | | 2.2 | | | | 33,018,073 | |
| |
Switzerland 8.2%
|
ABB Ltd. - Reg’d * | | | 370,075 | | | | 0.5 | | | | 7,665,624 | |
| Nestle S.A. - Reg’d | | | 546,897 | | | | 2.0 | | | | 29,955,988 | |
| Novartis AG - Reg’d | | | 416,308 | | | | 1.6 | | | | 24,122,007 | |
| Roche Holding AG | | | 110,889 | | | | 1.1 | | | | 16,284,513 | |
UBS AG - Reg’d * | | | 604,632 | | | | 0.7 | | | | 10,271,203 | |
| Other Securities | | | | | | | 2.3 | | | | 32,361,136 | |
| | | | | | | | | | | | | |
| | | | | | | | 8.2 | | | | 120,660,471 | |
| |
United Kingdom 20.9%
|
| Anglo American plc | | | 209,439 | | | | 0.7 | | | | 9,758,384 | |
| AstraZeneca plc | | | 226,301 | | | | 0.8 | | | | 11,383,365 | |
| Barclays plc | | | 1,910,729 | | | | 0.6 | | | | 8,396,586 | |
| BG Group plc | | | 533,772 | | | | 0.7 | | | | 10,390,478 | |
| BHP Billiton plc | | | 351,291 | | | | 0.8 | | | | 12,444,477 | |
| BP plc | | | 2,965,852 | | | | 1.4 | | | | 20,159,399 | |
| British American Tobacco plc | | | 315,160 | | | | 0.8 | | | | 12,006,427 | |
| GlaxoSmithKline plc | | | 819,583 | | | | 1.1 | | | | 16,004,434 | |
| HSBC Holdings plc | | | 2,777,237 | | | | 2.0 | | | | 28,904,486 | |
| Rio Tinto plc | | | 240,850 | | | | 1.1 | | | | 15,643,271 | |
| Royal Dutch Shell plc, B Share | | | 425,492 | | | | 0.9 | | | | 13,616,435 | |
| Royal Dutch Shell plc, Class A | | | 588,320 | | | | 1.3 | | | | 19,083,375 | |
| Standard Chartered plc | | | 265,572 | | | | 0.5 | | | | 7,681,634 | |
| Tesco plc | | | 1,274,021 | | | | 0.6 | | | | 8,718,918 | |
| Vodafone Group plc | | | 8,325,405 | | | | 1.5 | | | | 22,758,350 | |
| Other Securities | | | | | | | 6.1 | | | | 90,734,414 | |
| | | | | | | | | | | | | |
| | | | | | | | 20.9 | | | | 307,684,433 | |
| |
United States 0.1%
|
| Other Securities | | | | | | | 0.1 | | | | 1,082,071 | |
| | | | | | | | | | | | | |
| Total Common Stock |
| (Cost $1,065,367,784) | | | 1,457,582,563 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Preferred Stock 0.2% of net assets |
| |
Germany 0.2%
|
| Other Securities | | | | | | | 0.2 | | | | 3,013,548 | |
| | | | | | | | | | | | | |
| Total Preferred Stock |
| (Cost $2,548,296) | | | 3,013,548 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Rights 0.0% of net assets |
| |
Spain 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 215,167 | |
| |
United Kingdom 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 279,522 | |
| | | | | | | | | | | | | |
| Total Rights |
| (Cost $217,571) | | | 494,689 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Warrants 0.0% of net assets |
| |
Italy 0.0%
|
| Other Securities | | | | | | | 0.0 | | | | 1,023 | |
| | | | | | | | | | | | | |
| Total Warrants |
| (Cost $13,912) | | | 1,023 | |
| | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Other Investment Company 0.4% of net assets |
| |
United States 0.4%
|
| Other Securities | | | | | | | 0.4 | | | | 5,701,000 | |
| | | | | | | | | | | | | |
| Total Other Investment Company |
| (Cost $5,742,130) | | | 5,701,000 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| |
Collateral Invested for Securities on Loan 0.5% of net assets |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Invesco Short Term Investments Trust Government & Agency Portfolio | | | 8,024,266 | | | | 0.5 | | | | 8,024,266 | |
| | | | | | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $8,024,266) | | | 8,024,266 | |
| | | | | |
| |
|
End of collateral invested for securities on loan. |
See financial notes 47
Schwab International Index Fund
Portfolio Holdings continued
At 10/31/10, the tax basis cost of the fund’s investments was $1,092,266,341 and the unrealized appreciation and depreciation were $494,433,465 and ($119,906,983), respectively, with a net unrealized appreciation of $374,526,482.
At 10/31/10, the values of certain foreign securities held by the fund aggregating $1,319,881,718 were adjusted from their closing market values in accordance with procedures approved by the Board of Trustees.
For the following notes, please refer to complete schedule of holdings.
| | |
| * | | Non-income producing security. |
| (a) | | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (b) | | All or a portion of this security is on loan. |
| (c) | | Illiquid security. At the period end, the value of these amounted to $71,780 or 0.0% of net assets. |
| | | |
| CVA — | | Dutch Certificate. |
| Reg’d — | | Registered |
48 See financial notes
Schwab International Index Fund
Statement of
Assets and Liabilities
As of October 31, 2010.
| | | | | | | |
| |
Assets |
|
| Investments, at value including securities on loan of $7,755,326 (cost $1,073,889,693) | | | | | $1,466,792,823 | |
| Foreign currency, at value (cost $90,001) | | | | | 90,078 | |
| Collateral invested for securities on loan | | | | | 8,024,266 | |
| Receivables: | | | | | | |
| Investments sold | | | | | 1,425,700 | |
| Dividends | | | | | 3,214,065 | |
| Fund shares sold | | | | | 970,200 | |
| Foreign tax reclaims | | | | | 778,762 | |
| Income from securities on loan | | | | | 28,544 | |
| Prepaid expenses | | + | | | 38,877 | |
| | | |
Total assets | | | | | 1,481,363,315 | |
| |
Liabilities |
|
| Collateral held for securities on loan | | | | | 8,024,266 | |
| Payables: | | | | | | |
| Investments bought | | | | | 244,128 | |
| Investment adviser and administrator fees | | | | | 17,582 | |
| Shareholder service fees | | | | | 3,026 | |
| Fund shares redeemed | | | | | 1,379,018 | |
| Due to custodian | | | | | 941,986 | |
| Accrued expenses | | + | | | 98,360 | |
| | | |
Total liabilities | | | | | 10,708,366 | |
| |
Net Assets |
|
Total assets | | | | | 1,481,363,315 | |
Total liabilities | | − | | | 10,708,366 | |
| | | |
Net assets | | | | | $1,470,654,949 | |
| |
Net Assets by Source |
| Capital received from investors | | | | | 1,175,929,025 | |
| Net investment income not yet distributed | | | | | 26,168,756 | |
| Net realized capital losses | | | | | (124,508,861 | ) |
| Net unrealized capital gains | | | | | 393,066,029 | |
| |
Net Asset Value (NAV) |
| | | | | | | | | | | | | |
| | | | | Shares
| | | | | | | |
| Net Assets | | ÷ | | Outstanding | | = | | NAV | | | |
| $1,470,654,949 | | | | 84,975,684 | | | | | $17.31 | | | |
See financial notes 49
Schwab International Index Fund
Statement of
Operations
For November 1, 2009 through October 31, 2010.
| | | | | | | |
| |
Investment Income |
|
| Dividends (net of foreign withholding taxes of $3,964,257) | | | | | $41,575,712 | |
| Interest | | | | | 557 | |
| Securities on loan | | + | | | 1,481,877 | |
| | | |
Total investment income | | | | | 43,058,146 | |
| |
Expenses |
|
| Investment adviser and administrator fees | | | | | 2,099,198 | |
| Shareholder service fees | | | | | 275,102 | |
| Custodian fees | | | | | 239,483 | |
| Portfolio accounting fees | | | | | 92,942 | |
| Shareholder reports | | | | | 90,404 | |
| Transfer agent fees | | | | | 61,950 | |
| Professional fees | | | | | 49,098 | |
| Registration fees | | | | | 47,376 | |
| Trustees’ fees | | | | | 15,082 | |
| Interest expense | | | | | 3,595 | |
| Other expenses | | + | | | 61,879 | |
| | | |
| Total expenses | | | | | 3,036,109 | |
| Expense reduction by adviser and Schwab | | − | | | 337,509 | |
| | | |
Net expenses | | − | | | 2,698,600 | |
| | | |
Net investment income | | | | | 40,359,546 | |
| |
Realized and Unrealized Gains (Losses) |
|
| Net realized gains on investments | | | | | 9,269,139 | |
| Net realized gains on foreign currency transactions | | + | | | 135,102 | |
| | | |
Net realized gains | | | | | 9,404,241 | |
| Net unrealized gains on investments | | | | | 76,495,093 | |
| Net unrealized gains on foreign currency translations | | + | | | 99,177 | |
| | | |
Net unrealized gains | | + | | | 76,594,270 | |
| | | |
Net realized and unrealized gains | | | | | 85,998,511 | |
| | | | | | | |
Increase in net assets resulting from operations | | | | | $126,358,057 | |
50 See financial notes
Schwab International Index Fund
Statements of
Changes in Net Assets
For the current and prior report periods.
| | | | | | | | | | | |
| 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| Net investment income | | | | | $40,359,546 | | | | $35,059,161 | |
| Net realized gains (losses) | | | | | 9,404,241 | | | | (62,578,606 | ) |
| Net unrealized gains | | + | | | 76,594,270 | | | | 263,334,610 | |
| | | |
Increase in net assets from operations | | | | | 126,358,057 | | | | 235,815,165 | |
| |
Distributions to Shareholders1 |
|
Distributions from net investment income | | | | | | | | | | |
| Investor Shares | | | | | — | | | | 19,181,179 | |
| Select Shares | | + | | | 37,166,734 | | | | 33,019,436 | |
| | | |
Total distributions from net investment income | | | | | $37,166,734 | | | | $52,200,615 | |
Transactions in Fund Shares1
| | | | | | | | | | | | | | | | | | | |
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | VALUE | | | | SHARES | | | | VALUE | |
Shares Sold | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 5,593,998 | | | | $72,342,528 | |
| Select Shares | | + | | | 15,761,167 | | | | 253,347,349 | | | | 46,147,346 | | | | 706,130,082 | |
| | | |
Total shares sold | | | | | 15,761,167 | | | | $253,347,349 | | | | 51,741,344 | | | | $778,472,610 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Reinvested | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | 1,389,788 | | | | $17,441,840 | |
| Select Shares | | + | | | 2,026,607 | | | | 33,378,223 | | | | 2,393,622 | | | | 29,992,081 | |
| | | |
Total shares reinvested | | | | | 2,026,607 | | | | $33,378,223 | | | | 3,783,410 | | | | $47,433,921 | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
Shares Redeemed | | | | | | | | | | | | | | | | | | |
| Investor Shares | | | | | — | | | | $— | | | | (40,614,126 | ) | | | ($615,349,326 | ) |
| Select Shares | | + | | | (17,048,579 | ) | | | (274,591,340 | ) | | | (15,257,355 | ) | | | (204,274,518 | ) |
| | | |
Total shares redeemed | | | | | (17,048,579 | ) | | | ($274,591,340 | ) | | | (55,871,481 | ) | | | ($819,623,844 | ) |
| | | | | | | | | | | | | | | | | | | |
Net transactions in fund shares | | | | | 739,195 | | | | $12,134,232 | | | | (346,727 | ) | | | $6,282,687 | |
| |
Shares Outstanding and Net Assets |
|
| | | | | 11/1/09-10/31/10 | | | 11/1/08-10/31/09 | |
| | | | | | SHARES | | | | NET ASSETS | | | | SHARES | | | | NET ASSETS | |
| Beginning of period | | | | | 84,236,489 | | | | $1,369,329,394 | | | | 84,583,216 | | | | $1,179,432,157 | |
| Total increase or decrease | | + | | | 739,195 | | | | 101,325,555 | | | | (346,727 | ) | | | 189,897,237 | |
| | | |
End of period | | | | | 84,975,684 | | | | $1,470,654,949 | | | | 84,236,489 | | | | $1,369,329,394 | |
| | | |
| | | | | | | | | | | | | | | | | | | |
Net investment income not yet distributed | | | | | | | | | $26,168,756 | | | | | | | | $21,869,603 | |
| | | |
1 | | Effective August 21, 2009, all outstanding Investor Shares (32,128,613 shares valued at $510,896,349) combined with Select Shares, resulting in a single class of shares of the fund. |
See financial notes 51
Schwab Equity Index Funds
Financial Notes
1. Business Structure of the Funds:
Each of the funds discussed in this report is a series of Schwab Capital Trust, except Schwab 1000 Index Fund, which is a series of Schwab Investments. Both Schwab Capital Trust and Schwab Investments (the “trusts”), are no-load, open-end management investment companies. Each trust is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”). The list below shows all the funds in the trusts including the funds discussed in this report, which are highlighted:
| | | | | |
| |
Schwab Capital Trust (organized May 7, 1993)
Schwab S&P 500 Index Fund
Schwab Small-Cap Index Fund
Schwab Total Stock Market Index Fund
Schwab International Index Fund
Schwab MarketTrack All Equity Portfolio
Schwab MarketTrack Growth Portfolio
Schwab MarketTrack Balanced Portfolio
Schwab MarketTrack Conservative Portfolio
Laudus Small-Cap MarketMasters Fund
Laudus International MarketMasters Fund
Schwab Balanced Fund
Schwab Premier Equity Fund
Schwab Core Equity Fund
Schwab Dividend Equity Fund
Schwab Large-Cap Growth Fund
Schwab Small-Cap Equity Fund
Schwab Hedged Equity Fund
Schwab Financial Services Fund
Schwab Health Care Fund
Schwab International Core Equity Fund
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund | | Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab Fundamental US Large Company Index Fund
Schwab Fundamental US Small-Mid Company Index Fund
Schwab Fundamental International Large Company Index Fund
Schwab Fundamental International Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets Index Fund
Schwab Monthly Income Fund—Moderate Payout
Schwab Monthly Income Fund—Enhanced Payout
Schwab Monthly Income Fund—Maximum Payout
Schwab Investments (organized October 26, 1990)
Schwab 1000 Index Fund
Schwab YieldPlus Fund
Schwab Short-Term Bond Market Fund
Schwab Premier Income Fund
Schwab Total Bond Market Fund
Schwab GNMA Fund
Schwab Inflation Protected Fund
Schwab Tax-Free YieldPlus Fund
Schwab Tax-Free Bond Fund
Schwab California Tax-Free YieldPlus Fund
Schwab California Tax-Free Bond Fund
Schwab Global Real Estate Fund | | |
| |
Each fund in this report offers one share class. Shares are bought and sold (subject to a redemption fee, see financial note 8) at closing net asset value (“NAV”), which is the price for all outstanding shares of a fund. Each share has a par value of 1/1,000 of a cent, and the trustees may authorize the issuance of as many shares as necessary.
Each fund maintains its own account for purposes of holding assets and accounting, and is considered a separate entity for tax purposes. Within its account, each fund also may keep certain assets in segregated accounts, as required by securities laws.
2. Significant Accounting Policies:
The following is a summary of the significant accounting policies the funds use in their preparation of financial statements. The accounting policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”).
(a) Security Valuation:
The funds value the securities in their portfolios every business day. The funds use the following policies to value various types of securities:
| | |
| | • | Securities traded on an exchange or over-the-counter: valued at the closing value for the day, or, on days when no closing value has been reported, halfway between the most recent bid and asked quotes. Securities that are primarily traded on foreign exchanges are valued at the closing values of such securities on their respective exchanges with these values then translated into U.S. dollars at the valuation date exchange rate, unless these securities are fair valued as discussed below. |
| |
| | • | Securities for which no quoted value is available: The Board of Trustees has adopted procedures to fair value each fund’s securities when market prices are not “readily available” or are unreliable. For example, the fund may fair value a security when a security is de-listed or its trading is halted or suspended; when a security’s primary pricing source is unable or |
52
Schwab Equity Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
| | |
| | | unwilling to provide a price; or when a security’s primary trading market is closed during regular market hours. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. The Board of Trustees regularly reviews fair value determinations made by the funds pursuant to the procedures. |
| | |
| | • | International Fair Valuation: The Board of Trustees has adopted procedures to fair value foreign equity securities that trade in markets that close prior to when the funds value their holdings. By fair valuing securities whose prices may have been affected by events occurring after the close of trading, each fund seeks to establish prices that investors might expect to realize upon the current sales of these securities. This methodology is designed to deter “arbitrage” market timers, who seek to exploit delays between the change in the value of a fund’s portfolio holdings and the net asset value of the fund’s shares, and seeks to help ensure that the prices at which the fund’s shares are purchased and redeemed are fair and do not result in dilution of shareholder interest or other harm to shareholders. When fair value pricing is used at the open or close of a reporting period, it may cause a temporary divergence between the return of a fund and that of its index or benchmark. Each fund makes fair value determinations in good faith in accordance with the fund’s valuation procedures. Due to the subjective and variable nature of fair value pricing, there can be no assurance that a fund could obtain the fair value assigned to the security upon the sale of such security. The Board of Trustees regularly reviews fair value determinations made by the funds pursuant to the procedures. |
| |
| | • | Futures and forwards contracts: valued at their settlement prices as of the close of their exchanges (for futures) or at a value based on that day’s exchange rates (for forwards). |
| |
| | • | Short-term securities (60 days or less to maturity): valued at amortized cost, which approximates market value. |
| |
| | • | Underlying funds: valued at their respective net asset values as determined by the underlying fund in accordance with the 1940 Act for a given day. |
In accordance with the authoritative guidance on fair value measurements and disclosures under GAAP, the funds disclose the fair value of their investments in a hierarchy that prioritizes the inputs to valuation techniques used to measure the fair value. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (level 3 measurements). If the funds determine that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
The three levels of the fair value hierarchy are as follows:
| | |
| | • | Level 1 — quoted prices in active markets for identical securities — Investments whose values are based on quoted market prices in active markets, and whose values are therefore classified as Level 1 prices, include active listed equities. The funds do not adjust the quoted price for such investments, even in situations where the funds hold a large position and a sale could reasonably impact the quoted price. |
| |
| | • | Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.) — Investments that trade in markets that are not considered to be active, but whose values are based on quoted market prices, dealer quotations or valuations provided by alternative pricing sources supported by observable inputs are classified as Level 2 Prices. These generally include U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, less liquid listed equities, and state, municipal and provincial obligations. In addition, international securities whose markets close hours before the funds value their holdings may require fair valuations due to significant movement in the U.S. markets occurring after the daily close of the foreign markets. The Board of Trustees has approved a vendor that would calculate fair valuations of international equity securities based on a number of factors that appear to correlate to the movements in the U.S. markets. As investments whose values are classified as Level 2 Prices include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. |
53
Schwab Equity Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
| | |
| | • | Level 3 — significant unobservable inputs (including the funds’ own assumptions in determining the fair value of investments) — Investments whose values are classified as Level 3 prices have significant unobservable inputs, as they may trade infrequently or not at all. When observable prices are not available for these securities, the funds use one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the funds in estimating the value of Level 3 prices may include the original transaction price, quoted prices for similar securities or assets in active markets, completed or pending third-party transactions in the underlying investment or comparable issuers, and changes in financial ratios or cash flows. Level 3 prices may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the funds in the absence of market information. Assumptions used by the funds due to the lack of observable inputs may significantly impact the resulting fair value and therefore the funds’ results of operations. |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the funds’ investments as of October 31, 2010:
Schwab S&P 500 Index Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| Common Stock(a) | | | $9,997,803,572 | | | | $— | | | | $— | | | | $9,997,803,572 | |
| Short-Term Investments(a) | | | — | | | | 9,501,330 | | | | — | | | | 9,501,330 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $9,997,803,572 | | | | $9,501,330 | | | | $— | | | | $10,007,304,902 | |
| | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Collateral Invested for Securities on Loan | | | $13,300,790 | | | | $— | | | | $— | | | | $13,300,790 | |
| Futures Contracts* | | | 127,883 | | | | — | | | | — | | | | 127,883 | |
Schwab 1000 Index Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| Common Stock(a) | | | $4,568,022,168 | | | | $— | | | | $— | | | | $4,568,022,168 | |
| Other Investment Company(a) | | | 93,843 | | | | — | | | | — | | | | 93,843 | |
| Short-Term Investment(a) | | | — | | | | 2,078,649 | | | | — | | | | 2,078,649 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $4,568,116,011 | | | | $2,078,649 | | | | $— | | | | $4,570,194,660 | |
| | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Collateral Invested for Securities on Loan | | | $18,636,837 | | | | $— | | | | $— | | | | $18,636,837 | |
| Futures Contracts* | | | 8,122 | | | | — | | | | — | | | | 8,122 | |
54
Schwab Equity Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
Schwab Small-Cap Index Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| Common Stock(a) | | | $1,403,572,178 | | | | $— | | | | $— | | | | $1,403,572,178 | |
| Rights(a) | | | — | | | | — | | | | — | | | | — | |
| Short-Term Investments(a) | | | — | | | | 2,709,233 | | | | — | | | | 2,709,233 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $1,403,572,178 | | | | $2,709,233 | | | | $— | | | | $1,406,281,411 | |
| | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Collateral Invested for Securities on Loan | | | $41,794,683 | | | | $— | | | | $— | | | | $41,794,683 | |
| Futures Contracts* | | | 9,648 | | | | — | | | | — | | | | 9,648 | |
Schwab Total Stock Market Index Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| Common Stock(a) | | | $1,426,507,944 | | | | $— | | | | $— | | | | $1,426,507,944 | |
| Transportation | | | 29,426,340 | | | | — | | | | 3,300 | | | | 29,429,640 | |
| Rights(a) | | | — | | | | — | | | | 46,179 | | | | 46,179 | |
| Short-Term Investments(a) | | | — | | | | 11,744,551 | | | | — | | | | 11,744,551 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $1,455,934,284 | | | | $11,744,551 | | | | $49,479 | | | | $1,467,728,314 | |
| | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | | | | | | | | | | | | | | |
| Collateral Invested for Securities on Loan | | | $6,043,310 | | | | $— | | | | $— | | | | $6,043,310 | |
| Futures Contracts* | | | 956,293 | | | | — | | | | — | | | | 956,293 | |
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Change in
| | | | | | | | Balance
|
| | | as of
| | Accrued
| | Realized
| | Unrealized
| | Net
| | Gross
| | Gross
| | as of
|
| | | October 31,
| | Discounts
| | Gain
| | Gains
| | Purchases
| | Transfers
| | Transfers
| | October 31,
|
Investments in Securities | | 2009 | | (Premiums) | | (Loss) | | (Losses) | | (Sales) | | in | | out | | 2010 |
| |
| Common Stock | | | $3,300 | | | | $— | | | | $— | | | | $132 | | | | ($132 | ) | | | $— | | | | $— | | | | $3,300 | |
| Rights | | | — | | | | — | | | | — | | | | 46,179 | | | | — | | | | — | | | | — | | | | 46,179 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | $3,300 | | | | $— | | | | $— | | | | $46,311 | | | | ($132 | ) | | | $— | | | | $— | | | | $49,479 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
55
Schwab Equity Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
Schwab International Index Fund
| | | | | | | | | | | | | | | | | |
| | | Quoted Prices in
| | | | Significant
| | |
| | | Active Markets for
| | Significant Other
| | Unobservable
| | |
| | | Identical Assets
| | Observable Inputs
| | Inputs
| | |
Description | | (Level 1) | | (Level 2) | | (Level 3) | | Total |
| |
| Common Stock(a) | | | $— | | | | $769,964,773 | | | | $— | | | | $769,964,773 | |
| Canada | | | 137,769,204 | | | | — | | | | — | | | | 137,769,204 | |
| Germany | | | 1,044,422 | | | | 120,459,260 | | | | — | | | | 121,503,682 | |
| Switzerland | | | 1,828,987 | | | | 118,831,484 | | | | — | | | | 120,660,471 | |
| United Kingdom | | | — | | | | 307,612,653 | | | | 71,780 | | | | 307,684,433 | |
| Preferred Stock(a) | | | — | | | | 3,013,548 | | | | — | | | | 3,013,548 | |
| Rights(a) | | | 494,689 | | | | — | | | | — | | | | 494,689 | |
| Warrants(a) | | | 1,023 | | | | — | | | | — | | | | 1,023 | |
| Other Investment Companies(a) | | | 5,701,000 | | | | — | | | | — | | | | 5,701,000 | |
| | | | | | | | | | | | | | | | | |
| Total | | | $146,839,325 | | | | $1,319,881,718 | | | | $71,780 | | | | $1,466,792,823 | |
| | | | | | | | | | | | | | | | | |
| Other Financial Instruments | | | — | | | | — | | | | — | | | | — | |
| Collateral Invested for Securities on Loan | | | $8,024,266 | | | | $— | | | | $— | | | | $8,024,266 | |
The following is a reconciliation of Level 3 investments for which significant unobservable inputs were used to determine fair value:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Change in
| | | | | | | | Balance
|
| | | as of
| | Accrued
| | Realized
| | Unrealized
| | Net
| | Gross
| | Gross
| | as of
|
| | | October 31,
| | Discounts
| | Gain
| | Gains
| | Purchases
| | Transfers
| | Transfers
| | October 31,
|
Investments in Securities | | 2009 | | (Premiums) | | (Loss) | | (Losses) | | (Sales) | | in | | out | | 2010 |
| |
| Common Stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| United Kingdom | | | $29,238 | | | | $— | | | | $136 | | | | $2,135 | | | | $40,271 | | | | $— | | | | $— | | | | $71,780 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total | | | $29,238 | | | | $— | | | | $136 | | | | $2,135 | | | | $40,271 | | | | $— | | | | $— | | | | $71,780 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| * | | Futures Contracts are not included in Investments and are valued at the unrealized appreciation or depreciation. |
| ** | | The fund had no Other Financial Instruments. |
| (a) | | As categorized in complete schedule of holdings. |
All net realized and change in unrealized gains (losses) in the tables above are reflected in the accompanying statements of operations. Changes in net unrealized gains (losses) for Level 3 investments held by the funds at October 31, 2010 are as follows:
| | | | | |
Schwab Total Stock Market Index Fund | | | $46,311 | |
Schwab International Index Fund | | | $2,208 | |
In January 2010, the Financial Accounting Standards Board issued new guidance requiring reporting entities to make new disclosures about amounts and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements as well as inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances and settlements of Level 3 securities on a gross basis. The new and revised disclosures are required to be implemented for annual and interim periods beginning after December 15, 2009, except for the disclosures surrounding purchases, sales, issuances and settlements of Level 3 fair value measurements on a gross basis, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years.
The funds have adopted the new guidance for the period ended October 31, 2010. There were no significant transfers between Level 1 and Level 2 for the period ended October 31, 2010. Management is currently evaluating the impact of the adoption of the other provisions of the new guidance on the funds’ financial statements.
56
Schwab Equity Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
Some funds entered into equity index futures contracts (“futures”) during the period from November 1, 2009 through October 31, 2010. The funds invested in futures to gain market exposure while still keeping a small portion of assets in cash for business operations. The primary risk associated with investing in futures contracts is market risk. The fair value and variation margin for any futures contracts held at October 31, 2010 and the realized/unrealized gains (losses) on futures contracts held during the period ended October 31, 2010 are presented on the face of the Portfolio Holdings, Statement of Assets and Liabilities and Statement of Operation, respectively. Refer to financial note 2(b) for the fund’s accounting policies with respect to futures contracts and financial note 3 for disclosures concerning the risks of investing in futures contracts. During the period, the monthly average contract value of futures contracts and the monthly average number of contracts were as follows:
| | | | | | | | | |
| | Contract Values | | Number of Contracts |
| |
Schwab S&P 500 Index Fund | | | $34,687,969 | | | | 635 | |
Schwab 1000 Index Fund | | | 9,089,771 | | | | 165 | |
Schwab Small-Cap Index Fund | | | 10,931,392 | | | | 174 | |
Schwab Total Stock Market Index Fund | | | 11,694,263 | | | | 193 | |
Schwab International Index Fund | | | — | | | | — | |
(b) Accounting Policies for certain Portfolio Investments (if held):
Futures Contracts: Futures contracts are instruments that represent an agreement between two parties that obligates one party to buy, and the other party to sell, specific instruments at an agreed upon price on a stipulated future date. A fund must give the broker a deposit of cash and/or securities (the “initial margin”) whenever it enters into the futures contract. The amount of the deposit may vary from one contract to another. Subsequent payments (“variation margin”) are made or received by a fund depending on the daily fluctuations in the value of the futures contract and are accounted for as unrealized gains or losses until the contract is closed, at which time the gains and losses are realized. Futures are traded publicly on exchanges, and their market value changes daily.
Forward Currency Contracts: “Forwards”, as they are known, are contracts to buy and sell a currency at a set price on a future date. The accounting for forwards is treated similar to that of futures contracts in that gains and losses are accounted for as unrealized gains or losses until the contracts settles and such amounts are accounted for as realized.
Securities Lending: Under the Securities Lending Program, a fund (the “lender”) may make short-term loans of their securities to another party (the “borrower”). When the fund lends securities, the borrower provides cash, U.S. government securities or letters of credit as collateral against the loans in an amount at least equal to 100% of the market value of the loaned securities. The cash collateral of securities loaned is invested in money market portfolios registered under Rule 2a-7 of the 1940 Act. The investments of collateral are mark-to-market daily and the value of the collateral must be at least 100% of the market value of the loan securities each day. If the value of the collateral falls below 100%, it will be adjusted the following day.
Repurchase Agreements: In a repurchase agreement, a fund buys a security from another party (usually a financial institution) with the agreement that it be sold back in the future. The funds’ repurchase agreements are fully collateralized by cash, U.S. government securities, U.S. government agency securities or other securities. All collateral is held by the funds’ custodian (or, with tri-party agreements, the agent’s bank) and is monitored daily to ensure that its market value is at least equal to the repurchase price under the agreement.
(c) Security Transactions:
Security transactions are recorded as of the date the order to buy or sell the security is executed. Realized gains and losses from security transactions are based on the identified costs of the securities involved.
Assets and liabilities denominated in foreign currencies are reported in U.S. dollars. For assets and liabilities held on a given date, the dollar value is based on market exchange rates in effect on that date. Transactions involving foreign currencies, including purchases, sales, income receipts and expense payments, are calculated using exchange rates in effect on the transaction date. Realized foreign exchange gains or losses arise from sales of foreign currencies, currency gains or losses realized between the trade and settlement dates on securities transactions and the difference between the recorded amounts of dividends, interest, and foreign withholding taxes and the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized foreign exchange gains and losses arise from changes in foreign exchange rates on foreign denominated assets and liabilities other than
57
Schwab Equity Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
investments in securities held at the end of the reporting period. These realized and unrealized foreign exchange gains and losses are reported in foreign currency transactions or translations on the statement of operations. The funds do not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
Gains realized by the funds on the sale of securities in certain foreign countries may be subject to non-U.S. taxes. The funds record a liability based on unrealized gains to provide for potential non-U.S. taxes payable upon the sale of these securities.
When a fund closes out a futures or forwards position, it calculates the difference between the value of the position at the beginning and at the end of the contract, and records a realized gains or loss accordingly. A fund records the daily change in market value of futures, and also the change in the amount of margin deposit required (“due to/from broker”).
(d) Investment Income:
Interest income is recorded as it accrues. Dividends and distributions from portfolio securities and underlying funds are recorded on the date they are effective (the ex-dividend date), although the funds may record certain foreign security dividends on the day they learn of the ex-dividend date.
(e) Expenses:
Expenses that are specific to a fund are charged directly to the fund. Expenses that are common to all funds within the trust generally are allocated among the funds in proportion to their average daily net assets.
(f) Distributions to Shareholders:
The funds declare distributions from net investment income and net realized capital gains, if any, once a year.
(g) Custody Credit:
Certain funds have an arrangement with their custodian bank, State Street Bank and Trust Company, under which the funds receive a credit for their uninvested cash balance to offset their custody fees and accounting fees. The credit amounts, if any, are disclosed in the Statement of Operations as a reduction to the funds’ operating expenses.
(h) Accounting Estimates:
The accounting policies described in this report conform to accounting principles generally accepted in the United States of America. Notwithstanding this, shareholders should understand that in order to follow these principles, fund management has to make estimates and assumptions that affect the information reported in the financial statements. It’s possible that once the results are known, they may turn out to be different from these estimates and these differences may be material.
(i) Federal Income Taxes:
The funds intend to meet federal income and excise tax requirements for regulated investment companies. Accordingly, the funds distribute substantially all of their net investment income and realized net capital gains, if any, to their respective shareholders each year. As long as the funds meet the tax requirements, it is not required to pay federal income tax.
(j) Foreign Taxes:
The funds may be subject to foreign taxes (a portion of which may be reclaimable) on income, corporate events, foreign currency exchanges, capital gains on investments on currency repatriation. All foreign taxes are recorded in accordance with the applicable foreign tax regulations and rates that exist in foreign markets in which the funds invest. These foreign taxes, if any, are paid by the funds and are disclosed in the Statement of Operations. Foreign taxes payable as of October 31, 2010, if any, are reflected in the funds’ Statement of Assets and Liabilities.
(k) Indemnification:
Under the funds’ organizational documents, the officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business the funds enter into contracts with their
58
Schwab Equity Index Funds
Financial Notes (continued)
2. Significant Accounting Policies (continued):
vendors and others that provide general indemnifications. The funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. However, based on experience, the funds expect the risk of loss to be remote.
3. Risk Factors:
Investing in the funds may involve certain risks, as discussed in the funds’ prospectus, including, but not limited to those described below:
Equity markets rise and fall daily. As with any investment whose performance is tied to these markets, the value of your investment in the funds will fluctuate, which means that an investor could lose money.
The prices of equity securities rise and fall daily. These price movements may result from factors affecting individual companies, industries or the securities market as a whole. In addition, equity markets tend to move in cycles which may cause stock prices to fall over short or extended periods of time.
Certain funds primarily follow the large-cap portion of the U.S. stock market, as measured by the index. It follows these stocks during upturns as well as downturns. Because of its indexing strategy, the fund does not take steps to reduce market exposure or to lessen the effects of a declining market. In addition, because of a fund’s expenses, a fund’s performance is normally below that of the index.
As an index fund, a fund seeks to track the performance of its benchmark index, although it may not be successful in doing so. The divergence between the performance of a fund and its benchmark index, positive or negative, is called “tracking error.” Tracking error can be caused by many factors and it may be significant.
Certain funds do not fully replicate their benchmark index and may hold securities not included in the index. As a result, the fund is subject to the risk that the investment adviser’s investment strategy, the implementation of which is subject to a number of constraints, may not produce the intended results. Because the fund utilizes a sampling approach, it may not track the return of the index as well as it would if the fund purchased all of the securities in the benchmark index.
Historically, small-cap stocks have been riskier than large- and mid-cap stocks, and may move sharply, especially during market upturns and downturns. Small-cap companies may be more vulnerable to adverse business or economic events than larger, more established companies. During a period when small-cap stocks fall behind other types of investments — large-cap and mid-cap stocks, for instance — a fund’s small-cap holdings could reduce performance.
Both large- and mid-cap stocks tend to go in and out of favor based on market and economic conditions. However, stocks of mid-cap companies tend to be more vulnerable to adverse business or economic events than larger more established companies. During a period when large- and mid-cap U.S. stocks fall behind other types of investments — small-cap stocks, for instance — a fund’s large- and mid-cap holdings could reduce performance.
A fund’s investments in securities of foreign issuers may involve certain risks that are greater than those associated with investments in securities of U.S. issuers. These include risks of adverse changes in foreign economic, political, regulatory and other conditions; changes in currency exchange rates or exchange control regulations (including limitations on currency movements and exchanges); differing accounting, auditing, financial reporting and legal standards and practices; differing securities market structures; and higher transaction costs.
A fund’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments and could cause the fund to lose more than the principal amount invested. In addition, investments in derivatives may involve leverage, which means a small percentage of assets invested in derivatives can have a disproportionately large impact on the fund.
A particular investment may be difficult to purchase or sell. A fund may be unable to sell illiquid securities at an advantageous time or price.
Securities lending involves the risk of loss of rights in the collateral or delay in recovery of the collateral if the borrower fails to return the security loaned or becomes insolvent.
Please refer to the funds’ prospectus for a more complete description of the principal risks of investing in the funds.
59
Schwab Equity Index Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions:
Charles Schwab Investment Management, Inc. (“CSIM” or the “investment adviser”), a wholly owned subsidiary of The Charles Schwab Corporation, serves as each fund’s investment adviser and administrator pursuant to Investment Advisory and Administration Agreements (“Advisory Agreement”) between it and the trusts.
For its advisory and administrative services to the Schwab 1000 Index Fund, CSIM is entitled to receive an annual fee payable monthly based on the fund’s average daily net assets described as follows:
| | | | | |
| | | Schwab
|
| | | 1000
|
% of Average Daily Net Assets | | Index Fund |
| |
| First $500 million | | | 0.30% | |
| $500 million to $5 billion | | | 0.22% | |
| $5 billion to $10 billion | | | 0.20% | |
| Over $10 billion | | | 0.18% | |
For its advisory and administrative services to the following funds, CSIM is entitled to receive an annual fee payable monthly based on each fund’s average daily net assets described as follows:
| | | | | | | | | | | | | | | | | |
| | | | | | | Schwab
| | |
| | | Schwab
| | Schwab
| | Total Stock
| | Schwab
|
| | | S&P 500
| | Small-Cap
| | Market
| | International
|
% of Average Daily Net Assets | | Index Fund | | Index Fund | | Index Fund | | Index Fund |
| |
| Flat rate | | | 0.06% | | | | 0.15% | | | | 0.06% | | | | 0.15% | |
The Board of Trustees has adopted a Shareholder Servicing Plan (the “Plan”) on behalf of the funds. The Plan enables each fund to bear expenses relating to the provision by service providers, including Charles Schwab & Co., Inc. (a broker-dealer affiliate of CSIM, “Schwab”), of certain account maintenance, customer liaison and shareholder services to the current shareholders of the funds. Schwab serves as the funds’ paying agent under the Plan for making payments of the shareholder service fee due to the service providers (other than Schwab) under the Plan. All shareholder service fees paid by the funds to Schwab in its capacity as the funds’ paying agent will be passed through to the service providers, and Schwab will not retain any portion of such fees.
Pursuant to the Plan, each fund’s shares are subject to an annual shareholder servicing fee up to the amount set forth in the table below. The shareholder servicing fee paid to a particular service provider is made pursuant to its written agreement with Schwab (or, in the case of payments made to Schwab, pursuant to Schwab’s written agreement with the funds). Payments under the Plan are made as described in the table below regardless of Schwab’s or the service provider’s actual cost of providing the services. If the cost of providing the services under the Plan is less than the payments received, the unexpended portion of the fees may be retained as profit by Schwab or the service provider.
| | | | | | | | | | | | | | | | | | | |
| | | | | | | Schwab
| | |
Schwab
| | Schwab
| | Schwab
| | Total Stock
| | Schwab
|
S&P 500
| | 1000
| | Small-Cap
| | Market
| | International
|
Index Fund | | Index Fund | | Index Fund | | Index Fund | | Index Fund |
| |
| | 0.02% | | | | 0.10% | | | | 0.02% | | | | 0.02% | | | | 0.02% | |
Although these agreements specify certain fees for these services, CSIM and Schwab have made additional agreements (“expense limitation”) with the funds to limit the total annual fund operating expenses, excluding interest, taxes and certain non-routine expenses for so long as CSIM serves as the investment adviser to the funds, which may only be amended or terminated with the approval of the funds’ Board of Trustees. The expense limitation as a percentage of average daily net assets is as follows:
| | | | | | | | | | | | | | | | | | | |
| | | | | | | Schwab
| | |
Schwab
| | Schwab
| | Schwab
| | Total Stock
| | Schwab
|
S&P 500
| | 1000
| | Small-Cap
| | Market
| | International
|
Index Fund | | Index Fund | | Index Fund | | Index Fund | | Index Fund |
| |
| | 0.09% | | | | 0.29% | | | | 0.19% | | | | 0.09% | | | | 0.19% | |
60
Schwab Equity Index Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
The funds may engage in certain transactions involving affiliates. For instance, a fund may own shares of The Charles Schwab Corporation if that company is included in its index. Below is the summary of investment activities involving The Charles Schwab Corporation shares owned by the Schwab Equity Index Funds during the report period:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Balance
| | | | | | Balance
| | | | Realized
| | Dividends
|
| | | of Shares
| | | | | | of Shares
| | Market
| | Gain (Loss)
| | Received
|
| | | Held at
| | Gross
| | Gross
| | Held at
| | Value at
| | 11/1/09 to
| | 11/1/09 to
|
Fund | | 10/31/09 | | Additions | | Sales | | 10/31/10 | | 10/31/10 | | 10/31/10 | | 10/31/10 |
| |
| Schwab S&P 500 Index Fund | | | 891,781 | | | | — | | | | — | | | | 891,781 | | | | $13,733,427 | | | | $— | | | | $214,027 | |
| Schwab 1000 Index Fund | | | 403,065 | | | | — | | | | (29,600 | ) | | | 373,465 | | | | 5,751,361 | | | | 363,294 | | | | 91,726 | |
| Schwab Total Stock Market Index Fund | | | 111,120 | | | | — | | | | — | | | | 111,120 | | | | 1,711,248 | | | | — | | | | 26,669 | |
Certain Schwab Funds may own shares of other Schwab Funds. The table below reflects the percentage of each Schwab Equity Index Fund owned by other Schwab Funds as of October 31, 2010.
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Schwab
| | |
| | | Schwab
| | Schwab
| | Schwab
| | Total Stock
| | Schwab
|
| | | S&P 500
| | 1000
| | Small-Cap
| | Market
| | International
|
| | | Index Fund | | Index Fund | | Index Fund | | Index Fund | | Index Fund |
| |
Schwab MarketTrack Portfolios: | | | | | | | | | | | | | | | | | | | | |
| Schwab All Equity Portfolio | | | 2.2% | | | | —% | | | | 8.7% | | | | —% | | | | 9.9% | |
| Schwab Growth Portfolio | | | 2.6% | | | | —% | | | | 9.1% | | | | —% | | | | 8.7% | |
| Schwab Balanced Portfolio | | | 1.3% | | | | —% | | | | 4.8% | | | | —% | | | | 4.6% | |
| Schwab Conservative Portfolio | | | 0.4% | | | | —% | | | | 1.4% | | | | —% | | | | 1.3% | |
Schwab Annuity Portfolios: | | | | | | | | | | | | | | | | | | | | |
| Schwab Growth Portfolio II | | | 0.1% | | | | —% | | | | 0.5% | | | | —% | | | | 0.5% | |
Schwab Target Funds: | | | | | | | | | | | | | | | | | | | | |
| Schwab Target 2010 | | | 0.1% | | | | —% | | | | —% | | | | —% | | | | —% | |
| Schwab Target 2015 | | | 0.0% | * | | | —% | | | | —% | | | | —% | | | | —% | |
| Schwab Target 2020 | | | 0.3% | | | | —% | | | | —% | | | | —% | | | | —% | |
| Schwab Target 2025 | | | 0.1% | | | | —% | | | | —% | | | | —% | | | | —% | |
| Schwab Target 2030 | | | 0.4% | | | | —% | | | | —% | | | | —% | | | | —% | |
| Schwab Target 2035 | | | 0.1% | | | | —% | | | | —% | | | | —% | | | | —% | |
| Schwab Target 2040 | | | 0.3% | | | | —% | | | | —% | | | | —% | | | | —% | |
The funds may also let a related party own shares of the funds. As of October 31, 2010, the shares owned by Schwab Charitable Giving Trust (an affiliate of Schwab) as a percentage of the total shares of the Schwab S&P 500 Index Fund and the Schwab Small Cap Index Fund were 0.6% and 1.2%, respectively.
The funds may engage in direct transactions with certain other Schwab Funds when practical. When one fund is seeking to sell a security that another is seeking to buy, an interfund transaction can allow both funds to benefit by reducing transaction costs. This practice is limited to funds that share the same investment adviser, trustees and officers. For the year ended October 31, 2010, each fund’s total aggregate security transactions with other Schwab Funds were as follows:
| | | | | |
| Schwab S&P 500 Index Fund | | | $— | |
| Schwab 1000 Index Fund | | | 74,548,504 | |
| Schwab Small-Cap Index Fund | | | 74,548,504 | |
| Schwab Total Stock Market Index Fund | | | — | |
| Schwab International Index Fund | | | — | |
Pursuant to an exemptive order issued by the SEC, the funds may enter into interfund borrowing and lending transactions with other Schwab Funds. All loans are for temporary or emergency purposes only. The interest rate charged on the loan is the
61
Schwab Equity Index Funds
Financial Notes (continued)
4. Affiliates and Affiliated Transactions (continued):
average of the overnight repurchase agreement rate and the short-term bank loan rate. The interfund lending facility is subject to the oversight and periodic review of the Board of Trustees of the Schwab Funds. The funds had no interfund borrowing or lending activity during the period.
5. Board of Trustees:
Trustees may include people who are officers and/or directors of the investment adviser or Schwab. Federal securities law limits the percentage of such “interested persons” who may serve on a trust’s board, and the trusts were in compliance with these limitations throughout the report period. The trusts did not pay any of these persons for their services as trustees, but they did pay non-interested persons (independent trustees), as noted in each fund’s Statement of Operations.
6. Borrowing from Banks:
The funds may borrow money from banks and custodians. The funds have custodian overdraft facilities, a committed line of credit of $150 million with State Street Bank and Trust Company, an uncommitted line of credit of $100 million with Bank of America, N.A. and an uncommitted line of credit of $50 million with Brown Brothers Harriman. The funds pay interest on the amounts they borrow at rates that are negotiated periodically. The funds also pay an annual fee to State Street Bank and Trust Company for the committed line of credit.
There were no borrowings from the lines of credit during the period. However, the funds utilized their overdraft facility and incurred interest expense, which is disclosed in the Statement of Operations, if any. The interest expense is determined based on a negotiated rate above the current Federal Funds Rate.
7. Purchases and Sales/Maturities of Investment Securities:
For the period ended October 31, 2010, purchases and sales/maturities of securities (excluding short-term obligations) were as follows:
| | | | | | | | | |
| | | Purchase of Securities | | Sales/Maturities of Securities |
| |
| Schwab S&P 500 Index Fund | | | $420,455,084 | | | | $210,012,042 | |
| Schwab 1000 Index Fund | | | 231,667,979 | | | | 522,756,193 | |
| Schwab Small-Cap Index Fund | | | 433,566,154 | | | | 421,145,302 | |
| Schwab Total Stock Market Index Fund | | | 103,686,646 | | | | 36,962,403 | |
| Schwab International Index Fund | | | 202,740,948 | | | | 181,094,722 | |
8. Redemption Fee:
The funds charge a 2.00% redemption fee on shares sold or exchanged within 30 days of the original purchase date. Such amounts are netted against redemption proceeds on the Statement of Changes in Net Assets. The redemption fees charged during the current period and prior fiscal year are:
| | | | | | | | | |
| | | Current Period
| | Prior Period
|
| | | (11/01/09-10/31/10) | | (11/01/08-10/31/09) |
| |
| Schwab S&P 500 Index Fund | | | $141,923 | | | | $223,146 | |
| Schwab 1000 Index Fund | | | 21,488 | | | | 106,941 | |
| Schwab Small-Cap Index Fund | | | 23,624 | | | | 41,948 | |
| Schwab Total Stock Market Index Fund | | | 22,830 | | | | 65,047 | |
| Schwab International Index Fund | | | 23,029 | | | | 38,278 | |
62
Schwab Equity Index Funds
Financial Notes (continued)
9. Federal Income Taxes:
As of October 31, 2010, the components of distributable earnings on a tax-basis were as follows:
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Schwab
| | |
| | | Schwab
| | Schwab
| | Schwab
| | Total Stock
| | Schwab
|
| | | S&P 500
| | 1000
| | Small-Cap
| | Market
| | International
|
| | | Index Fund | | Index Fund | | Index Fund | | Index Fund | | Index Fund |
| |
| Undistributed ordinary income | | | $150,913,194 | | | | $56,524,536 | | | | $8,620,185 | | | | $21,095,712 | | | | $36,231,864 | |
| Undistributed long-term capital gains | | | — | | | | 59,069,725 | | | | 4,029,340 | | | | — | | | | — | |
| Unrealized appreciation | | | 2,713,509,546 | | | | 2,546,102,555 | | | | 294,136,862 | | | | 412,059,292 | | | | 494,433,465 | |
| Unrealized depreciation | | | (1,329,569,571 | ) | | | (100,382,704 | ) | | | (151,485,996 | ) | | | (188,788,305 | ) | | | (119,906,983 | ) |
| Other unrealized appreciation/(depreciation) | | | — | | | | — | | | | 1 | | | | — | | | | 162,899 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net unrealized appreciation/(depreciation) | | | $1,383,939,975 | | | | $2,445,719,851 | | | | $142,650,867 | | | | $223,270,987 | | | | $374,689,381 | |
| | | | | | | | | | | | | | | | | | | | | |
The primary differences between book-basis and tax-basis unrealized appreciation or unrealized depreciation of investments are the tax deferral of losses on wash sales, Passive Foreign Investment Companies (PFIC), partnership investments, non taxable dividends and futures mark to market.
Capital loss carryforwards may be used to offset future realized capital gains for federal income tax purposes. As of October 31, 2010, the following funds had capital loss carryforwards available to offset net capital gains before the expiration dates:
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Schwab
| | |
| | | Schwab
| | Schwab
| | Schwab
| | Total Stock
| | Schwab
|
| | | S&P 500
| | 1000
| | Small-Cap
| | Market
| | International
|
Expiration Date | | Index Fund | | Index Fund | | Index Fund | | Index Fund | | Index Fund |
| |
| October 31, 2011 | | | $72,380,652 | | | | $— | | | | $— | | | | $— | | | | $39,016,178 | |
| October 31, 2012 | | | 29,211,932 | | | | — | | | | — | | | | — | | | | 8,278,017 | |
| October 31, 2013 | | | 178,254,818 | | | | — | | | | — | | | | — | | | | — | |
| October 31, 2014 | | | 109,256,533 | | | | — | | | | — | | | | — | | | | — | |
| October 31, 2015 | | | 89,645,092 | | | | — | | | | — | | | | — | | | | — | |
| October 31, 2016 | | | 77,879,594 | | | | — | | | | — | | | | 22,023,303 | | | | 3,212,061 | |
| October 31, 2017 | | | 20,049,252 | | | | — | | | | — | | | | 4,871,496 | | | | 65,689,066 | |
| | | | | | | | | | | | | | | | | | | | | |
| Total | | | $576,677,873 | | | | $— | | | | $— | | | | $26,894,799 | | | | $116,195,322 | |
| | | | | | | | | | | | | | | | | | | | | |
As of October 31, 2010, the funds had capital losses utilized and capital losses expired as follows:
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Schwab
| | |
| | | Schwab
| | Schwab
| | Schwab
| | Total Stock
| | Schwab
|
| | | S&P 500
| | 1000
| | Small-Cap
| | Market
| | International
|
| | | Index Fund | | Index Fund | | Index Fund | | Index Fund | | Index Fund |
| |
| Capital loss utilized | | | $40,478,718 | | | | $6,343,580 | | | | $80,030,788 | | | | $3,377,458 | | | | $7,656,662 | |
| Capital loss expired | | | $361,399,022 | | | | $— | | | | $— | | | | $— | | | | $105,065,251 | |
63
Schwab Equity Index Funds
Financial Notes (continued)
9. Federal Income Taxes (continued):
The tax-basis components of distributions during the current and prior fiscal years were:
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Schwab
| | |
| | | Schwab
| | Schwab
| | Schwab
| | Total Stock
| | Schwab
|
| | | S&P 500
| | 1000
| | Small-Cap
| | Market
| | International
|
| | | Index Fund | | Index Fund | | Index Fund | | Index Fund | | Index Fund |
| |
Current period distributions | | | | | | | | | | | | | | | | | | | | |
| Ordinary income | | | $130,372,304 | | | | $78,998,534 | | | | $11,038,239 | | | | $20,970,578 | | | | $37,166,734 | |
| |
Prior period distributions |
| Ordinary income | | | $135,806,905 | | | | $99,150,991 | | | | $21,820,017 | | | | $21,340,641 | | | | $52,200,615 | |
Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to differing treatment for items such as non-U.S. currency gains and losses, short-term capital gains and losses; capital losses related to wash sales, unrealized appreciation of certain investments in non-U.S. securities; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the funds for financial reporting purposes. The funds may also designate a portion of the amount paid to redeeming shareholders as a distribution for tax purposes.
The permanent book and tax basis differences may result in reclassifications between capital account and other accounts as required. The adjustments will have no impact on net assets or the results of operations. As of October 31, 2010, the funds made the following reclassifications:
| | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | Schwab
| | |
| | | Schwab
| | Schwab
| | Schwab
| | Total Stock
| | Schwab
|
| | | S&P 500
| | 1000
| | Small-Cap
| | Market
| | International
|
| | | Index Fund | | Index Fund | | Index Fund | | Index Fund | | Index Fund |
| |
| Capital shares | | | ($361,399,022 | ) | | | ($2 | ) | | | $— | | | | $— | | | | ($105,065,251 | ) |
| Undistributed net investment income | | | (70,084 | ) | | | (4,046,130 | ) | | | (3,798,027 | ) | | | 1,399,778 | | | | 1,106,341 | |
| Net realized capital gains and losses | | | 361,469,106 | | | | 4,046,132 | | | | 3,798,027 | | | | (1,399,778 | ) | | | 103,958,910 | |
As of October 31, 2010, management has reviewed the tax positions for open periods (for federal purposes, three years from the date of filing and state purposes, four years from the date of filing) as applicable to the funds, and has determined that no provision for income tax is required in the funds’ financial statements. The funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the Statement of Operations. During the year of October 31, 2010, the funds did not incur any interest or penalties.
10. Subsequent Events:
Management has determined there are no subsequent events or transactions through the date the financial statements were issued that would have materially impacted the financial statements as presented.
11. Reorganization:
Under a plan of reorganization adopted by the Schwab Capital Trust, all of the assets and liabilities of the Schwab Institutional Select S&P 500 Fund were transferred to the Schwab S&P 500 Index Fund. The reorganization which qualified as a tax free exchange for federal income tax purposes, was completed at the close of business on September 9, 2009. The following is a
64
Schwab Equity Index Funds
Financial Notes (continued)
11. Reorganization (continued):
summary of shares outstanding, net assets and net asset value per share issued and unrealized appreciation/depreciation immediately before and after the reorganization.
| | | | | | | | | | | | | |
| | | Before Reorganization | | After Reorganization |
| | | | | Schwab
| | |
| | | Schwab
| | Institutional Select
| | Schwab
|
| | | S&P 500 Index Fund | | S&P 500 Fund | | S&P 500 Index Fund |
| |
| Shares | | | 345,295,674 | | | | 369,037,913 | | | | 530,939,364 | |
| Net Assets | | | $5,596,066,040 | | | | $3,008,644,483 | | | | $8,604,710,522 | |
| Net Asset Value | | | $16.21 | | | | $8.15 | | | | $16.21 | |
| Net unrealized appreciation/(depreciation) | | | $598,517,347 | | | | ($368,306,557 | ) | | | $230,210,790 | |
65
Report of Independent Registered Public Accounting Firm
To the Boards of Trustees and Shareholders of:
Schwab S&P 500 Index Fund
Schwab 1000 Index Fund
Schwab Small-Cap Index Fund
Schwab Total Stock Market Index Fund
Schwab International Index Fund
In our opinion, the accompanying statements of assets and liabilities, including the summary portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schwab 1000 Index Fund (one of the portfolios constituting Schwab Investments), Schwab S&P 500 Index Fund, Schwab Small-Cap Index Fund, Schwab Total Stock Market Index Fund and Schwab International Index Fund (four of the portfolios constituting Schwab Capital Trust) (hereafter collectively referred to as the “Funds”) at October 31, 2010, the results of each of their operations for the year then ended, the changes in each of their net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
December 15, 2010
66
Other Federal Tax Information (unaudited)
For corporate shareholders, the following percentage of the funds dividend distributions paid during the fiscal year ended October 31, 2010, qualify for the corporate dividends received deduction:
| | | | | |
| | | Percentage |
| |
| Schwab S&P 500 Index Fund | | | 100.00 | |
| Schwab 1000 Index Fund | | | 100.00 | |
| Schwab Small-Cap Index Fund | | | 93.77 | |
| Schwab Total Stock Market Index Fund | | | 98.94 | |
| Schwab International Index Fund | | | — | |
For the fiscal year ended October 31, 2010, the funds designate the following amounts of the dividend distributions as qualified dividends for the purpose of the maximum rate under section 1(h)(ii) of the Internal Revenue Code. Shareholders will be notified in January 2011 via IRS form 1099 of the amounts for use in preparing their 2010 income tax return.
| | | | | |
| Schwab S&P 500 Index Fund | | | $125,874,825 | |
| Schwab 1000 Index Fund | | | 78,998,534 | |
| Schwab Small-Cap Index Fund | | | 10,798,047 | |
| Schwab Total Stock Market Index Fund | | | 20,834,669 | |
| Schwab International Index Fund | | | 37,381,674 | |
The Schwab International Index Fund may elect to pass on the benefits of the foreign tax credit of $1,889,580 to its Shareholders for the year ended October 31, 2010. The respective foreign source income on the fund is $45,187,809.
67
Investment Advisory Agreement Approval
The Investment Company Act of 1940 (the “1940 Act”) requires that initial approval of, as well as the continuation of, a fund’s investment advisory agreement must be specifically approved (1) by the vote of the trustees or by a vote of the shareholders of the fund, and (2) by the vote of a majority of the trustees who are not parties to the investment advisory agreement or “interested persons” of any party (the “Independent Trustees”), cast in person at a meeting called for the purpose of voting on such approval. In connection with such approvals, the fund’s trustees must request and evaluate, and the investment adviser is required to furnish, such information as may be reasonably necessary to evaluate the terms of the investment advisory agreement.
The Board of Trustees (the “Board” or the “Trustees”, as appropriate) calls and holds one or more meetings each year that are dedicated, in whole or in part, to considering whether to renew the investment advisory agreements between Schwab Capital Trust and Schwab Investments (collectively, the “Trusts”) and Charles Schwab Investment Management, Inc. (“CSIM”) (the “Agreements”) with respect to the existing funds in the Trusts, including Schwab S&P 500 Index Fund, Schwab 1000 Index Fund, Schwab Small-Cap Index Fund, Schwab Total Stock Market Index Fund and Schwab International Index Fund (the “Funds”), and to review certain other agreements pursuant to which CSIM provides investment advisory services to certain other registered investment companies. In preparation for the meeting(s), the Board requests and reviews a wide variety of materials provided by CSIM, including information about CSIM’s affiliates, personnel and operations. The Board also receives extensive data provided by third parties. This information is in addition to the detailed information about the Funds that the Board reviews during the course of each year, including information that relates to Fund operations and Fund performance. The Independent Trustees receive advice from independent counsel to the Independent Trustees, including a memorandum regarding the responsibilities of trustees for the approval of investment advisory agreements. In addition, the Independent Trustees meet in executive session outside the presence of Fund management and participate in question and answer sessions with representatives of CSIM.
The Board, including a majority of the Independent Trustees, considered information specifically relating to its consideration of the continuance of the Agreements with respect to the Funds at meetings held on April 28, 2010, and June 3, 2010, and approved the renewal of the Agreements with respect to the Funds for an additional one year term at the meeting held on June 3, 2010. The Board’s approval of the Agreements with respect to the Funds was based on consideration and evaluation of a variety of specific factors discussed at these meetings and at prior meetings, including:
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| 1. | the nature, extent and quality of the services provided to the Funds under the Agreement, including the resources of CSIM and its affiliates dedicated to the Funds; |
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| 2. | each Fund’s investment performance and how it compared to that of certain other comparable mutual funds; |
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| 3. | each Fund’s expenses and how those expenses compared to those of certain other comparable mutual funds; |
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| 4. | the profitability of CSIM and its affiliates, including Charles Schwab & Co., Inc. (“Schwab”), with respect to each Fund, including both direct and indirect benefits accruing to CSIM and its affiliates; and |
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| 5. | the extent to which economies of scale would be realized as the Funds grow and whether fee levels in the Agreements reflect those economies of scale for the benefit of Fund investors. |
Nature, Extent and Quality of Services. The Board considered the nature, extent and quality of the services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds. In this regard, the Trustees evaluated, among other things, CSIM’s personnel, experience, track record and compliance program. The Trustees also considered investments in CSIM’s mutual fund infrastructure, Schwab’s wide range of products, services, and channel alternatives such as free advice, investment and research tools, Internet access, and an array of account features that benefit the Funds and their shareholders. The Trustees also considered Schwab’s excellent reputation as a full service brokerage firm and its overall financial condition. Finally, the Trustees considered that the vast majority of the Funds’ shareholders are also brokerage clients of Schwab. Following such evaluation, the Board concluded, within the context of its full deliberations, that the nature, extent and quality of services provided by CSIM to the Funds and the resources of CSIM and its affiliates dedicated to the Funds supported renewal of the Agreements with respect to the Funds.
Fund Performance. The Board considered Fund performance in determining whether to renew the Agreements with respect to the Funds. Specifically, the Trustees considered each Fund’s performance relative to a peer category of other mutual funds and appropriate indices/ benchmarks, in light of total return, and market trends. As part of this review, the Trustees considered the composition of the peer category, selection criteria and the reputation of the third party who prepared the peer category analysis. In evaluating the performance of each Fund, the Trustees considered both
68
risk and shareholder risk expectations for such Fund and the appropriateness of the benchmark used to compare the performance of each Fund. The Trustees further considered the level of Fund performance in the context of its review of Fund expenses and adviser profitability discussed below. Following such evaluation the Board concluded, within the context of its full deliberations, that the performance of the Funds supported renewal of the Agreements with respect to the Funds.
Fund Expenses. With respect to the Funds’ expenses, the Trustees considered the rate of compensation called for by the Agreements, and each Fund’s net operating expense ratio, in each case, in comparison to those of a peer group of mutual funds, such peer groups and comparisons having been selected and calculated by an independent third party. The Trustees considered the effects of CSIM’s and Schwab’s historical practice of voluntarily waiving management and other fees to prevent total Fund expenses from exceeding a specified cap. The Trustees also considered CSIM’s contractual commitment to keep each Fund’s expense cap for so long as CSIM serves as the adviser to such Fund. The Trustees also considered fees charged by CSIM to other mutual funds and exchange-traded funds. Following such evaluation, the Board concluded, within the context of its full deliberations, that the expenses of the Funds are reasonable and supported renewal of the Agreements with respect to the Funds.
Profitability. With regard to profitability, the Trustees considered the compensation flowing to CSIM and its affiliates, directly or indirectly. In this connection, the Trustees reviewed management’s profitability analyses, together with certain commentary thereon from an independent accounting firm. The Trustees also considered any other benefits derived by CSIM from its relationship with the Funds, such as whether, by virtue of its management of the Funds, CSIM obtains investment information or other research resources that aid it in providing advisory services to other clients. The Trustees considered whether the varied levels of compensation and profitability under the Agreements and other service agreements were reasonable and justified in light of the quality of all services rendered to each Fund by CSIM and its affiliates. Based on this evaluation, the Board concluded, within the context of its full deliberations, that the profitability of CSIM is reasonable and supported renewal of the Agreements with respect to the Funds.
Economies of Scale. The Trustees considered the existence of any economies of scale and whether those are passed along to a Fund’s shareholders through a graduated investment advisory fee schedule or other means, including any fee waivers by CSIM and its affiliates. In this regard, and consistent with their consideration of Fund expenses, the Trustees considered that CSIM and Schwab have committed resources to minimize the effects on shareholders of diseconomies of scale during periods when fund assets were relatively small through their contractual expense waivers. For example, such diseconomies of scale may particularly affect newer funds or funds with investment strategies that are from time to time out of favor, but shareholders may benefit from the continued availability of such funds at subsidized expense levels. The Trustees also considered the existing contractual investment advisory fee schedules relating to Schwab 1000 Index Fund that include lower fees at higher graduated asset levels. Based on this evaluation the Board concluded, within the context of its full deliberations, that the Funds obtain reasonable benefit from economies of scale.
In the course of their deliberations, the Trustees did not identify any particular information or factor that was all important or controlling. Based on the Trustees’ deliberation and their evaluation of the information described above, the Board, including all of the Independent Trustees, approved the continuation of the Agreements with respect to the Funds and concluded that the compensation under the Agreements with respect to the Funds is fair and reasonable in light of such services and expenses and such other matters as the Trustees have considered to be relevant in the exercise of their reasonable judgment.
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Trustees and Officers
The tables below give information about the trustees and officers for Schwab Capital Trust which includes the funds covered in this report. The “Fund Complex” includes The Charles Schwab Family of Funds, Schwab Capital Trust, Schwab Investments, Schwab Annuity Portfolios, Schwab Strategic Trust, Laudus Trust and Laudus Institutional Trust. The Fund Complex includes 84 funds.
The address for all trustees and officers is 211 Main Street, San Francisco, CA 94105. You can find more information about the trustees and officers in the Statement of Additional Information, which is available free by calling 1-800-435-4000.
Independent Trustees
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served1) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Mariann Byerwalter
1960
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Chairman of JDN Corporate Advisory LLC. | | 73 | | Director, Redwood Trust, Inc. (1998 – present)
Director, PMI Group Inc. (2001 – 2009)
Director, Excelsior Funds (2006 – 2007) |
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|
John F. Cogan
1947
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | Senior Fellow: The Hoover Institution at Stanford University (Oct. 1979 – present); Senior Fellow Stanford Institute for Economic Policy Research; Professor of Public Policy, Stanford University (Sept. 1994 – present). | | 73 | | Director, Gilead Sciences, Inc. (2005 – present)
Director, Monaco Coach Corporation (2005 – 2009) |
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|
William A. Hasler
1941
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Dean Emeritus, Haas School of Business, University of California, Berkeley (July 1998 – present). | | 73 | | Director, Ditech Networks Corporation (1997 – present)
Director, TOUSA (1998 – present)
Director, Mission West Properties (1998 – present)
Director, Globalstar, Inc. (2009 – present)
Director, Harris-Stratex Networks (2001 – present)
Director, Aphton Corp. (1991 – 2007)
Director, Solectron Corporation (1998 – 2007)
Director, Genitope Corporation (2000 – 2009)
Director, Excelsior Funds (2006 – 2007) |
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|
Gerald B. Smith
1950
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Chairman, Chief Executive Officer and Founder of Smith Graham & Co. (investment advisors) (1990 – present). | | 73 | | Lead Independent Director, Board of Cooper Industries (2002 – present)
Director and Chairman of the Audit Committee, Oneok Partners LP (2003 – present)
Director, Oneok, Inc (2009 – present) |
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|
Donald R. Stephens
1938
Trustee
(Trustee of Schwab Capital Trust since 2000.) | | Managing Partner, D.R. Stephens & Company (investments) (1973 – present). | | 73 | | None |
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|
70
Independent Trustees (continued)
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served1) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Joseph H. Wender
1944
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | Senior Consultant, Goldman Sachs & Co., Inc. (Jan. 2008- present); Partner, Colgin Partners, LLC (vineyards) (February 1998 – present); Senior Director, Chairman of the Finance Committee, GSC Group (July 2005 – Dec. 2007); General Partner, Goldman Sachs & Co., Inc. (Oct. 1982 – June 2005). | | 73 | | Board Member and Chairman of the Audit Committee, Isis Pharmaceuticals (1994 – present) |
| |
|
Michael W. Wilsey
1943
Trustee
(Trustee of Schwab Capital Trust since 1993.) | | Chairman and Chief Executive Officer, Wilsey Bennett, Inc. (real estate investment and management, and other investments). | | 73 | | None |
| |
|
Interested Trustees
| | | | | | | |
Name, Year of Birth,
| | | | Number of
| | |
and Position(s) with
| | | | Portfolios in
| | |
the trust; (Terms of
| | | | Fund Complex
| | |
office, and length of
| | Principal Occupations
| | Overseen by
| | |
| Time Served ) | | During the Past Five Years | | the Trustee | | Other Directorships |
| |
Charles R. Schwab2
1937
Chairman and Trustee
(Chairman and Trustee of Schwab Capital Trust since 1993.) | | Chairman and Director, The Charles Schwab Corporation, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc., Charles Schwab Bank, N. A.; Chairman and Chief Executive Officer, Schwab (SIS) Holdings Inc. I, Schwab International Holdings, Inc.; Chief Executive Officer, Schwab Holdings, Inc.; Through June 2007, Director, U.S. Trust Company, N. A., U.S. Trust Corporation, United States Trust Company of New York. Until October 2008, Chief Executive Officer, The Charles Schwab Corporation, Charles Schwab & Co., Inc. | | 73 | | None |
| |
|
Walter W. Bettinger II2
1960
Trustee
(Trustee of Schwab Capital Trust since 2008.) | | As of October 2008, President and Chief Executive Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. Since October 2008, Director, The Charles Schwab Corporation. Since May 2008, Director, Charles Schwab & Co., Inc. and Schwab Holdings, Inc. Since 2006, Director, Charles Schwab Bank. From 2004 through 2007, Executive Vice President and President, Schwab Investor Services. From 2004 through 2005, Executive Vice President and Chief Operating Officer, Individual Investor Enterprise, and from 2002 through 2004, Executive Vice President, Corporate Services. Until October 2008, President and Chief Operating Officer, Charles Schwab & Co., Inc. and The Charles Schwab Corporation. | | 84 | | None |
| |
|
71
Officers of the Trust
| | | |
Name, Year of Birth, and Position(s)
| | |
with the trust; (Terms of office, and
| | |
| length of Time Served3) | | Principal Occupations During the Past Five Years |
| |
Marie Chandoha
1961
President and Chief Executive Officer
(Officer of Schwab Capital Trust since 2010.) | | Executive Vice President, Charles Schwab & Co., Inc. (Sept. 2010 – present); Director, President and Chief Executive Officer (Dec. 2010 – present), Chief Investment Officer, (Sept. 2010 – present), Charles Schwab Investment Management, Inc.; President and Chief Executive Officer, Schwab Funds, Laudus Funds and Schwab ETFs (Dec. 2010 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010); Co-Head and Senior Portfolio Manager, Wells Capital Management (June 1999 – March 2007). |
| |
|
George Pereira
1964
Treasurer and Principal Financial Officer
(Officer of Schwab Capital Trust since 2004.) | | Senior Vice President and Chief Financial Officer, Charles Schwab Investment Management, Inc. (November 2004 – present); Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (Nov. 2004 – present) and Schwab ETFs (Oct. 2009 – present); Director, Charles Schwab Worldwide Fund, PLC and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present); Treasurer, Chief Financial Officer and Chief Accounting Officer, Excelsior Funds (June 2006 – June 2007). |
| |
|
Koji E. Felton
1961
Secretary and Chief Legal Officer
(Officer of Schwab Capital Trust since 1998.) | | Senior Vice President, Chief Counsel and Corporate Secretary, Charles Schwab Investment Management, Inc. (July 2000 – present); Senior Vice President and Deputy General Counsel, Charles Schwab & Co., Inc. (June 1998 – present); Vice President and Assistant Clerk, Laudus Funds (Jan. 2010 – present); Chief Legal Officer and Secretary, Schwab Funds (Nov. 1998 – present) and Schwab ETFs (Oct. 2009 – present); Chief Legal Officer and Secretary, Excelsior Funds (June 2006 – June 2007). |
| |
|
Catherine MacGregor
1964
Vice President
(Officer of Schwab Capital Trust since 2005.) | | Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 – present); Vice President (Dec. 2005 – present), Chief Legal Officer and Clerk, Laudus Funds (March 2007 – present); Vice President and Assistant Clerk, Schwab Funds (Dec. 2005 – present) and Schwab ETFs (Oct. 2009 – present). |
| |
|
Michael Haydel
1972
Vice President
(Officer of Schwab Capital Trust since 2006.) | | Vice President, Asset Management Client Services, Charles Schwab & Co., Inc. (2004 – present); Vice President (Sept. 2005 – present), Anti-Money Laundering Officer (Oct. 2005 – Feb. 2009), Laudus Funds; Vice President, Schwab Funds (June 2007 – present) and Schwab ETFs (Oct. 2009 – present). |
| |
|
| | |
| 1 | | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Schwab Funds® retirement policy requires that independent trustees elected after January 1, 2000 retire at age 72 or after 20 years of service as a trustee, whichever comes first, provided that any trustee who serves on both Schwab Funds and Laudus Funds retires from both boards when first required to retire by either board. Independent trustees elected prior to January 1, 2000 will retire on the following schedule: Messrs. Stephens and Wilsey will retire on December 31, 2010. |
| 2 | | Mr. Schwab and Mr. Bettinger are Interested Trustees because they are employees of Schwab and/or the investment adviser. In addition to their employment with Schwab and/or the investment adviser, Messrs. Schwab and Bettinger also own stock of The Charles Schwab Corporation. |
| 3 | | The President, Treasurer and Secretary hold office until their respective successors are chosen and qualified or until he or she sooner dies, resigns, is removed or becomes disqualified. Each of the other officers serves at the pleasure of the Board. |
72
Glossary
asset allocation The practice of dividing a portfolio among different asset classes, with each asset class assigned a particular percentage.
asset class A group of securities with similar structure and basic characteristics. Stocks, bonds and cash are the three main examples of asset classes.
beta A historical measure of an investment’s volatility relative to a market index (usually the S&P 500®). The index is defined as having a beta of 1.00. Investments with a beta higher than 1.00 have been more volatile than the index; those with a beta of less than 1.00 have been less volatile.
bond A security representing a loan from the investor to the issuer. A bond typically pays interest at a fixed rate (the “coupon rate”) until a specified date (the “maturity date”), at which time the issuer returns the money borrowed (“principal” or “face value”) to the bondholder. Because of their structure, bonds are sometimes called “fixed income securities” or “debt securities.”
An individual bond is subject to the credit risk of the issuer. Changes in interest rates can affect a bond’s market value prior to call or maturity. There is no guarantee that a bond’s yield to call or maturity will provide a positive return over the rate of inflation.
bond fund A bond fund is subject to the same credit, interest rate, and inflation risks as bonds. In addition, a bond fund incurs ongoing fees and expenses. A bond fund’s net asset value will fluctuate with the price of the underlying bonds and the portfolio turnover activity; return of principal is not guaranteed.
cap, capitalization See “market cap.”
capital gain, capital loss the difference between the amount paid for an investment and its value at a later time. If the investment has been sold, the capital gain or loss is considered a realized gain or loss. If the investment is still held, the gain or loss is still “on paper” and is considered unrealized.
earnings growth rate For a mutual fund, the average yearly rate at which the earnings of the companies in the fund’s portfolio have grown, measured over the past five years.
earnings per share (EPS) A company’s earnings, or net income, for the past 12 months, divided by the number of shares outstanding.
expense ratio The amount that is taken from a mutual fund’s assets each year to cover the fund’s operating expenses. An expense ratio of 0.50% means that a fund’s expenses amount to half of one percent of its average net assets a year.
gross domestic product (GDP) The output of goods and services produced by labor and property located in the United States.
market cap, market capitalization The value of a company as determined by the total value of all shares of its stock outstanding.
median market cap The midpoint of the range of market caps of the stocks held by a fund. There are different ways of calculating median market cap. With a simple median, half of the stocks in the fund’s portfolio would be larger than the median, and half would be smaller. With a weighted median (the type that is calculated for these funds), half of the fund’s assets are invested in stocks that are larger than the median market cap, and half in stocks that are smaller.
net asset value (NAV) The value of one share of a mutual fund. NAV is calculated by taking the fund’s total assets, subtracting liabilities, and dividing by the number of shares outstanding.
outstanding shares, shares outstanding When speaking of a company or mutual fund, indicates all shares currently held by investors.
price-to-book ratio (P/B) The market price of a company’s stock compared with its “book value.” A mutual fund’s P/B is the weighted average of the P/B of all stocks in the fund’s portfolio.
price-to-earnings ratio (P/E) The market price of a company’s stock compared with earnings over the past year. A mutual fund’s P/E is the weighted average of the P/E of all stocks in the fund’s portfolio.
return on equity (ROE) The average yearly rate of return for each dollar of investors’ money, measured over the past five years.
stock A share of ownership, or equity, in the issuing company.
total return The percentage that an investor would have earned or lost on an investment in the fund assuming dividends and distributions were reinvested.
weighted average For mutual funds, an average that gives the same weight to each security as the security represents in the fund’s portfolio.
yield The income paid out by an investment, expressed as a percentage of the investment’s market value.
73
PRIVACY NOTICE
THIS IS NOT PART OF THE SHAREHOLDER REPORT
A Commitment to Your Privacy
Your Privacy Is Not for Sale
We do not and will not sell your personal information to anyone, for any reason.
We are committed to protecting the privacy of information we maintain about you. Below are details about our commitment, including the types of information we collect and how we use and share that information. This Privacy Notice applies to you only if you are an individual who invests directly in the funds by placing orders through the funds’ transfer agent. If you place orders through your brokerage account at Charles Schwab & Co., Inc. or an account with another broker-dealer, investment advisor, 401(k) plan, employee benefit plan, administrator, bank or other financial intermediary, you are covered by the privacy policies of that financial institution and should consult those policies.
How We Collect Information About You
We collect personal information about you in a number of ways.
| |
| • | APPLICATION AND REGISTRATION INFORMATION. |
We collect personal information from you when you open an account or utilize one of our services. We may also collect information about you from third parties such as consumer reporting agencies to verify your identity. The information we collect may include personal information, including your Social Security number, as well as details about your interests, investments and investment experience.
| |
| • | TRANSACTION AND EXPERIENCE INFORMATION. |
Once your account has been opened, we collect and maintain personal information about your account activity, including your transactions, balances, positions and history. This information allows us to administer your account and provide the services you have requested.
When you visit our websites, we may use devices known as “cookies,” graphic interchange format files (GIFs), or other similar web tools to enhance your web experience. These tools help us to recognize you, maintain your web session, and provide a more personalized experience. To learn more, please click the Privacy link on our website.
How We Share and Use Your Information
We provide access to information about you to our affiliated companies, outside companies and other third parties in certain limited circumstances, including:
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| • | to help us process transactions for your account; |
| |
| • | when we use other companies to provide services for us, such as printing and mailing your account statements; |
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| • | when we believe that disclosure is required or permitted under law (for example, to cooperate with regulators or law enforcement, resolve consumer disputes, perform credit/authentication checks, or for risk control). |
State Laws
We will comply with state laws that apply to the disclosure or use of information about you.
Safeguarding Your Information — Security Is a Partnership
We take precautions to ensure the information we collect about you is protected and is accessed only by authorized individuals or organizations.
Companies we use to provide support services are not allowed to use information about our shareholders for their own purposes and are contractually obligated to maintain strict confidentiality. We limit their use of information to the performance of the specific services we have requested.
We restrict access to personal information by our employees and agents. Our employees are trained about privacy and are required to safeguard personal information.
We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
Contact Us
To provide us with updated information, report suspected fraud or identity theft, or for any other questions, please call one of the numbers below.
Schwab Funds® direct investors: 1-800-407-0256
© 2010 Schwab Funds. All rights reserved.
Schwab Funds® offers you an extensive family of mutual funds, each one based on a clearly defined investment approach and using disciplined management strategies. The list at right shows all currently available Schwab Funds.
Whether you are an experienced investor or just starting out, Schwab Funds can help you achieve your financial goals. An investor should consider a fund’s investment objectives, risks, charges and expenses carefully before investing or sending money. This and other important information can be found in the fund’s prospectus. Please call 1-800-435-4000 for a prospectus and brochure for any Schwab Fund. Please read the prospectus carefully before you invest. This report must be preceded or accompanied by a current prospectus.
Proxy Voting Policies, Procedures and Results
A description of the proxy voting policies and procedures used to determine how to vote proxies on behalf of the funds is available without charge, upon request, by visiting Schwab’s website at www.schwabfunds.com/prospectus, the SEC’s website at http://www.sec.gov, or by contacting Schwab Funds at 1-800-435-4000.
Information regarding how a fund voted proxies relating to portfolio securities during the most recent twelve-month period ended June 30 is available, without charge, by visiting Schwab’s website at www.schwabfunds.com/prospectus or the SEC’s website at http://www.sec.gov.
The Schwab Funds Family®
Stock Funds
Schwab Premier Equity Fund®
Schwab Core Equity Fundtm
Schwab Dividend Equity Fundtm
Schwab Large-Cap Growth Fundtm
Schwab Small-Cap Equity Fundtm
Schwab Hedged Equity Fundtm
Schwab Financial Services Fundtm
Schwab Health Care Fundtm
Schwab® International Core Equity Fund
Schwab Fundamental US Large* Company Index Fund
Schwab Fundamental US Small-Mid* Company Index Fund
Schwab Fundamental International* Large Company Index Fund
Schwab Fundamental International* Small-Mid Company Index Fund
Schwab Fundamental Emerging Markets* Index Fund
Schwab Global Real Estate Fundtm
Schwab S&P 500 Index Fund
Schwab 1000 Index® Fund
Schwab Small-Cap Index Fund®
Schwab Total Stock Market Index Fund®
Schwab International Index Fund®
Asset Allocation Funds
Schwab Balanced Fundtm
Schwab MarketTrack All Equity Portfoliotm
Schwab MarketTrack Growth Portfoliotm
Schwab MarketTrack Balanced Portfoliotm
Schwab MarketTrack Conservative Portfoliotm
Schwab Target 2010 Fund
Schwab Target 2015 Fund
Schwab Target 2020 Fund
Schwab Target 2025 Fund
Schwab Target 2030 Fund
Schwab Target 2035 Fund
Schwab Target 2040 Fund
Schwab® Monthly Income Fund – Moderate Payout
Schwab® Monthly Income Fund – Enhanced Payout
Schwab® Monthly Income Fund – Maximum Payout
Bond Funds
Schwab YieldPlus Fund®
Schwab Short-Term Bond Market Fundtm
Schwab® Premier Income Fund
Schwab Total Bond Market Fundtm
Schwab GNMA Fundtm
Schwab Inflation Protected Fundtm
Schwab Tax-Free YieldPlus Fundtm
Schwab Tax-Free Bond Fundtm
Schwab California Tax-Free YieldPlus Fundtm
Schwab California Tax-Free Bond Fundtm
Schwab Money Funds
Schwab offers an array of money market funds that seek high current income consistent with safety and liquidity1. Choose from taxable or tax-advantaged alternatives. Many can be linked to your eligible Schwab account to “sweep” cash balances automatically, subject to availability, when you’re between investments. Or, for your larger cash reserves, choose one of our Value Advantage Investments®.
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| * | | SCHWAB is a registered trademark of Charles Schwab & Co., Inc. FUNDAMENTAL INDEX, FUNDAMENTAL US LARGE, FUNDAMENTAL US SMALL-MID, FUNDAMENTAL INTERNATIONAL AND FUNDAMENTAL EMERGING MARKETS are trademarks of Research Affiliates LLC. |
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| 1 | | Investments in money market funds are neither insured nor guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other government agency and, although they seek to preserve the value of your investment at $1 per share, it is possible to lose money. |
Investment Adviser
Charles Schwab Investment Management, Inc.
211 Main Street, San Francisco, CA 94105
Funds
Schwab Funds®
P.O. Box 3812, Englewood, CO 80155–3812
This report is not authorized for distribution to prospective investors
unless preceded or accompanied by a current prospectus.
© 2010 Charles Schwab & Co., Inc. All rights reserved.
Member SIPC®
Printed on recycled paper.
MFR13810-13
| (a) | | Registrant has adopted a code of ethics that applies to its principal executive officer, principal financial officer, and any other persons who perform a similar function, regardless of whether these individuals are employed by Registrant or a third party. |
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| (c) | | During the period covered by the report, no amendments were made to the provisions of this code of ethics. |
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| (d) | | During the period covered by the report, Registrant did not grant any waivers, including implicit waivers, from the provisions of this code of ethics. |
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| (f)(1) | | Registrant has filed this code of ethics as an exhibit pursuant to Item 12(a)(1) of Form N-CSR. |
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| Item 3: Audit Committee Financial Expert. |
Registrant’s Board of Trustees has determined that William Hasler and Mariann Byerwalter, currently serving on its audit committee, are “audit committee financial experts,” as such term is defined in Item 3 of Form N-CSR. Each of these members of Registrant’s audit committee is “independent” under the standards set forth in Item 3 of Form N-CSR.
The designation of each of Mr. Hasler and Ms. Byerwalter as an “audit committee financial expert” pursuant to Item 3 of Form N-CSR does not (i) impose upon such individual any duties, obligations, or liability that are greater than the duties, obligations and liability imposed upon such individual as a member of Registrant’s audit committee or Board of Trustees in the absence of such designation; and (ii) affect the duties, obligations or liability of any other member of Registrant’s audit committee or Board of Trustees.
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| Item 4: Principal Accountant Fees and Services. |
Registrant is composed of thirty-five series. Thirty-two series have a fiscal year-end of October 31, whose annual financial statements are reported in Item 1, and three series has a fiscal year-end of December 31. Principal accountant fees disclosed in Items 4(a)-(d) and 4(g) include fees billed for services rendered to each of the thirty-five series, based on their respective 2010 and 2009 fiscal years, as applicable.
(a) Below are the aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of Registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.
Audit Fees
2010: $1,158,777 2009: $1,219,764
(b) Below are the aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of Registrant’s financial statements and are not reported under paragraph (a) above.
Audit-Related Fees
For services rendered to Registrant:
2010: $82,667 2009: $94,555
Nature of these services: tax provision review and procedures performed related to Registrant’s service provider conversion.
In each of the last two fiscal years there were no “Audit-Related Fees” required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
(c) Below are the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.
Tax Fees
For services rendered to Registrant:
2010: $90,725 2009: $103,222
Nature of these services: preparation and review of tax returns.
In each of the last two fiscal years there were no “Tax Fees” required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
(d) Below are the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) above.
All Other Fees
For services rendered to Registrant:
2010: $13,258 2009: $13,258
| | |
| | Nature of these services: | review of the methodology of allocation of Charles Schwab & Co., Inc. (“Schwab”) expenses for purposes of Section 15(c) of the Investment Company Act of 1940. |
In each of the last two fiscal years there were no “All Other Fees” required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X.
(e)(1) Registrant’s audit committee does not have pre-approval policies and procedures as described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
(2) There were no services described in each of paragraphs (b) through (d) above (including services required to be approved by Registrant’s audit committee pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X) that were approved by Registrant’s audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.
(f) Not applicable.
(g) Below are the aggregate non-audit fees billed in each of the last two fiscal years by Registrant’s principal accountant for services rendered to Registrant, to Registrant’s investment adviser, and to any entity controlling, controlled by, or under common control with Registrant’s investment adviser that provides ongoing services to Registrant.
2009: $186,650 2008: $211,035
Although not required to be included in the amounts disclosed under this paragraph (g) or any other paragraph of this Item 4, below are the aggregate fees billed in each of the last two fiscal years by Registrant’s principal accountant for tax compliance services rendered to U.S. Trust, an entity under common control with Registrant’s investment adviser that does not provide services to Registrant.
| (h) | | During the past fiscal year, all non-audit services provided by Registrant’s principal accountant to either Registrant’s investment adviser or to any entity controlling, controlled by, or under common control with Registrant’s investment adviser that provides ongoing services to Registrant were pre-approved. Included in the audit committee’s pre-approval was the review and consideration as to whether the provision of these non-audit services is compatible with maintaining the principal accountant’s independence. |
| | |
| Item 5: Audit Committee of Listed Registrants. |
Not applicable.
| | |
| Item 6: Schedule of Investments. |
Except as noted below, the schedules of investments are included as part of the report to shareholders filed under Item 1 of this Form. The schedules of investments for the Schwab S&P 500 Index Fund, Schwab Small-Cap Index Fund, Schwab Total Stock Market Index Fund, Schwab International Index Fund, Schwab Fundamental US Large Company Index Fund, Schwab Fundamental US Small-Mid Company Index Fund, Schwab Fundamental International Large Company Index Fund, Schwab Fundamental International Small-Mid Company Index Fund and Schwab Fundamental Emerging Markets Index Fund are filed under this Item.
Schwab S&P 500 Index Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .9% | | Common Stock | | | 8,564,085,806 | | | | 9,997,803,572 | |
| | 0 | .1% | | Short-Term Investments | | | 9,501,330 | | | | 9,501,330 | |
| |
| |
| | 100 | .0% | | Total Investments | | | 8,573,587,136 | | | | 10,007,304,902 | |
| | 0 | .1% | | Collateral Invested for Securities on Loan | | | 13,300,790 | | | | 13,300,790 | |
| | (0 | .1)% | | Other Assets and Liabilities, Net | | | | | | | (13,679,342 | ) |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 10,006,926,350 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 99.9% of net assets |
| |
Automobiles & Components 0.8%
|
Ford Motor Co. * | | | 3,176,997 | | | | 44,890,968 | |
| Harley-Davidson, Inc. | | | 231,470 | | | | 7,101,499 | |
| Johnson Controls, Inc. | | | 590,859 | | | | 20,750,968 | |
The Goodyear Tire & Rubber Co. * | | | 197,636 | | | | 2,019,840 | |
| | | | | | | | | |
| | | | | | | | 74,763,275 | |
| |
Banks 2.8%
|
| BB&T Corp. | | | 636,113 | | | | 14,891,405 | |
| Comerica, Inc. | | | 164,570 | | | | 5,888,315 | |
| Fifth Third Bancorp | | | 791,629 | | | | 9,942,860 | |
First Horizon National Corp. * | | | 234,608 | | | | 2,367,195 | |
| Hudson City Bancorp, Inc. | | | 481,992 | | | | 5,615,207 | |
| Huntington Bancshares, Inc. | | | 768,693 | | | | 4,358,489 | |
| KeyCorp | | | 808,498 | | | | 6,621,599 | |
M&T Bank Corp. (c) | | | 76,398 | | | | 5,710,750 | |
| Marshall & Ilsley Corp. | | | 329,392 | | | | 1,946,707 | |
| People’s United Financial, Inc. | | | 343,300 | | | | 4,226,023 | |
| PNC Financial Services Group, Inc. | | | 491,178 | | | | 26,474,494 | |
| Regions Financial Corp. | | | 1,079,945 | | | | 6,803,653 | |
| SunTrust Banks, Inc. | | | 466,116 | | | | 11,662,222 | |
| U.S. Bancorp | | | 1,774,328 | | | | 42,903,251 | |
| Wells Fargo & Co. | | | 4,864,309 | | | | 126,861,179 | |
| Zions Bancorp | | | 109,298 | | | | 2,258,097 | |
| | | | | | | | | |
| | | | | | | | 278,531,446 | |
| |
Capital Goods 8.0%
|
| 3M Co. | | | 658,619 | | | | 55,468,892 | |
| Caterpillar, Inc. | | | 577,162 | | | | 45,364,933 | |
| Cummins, Inc. | | | 182,562 | | | | 16,083,712 | |
| Danaher Corp. | | | 488,074 | | | | 21,162,889 | |
| Deere & Co. | | | 404,286 | | | | 31,049,165 | |
| Dover Corp. | | | 174,270 | | | | 9,253,737 | |
| Eaton Corp. | | | 143,839 | | | | 12,777,218 | |
| Emerson Electric Co. | | | 718,815 | | | | 39,462,943 | |
| Fastenal Co. | | | 98,649 | | | | 5,078,450 | |
| Flowserve Corp. | | | 50,100 | | | | 5,010,000 | |
| Fluor Corp. | | | 160,582 | | | | 7,738,447 | |
| General Dynamics Corp. | | | 371,660 | | | | 25,317,479 | |
| General Electric Co. | | | 9,950,352 | | | | 159,404,639 | |
| Goodrich Corp. | | | 114,696 | | | | 9,413,101 | |
| Honeywell International, Inc. | | | 699,429 | | | | 32,950,100 | |
| Illinois Tool Works, Inc. | | | 437,336 | | | | 19,986,255 | |
| ITT Corp. | | | 169,678 | | | | 8,007,105 | |
Jacobs Engineering Group, Inc. * | | | 98,834 | | | | 3,815,981 | |
L-3 Communications Holdings, Inc. | | | 110,383 | | | | 7,968,549 | |
| Lockheed Martin Corp. | | | 305,491 | | | | 21,778,453 | |
| Masco Corp. | | | 347,388 | | | | 3,703,156 | |
| Northrop Grumman Corp. | | | 301,767 | | | | 19,074,692 | |
| PACCAR, Inc. | | | 325,350 | | | | 16,677,441 | |
| Pall Corp. | | | 86,430 | | | | 3,687,968 | |
| Parker Hannifin Corp. | | | 155,336 | | | | 11,890,971 | |
| Precision Castparts Corp. | | | 129,927 | | | | 17,745,430 | |
Quanta Services, Inc. * | | | 181,000 | | | | 3,558,460 | |
| Raytheon Co. | | | 371,488 | | | | 17,118,167 | |
| Rockwell Automation, Inc. | | | 132,521 | | | | 8,265,335 | |
| Rockwell Collins, Inc. | | | 147,405 | | | | 8,919,477 | |
| Roper Industries, Inc. | | | 85,000 | | | | 5,901,550 | |
| Snap-on, Inc. | | | 58,282 | | | | 2,972,382 | |
| Textron, Inc. | | | 230,904 | | | | 4,807,421 | |
| The Boeing Co. | | | 708,654 | | | | 50,059,319 | |
| Tyco International Ltd. | | | 475,000 | | | | 18,183,000 | |
| United Technologies Corp. | | | 882,035 | | | | 65,949,757 | |
| W.W. Grainger, Inc. | | | 63,127 | | | | 7,829,642 | |
| | | | | | | | | |
| | | | | | | | 803,436,216 | |
| |
Commercial & Professional Supplies 0.6%
|
| Avery Dennison Corp. | | | 89,776 | | | | 3,263,358 | |
| Cintas Corp. | | | 122,876 | | | | 3,375,404 | |
| Equifax, Inc. | | | 119,661 | | | | 3,964,369 | |
| Iron Mountain, Inc. | | | 150,100 | | | | 3,270,679 | |
| Pitney Bowes, Inc. | | | 196,591 | | | | 4,313,206 | |
| R.R. Donnelley & Sons Co. | | | 194,869 | | | | 3,595,333 | |
| Republic Services, Inc. | | | 281,634 | | | | 8,395,509 | |
| Robert Half International, Inc. | | | 107,442 | | | | 2,912,753 | |
Stericycle, Inc. * | | | 74,600 | | | | 5,351,804 | |
| The Dun & Bradstreet Corp. | | | 40,100 | | | | 2,983,841 | |
| Waste Management, Inc. | | | 476,916 | | | | 17,035,439 | |
| | | | | | | | | |
| | | | | | | | 58,461,695 | |
| |
Consumer Durables & Apparel 1.1%
|
| Coach, Inc. | | | 283,028 | | | | 14,151,400 | |
| D.R. Horton, Inc. | | | 189,516 | | | | 1,978,547 | |
Eastman Kodak Co. * | | | 117,413 | | | | 553,015 | |
| Fortune Brands, Inc. | | | 138,179 | | | | 7,468,575 | |
Harman International Industries, Inc. * | | | 51,156 | | | | 1,716,284 | |
| Hasbro, Inc. | | | 134,117 | | | | 6,202,911 | |
See financial notes 1
Schwab S&P 500 Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Leggett & Platt, Inc. | | | 157,894 | | | | 3,217,880 | |
| Lennar Corp., Class A | | | 83,818 | | | | 1,216,199 | |
| Mattel, Inc. | | | 358,794 | | | | 8,370,664 | |
| Newell Rubbermaid, Inc. | | | 250,050 | | | | 4,413,383 | |
| NIKE, Inc., Class B | | | 371,862 | | | | 30,284,441 | |
| Polo Ralph Lauren Corp. | | | 60,526 | | | | 5,863,759 | |
Pulte Group, Inc. * | | | 293,286 | | | | 2,302,295 | |
| Stanley Black & Decker, Inc. | | | 148,581 | | | | 9,207,565 | |
| VF Corp. | | | 80,391 | | | | 6,691,747 | |
| Whirlpool Corp. | | | 76,122 | | | | 5,772,331 | |
| | | | | | | | | |
| | | | | | | | 109,410,996 | |
| |
Consumer Services 1.9%
|
Apollo Group, Inc., Class A * | | | 109,790 | | | | 4,114,929 | |
| Carnival Corp. | | | 416,421 | | | | 17,976,895 | |
| Darden Restaurants, Inc. | | | 128,248 | | | | 5,862,216 | |
| DeVry, Inc. | | | 40,000 | | | | 1,914,400 | |
| H&R Block, Inc. | | | 262,105 | | | | 3,090,218 | |
| International Game Technology | | | 227,760 | | | | 3,550,778 | |
| Marriott International, Inc., Class A | | | 238,772 | | | | 8,846,503 | |
| McDonald’s Corp. | | | 1,009,338 | | | | 78,496,216 | |
| Starbucks Corp. | | | 714,662 | | | | 20,353,574 | |
| Starwood Hotels & Resorts Worldwide, Inc. | | | 180,068 | | | | 9,748,881 | |
| Wyndham Worldwide Corp. | | | 178,464 | | | | 5,130,840 | |
| Wynn Resorts Ltd. | | | 74,700 | | | | 8,005,599 | |
| Yum! Brands, Inc. | | | 444,985 | | | | 22,053,457 | |
| | | | | | | | | |
| | | | | | | | 189,144,506 | |
| |
Diversified Financials 7.1%
|
| American Express Co. | | | 975,741 | | | | 40,454,222 | |
| Ameriprise Financial, Inc. | | | 238,214 | | | | 12,313,282 | |
| Bank of America Corp. | | | 9,367,011 | | | | 107,158,606 | |
| Bank of New York Mellon Corp. | | | 1,117,673 | | | | 28,008,885 | |
| Capital One Financial Corp. | | | 422,474 | | | | 15,745,606 | |
Citigroup, Inc. * | | | 23,804,076 | | | | 99,262,997 | |
| CME Group, Inc. | | | 63,537 | | | | 18,403,492 | |
| Discover Financial Services | | | 500,773 | | | | 8,838,643 | |
E*TRADE Financial Corp. * | | | 141,519 | | | | 2,023,722 | |
| Federated Investors, Inc., Class B | | | 76,906 | | | | 1,915,728 | |
| Franklin Resources, Inc. | | | 145,835 | | | | 16,727,275 | |
IntercontinentalExchange, Inc. * | | | 67,958 | | | | 7,806,336 | |
| Invesco Ltd. | | | 436,147 | | | | 10,031,381 | |
| Janus Capital Group, Inc. | | | 171,695 | | | | 1,813,099 | |
| JPMorgan Chase & Co. | | | 3,714,631 | | | | 139,781,565 | |
| Legg Mason, Inc. | | | 153,698 | | | | 4,769,249 | |
Leucadia National Corp. * | | | 177,151 | | | | 4,503,178 | |
| Moody’s Corp. | | | 188,529 | | | | 5,101,595 | |
| Morgan Stanley | | | 1,280,754 | | | | 31,852,352 | |
| Northern Trust Corp. | | | 225,818 | | | | 11,207,347 | |
| NYSE Euronext | | | 245,500 | | | | 7,522,120 | |
SLM Corp. * | | | 493,118 | | | | 5,868,104 | |
| State Street Corp. | | | 466,026 | | | | 19,461,246 | |
| T. Rowe Price Group, Inc. | | | 243,179 | | | | 13,440,503 | |
The Charles Schwab Corp. (b) | | | 891,781 | | | | 13,733,427 | |
| The Goldman Sachs Group, Inc. | | | 480,169 | | | | 77,283,201 | |
The NASDAQ OMX Group, Inc. * | | | 116,400 | | | | 2,446,728 | |
| | | | | | | | | |
| | | | | | | | 707,473,889 | |
| |
Energy 11.1%
|
| Anadarko Petroleum Corp. | | | 446,909 | | | | 27,516,187 | |
| Apache Corp. | | | 326,206 | | | | 32,953,330 | |
| Baker Hughes, Inc. | | | 397,463 | | | | 18,414,461 | |
| Cabot Oil & Gas Corp. | | | 92,200 | | | | 2,671,956 | |
Cameron International Corp. * | | | 198,400 | | | | 8,680,000 | |
| Chesapeake Energy Corp. | | | 609,566 | | | | 13,227,582 | |
| Chevron Corp. | | | 1,871,934 | | | | 154,640,468 | |
| ConocoPhillips | | | 1,388,390 | | | | 82,470,366 | |
| CONSOL Energy, Inc. | | | 171,318 | | | | 6,297,650 | |
Denbury Resources, Inc. * | | | 330,200 | | | | 5,620,004 | |
| Devon Energy Corp. | | | 414,458 | | | | 26,948,059 | |
| Diamond Offshore Drilling, Inc. | | | 65,300 | | | | 4,320,248 | |
| El Paso Corp. | | | 628,871 | | | | 8,338,829 | |
| EOG Resources, Inc. | | | 232,406 | | | | 22,245,902 | |
| EQT Corp. | | | 122,400 | | | | 4,582,656 | |
| Exxon Mobil Corp. | | | 4,791,041 | | | | 318,460,495 | |
FMC Technologies, Inc. * | | | 115,000 | | | | 8,291,500 | |
| Halliburton Co. | | | 839,568 | | | | 26,748,637 | |
| Helmerich & Payne, Inc. | | | 95,000 | | | | 4,064,100 | |
| Hess Corp. | | | 273,440 | | | | 17,234,923 | |
| Marathon Oil Corp. | | | 670,652 | | | | 23,855,091 | |
| Massey Energy Co. | | | 89,200 | | | | 3,752,644 | |
| Murphy Oil Corp. | | | 174,292 | | | | 11,356,867 | |
Nabors Industries Ltd. * | | | 287,890 | | | | 6,016,901 | |
| National Oilwell Varco, Inc. | | | 401,424 | | | | 21,580,554 | |
| Noble Energy, Inc. | | | 160,284 | | | | 13,059,940 | |
| Occidental Petroleum Corp. | | | 759,350 | | | | 59,707,691 | |
| Peabody Energy Corp. | | | 261,564 | | | | 13,836,736 | |
| Pioneer Natural Resources Co. | | | 119,800 | | | | 8,362,040 | |
| QEP Resources, Inc. | | | 162,691 | | | | 5,373,684 | |
| Range Resources Corp. | | | 139,500 | | | | 5,215,905 | |
Rowan Cos., Inc. * | | | 126,263 | | | | 4,154,053 | |
| Schlumberger Ltd. | | | 1,289,615 | | | | 90,131,192 | |
Southwestern Energy Co. * | | | 312,100 | | | | 10,564,585 | |
| Spectra Energy Corp. | | | 595,509 | | | | 14,155,249 | |
| Sunoco, Inc. | | | 109,001 | | | | 4,084,267 | |
| Tesoro Corp. | | | 164,807 | | | | 2,135,899 | |
| The Williams Cos., Inc. | | | 546,298 | | | | 11,756,333 | |
| Valero Energy Corp. | | | 549,440 | | | | 9,862,448 | |
| | | | | | | | | |
| | | | | | | | 1,112,689,432 | |
| |
Food & Staples Retailing 2.4%
|
| Costco Wholesale Corp. | | | 411,092 | | | | 25,804,245 | |
| CVS Caremark Corp. | | | 1,267,851 | | | | 38,187,672 | |
| Safeway, Inc. | | | 355,696 | | | | 8,145,439 | |
| SUPERVALU, Inc. | | | 229,681 | | | | 2,478,258 | |
| Sysco Corp. | | | 544,957 | | | | 16,054,433 | |
| The Kroger Co. | | | 603,247 | | | | 13,271,434 | |
| Wal-Mart Stores, Inc. | | | 1,867,102 | | | | 101,140,915 | |
| Walgreen Co. | | | 921,611 | | | | 31,224,181 | |
Whole Foods Market, Inc. * | | | 139,416 | | | | 5,541,786 | |
| | | | | | | | | |
| | | | | | | | 241,848,363 | |
| |
Food, Beverage & Tobacco 6.2%
|
| Altria Group, Inc. | | | 1,901,291 | | | | 48,330,817 | |
| Archer-Daniels-Midland Co. | | | 600,599 | | | | 20,011,959 | |
| Brown-Forman Corp., Class B | | | 80,728 | | | | 4,909,070 | |
| Campbell Soup Co. | | | 198,711 | | | | 7,203,274 | |
2 See financial notes
Schwab S&P 500 Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Coca-Cola Enterprises, Inc. | | | 268,162 | | | | 6,438,570 | |
| ConAgra Foods, Inc. | | | 429,049 | | | | 9,649,312 | |
Constellation Brands, Inc., Class A * | | | 175,065 | | | | 3,454,032 | |
Dean Foods Co. * | | | 119,970 | | | | 1,247,688 | |
| Dr Pepper Snapple Group, Inc. | | | 216,800 | | | | 7,924,040 | |
| General Mills, Inc. | | | 628,780 | | | | 23,604,401 | |
| H.J. Heinz Co. | | | 303,643 | | | | 14,911,908 | |
| Hormel Foods Corp. | | | 50,000 | | | | 2,296,000 | |
| Kellogg Co. | | | 234,434 | | | | 11,782,653 | |
| Kraft Foods, Inc., Class A | | | 1,587,654 | | | | 51,233,594 | |
| Lorillard, Inc. | | | 143,597 | | | | 12,254,568 | |
| McCormick & Co., Inc. - Non Voting Shares | | | 132,602 | | | | 5,863,660 | |
| Mead Johnson Nutrition Co. | | | 180,000 | | | | 10,587,600 | |
| Molson Coors Brewing Co., Class B | | | 127,030 | | | | 5,999,627 | |
| PepsiCo, Inc. | | | 1,488,963 | | | | 97,229,284 | |
| Philip Morris International, Inc. | | | 1,735,046 | | | | 101,500,191 | |
| Reynolds American, Inc. | | | 163,798 | | | | 10,630,490 | |
| Sara Lee Corp. | | | 669,142 | | | | 9,588,805 | |
| The Coca-Cola Co. | | | 2,170,228 | | | | 133,078,381 | |
| The Hershey Co. | | | 154,428 | | | | 7,642,642 | |
| The JM Smucker Co. | | | 118,675 | | | | 7,628,429 | |
| Tyson Foods, Inc., Class A | | | 327,690 | | | | 5,095,579 | |
| | | | | | | | | |
| | | | | | | | 620,096,574 | |
| |
Health Care Equipment & Services 3.7%
|
| Aetna, Inc. | | | 416,980 | | | | 12,451,023 | |
| AmerisourceBergen Corp. | | | 287,046 | | | | 9,420,850 | |
| Baxter International, Inc. | | | 544,689 | | | | 27,724,670 | |
| Becton, Dickinson & Co. | | | 224,690 | | | | 16,968,589 | |
Boston Scientific Corp. * | | | 1,305,674 | | | | 8,330,200 | |
| C.R. Bard, Inc. | | | 91,473 | | | | 7,603,236 | |
| Cardinal Health, Inc. | | | 330,733 | | | | 11,473,128 | |
CareFusion Corp. * | | | 165,366 | | | | 3,991,935 | |
Cerner Corp. * | | | 76,000 | | | | 6,675,080 | |
| CIGNA Corp. | | | 271,908 | | | | 9,568,443 | |
Coventry Health Care, Inc. * | | | 165,885 | | | | 3,885,027 | |
DaVita, Inc. * | | | 80,100 | | | | 5,747,175 | |
| DENTSPLY International, Inc. | | | 112,400 | | | | 3,528,236 | |
Express Scripts, Inc. * | | | 495,972 | | | | 24,064,561 | |
Hospira, Inc. * | | | 141,382 | | | | 8,409,401 | |
Humana, Inc. * | | | 159,403 | | | | 9,291,601 | |
Intuitive Surgical, Inc. * | | | 34,400 | | | | 9,045,480 | |
Laboratory Corp. of America Holdings * | | | 100,891 | | | | 8,204,456 | |
| McKesson Corp. | | | 255,875 | | | | 16,882,633 | |
Medco Health Solutions, Inc. * | | | 404,782 | | | | 21,263,198 | |
| Medtronic, Inc. | | | 1,031,139 | | | | 36,306,404 | |
| Patterson Cos., Inc. | | | 107,947 | | | | 2,984,735 | |
| Quest Diagnostics, Inc. | | | 136,380 | | | | 6,701,713 | |
St. Jude Medical, Inc. * | | | 319,387 | | | | 12,232,522 | |
| Stryker Corp. | | | 295,440 | | | | 14,621,326 | |
Tenet Healthcare Corp. * | | | 354,317 | | | | 1,544,822 | |
| UnitedHealth Group, Inc. | | | 1,049,510 | | | | 37,834,835 | |
Varian Medical Systems, Inc. * | | | 95,806 | | | | 6,056,855 | |
WellPoint, Inc. * | | | 372,629 | | | | 20,248,660 | |
Zimmer Holdings, Inc. * | | | 210,223 | | | | 9,972,979 | |
| | | | | | | | | |
| | | | | | | | 373,033,773 | |
| |
Household & Personal Products 2.6%
|
| Avon Products, Inc. | | | 391,020 | | | | 11,906,559 | |
| Colgate-Palmolive Co. | | | 464,097 | | | | 35,791,161 | |
| Kimberly-Clark Corp. | | | 383,395 | | | | 24,284,239 | |
| The Clorox Co. | | | 127,857 | | | | 8,508,883 | |
| The Estee Lauder Cos., Inc., Class A | | | 98,326 | | | | 6,997,862 | |
| The Procter & Gamble Co. | | | 2,675,090 | | | | 170,055,471 | |
| | | | | | | | | |
| | | | | | | | 257,544,175 | |
| |
Insurance 4.0%
|
| ACE Ltd. | | | 312,000 | | | | 18,539,040 | |
| Aflac, Inc. | | | 429,773 | | | | 24,020,013 | |
American International Group, Inc. (c)* | | | 144,577 | | | | 6,073,680 | |
| Aon Corp. | | | 276,350 | | | | 10,984,913 | |
| Assurant, Inc. | | | 89,346 | | | | 3,532,741 | |
Berkshire Hathaway, Inc., Class B * | | | 1,591,030 | | | | 126,582,347 | |
| Cincinnati Financial Corp. | | | 155,203 | | | | 4,569,176 | |
Genworth Financial, Inc., Class A * | | | 496,064 | | | | 5,625,366 | |
| Lincoln National Corp. | | | 270,971 | | | | 6,633,370 | |
| Loews Corp. | | | 338,716 | | | | 13,372,508 | |
| Marsh & McLennan Cos., Inc. | | | 485,779 | | | | 12,134,759 | |
| MetLife, Inc. | | | 812,377 | | | | 32,763,164 | |
| Principal Financial Group, Inc. | | | 313,367 | | | | 8,410,770 | |
| Prudential Financial, Inc. | | | 428,131 | | | | 22,511,128 | |
| The Allstate Corp. | | | 502,110 | | | | 15,309,334 | |
| The Chubb Corp. | | | 333,893 | | | | 19,372,472 | |
| The Hartford Financial Services Group, Inc. | | | 369,895 | | | | 8,870,082 | |
| The Progressive Corp. | | | 641,620 | | | | 13,576,679 | |
| The Travelers Cos., Inc. | | | 461,960 | | | | 25,500,192 | |
| Torchmark Corp. | | | 92,541 | | | | 5,300,748 | |
| Unum Group | | | 316,540 | | | | 7,096,827 | |
| XL Group plc | | | 345,299 | | | | 7,303,074 | |
| | | | | | | | | |
| | | | | | | | 398,082,383 | |
| |
Materials 3.6%
|
| Air Products & Chemicals, Inc. | | | 203,601 | | | | 17,299,977 | |
| Airgas, Inc. | | | 76,600 | | | | 5,433,238 | |
| AK Steel Holding Corp. | | | 140,900 | | | | 1,773,931 | |
| Alcoa, Inc. | | | 942,464 | | | | 12,374,552 | |
| Allegheny Technologies, Inc. | | | 92,070 | | | | 4,851,168 | |
| Ball Corp. | | | 90,069 | | | | 5,796,841 | |
| Bemis Co., Inc. | | | 88,735 | | | | 2,818,224 | |
| CF Industries Holdings, Inc. | | | 66,225 | | | | 8,114,549 | |
| Cliffs Natural Resources, Inc. | | | 120,000 | | | | 7,824,000 | |
| E.I. du Pont de Nemours & Co. | | | 853,204 | | | | 40,339,485 | |
| Eastman Chemical Co. | | | 74,058 | | | | 5,818,737 | |
| Ecolab, Inc. | | | 197,228 | | | | 9,727,285 | |
| FMC Corp. | | | 59,500 | | | | 4,349,450 | |
| Freeport-McMoRan Copper & Gold, Inc. | | | 431,870 | | | | 40,889,452 | |
| International Flavors & Fragrances, Inc. | | | 71,843 | | | | 3,603,645 | |
| International Paper Co. | | | 438,589 | | | | 11,087,530 | |
| MeadWestvaco Corp. | | | 155,750 | | | | 4,007,447 | |
| Monsanto Co. | | | 504,200 | | | | 29,959,564 | |
See financial notes 3
Schwab S&P 500 Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Newmont Mining Corp. | | | 457,546 | | | | 27,850,825 | |
| Nucor Corp. | | | 271,500 | | | | 10,376,730 | |
Owens-Illinois, Inc. * | | | 157,500 | | | | 4,414,725 | |
Pactiv Corp. * | | | 121,643 | | | | 4,036,115 | |
| PPG Industries, Inc. | | | 160,248 | | | | 12,291,022 | |
| Praxair, Inc. | | | 287,779 | | | | 26,285,734 | |
| Sealed Air Corp. | | | 145,968 | | | | 3,379,159 | |
| Sigma-Aldrich Corp. | | | 116,454 | | | | 7,385,513 | |
| The Dow Chemical Co. | | | 1,037,835 | | | | 31,996,453 | |
| The Sherwin-Williams Co. | | | 101,636 | | | | 7,416,379 | |
Titanium Metals Corp. * | | | 82,800 | | | | 1,627,848 | |
| United States Steel Corp. | | | 134,613 | | | | 5,760,090 | |
| Vulcan Materials Co. | | | 106,571 | | | | 3,890,907 | |
| | | | | | | | | |
| | | | | | | | 362,780,575 | |
| |
Media 3.2%
|
| CBS Corp., Class B - Non Voting Shares | | | 633,936 | | | | 10,732,537 | |
| Comcast Corp., Class A | | | 2,616,164 | | | | 53,840,655 | |
DIRECTV, Class A * | | | 815,402 | | | | 35,437,371 | |
Discovery Communications, Inc., Class A * | | | 255,000 | | | | 11,375,550 | |
| Gannett Co., Inc. | | | 207,114 | | | | 2,454,301 | |
| Meredith Corp. | | | 33,112 | | | | 1,124,152 | |
| News Corp., Class A | | | 2,142,001 | | | | 30,973,334 | |
| Omnicom Group, Inc. | | | 293,147 | | | | 12,886,742 | |
| Scripps Networks Interactive, Class A | | | 91,193 | | | | 4,640,812 | |
The Interpublic Group of Cos., Inc. * | | | 394,465 | | | | 4,082,713 | |
| The McGraw-Hill Cos., Inc. | | | 298,767 | | | | 11,248,578 | |
The New York Times Co., Class A * | | | 113,434 | | | | 870,039 | |
| The Walt Disney Co. | | | 1,801,283 | | | | 65,044,329 | |
The Washington Post Co., Class B (c) | | | 5,369 | | | | 2,159,143 | |
| Time Warner Cable, Inc. | | | 335,101 | | | | 19,392,295 | |
| Time Warner, Inc. | | | 1,058,674 | | | | 34,417,492 | |
| Viacom Inc., Class B | | | 574,153 | | | | 22,156,564 | |
| | | | | | | | | |
| | | | | | | | 322,836,607 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 7.8%
|
| Abbott Laboratories | | | 1,448,386 | | | | 74,331,169 | |
| Allergan, Inc. | | | 283,958 | | | | 20,561,399 | |
Amgen, Inc. * | | | 907,459 | | | | 51,897,580 | |
Biogen Idec, Inc. * | | | 234,891 | | | | 14,730,015 | |
| Bristol-Myers Squibb Co. | | | 1,612,264 | | | | 43,369,902 | |
Celgene Corp. * | | | 434,613 | | | | 26,976,429 | |
Cephalon, Inc. * | | | 67,600 | | | | 4,491,344 | |
| Eli Lilly & Co. | | | 966,023 | | | | 34,004,010 | |
Forest Laboratories, Inc. * | | | 289,564 | | | | 9,570,090 | |
Genzyme Corp. * | | | 250,448 | | | | 18,064,814 | |
Gilead Sciences, Inc. * | | | 795,275 | | | | 31,548,559 | |
| Johnson & Johnson | | | 2,577,325 | | | | 164,098,283 | |
King Pharmaceuticals, Inc. * | | | 267,725 | | | | 3,785,631 | |
Life Technologies Corp. * | | | 151,835 | | | | 7,619,081 | |
| Merck & Co., Inc. | | | 2,880,714 | | | | 104,512,304 | |
Mylan, Inc. * | | | 261,751 | | | | 5,318,780 | |
| PerkinElmer, Inc. | | | 105,660 | | | | 2,477,727 | |
| Pfizer, Inc. | | | 7,524,533 | | | | 130,926,874 | |
Thermo Fisher Scientific, Inc. * | | | 386,537 | | | | 19,875,732 | |
Waters Corp. * | | | 90,352 | | | | 6,697,794 | |
Watson Pharmaceuticals, Inc. * | | | 107,446 | | | | 5,012,356 | |
| | | | | | | | | |
| | | | | | | | 779,869,873 | |
| |
Real Estate 1.5%
|
| Apartment Investment & Management Co., Class A | | | 126,014 | | | | 2,937,386 | |
| AvalonBay Communities, Inc. | | | 77,499 | | | | 8,238,919 | |
| Boston Properties, Inc. | | | 124,976 | | | | 10,771,681 | |
CB Richard Ellis Group, Inc., Class A * | | | 233,040 | | | | 4,276,284 | |
| Equity Residential | | | 250,522 | | | | 12,182,885 | |
| HCP, Inc. | | | 274,500 | | | | 9,884,745 | |
| Health Care REIT, Inc. | | | 96,900 | | | | 4,951,590 | |
| Host Hotels & Resorts, Inc. | | | 614,511 | | | | 9,764,580 | |
| Kimco Realty Corp. | | | 378,159 | | | | 6,515,679 | |
| Plum Creek Timber Co., Inc. | | | 158,777 | | | | 5,849,345 | |
| ProLogis | | | 456,746 | | | | 6,234,583 | |
| Public Storage | | | 126,878 | | | | 12,588,835 | |
| Simon Property Group, Inc. | | | 273,253 | | | | 26,237,753 | |
| Ventas, Inc. | | | 145,300 | | | | 7,782,268 | |
| Vornado Realty Trust | | | 147,756 | | | | 12,912,397 | |
| Weyerhaeuser Co. | | | 494,240 | | | | 8,016,573 | |
| | | | | | | | | |
| | | | | | | | 149,145,503 | |
| |
Retailing 3.6%
|
| Abercrombie & Fitch Co., Class A | | | 91,645 | | | | 3,927,905 | |
Amazon.com, Inc. * | | | 324,190 | | | | 53,536,736 | |
AutoNation, Inc. (c)* | | | 64,533 | | | | 1,498,456 | |
AutoZone, Inc. * | | | 27,098 | | | | 6,439,298 | |
Bed Bath & Beyond, Inc. * | | | 259,369 | | | | 11,386,299 | |
| Best Buy Co., Inc. | | | 328,157 | | | | 14,104,188 | |
Big Lots, Inc. * | | | 95,867 | | | | 3,007,348 | |
CarMax, Inc. * | | | 200,000 | | | | 6,198,000 | |
| Expedia, Inc. | | | 190,226 | | | | 5,507,043 | |
| Family Dollar Stores, Inc. | | | 137,730 | | | | 6,358,994 | |
GameStop Corp., Class A * | | | 146,800 | | | | 2,886,088 | |
| Genuine Parts Co. | | | 126,238 | | | | 6,041,751 | |
| J.C. Penney Co., Inc. | | | 207,121 | | | | 6,458,033 | |
Kohl’s Corp. * | | | 288,610 | | | | 14,776,832 | |
| Limited Brands, Inc. | | | 268,835 | | | | 7,901,061 | |
| Lowe’s Cos., Inc. | | | 1,308,088 | | | | 27,901,517 | |
| Macy’s, Inc. | | | 425,926 | | | | 10,068,891 | |
| Nordstrom, Inc. | | | 169,996 | | | | 6,546,546 | |
O’Reilly Automotive, Inc. * | | | 101,700 | | | | 5,949,450 | |
Office Depot, Inc. * | | | 328,327 | | | | 1,474,188 | |
Priceline.com, Inc. * | | | 38,000 | | | | 14,318,780 | |
| RadioShack Corp. | | | 145,746 | | | | 2,933,867 | |
| Ross Stores, Inc. | | | 115,000 | | | | 6,783,850 | |
Sears Holdings Corp. (c)* | | | 52,326 | | | | 3,766,426 | |
| Staples, Inc. | | | 653,469 | | | | 13,376,510 | |
| Target Corp. | | | 681,108 | | | | 35,376,749 | |
| The Gap, Inc. | | | 450,962 | | | | 8,572,787 | |
| The Home Depot, Inc. | | | 1,552,250 | | | | 47,933,480 | |
| The TJX Cos., Inc. | | | 375,453 | | | | 17,229,538 | |
| Tiffany & Co. | | | 129,028 | | | | 6,838,484 | |
Urban Outfitters, Inc. * | | | 90,000 | | | | 2,769,300 | |
| | | | | | | | | |
| | | | | | | | 361,868,395 | |
4 See financial notes
Schwab S&P 500 Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Semiconductors & Semiconductor Equipment 2.5%
|
Advanced Micro Devices, Inc. * | | | 484,339 | | | | 3,550,205 | |
| Altera Corp. | | | 301,746 | | | | 9,417,493 | |
| Analog Devices, Inc. | | | 296,254 | | | | 9,974,872 | |
| Applied Materials, Inc. | | | 1,215,472 | | | | 15,023,234 | |
| Broadcom Corp., Class A | | | 422,318 | | | | 17,205,235 | |
First Solar, Inc. * | | | 45,000 | | | | 6,195,600 | |
| Intel Corp. | | | 5,153,905 | | | | 103,438,873 | |
KLA-Tencor Corp. | | | 160,681 | | | | 5,739,525 | |
| Linear Technology Corp. | | | 214,968 | | | | 6,928,419 | |
LSI Corp. * | | | 437,376 | | | | 2,291,850 | |
MEMC Electronic Materials, Inc. * | | | 164,927 | | | | 2,114,364 | |
| Microchip Technology, Inc. | | | 161,223 | | | | 5,188,156 | |
Micron Technology, Inc. * | | | 708,775 | | | | 5,861,569 | |
| National Semiconductor Corp. | | | 214,375 | | | | 2,936,938 | |
Novellus Systems, Inc. * | | | 101,311 | | | | 2,959,294 | |
NVIDIA Corp. * | | | 500,082 | | | | 6,015,987 | |
Teradyne, Inc. * | | | 84,449 | | | | 949,207 | |
| Texas Instruments, Inc. | | | 1,158,954 | | | | 34,270,270 | |
| Xilinx, Inc. | | | 269,163 | | | | 7,216,260 | |
| | | | | | | | | |
| | | | | | | | 247,277,351 | |
| |
Software & Services 9.3%
|
Adobe Systems, Inc. * | | | 501,976 | | | | 14,130,624 | |
Akamai Technologies, Inc. * | | | 145,141 | | | | 7,499,435 | |
Autodesk, Inc. * | | | 187,681 | | | | 6,790,299 | |
| Automatic Data Processing, Inc. | | | 476,173 | | | | 21,151,605 | |
BMC Software, Inc. * | | | 186,239 | | | | 8,466,425 | |
| CA, Inc. | | | 370,925 | | | | 8,609,169 | |
Citrix Systems, Inc. * | | | 160,708 | | | | 10,296,562 | |
Cognizant Technology Solutions Corp., Class A * | | | 271,648 | | | | 17,708,733 | |
| Computer Sciences Corp. | | | 144,040 | | | | 7,065,162 | |
Compuware Corp. * | | | 278,185 | | | | 2,784,632 | |
eBay, Inc. * | | | 1,001,569 | | | | 29,856,772 | |
Electronic Arts, Inc. * | | | 305,892 | | | | 4,848,388 | |
| Fidelity National Information Services, Inc. | | | 309,034 | | | | 8,374,821 | |
Fiserv, Inc. * | | | 150,352 | | | | 8,197,191 | |
Google, Inc., Class A * | | | 229,758 | | | | 140,839,356 | |
| International Business Machines Corp. | | | 1,190,690 | | | | 170,983,084 | |
Intuit, Inc. * | | | 302,909 | | | | 14,539,632 | |
| MasterCard, Inc., Class A | | | 88,000 | | | | 21,125,280 | |
McAfee, Inc. * | | | 137,400 | | | | 6,499,020 | |
| Microsoft Corp. | | | 7,184,631 | | | | 191,398,570 | |
Monster Worldwide, Inc. * | | | 89,138 | | | | 1,609,832 | |
Novell, Inc. * | | | 325,547 | | | | 1,930,494 | |
| Oracle Corp. | | | 3,629,986 | | | | 106,721,588 | |
| Paychex, Inc. | | | 305,065 | | | | 8,450,301 | |
Red Hat, Inc. * | | | 148,000 | | | | 6,254,480 | |
SAIC, Inc. * | | | 212,000 | | | | 3,294,480 | |
Salesforce.com, Inc. * | | | 94,871 | | | | 11,011,677 | |
Symantec Corp. * | | | 793,350 | | | | 12,836,403 | |
Teradata Corp. * | | | 161,371 | | | | 6,351,563 | |
| Total System Services, Inc. | | | 177,100 | | | | 2,764,531 | |
VeriSign, Inc. * | | | 180,525 | | | | 6,273,244 | |
| Visa, Inc., Class A | | | 445,000 | | | | 34,785,650 | |
| Western Union Co. | | | 678,625 | | | | 11,943,800 | |
Yahoo!, Inc. * | | | 1,162,255 | | | | 19,188,830 | |
| | | | | | | | | |
| | | | | | | | 934,581,633 | |
| |
Technology Hardware & Equipment 7.5%
|
Agilent Technologies, Inc. * | | | 340,466 | | | | 11,848,217 | |
| Amphenol Corp., Class A | | | 161,800 | | | | 8,111,034 | |
Apple, Inc. * | | | 847,740 | | | | 255,059,534 | |
Cisco Systems, Inc. * | | | 5,323,628 | | | | 121,538,427 | |
| Corning, Inc. | | | 1,450,987 | | | | 26,524,042 | |
Dell, Inc. * | | | 1,577,085 | | | | 22,678,482 | |
EMC Corp. * | | | 1,918,045 | | | | 40,298,125 | |
FLIR Systems, Inc. * | | | 129,500 | | | | 3,605,280 | |
| Harris Corp. | | | 129,300 | | | | 5,843,067 | |
| Hewlett-Packard Co. | | | 2,116,908 | | | | 89,037,151 | |
| Jabil Circuit, Inc. | | | 170,686 | | | | 2,618,323 | |
JDS Uniphase Corp. * | | | 191,981 | | | | 2,017,720 | |
Juniper Networks, Inc. * | | | 491,565 | | | | 15,921,790 | |
Lexmark International, Inc., Class A * | | | 83,508 | | | | 3,175,809 | |
| Molex, Inc. | | | 126,666 | | | | 2,571,320 | |
Motorola, Inc. * | | | 2,130,254 | | | | 17,361,570 | |
NetApp, Inc. * | | | 332,174 | | | | 17,688,266 | |
QLogic Corp. * | | | 146,917 | | | | 2,581,332 | |
| QUALCOMM, Inc. | | | 1,496,265 | | | | 67,526,440 | |
SanDisk Corp. * | | | 197,824 | | | | 7,434,226 | |
| Tellabs, Inc. | | | 436,856 | | | | 2,979,358 | |
Western Digital Corp. * | | | 206,000 | | | | 6,596,120 | |
| Xerox Corp. | | | 1,339,866 | | | | 15,676,432 | |
| | | | | | | | | |
| | | | | | | | 748,692,065 | |
| |
Telecommunication Services 3.1%
|
American Tower Corp., Class A * | | | 358,600 | | | | 18,507,346 | |
| AT&T, Inc. | | | 5,502,536 | | | | 156,822,276 | |
| CenturyLink, Inc. | | | 293,318 | | | | 12,137,499 | |
| Frontier Communications Corp. | | | 937,945 | | | | 8,235,157 | |
MetroPCS Communications, Inc. * | | | 120,000 | | | | 1,249,200 | |
| Qwest Communications International, Inc. | | | 1,415,741 | | | | 9,343,890 | |
Sprint Nextel Corp. * | | | 3,022,208 | | | | 12,451,497 | |
| Verizon Communications, Inc. | | | 2,648,178 | | | | 85,986,340 | |
| Windstream Corp. | | | 396,374 | | | | 5,018,095 | |
| | | | | | | | | |
| | | | | | | | 309,751,300 | |
| |
Transportation 2.0%
|
| C.H. Robinson Worldwide, Inc. | | | 140,195 | | | | 9,880,944 | |
| CSX Corp. | | | 358,297 | | | | 22,017,351 | |
| Expeditors International of Washington, Inc. | | | 182,700 | | | | 9,018,072 | |
| FedEx Corp. | | | 289,468 | | | | 25,392,133 | |
| Norfolk Southern Corp. | | | 352,392 | | | | 21,668,584 | |
| Ryder System, Inc. | | | 60,702 | | | | 2,655,712 | �� |
| Southwest Airlines Co. | | | 697,736 | | | | 9,600,847 | |
| Union Pacific Corp. | | | 471,475 | | | | 41,338,928 | |
| United Parcel Service, Inc., Class B | | | 932,518 | | | | 62,795,762 | |
| | | | | | | | | |
| | | | | | | | 204,368,333 | |
| |
Utilities 3.5%
|
| Allegheny Energy, Inc. | | | 158,380 | | | | 3,674,416 | |
See financial notes 5
Schwab S&P 500 Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Ameren Corp. | | | 217,420 | | | | 6,300,832 | |
| American Electric Power Co., Inc. | | | 445,802 | | | | 16,690,827 | |
| CenterPoint Energy, Inc. | | | 346,166 | | | | 5,732,509 | |
| CMS Energy Corp. | | | 212,084 | | | | 3,898,104 | |
| Consolidated Edison, Inc. | | | 256,565 | | | | 12,756,412 | |
| Constellation Energy Group, Inc. | | | 182,265 | | | | 5,511,694 | |
| Dominion Resources, Inc. | | | 551,564 | | | | 23,970,971 | |
| DTE Energy Co. | | | 153,312 | | | | 7,168,869 | |
| Duke Energy Corp. | | | 1,203,398 | | | | 21,913,877 | |
| Edison International | | | 306,093 | | | | 11,294,832 | |
| Entergy Corp. | | | 183,353 | | | | 13,665,299 | |
| Exelon Corp. | | | 615,890 | | | | 25,140,630 | |
| FirstEnergy Corp. | | | 285,055 | | | | 10,353,198 | |
| Integrys Energy Group, Inc. | | | 71,494 | | | | 3,802,766 | |
| NextEra Energy, Inc. | | | 384,238 | | | | 21,148,459 | |
| Nicor, Inc. | | | 34,408 | | | | 1,638,853 | |
| NiSource, Inc. | | | 256,762 | | | | 4,444,550 | |
| Northeast Utilities | | | 163,700 | | | | 5,120,536 | |
NRG Energy, Inc. * | | | 240,000 | | | | 4,778,400 | |
| ONEOK, Inc. | | | 96,000 | | | | 4,782,720 | |
| Pepco Holdings, Inc. | | | 205,700 | | | | 3,961,782 | |
| PG&E Corp. | | | 364,106 | | | | 17,411,549 | |
| Pinnacle West Capital Corp. | | | 94,461 | | | | 3,888,015 | |
| PPL Corp. | | | 436,970 | | | | 11,754,493 | |
| Progress Energy, Inc. | | | 260,859 | | | | 11,738,655 | |
| Public Service Enterprise Group, Inc. | | | 472,170 | | | | 15,274,699 | |
| SCANA Corp. | | | 113,900 | | | | 4,651,676 | |
| Sempra Energy | | | 240,269 | | | | 12,849,586 | |
| Southern Co. | | | 775,525 | | | | 29,369,132 | |
| TECO Energy, Inc. | | | 194,819 | | | | 3,426,866 | |
The AES Corp. * | | | 623,349 | | | | 7,442,787 | |
| Wisconsin Energy Corp. | | | 109,300 | | | | 6,507,722 | |
| Xcel Energy, Inc. | | | 421,186 | | | | 10,049,498 | |
| | | | | | | | | |
| | | | | | | | 352,115,214 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $8,564,085,806) | | | 9,997,803,572 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Dates | | ($) | | ($) |
| |
Short-Term Investments 0.1% of net assets |
| |
Time Deposit 0.1%
|
| HSBC Bank USA |
0.03% 11/01/10 | | | 7,139,229 | | | | 7,139,229 | |
| |
U.S. Treasury Obligation 0.0%
|
| U.S. Treasury Bill |
0.14% 12/16/10 (a) | | | 2,362,500 | | | | 2,362,101 | |
| | | | | | | | | |
| Total Short-Term Investments |
| (Cost $9,501,330) | | | 9,501,330 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Collateral Invested for Securities on Loan 0.1% of net assets |
| | | | | | | | | |
| | | | | | | | | |
| Invesco Short Term Investments Trust Government & Agency Portfolio | | | 13,300,790 | | | | 13,300,790 | |
| | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $13,300,790) | | | 13,300,790 | |
| | | | | |
| |
|
End of Collateral Invested for Securities on Loan. |
At 10/31/10 tax basis cost of the fund’s investments was $8,623,364,927 and the unrealized appreciation and depreciation were $2,713,509,546 and ($1,329,569,571), respectively, with a net unrealized appreciation of $1,383,939,975.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is held as collateral for open futures contracts. |
| (b) | | Issuer is affiliated with the fund’s adviser. |
| (c) | | All or a portion of this security is on loan. |
| | | |
| REIT — | | Real Estate Investment Trust |
In addition to the above, the fund held the following at 10/31/10.
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contract |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
S&P 500 Index, e-mini, Long, expires 12/17/10 | | | 30 | | | | 1,769,550 | | | | 127,883 | |
6 See financial notes
Schwab Small-Cap Index Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .8% | | Common Stock | | | 1,251,261,679 | | | | 1,403,572,178 | |
| | 0 | .0% | | Rights | | | — | | | | — | |
| | 0 | .2% | | Short-Term Investments | | | 2,709,233 | | | | 2,709,233 | |
| |
| |
| | 100 | .0% | | Total Investments | | | 1,253,970,912 | | | | 1,406,281,411 | |
| | 3 | .0% | | Collateral Invested for Securities on Loan | | | 41,794,683 | | | | 41,794,683 | |
| | (3 | .0)% | | Other Assets and Liabilities, Net | | | | | | | (42,052,321 | ) |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 1,406,023,773 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 99.8% of net assets |
| |
Automobiles & Components 1.1%
|
American Axle & Manufacturing Holdings, Inc. * | | | 106,200 | | | | 979,164 | |
| Cooper Tire & Rubber Co. | | | 111,323 | | | | 2,183,044 | |
Dana Holding Corp. * | | | 256,200 | | | | 3,625,230 | |
Drew Industries, Inc. * | | | 28,900 | | | | 608,923 | |
Exide Technologies * | | | 161,700 | | | | 952,413 | |
Fuel Systems Solutions, Inc. (d)* | | | 24,000 | | | | 983,520 | |
Modine Manufacturing Co. * | | | 85,100 | | | | 1,150,552 | |
| Superior Industries International, Inc. | | | 42,700 | | | | 766,465 | |
Tenneco, Inc. * | | | 106,500 | | | | 3,474,030 | |
Winnebago Industries, Inc. * | | | 53,500 | | | | 535,000 | |
| | | | | | | | | |
| | | | | | | | 15,258,341 | |
| |
Banks 6.5%
|
| 1st Source Corp. | | | 19,221 | | | | 339,635 | |
| Astoria Financial Corp. | | | 150,000 | | | | 1,863,000 | |
| BancFirst Corp. | | | 13,416 | | | | 551,398 | |
| Bank of the Ozarks, Inc. | | | 22,300 | | | | 847,623 | |
Beneficial Mutual Bancorp, Inc. * | | | 60,203 | | | | 441,890 | |
| Boston Private Financial Holdings, Inc. | | | 133,200 | | | | 760,572 | |
| Brookline Bancorp, Inc. | | | 102,992 | | | | 1,003,142 | |
| Cathay General Bancorp | | | 142,822 | | | | 1,942,379 | |
| Chemical Financial Corp. | | | 46,903 | | | | 951,193 | |
| City Holding Co. | | | 31,200 | | | | 989,040 | |
| Columbia Banking System, Inc. | | | 71,800 | | | | 1,307,478 | |
| Community Bank System, Inc. | | | 60,200 | | | | 1,406,874 | |
| Community Trust Bancorp, Inc. | | | 34,100 | | | | 931,271 | |
| CVB Financial Corp. | | | 156,319 | | | | 1,189,588 | |
| Dime Community Bancshares | | | 44,400 | | | | 647,796 | |
| F.N.B. Corp. | | | 209,737 | | | | 1,782,764 | |
| First Commonwealth Financial Corp. | | | 206,656 | | | | 1,202,738 | |
| First Financial Bancorp | | | 88,389 | | | | 1,488,471 | |
| First Financial Bankshares, Inc. | | | 40,721 | | | | 1,924,474 | |
| First Financial Corp. | | | 21,300 | | | | 622,599 | |
| First Midwest Bancorp, Inc. | | | 130,963 | | | | 1,402,614 | |
| Flushing Financial Corp. | | | 56,900 | | | | 748,235 | |
| Glacier Bancorp, Inc. | | | 130,811 | | | | 1,700,543 | |
| Hancock Holding Co. | | | 52,110 | | | | 1,637,296 | |
| Home Bancshares, Inc. | | | 39,490 | | | | 812,309 | |
| IBERIABANK Corp. | | | 48,800 | | | | 2,540,040 | |
| Independent Bank Corp. | | | 38,500 | | | | 904,365 | |
| International Bancshares Corp. | | | 95,400 | | | | 1,634,202 | |
Investors Bancorp, Inc. * | | | 86,400 | | | | 1,036,800 | |
| Kearny Financial Corp. | | | 29,200 | | | | 254,916 | |
| MB Financial, Inc. | | | 93,024 | | | | 1,385,127 | |
MGIC Investment Corp. * | | | 334,000 | | | | 2,945,880 | |
| National Penn Bancshares, Inc. | | | 231,178 | | | | 1,500,345 | |
| NBT Bancorp, Inc. | | | 71,485 | | | | 1,576,244 | |
| NewAlliance Bancshares, Inc. | | | 195,100 | | | | 2,514,839 | |
| Northfield Bancorp, Inc. | | | 24,900 | | | | 282,615 | |
| Northwest Bancshares, Inc. | | | 201,209 | | | | 2,281,710 | |
Ocwen Financial Corp. * | | | 129,800 | | | | 1,120,174 | |
| Old National Bancorp | | | 160,383 | | | | 1,517,223 | |
| Oritani Financial Corp. | | | 67,250 | | | | 713,522 | |
| PacWest Bancorp | | | 54,816 | | | | 955,443 | |
| Park National Corp. | | | 20,953 | | | | 1,369,278 | |
Pinnacle Financial Partners, Inc. * | | | 60,632 | | | | 691,811 | |
Popular, Inc. * | | | 1,661,500 | | | | 4,535,895 | |
| PrivateBancorp, Inc. | | | 107,676 | | | | 1,269,500 | |
| Provident Financial Services, Inc. | | | 94,551 | | | | 1,195,125 | |
| Radian Group, Inc. | | | 242,300 | | | | 1,839,057 | |
| Republic Bancorp, Inc., Class A | | | 15,900 | | | | 324,996 | |
| Roma Financial Corp. | | | 20,700 | | | | 205,137 | |
| S&T Bancorp, Inc. | | | 42,081 | | | | 824,788 | |
| SCBT Financial Corp. | | | 23,400 | | | | 714,402 | |
Signature Bank * | | | 74,709 | | | | 3,155,708 | |
| Simmons First National Corp., Class A | | | 27,600 | | | | 750,444 | |
| Sterling Bancshares, Inc. | | | 185,012 | | | | 997,215 | |
| Susquehanna Bancshares, Inc. | | | 236,908 | | | | 1,871,573 | |
| Synovus Financial Corp. | | | 1,422,000 | | | | 3,071,520 | |
Texas Capital Bancshares, Inc. * | | | 52,000 | | | | 943,800 | |
| Tompkins Financial Corp. | | | 11,330 | | | | 437,338 | |
| TrustCo Bank Corp. NY | | | 131,602 | | | | 709,335 | |
| Trustmark Corp. | | | 102,877 | | | | 2,272,553 | |
| Umpqua Holdings Corp. | | | 208,195 | | | | 2,290,145 | |
United Bankshares, Inc. (d) | | | 70,322 | | | | 1,879,004 | |
United Community Banks, Inc. * | | | 152,030 | | | | 297,979 | |
| ViewPoint Financial Group | | | 31,360 | | | | 301,056 | |
| Webster Financial Corp. | | | 118,400 | | | | 2,027,008 | |
| WesBanco, Inc. | | | 44,198 | | | | 734,129 | |
Western Alliance Bancorp * | | | 90,700 | | | | 547,828 | |
| Whitney Holding Corp. | | | 177,400 | | | | 1,468,872 | |
| Wilmington Trust Corp. | | | 160,700 | | | | 1,142,577 | |
| Wintrust Financial Corp. | | | 60,955 | | | | 1,824,993 | |
| | | | | | | | | |
| | | | | | | | 91,351,433 | |
18 See financial notes
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Capital Goods 9.8%
|
| A.O. Smith Corp. | | | 42,330 | | | | 2,371,750 | |
| AAON, Inc. | | | 23,100 | | | | 567,105 | |
AAR CORP. * | | | 71,597 | | | | 1,577,998 | |
| Actuant Corp., Class A | | | 124,748 | | | | 2,803,088 | |
Aerovironment, Inc. * | | | 24,400 | | | | 572,424 | |
| Aircastle Ltd. | | | 101,800 | | | | 937,578 | |
| Albany International Corp., Class A | | | 60,600 | | | | 1,236,240 | |
| American Science & Engineering, Inc. | | | 15,700 | | | | 1,292,895 | |
| Ameron International Corp. | | | 15,500 | | | | 1,065,780 | |
| Apogee Enterprises, Inc. | | | 49,200 | | | | 516,108 | |
| Applied Industrial Technologies, Inc. | | | 68,466 | | | | 2,082,051 | |
ArvinMeritor, Inc. * | | | 172,300 | | | | 2,856,734 | |
Astec Industries, Inc. * | | | 32,695 | | | | 963,522 | |
| AZZ, Inc. | | | 22,600 | | | | 839,364 | |
| Badger Meter, Inc. | | | 24,303 | | | | 1,009,304 | |
| Baldor Electric Co. | | | 77,708 | | | | 3,265,290 | |
| Barnes Group, Inc. | | | 76,840 | | | | 1,397,720 | |
Beacon Roofing Supply, Inc. * | | | 92,382 | | | | 1,363,558 | |
| Belden, Inc. | | | 83,200 | | | | 2,321,280 | |
Blount International, Inc. * | | | 62,762 | | | | 941,430 | |
| Brady Corp., Class A | | | 96,329 | | | | 2,962,117 | |
| Briggs & Stratton Corp. | | | 101,093 | | | | 1,779,237 | |
Broadwind Energy, Inc. (d)* | | | 64,800 | | | | 123,120 | |
Ceradyne, Inc. * | | | 47,012 | | | | 1,119,356 | |
Chart Industries, Inc. * | | | 48,200 | | | | 1,123,060 | |
| CIRCOR International, Inc. | | | 28,200 | | | | 989,256 | |
Colfax Corp. * | | | 60,400 | | | | 970,628 | |
| Comfort Systems USA, Inc. | | | 70,700 | | | | 809,515 | |
| Cubic Corp. | | | 26,015 | | | | 1,133,474 | |
| Curtiss-Wright Corp. | | | 83,900 | | | | 2,590,832 | |
DigitalGlobe, Inc. * | | | 65,600 | | | | 2,141,840 | |
| Encore Wire Corp. | | | 31,541 | | | | 654,791 | |
Ener1, Inc. (d)* | | | 65,600 | | | | 237,472 | |
EnerSys * | | | 73,278 | | | | 1,931,608 | |
EnPro Industries, Inc. * | | | 43,700 | | | | 1,535,618 | |
| ESCO Technologies, Inc. | | | 48,669 | | | | 1,668,373 | |
Esterline Technologies Corp. * | | | 54,911 | | | | 3,318,821 | |
Force Protection, Inc. * | | | 122,200 | | | | 685,542 | |
| Franklin Electric Co., Inc. | | | 38,518 | | | | 1,390,885 | |
| GATX Corp. | | | 84,800 | | | | 2,684,768 | |
GeoEye, Inc. * | | | 35,100 | | | | 1,553,877 | |
Gibraltar Industries, Inc. * | | | 48,272 | | | | 440,723 | |
| Granite Construction, Inc. | | | 61,900 | | | | 1,496,742 | |
| Great Lakes Dredge & Dock Co. | | | 73,200 | | | | 453,108 | |
Griffon Corp. * | | | 77,421 | | | | 912,794 | |
H&E Equipment Services, Inc. * | | | 49,431 | | | | 480,469 | |
HEICO Corp. (d) | | | 59,825 | | | | 2,978,088 | |
Hexcel Corp. * | | | 177,783 | | | | 3,159,204 | |
II-VI, Inc. * | | | 51,600 | | | | 2,029,944 | |
Insituform Technologies, Inc., Class A * | | | 71,500 | | | | 1,544,400 | |
Interline Brands, Inc. * | | | 53,034 | | | | 1,065,453 | |
| John Bean Technologies Corp. | | | 45,600 | | | | 779,760 | |
| Kaman Corp. | | | 42,349 | | | | 1,141,305 | |
| Kaydon Corp. | | | 59,535 | | | | 2,075,985 | |
Layne Christensen Co. * | | | 39,911 | | | | 1,115,113 | |
| Lindsay Corp. | | | 27,400 | | | | 1,579,610 | |
MasTec, Inc. * | | | 97,573 | | | | 1,190,391 | |
Michael Baker Corp. * | | | 13,900 | | | | 454,252 | |
Moog, Inc., Class A * | | | 83,400 | | | | 3,135,840 | |
| Mueller Industries, Inc. | | | 74,724 | | | | 2,196,886 | |
| Mueller Water Products, Inc., Class A | | | 283,100 | | | | 854,962 | |
| NACCO Industries, Inc., Class A | | | 9,477 | | | | 940,687 | |
Orbital Sciences Corp. * | | | 114,336 | | | | 1,856,817 | |
Orion Marine Group, Inc. * | | | 49,300 | | | | 616,743 | |
Polypore International, Inc. * | | | 44,300 | | | | 1,473,861 | |
Powell Industries, Inc. * | | | 16,000 | | | | 493,760 | |
| Quanex Building Products Corp. | | | 67,404 | | | | 1,214,620 | |
| Raven Industries, Inc. | | | 29,500 | | | | 1,213,040 | |
RBC Bearings, Inc. * | | | 36,000 | | | | 1,199,520 | |
| Robbins & Myers, Inc. | | | 56,800 | | | | 1,648,904 | |
RSC Holdings, Inc. * | | | 62,000 | | | | 500,960 | |
Rush Enterprises, Inc., Class A * | | | 56,287 | | | | 894,400 | |
| Simpson Manufacturing Co., Inc. | | | 70,694 | | | | 1,879,046 | |
| Sun Hydraulics Corp. | | | 19,500 | | | | 605,865 | |
| TAL International Group, Inc. | | | 23,100 | | | | 647,262 | |
Taser International, Inc. * | | | 107,100 | | | | 424,116 | |
Teledyne Technologies, Inc. * | | | 66,300 | | | | 2,756,091 | |
| Tennant Co. | | | 31,200 | | | | 1,046,760 | |
| The Gorman-Rupp Co. | | | 25,700 | | | | 766,374 | |
| The Manitowoc Co., Inc. | | | 233,200 | | | | 2,597,848 | |
The Middleby Corp. * | | | 33,052 | | | | 2,467,662 | |
| The Toro Co. | | | 59,535 | | | | 3,379,207 | |
| Tredegar Corp. | | | 39,900 | | | | 769,671 | |
| Trinity Industries, Inc. | | | 145,800 | | | | 3,314,034 | |
| Triumph Group, Inc. | | | 29,701 | | | | 2,482,707 | |
Tutor Perini Corp. * | | | 54,930 | | | | 1,274,925 | |
United Rentals, Inc. * | | | 119,800 | | | | 2,251,042 | |
| Universal Forest Products, Inc. | | | 35,562 | | | | 1,071,839 | |
USG Corp. * | | | 151,600 | | | | 1,922,288 | |
| Vicor Corp. | | | 23,900 | | | | 425,659 | |
| Watts Water Technologies, Inc., Class A | | | 57,807 | | | | 2,033,072 | |
WESCO International, Inc. * | | | 80,100 | | | | 3,429,882 | |
| | | | | | | | | |
| | | | | | | | 138,069,100 | |
| |
Commercial & Professional Supplies 3.7%
|
| ABM Industries, Inc. | | | 90,109 | | | | 2,031,958 | |
Acco Brands Corp. * | | | 100,400 | | | | 625,492 | |
| Administaff, Inc. | | | 36,310 | | | | 951,685 | |
CBIZ, Inc. * | | | 73,222 | | | | 433,474 | |
Cenveo, Inc. * | | | 102,700 | | | | 564,850 | |
Consolidated Graphics, Inc. * | | | 20,500 | | | | 954,275 | |
CoStar Group, Inc. * | | | 37,883 | | | | 1,881,270 | |
| Deluxe Corp. | | | 94,146 | | | | 1,924,344 | |
| EnergySolutions, Inc. | | | 136,500 | | | | 640,185 | |
EnerNOC, Inc. (d)* | | | 26,000 | | | | 781,820 | |
| Ennis, Inc. | | | 39,000 | | | | 703,560 | |
Exponent, Inc. * | | | 25,300 | | | | 807,576 | |
| G & K Services, Inc., Class A | | | 29,330 | | | | 725,038 | |
| Healthcare Services Group, Inc. | | | 79,950 | | | | 1,921,198 | |
| Heidrick & Struggles International, Inc. | | | 37,300 | | | | 801,204 | |
| Herman Miller, Inc. | | | 113,100 | | | | 2,174,913 | |
| HNI Corp. | | | 82,800 | | | | 2,041,848 | |
Huron Consulting Group, Inc. * | | | 37,500 | | | | 746,625 | |
ICF International, Inc. * | | | 20,900 | | | | 535,458 | |
| Interface, Inc., Class A | | | 99,400 | | | | 1,430,366 | |
See financial notes 19
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Kelly Services, Inc., Class A * | | | 46,723 | | | | 693,837 | |
Kforce, Inc. * | | | 59,400 | | | | 891,594 | |
| Knoll, Inc. | | | 86,303 | | | | 1,309,217 | |
Korn/Ferry International * | | | 78,461 | | | | 1,383,267 | |
M&F Worldwide Corp. * | | | 19,070 | | | | 512,602 | |
| McGrath Rentcorp | | | 38,898 | | | | 984,508 | |
| Mine Safety Appliances Co. | | | 55,589 | | | | 1,565,386 | |
Mobile Mini, Inc. * | | | 60,768 | | | | 1,059,186 | |
Navigant Consulting, Inc. * | | | 91,948 | | | | 841,324 | |
| Resources Connection, Inc. | | | 92,050 | | | | 1,490,290 | |
School Specialty, Inc. * | | | 26,093 | | | | 349,646 | |
| Steelcase, Inc., Class A | | | 142,042 | | | | 1,194,573 | |
Sykes Enterprises, Inc. * | | | 80,693 | | | | 1,340,311 | |
Tetra Tech, Inc. * | | | 112,700 | | | | 2,373,462 | |
The Advisory Board Co. * | | | 25,476 | | | | 1,192,532 | |
| The Brink’s Co. | | | 88,000 | | | | 2,076,800 | |
| The Corporate Executive Board Co. | | | 65,100 | | | | 2,033,724 | |
The Geo Group, Inc. * | | | 118,700 | | | | 3,044,655 | |
TrueBlue, Inc. * | | | 80,576 | | | | 1,132,093 | |
| UniFirst Corp. | | | 26,335 | | | | 1,212,200 | |
United Stationers, Inc. * | | | 44,067 | | | | 2,476,565 | |
| Viad Corp. | | | 33,896 | | | | 676,564 | |
| | | | | | | | | |
| | | | | | | | 52,511,475 | |
| |
Consumer Durables & Apparel 3.4%
|
| American Greetings Corp., Class A | | | 74,111 | | | | 1,435,530 | |
| Brunswick Corp. | | | 162,400 | | | | 2,569,168 | |
| Callaway Golf Co. | | | 108,369 | | | | 745,579 | |
Carter’s, Inc. * | | | 106,014 | | | | 2,639,749 | |
| Columbia Sportswear Co. | | | 18,919 | | | | 988,518 | |
Crocs, Inc. * | | | 157,600 | | | | 2,195,368 | |
Deckers Outdoor Corp. * | | | 68,800 | | | | 3,997,280 | |
| Ethan Allen Interiors, Inc. | | | 42,479 | | | | 644,406 | |
G-III Apparel Group Ltd. * | | | 26,600 | | | | 702,240 | |
Helen of Troy Ltd. * | | | 54,100 | | | | 1,387,665 | |
Iconix Brand Group, Inc. * | | | 131,400 | | | | 2,299,500 | |
iRobot Corp. * | | | 35,900 | | | | 749,592 | |
| KB HOME | | | 136,100 | | | | 1,430,411 | |
La-Z-Boy, Inc. * | | | 94,800 | | | | 736,596 | |
Liz Claiborne, Inc. * | | | 174,800 | | | | 1,069,776 | |
Maidenform Brands, Inc. * | | | 40,700 | | | | 1,089,132 | |
Meritage Homes Corp. * | | | 59,885 | | | | 1,096,494 | |
| National Presto Industries, Inc. | | | 8,600 | | | | 962,598 | |
| Polaris Industries, Inc. | | | 60,123 | | | | 4,274,144 | |
| Pool Corp. | | | 90,077 | | | | 1,814,151 | |
Skechers U.S.A., Inc., Class A * | | | 61,478 | | | | 1,195,132 | |
Standard Pacific Corp. * | | | 179,000 | | | | 649,770 | |
Steven Madden Ltd. * | | | 44,400 | | | | 1,878,120 | |
| The Jones Group, Inc. | | | 157,100 | | | | 2,271,666 | |
| The Ryland Group, Inc. | | | 76,500 | | | | 1,145,970 | |
The Timberland Co., Class A * | | | 71,560 | | | | 1,501,329 | |
True Religion Apparel, Inc. * | | | 46,600 | | | | 952,970 | |
Under Armour, Inc., Class A (d)* | | | 65,820 | | | | 3,072,478 | |
Volcom, Inc. * | | | 30,500 | | | | 523,685 | |
| Wolverine World Wide, Inc. | | | 86,736 | | | | 2,525,752 | |
| | | | | | | | | |
| | | | | | | | 48,544,769 | |
| |
Consumer Services 4.5%
|
American Public Education, Inc. * | | | 33,500 | | | | 936,660 | |
| Ameristar Casinos, Inc. | | | 55,075 | | | | 984,741 | |
Biglari Holdings, Inc. * | | | 2,300 | | | | 766,797 | |
BJ’s Restaurants, Inc. * | | | 38,900 | | | | 1,289,535 | |
| Bob Evans Farms, Inc. | | | 57,046 | | | | 1,637,220 | |
Boyd Gaming Corp. * | | | 93,600 | | | | 777,816 | |
Bridgepoint Education, Inc. (d)* | | | 25,600 | | | | 364,544 | |
Buffalo Wild Wings, Inc. * | | | 31,900 | | | | 1,500,257 | |
California Pizza Kitchen, Inc. * | | | 44,500 | | | | 734,695 | |
Capella Education Co. * | | | 26,700 | | | | 1,463,961 | |
CEC Entertainment, Inc. * | | | 45,538 | | | | 1,511,862 | |
| Churchill Downs, Inc. | | | 16,261 | | | | 589,136 | |
Coinstar, Inc. * | | | 57,100 | | | | 3,287,818 | |
Corinthian Colleges, Inc. (d)* | | | 161,100 | | | | 840,942 | |
| Cracker Barrel Old Country Store, Inc. | | | 42,053 | | | | 2,266,236 | |
DineEquity, Inc. * | | | 27,800 | | | | 1,235,710 | |
Domino’s Pizza, Inc. * | | | 67,079 | | | | 995,452 | |
Gaylord Entertainment Co. * | | | 94,335 | | | | 3,145,129 | |
Grand Canyon Education, Inc. * | | | 41,000 | | | | 771,210 | |
| Hillenbrand, Inc. | | | 113,900 | | | | 2,447,711 | |
| International Speedway Corp., Class A | | | 56,300 | | | | 1,285,892 | |
Interval Leisure Group, Inc. * | | | 72,800 | | | | 1,044,680 | |
Jack in the Box, Inc. * | | | 101,588 | | | | 2,352,778 | |
K12, Inc. * | | | 54,300 | | | | 1,515,513 | |
LIFE TIME FITNESS, Inc. * | | | 76,177 | | | | 2,752,275 | |
Lincoln Educational Services Corp. * | | | 19,400 | | | | 241,724 | |
| Matthews International Corp., Class A | | | 55,784 | | | | 1,841,988 | |
Orient-Express Hotels Ltd., Class A * | | | 104,600 | | | | 1,324,236 | |
| P.F. Chang’s China Bistro, Inc. | | | 40,742 | | | | 1,870,873 | |
Papa John’s International, Inc. * | | | 47,855 | | | | 1,236,095 | |
Peet’s Coffee & Tea, Inc. * | | | 23,900 | | | | 914,175 | |
Pinnacle Entertainment, Inc. * | | | 107,285 | | | | 1,373,248 | |
Pre-Paid Legal Services, Inc. * | | | 14,300 | | | | 860,574 | |
| Regis Corp. | | | 105,049 | | | | 2,148,252 | |
Ruby Tuesday, Inc. * | | | 118,600 | | | | 1,435,060 | |
Scientific Games Corp., Class A * | | | 119,500 | | | | 944,050 | |
Shuffle Master, Inc. * | | | 98,600 | | | | 927,826 | |
Sonic Corp. * | | | 99,229 | | | | 881,153 | |
| Speedway Motorsports, Inc. | | | 21,584 | | | | 330,235 | |
Steiner Leisure Ltd. * | | | 31,609 | | | | 1,225,481 | |
| Stewart Enterprises, Inc., Class A | | | 144,000 | | | | 800,640 | |
Texas Roadhouse, Inc. * | | | 84,696 | | | | 1,300,930 | |
The Cheesecake Factory, Inc. * | | | 110,800 | | | | 3,226,496 | |
| The Marcus Corp. | | | 35,083 | | | | 449,764 | |
| Universal Technical Institute, Inc. | | | 38,600 | | | | 746,910 | |
Vail Resorts, Inc. * | | | 53,871 | | | | 2,185,008 | |
| | | | | | | | | |
| | | | | | | | 62,763,288 | |
| |
Diversified Financials 3.2%
|
American Capital Ltd. * | | | 616,600 | | | | 4,303,868 | |
| Ares Capital Corp. | | | 278,130 | | | | 4,655,896 | |
| BlackRock Kelso Capital Corp. | | | 74,000 | | | | 867,280 | |
| Cash America International, Inc. | | | 53,870 | | | | 1,897,840 | |
| Cohen & Steers, Inc. | | | 30,628 | | | | 767,844 | |
| Compass Diversified Holdings | | | 49,000 | | | | 834,470 | |
Cowen Group, Inc., Class A * | | | 60,400 | | | | 211,400 | |
Dollar Financial Corp. * | | | 44,400 | | | | 1,110,888 | |
20 See financial notes
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Duff & Phelps Corp., Class A | | | 31,000 | | | | 432,140 | |
Encore Capital Group, Inc. * | | | 24,700 | | | | 501,904 | |
| Evercore Partners, Inc., Class A | | | 25,500 | | | | 774,180 | |
EZCORP, Inc., Class A * | | | 89,500 | | | | 1,922,460 | |
FBR Capital Markets Corp. * | | | 54,200 | | | | 191,868 | |
| Fifth Street Finance Corp. | | | 92,800 | | | | 1,095,040 | |
First Cash Financial Services, Inc. * | | | 46,000 | | | | 1,337,220 | |
| GAMCO Investors, Inc., Class A | | | 8,700 | | | | 372,708 | |
| GFI Group, Inc. | | | 119,868 | | | | 574,168 | |
Gleacher & Co., Inc. * | | | 99,600 | | | | 224,100 | |
| Hercules Technology Growth Capital, Inc. | | | 65,400 | | | | 665,772 | |
Interactive Brokers Group, Inc., Class A * | | | 72,700 | | | | 1,360,944 | |
Investment Technology Group, Inc. * | | | 80,465 | | | | 1,145,822 | |
| KBW, Inc. | | | 53,400 | | | | 1,351,020 | |
Knight Capital Group, Inc., Class A * | | | 171,400 | | | | 2,233,342 | |
| MarketAxess Holdings, Inc. | | | 58,460 | | | | 1,062,218 | |
| MCG Capital Corp. | | | 122,300 | | | | 774,159 | |
MF Global Holdings Ltd. * | | | 221,600 | | | | 1,735,128 | |
| Nelnet, Inc., Class A | | | 35,600 | | | | 799,932 | |
| Oppenheimer Holdings, Inc., Class A | | | 17,200 | | | | 437,740 | |
optionsXpress Holdings, Inc. * | | | 78,547 | | | | 1,254,395 | |
PHH Corp. * | | | 99,363 | | | | 1,914,725 | |
PICO Holdings, Inc. * | | | 41,600 | | | | 1,278,784 | |
Piper Jaffray Cos., Inc. * | | | 29,439 | | | | 911,726 | |
Portfolio Recovery Associates, Inc. * | | | 32,843 | | | | 2,202,123 | |
| Prospect Capital Corp. | | | 121,300 | | | | 1,199,657 | |
| SWS Group, Inc. | | | 49,100 | | | | 337,317 | |
| The Student Loan Corp. | | | 19,700 | | | | 587,454 | |
World Acceptance Corp. * | | | 32,300 | | | | 1,393,745 | |
| | | | | | | | | |
| | | | | | | | 44,721,277 | |
| |
Energy 5.9%
|
| Alon USA Energy, Inc. | | | 64,700 | | | | 366,849 | |
| Apco Oil & Gas International, Inc. | | | 10,600 | | | | 391,034 | |
ATP Oil & Gas Corp. (d)* | | | 74,400 | | | | 1,068,384 | |
Basic Energy Services, Inc. * | | | 38,100 | | | | 421,386 | |
| Berry Petroleum Co., Class A | | | 81,500 | | | | 2,788,115 | |
Bill Barrett Corp. * | | | 76,100 | | | | 2,872,775 | |
BPZ Resources, Inc. (d)* | | | 179,900 | | | | 669,228 | |
Brigham Exploration Co. * | | | 201,000 | | | | 4,239,090 | |
Bristow Group, Inc. * | | | 65,987 | | | | 2,558,976 | |
Cal Dive International, Inc. * | | | 144,500 | | | | 731,170 | |
Carrizo Oil & Gas, Inc. * | | | 58,000 | | | | 1,369,960 | |
Clayton Williams Energy, Inc. * | | | 11,000 | | | | 656,920 | |
Clean Energy Fuels Corp. (d)* | | | 65,900 | | | | 956,868 | |
Complete Production Services, Inc. * | | | 120,700 | | | | 2,828,001 | |
Contango Oil & Gas Co. * | | | 23,200 | | | | 1,220,088 | |
Crosstex Energy, Inc. * | | | 74,400 | | | | 603,384 | |
CVR Energy, Inc. * | | | 67,800 | | | | 645,456 | |
| Delek US Holdings, Inc. | | | 73,400 | | | | 539,490 | |
Delta Petroleum Corp. * | | | 237,300 | | | | 173,704 | |
Exterran Holdings, Inc. * | | | 115,000 | | | | 2,894,550 | |
| Frontier Oil Corp. | | | 192,500 | | | | 2,550,625 | |
| General Maritime Corp. | | | 102,834 | | | | 394,882 | |
Global Industries Ltd. * | | | 200,482 | | | | 1,160,791 | |
GMX Resources, Inc. (d)* | | | 57,400 | | | | 257,152 | |
Goodrich Petroleum Corp. * | | | 44,700 | | | | 609,708 | |
GulfMark Offshore, Inc., Class A * | | | 39,000 | | | | 1,154,790 | |
Gulfport Energy Corp. * | | | 50,300 | | | | 837,998 | |
Helix Energy Solutions Group, Inc. * | | | 179,400 | | | | 2,276,586 | |
Hercules Offshore, Inc. * | | | 196,600 | | | | 463,976 | |
| Holly Corp. | | | 75,800 | | | | 2,480,934 | |
Hornbeck Offshore Services, Inc. * | | | 52,245 | | | | 1,161,929 | |
International Coal Group, Inc. * | | | 309,168 | | | | 1,737,524 | |
ION Geophysical Corp. * | | | 247,900 | | | | 1,212,231 | |
James River Coal Co. * | | | 49,000 | | | | 848,190 | |
Key Energy Services, Inc. * | | | 219,900 | | | | 2,166,015 | |
| Lufkin Industries, Inc. | | | 54,790 | | | | 2,676,491 | |
McMoRan Exploration Co. * | | | 151,300 | | | | 2,547,892 | |
Newpark Resources, Inc. * | | | 142,610 | | | | 838,547 | |
| Nordic American Tanker Shipping Ltd. | | | 85,200 | | | | 2,217,756 | |
Northern Oil & Gas, Inc. * | | | 66,100 | | | | 1,300,848 | |
| Overseas Shipholding Group, Inc. | | | 47,800 | | | | 1,597,954 | |
Parker Drilling Co. * | | | 265,065 | | | | 1,121,225 | |
| Penn Virginia Corp. | | | 83,478 | | | | 1,237,144 | |
Petroleum Development Corp. * | | | 35,403 | | | | 1,104,928 | |
PetroQuest Energy, Inc. * | | | 97,000 | | | | 541,260 | |
Pioneer Drilling Co. * | | | 99,600 | | | | 613,536 | |
Rex Energy Corp. * | | | 54,300 | | | | 668,976 | |
Rosetta Resources, Inc. * | | | 96,300 | | | | 2,302,533 | |
| RPC, Inc. | | | 54,689 | | | | 1,203,705 | |
SEACOR Holdings, Inc. * | | | 41,000 | | | | 3,884,750 | |
Stone Energy Corp. * | | | 77,168 | | | | 1,206,136 | |
Swift Energy Co. * | | | 68,901 | | | | 2,194,497 | |
TETRA Technologies, Inc. * | | | 138,774 | | | | 1,354,434 | |
USEC, Inc. * | | | 184,023 | | | | 988,203 | |
Venoco, Inc. * | | | 38,600 | | | | 597,528 | |
| W&T Offshore, Inc. | | | 63,200 | | | | 687,616 | |
Western Refining, Inc. (d)* | | | 53,822 | | | | 357,916 | |
Willbros Group, Inc. * | | | 72,900 | | | | 645,894 | |
| World Fuel Services Corp. | | | 115,956 | | | | 3,273,438 | |
| | | | | | | | | |
| | | | | | | | 82,471,966 | |
| |
Food & Staples Retailing 0.9%
|
| Ingles Markets, Inc., Class A | | | 23,631 | | | | 433,865 | |
| Nash Finch Co. | | | 22,900 | | | | 959,510 | |
| PriceSmart, Inc. | | | 39,000 | | | | 1,143,870 | |
Rite Aid Corp. * | | | 1,176,300 | | | | 1,075,962 | |
| Ruddick Corp. | | | 75,100 | | | | 2,620,990 | |
| The Andersons, Inc. | | | 30,600 | | | | 1,204,722 | |
The Great Atlantic & Pacific Tea Co., Inc. (d)* | | | 43,790 | | | | 150,638 | |
United Natural Foods, Inc. * | | | 79,582 | | | | 2,845,852 | |
| Village Super Market, Inc., Class A | | | 11,400 | | | | 332,880 | |
| Weis Markets, Inc. | | | 20,000 | | | | 779,200 | |
Winn-Dixie Stores, Inc. * | | | 90,300 | | | | 605,010 | |
| | | | | | | | | |
| | | | | | | | 12,152,499 | |
| |
Food, Beverage & Tobacco 1.8%
|
Alliance One International, Inc. * | | | 163,900 | | | | 724,438 | |
| B&G Foods, Inc. | | | 87,100 | | | | 1,066,975 | |
See financial notes 21
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Cal-Maine Foods, Inc. | | | 22,300 | | | | 646,031 | |
Chiquita Brands International, Inc. * | | | 74,202 | | | | 984,661 | |
| Coca-Cola Bottling Co. | | | 4,200 | | | | 223,944 | |
Darling International, Inc. * | | | 162,800 | | | | 1,629,628 | |
| Diamond Foods, Inc. | | | 39,000 | | | | 1,723,800 | |
Dole Food Co., Inc. (d)* | | | 65,900 | | | | 607,598 | |
Fresh Del Monte Produce, Inc. * | | | 77,200 | | | | 1,708,436 | |
| J & J Snack Foods Corp. | | | 24,900 | | | | 1,067,463 | |
| Lance, Inc. | | | 59,000 | | | | 1,341,660 | |
| National Beverage Corp. | | | 28,901 | | | | 413,284 | |
| Sanderson Farms, Inc. | | | 35,700 | | | | 1,498,686 | |
Smart Balance, Inc. * | | | 112,100 | | | | 399,076 | |
Synutra International, Inc. (d)* | | | 24,300 | | | | 269,244 | |
The Boston Beer Co., Inc., Class A * | | | 17,300 | | | | 1,238,507 | |
The Hain Celestial Group, Inc. * | | | 67,831 | | | | 1,677,461 | |
| Tootsie Roll Industries, Inc. | | | 49,646 | | | | 1,303,207 | |
TreeHouse Foods, Inc. * | | | 63,600 | | | | 2,970,120 | |
| Universal Corp. | | | 45,445 | | | | 1,883,241 | |
Vector Group Ltd. (d) | | | 97,182 | | | | 1,817,303 | |
| | | | | | | | | |
| | | | | | | | 25,194,763 | |
| |
Health Care Equipment & Services 6.8%
|
Abaxis, Inc. * | | | 40,500 | | | | 972,405 | |
Accuray, Inc. * | | | 83,400 | | | | 548,772 | |
Air Methods Corp. * | | | 20,100 | | | | 822,090 | |
Align Technology, Inc. * | | | 120,000 | | | | 2,043,600 | |
American Medical Systems Holdings, Inc. * | | | 136,925 | | | | 2,765,885 | |
AMERIGROUP Corp. * | | | 94,000 | | | | 3,922,620 | |
AmSurg Corp. * | | | 51,900 | | | | 938,352 | |
| Analogic Corp. | | | 27,554 | | | | 1,257,289 | |
AngioDynamics, Inc. * | | | 37,400 | | | | 531,828 | |
athenahealth, Inc. (d)* | | | 62,000 | | | | 2,478,140 | |
Bio-Reference Laboratories, Inc. * | | | 41,400 | | | | 892,584 | |
Centene Corp. * | | | 88,392 | | | | 1,972,909 | |
| Chemed Corp. | | | 44,000 | | | | 2,593,360 | |
| Computer Programs & Systems, Inc. | | | 18,000 | | | | 822,060 | |
Conceptus, Inc. * | | | 54,300 | | | | 771,603 | |
CONMED Corp. * | | | 51,500 | | | | 1,133,515 | |
CorVel Corp. * | | | 13,300 | | | | 595,840 | |
Cyberonics, Inc. * | | | 41,500 | | | | 1,141,665 | |
Dexcom, Inc. * | | | 93,100 | | | | 1,280,125 | |
Emergency Medical Services Corp., Class A * | | | 51,200 | | | | 2,784,256 | |
Emeritus Corp. (d)* | | | 47,800 | | | | 891,470 | |
| Ensign Group, Inc. | | | 18,500 | | | | 347,245 | |
Genoptix, Inc. * | | | 31,600 | | | | 537,832 | |
Gentiva Health Services, Inc. * | | | 53,896 | | | | 1,254,699 | |
Greatbatch, Inc. * | | | 41,000 | | | | 891,750 | |
Haemonetics Corp. * | | | 47,100 | | | | 2,574,015 | |
Hanger Orthopedic Group, Inc. * | | | 58,300 | | | | 1,091,376 | |
Healthspring, Inc. * | | | 100,544 | | | | 2,934,879 | |
Healthways, Inc. * | | | 74,863 | | | | 784,564 | |
| Hill-Rom Holdings, Inc. | | | 115,300 | | | | 4,467,875 | |
HMS Holdings Corp. * | | | 49,600 | | | | 2,981,456 | |
ICU Medical, Inc. * | | | 22,600 | | | | 824,900 | |
Immucor, Inc. * | | | 129,000 | | | | 2,244,600 | |
Insulet Corp. * | | | 67,700 | | | | 1,079,815 | |
Integra LifeSciences Holdings * | | | 37,748 | | | | 1,623,919 | |
| Invacare Corp. | | | 54,211 | | | | 1,463,697 | |
IPC The Hospitalist Co. * | | | 24,900 | | | | 797,547 | |
Kindred Healthcare, Inc. * | | | 71,892 | | | | 986,358 | |
| Landauer, Inc. | | | 16,700 | | | | 1,020,203 | |
LHC Group, Inc. * | | | 26,400 | | | | 710,160 | |
Magellan Health Services, Inc. * | | | 62,000 | | | | 2,976,000 | |
MAKO Surgical Corp. (d)* | | | 29,900 | | | | 322,322 | |
MedAssets, Inc. * | | | 80,500 | | | | 1,492,470 | |
Medidata Solutions, Inc. * | | | 29,300 | | | | 545,859 | |
| Meridian Bioscience, Inc. | | | 82,650 | | | | 1,891,859 | |
Merit Medical Systems, Inc. * | | | 51,666 | | | | 816,840 | |
Molina Healthcare, Inc. * | | | 24,000 | | | | 622,080 | |
MWI Veterinary Supply, Inc. * | | | 22,500 | | | | 1,287,000 | |
| National Healthcare Corp. | | | 19,188 | | | | 698,635 | |
Natus Medical, Inc. * | | | 52,200 | | | | 683,820 | |
Neogen Corp. * | | | 40,950 | | | | 1,368,549 | |
NuVasive, Inc. * | | | 70,300 | | | | 1,841,860 | |
NxStage Medical, Inc. * | | | 35,900 | | | | 723,744 | |
Omnicell, Inc. * | | | 58,300 | | | | 814,451 | |
PharMerica Corp. * | | | 58,664 | | | | 588,987 | |
PSS World Medical, Inc. * | | | 103,066 | | | | 2,435,450 | |
Psychiatric Solutions, Inc. * | | | 103,500 | | | | 3,487,950 | |
Quidel Corp. * | | | 50,700 | | | | 586,092 | |
RehabCare Group, Inc. * | | | 45,400 | | | | 1,009,242 | |
SonoSite, Inc. * | | | 25,900 | | | | 807,303 | |
Sun Healthcare Group, Inc. * | | | 77,900 | | | | 740,829 | |
SurModics, Inc. * | | | 39,919 | | | | 477,431 | |
Triple-S Management Corp., Class B * | | | 37,900 | | | | 639,373 | |
| Universal American Financial Corp. | | | 79,202 | | | | 1,273,568 | |
Volcano Corp. * | | | 89,600 | | | | 2,188,032 | |
WellCare Health Plans, Inc. * | | | 74,600 | | | | 2,072,388 | |
| West Pharmaceutical Services, Inc. | | | 58,465 | | | | 2,086,616 | |
Wright Medical Group, Inc. * | | | 69,300 | | | | 924,462 | |
Zoll Medical Corp. * | | | 37,700 | | | | 1,226,381 | |
| | | | | | | | | |
| | | | | | | | 96,406,851 | |
| |
Household & Personal Products 0.5%
|
Central Garden & Pet Co., Class A * | | | 112,700 | | | | 1,177,715 | |
Elizabeth Arden, Inc. * | | | 42,598 | | | | 871,129 | |
| Inter Parfums, Inc. | | | 26,000 | | | | 454,740 | |
| Nu Skin Enterprises, Inc., Class A | | | 88,122 | | | | 2,696,533 | |
Prestige Brands Holdings, Inc. * | | | 71,300 | | | | 766,475 | |
Revlon, Inc., Class A * | | | 28,402 | | | | 324,351 | |
USANA Health Sciences, Inc. * | | | 10,400 | | | | 456,768 | |
WD-40 Co. | | | 29,500 | | | | 1,088,255 | |
| | | | | | | | | |
| | | | | | | | 7,835,966 | |
| |
Insurance 3.4%
|
| Alterra Capital Holdings Ltd. | | | 194,884 | | | | 3,936,657 | |
| American Equity Investment Life Holding Co. | | | 107,264 | | | | 1,163,814 | |
| AmTrust Financial Services, Inc. | | | 40,705 | | | | 609,354 | |
| Argo Group International Holdings Ltd. | | | 56,938 | | | | 1,975,179 | |
| Baldwin & Lyons, Inc., Class B | | | 4,900 | | | | 122,500 | |
CNA Surety Corp. * | | | 37,000 | | | | 712,250 | |
22 See financial notes
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
CNO Financial Group, Inc. * | | | 454,400 | | | | 2,471,936 | |
| Delphi Financial Group, Inc., Class A | | | 87,280 | | | | 2,362,670 | |
| Donegal Group, Inc., Class A | | | 18,320 | | | | 253,732 | |
eHealth, Inc. * | | | 42,900 | | | | 579,579 | |
| Employers Holdings, Inc. | | | 82,000 | | | | 1,327,580 | |
Enstar Group Ltd. * | | | 15,394 | | | | 1,234,445 | |
| FBL Financial Group, Inc., Class A | | | 27,168 | | | | 710,715 | |
| Flagstone Reinsurance Holdings S.A. | | | 30,529 | | | | 332,766 | |
Global Indemnity plc * | | | 22,055 | | | | 372,288 | |
Greenlight Capital Re Ltd., Class A * | | | 55,389 | | | | 1,581,910 | |
| Harleysville Group, Inc. | | | 25,863 | | | | 887,877 | |
Hilltop Holdings, Inc. * | | | 73,739 | | | | 736,653 | |
| Horace Mann Educators Corp. | | | 78,278 | | | | 1,463,016 | |
| Infinity Property & Casualty Corp. | | | 24,692 | | | | 1,277,811 | |
MBIA, Inc. * | | | 290,700 | | | | 3,258,747 | |
| Meadowbrook Insurance Group, Inc. | | | 105,100 | | | | 907,013 | |
| Montpelier Re Holdings Ltd. | | | 126,100 | | | | 2,310,152 | |
National Financial Partners Corp. * | | | 63,200 | | | | 872,160 | |
| National Interstate Corp. | | | 22,008 | | | | 472,512 | |
| National Western Life Insurance Co., Class A | | | 4,494 | | | | 719,085 | |
| OneBeacon Insurance Group Ltd., Class A | | | 44,200 | | | | 622,336 | |
| Protective Life Corp. | | | 157,400 | | | | 3,772,878 | |
| RLI Corp. | | | 29,455 | | | | 1,691,306 | |
| Safety Insurance Group, Inc. | | | 26,870 | | | | 1,248,380 | |
| Selective Insurance Group, Inc. | | | 91,014 | | | | 1,539,957 | |
| State Auto Financial Corp. | | | 37,356 | | | | 584,995 | |
The Navigators Group, Inc. * | | | 22,485 | | | | 1,033,635 | |
| Tower Group, Inc. | | | 82,665 | | | | 2,007,106 | |
| United Fire & Casualty Co. | | | 37,200 | | | | 745,116 | |
| Unitrin, Inc. | | | 88,100 | | | | 2,140,830 | |
| | | | | | | | | |
| | | | | | | | 48,038,940 | |
| |
Materials 4.9%
|
| A. Schulman, Inc. | | | 57,609 | | | | 1,250,115 | |
Allied Nevada Gold Corp. * | | | 126,500 | | | | 3,122,020 | |
| AMCOL International Corp. | | | 45,652 | | | | 1,266,386 | |
| Arch Chemicals, Inc. | | | 44,572 | | | | 1,582,752 | |
| Balchem Corp. | | | 51,500 | | | | 1,573,840 | |
Brush Engineered Materials, Inc. * | | | 37,200 | | | | 1,233,180 | |
| Buckeye Technologies, Inc. | | | 71,300 | | | | 1,286,965 | |
Calgon Carbon Corp. * | | | 96,700 | | | | 1,451,467 | |
| Carpenter Technology Corp. | | | 78,900 | | | | 2,813,574 | |
Century Aluminum Co. * | | | 105,500 | | | | 1,426,360 | |
Clearwater Paper Corp. * | | | 20,900 | | | | 1,687,675 | |
Coeur d’Alene Mines Corp. * | | | 160,950 | | | | 3,317,179 | |
| Deltic Timber Corp. | | | 22,204 | | | | 1,036,483 | |
| Eagle Materials, Inc. | | | 77,890 | | | | 1,827,299 | |
Ferro Corp. * | | | 158,300 | | | | 2,171,876 | |
Graphic Packaging Holding Co. * | | | 94,715 | | | | 346,657 | |
| H.B. Fuller Co. | | | 89,516 | | | | 1,847,610 | |
| Haynes International, Inc. | | | 26,425 | | | | 958,171 | |
Hecla Mining Co. * | | | 439,400 | | | | 3,027,466 | |
Horsehead Holding Corp. * | | | 79,700 | | | | 871,121 | |
| Innophos Holdings, Inc. | | | 32,500 | | | | 1,193,400 | |
| Kaiser Aluminum Corp. | | | 28,350 | | | | 1,275,466 | |
KapStone Paper & Packaging Corp. * | | | 61,000 | | | | 780,800 | |
| Koppers Holdings, Inc. | | | 36,500 | | | | 1,017,620 | |
Louisiana-Pacific Corp. * | | | 229,100 | | | | 1,773,234 | |
| Minerals Technologies, Inc. | | | 33,561 | | | | 1,969,024 | |
| NewMarket Corp. | | | 17,700 | | | | 2,097,804 | |
| Olin Corp. | | | 144,500 | | | | 2,888,555 | |
OM Group, Inc. * | | | 54,500 | | | | 1,813,215 | |
| P.H. Glatfelter Co. | | | 83,900 | | | | 1,043,716 | |
PolyOne Corp. * | | | 170,175 | | | | 2,198,661 | |
RTI International Metals, Inc. * | | | 55,166 | | | | 1,715,663 | |
| Schnitzer Steel Industries, Inc., Class A | | | 39,200 | | | | 2,026,248 | |
| Schweitzer-Mauduit International, Inc. | | | 32,600 | | | | 2,092,268 | |
| Sensient Technologies Corp. | | | 90,025 | | | | 2,908,708 | |
| Stepan Co. | | | 12,900 | | | | 869,976 | |
Stillwater Mining Co. * | | | 83,541 | | | | 1,487,030 | |
| Texas Industries, Inc. | | | 51,051 | | | | 1,744,413 | |
Wausau Paper Corp. * | | | 73,820 | | | | 623,041 | |
| Westlake Chemical Corp. | | | 38,000 | | | | 1,214,480 | |
| Worthington Industries, Inc. | | | 107,160 | | | | 1,650,264 | |
| Zep, Inc. | | | 39,700 | | | | 720,158 | |
| | | | | | | | | |
| | | | | | | | 69,201,940 | |
| |
Media 1.1%
|
| Arbitron, Inc. | | | 48,856 | | | | 1,237,034 | |
Ascent Media Corp., Class A * | | | 25,200 | | | | 686,448 | |
Belo Corp., Class A * | | | 166,000 | | | | 961,140 | |
CKX, Inc. * | | | 138,371 | | | | 564,554 | |
| Harte-Hanks, Inc. | | | 83,716 | | | | 1,011,289 | |
Knology, Inc. * | | | 54,100 | | | | 787,155 | |
| Meredith Corp. | | | 64,700 | | | | 2,196,565 | |
| National CineMedia, Inc. | | | 75,300 | | | | 1,394,556 | |
| Scholastic Corp. | | | 46,969 | | | | 1,383,237 | |
The E.W. Scripps Co., Class A * | | | 53,300 | | | | 465,842 | |
Valassis Communications, Inc. * | | | 88,600 | | | | 2,923,800 | |
Warner Music Group Corp. * | | | 113,786 | | | | 591,687 | |
| World Wrestling Entertainment, Inc., Class A | | | 57,200 | | | | 791,648 | |
| | | | | | | | | |
| | | | | | | | 14,994,955 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 4.7%
|
Acorda Therapeutics, Inc. * | | | 70,100 | | | | 1,895,504 | |
Affymax, Inc. * | | | 27,300 | | | | 138,411 | |
Affymetrix, Inc. * | | | 130,700 | | | | 585,536 | |
Alkermes, Inc. * | | | 178,142 | | | | 2,061,103 | |
Allos Therapeutics, Inc. * | | | 133,800 | | | | 532,524 | |
Alnylam Pharmaceuticals, Inc. * | | | 64,800 | | | | 851,472 | |
AMAG Pharmaceuticals, Inc. * | | | 38,000 | | | | 604,580 | |
Auxilium Pharmaceuticals, Inc. * | | | 86,700 | | | | 2,145,825 | |
Cadence Pharmaceuticals, Inc. (d)* | | | 45,500 | | | | 404,040 | |
Celera Corp. * | | | 149,817 | | | | 853,957 | |
Cell Therapeutics, Inc. * | | | 1,056,700 | | | | 397,319 | |
Cepheid, Inc. * | | | 107,800 | | | | 2,268,112 | |
Clinical Data, Inc. (d)* | | | 26,300 | | | | 499,437 | |
Cubist Pharmaceuticals, Inc. * | | | 109,332 | | | | 2,545,249 | |
Dionex Corp. * | | | 31,844 | | | | 2,841,440 | |
Emergent Biosolutions, Inc. * | | | 27,700 | | | | 500,539 | |
See financial notes 23
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Enzon Pharmaceuticals, Inc. * | | | 107,400 | | | | 1,208,250 | |
Exelixis, Inc. * | | | 188,972 | | | | 842,815 | |
Genomic Health, Inc. * | | | 24,900 | | | | 352,584 | |
Geron Corp. (d)* | | | 197,200 | | | | 1,100,376 | |
Halozyme Therapeutics, Inc. * | | | 128,100 | | | | 938,973 | |
ImmunoGen, Inc. (d)* | | | 122,600 | | | | 1,007,772 | |
Impax Laboratories, Inc. * | | | 102,400 | | | | 1,929,216 | |
Incyte Corp. * | | | 215,463 | | | | 3,589,614 | |
Inspire Pharmaceuticals, Inc. * | | | 113,500 | | | | 794,500 | |
InterMune, Inc. * | | | 76,600 | | | | 1,006,524 | |
Isis Pharmaceuticals, Inc. * | | | 181,000 | | | | 1,654,340 | |
Lexicon Pharmaceuticals, Inc. * | | | 277,500 | | | | 491,175 | |
Luminex Corp. * | | | 75,800 | | | | 1,365,158 | |
MannKind Corp. (d)* | | | 112,100 | | | | 715,198 | |
Martek Biosciences Corp. * | | | 66,676 | | | | 1,463,538 | |
| Medicis Pharmaceutical Corp., Class A | | | 109,449 | | | | 3,256,108 | |
Medivation, Inc. * | | | 54,200 | | | | 626,010 | |
Micromet, Inc. * | | | 104,000 | | | | 778,960 | |
Momenta Pharmaceuticals, Inc. (d)* | | | 72,244 | | | | 1,207,197 | |
Nektar Therapeutics * | | | 171,871 | | | | 2,504,161 | |
Opko Health, Inc. * | | | 79,700 | | | | 219,972 | |
Optimer Pharmaceuticals, Inc. * | | | 60,900 | | | | 571,851 | |
Par Pharmaceutical Cos., Inc. * | | | 68,880 | | | | 2,239,289 | |
PAREXEL International Corp. * | | | 107,018 | | | | 2,300,887 | |
Pharmasset, Inc. * | | | 51,100 | | | | 1,916,250 | |
Rigel Pharmaceuticals, Inc. * | | | 95,300 | | | | 791,943 | |
Savient Pharmaceuticals, Inc. (d)* | | | 122,600 | | | | 1,521,466 | |
Seattle Genetics, Inc. * | | | 155,298 | | | | 2,545,334 | |
Targacept, Inc. * | | | 29,600 | | | | 732,896 | |
The Medicines Co. * | | | 94,108 | | | | 1,201,759 | |
Theravance, Inc. * | | | 112,438 | | | | 2,291,486 | |
ViroPharma, Inc. * | | | 138,474 | | | | 2,265,435 | |
VIVUS, Inc. (d)* | | | 148,200 | | | | 1,147,068 | |
XenoPort, Inc. * | | | 55,800 | | | | 432,450 | |
| | | | | | | | | |
| | | | | | | | 66,135,603 | |
| |
Real Estate 6.6%
|
| Acadia Realty Trust | | | 73,136 | | | | 1,395,435 | |
| Alexander’s, Inc. | | | 3,610 | | | | 1,356,782 | |
| American Campus Communities, Inc. | | | 113,000 | | | | 3,574,190 | |
Ashford Hospitality Trust * | | | 106,000 | | | | 1,075,900 | |
| BioMed Realty Trust, Inc. | | | 207,534 | | | | 3,808,249 | |
| Brandywine Realty Trust | | | 236,530 | | | | 2,831,264 | |
| CBL & Associates Properties, Inc. | | | 253,606 | | | | 3,976,542 | |
| Colonial Properties Trust | | | 126,800 | | | | 2,273,524 | |
| Cousins Properties, Inc. | | | 186,816 | | | | 1,384,307 | |
| DCT Industrial Trust, Inc. | | | 381,400 | | | | 1,910,814 | |
DiamondRock Hospitality Co. * | | | 271,117 | | | | 2,868,418 | |
| DuPont Fabros Technology, Inc. | | | 103,300 | | | | 2,592,830 | |
| EastGroup Properties, Inc. | | | 50,490 | | | | 2,043,835 | |
| Entertainment Properties Trust | | | 84,355 | | | | 3,899,732 | |
| Equity Lifestyle Properties, Inc. | | | 55,859 | | | | 3,179,494 | |
| Equity One, Inc. | | | 62,637 | | | | 1,171,312 | |
| Extra Space Storage, Inc. | | | 157,758 | | | | 2,555,680 | |
| First Potomac Realty Trust | | | 62,700 | | | | 1,033,296 | |
Forestar Group, Inc. * | | | 71,600 | | | | 1,224,360 | |
| Franklin Street Properties Corp. | | | 124,565 | | | | 1,662,943 | |
| Getty Realty Corp. | | | 36,542 | | | | 1,041,812 | |
| Healthcare Realty Trust, Inc. | | | 112,681 | | | | 2,720,119 | |
| Hersha Hospitality Trust | | | 218,100 | | | | 1,330,410 | |
| Home Properties, Inc. | | | 65,765 | | | | 3,580,904 | |
| Inland Real Estate Corp. | | | 130,436 | | | | 1,133,489 | |
| Investors Real Estate Trust | | | 135,100 | | | | 1,188,880 | |
| Kilroy Realty Corp. | | | 95,600 | | | | 3,266,652 | |
| LaSalle Hotel Properties | | | 132,726 | | | | 3,144,279 | |
| Lexington Realty Trust | | | 203,184 | | | | 1,580,772 | |
| LTC Properties, Inc. | | | 43,067 | | | | 1,199,416 | |
| Medical Properties Trust, Inc. | | | 201,200 | | | | 2,251,428 | |
| Mid-America Apartment Communities, Inc. | | | 54,452 | | | | 3,323,206 | |
| National Health Investors, Inc. | | | 50,768 | | | | 2,350,558 | |
| Parkway Properties, Inc. | | | 39,800 | | | | 619,288 | |
| Pennsylvania Real Estate Investment Trust | | | 92,112 | | | | 1,314,438 | |
| Post Properties, Inc. | | | 89,167 | | | | 2,714,243 | |
| Potlatch Corp. | | | 73,203 | | | | 2,492,562 | |
| PS Business Parks, Inc. | | | 33,238 | | | | 1,969,684 | |
| Saul Centers, Inc. | | | 25,300 | | | | 1,079,804 | |
| Sovran Self Storage, Inc. | | | 50,526 | | | | 1,974,051 | |
| Sun Communities, Inc. | | | 30,800 | | | | 1,004,388 | |
Sunstone Hotel Investors, Inc. * | | | 180,610 | | | | 1,959,618 | |
Tejon Ranch Co. * | | | 21,292 | | | | 473,960 | |
U-Store-It Trust | | | 143,500 | | | | 1,235,535 | |
| Universal Health Realty Income Trust | | | 21,900 | | | | 813,585 | |
| Urstadt Biddle Properties, Class A | | | 39,400 | | | | 756,874 | |
| | | | | | | | | |
| | | | | | | | 92,338,862 | |
| |
Retailing 4.8%
|
99 Cents Only Stores * | | | 80,806 | | | | 1,246,028 | |
AnnTaylor Stores Corp. * | | | 108,000 | | | | 2,516,400 | |
Asbury Automotive Group, Inc. * | | | 59,400 | | | | 856,548 | |
Barnes & Noble, Inc. (d) | | | 72,900 | | | | 1,092,042 | |
| bebe stores, Inc. | | | 43,149 | | | | 283,057 | |
Blue Nile, Inc. (d)* | | | 26,800 | | | | 1,141,680 | |
| Brown Shoe Co., Inc. | | | 71,175 | | | | 836,306 | |
Cabela’s, Inc. * | | | 74,236 | | | | 1,376,335 | |
Charming Shoppes, Inc. * | | | 212,600 | | | | 741,974 | |
Citi Trends, Inc. * | | | 27,000 | | | | 566,460 | |
Coldwater Creek, Inc. * | | | 106,700 | | | | 359,579 | |
Collective Brands, Inc. * | | | 114,500 | | | | 1,755,285 | |
| Dillard’s, Inc., Class A | | | 93,700 | | | | 2,390,287 | |
DSW, Inc., Class A * | | | 22,700 | | | | 755,229 | |
| Fred’s, Inc., Class A | | | 71,500 | | | | 856,570 | |
Genesco, Inc. * | | | 41,744 | | | | 1,367,533 | |
Group 1 Automotive, Inc. * | | | 44,500 | | | | 1,569,070 | |
hhgregg, Inc. * | | | 30,400 | | | | 700,416 | |
Hibbett Sports, Inc. * | | | 52,775 | | | | 1,422,286 | |
HSN, Inc. * | | | 72,700 | | | | 2,176,638 | |
Jo-Ann Stores, Inc. * | | | 49,300 | | | | 2,132,225 | |
Jos. A. Bank Clothiers, Inc. * | | | 50,418 | | | | 2,198,225 | |
Lumber Liquidators Holdings, Inc. * | | | 28,500 | | | | 686,280 | |
| Monro Muffler Brake, Inc. | | | 37,700 | | | | 1,799,798 | |
NutriSystem, Inc. (d) | | | 54,548 | | | | 1,042,958 | |
OfficeMax, Inc. * | | | 154,000 | | | | 2,725,800 | |
Orbitz Worldwide, Inc. * | | | 77,000 | | | | 523,600 | |
Penske Automotive Group, Inc. * | | | 69,116 | | | | 929,610 | |
PetMed Express, Inc. (d) | | | 42,100 | | | | 650,445 | |
24 See financial notes
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Pier 1 Imports, Inc. * | | | 211,900 | | | | 1,839,292 | |
Rent-A-Center, Inc. | | | 123,705 | | | | 3,109,944 | |
Retail Ventures, Inc. * | | | 54,900 | | | | 746,091 | |
Saks, Inc. * | | | 293,500 | | | | 3,269,590 | |
Select Comfort Corp. * | | | 99,200 | | | | 824,352 | |
Shutterfly, Inc. * | | | 38,300 | | | | 1,152,830 | |
Sonic Automotive, Inc., Class A * | | | 72,900 | | | | 796,068 | |
| Stage Stores, Inc. | | | 73,327 | | | | 977,449 | |
Stein Mart, Inc. * | | | 48,000 | | | | 450,720 | |
| Systemax, Inc. | | | 24,400 | | | | 315,980 | |
The Buckle, Inc. (d) | | | 46,864 | | | | 1,363,274 | |
| The Cato Corp., Class A | | | 54,604 | | | | 1,444,276 | |
The Children’s Place Retail Stores, Inc. * | | | 50,413 | | | | 2,221,197 | |
| The Finish Line, Inc., Class A | | | 98,219 | | | | 1,502,751 | |
The Gymboree Corp. * | | | 48,660 | | | | 3,165,820 | |
| The Men’s Wearhouse, Inc. | | | 96,000 | | | | 2,346,240 | |
| The Pep Boys - Manny, Moe & Jack | | | 85,700 | | | | 1,001,833 | |
The Talbots, Inc. * | | | 128,200 | | | | 1,253,796 | |
Ulta Salon, Cosmetics & Fragrance, Inc. * | | | 51,300 | | | | 1,574,397 | |
Zumiez, Inc. * | | | 38,400 | | | | 1,006,848 | |
| | | | | | | | | |
| | | | | | | | 67,061,412 | |
| |
Semiconductors & Semiconductor Equipment 4.3%
|
Advanced Energy Industries, Inc. * | | | 72,700 | | | | 1,043,972 | |
Amkor Technology, Inc. * | | | 239,118 | | | | 1,724,041 | |
Applied Micro Circuits Corp. * | | | 122,565 | | | | 1,234,230 | |
ATMI, Inc. * | | | 60,254 | | | | 1,064,688 | |
Brooks Automation, Inc. * | | | 118,431 | | | | 804,146 | |
Cabot Microelectronics Corp. * | | | 49,100 | | | | 1,896,733 | |
Cavium Networks, Inc. * | | | 67,500 | | | | 2,151,225 | |
Cirrus Logic, Inc. (d)* | | | 120,100 | | | | 1,543,285 | |
Cymer, Inc. * | | | 53,365 | | | | 1,971,837 | |
Diodes, Inc. * | | | 64,181 | | | | 1,410,698 | |
Energy Conversion Devices, Inc. (d)* | | | 81,763 | | | | 368,751 | |
Entegris, Inc. * | | | 239,100 | | | | 1,429,818 | |
Fairchild Semiconductor International, Inc. * | | | 245,000 | | | | 2,761,150 | |
FEI Co. * | | | 66,400 | | | | 1,444,864 | |
FormFactor, Inc. * | | | 91,473 | | | | 890,032 | |
GT Solar International, Inc. * | | | 51,600 | | | | 424,668 | |
Hittite Microwave Corp. * | | | 38,609 | | | | 1,994,927 | |
Integrated Device Technology, Inc. * | | | 302,500 | | | | 1,781,725 | |
International Rectifier Corp. * | | | 131,350 | | | | 3,051,261 | |
Kulicke & Soffa Industries, Inc. * | | | 127,500 | | | | 793,050 | |
LDK Solar Co., Ltd. ADR (d)* | | | 68,700 | | | | 781,119 | |
| Micrel, Inc. | | | 76,505 | | | | 911,175 | |
Microsemi Corp. * | | | 150,719 | | | | 3,014,380 | |
MKS Instruments, Inc. * | | | 91,099 | | | | 1,881,194 | |
Monolithic Power Systems * | | | 64,200 | | | | 1,031,694 | |
Netlogic Microsystems, Inc. * | | | 93,900 | | | | 2,822,634 | |
OmniVision Technologies, Inc. * | | | 70,973 | | | | 1,925,497 | |
| Power Integrations, Inc. | | | 53,262 | | | | 1,819,430 | |
RF Micro Devices, Inc. * | | | 493,304 | | | | 3,596,186 | |
Semtech Corp. * | | | 113,429 | | | | 2,428,515 | |
Standard Microsystems Corp. * | | | 48,892 | | | | 1,180,253 | |
Tessera Technologies, Inc. * | | | 91,590 | | | | 1,807,071 | |
TriQuint Semiconductor, Inc. * | | | 279,900 | | | | 2,882,970 | |
Veeco Instruments, Inc. (d)* | | | 70,900 | | | | 2,967,165 | |
Volterra Semiconductor Corp. * | | | 46,400 | | | | 947,952 | |
Zoran Corp. * | | | 88,924 | | | | 629,582 | |
| | | | | | | | | |
| | | | | | | | 60,411,918 | |
| |
Software & Services 7.4%
|
ACI Worldwide, Inc. * | | | 60,759 | | | | 1,480,697 | |
Acxiom Corp. * | | | 145,476 | | | | 2,553,104 | |
Advent Software, Inc. * | | | 28,114 | | | | 1,510,284 | |
Ariba, Inc. * | | | 152,500 | | | | 2,863,950 | |
Art Technology Group, Inc. * | | | 273,500 | | | | 1,145,965 | |
| Blackbaud, Inc. | | | 88,469 | | | | 2,246,228 | |
Blackboard, Inc. (d)* | | | 61,761 | | | | 2,577,904 | |
Bottomline Technologies, Inc. * | | | 54,700 | | | | 985,694 | |
CACI International, Inc., Class A * | | | 55,300 | | | | 2,771,636 | |
CommVault Systems, Inc. * | | | 77,500 | | | | 2,242,075 | |
comScore, Inc. * | | | 44,600 | | | | 1,048,546 | |
Constant Contact, Inc. (d)* | | | 36,500 | | | | 839,500 | |
Convergys Corp. * | | | 231,900 | | | | 2,625,108 | |
CSG Systems International, Inc. * | | | 62,600 | | | | 1,216,944 | |
DealerTrack Holdings, Inc. * | | | 73,036 | | | | 1,411,055 | |
Deltek, Inc. * | | | 43,700 | | | | 343,482 | |
Digital River, Inc. * | | | 71,100 | | | | 2,649,186 | |
| EarthLink, Inc. | | | 193,881 | | | | 1,742,990 | |
Ebix, Inc. (d)* | | | 55,600 | | | | 1,373,320 | |
Epicor Software Corp. * | | | 124,700 | | | | 1,172,180 | |
| EPIQ Systems, Inc. | | | 63,600 | | | | 745,392 | |
Euronet Worldwide, Inc. * | | | 90,036 | | | | 1,626,050 | |
Exlservice Holdings, Inc. * | | | 19,300 | | | | 367,665 | |
| Fair Isaac Corp. | | | 86,700 | | | | 2,084,268 | |
Forrester Research, Inc. * | | | 25,317 | | | | 837,233 | |
Global Cash Access Holdings, Inc. * | | | 109,600 | | | | 398,944 | |
GSI Commerce, Inc. * | | | 108,000 | | | | 2,637,360 | |
| Heartland Payment Systems, Inc. | | | 68,900 | | | | 983,892 | |
| iGATE Corp. | | | 43,340 | | | | 885,870 | |
InfoSpace, Inc. * | | | 65,100 | | | | 549,444 | |
Internet Brands, Inc., Class A * | | | 47,300 | | | | 626,252 | |
j2 Global Communications, Inc. * | | | 81,728 | | | | 2,153,533 | |
JDA Software Group, Inc. * | | | 65,369 | | | | 1,653,836 | |
Lawson Software, Inc. * | | | 254,500 | | | | 2,265,050 | |
LogMeIn, Inc. * | | | 16,800 | | | | 667,464 | |
Manhattan Associates, Inc. * | | | 41,947 | | | | 1,291,129 | |
| MAXIMUS, Inc. | | | 32,574 | | | | 1,974,962 | |
Mentor Graphics Corp. * | | | 193,267 | | | | 2,087,284 | |
MicroStrategy, Inc., Class A * | | | 15,662 | | | | 1,419,447 | |
ModusLink Global Solutions, Inc. * | | | 84,200 | | | | 558,246 | |
NCI, Inc., Class A * | | | 16,700 | | | | 311,288 | |
NetScout Systems, Inc. * | | | 59,100 | | | | 1,387,077 | |
NetSuite, Inc. * | | | 25,000 | | | | 512,000 | |
| NIC, Inc. | | | 94,200 | | | | 817,656 | |
OpenTable, Inc. * | | | 21,600 | | | | 1,325,160 | |
| Pegasystems, Inc. | | | 25,800 | | | | 697,890 | |
Progress Software Corp. * | | | 76,280 | | | | 2,850,583 | |
Radiant Systems, Inc. * | | | 50,600 | | | | 987,206 | |
RealNetworks, Inc. * | | | 139,430 | | | | 418,290 | |
RightNow Technologies, Inc. * | | | 42,700 | | | | 1,115,324 | |
Rosetta Stone, Inc. (d)* | | | 17,600 | | | | 407,440 | |
| Sapient Corp. | | | 212,363 | | | | 2,794,697 | |
SAVVIS, Inc. * | | | 66,200 | | | | 1,588,138 | |
See financial notes 25
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Sourcefire, Inc. * | | | 40,200 | | | | 948,318 | |
SRA International, Inc., Class A * | | | 79,295 | | | | 1,586,693 | |
SuccessFactors, Inc. * | | | 119,700 | | | | 3,246,264 | |
Synchronoss Technologies, Inc. * | | | 30,100 | | | | 641,431 | |
| Syntel, Inc. | | | 22,283 | | | | 1,088,747 | |
Take-Two Interactive Software, Inc. * | | | 149,304 | | | | 1,591,581 | |
Taleo Corp., Class A * | | | 70,600 | | | | 2,025,514 | |
TeleCommunication Systems, Inc., Class A * | | | 65,700 | | | | 355,437 | |
TeleTech Holdings, Inc. * | | | 54,400 | | | | 825,792 | |
Terremark Worldwide, Inc. * | | | 119,100 | | | | 1,189,809 | |
The Ultimate Software Group, Inc. * | | | 50,800 | | | | 2,102,104 | |
TiVo, Inc. * | | | 199,503 | | | | 2,222,463 | |
TNS, Inc. * | | | 47,300 | | | | 905,322 | |
Tyler Technologies, Inc. * | | | 45,200 | | | | 922,532 | |
Unisys Corp. * | | | 76,350 | | | | 1,759,867 | |
| United Online, Inc. | | | 181,487 | | | | 1,121,590 | |
ValueClick, Inc. * | | | 155,200 | | | | 2,135,552 | |
Websense, Inc. * | | | 75,404 | | | | 1,517,128 | |
Wright Express Corp. * | | | 76,676 | | | | 2,891,452 | |
| | | | | | | | | |
| | | | | | | | 104,903,514 | |
| |
Technology Hardware & Equipment 6.9%
|
Acme Packet, Inc. * | | | 72,100 | | | | 2,851,555 | |
ADC Telecommunications, Inc. * | | | 174,300 | | | | 2,211,867 | |
| ADTRAN, Inc. | | | 102,905 | | | | 3,320,744 | |
| Anixter International, Inc. | | | 53,100 | | | | 2,850,939 | |
Arris Group, Inc. * | | | 249,860 | | | | 2,326,197 | |
Aruba Networks, Inc. * | | | 110,600 | | | | 2,423,246 | |
Aviat Networks, Inc. * | | | 108,400 | | | | 493,220 | |
Avid Technology, Inc. * | | | 50,405 | | | | 636,111 | |
Benchmark Electronics, Inc. * | | | 118,494 | | | | 1,946,856 | |
| Black Box Corp. | | | 29,892 | | | | 992,414 | |
Blue Coat Systems, Inc. * | | | 74,600 | | | | 2,011,962 | |
Brightpoint, Inc. * | | | 127,995 | | | | 958,683 | |
Checkpoint Systems, Inc. * | | | 71,644 | | | | 1,576,168 | |
Ciena Corp. (d)* | | | 168,400 | | | | 2,339,076 | |
Cogent, Inc. * | | | 85,809 | | | | 902,711 | |
| Cognex Corp. | | | 68,609 | | | | 1,831,860 | |
Coherent, Inc. * | | | 46,951 | | | | 1,970,064 | |
Compellent Technologies, Inc. * | | | 41,800 | | | | 1,056,286 | |
| Comtech Telecommunications Corp. | | | 52,000 | | | | 1,602,640 | |
DG Fastchannel, Inc. * | | | 44,100 | | | | 1,038,555 | |
DTS, Inc. * | | | 32,200 | | | | 1,281,560 | |
Echelon Corp. * | | | 52,300 | | | | 411,601 | |
Electronics for Imaging, Inc. * | | | 72,409 | | | | 991,279 | |
Emulex Corp. * | | | 143,390 | | | | 1,634,646 | |
Finisar Corp. * | | | 114,700 | | | | 1,951,047 | |
Harmonic, Inc. * | | | 166,800 | | | | 1,164,264 | |
Hughes Communications, Inc. * | | | 17,500 | | | | 496,825 | |
Imation Corp. * | | | 49,813 | | | | 485,179 | |
Infinera Corp. * | | | 80,700 | | | | 660,933 | |
Insight Enterprises, Inc. * | | | 84,400 | | | | 1,276,128 | |
InterDigital, Inc. * | | | 80,294 | | | | 2,695,470 | |
Intermec, Inc. * | | | 104,240 | | | | 1,214,396 | |
IPG Photonics Corp. * | | | 45,118 | | | | 1,015,155 | |
Isilon Systems, Inc. * | | | 47,700 | | | | 1,358,019 | |
Ixia * | | | 102,064 | | | | 1,597,302 | |
L-1 Identity Solutions, Inc. * | | | 139,384 | | | | 1,643,337 | |
Littelfuse, Inc. * | | | 40,000 | | | | 1,697,200 | |
Loral Space & Communications, Inc. * | | | 16,800 | | | | 934,584 | |
Maxwell Technologies, Inc. * | | | 48,100 | | | | 780,182 | |
| Methode Electronics, Inc. | | | 67,200 | | | | 624,288 | |
| MTS Systems Corp. | | | 30,175 | | | | 988,835 | |
Multi-Fineline Electronix, Inc. * | | | 18,600 | | | | 455,328 | |
Netezza Corp. * | | | 91,400 | | | | 2,464,144 | |
NETGEAR, Inc. * | | | 64,300 | | | | 1,981,083 | |
OSI Systems, Inc. * | | | 32,300 | | | | 1,162,800 | |
| Park Electrochemical Corp. | | | 37,800 | | | | 1,020,600 | |
| Plantronics, Inc. | | | 90,393 | | | | 3,243,301 | |
Plexus Corp. * | | | 73,762 | | | | 2,238,677 | |
Quantum Corp. * | | | 391,800 | | | | 1,324,284 | |
Rofin-Sinar Technologies, Inc. * | | | 50,236 | | | | 1,403,091 | |
Rogers Corp. * | | | 30,267 | | | | 1,077,505 | |
Sanmina-SCI Corp. * | | | 144,600 | | | | 1,905,828 | |
ScanSource, Inc. * | | | 48,378 | | | | 1,448,437 | |
Smart Modular Technologies (WWH), Inc. * | | | 91,300 | | | | 674,707 | |
Sonus Networks, Inc. * | | | 559,358 | | | | 1,739,603 | |
STEC, Inc. (d)* | | | 59,200 | | | | 923,520 | |
Stratasys, Inc. * | | | 37,300 | | | | 1,168,236 | |
Super Micro Computer, Inc. * | | | 42,800 | | | | 475,936 | |
| Sycamore Networks, Inc. | | | 35,711 | | | | 1,088,828 | |
Synaptics, Inc. (d)* | | | 63,300 | | | | 1,704,669 | |
SYNNEX Corp. * | | | 37,900 | | | | 1,100,616 | |
Tekelec * | | | 123,827 | | | | 1,612,228 | |
TTM Technologies, Inc. * | | | 79,400 | | | | 832,112 | |
Universal Display Corp. * | | | 58,000 | | | | 1,452,320 | |
ViaSat, Inc. * | | | 72,919 | | | | 3,002,075 | |
Xyratex Ltd. * | | | 54,200 | | | | 839,016 | |
| | | | | | | | | |
| | | | | | | | 96,582,328 | |
| |
Telecommunication Services 1.2%
|
AboveNet, Inc. * | | | 33,400 | | | | 1,900,126 | |
| Alaska Communication Systems Group, Inc. | | | 75,300 | | | | 755,259 | |
| Atlantic Tele-Network, Inc. | | | 17,400 | | | | 735,324 | |
Cbeyond, Inc. * | | | 45,800 | | | | 620,590 | |
Cincinnati Bell, Inc. * | | | 373,345 | | | | 914,695 | |
Cogent Communications Group, Inc. * | | | 82,000 | | | | 889,700 | |
| Consolidated Communications Holdings, Inc. | | | 42,200 | | | | 781,544 | |
Global Crossing Ltd. * | | | 77,024 | | | | 1,047,527 | |
Leap Wireless International, Inc. * | | | 109,600 | | | | 1,250,536 | |
Neutral Tandem, Inc. * | | | 61,700 | | | | 902,054 | |
| NTELOS Holdings Corp. | | | 67,600 | | | | 1,228,292 | |
PAETEC Holding Corp. * | | | 233,100 | | | | 983,682 | |
Premiere Global Services, Inc. * | | | 118,800 | | | | 811,404 | |
| Shenandoah Telecommunications Co. | | | 43,500 | | | | 793,875 | |
Syniverse Holdings, Inc. * | | | 127,700 | | | | 3,893,573 | |
| | | | | | | | | |
| | | | | | | | 17,508,181 | |
| |
Transportation 3.4%
|
AirTran Holdings, Inc. * | | | 247,498 | | | | 1,831,485 | |
Alaska Air Group, Inc. * | | | 64,809 | | | | 3,421,915 | |
26 See financial notes
Schwab Small-Cap Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Alexander & Baldwin, Inc. | | | 74,000 | | | | 2,547,820 | |
| Allegiant Travel Co. | | | 27,900 | | | | 1,313,811 | |
AMERCO * | | | 9,104 | | | | 749,441 | |
| Arkansas Best Corp. | | | 46,272 | | | | 1,172,070 | |
Atlas Air Worldwide Holdings, Inc. * | | | 37,000 | | | | 1,933,620 | |
Avis Budget Group, Inc. * | | | 187,600 | | | | 2,178,036 | |
| Con-way, Inc. | | | 98,400 | | | | 3,248,184 | |
Dollar Thrifty Automotive Group, Inc. * | | | 50,800 | | | | 2,357,120 | |
Excel Maritime Carriers Ltd. (d)* | | | 54,600 | | | | 317,772 | |
| Forward Air Corp. | | | 48,682 | | | | 1,308,572 | |
Genco Shipping & Trading Ltd. * | | | 28,100 | | | | 465,055 | |
Genesee & Wyoming, Inc., Class A * | | | 75,372 | | | | 3,484,448 | |
| Heartland Express, Inc. | | | 96,800 | | | | 1,443,288 | |
Hub Group, Inc., Class A * | | | 69,692 | | | | 2,262,899 | |
JetBlue Airways Corp. * | | | 379,200 | | | | 2,646,816 | |
| Marten Transport Ltd. | | | 34,102 | | | | 724,327 | |
Old Dominion Freight Line, Inc. * | | | 76,483 | | | | 2,145,348 | |
| Seaspan Corp. | | | 99,000 | | | | 1,333,530 | |
| SkyWest, Inc. | | | 111,212 | | | | 1,685,974 | |
US Airways Group, Inc. * | | | 296,400 | | | | 3,494,556 | |
| UTI Worldwide, Inc. | | | 184,400 | | | | 3,544,168 | |
| Werner Enterprises, Inc. | | | 80,543 | | | | 1,717,177 | |
| | | | | | | | | |
| | | | | | | | 47,327,432 | |
| |
Utilities 3.0%
|
| ALLETE, Inc. | | | 54,590 | | | | 1,985,984 | |
| American States Water Co. | | | 34,100 | | | | 1,273,635 | |
| Avista Corp. | | | 97,412 | | | | 2,127,478 | |
| Black Hills Corp. | | | 74,998 | | | | 2,387,936 | |
| California Water Service Group | | | 34,987 | | | | 1,306,415 | |
| CH Energy Group, Inc. | | | 26,297 | | | | 1,195,199 | |
Dynegy, Inc. * | | | 185,600 | | | | 861,184 | |
El Paso Electric Co. * | | | 77,416 | | | | 1,904,434 | |
| IDACORP, Inc. | | | 87,700 | | | | 3,227,360 | |
| MGE Energy, Inc. | | | 42,560 | | | | 1,725,808 | |
| Northwest Natural Gas Co. | | | 48,795 | | | | 2,405,105 | |
| NorthWestern Corp. | | | 65,912 | | | | 1,962,200 | |
| Otter Tail Corp. | | | 63,309 | | | | 1,299,101 | |
| PNM Resources, Inc. | | | 159,500 | | | | 1,880,505 | |
| Portland General Electric Co. | | | 138,300 | | | | 2,890,470 | |
| SJW Corp. | | | 19,400 | | | | 469,480 | |
| South Jersey Industries, Inc. | | | 54,860 | | | | 2,762,750 | |
| Southwest Gas Corp. | | | 82,696 | | | | 2,874,513 | |
| The Empire District Electric Co. | | | 66,300 | | | | 1,394,952 | |
| The Laclede Group, Inc. | | | 46,277 | | | | 1,624,785 | |
| UIL Holdings Corp. | | | 69,010 | | | | 1,998,530 | |
| Unisource Energy Corp. | | | 63,517 | | | | 2,227,541 | |
| | | | | | | | | |
| | | | | | | | 41,785,365 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $1,251,261,679) | | | 1,403,572,178 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Rights 0.0% of net assets |
| |
Pharmaceuticals, Biotechnology & Life Sciences 0.0%
|
Indevus Pharmaceuticals, Inc. (b),(c)* | | | 138,800 | | | | — | |
| | | | | | | | | |
| Total Rights |
| (Cost $—) | | | — | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Dates | | ($) | | ($) |
| |
Short-Term Investments 0.2% of net assets |
| |
Time Deposit 0.0%
|
| HSBC Bank USA |
0.03% 11/01/10 | | | 567,594 | | | | 567,594 | |
| |
U.S. Treasury Obligation 0.2%
|
| U.S. Treasury Bill |
0.14% 12/16/10 (a) | | | 2,142,000 | | | | 2,141,639 | |
| | | | | | | | | |
| Total Short-Term Investments |
| (Cost $2,709,233) | | | 2,709,233 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Collateral Invested for Securities on Loan 3.0% of net assets |
| | | | | | | | | |
| | | | | | | | | |
| Invesco Short Term Investments Trust Government & Agency Portfolio | | | 41,794,683 | | | | 41,794,683 | |
| | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $41,794,683) | | | 41,794,683 | |
| | | | | |
| |
|
End of collateral invested for securities on loan. |
At 10/31/10 tax basis cost of the fund’s investments was $1,263,630,545 and the unrealized appreciation and depreciation were $294,136,862 and ($151,485,996), respectively, with a net unrealized appreciation of $142,650,866.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is held as collateral for open futures contracts. |
| (b) | | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (c) | | Illiquid security. At the period end, the value of these securities amounted to $0 or 0.0% of net assets. |
| (d) | | All or a portion of this security is on loan. |
| | | |
| ADR — | | American Depositary Receipt |
See financial notes 27
Schwab Small-Cap Index Fund
Portfolio Holdings continued
In addition to the above, the fund held the following at 10/31/10.
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contract |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Russell 2000 Index, mini, Long, expires 12/17/10 | | | 25 | | | | 1,755,500 | | | | 9,648 | |
28 See financial notes
Schwab Total Stock Market Index Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .0% | | Common Stock | | | 1,225,735,417 | | | | 1,455,937,584 | |
| | 0 | .0% | | Rights | | | — | | | | 46,179 | |
| | 0 | .8% | | Short-Term Investments | | | 11,744,551 | | | | 11,744,551 | |
| |
| |
| | 99 | .8% | | Total Investments | | | 1,237,479,968 | | | | 1,467,728,314 | |
| | 0 | .4% | | Collateral Invested for Securities on Loan | | | 6,043,310 | | | | 6,043,310 | |
| | (0 | .2)% | | Other Assets and Liabilities, Net | | | | | | | (3,379,812 | ) |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 1,470,391,812 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 99.0% of net assets |
| |
Automobiles & Components 0.8%
|
American Axle & Manufacturing Holdings, Inc. * | | | 5,300 | | | | 48,866 | |
BorgWarner, Inc. * | | | 13,800 | | | | 774,318 | |
| Cooper Tire & Rubber Co. | | | 8,900 | | | | 174,529 | |
Dana Holding Corp. * | | | 13,500 | | | | 191,025 | |
Drew Industries, Inc. * | | | 2,400 | | | | 50,568 | |
Federal-Mogul Corp. * | | | 9,200 | | | | 182,436 | |
Ford Motor Co. * | | | 375,736 | | | | 5,309,150 | |
| Gentex Corp. | | | 15,000 | | | | 299,700 | |
| Harley-Davidson, Inc. | | | 25,500 | | | | 782,340 | |
| Johnson Controls, Inc. | | | 72,000 | | | | 2,528,640 | |
Lear Corp. * | | | 6,000 | | | | 530,400 | |
| Standard Motor Products, Inc. | | | 7,500 | | | | 79,725 | |
Stoneridge, Inc. * | | | 8,200 | | | | 90,200 | |
| Strattec Security Corp. | | | 1,500 | | | | 45,915 | |
| Superior Industries International, Inc. | | | 800 | | | | 14,360 | |
Tenneco, Inc. * | | | 7,480 | | | | 243,997 | |
The Goodyear Tire & Rubber Co. * | | | 26,000 | | | | 265,720 | |
| Thor Industries, Inc. | | | 4,500 | | | | 141,705 | |
TRW Automotive Holdings Corp. * | | | 9,800 | | | | 447,762 | |
Winnebago Industries, Inc. * | | | 5,100 | | | | 51,000 | |
| | | | | | | | | |
| | | | | | | | 12,252,356 | |
| |
Banks 3.2%
|
| 1st Source Corp. | | | 5,528 | | | | 97,680 | |
Ameris Bancorp * | | | 1,848 | | | | 17,131 | |
| Arrow Financial Corp. | | | 1,146 | | | | 27,951 | |
| Associated Banc-Corp | | | 18,500 | | | | 234,395 | |
| Astoria Financial Corp. | | | 8,300 | | | | 103,086 | |
| BancFirst Corp. | | | 2,300 | | | | 94,530 | |
| BancorpSouth, Inc. | | | 7,612 | | | | 100,402 | |
BancTrust Financial Group, Inc. (d)* | | | 2,100 | | | | 6,132 | |
| Bank Mutual Corp. | | | 6,168 | | | | 29,730 | |
| Bank of Hawaii Corp. | | | 6,500 | | | | 280,735 | |
| Bank of the Ozarks, Inc. | | | 2,800 | | | | 106,428 | |
| Banner Corp. | | | 1,200 | | | | 1,992 | |
| BB&T Corp. | | | 72,458 | | | | 1,696,242 | |
Beneficial Mutual Bancorp, Inc. * | | | 7,500 | | | | 55,050 | |
Berkshire Bancorp, Inc. * | | | 3,600 | | | | 16,884 | |
| Berkshire Hills Bancorp, Inc. | | | 1,400 | | | | 27,076 | |
| BOK Financial Corp. | | | 7,540 | | | | 348,574 | |
| Boston Private Financial Holdings, Inc. | | | 5,129 | | | | 29,287 | |
| Brookline Bancorp, Inc. | | | 5,405 | | | | 52,645 | |
| Bryn Mawr Bank Corp. | | | 1,400 | | | | 23,394 | |
Camco Financial Corp. * | | | 700 | | | | 1,428 | |
| Camden National Corp. | | | 700 | | | | 23,968 | |
Capital City Bank Group, Inc. (d) | | | 4,375 | | | | 52,281 | |
| CapitalSource, Inc. | | | 32,900 | | | | 201,019 | |
Capitol Bancorp Ltd. (d)* | | | 1,500 | | | | 1,710 | |
| Capitol Federal Financial | | | 6,920 | | | | 161,928 | |
| Cathay General Bancorp | | | 9,200 | | | | 125,120 | |
Central Pacific Financial Corp. (d)* | | | 3,400 | | | | 5,168 | |
| Century Bancorp Inc., Class A | | | 800 | | | | 19,004 | |
| Chemical Financial Corp. | | | 5,383 | | | | 109,167 | |
CIT Group, Inc. * | | | 15,000 | | | | 649,950 | |
| Citizens South Banking Corp. | | | 1,050 | | | | 4,883 | |
| City Holding Co. | | | 1,800 | | | | 57,060 | |
| City National Corp. | | | 6,100 | | | | 314,577 | |
| Columbia Banking System, Inc. | | | 4,951 | | | | 90,158 | |
| Comerica, Inc. | | | 16,496 | | | | 590,227 | |
| Commerce Bancshares, Inc. | | | 16,201 | | | | 596,845 | |
| Community Bank System, Inc. | | | 4,400 | | | | 102,828 | |
| Community Trust Bancorp, Inc. | | | 2,487 | | | | 67,920 | |
| Cullen/Frost Bankers, Inc. | | | 6,300 | | | | 330,372 | |
| CVB Financial Corp. | | | 10,311 | | | | 78,467 | |
| Dime Community Bancshares | | | 6,875 | | | | 100,306 | |
| East West Bancorp, Inc. | | | 16,600 | | | | 292,658 | |
| F.N.B. Corp. | | | 12,161 | | | | 103,368 | |
| Fifth Third Bancorp | | | 89,714 | | | | 1,126,808 | |
First BanCorp Puerto Rico * | | | 7,200 | | | | 2,196 | |
| First Busey Corp. | | | 1,500 | | | | 6,960 | |
| First Citizens BancShares, Inc., Class A | | | 300 | | | | 56,034 | |
| First Commonwealth Financial Corp. | | | 10,504 | | | | 61,133 | |
| First Financial Bancorp | | | 5,339 | | | | 89,909 | |
| First Financial Bankshares, Inc. | | | 4,000 | | | | 189,040 | |
| First Financial Corp. | | | 600 | | | | 17,538 | |
| First Financial Holdings, Inc. | | | 3,900 | | | | 40,755 | |
First Horizon National Corp. * | | | 24,375 | | | | 245,944 | |
| First M&F Corp. | | | 2,000 | | | | 8,000 | |
| First Merchants Corp. | | | 3,041 | | | | 25,301 | |
| First Midwest Bancorp, Inc. | | | 6,125 | | | | 65,599 | |
| First Niagara Financial Group, Inc. | | | 23,855 | | | | 282,682 | |
First Place Financial Corp. * | | | 2,900 | | | | 9,599 | |
First United Corp. (d) | | | 2,200 | | | | 9,218 | |
| FirstMerit Corp. | | | 10,406 | | | | 178,775 | |
| Flushing Financial Corp. | | | 6,800 | | | | 89,420 | |
See financial notes 29
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Fulton Financial Corp. | | | 21,762 | | | | 203,257 | |
| Glacier Bancorp, Inc. | | | 7,697 | | | | 100,061 | |
| Great Southern Bancorp, Inc. | | | 1,400 | | | | 31,486 | |
| Hancock Holding Co. | | | 5,100 | | | | 160,242 | |
| Hawthorn Bancshares, Inc. | | | 811 | | | | 8,053 | |
Heritage Financial Corp. * | | | 735 | | | | 9,930 | |
| Home Bancshares, Inc. | | | 3,300 | | | | 67,881 | |
| Hudson City Bancorp, Inc. | | | 55,731 | | | | 649,266 | |
| Huntington Bancshares, Inc. | | | 78,699 | | | | 446,223 | |
| IBERIABANK Corp. | | | 3,875 | | | | 201,694 | |
| Independent Bank Corp. | | | 1,000 | | | | 23,490 | |
Independent Bank Corp., Michigan * | | | 431 | | | | 750 | |
| Indiana Community Bancorp | | | 800 | | | | 11,108 | |
Integra Bank Corp. (d)* | | | 1,225 | | | | 868 | |
| International Bancshares Corp. | | | 7,784 | | | | 133,340 | |
Investors Bancorp, Inc. * | | | 9,600 | | | | 115,200 | |
| Kearny Financial Corp. | | | 5,500 | | | | 48,015 | |
| KeyCorp | | | 96,790 | | | | 792,710 | |
| Lakeland Financial Corp. | | | 2,200 | | | | 41,778 | |
| M&T Bank Corp. | | | 10,246 | | | | 765,888 | |
| MainSource Financial Group, Inc. | | | 2,735 | | | | 22,618 | |
| Marshall & Ilsley Corp. | | | 56,650 | | | | 334,801 | |
| MB Financial, Inc. | | | 5,133 | | | | 76,430 | |
| Merchants Bancshares, Inc. | | | 750 | | | | 19,358 | |
MGIC Investment Corp. * | | | 21,800 | | | | 192,276 | |
| MutualFirst Financial, Inc. | | | 2,000 | | | | 16,180 | |
Nara Bancorp, Inc. * | | | 4,000 | | | | 31,360 | |
| National Penn Bancshares, Inc. | | | 13,175 | | | | 85,506 | |
| NBT Bancorp, Inc. | | | 4,400 | | | | 97,020 | |
| New York Community Bancorp, Inc. | | | 46,585 | | | | 788,684 | |
| NewAlliance Bancshares, Inc. | | | 9,100 | | | | 117,299 | |
North Valley Bancorp * | | | 1,500 | | | | 2,505 | |
| Northrim BanCorp, Inc. | | | 4,281 | | | | 72,991 | |
| Northwest Bancshares, Inc. | | | 11,250 | | | | 127,575 | |
| OceanFirst Financial Corp. | | | 1,050 | | | | 12,537 | |
Ocwen Financial Corp. * | | | 8,420 | | | | 72,665 | |
| Old National Bancorp | | | 9,244 | | | | 87,448 | |
| Oriental Financial Group, Inc. | | | 5,163 | | | | 68,306 | |
| Oritani Financial Corp. | | | 13,200 | | | | 140,052 | |
PAB Bankshares, Inc. (d)* | | | 714 | | | | 464 | |
Pacific Capital Bancorp (d)* | | | 6,844 | | | | 4,380 | |
| PacWest Bancorp | | | 3,000 | | | | 52,290 | |
| Park National Corp. | | | 845 | | | | 55,221 | |
| People’s United Financial, Inc. | | | 41,187 | | | | 507,012 | |
| Peoples Financial Corp. | | | 3,000 | | | | 41,040 | |
Pinnacle Financial Partners, Inc. * | | | 475 | | | | 5,420 | |
| PNC Financial Services Group, Inc. | | | 59,032 | | | | 3,181,825 | |
Popular, Inc. * | | | 69,200 | | | | 188,916 | |
| Premier Financial Bancorp, Inc. | | | 245 | | | | 1,639 | |
| PrivateBancorp, Inc. | | | 8,000 | | | | 94,320 | |
| Prosperity Bancshares, Inc. | | | 6,400 | | | | 198,976 | |
| Provident Financial Holdings, Inc. | | | 750 | | | | 5,093 | |
| Provident Financial Services, Inc. | | | 5,217 | | | | 65,943 | |
| Radian Group, Inc. | | | 15,000 | | | | 113,850 | |
| Regions Financial Corp. | | | 130,962 | | | | 825,061 | |
| Renasant Corp. | | | 1,125 | | | | 18,394 | |
| Republic Bancorp, Inc., Class A | | | 6,521 | | | | 133,289 | |
| Roma Financial Corp. | | | 4,000 | | | | 39,640 | |
| S&T Bancorp, Inc. | | | 4,400 | | | | 86,240 | |
| S.Y. Bancorp, Inc. | | | 1,470 | | | | 36,015 | |
| Sandy Spring Bancorp, Inc. | | | 5,900 | | | | 102,660 | |
| SCBT Financial Corp. | | | 3,000 | | | | 91,590 | |
Seacoast Banking Corp. of Florida * | | | 1,980 | | | | 2,475 | |
| Shore Bancshares, Inc. | | | 750 | | | | 7,395 | |
Signature Bank * | | | 3,000 | | | | 126,720 | |
| Simmons First National Corp., Class A | | | 4,000 | | | | 108,760 | |
| Southwest Bancorp, Inc. | | | 3,300 | | | | 32,670 | |
| State Bancorp, Inc. | | | 2,558 | | | | 23,482 | |
| StellarOne Corp. | | | 3,000 | | | | 38,340 | |
| Sterling Bancorp | | | 1,918 | | | | 18,010 | |
| Sterling Bancshares, Inc. | | | 9,150 | | | | 49,319 | |
| Suffolk Bancorp | | | 2,400 | | | | 62,160 | |
Sun Bancorp, Inc. * | | | 4,218 | | | | 16,661 | |
| SunTrust Banks, Inc. | | | 56,342 | | | | 1,409,677 | |
| Susquehanna Bancshares, Inc. | | | 13,468 | | | | 106,397 | |
SVB Financial Group * | | | 5,200 | | | | 225,368 | |
| Synovus Financial Corp. | | | 45,700 | | | | 98,712 | |
| TCF Financial Corp. | | | 13,600 | | | | 178,976 | |
Texas Capital Bancshares, Inc. * | | | 4,000 | | | | 72,600 | |
| TF Financial Corp. | | | 700 | | | | 15,575 | |
| TFS Financial Corp. | | | 19,500 | | | | 170,625 | |
| The First of Long Island Corp. | | | 4,000 | | | | 99,520 | |
The PMI Group, Inc. * | | | 8,100 | | | | 27,135 | |
| Timberland Bancorp, Inc. | | | 2,000 | | | | 7,620 | |
| Tompkins Financial Corp. | | | 1,024 | | | | 39,526 | |
Tree.com, Inc. * | | | 1,044 | | | | 7,726 | |
| TriCo Bancshares | | | 400 | | | | 6,236 | |
| TrustCo Bank Corp. NY | | | 10,357 | | | | 55,824 | |
| Trustmark Corp. | | | 8,300 | | | | 183,347 | |
| U.S. Bancorp | | | 210,531 | | | | 5,090,640 | |
| UMB Financial Corp. | | | 3,574 | | | | 132,452 | |
| Umpqua Holdings Corp. | | | 12,343 | | | | 135,773 | |
| Union First Market Bankshares Corp. | | | 7,050 | | | | 90,663 | |
United Bankshares, Inc. (d) | | | 7,400 | | | | 197,728 | |
United Community Banks, Inc. * | | | 10,894 | | | | 21,352 | |
| Valley National Bancorp | | | 17,399 | | | | 232,103 | |
| Washington Federal, Inc. | | | 11,942 | | | | 179,488 | |
| Washington Trust Bancorp, Inc. | | | 1,000 | | | | 20,090 | |
| Webster Financial Corp. | | | 8,663 | | | | 148,311 | |
| Wells Fargo & Co. | | | 542,906 | | | | 14,158,988 | |
| WesBanco, Inc. | | | 4,456 | | | | 74,014 | |
West Coast Bancorp * | | | 4,581 | | | | 12,048 | |
| Westamerica Bancorp | | | 5,200 | | | | 260,104 | |
| Whitney Holding Corp. | | | 9,675 | | | | 80,109 | |
| Wilmington Trust Corp. | | | 8,700 | | | | 61,857 | |
| Wintrust Financial Corp. | | | 5,800 | | | | 173,652 | |
| WSFS Financial Corp. | | | 2,000 | | | | 78,080 | |
| Zions Bancorp | | | 18,725 | | | | 386,858 | |
| | | | | | | | | |
| | | | | | | | 46,685,962 | |
| |
Capital Goods 8.0%
|
3D Systems Corp. * | | | 1,400 | | | | 36,176 | |
| 3M Co. | | | 72,000 | | | | 6,063,840 | �� |
| A.O. Smith Corp. | | | 1,300 | | | | 72,839 | |
| AAON, Inc. | | | 6,113 | | | | 150,074 | |
AAR CORP. * | | | 5,000 | | | | 110,200 | |
| Aceto Corp. | | | 5,000 | | | | 36,850 | |
30 See financial notes
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Actuant Corp., Class A | | | 8,680 | | | | 195,040 | |
| Acuity Brands, Inc. | | | 5,200 | | | | 260,364 | |
Aecom Technology Corp. * | | | 11,000 | | | | 291,390 | |
Aerosonic Corp. * | | | 300 | | | | 837 | |
AGCO Corp. * | | | 9,762 | | | | 414,592 | |
| Aircastle Ltd. | | | 5,500 | | | | 50,655 | |
| Alamo Group, Inc. | | | 500 | | | | 12,000 | |
| Albany International Corp., Class A | | | 3,918 | | | | 79,927 | |
Alliant Techsystems, Inc. * | | | 2,437 | | | | 185,797 | |
| American Science & Engineering, Inc. | | | 500 | | | | 41,175 | |
American Superconductor Corp. (d)* | | | 700 | | | | 23,555 | |
| American Woodmark Corp. | | | 4,000 | | | | 70,800 | |
| Ameron International Corp. | | | 900 | | | | 61,884 | |
| AMETEK, Inc. | | | 11,300 | | | | 610,765 | |
| Ampco-Pittsburgh Corp. | | | 2,800 | | | | 72,380 | |
| Apogee Enterprises, Inc. | | | 1,200 | | | | 12,588 | |
| Applied Industrial Technologies, Inc. | | | 6,525 | | | | 198,425 | |
| Applied Signal Technology, Inc. | | | 2,500 | | | | 83,900 | |
Armstrong World Industries, Inc. * | | | 3,500 | | | | 146,125 | |
ArvinMeritor, Inc. * | | | 9,900 | | | | 164,142 | |
Astronics Corp. * | | | 938 | | | | 19,557 | |
Babcock & Wilcox Co. * | | | 12,500 | | | | 285,250 | |
| Badger Meter, Inc. | | | 4,000 | | | | 166,120 | |
| Baldor Electric Co. | | | 3,800 | | | | 159,676 | |
| Barnes Group, Inc. | | | 3,600 | | | | 65,484 | |
BE Aerospace, Inc. * | | | 10,200 | | | | 374,952 | |
Beacon Roofing Supply, Inc. * | | | 5,000 | | | | 73,800 | |
| Belden, Inc. | | | 4,400 | | | | 122,760 | |
Blount International, Inc. * | | | 4,200 | | | | 63,000 | |
| Brady Corp., Class A | | | 6,400 | | | | 196,800 | |
Breeze-Eastern Corp. * | | | 500 | | | | 3,463 | |
| Briggs & Stratton Corp. | | | 6,500 | | | | 114,400 | |
| Bucyrus International, Inc. | | | 10,000 | | | | 681,600 | |
| Carlisle Cos., Inc. | | | 6,200 | | | | 217,434 | |
| Cascade Corp. | | | 4,400 | | | | 155,716 | |
| Caterpillar, Inc. | | | 66,800 | | | | 5,250,480 | |
Ceradyne, Inc. * | | | 2,500 | | | | 59,525 | |
Chart Industries, Inc. * | | | 3,000 | | | | 69,900 | |
| CIRCOR International, Inc. | | | 3,750 | | | | 131,550 | |
| CLARCOR, Inc. | | | 6,400 | | | | 253,824 | |
Coleman Cable, Inc. * | | | 1,500 | | | | 10,710 | |
Columbus McKinnon Corp. * | | | 2,400 | | | | 42,144 | |
| Cooper Industries plc | | | 11,000 | | | | 576,620 | |
| Crane Co. | | | 5,000 | | | | 191,300 | |
| Cubic Corp. | | | 2,000 | | | | 87,140 | |
| Cummins, Inc. | | | 19,600 | | | | 1,726,760 | |
| Curtiss-Wright Corp. | | | 3,600 | | | | 111,168 | |
| Danaher Corp. | | | 58,000 | | | | 2,514,880 | |
| Deere & Co. | | | 47,000 | | | | 3,609,600 | |
DigitalGlobe, Inc. * | | | 3,500 | | | | 114,275 | |
| Donaldson Co., Inc. | | | 6,500 | | | | 316,680 | |
| Dover Corp. | | | 20,700 | | | | 1,099,170 | |
| Ducommun, Inc. | | | 3,200 | | | | 68,704 | |
Dycom Industries, Inc. * | | | 3,300 | | | | 35,310 | |
| Eaton Corp. | | | 18,100 | | | | 1,607,823 | |
EMCOR Group, Inc. * | | | 7,800 | | | | 201,630 | |
| Emerson Electric Co. | | | 79,000 | | | | 4,337,100 | |
EnerSys * | | | 4,500 | | | | 118,620 | |
EnPro Industries, Inc. * | | | 3,000 | | | | 105,420 | |
| ESCO Technologies, Inc. | | | 2,800 | | | | 95,984 | |
Esterline Technologies Corp. * | | | 2,400 | | | | 145,056 | |
| Fastenal Co. | | | 13,200 | | | | 679,536 | |
| Federal Signal Corp. | | | 5,300 | | | | 29,945 | |
Flow International Corp. * | | | 900 | | | | 2,376 | |
| Flowserve Corp. | | | 6,900 | | | | 690,000 | |
| Fluor Corp. | | | 20,200 | | | | 973,438 | |
| Franklin Electric Co., Inc. | | | 1,300 | | | | 46,943 | |
| FreightCar America, Inc. | | | 2,500 | | | | 66,150 | |
FuelCell Energy, Inc. * | | | 1,200 | | | | 1,368 | |
Furmanite Corp. * | | | 1,400 | | | | 8,050 | |
| Gardner Denver, Inc. | | | 6,400 | | | | 370,048 | |
| GATX Corp. | | | 4,000 | | | | 126,640 | |
GenCorp, Inc. * | | | 2,500 | | | | 12,175 | |
General Cable Corp. * | | | 4,700 | | | | 131,318 | |
| General Dynamics Corp. | | | 36,400 | | | | 2,479,568 | |
| General Electric Co. | | | 1,178,766 | | | | 18,883,831 | |
GeoEye, Inc. * | | | 6,000 | | | | 265,620 | |
Gibraltar Industries, Inc. * | | | 2,500 | | | | 22,825 | |
| Goodrich Corp. | | | 13,404 | | | | 1,100,066 | |
| Graco, Inc. | | | 7,012 | | | | 241,283 | |
GrafTech International Ltd. * | | | 13,100 | | | | 215,757 | |
| Granite Construction, Inc. | | | 4,850 | | | | 117,273 | |
Griffon Corp. * | | | 5,500 | | | | 64,845 | |
| Hardinge, Inc. | | | 1,800 | | | | 14,364 | |
| Harsco Corp. | | | 9,200 | | | | 213,256 | |
Hawk Corp., Class A * | | | 1,800 | | | | 89,694 | |
| HEICO Corp., Class A | | | 2,857 | | | | 106,109 | |
Herley Industries, Inc. * | | | 4,000 | | | | 66,440 | |
Hexcel Corp. * | | | 10,000 | | | | 177,700 | |
| Honeywell International, Inc. | | | 74,062 | | | | 3,489,061 | |
| Hubbell, Inc., Class B | | | 6,800 | | | | 367,336 | |
| IDEX Corp. | | | 10,225 | | | | 368,918 | |
II-VI, Inc. * | | | 3,800 | | | | 149,492 | |
| Illinois Tool Works, Inc. | | | 51,700 | | | | 2,362,690 | |
| Ingersoll-Rand plc | | | 33,000 | | | | 1,297,230 | |
Insituform Technologies, Inc., Class A * | | | 4,300 | | | | 92,880 | |
Integrated Electrical Services, Inc. * | | | 5,105 | | | | 18,633 | |
Interline Brands, Inc. * | | | 2,000 | | | | 40,180 | |
| ITT Corp. | | | 17,400 | | | | 821,106 | |
Jacobs Engineering Group, Inc. * | | | 10,600 | | | | 409,266 | |
| John Bean Technologies Corp. | | | 1,983 | | | | 33,909 | |
| Joy Global, Inc. | | | 19,350 | | | | 1,372,882 | |
Kadant, Inc. * | | | 1 | | | | 20 | |
| Kaman Corp. | | | 3,000 | | | | 80,850 | |
| Kaydon Corp. | | | 3,300 | | | | 115,071 | |
| KBR, Inc. | | | 17,000 | | | | 431,800 | |
| Kennametal, Inc. | | | 8,000 | | | | 273,120 | |
Kratos Defense & Security Solutions, Inc. * | | | 180 | | | | 2,052 | |
L-3 Communications Holdings, Inc. | | | 15,100 | | | | 1,090,069 | |
Ladish Co., Inc. * | | | 1,300 | | | | 41,587 | |
| Lawson Products, Inc. | | | 2,000 | | | | 36,860 | |
| Lennox International, Inc. | | | 4,771 | | | | 195,659 | |
| Lincoln Electric Holdings, Inc. | | | 3,900 | | | | 233,064 | |
| Lockheed Martin Corp. | | | 33,052 | | | | 2,356,277 | |
Lydall, Inc. * | | | 2,500 | | | | 18,575 | |
Magnetek, Inc. * | | | 1,500 | | | | 1,785 | |
| Masco Corp. | | | 35,800 | | | | 381,628 | |
MasTec, Inc. * | | | 5,350 | | | | 65,270 | |
See financial notes 31
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Michael Baker Corp. * | | | 3,000 | | | | 98,040 | |
Moog, Inc., Class A * | | | 5,787 | | | | 217,591 | |
| MSC Industrial Direct Co., Inc., Class A | | | 4,300 | | | | 244,842 | |
| Mueller Industries, Inc. | | | 4,200 | | | | 123,480 | |
| Mueller Water Products, Inc., Class A | | | 16,139 | | | | 48,740 | |
| NACCO Industries, Inc., Class A | | | 1,300 | | | | 129,038 | |
Navistar International Corp. * | | | 6,500 | | | | 313,170 | |
NCI Building Systems, Inc. * | | | 580 | | | | 5,748 | |
NN, Inc. * | | | 1,800 | | | | 14,976 | |
| Nordson Corp. | | | 4,000 | | | | 312,080 | |
| Northrop Grumman Corp. | | | 30,032 | | | | 1,898,323 | |
| Omega Flex, Inc. | | | 700 | | | | 9,646 | |
Orbital Sciences Corp. * | | | 4,600 | | | | 74,704 | |
Oshkosh Corp. * | | | 9,000 | | | | 265,590 | |
Owens Corning, Inc. * | | | 11,000 | | | | 297,440 | |
| PACCAR, Inc. | | | 37,725 | | | | 1,933,783 | |
| Pall Corp. | | | 12,900 | | | | 550,443 | |
| Parker Hannifin Corp. | | | 16,500 | | | | 1,263,075 | |
| Pentair, Inc. | | | 9,500 | | | | 310,935 | |
Powell Industries, Inc. * | | | 1,000 | | | | 30,860 | |
| Precision Castparts Corp. | | | 16,302 | | | | 2,226,527 | |
| Quanex Building Products Corp. | | | 5,625 | | | | 101,363 | |
Quanta Services, Inc. * | | | 21,371 | | | | 420,154 | |
| Raven Industries, Inc. | | | 2,800 | | | | 115,136 | |
| Raytheon Co. | | | 44,900 | | | | 2,068,992 | |
| Regal-Beloit Corp. | | | 4,500 | | | | 259,695 | |
| Robbins & Myers, Inc. | | | 2,500 | | | | 72,575 | |
| Rockwell Automation, Inc. | | | 15,700 | | | | 979,209 | |
| Rockwell Collins, Inc. | | | 17,100 | | | | 1,034,721 | |
| Roper Industries, Inc. | | | 9,500 | | | | 659,585 | |
Sauer-Danfoss, Inc. * | | | 3,800 | | | | 84,018 | |
| Seaboard Corp. | | | 200 | | | | 370,810 | |
| Simpson Manufacturing Co., Inc. | | | 3,200 | | | | 85,056 | |
| Snap-on, Inc. | | | 7,000 | | | | 357,000 | |
Spirit AeroSystems Holdings, Inc., Class A * | | | 11,000 | | | | 238,040 | |
| SPX Corp. | | | 8,610 | | | | 577,387 | |
| Standex International Corp. | | | 3,000 | | | | 80,790 | |
Taser International, Inc. * | | | 1,700 | | | | 6,732 | |
Tecumseh Products Co., Class A * | | | 3,200 | | | | 41,440 | |
Teledyne Technologies, Inc. * | | | 12,157 | | | | 505,366 | |
| Tennant Co. | | | 4,200 | | | | 140,910 | |
Terex Corp. * | | | 11,400 | | | | 255,930 | |
| Textron, Inc. | | | 30,100 | | | | 626,682 | |
| The Boeing Co. | | | 75,800 | | | | 5,354,512 | |
| The Gorman-Rupp Co. | | | 4,491 | | | | 133,922 | |
The Greenbrier Cos., Inc. * | | | 4,100 | | | | 74,620 | |
| The Manitowoc Co., Inc. | | | 14,600 | | | | 162,644 | |
The Middleby Corp. * | | | 5,000 | | | | 373,300 | |
The Shaw Group, Inc. * | | | 8,500 | | | | 259,760 | |
| The Timken Co. | | | 9,600 | | | | 397,632 | |
| The Toro Co. | | | 4,100 | | | | 232,716 | |
Thomas & Betts Corp. * | | | 7,300 | | | | 317,915 | |
| Titan International, Inc. | | | 4,125 | | | | 62,576 | |
TransDigm Group, Inc. * | | | 3,600 | | | | 238,572 | |
| Tredegar Corp. | | | 5,100 | | | | 98,379 | |
| Trinity Industries, Inc. | | | 13,650 | | | | 310,265 | |
| Triumph Group, Inc. | | | 1,200 | | | | 100,308 | |
Tutor Perini Corp. * | | | 5,000 | | | | 116,050 | |
| Tyco International Ltd. | | | 54,233 | | | | 2,076,039 | |
United Rentals, Inc. * | | | 5,900 | | | | 110,861 | |
| United Technologies Corp. | | | 93,068 | | | | 6,958,694 | |
| Universal Forest Products, Inc. | | | 2,500 | | | | 75,350 | |
URS Corp. * | | | 7,700 | | | | 299,761 | |
USG Corp. * | | | 7,400 | | | | 93,832 | |
| Valmont Industries, Inc. | | | 1,900 | | | | 149,815 | |
| Vicor Corp. | | | 4,200 | | | | 74,802 | |
| W.W. Grainger, Inc. | | | 7,300 | | | | 905,419 | |
Wabash National Corp. * | | | 2,500 | | | | 20,150 | |
WABCO Holdings, Inc. * | | | 8,133 | | | | 377,534 | |
| Wabtec Corp. | | | 5,828 | | | | 272,984 | |
| Watsco, Inc. | | | 3,400 | | | | 190,298 | |
| Watts Water Technologies, Inc., Class A | | | 4,000 | | | | 140,680 | |
WESCO International, Inc. * | | | 4,800 | | | | 205,536 | |
| Woodward Governor Co. | | | 8,000 | | | | 250,720 | |
| | | | | | | | | |
| | | | | | | | 118,257,861 | |
| |
Commercial & Professional Supplies 1.0%
|
A.T. Cross Co., Class A * | | | 2,400 | | | | 16,800 | |
| ABM Industries, Inc. | | | 4,900 | | | | 110,495 | |
| Administaff, Inc. | | | 2,800 | | | | 73,388 | |
American Reprographics Co. * | | | 7,000 | | | | 49,840 | |
AMREP Corp. * | | | 2,500 | | | | 24,900 | |
| Avery Dennison Corp. | | | 12,700 | | | | 461,645 | |
| Bowne & Co., Inc. | | | 4,356 | | | | 49,441 | |
Casella Waste Systems, Inc., Class A * | | | 6,500 | | | | 32,045 | |
| CDI Corp. | | | 3,700 | | | | 53,021 | |
Cenveo, Inc. * | | | 7,300 | | | | 40,150 | |
| Cintas Corp. | | | 15,350 | | | | 421,665 | |
Clean Harbors, Inc. * | | | 2,500 | | | | 176,250 | |
| CompX International, Inc. | | | 2,000 | | | | 23,240 | |
Consolidated Graphics, Inc. * | | | 3,900 | | | | 181,545 | |
Copart, Inc. * | | | 9,550 | | | | 323,363 | |
Corrections Corp. of America * | | | 11,484 | | | | 294,794 | |
CoStar Group, Inc. * | | | 800 | | | | 39,728 | |
| Covanta Holding Corp. | | | 11,700 | | | | 184,626 | |
CRA International, Inc. * | | | 2,500 | | | | 46,625 | |
| Deluxe Corp. | | | 6,800 | | | | 138,992 | |
| EnergySolutions, Inc. | | | 7,000 | | | | 32,830 | |
| Ennis, Inc. | | | 4,500 | | | | 81,180 | |
| Equifax, Inc. | | | 13,095 | | | | 433,837 | |
Exponent, Inc. * | | | 6,000 | | | | 191,520 | |
FTI Consulting, Inc. * | | | 2,700 | | | | 95,742 | |
| G & K Services, Inc., Class A | | | 4,100 | | | | 101,352 | |
GP Strategies Corp. * | | | 1,500 | | | | 13,020 | |
| Healthcare Services Group, Inc. | | | 8,437 | | | | 202,741 | |
| Heidrick & Struggles International, Inc. | | | 3,100 | | | | 66,588 | |
| Herman Miller, Inc. | | | 5,700 | | | | 109,611 | |
| HNI Corp. | | | 4,000 | | | | 98,640 | |
Hudson Highland Group, Inc. * | | | 3,220 | | | | 11,334 | |
IHS, Inc., Class A * | | | 6,600 | | | | 476,784 | |
| Interface, Inc., Class A | | | 5,800 | | | | 83,462 | |
| Iron Mountain, Inc. | | | 20,180 | | | | 439,722 | |
KAR Auction Services, Inc. * | | | 3,000 | | | | 38,640 | |
Kelly Services, Inc., Class A * | | | 5,700 | | | | 84,645 | |
Kforce, Inc. * | | | 2,905 | | | | 43,604 | |
| Kimball International, Inc., Class B | | | 6,100 | | | | 37,088 | |
| Knoll, Inc. | | | 4,000 | | | | 60,680 | |
32 See financial notes
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Korn/Ferry International * | | | 3,600 | | | | 63,468 | |
M&F Worldwide Corp. * | | | 4,200 | | | | 112,896 | |
| Manpower, Inc. | | | 6,991 | | | | 382,617 | |
| McGrath Rentcorp | | | 1,600 | | | | 40,496 | |
| Mine Safety Appliances Co. | | | 2,700 | | | | 76,032 | |
Mobile Mini, Inc. * | | | 1,200 | | | | 20,916 | |
| Multi-Color Corp. | | | 4,625 | | | | 73,769 | |
Navigant Consulting, Inc. * | | | 5,000 | | | | 45,750 | |
On Assignment, Inc. * | | | 4,700 | | | | 26,555 | |
| Pitney Bowes, Inc. | | | 23,000 | | | | 504,620 | |
| R.R. Donnelley & Sons Co. | | | 23,500 | | | | 433,575 | |
| Republic Services, Inc. | | | 36,645 | | | | 1,092,388 | |
| Resources Connection, Inc. | | | 3,700 | | | | 59,903 | |
| Robert Half International, Inc. | | | 17,000 | | | | 460,870 | |
| Rollins, Inc. | | | 10,012 | | | | 260,813 | |
School Specialty, Inc. * | | | 2,600 | | | | 34,840 | |
SFN Group, Inc. * | | | 6,830 | | | | 51,771 | |
| Steelcase, Inc., Class A | | | 11,500 | | | | 96,715 | |
Stericycle, Inc. * | | | 9,400 | | | | 674,356 | |
| Superior Uniform Group, Inc. | | | 1,600 | | | | 16,864 | |
Sykes Enterprises, Inc. * | | | 4,026 | | | | 66,872 | |
Tetra Tech, Inc. * | | | 12,031 | | | | 253,373 | |
The Advisory Board Co. * | | | 1,000 | | | | 46,810 | |
| The Brink’s Co. | | | 5,600 | | | | 132,160 | |
| The Corporate Executive Board Co. | | | 2,700 | | | | 84,348 | |
| The Dun & Bradstreet Corp. | | | 5,640 | | | | 419,672 | |
The Geo Group, Inc. * | | | 17,380 | | | | 445,797 | |
| The Standard Register Co. | | | 4,100 | | | | 13,161 | |
| Towers Watson & Co., Class A | | | 4,600 | | | | 236,532 | |
TRC Cos., Inc. * | | | 1,350 | | | | 3,267 | |
TrueBlue, Inc. * | | | 6,000 | | | | 84,300 | |
| UniFirst Corp. | | | 1,500 | | | | 69,045 | |
United Stationers, Inc. * | | | 2,900 | | | | 162,980 | |
Verisk Analytics, Inc., Class A * | | | 5,000 | | | | 149,050 | |
| Viad Corp. | | | 3,625 | | | | 72,355 | |
| Virco Mfg. Corp. | | | 1,170 | | | | 3,428 | |
Volt Information Sciences, Inc. * | | | 3,150 | | | | 25,452 | |
Waste Connections, Inc. * | | | 5,475 | | | | 223,052 | |
| Waste Management, Inc. | | | 54,100 | | | | 1,932,452 | |
| | | | | | | | | |
| | | | | | | | 14,398,893 | |
| |
Consumer Durables & Apparel 1.4%
|
| American Greetings Corp., Class A | | | 8,500 | | | | 164,645 | |
| Blyth, Inc. | | | 1,200 | | | | 48,144 | |
Brookfield Homes Corp. (d)* | | | 3,074 | | | | 25,637 | |
| Brunswick Corp. | | | 7,400 | | | | 117,068 | |
| Callaway Golf Co. | | | 5,600 | | | | 38,528 | |
Carter’s, Inc. * | | | 8,000 | | | | 199,200 | |
Cavco Industries, Inc. * | | | 410 | | | | 12,993 | |
| Coach, Inc. | | | 32,008 | | | | 1,600,400 | |
| Columbia Sportswear Co. | | | 4,350 | | | | 227,287 | |
| CSS Industries, Inc. | | | 3,400 | | | | 56,882 | |
| D.R. Horton, Inc. | | | 24,604 | | | | 256,866 | |
Deckers Outdoor Corp. * | | | 7,500 | | | | 435,750 | |
DGSE Cos., Inc. (d)* | | | 700 | | | | 2,835 | |
Eastman Kodak Co. * | | | 22,700 | | | | 106,917 | |
| Ethan Allen Interiors, Inc. | | | 4,200 | | | | 63,714 | |
| Flexsteel Industries, Inc. | | | 600 | | | | 9,072 | |
Foamex International, Inc. (a),(c)* | | | 2,278 | | | | — | |
| Fortune Brands, Inc. | | | 16,500 | | | | 891,825 | |
Fossil, Inc. * | | | 5,462 | | | | 322,203 | |
Furniture Brands International, Inc. * | | | 4,700 | | | | 23,547 | |
Garmin Ltd. (d) | | | 16,000 | | | | 525,440 | |
Hanesbrands, Inc. * | | | 11,047 | | | | 273,966 | |
Harman International Industries, Inc. * | | | 6,800 | | | | 228,140 | |
| Hasbro, Inc. | | | 14,500 | | | | 670,625 | |
Helen of Troy Ltd. * | | | 5,000 | | | | 128,250 | |
Hovnanian Enterprises, Inc., Class A (d)* | | | 3,700 | | | | 13,172 | |
| Jarden Corp. | | | 7,059 | | | | 226,312 | |
K-Swiss, Inc., Class A * | | | 2,400 | | | | 29,184 | |
| KB HOME | | | 7,800 | | | | 81,978 | |
Kenneth Cole Productions, Inc., Class A * | | | 3,100 | | | | 41,695 | |
Kid Brands, Inc. * | | | 3,000 | | | | 29,280 | |
| Leggett & Platt, Inc. | | | 16,200 | | | | 330,156 | |
| Lennar Corp., Class A | | | 12,190 | | | | 176,877 | |
Liz Claiborne, Inc. * | | | 8,600 | | | | 52,632 | |
| M.D.C. Holdings, Inc. | | | 4,403 | | | | 113,377 | |
M/I Homes, Inc. * | | | 1,800 | | | | 19,044 | |
Maidenform Brands, Inc. * | | | 5,000 | | | | 133,800 | |
Marine Products Corp. * | | | 405 | | | | 2,515 | |
| Mattel, Inc. | | | 34,300 | | | | 800,219 | |
Meritage Homes Corp. * | | | 1,000 | | | | 18,310 | |
Mohawk Industries, Inc. * | | | 4,819 | | | | 276,321 | |
Movado Group, Inc. * | | | 3,300 | | | | 37,092 | |
Nautilus, Inc. * | | | 4,125 | | | | 6,105 | |
| Newell Rubbermaid, Inc. | | | 30,900 | | | | 545,385 | |
| NIKE, Inc., Class B | | | 41,100 | | | | 3,347,184 | |
NVR, Inc. * | | | 500 | | | | 313,705 | |
| Oxford Industries, Inc. | | | 2,500 | | | | 57,575 | |
Palm Harbor Homes, Inc. * | | | 2,700 | | | | 3,483 | |
Perry Ellis International, Inc. * | | | 5,500 | | | | 123,640 | |
| Phillips-Van Heusen Corp. | | | 5,600 | | | | 343,504 | |
| Polaris Industries, Inc. | | | 3,200 | | | | 227,488 | |
| Polo Ralph Lauren Corp. | | | 7,500 | | | | 726,600 | |
| Pool Corp. | | | 5,662 | | | | 114,033 | |
Pulte Group, Inc. * | | | 30,676 | | | | 240,807 | |
Quiksilver, Inc. * | | | 4,000 | | | | 16,680 | |
RC2 Corp. * | | | 2,200 | | | | 46,420 | |
Skechers U.S.A., Inc., Class A * | | | 6,500 | | | | 126,360 | |
| Skyline Corp. | | | 2,600 | | | | 46,358 | |
Standard Pacific Corp. * | | | 4,800 | | | | 17,424 | |
| Stanley Black & Decker, Inc. | | | 18,652 | | | | 1,155,864 | |
Stanley Furniture Co., Inc. * | | | 5,200 | | | | 20,072 | |
Steven Madden Ltd. * | | | 4,050 | | | | 171,315 | |
| Sturm, Ruger & Co., Inc. | | | 6,000 | | | | 93,960 | |
Tandy Brands Accessories, Inc. * | | | 1,000 | | | | 3,280 | |
Tempur-Pedic International, Inc. * | | | 8,000 | | | | 276,000 | |
| The Jones Group, Inc. | | | 12,156 | | | | 175,776 | |
| The Ryland Group, Inc. | | | 3,700 | | | | 55,426 | |
The Timberland Co., Class A * | | | 5,300 | | | | 111,194 | |
The Warnaco Group, Inc. * | | | 2,500 | | | | 132,775 | |
Toll Brothers, Inc. * | | | 13,700 | | | | 245,778 | |
| Tupperware Brands Corp. | | | 4,800 | | | | 215,088 | |
Uniroyal Technology Corp. (a),(c)* | | | 1,100 | | | | — | |
Universal Electronics, Inc. * | | | 5,200 | | | | 109,512 | |
| VF Corp. | | | 13,500 | | | | 1,123,740 | |
| Whirlpool Corp. | | | 6,849 | | | | 519,360 | |
See financial notes 33
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Wolverine World Wide, Inc. | | | 7,800 | | | | 227,136 | |
| | | | | | | | | |
| | | | | | | | 19,750,925 | |
| |
Consumer Services 2.3%
|
| Ambassadors Group, Inc. | | | 3,400 | | | | 37,706 | |
| Ameristar Casinos, Inc. | | | 6,400 | | | | 114,432 | |
Apollo Group, Inc., Class A * | | | 14,550 | | | | 545,334 | |
Bally Technologies, Inc. * | | | 6,000 | | | | 216,480 | |
Biglari Holdings, Inc. * | | | 79 | | | | 26,338 | |
| Bob Evans Farms, Inc. | | | 2,200 | | | | 63,140 | |
Boyd Gaming Corp. * | | | 7,800 | | | | 64,818 | |
| Brinker International, Inc. | | | 10,350 | | | | 191,889 | |
Career Education Corp. * | | | 8,614 | | | | 151,090 | |
| Carnival Corp. | | | 50,000 | | | | 2,158,500 | |
CEC Entertainment, Inc. * | | | 2,025 | | | | 67,230 | |
Chipotle Mexican Grill, Inc. * | | | 2,600 | | | | 546,546 | |
| Choice Hotels International, Inc. | | | 6,800 | | | | 258,604 | |
| Churchill Downs, Inc. | | | 900 | | | | 32,607 | |
Coinstar, Inc. * | | | 5,000 | | | | 287,900 | |
Corinthian Colleges, Inc. * | | | 9,200 | | | | 48,024 | |
| CPI Corp. | | | 2,900 | | | | 71,514 | |
| Cracker Barrel Old Country Store, Inc. | | | 3,446 | | | | 185,705 | |
| Darden Restaurants, Inc. | | | 13,300 | | | | 607,943 | |
| DeVry, Inc. | | | 7,800 | | | | 373,308 | |
DineEquity, Inc. * | | | 3,000 | | | | 133,350 | |
Domino’s Pizza, Inc. * | | | 5,100 | | | | 75,684 | |
| Dover Downs Gaming & Entertainment, Inc. | | | 4,899 | | | | 17,049 | |
Dover Motorsports, Inc. * | | | 1,400 | | | | 2,366 | |
Empire Resorts, Inc. * | | | 3,000 | | | | 2,580 | |
Gaylord Entertainment Co. * | | | 4,625 | | | | 154,197 | |
| H&R Block, Inc. | | | 36,200 | | | | 426,798 | |
| Hillenbrand, Inc. | | | 5,800 | | | | 124,642 | |
| International Game Technology | | | 32,600 | | | | 508,234 | |
| International Speedway Corp., Class A | | | 3,245 | | | | 74,116 | |
Interval Leisure Group, Inc. * | | | 6,269 | | | | 89,960 | |
Isle of Capri Casinos, Inc. * | | | 4,400 | | | | 35,376 | |
ITT Educational Services, Inc. * | | | 6,000 | | | | 387,180 | |
Jack in the Box, Inc. * | | | 8,400 | | | | 194,544 | |
Jackson Hewitt Tax Service, Inc. (d)* | | | 3,000 | | | | 2,970 | |
Krispy Kreme Doughnuts, Inc. * | | | 2,100 | | | | 11,760 | |
Lakes Entertainment, Inc. * | | | 1,800 | | | | 4,212 | |
Las Vegas Sands Corp. * | | | 43,000 | | | | 1,972,840 | |
| Learning Tree International, Inc. | | | 1,400 | | | | 13,580 | |
LIFE TIME FITNESS, Inc. * | | | 5,500 | | | | 198,715 | |
Luby’s, Inc. * | | | 1,400 | | | | 7,098 | |
| Marriott International, Inc., Class A | | | 37,808 | | | | 1,400,786 | |
| Matthews International Corp., Class A | | | 1,900 | | | | 62,738 | |
| McDonald’s Corp. | | | 125,709 | | | | 9,776,389 | |
MGM Resorts International * | | | 37,500 | | | | 409,875 | |
Monarch Casino & Resort, Inc. * | | | 8,000 | | | | 92,400 | |
MTR Gaming Group, Inc. * | | | 5,300 | | | | 10,229 | |
Multimedia Games, Inc. * | | | 1,500 | | | | 5,880 | |
Nobel Learning Communities, Inc. * | | | 500 | | | | 3,355 | |
O’Charley’s, Inc. * | | | 400 | | | | 3,000 | |
Orient-Express Hotels Ltd., Class A * | | | 1,600 | | | | 20,256 | |
| P.F. Chang’s China Bistro, Inc. | | | 800 | | | | 36,736 | |
Panera Bread Co., Class A * | | | 3,800 | | | | 340,138 | |
Papa John’s International, Inc. * | | | 3,400 | | | | 87,822 | |
Peet’s Coffee & Tea, Inc. * | | | 1,800 | | | | 68,850 | |
Penn National Gaming, Inc. * | | | 6,800 | | | | 226,168 | |
Pinnacle Entertainment, Inc. * | | | 6,800 | | | | 87,040 | |
Pre-Paid Legal Services, Inc. * | | | 3,600 | | | | 216,648 | |
| Regis Corp. | | | 6,900 | | | | 141,105 | |
Royal Caribbean Cruises Ltd. * | | | 19,500 | | | | 771,030 | |
Ruby Tuesday, Inc. * | | | 5,600 | | | | 67,760 | |
Scientific Games Corp., Class A * | | | 9,500 | | | | 75,050 | |
| Service Corp. International | | | 27,100 | | | | 224,388 | |
Shuffle Master, Inc. * | | | 2,812 | | | | 26,461 | |
Sonic Corp. * | | | 7,968 | | | | 70,756 | |
| Sotheby’s | | | 8,438 | | | | 369,922 | |
| Speedway Motorsports, Inc. | | | 4,800 | | | | 73,440 | |
| Starbucks Corp. | | | 77,600 | | | | 2,210,048 | |
| Starwood Hotels & Resorts Worldwide, Inc. | | | 17,730 | | | | 959,902 | |
| Stewart Enterprises, Inc., Class A | | | 10,000 | | | | 55,600 | |
| Strayer Education, Inc. | | | 700 | | | | 97,881 | |
Texas Roadhouse, Inc. * | | | 5,900 | | | | 90,624 | |
The Cheesecake Factory, Inc. * | | | 5,887 | | | | 171,429 | |
Vail Resorts, Inc. * | | | 3,800 | | | | 154,128 | |
| Weight Watchers International, Inc. | | | 8,700 | | | | 291,363 | |
| Wendy’s/Arby’s Group, Inc., Class A | | | 50,775 | | | | 233,565 | |
WMS Industries, Inc. * | | | 8,250 | | | | 359,947 | |
| Wyndham Worldwide Corp. | | | 19,744 | | | | 567,640 | |
| Wynn Resorts Ltd. | | | 9,000 | | | | 964,530 | |
| Yum! Brands, Inc. | | | 48,000 | | | | 2,378,880 | |
| | | | | | | | | |
| | | | | | | | 33,690,118 | |
| |
Diversified Financials 6.0%
|
| Advance America Cash Advance Centers, Inc. | | | 12,500 | | | | 62,375 | |
Affiliated Managers Group, Inc. * | | | 4,800 | | | | 410,928 | |
| American Express Co. | | | 117,650 | | | | 4,877,769 | |
| Ameriprise Financial, Inc. | | | 27,530 | | | | 1,423,026 | |
Asset Acceptance Capital Corp. * | | | 2,500 | | | | 14,450 | |
| ASTA Funding, Inc. | | | 6,000 | | | | 49,380 | |
| Bank of America Corp. | | | 1,087,456 | | | | 12,440,497 | |
| Bank of New York Mellon Corp. | | | 127,734 | | | | 3,201,014 | |
| BGC Partners, Inc., Class A | | | 28,300 | | | | 196,402 | |
| BlackRock, Inc. | | | 4,900 | | | | 837,851 | |
| Calamos Asset Management, Inc., Class A | | | 5,000 | | | | 59,950 | |
| Capital One Financial Corp. | | | 48,710 | | | | 1,815,422 | |
Cardtronics, Inc. * | | | 3,000 | | | | 50,850 | |
| Cash America International, Inc. | | | 6,500 | | | | 228,995 | |
Citigroup, Inc. * | | | 2,591,286 | | | | 10,805,663 | |
| CME Group, Inc. | | | 6,330 | | | | 1,833,484 | |
| Cohen & Steers, Inc. | | | 5,400 | | | | 135,378 | |
CompuCredit Holdings Corp. (d) | | | 8,400 | | | | 47,292 | |
Cowen Group, Inc., Class A * | | | 6,500 | | | | 22,750 | |
Credit Acceptance Corp. * | | | 2,400 | | | | 141,144 | |
| Discover Financial Services | | | 60,150 | | | | 1,061,647 | |
Dollar Financial Corp. * | | | 6,500 | | | | 162,630 | |
E*TRADE Financial Corp. * | | | 21,933 | | | | 313,642 | |
34 See financial notes
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Eaton Vance Corp. | | | 11,600 | | | | 333,732 | |
Encore Capital Group, Inc. * | | | 2,000 | | | | 40,640 | |
| Evercore Partners, Inc., Class A | | | 6,500 | | | | 197,340 | |
EZCORP, Inc., Class A * | | | 8,500 | | | | 182,580 | |
FBR Capital Markets Corp. * | | | 4,000 | | | | 14,160 | |
Federated Investors, Inc., Class B (d) | | | 9,950 | | | | 247,854 | |
First Cash Financial Services, Inc. * | | | 3,000 | | | | 87,210 | |
| Franklin Resources, Inc. | | | 20,600 | | | | 2,362,820 | |
| GAMCO Investors, Inc., Class A | | | 3,200 | | | | 137,088 | |
| GFI Group, Inc. | | | 9,900 | | | | 47,421 | |
| Greenhill & Co., Inc. | | | 2,500 | | | | 194,175 | |
Interactive Brokers Group, Inc., Class A * | | | 3,400 | | | | 63,648 | |
IntercontinentalExchange, Inc. * | | | 8,100 | | | | 930,447 | |
International Assets Holding Corp. * | | | 737 | | | | 16,251 | |
| Invesco Ltd. | | | 45,000 | | | | 1,035,000 | |
Investment Technology Group, Inc. * | | | 4,750 | | | | 67,640 | |
| Janus Capital Group, Inc. | | | 19,200 | | | | 202,752 | |
| Jefferies Group, Inc. | | | 14,200 | | | | 339,806 | |
| JPMorgan Chase & Co. | | | 436,944 | | | | 16,442,203 | |
Knight Capital Group, Inc., Class A * | | | 9,700 | | | | 126,391 | |
LaBranche & Co., Inc. * | | | 5,400 | | | | 17,550 | |
| Legg Mason, Inc. | | | 19,050 | | | | 591,121 | |
Leucadia National Corp. * | | | 21,908 | | | | 556,901 | |
| MarketAxess Holdings, Inc. | | | 4,000 | | | | 72,680 | |
MF Global Holdings Ltd. * | | | 14,000 | | | | 109,620 | |
| MicroFinancial, Inc. | | | 1,900 | | | | 7,676 | |
| Moody’s Corp. | | | 26,600 | | | | 719,796 | |
| Morgan Stanley | | | 140,500 | | | | 3,494,235 | |
MSCI, Inc., Class A * | | | 13,000 | | | | 466,050 | |
| Nelnet, Inc., Class A | | | 7,500 | | | | 168,525 | |
NewStar Financial, Inc. * | | | 4,000 | | | | 30,440 | |
| Northern Trust Corp. | | | 25,500 | | | | 1,265,565 | |
| NYSE Euronext | | | 22,500 | | | | 689,400 | |
optionsXpress Holdings, Inc. * | | | 5,300 | | | | 84,641 | |
Penson Worldwide, Inc. * | | | 8,000 | | | | 41,200 | |
PHH Corp. * | | | 7,186 | | | | 138,474 | |
Piper Jaffray Cos., Inc. * | | | 3,950 | | | | 122,332 | |
Portfolio Recovery Associates, Inc. * | | | 2,000 | | | | 134,100 | |
| Raymond James Financial, Inc. | | | 10,350 | | | | 292,077 | |
| Resource America, Inc., Class A | | | 4,000 | | | | 24,680 | |
| SEI Investments Co. | | | 19,400 | | | | 429,710 | |
SLM Corp. * | | | 52,300 | | | | 622,370 | |
| State Street Corp. | | | 52,983 | | | | 2,212,570 | |
Stifel Financial Corp. * | | | 3,000 | | | | 142,170 | |
| SWS Group, Inc. | | | 8,211 | | | | 56,410 | |
| T. Rowe Price Group, Inc. | | | 26,400 | | | | 1,459,128 | |
TD Ameritrade Holding Corp. * | | | 38,800 | | | | 663,092 | |
The Charles Schwab Corp. (b) | | | 111,120 | | | | 1,711,248 | |
The First Marblehead Corp. * | | | 7,500 | | | | 16,725 | |
| The Goldman Sachs Group, Inc. | | | 47,700 | | | | 7,677,315 | |
The NASDAQ OMX Group, Inc. * | | | 17,100 | | | | 359,442 | |
| The Student Loan Corp. | | | 1,700 | | | | 50,694 | |
TradeStation Group, Inc. * | | | 4,000 | | | | 21,960 | |
Virtus Investment Partners, Inc. * | | | 475 | | | | 17,456 | |
| Waddell & Reed Financial, Inc., Class A | | | 10,250 | | | | 297,967 | |
| Westwood Holdings Group, Inc. | | | 4,285 | | | | 154,389 | |
World Acceptance Corp. * | | | 5,000 | | | | 215,750 | |
| | | | | | | | | |
| | | | | | | | 88,397,156 | |
| |
Energy 10.3%
|
Abraxas Petroleum Corp. * | | | 8,500 | | | | 26,180 | |
| Adams Resources & Energy, Inc. | | | 1,400 | | | | 27,440 | |
| Alon USA Energy, Inc. | | | 8,700 | | | | 49,329 | |
Alpha Natural Resources, Inc. * | | | 16,210 | | | | 732,206 | |
| Anadarko Petroleum Corp. | | | 54,660 | | | | 3,365,416 | |
| Apache Corp. | | | 39,572 | | | | 3,997,563 | |
| Apco Oil & Gas International, Inc. | | | 800 | | | | 29,512 | |
Approach Resources, Inc. * | | | 4,000 | | | | 61,800 | |
| Arch Coal, Inc. | | | 12,500 | | | | 307,375 | |
Atlas Energy, Inc. * | | | 10,965 | | | | 319,301 | |
ATP Oil & Gas Corp. (d)* | | | 6,600 | | | | 94,776 | |
Atwood Oceanics, Inc. * | | | 4,800 | | | | 156,048 | |
| Baker Hughes, Inc. | | | 44,750 | | | | 2,073,268 | |
Basic Energy Services, Inc. * | | | 3,000 | | | | 33,180 | |
| Berry Petroleum Co., Class A | | | 4,000 | | | | 136,840 | |
Bill Barrett Corp. * | | | 3,700 | | | | 139,675 | |
Brigham Exploration Co. * | | | 5,000 | | | | 105,450 | |
Bristow Group, Inc. * | | | 6,800 | | | | 263,704 | |
| Cabot Oil & Gas Corp. | | | 11,200 | | | | 324,576 | |
Cal Dive International, Inc. * | | | 9,000 | | | | 45,540 | |
Callon Petroleum Co. * | | | 5,000 | | | | 24,650 | |
Cameron International Corp. * | | | 25,547 | | | | 1,117,681 | |
| CARBO Ceramics, Inc. | | | 1,900 | | | | 159,163 | |
Carrizo Oil & Gas, Inc. * | | | 3,000 | | | | 70,860 | |
| Chesapeake Energy Corp. | | | 66,500 | | | | 1,443,050 | |
| Chevron Corp. | | | 220,339 | | | | 18,202,205 | |
| Cimarex Energy Co. | | | 8,008 | | | | 614,614 | |
Clayton Williams Energy, Inc. * | | | 2,500 | | | | 149,300 | |
Clean Energy Fuels Corp. (d)* | | | 4,000 | | | | 58,080 | |
Cobalt International Energy, Inc. * | | | 7,000 | | | | 64,750 | |
Complete Production Services, Inc. * | | | 6,100 | | | | 142,923 | |
Comstock Resources, Inc. * | | | 4,500 | | | | 100,575 | |
Concho Resources, Inc. * | | | 9,400 | | | | 645,498 | |
| ConocoPhillips | | | 152,323 | | | | 9,047,986 | |
| CONSOL Energy, Inc. | | | 25,100 | | | | 922,676 | |
Contango Oil & Gas Co. * | | | 2,000 | | | | 105,180 | |
Continental Resources, Inc. * | | | 10,000 | | | | 475,300 | |
CREDO Petroleum Corp. * | | | 6,700 | | | | 53,600 | |
Crosstex Energy, Inc. * | | | 3,200 | | | | 25,952 | |
CVR Energy, Inc. * | | | 6,900 | | | | 65,688 | |
| Delek US Holdings, Inc. | | | 7,000 | | | | 51,450 | |
Delta Petroleum Corp. * | | | 8,600 | | | | 6,295 | |
Denbury Resources, Inc. * | | | 32,225 | | | | 548,469 | |
| Devon Energy Corp. | | | 46,560 | | | | 3,027,331 | |
| Diamond Offshore Drilling, Inc. | | | 8,200 | | | | 542,512 | |
Dresser-Rand Group, Inc. * | | | 9,000 | | | | 307,980 | |
Dril-Quip, Inc. * | | | 3,100 | | | | 214,210 | |
| El Paso Corp. | | | 109,587 | | | | 1,453,124 | |
ENGlobal Corp. * | | | 4,000 | | | | 11,560 | |
| EOG Resources, Inc. | | | 26,300 | | | | 2,517,436 | |
| EQT Corp. | | | 16,300 | | | | 610,272 | |
| EXCO Resources, Inc. | | | 19,000 | | | | 281,770 | |
Exterran Holdings, Inc. * | | | 10,720 | | | | 269,822 | |
See financial notes 35
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Exxon Mobil Corp. | | | 565,034 | | | | 37,557,810 | |
FMC Technologies, Inc. * | | | 13,182 | | | | 950,422 | |
Forest Oil Corp. * | | | 9,450 | | | | 290,398 | |
| Frontier Oil Corp. | | | 14,400 | | | | 190,800 | |
| General Maritime Corp. | | | 14,720 | | | | 56,525 | |
Geomet, Inc. * | | | 4,000 | | | | 2,944 | |
Global Industries Ltd. * | | | 14,400 | | | | 83,376 | |
Goodrich Petroleum Corp. * | | | 3,500 | | | | 47,740 | |
| Gulf Island Fabrication, Inc. | | | 2,800 | | | | 63,952 | |
GulfMark Offshore, Inc., Class A * | | | 4,100 | | | | 121,401 | |
Gulfport Energy Corp. * | | | 5,000 | | | | 83,300 | |
| Halliburton Co. | | | 99,700 | | | | 3,176,442 | |
Harvest Natural Resources, Inc. * | | | 6,000 | | | | 74,880 | |
Helix Energy Solutions Group, Inc. * | | | 8,564 | | | | 108,677 | |
| Helmerich & Payne, Inc. | | | 9,600 | | | | 410,688 | |
Hercules Offshore, Inc. * | | | 7,400 | | | | 17,464 | |
| Hess Corp. | | | 31,200 | | | | 1,966,536 | |
| Holly Corp. | | | 8,000 | | | | 261,840 | |
Hornbeck Offshore Services, Inc. * | | | 5,000 | | | | 111,200 | |
Houston American Energy Corp. (d) | | | 4,000 | | | | 56,200 | |
International Coal Group, Inc. * | | | 12,800 | | | | 71,936 | |
ION Geophysical Corp. * | | | 7,900 | | | | 38,631 | |
James River Coal Co. * | | | 5,500 | | | | 95,205 | |
Key Energy Services, Inc. * | | | 13,300 | | | | 131,005 | |
Kinder Morgan Management L.L.C. * | | | — | | | | 1 | |
| Lufkin Industries, Inc. | | | 7,000 | | | | 341,950 | |
| Marathon Oil Corp. | | | 77,808 | | | | 2,767,631 | |
Mariner Energy, Inc. * | | | 12,601 | | | | 314,017 | |
| Massey Energy Co. | | | 9,800 | | | | 412,286 | |
Matrix Service Co. * | | | 8,000 | | | | 72,640 | |
McDermott International, Inc. * | | | 25,000 | | | | 385,750 | |
McMoRan Exploration Co. * | | | 4,500 | | | | 75,780 | |
| Murphy Oil Corp. | | | 21,500 | | | | 1,400,940 | |
Nabors Industries Ltd. * | | | 31,634 | | | | 661,151 | |
| National Oilwell Varco, Inc. | | | 46,122 | | | | 2,479,519 | |
Natural Gas Services Group * | | | 7,500 | | | | 118,125 | |
Newfield Exploration Co. * | | | 14,100 | | | | 840,642 | |
Newpark Resources, Inc. * | | | 11,500 | | | | 67,620 | |
Ngas Resources, Inc. (d)* | | | 4,000 | | | | 2,400 | |
| Noble Corp. | | | 20,000 | | | | 690,600 | |
| Noble Energy, Inc. | | | 24,218 | | | | 1,973,283 | |
| Occidental Petroleum Corp. | | | 88,620 | | | | 6,968,191 | |
Oceaneering International, Inc. * | | | 5,200 | | | | 321,724 | |
Oil States International, Inc. * | | | 6,600 | | | | 337,392 | |
| Overseas Shipholding Group, Inc. | | | 3,700 | | | | 123,691 | |
OYO Geospace Corp. * | | | 300 | | | | 18,183 | |
| Panhandle Oil & Gas, Inc., Class A | | | 2,000 | | | | 49,400 | |
Parker Drilling Co. * | | | 18,300 | | | | 77,409 | |
Patriot Coal Corp. * | | | 9,700 | | | | 130,853 | |
| Patterson-UTI Energy, Inc. | | | 13,200 | | | | 256,212 | |
| Peabody Energy Corp. | | | 31,700 | | | | 1,676,930 | |
| Penn Virginia Corp. | | | 5,000 | | | | 74,100 | |
Petrohawk Energy Corp. * | | | 32,600 | | | | 554,526 | |
Petroleum Development Corp. * | | | 4,000 | | | | 124,840 | |
PetroQuest Energy, Inc. * | | | 4,200 | | | | 23,436 | |
PHI, Inc. - Non Voting Shares * | | | 4,000 | | | | 69,880 | |
Pioneer Drilling Co. * | | | 9,200 | | | | 56,672 | |
| Pioneer Natural Resources Co. | | | 13,133 | | | | 916,683 | |
Plains Exploration & Production Co. * | | | 9,765 | | | | 272,151 | |
Pride International, Inc. * | | | 18,700 | | | | 566,984 | |
| QEP Resources, Inc. | | | 19,200 | | | | 634,176 | |
Quicksilver Resources, Inc. * | | | 14,900 | | | | 223,053 | |
| Range Resources Corp. | | | 17,600 | | | | 658,064 | |
REX American Resources Corp. * | | | 1,875 | | | | 31,106 | |
Rex Energy Corp. * | | | 8,000 | | | | 98,560 | |
Rosetta Resources, Inc. * | | | 6,600 | | | | 157,806 | |
Rowan Cos., Inc. * | | | 11,400 | | | | 375,060 | |
| RPC, Inc. | | | 11,475 | | | | 252,565 | |
SandRidge Energy, Inc. * | | | 41,331 | | | | 226,081 | |
| Schlumberger Ltd. | | | 150,760 | | | | 10,536,616 | |
SEACOR Holdings, Inc. * | | | 1,250 | | | | 118,437 | |
Seahawk Drilling, Inc. * | | | 1,046 | | | | 10,544 | |
| Ship Finance International Ltd. | | | 6,100 | | | | 122,671 | |
| SM Energy Co. | | | 7,400 | | | | 308,432 | |
| Southern Union Co. | | | 15,874 | | | | 398,914 | |
Southwestern Energy Co. * | | | 38,000 | | | | 1,286,300 | |
| Spectra Energy Corp. | | | 72,678 | | | | 1,727,556 | |
Stone Energy Corp. * | | | 4,383 | | | | 68,506 | |
| Sunoco, Inc. | | | 17,000 | | | | 636,990 | |
Superior Energy Services, Inc. * | | | 9,900 | | | | 273,438 | |
Swift Energy Co. * | | | 2,500 | | | | 79,625 | |
T-3 Energy Services, Inc. * | | | 5,000 | | | | 167,350 | |
| Teekay Corp. | | | 6,000 | | | | 190,800 | |
| Tesoro Corp. | | | 14,600 | | | | 189,216 | |
TETRA Technologies, Inc. * | | | 8,300 | | | | 81,008 | |
| The Williams Cos., Inc. | | | 67,360 | | | | 1,449,587 | |
| Tidewater, Inc. | | | 7,700 | | | | 355,201 | |
Ultra Petroleum Corp. * | | | 13,000 | | | | 534,950 | |
Union Drilling, Inc. * | | | 2,500 | | | | 11,425 | |
Unit Corp. * | | | 4,400 | | | | 172,612 | |
USEC, Inc. * | | | 14,300 | | | | 76,791 | |
VAALCO Energy, Inc. * | | | 9,000 | | | | 52,920 | |
| Valero Energy Corp. | | | 65,980 | | | | 1,184,341 | |
Verenium Corp. * | | | 91 | | | | 349 | |
| W&T Offshore, Inc. | | | 7,500 | | | | 81,600 | |
Warren Resources, Inc. * | | | 5,000 | | | | 20,900 | |
Weatherford International Ltd. * | | | 76,000 | | | | 1,277,560 | |
Western Refining, Inc. (d)* | | | 5,600 | | | | 37,240 | |
Westmoreland Coal Co. * | | | 6,500 | | | | 69,030 | |
Whiting Petroleum Corp. * | | | 5,400 | | | | 542,376 | |
| World Fuel Services Corp. | | | 8,200 | | | | 231,486 | |
| | | | | | | | | |
| | | | | | | | 151,765,347 | |
| |
Food & Staples Retailing 2.1%
|
| Arden Group, Inc., Class A | | | 600 | | | | 52,836 | |
BJ’s Wholesale Club, Inc. * | | | 6,100 | | | | 254,553 | |
| Casey’s General Stores, Inc. | | | 5,100 | | | | 211,446 | |
| Costco Wholesale Corp. | | | 48,600 | | | | 3,050,622 | |
| CVS Caremark Corp. | | | 150,640 | | | | 4,537,277 | |
| Ingles Markets, Inc., Class A | | | 300 | | | | 5,508 | |
| Nash Finch Co. | | | 1,700 | | | | 71,230 | |
| PriceSmart, Inc. | | | 500 | | | | 14,665 | |
Rite Aid Corp. * | | | 75,000 | | | | 68,602 | |
| Ruddick Corp. | | | 3,100 | | | | 108,190 | |
| Safeway, Inc. | | | 38,900 | | | | 890,810 | |
| Spartan Stores, Inc. | | | 500 | | | | 7,475 | |
| SUPERVALU, Inc. | | | 24,332 | | | | 262,542 | |
| Sysco Corp. | | | 56,136 | | | | 1,653,767 | |
36 See financial notes
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| The Andersons, Inc. | | | 1,000 | | | | 39,370 | |
The Great Atlantic & Pacific Tea Co., Inc. (d)* | | | 2,705 | | | | 9,305 | |
| The Kroger Co. | | | 66,800 | | | | 1,469,600 | |
The Pantry, Inc. * | | | 1,000 | | | | 19,450 | |
United Natural Foods, Inc. * | | | 2,600 | | | | 92,976 | |
| Wal-Mart Stores, Inc. | | | 240,600 | | | | 13,033,302 | |
| Walgreen Co. | | | 107,400 | | | | 3,638,712 | |
| Weis Markets, Inc. | | | 1,700 | | | | 66,232 | |
Whole Foods Market, Inc. * | | | 13,900 | | | | 552,525 | |
Winn-Dixie Stores, Inc. * | | | 5,000 | | | | 33,500 | |
| | | | | | | | | |
| | | | | | | | 30,144,495 | |
| |
Food, Beverage & Tobacco 5.3%
|
Alliance One International, Inc. * | | | 10,800 | | | | 47,736 | |
| Altria Group, Inc. | | | 228,800 | | | | 5,816,096 | |
| Archer-Daniels-Midland Co. | | | 62,958 | | | | 2,097,761 | |
| Bridgford Foods Corp. | | | 300 | | | | 3,687 | |
| Brown-Forman Corp., Class B | | | 12,390 | | | | 753,436 | |
| Bunge Ltd. | | | 12,000 | | | | 720,840 | |
| Campbell Soup Co. | | | 20,400 | | | | 739,500 | |
Chiquita Brands International, Inc. * | | | 6,200 | | | | 82,274 | |
| Coca-Cola Bottling Co. | | | 3,400 | | | | 181,288 | |
| Coca-Cola Enterprises, Inc. | | | 36,000 | | | | 864,360 | |
| ConAgra Foods, Inc. | | | 48,293 | | | | 1,086,110 | |
Constellation Brands, Inc., Class A * | | | 21,100 | | | | 416,303 | |
| Corn Products International, Inc. | | | 11,800 | | | | 502,090 | |
Darling International, Inc. * | | | 8,500 | | | | 85,085 | |
Dean Foods Co. * | | | 19,113 | | | | 198,775 | |
| Del Monte Foods Co. | | | 19,031 | | | | 272,905 | |
| Diamond Foods, Inc. | | | 3,000 | | | | 132,600 | |
| Dr Pepper Snapple Group, Inc. | | | 25,500 | | | | 932,025 | |
| Flowers Foods, Inc. | | | 7,158 | | | | 182,386 | |
Fresh Del Monte Produce, Inc. * | | | 4,200 | | | | 92,946 | |
| General Mills, Inc. | | | 68,600 | | | | 2,575,244 | |
Green Mountain Coffee Roasters, Inc. * | | | 12,150 | | | | 400,828 | |
| Griffin Land & Nurseries, Inc. | | | 300 | | | | 7,380 | |
| H.J. Heinz Co. | | | 33,900 | | | | 1,664,829 | |
Hansen Natural Corp. * | | | 10,000 | | | | 512,100 | |
Harbinger Group, Inc. * | | | 8,000 | | | | 41,280 | |
| Hormel Foods Corp. | | | 11,500 | | | | 528,080 | |
| J & J Snack Foods Corp. | | | 6,400 | | | | 274,368 | |
John B. Sanfilippo & Son, Inc. * | | | 5,000 | | | | 67,100 | |
| Kellogg Co. | | | 29,400 | | | | 1,477,644 | |
| Kraft Foods, Inc., Class A | | | 172,513 | | | | 5,566,995 | |
| Lancaster Colony Corp. | | | 3,400 | | | | 169,592 | |
| Lance, Inc. | | | 2,900 | | | | 65,946 | |
| Lorillard, Inc. | | | 19,548 | | | | 1,668,226 | |
| McCormick & Co., Inc. - Non Voting Shares | | | 14,300 | | | | 632,346 | |
| Mead Johnson Nutrition Co. | | | 19,000 | | | | 1,117,580 | |
| Molson Coors Brewing Co., Class B | | | 17,000 | | | | 802,910 | |
| National Beverage Corp. | | | 4,500 | | | | 64,350 | |
| PepsiCo, Inc. | | | 174,858 | | | | 11,418,227 | |
| Philip Morris International, Inc. | | | 208,800 | | | | 12,214,800 | |
Ralcorp Holdings, Inc. * | | | 6,700 | | | | 415,802 | |
| Reynolds American, Inc. | | | 22,664 | | | | 1,470,894 | |
| Rocky Mountain Chocolate Factory, Inc. | | | 2,427 | | | | 23,299 | |
| Sanderson Farms, Inc. | | | 1,750 | | | | 73,465 | |
| Sara Lee Corp. | | | 72,378 | | | | 1,037,177 | |
Smithfield Foods, Inc. * | | | 16,800 | | | | 281,400 | |
| Tasty Baking Co. | | | 500 | | | | 3,160 | |
The Boston Beer Co., Inc., Class A * | | | 2,500 | | | | 178,975 | |
| The Coca-Cola Co. | | | 231,200 | | | | 14,177,184 | |
The Hain Celestial Group, Inc. * | | | 4,406 | | | | 108,960 | |
| The Hershey Co. | | | 19,400 | | | | 960,106 | |
| The JM Smucker Co. | | | 15,246 | | | | 980,013 | |
| Tootsie Roll Industries, Inc. | | | 2,689 | | | | 70,586 | |
TreeHouse Foods, Inc. * | | | 1,722 | | | | 80,417 | |
| Tyson Foods, Inc., Class A | | | 33,340 | | | | 518,437 | |
| Universal Corp. | | | 4,800 | | | | 198,912 | |
Vector Group Ltd. (d) | | | 4,536 | | | | 84,823 | |
| | | | | | | | | |
| | | | | | | | 77,141,638 | |
| |
Health Care Equipment & Services 4.3%
|
ABIOMED, Inc. * | | | 800 | | | | 8,248 | |
| Aetna, Inc. | | | 49,200 | | | | 1,469,112 | |
Alere, Inc. * | | | 9,441 | | | | 278,982 | |
Align Technology, Inc. * | | | 8,700 | | | | 148,161 | |
Alliance HealthCare Services, Inc. * | | | 1,800 | | | | 7,092 | |
Allied Healthcare International, Inc. * | | | 6,000 | | | | 16,980 | |
Allscripts Healthcare Solutions, Inc. * | | | 13,960 | | | | 266,496 | |
Amedisys, Inc. * | | | 3,334 | | | | 84,884 | |
| America Service Group, Inc. | | | 3,550 | | | | 54,315 | |
American Dental Partners, Inc. * | | | 3,000 | | | | 34,980 | |
American Medical Systems Holdings, Inc. * | | | 7,800 | | | | 157,560 | |
AMERIGROUP Corp. * | | | 4,300 | | | | 179,439 | |
| AmerisourceBergen Corp. | | | 41,296 | | | | 1,355,335 | |
AMN Healthcare Services, Inc. * | | | 7,110 | | | | 37,683 | |
AmSurg Corp. * | | | 2,300 | | | | 41,584 | |
| Analogic Corp. | | | 1,400 | | | | 63,882 | |
ArthroCare Corp. * | | | 3,000 | | | | 81,840 | |
Assisted Living Concepts, Inc., Class A * | | | 2,000 | | | | 64,500 | |
athenahealth, Inc. (d)* | | | 4,000 | | | | 159,880 | |
| Baxter International, Inc. | | | 62,918 | | | | 3,202,526 | |
| Beckman Coulter, Inc. | | | 8,100 | | | | 431,244 | |
| Becton, Dickinson & Co. | | | 24,300 | | | | 1,835,136 | |
BioScrip, Inc. * | | | 2,172 | | | | 12,228 | |
Boston Scientific Corp. * | | | 154,068 | | | | 982,954 | |
Brookdale Senior Living, Inc. * | | | 5,300 | | | | 99,534 | |
| C.R. Bard, Inc. | | | 11,000 | | | | 914,320 | |
| Cantel Medical Corp. | | | 3,571 | | | | 66,135 | |
| Cardinal Health, Inc. | | | 39,760 | | | | 1,379,274 | |
CareFusion Corp. * | | | 21,080 | | | | 508,871 | |
Catalyst Health Solutions, Inc. * | | | 4,900 | | | | 185,465 | |
Centene Corp. * | | | 4,000 | | | | 89,280 | |
Cerner Corp. * | | | 8,400 | | | | 737,772 | |
| Chemed Corp. | | | 3,900 | | | | 229,866 | |
Chindex International, Inc. * | | | 3,300 | | | | 44,682 | |
| CIGNA Corp. | | | 34,400 | | | | 1,210,536 | |
Community Health Systems, Inc. * | | | 10,100 | | | | 303,808 | |
See financial notes 37
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
CONMED Corp. * | | | 4,200 | | | | 92,442 | |
CorVel Corp. * | | | 2,850 | | | | 127,680 | |
Coventry Health Care, Inc. * | | | 23,937 | | | | 560,605 | |
| Covidien plc | | | 47,000 | | | | 1,873,890 | |
Cross Country Healthcare, Inc. * | | | 7,100 | | | | 51,830 | |
CryoLife, Inc. * | | | 4,250 | | | | 27,413 | |
Cyberonics, Inc. * | | | 4,200 | | | | 115,542 | |
DaVita, Inc. * | | | 14,250 | | | | 1,022,437 | |
| DENTSPLY International, Inc. | | | 16,100 | | | | 505,379 | |
Edwards Lifesciences Corp. * | | | 13,800 | | | | 881,958 | |
Emdeon, Inc., Class A * | | | 5,000 | | | | 68,150 | |
Emergency Medical Services Corp., Class A * | | | 3,300 | | | | 179,454 | |
| Ensign Group, Inc. | | | 3,000 | | | | 56,310 | |
Express Scripts, Inc. * | | | 56,400 | | | | 2,736,528 | |
Five Star Quality Care, Inc. * | | | 135 | | | | 733 | |
Gen-Probe, Inc. * | | | 6,400 | | | | 309,952 | |
Gentiva Health Services, Inc. * | | | 3,250 | | | | 75,660 | |
Greatbatch, Inc. * | | | 4,100 | | | | 89,175 | |
Haemonetics Corp. * | | | 3,700 | | | | 202,205 | |
Hanger Orthopedic Group, Inc. * | | | 5,400 | | | | 101,088 | |
Health Management Associates, Inc., Class A * | | | 24,900 | | | | 199,449 | |
Health Net, Inc. * | | | 11,100 | | | | 298,479 | |
HEALTHSOUTH Corp. * | | | 20,000 | | | | 361,800 | |
Healthspring, Inc. * | | | 4,600 | | | | 134,274 | |
HealthStream, Inc. * | | | 1,500 | | | | 9,600 | |
Healthways, Inc. * | | | 3,100 | | | | 32,488 | |
Henry Schein, Inc. * | | | 10,600 | | | | 595,190 | |
| Hill-Rom Holdings, Inc. | | | 5,800 | | | | 224,750 | |
Hologic, Inc. * | | | 29,512 | | | | 472,782 | |
Hospira, Inc. * | | | 17,070 | | | | 1,015,324 | |
Humana, Inc. * | | | 18,900 | | | | 1,101,681 | |
ICU Medical, Inc. * | | | 550 | | | | 20,075 | |
IDEXX Laboratories, Inc. * | | | 5,000 | | | | 299,800 | |
Immucor, Inc. * | | | 6,795 | | | | 118,233 | |
Integra LifeSciences Holdings * | | | 3,100 | | | | 133,362 | |
Intuitive Surgical, Inc. * | | | 5,050 | | | | 1,327,897 | |
| Invacare Corp. | | | 4,000 | | | | 108,000 | |
Kindred Healthcare, Inc. * | | | 4,624 | | | | 63,441 | |
Kinetic Concepts, Inc. * | | | 5,600 | | | | 212,968 | |
Laboratory Corp. of America Holdings * | | | 12,800 | | | | 1,040,896 | |
| Landauer, Inc. | | | 1,100 | | | | 67,199 | |
LCA-Vision, Inc. * | | | 2,500 | | | | 17,400 | |
LeMaitre Vascular, Inc. * | | | 2,000 | | | | 13,000 | |
LifePoint Hospitals, Inc. * | | | 6,707 | | | | 227,501 | |
| Lincare Holdings, Inc. | | | 10,650 | | | | 279,243 | |
Magellan Health Services, Inc. * | | | 3,007 | | | | 144,336 | |
| McKesson Corp. | | | 28,500 | | | | 1,880,430 | |
MedAssets, Inc. * | | | 6,000 | | | | 111,240 | |
MedCath Corp. * | | | 4,500 | | | | 44,595 | |
Medco Health Solutions, Inc. * | | | 53,066 | | | | 2,787,557 | |
Medical Action Industries, Inc. * | | | 6,250 | | | | 62,000 | |
MEDNAX, Inc. * | | | 6,000 | | | | 355,260 | |
| Medtronic, Inc. | | | 119,874 | | | | 4,220,764 | |
| Meridian Bioscience, Inc. | | | 11,250 | | | | 257,512 | |
Merit Medical Systems, Inc. * | | | 2,222 | | | | 35,130 | |
Molina Healthcare, Inc. * | | | 2,500 | | | | 64,800 | |
| National Healthcare Corp. | | | 2,100 | | | | 76,461 | |
Neogen Corp. * | | | 1,405 | | | | 46,955 | |
NuVasive, Inc. * | | | 10,000 | | | | 262,000 | |
| Omnicare, Inc. | | | 13,000 | | | | 313,560 | |
Omnicell, Inc. * | | | 3,000 | | | | 41,910 | |
OraSure Technologies, Inc. * | | | 1,500 | | | | 6,105 | |
| Owens & Minor, Inc. | | | 7,500 | | | | 213,600 | |
| Patterson Cos., Inc. | | | 10,600 | | | | 293,090 | |
PDI, Inc. * | | | 2,900 | | | | 25,433 | |
PharMerica Corp. * | | | 3,413 | | | | 34,267 | |
Providence Service Corp. * | | | 3,000 | | | | 49,290 | |
PSS World Medical, Inc. * | | | 5,800 | | | | 137,054 | |
Psychiatric Solutions, Inc. * | | | 4,400 | | | | 148,280 | |
| Quality Systems, Inc. | | | 2,000 | | | | 128,520 | |
| Quest Diagnostics, Inc. | | | 19,820 | | | | 973,955 | |
RehabCare Group, Inc. * | | | 4,000 | | | | 88,920 | |
Res-Care, Inc. * | | | 7,500 | | | | 99,225 | |
ResMed, Inc. * | | | 18,000 | | | | 573,660 | |
RTI Biologics, Inc. * | | | 1,700 | | | | 4,199 | |
SonoSite, Inc. * | | | 2,800 | | | | 87,276 | |
St. Jude Medical, Inc. * | | | 35,800 | | | | 1,371,140 | |
| STERIS Corp. | | | 6,100 | | | | 208,742 | |
| Stryker Corp. | | | 37,100 | | | | 1,836,079 | |
Sunrise Senior Living, Inc. * | | | 3,400 | | | | 11,662 | |
Symmetry Medical, Inc. * | | | 3,000 | | | | 26,550 | |
| Teleflex, Inc. | | | 4,300 | | | | 239,725 | |
Tenet Healthcare Corp. * | | | 50,150 | | | | 218,654 | |
| The Cooper Cos., Inc. | | | 5,781 | | | | 285,235 | |
Thoratec Corp. * | | | 5,636 | | | | 183,959 | |
U.S. Physical Therapy, Inc. * | | | 3,500 | | | | 65,695 | |
| UnitedHealth Group, Inc. | | | 129,080 | | | | 4,653,334 | |
| Universal American Financial Corp. | | | 4,000 | | | | 64,320 | |
| Universal Health Services, Inc., Class B | | | 12,000 | | | | 495,240 | |
| Utah Medical Products, Inc. | | | 2,500 | | | | 71,300 | |
Varian Medical Systems, Inc. * | | | 11,900 | | | | 752,318 | |
VCA Antech, Inc. * | | | 9,900 | | | | 204,633 | |
Volcano Corp. * | | | 4,500 | | | | 109,890 | |
WellCare Health Plans, Inc. * | | | 3,200 | | | | 88,896 | |
WellPoint, Inc. * | | | 47,023 | | | | 2,555,230 | |
| West Pharmaceutical Services, Inc. | | | 4,600 | | | | 164,174 | |
Wright Medical Group, Inc. * | | | 4,200 | | | | 56,028 | |
| Young Innovations, Inc. | | | 2,000 | | | | 55,540 | |
Zimmer Holdings, Inc. * | | | 23,300 | | | | 1,105,352 | |
Zoll Medical Corp. * | | | 3,000 | | | | 97,590 | |
| | | | | | | | | |
| | | | | | | | 62,686,517 | |
| |
Household & Personal Products 2.2%
|
| Alberto-Culver Co. | | | 9,450 | | | | 352,391 | |
| Avon Products, Inc. | | | 44,000 | | | | 1,339,800 | |
Cellu Tissue Holdings, Inc. * | | | 3,500 | | | | 41,790 | |
Central Garden & Pet Co., Class A * | | | 6,200 | | | | 64,790 | |
| Church & Dwight Co., Inc. | | | 7,950 | | | | 523,507 | |
| Colgate-Palmolive Co. | | | 52,500 | | | | 4,048,800 | |
Elizabeth Arden, Inc. * | | | 3,500 | | | | 71,575 | |
Energizer Holdings, Inc. * | | | 6,333 | | | | 473,582 | |
| Herbalife Ltd. | | | 5,800 | | | | 370,388 | |
| Inter Parfums, Inc. | | | 4,013 | | | | 70,187 | |
| Kimberly-Clark Corp. | | | 43,639 | | | | 2,764,094 | |
Medifast, Inc. * | | | 3,500 | | | | 83,580 | |
| Nu Skin Enterprises, Inc., Class A | | | 6,500 | | | | 198,900 | |
Nutraceutical International Corp. * | | | 5,000 | | | | 81,250 | |
38 See financial notes
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Oil-Dri Corp. of America | | | 500 | | | | 10,995 | |
Orchids Paper Products Co. * | | | 2,500 | | | | 32,500 | |
Prestige Brands Holdings, Inc. * | | | 3,500 | | | | 37,625 | |
Revlon, Inc., Class A * | | | 3,500 | | | | 39,970 | |
| Schiff Nutrition International, Inc. | | | 3,500 | | | | 28,280 | |
| The Clorox Co. | | | 14,700 | | | | 978,285 | |
| The Estee Lauder Cos., Inc., Class A | | | 12,800 | | | | 910,976 | |
| The Female Health Co. | | | 3,500 | | | | 19,460 | |
| The Procter & Gamble Co. | | | 316,215 | | | | 20,101,788 | |
USANA Health Sciences, Inc. * | | | 3,500 | | | | 153,720 | |
WD-40 Co. | | | 1,600 | | | | 59,024 | |
| | | | | | | | | |
| | | | | | | | 32,857,257 | |
| |
Insurance 4.0%
|
| 21st Century Holding Co. | | | 1,500 | | | | 5,340 | |
| ACE Ltd. | | | 31,000 | | | | 1,842,020 | |
| Aflac, Inc. | | | 50,600 | | | | 2,828,034 | |
Alleghany Corp. * | | | 236 | | | | 70,913 | |
| Allied World Assurance Co. Holdings Ltd. | | | 4,900 | | | | 280,329 | |
| American Equity Investment Life Holding Co. | | | 6,400 | | | | 69,440 | |
| American Financial Group, Inc. | | | 10,750 | | | | 328,735 | |
American International Group, Inc. * | | | 5,596 | | | | 235,088 | |
| American National Insurance Co. | | | 1,300 | | | | 101,972 | |
American Safety Insurance Holdings Ltd. * | | | 3,000 | | | | 55,710 | |
| AmTrust Financial Services, Inc. | | | 7,500 | | | | 112,275 | |
| Aon Corp. | | | 31,496 | | | | 1,251,966 | |
Arch Capital Group Ltd. * | | | 6,900 | | | | 596,091 | |
| Argo Group International Holdings Ltd. | | | 4,556 | | | | 158,048 | |
| Arthur J. Gallagher & Co. | | | 6,800 | | | | 191,488 | |
| Aspen Insurance Holdings Ltd. | | | 7,000 | | | | 198,590 | |
| Assurant, Inc. | | | 11,500 | | | | 454,710 | |
| Assured Guaranty Ltd. | | | 12,000 | | | | 228,600 | |
| Axis Capital Holdings Ltd. | | | 15,200 | | | | 516,952 | |
| Baldwin & Lyons, Inc., Class B | | | 750 | | | | 18,750 | |
Berkshire Hathaway, Inc., Class B * | | | 214,774 | | | | 17,087,419 | |
| Brown & Brown, Inc. | | | 14,000 | | | | 312,060 | |
| Cincinnati Financial Corp. | | | 16,450 | | | | 484,288 | |
Citizens, Inc. * | | | 5,000 | | | | 34,600 | |
CNA Financial Corp. * | | | 23,900 | | | | 662,508 | |
CNA Surety Corp. * | | | 4,700 | | | | 90,475 | |
CNO Financial Group, Inc. * | | | 16,000 | | | | 87,040 | |
Crawford & Co., Class B * | | | 1,600 | | | | 4,096 | |
| Delphi Financial Group, Inc., Class A | | | 6,772 | | | | 183,318 | |
| Eastern Insurance Holdings, Inc. | | | 2,500 | | | | 27,825 | |
| EMC Insurance Group, Inc. | | | 1,200 | | | | 25,368 | |
| Employers Holdings, Inc. | | | 4,200 | | | | 67,998 | |
| Endurance Specialty Holdings Ltd. | | | 5,000 | | | | 207,000 | |
| Erie Indemnity Co., Class A | | | 5,500 | | | | 314,490 | |
| Everest Re Group Ltd. | | | 5,900 | | | | 497,252 | |
| FBL Financial Group, Inc., Class A | | | 5,090 | | | | 133,154 | |
| Fidelity National Financial, Inc., Class A | | | 24,827 | | | | 332,434 | |
| First American Financial Corp. | | | 7,800 | | | | 109,512 | |
| Flagstone Reinsurance Holdings S.A. | | | 7,500 | | | | 81,750 | |
FPIC Insurance Group, Inc. * | | | 600 | | | | 21,252 | |
Genworth Financial, Inc., Class A * | | | 44,500 | | | | 504,630 | |
Greenlight Capital Re Ltd., Class A * | | | 3,000 | | | | 85,680 | |
| Hanover Insurance Group, Inc. | | | 4,900 | | | | 221,725 | |
| Harleysville Group, Inc. | | | 1,800 | | | | 61,794 | |
| HCC Insurance Holdings, Inc. | | | 10,950 | | | | 289,956 | |
Hilltop Holdings, Inc. * | | | 3,726 | | | | 37,223 | |
| Horace Mann Educators Corp. | | | 4,300 | | | | 80,367 | |
| Independence Holding Co. | | | 2,700 | | | | 22,842 | |
| Infinity Property & Casualty Corp. | | | 2,500 | | | | 129,375 | |
| Lincoln National Corp. | | | 31,926 | | | | 781,548 | |
| Loews Corp. | | | 39,645 | | | | 1,565,185 | |
Markel Corp. * | | | 1,100 | | | | 368,522 | |
| Marsh & McLennan Cos., Inc. | | | 56,500 | | | | 1,411,370 | |
MBIA, Inc. * | | | 25,250 | | | | 283,053 | |
| Mercury General Corp. | | | 5,400 | | | | 229,392 | |
| MetLife, Inc. | | | 72,000 | | | | 2,903,760 | |
| Montpelier Re Holdings Ltd. | | | 8,100 | | | | 148,392 | |
National Financial Partners Corp. * | | | 2,500 | | | | 34,500 | |
| National Western Life Insurance Co., Class A | | | 300 | | | | 48,003 | |
| NYMAGIC, Inc. | | | 2,100 | | | | 53,907 | |
| Old Republic International Corp. | | | 20,822 | | | | 274,850 | |
| OneBeacon Insurance Group Ltd., Class A | | | 8,200 | | | | 115,456 | |
| PartnerRe Ltd. | | | 6,900 | | | | 547,308 | |
| Platinum Underwriters Holdings Ltd. | | | 4,500 | | | | 193,725 | |
| Presidential Life Corp. | | | 1,000 | | | | 9,570 | |
| Principal Financial Group, Inc. | | | 28,400 | | | | 762,256 | |
ProAssurance Corp. * | | | 1,670 | | | | 96,008 | |
| Protective Life Corp. | | | 8,500 | | | | 203,745 | |
| Prudential Financial, Inc. | | | 50,000 | | | | 2,629,000 | |
| Reinsurance Group of America, Inc. | | | 7,100 | | | | 355,497 | |
| RenaissanceRe Holdings Ltd. | | | 5,800 | | | | 349,508 | |
| RLI Corp. | | | 2,800 | | | | 160,776 | |
| Safety Insurance Group, Inc. | | | 1,000 | | | | 46,460 | |
| Selective Insurance Group, Inc. | | | 5,400 | | | | 91,368 | |
| StanCorp Financial Group, Inc. | | | 5,000 | | | | 214,500 | |
| State Auto Financial Corp. | | | 3,800 | | | | 59,508 | |
| Stewart Information Services Corp. | | | 1,400 | | | | 15,148 | |
| The Allstate Corp. | | | 58,874 | | | | 1,795,068 | |
| The Chubb Corp. | | | 37,094 | | | | 2,152,194 | |
| The Hartford Financial Services Group, Inc. | | | 39,400 | | | | 944,812 | |
The Navigators Group, Inc. * | | | 1,500 | | | | 68,955 | |
The Phoenix Cos., Inc. * | | | 9,500 | | | | 19,950 | |
| The Progressive Corp. | | | 85,200 | | | | 1,802,832 | |
| The Travelers Cos., Inc. | | | 52,050 | | | | 2,873,160 | |
| Torchmark Corp. | | | 10,600 | | | | 607,168 | |
| Tower Group, Inc. | | | 4,000 | | | | 97,120 | |
| Transatlantic Holdings, Inc. | | | 6,437 | | | | 338,586 | |
| United Fire & Casualty Co. | | | 5,000 | | | | 100,150 | |
| Unitrin, Inc. | | | 5,600 | | | | 136,080 | |
| Unum Group | | | 36,914 | | | | 827,612 | |
| Validus Holdings Ltd. | | | 11,363 | | | | 322,255 | |
| W. R. Berkley Corp. | | | 22,950 | | | | 631,584 | |
| Wesco Financial Corp. | | | 200 | | | | 72,680 | |
See financial notes 39
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| White Mountains Insurance Group Ltd. | | | 200 | | | | 63,840 | |
| XL Group plc | | | 30,200 | | | | 638,730 | |
| | | | | | | | | |
| | | | | | | | 59,187,573 | |
| |
Materials 4.1%
|
| A. Schulman, Inc. | | | 2,300 | | | | 49,910 | |
A.M. Castle & Co. * | | | 4,000 | | | | 61,600 | |
AEP Industries, Inc. * | | | 1,900 | | | | 46,303 | |
| Air Products & Chemicals, Inc. | | | 22,700 | | | | 1,928,819 | |
| Airgas, Inc. | | | 7,500 | | | | 531,975 | |
| AK Steel Holding Corp. | | | 11,527 | | | | 145,125 | |
| Albemarle Corp. | | | 11,000 | | | | 551,430 | |
| Alcoa, Inc. | | | 110,164 | | | | 1,446,453 | |
| Allegheny Technologies, Inc. | | | 10,700 | | | | 563,783 | |
| AMCOL International Corp. | | | 3,000 | | | | 83,220 | |
| AptarGroup, Inc. | | | 6,900 | | | | 309,672 | |
| Arch Chemicals, Inc. | | | 2,700 | | | | 95,877 | |
| Ashland, Inc. | | | 14,523 | | | | 749,822 | |
| Balchem Corp. | | | 3,000 | | | | 91,680 | |
| Ball Corp. | | | 10,700 | | | | 688,652 | |
| Bemis Co., Inc. | | | 10,900 | | | | 346,184 | |
Brush Engineered Materials, Inc. * | | | 4,000 | | | | 132,600 | |
| Buckeye Technologies, Inc. | | | 7,700 | | | | 138,985 | |
| Cabot Corp. | | | 13,200 | | | | 449,064 | |
Calgon Carbon Corp. * | | | 7,000 | | | | 105,070 | |
| Carpenter Technology Corp. | | | 5,000 | | | | 178,300 | |
| Celanese Corp., Series A | | | 18,500 | | | | 659,525 | |
Century Aluminum Co. * | | | 7,100 | | | | 95,992 | |
| CF Industries Holdings, Inc. | | | 8,400 | | | | 1,029,252 | |
| Chase Corp. | | | 200 | | | | 3,172 | |
Clearwater Paper Corp. * | | | 786 | | | | 63,470 | |
| Cliffs Natural Resources, Inc. | | | 13,300 | | | | 867,160 | |
| Commercial Metals Co. | | | 12,000 | | | | 166,560 | |
| Compass Minerals International, Inc. | | | 5,000 | | | | 394,350 | |
Crown Holdings, Inc. * | | | 16,900 | | | | 544,011 | |
| Cytec Industries, Inc. | | | 6,600 | | | | 326,832 | |
| Deltic Timber Corp. | | | 700 | | | | 32,676 | |
| Domtar Corp. | | | 3,250 | | | | 257,920 | |
| E.I. du Pont de Nemours & Co. | | | 98,695 | | | | 4,666,300 | |
| Eagle Materials, Inc. | | | 4,143 | | | | 97,195 | |
| Eastman Chemical Co. | | | 8,100 | | | | 636,417 | |
| Ecolab, Inc. | | | 24,000 | | | | 1,183,680 | |
Ferro Corp. * | | | 8,200 | | | | 112,504 | |
| FMC Corp. | | | 9,200 | | | | 672,520 | |
| Freeport-McMoRan Copper & Gold, Inc. | | | 51,622 | | | | 4,887,571 | |
| Greif, Inc., Class A | | | 7,400 | | | | 434,676 | |
| H.B. Fuller Co. | | | 6,500 | | | | 134,160 | |
Hawkins, Inc. (d) | | | 1,900 | | | | 68,210 | |
Headwaters, Inc. * | | | 7,500 | | | | 25,500 | |
Hecla Mining Co. * | | | 28,500 | | | | 196,365 | |
Horsehead Holding Corp. * | | | 4,000 | | | | 43,720 | |
| Huntsman Corp. | | | 21,500 | | | | 297,775 | |
| Innophos Holdings, Inc. | | | 6,500 | | | | 238,680 | |
| International Flavors & Fragrances, Inc. | | | 7,400 | | | | 371,184 | |
| International Paper Co. | | | 45,304 | | | | 1,145,285 | |
Intrepid Potash, Inc. * | | | 6,500 | | | | 223,145 | |
| Koppers Holdings, Inc. | | | 2,500 | | | | 69,700 | |
Kronos Worldwide, Inc. (d)* | | | 6,060 | | | | 245,127 | |
Landec Corp. * | | | 6,500 | | | | 40,885 | |
Louisiana-Pacific Corp. * | | | 13,800 | | | | 106,812 | |
Martin Marietta Materials, Inc. (d) | | | 4,200 | | | | 338,016 | |
| MeadWestvaco Corp. | | | 19,974 | | | | 513,931 | |
| Minerals Technologies, Inc. | | | 3,100 | | | | 181,877 | |
Mod-Pac Corp. * | | | 500 | | | | 2,485 | |
| Monsanto Co. | | | 60,290 | | | | 3,582,432 | |
| Myers Industries, Inc. | | | 8,080 | | | | 71,346 | |
| Nalco Holding Co. | | | 13,600 | | | | 383,248 | |
| Neenah Paper, Inc. | | | 1,231 | | | | 18,896 | |
| NewMarket Corp. | | | 2,000 | | | | 237,040 | |
| Newmont Mining Corp. | | | 51,251 | | | | 3,119,648 | |
| NL Industries, Inc. | | | 7,800 | | | | 89,622 | |
| Nucor Corp. | | | 27,000 | | | | 1,031,940 | |
| Olin Corp. | | | 7,320 | | | | 146,327 | |
OM Group, Inc. * | | | 2,400 | | | | 79,848 | |
Omnova Solutions, Inc. * | | | 3,400 | | | | 27,132 | |
Owens-Illinois, Inc. * | | | 17,700 | | | | 496,131 | |
| P.H. Glatfelter Co. | | | 4,000 | | | | 49,760 | |
| Packaging Corp. of America | | | 11,000 | | | | 268,730 | |
Pactiv Corp. * | | | 14,400 | | | | 477,792 | |
Penford Corp. * | | | 5,200 | | | | 30,888 | |
PolyOne Corp. * | | | 15,200 | | | | 196,384 | |
| PPG Industries, Inc. | | | 17,400 | | | | 1,334,580 | |
| Praxair, Inc. | | | 33,700 | | | | 3,078,158 | |
| Reliance Steel & Aluminum Co. | | | 8,500 | | | | 355,725 | |
| Rock-Tenn Co., Class A | | | 4,500 | | | | 255,825 | |
Rockwood Holdings, Inc. * | | | 5,900 | | | | 200,128 | |
| Royal Gold, Inc. | | | 5,200 | | | | 257,452 | |
| RPM International, Inc. | | | 15,600 | | | | 323,076 | |
RTI International Metals, Inc. * | | | 4,500 | | | | 139,950 | |
| Schnitzer Steel Industries, Inc., Class A | | | 1,650 | | | | 85,288 | |
| Schweitzer-Mauduit International, Inc. | | | 3,300 | | | | 211,794 | |
| Sealed Air Corp. | | | 16,500 | | | | 381,975 | |
| Sensient Technologies Corp. | | | 4,800 | | | | 155,088 | |
| Sigma-Aldrich Corp. | | | 12,600 | | | | 799,092 | |
| Silgan Holdings, Inc. | | | 11,600 | | | | 391,500 | |
| Sonoco Products Co. | | | 10,500 | | | | 351,750 | |
| Southern Copper Corp. | | | 23,400 | | | | 1,001,520 | |
Spartech Corp. * | | | 8,200 | | | | 69,372 | |
| Steel Dynamics, Inc. | | | 23,500 | | | | 341,220 | |
| Stepan Co. | | | 1,200 | | | | 80,928 | |
Stillwater Mining Co. * | | | 11,233 | | | | 199,947 | |
| Temple-Inland, Inc. | | | 11,800 | | | | 244,496 | |
| Texas Industries, Inc. | | | 4,000 | | | | 136,680 | |
| The Dow Chemical Co. | | | 127,266 | | | | 3,923,611 | |
| The Lubrizol Corp. | | | 7,400 | | | | 758,426 | |
| The Mosaic Co. | | | 16,500 | | | | 1,207,140 | |
| The Scotts Miracle-Gro Co., Class A | | | 5,600 | | | | 299,040 | |
| The Sherwin-Williams Co. | | | 13,000 | | | | 948,610 | |
| The Valspar Corp. | | | 10,400 | | | | 333,840 | |
Titanium Metals Corp. * | | | 16,307 | | | | 320,596 | |
| United States Steel Corp. | | | 14,900 | | | | 637,571 | |
| Valhi, Inc. | | | 9,600 | | | | 193,728 | |
| Vulcan Materials Co. | | | 7,592 | | | | 277,184 | |
| Walter Energy, Inc. | | | 4,900 | | | | 431,004 | |
Wausau Paper Corp. * | | | 8,700 | | | | 73,428 | |
| Westlake Chemical Corp. | | | 5,100 | | | | 162,996 | |
40 See financial notes
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Worthington Industries, Inc. | | | 7,200 | | | | 110,880 | |
| Zep, Inc. | | | 6,600 | | | | 119,724 | |
| | | | | | | | | |
| | | | | | | | 60,569,650 | |
| |
Media 3.1%
|
AH Belo Corp., Class A * | | | 1,880 | | | | 13,668 | |
Alloy, Inc. * | | | 3,500 | | | | 34,125 | |
| Arbitron, Inc. | | | 2,120 | | | | 53,678 | |
Ascent Media Corp., Class A * | | | 1,116 | | | | 30,400 | |
Belo Corp., Class A * | | | 9,400 | | | | 54,426 | |
| Cablevision Systems Corp., Class A | | | 21,100 | | | | 564,214 | |
Carmike Cinemas, Inc. * | | | 2,500 | | | | 20,025 | |
| CBS Corp., Class B - Non Voting Shares | | | 72,006 | | | | 1,219,062 | |
CKX, Inc. * | | | 7,300 | | | | 29,784 | |
Clear Channel Outdoor Holdings, Inc., Class A * | | | 28,700 | | | | 340,956 | |
| Comcast Corp., Class A | | | 227,004 | | | | 4,671,742 | |
| Comcast Corp., Special Class A | | | 64,200 | | | | 1,240,986 | |
Crown Media Holdings, Inc., Class A (d)* | | | 6,000 | | | | 17,520 | |
Cumulus Media Inc., Class A * | | | 4,351 | | | | 13,314 | |
DIRECTV, Class A * | | | 105,626 | | | | 4,590,506 | |
Discovery Communications, Inc., Class A * | | | 36,561 | | | | 1,630,986 | |
| DISH Network Corp., Class A | | | 25,700 | | | | 510,402 | |
DreamWorks Animation SKG, Inc., Class A * | | | 8,200 | | | | 289,460 | |
Entercom Communications Corp., Class A * | | | 3,000 | | | | 25,050 | |
| Gannett Co., Inc. | | | 19,500 | | | | 231,075 | |
| Harte-Hanks, Inc. | | | 8,100 | | | | 97,848 | |
| John Wiley & Sons, Inc., Class A | | | 6,300 | | | | 271,908 | |
Journal Communications, Inc., Class A * | | | 7,500 | | | | 34,575 | |
Lamar Advertising Co., Class A * | | | 9,200 | | | | 312,708 | |
Liberty Global, Inc., Series A (d)* | | | 37,575 | | | | 1,419,959 | |
Liberty Media Corp - Capital, Series A * | | | 11,161 | | | | 642,204 | |
Liberty Media-Starz, Series A * | | | 4,464 | | | | 292,481 | |
Live Nation Entertainment, Inc. * | | | 15,457 | | | | 146,687 | |
Madison Square Garden, Inc., Class A * | | | 5,275 | | | | 109,667 | |
Martha Stewart Living Omnimedia, Inc., Class A * | | | 3,900 | | | | 17,004 | |
Media General, Inc., Class A * | | | 2,000 | | | | 11,020 | |
Mediacom Communications Corp., Class A * | | | 7,600 | | | | 52,440 | |
| Meredith Corp. | | | 3,800 | | | | 129,010 | |
Morningstar, Inc. * | | | 3,200 | | | | 156,224 | |
| News Corp., Class A | | | 253,950 | | | | 3,672,117 | |
| Omnicom Group, Inc. | | | 33,600 | | | | 1,477,056 | |
Playboy Enterprises, Inc., Class B * | | | 4,500 | | | | 21,825 | |
| Regal Entertainment Group, Class A | | | 12,100 | | | | 163,350 | |
Salem Communications Corp., Class A * | | | 900 | | | | 2,889 | |
| Scholastic Corp. | | | 2,200 | | | | 64,790 | |
| Scripps Networks Interactive, Class A | | | 12,000 | | | | 610,680 | |
Sinclair Broadcast Group, Inc., Class A * | | | 7,300 | | | | 58,327 | |
Sirius XM Radio, Inc. * | | | 200,000 | | | | 299,000 | |
The E.W. Scripps Co., Class A * | | | 4,000 | | | | 34,960 | |
The Interpublic Group of Cos., Inc. * | | | 53,337 | | | | 552,038 | |
| The McGraw-Hill Cos., Inc. | | | 34,600 | | | | 1,302,690 | |
The New York Times Co., Class A * | | | 13,200 | | | | 101,244 | |
| The Walt Disney Co. | | | 197,893 | | | | 7,145,916 | |
The Washington Post Co., Class B (d) | | | 600 | | | | 241,290 | |
| Time Warner Cable, Inc. | | | 42,711 | | | | 2,471,686 | |
| Time Warner, Inc. | | | 127,350 | | | | 4,140,148 | |
Valassis Communications, Inc. * | | | 3,700 | | | | 122,100 | |
| Value Line, Inc. | | | 300 | | | | 5,139 | |
| Viacom Inc., Class B | | | 56,606 | | | | 2,184,426 | |
| Virgin Media, Inc. | | | 31,000 | | | | 788,330 | |
Warner Music Group Corp. * | | | 11,700 | | | | 60,840 | |
| World Wrestling Entertainment, Inc., Class A | | | 4,900 | | | | 67,816 | |
| | | | | | | | | |
| | | | | | | | 44,863,771 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 7.2%
|
| Abbott Laboratories | | | 166,905 | | | | 8,565,565 | |
Accelrys, Inc. * | | | 10,764 | | | | 78,039 | |
Acorda Therapeutics, Inc. * | | | 5,000 | | | | 135,200 | |
Acura Pharmaceuticals, Inc. (d)* | | | 4,500 | | | | 11,790 | |
Adolor Corp. * | | | 8,700 | | | | 10,788 | |
Affymax, Inc. * | | | 2,900 | | | | 14,703 | |
Affymetrix, Inc. * | | | 8,900 | | | | 39,872 | |
Albany Molecular Research, Inc. * | | | 5,600 | | | | 35,840 | |
Alexion Pharmaceuticals, Inc. * | | | 9,200 | | | | 628,360 | |
Alkermes, Inc. * | | | 8,500 | | | | 98,345 | |
| Allergan, Inc. | | | 34,968 | | | | 2,532,033 | |
Allos Therapeutics, Inc. * | | | 6,000 | | | | 23,880 | |
Alnylam Pharmaceuticals, Inc. * | | | 7,400 | | | | 97,236 | |
AMAG Pharmaceuticals, Inc. * | | | 3,000 | | | | 47,730 | |
Amgen, Inc. * | | | 109,268 | | | | 6,249,037 | |
Amicus Therapeutics, Inc. * | | | 500 | | | | 2,065 | |
Amylin Pharmaceuticals, Inc. * | | | 15,400 | | | | 200,662 | |
Arena Pharmaceuticals, Inc. * | | | 6,300 | | | | 10,395 | |
ArQule, Inc. * | | | 8,800 | | | | 48,576 | |
Auxilium Pharmaceuticals, Inc. * | | | 5,000 | | | | 123,750 | |
Bio-Rad Laboratories, Inc., Class A * | | | 3,000 | | | | 271,860 | |
BioCryst Pharmaceuticals, Inc. (d)* | | | 4,900 | | | | 24,304 | |
Biogen Idec, Inc. * | | | 31,125 | | | | 1,951,849 | |
BioMarin Pharmaceuticals, Inc. * | | | 10,300 | | | | 269,448 | |
| Bristol-Myers Squibb Co. | | | 209,450 | | | | 5,634,205 | |
Bruker Corp. * | | | 14,600 | | | | 218,854 | |
Caliper Life Sciences, Inc. * | | | 7,700 | | | | 34,650 | |
Cambrex Corp. * | | | 16,400 | | | | 74,292 | |
Caraco Pharmaceutical Laboratories Ltd. * | | | 5,000 | | | | 25,800 | |
Celera Corp. * | | | 9,600 | | | | 54,720 | |
Celgene Corp. * | | | 51,445 | | | | 3,193,191 | |
Cell Therapeutics, Inc. * | | | 62,000 | | | | 23,312 | |
Cephalon, Inc. * | | | 9,000 | | | | 597,960 | |
Cepheid, Inc. * | | | 5,000 | | | | 105,200 | |
See financial notes 41
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Charles River Laboratories International, Inc. * | | | 6,416 | | | | 210,252 | |
Clinical Data, Inc. * | | | 3,175 | | | | 60,293 | |
Covance, Inc. * | | | 5,800 | | | | 272,542 | |
Cubist Pharmaceuticals, Inc. * | | | 8,900 | | | | 207,192 | |
Cypress Bioscience, Inc. * | | | 7,500 | | | | 29,925 | |
Dendreon Corp. * | | | 14,900 | | | | 543,850 | |
Dionex Corp. * | | | 5,200 | | | | 463,996 | |
Durect Corp. * | | | 8,000 | | | | 21,360 | |
Dyax Corp. * | | | 7,000 | | | | 16,870 | |
| Eli Lilly & Co. | | | 106,400 | | | | 3,745,280 | |
Emergent Biosolutions, Inc. * | | | 4,000 | | | | 72,280 | |
Endo Pharmaceuticals Holdings, Inc. * | | | 10,500 | | | | 385,770 | |
Enzo Biochem, Inc. * | | | 9,281 | | | | 40,001 | |
Enzon Pharmaceuticals, Inc. * | | | 8,900 | | | | 100,125 | |
eResearch Technology, Inc. * | | | 9,125 | | | | 69,532 | |
Exelixis, Inc. * | | | 11,300 | | | | 50,398 | |
Forest Laboratories, Inc. * | | | 31,300 | | | | 1,034,465 | |
Furiex Pharmaceuticals, Inc. * | | | 1,000 | | | | 11,510 | |
Genomic Health, Inc. * | | | 5,000 | | | | 70,800 | |
Genzyme Corp. * | | | 28,132 | | | | 2,029,161 | |
Geron Corp. (d)* | | | 11,500 | | | | 64,170 | |
Gilead Sciences, Inc. * | | | 99,640 | | | | 3,952,719 | |
GTX, Inc. (d)* | | | 3,000 | | | | 8,400 | |
Halozyme Therapeutics, Inc. * | | | 9,000 | | | | 65,970 | |
Harvard Bioscience, Inc. * | | | 6,500 | | | | 25,610 | |
Human Genome Sciences, Inc. * | | | 20,100 | | | | 540,288 | |
Illumina, Inc. * | | | 12,200 | | | | 662,582 | |
ImmunoGen, Inc. * | | | 1,500 | | | | 12,330 | |
Impax Laboratories, Inc. * | | | 8,500 | | | | 160,140 | |
Incyte Corp. * | | | 12,100 | | | | 201,586 | |
Inspire Pharmaceuticals, Inc. * | | | 7,800 | | | | 54,600 | |
InterMune, Inc. * | | | 4,600 | | | | 60,444 | |
Isis Pharmaceuticals, Inc. * | | | 10,300 | | | | 94,142 | |
| Johnson & Johnson | | | 306,670 | | | | 19,525,679 | |
Kendle International, Inc. * | | | 2,700 | | | | 24,597 | |
King Pharmaceuticals, Inc. * | | | 25,616 | | | | 362,210 | |
Lexicon Pharmaceuticals, Inc. * | | | 6,900 | | | | 12,213 | |
Life Technologies Corp. * | | | 20,862 | | | | 1,046,855 | |
Ligand Pharmaceuticals, Inc., Class B * | | | 2,689 | | | | 4,356 | |
Luminex Corp. * | | | 7,800 | | | | 140,478 | |
MannKind Corp. (d)* | | | 7,000 | | | | 44,660 | |
MAP Pharmaceuticals, Inc. * | | | 4,000 | | | | 60,920 | |
Martek Biosciences Corp. * | | | 3,000 | | | | 65,850 | |
Matrixx Initiatives, Inc. * | | | 2,700 | | | | 14,472 | |
Maxygen, Inc. * | | | 10,000 | | | | 64,100 | |
| Medicis Pharmaceutical Corp., Class A | | | 5,900 | | | | 175,525 | |
Medivation, Inc. * | | | 5,000 | | | | 57,750 | |
| Merck & Co., Inc. | | | 340,970 | | | | 12,370,392 | |
Mettler-Toledo International, Inc. * | | | 3,200 | | | | 417,792 | |
Momenta Pharmaceuticals, Inc. (d)* | | | 4,000 | | | | 66,840 | |
Mylan, Inc. * | | | 35,000 | | | | 711,200 | |
Myrexis, Inc. * | | | 7,200 | | | | 26,424 | |
Myriad Genetics, Inc. * | | | 14,800 | | | | 294,964 | |
Nabi Biopharmaceuticals * | | | 6,300 | | | | 30,933 | |
Nektar Therapeutics * | | | 8,400 | | | | 122,388 | |
Neurocrine Biosciences, Inc. * | | | 6,900 | | | | 56,166 | |
NPS Pharmacuticals, Inc. * | | | 4,500 | | | | 28,035 | |
Onyx Pharmaceuticals, Inc. * | | | 7,500 | | | | 201,225 | |
Pain Therapeutics, Inc. * | | | 7,400 | | | | 56,832 | |
Par Pharmaceutical Cos., Inc. * | | | 8,900 | | | | 289,339 | |
PAREXEL International Corp. * | | | 7,800 | | | | 167,700 | |
| PDL BioPharma, Inc. | | | 9,500 | | | | 49,685 | |
| PerkinElmer, Inc. | | | 11,477 | | | | 269,136 | |
| Perrigo Co. | | | 10,300 | | | | 678,564 | |
| Pfizer, Inc. | | | 883,801 | | | | 15,378,137 | |
| Pharmaceutical Product Development, Inc. | | | 12,000 | | | | 309,720 | |
Pharmasset, Inc. * | | | 3,000 | | | | 112,500 | |
POZEN, Inc. * | | | 4,800 | | | | 31,920 | |
Regeneron Pharmaceuticals, Inc. * | | | 9,200 | | | | 239,936 | |
Salix Pharmaceuticals Ltd. * | | | 7,000 | | | | 264,810 | |
Sangamo BioSciences, Inc. * | | | 4,700 | | | | 17,484 | |
Savient Pharmaceuticals, Inc. * | | | 6,800 | | | | 84,388 | |
Seattle Genetics, Inc. * | | | 8,500 | | | | 139,315 | |
Sucampo Pharmaceuticals, Inc., Class A * | | | 6,500 | | | | 21,970 | |
SuperGen, Inc. * | | | 5,900 | | | | 16,402 | |
Synta Pharmaceuticals Corp. * | | | 8,500 | | | | 31,450 | |
Talecris Biotherapeutics Holdings Corp. * | | | 7,000 | | | | 171,640 | |
| Techne Corp. | | | 3,800 | | | | 231,496 | |
The Medicines Co. * | | | 8,300 | | | | 105,991 | |
Theravance, Inc. * | | | 5,700 | | | | 116,166 | |
Thermo Fisher Scientific, Inc. * | | | 43,602 | | | | 2,242,015 | |
United Therapeutics Corp. * | | | 6,000 | | | | 360,000 | |
Vertex Pharmaceuticals, Inc. * | | | 18,644 | | | | 714,625 | |
Vical, Inc. * | | | 6,600 | | | | 14,256 | |
ViroPharma, Inc. * | | | 13,000 | | | | 212,680 | |
VIVUS, Inc. (d)* | | | 8,500 | | | | 65,790 | |
Waters Corp. * | | | 10,700 | | | | 793,191 | |
Watson Pharmaceuticals, Inc. * | | | 10,732 | | | | 500,648 | |
XenoPort, Inc. * | | | 2,500 | | | | 19,375 | |
Zalicus, Inc. * | | | 10,500 | | | | 13,650 | |
| | | | | | | | | |
| | | | | | | | 106,418,929 | |
| |
Real Estate 2.7%
|
| Acadia Realty Trust | | | 3,000 | | | | 57,240 | |
| Alexander’s, Inc. | | | 700 | | | | 263,088 | |
| Alexandria Real Estate Equities, Inc. | | | 5,500 | | | | 404,140 | |
| AMB Property Corp. | | | 18,700 | | | | 527,153 | |
| American Campus Communities, Inc. | | | 7,500 | | | | 237,225 | |
| American Capital Agency Corp. | | | 6,200 | | | | 178,064 | |
American Realty Investors, Inc. (d)* | | | 1,537 | | | | 11,912 | |
| Annaly Capital Management, Inc. | | | 61,600 | | | | 1,090,936 | |
| Anworth Mortgage Asset Corp. | | | 24,200 | | | | 169,642 | |
| Apartment Investment & Management Co., Class A | | | 13,711 | | | | 319,603 | |
Ashford Hospitality Trust * | | | 3,000 | | | | 30,450 | |
| AvalonBay Communities, Inc. | | | 8,892 | | | | 945,309 | |
Avatar Holdings, Inc. * | | | 4,500 | | | | 82,080 | |
| BioMed Realty Trust, Inc. | | | 14,000 | | | | 256,900 | |
| Boston Properties, Inc. | | | 16,900 | | | | 1,456,611 | |
| Brandywine Realty Trust | | | 14,863 | | | | 177,910 | |
| BRE Properties, Inc. | | | 8,000 | | | | 343,440 | |
| Brookfield Properties Corp. | | | 35,200 | | | | 612,128 | |
| Camden Property Trust | | | 7,800 | | | | 386,802 | |
42 See financial notes
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Capstead Mortgage Corp. | | | 6,240 | | | | 71,136 | |
CB Richard Ellis Group, Inc., Class A * | | | 32,500 | | | | 596,375 | |
| CBL & Associates Properties, Inc. | | | 16,485 | | | | 258,485 | |
| Chimera Investment Corp. | | | 90,900 | | | | 372,690 | |
| Colonial Properties Trust | | | 7,067 | | | | 126,711 | |
| CommonWealth REIT | | | 6,850 | | | | 174,333 | |
| Consolidated-Tomoka Land Co. | | | 1,100 | | | | 28,897 | |
| Corporate Office Properties Trust | | | 6,500 | | | | 230,685 | |
| Cousins Properties, Inc. | | | 9,089 | | | | 67,350 | |
| DCT Industrial Trust, Inc. | | | 20,300 | | | | 101,703 | |
| Developers Diversified Realty Corp. | | | 20,284 | | | | 261,664 | |
DiamondRock Hospitality Co. * | | | 16,786 | | | | 177,596 | |
| Digital Realty Trust, Inc. | | | 10,000 | | | | 597,300 | |
| Douglas Emmett, Inc. | | | 12,000 | | | | 215,280 | |
| Duke Realty Corp. | | | 27,290 | | | | 340,306 | |
| DuPont Fabros Technology, Inc. | | | 7,500 | | | | 188,250 | |
| EastGroup Properties, Inc. | | | 3,900 | | | | 157,872 | |
| Entertainment Properties Trust | | | 5,200 | | | | 240,396 | |
| Equity Lifestyle Properties, Inc. | | | 3,000 | | | | 170,760 | |
| Equity One, Inc. | | | 12,100 | | | | 226,270 | |
| Equity Residential | | | 30,500 | | | | 1,483,215 | |
| Essex Property Trust, Inc. | | | 3,600 | | | | 406,656 | |
| Extra Space Storage, Inc. | | | 11,000 | | | | 178,200 | |
| Federal Realty Investment Trust | | | 8,200 | | | | 672,236 | |
FelCor Lodging Trust, Inc. * | | | 12,200 | | | | 75,030 | |
First Industrial Realty Trust, Inc. (d)* | | | 31,900 | | | | 233,827 | |
Forest City Enterprises, Inc., Class A * | | | 15,400 | | | | 224,686 | |
Forestar Group, Inc. * | | | 2,933 | | | | 50,154 | |
| Franklin Street Properties Corp. | | | 14,000 | | | | 186,900 | |
| Getty Realty Corp. | | | 2,000 | | | | 57,020 | |
| Glimcher Realty Trust | | | 7,300 | | | | 54,823 | |
Gramercy Capital Corp. * | | | 1,028 | | | | 2,303 | |
| Hatteras Financial Corp. | | | 4,000 | | | | 117,120 | |
| HCP, Inc. | | | 28,348 | | | | 1,020,811 | |
| Health Care REIT, Inc. | | | 12,700 | | | | 648,970 | |
| Healthcare Realty Trust, Inc. | | | 7,900 | | | | 190,706 | |
| Hersha Hospitality Trust | | | 13,500 | | | | 82,350 | |
| Highwoods Properties, Inc. | | | 8,600 | | | | 284,918 | |
| Home Properties, Inc. | | | 5,500 | | | | 299,475 | |
| Hospitality Properties Trust | | | 14,600 | | | | 333,026 | |
| Host Hotels & Resorts, Inc. | | | 63,263 | | | | 1,005,249 | |
| Inland Real Estate Corp. | | | 5,500 | | | | 47,795 | |
| Investors Real Estate Trust | | | 8,000 | | | | 70,400 | |
iStar Financial, Inc. * | | | 9,390 | | | | 42,912 | |
| Jones Lang LaSalle, Inc. | | | 5,300 | | | | 413,718 | |
| Kilroy Realty Corp. | | | 4,800 | | | | 164,016 | |
| Kimco Realty Corp. | | | 39,095 | | | | 673,607 | |
| LaSalle Hotel Properties | | | 6,600 | | | | 156,354 | |
| Lexington Realty Trust | | | 10,867 | | | | 84,545 | |
| Liberty Property Trust | | | 11,300 | | | | 378,098 | |
| LTC Properties, Inc. | | | 2,800 | | | | 77,980 | |
| Mack-Cali Realty Corp. | | | 8,900 | | | | 298,862 | |
Maui Land & Pineapple Co., Inc. * | | | 800 | | | | 3,520 | |
| Medical Properties Trust, Inc. | | | 12,300 | | | | 137,637 | |
| MFA Financial, Inc. | | | 29,000 | | | | 229,390 | |
| Mid-America Apartment Communities, Inc. | | | 2,500 | | | | 152,575 | |
| Mission West Properties, Inc. | | | 1,000 | | | | 6,700 | |
MPG Office Trust, Inc. * | | | 7,500 | | | | 20,325 | |
| National Health Investors, Inc. | | | 6,100 | | | | 282,430 | |
| National Retail Properties, Inc. | | | 9,320 | | | | 252,572 | |
| Nationwide Health Properties, Inc. | | | 14,100 | | | | 575,703 | |
New Century Financial Corp. (a),(c)* | | | 3,600 | | | | — | |
| OMEGA Healthcare Investors, Inc. | | | 9,784 | | | | 225,032 | |
| Parkway Properties, Inc. | | | 3,500 | | | | 54,460 | |
| Pennsylvania Real Estate Investment Trust | | | 5,500 | | | | 78,485 | |
| Piedmont Office Realty Trust, Inc., Class A | | | 6,000 | | | | 113,220 | |
| Plum Creek Timber Co., Inc. | | | 18,047 | | | | 664,851 | |
| PMC Commercial Trust | | | 2,500 | | | | 20,425 | |
| Post Properties, Inc. | | | 5,200 | | | | 158,288 | |
| Potlatch Corp. | | | 5,753 | | | | 195,890 | |
| ProLogis | | | 51,954 | | | | 709,172 | |
| PS Business Parks, Inc. | | | 3,000 | | | | 177,780 | |
| Public Storage | | | 14,590 | | | | 1,447,620 | |
RAIT Financial Trust * | | | 10,300 | | | | 17,304 | |
| Ramco-Gershenson Properties Trust | | | 4,900 | | | | 56,742 | |
| Rayonier, Inc. | | | 7,388 | | | | 385,654 | |
Realty Income Corp. (d) | | | 11,600 | | | | 397,648 | |
| Redwood Trust, Inc. | | | 8,500 | | | | 120,530 | |
| Regency Centers Corp. | | | 8,700 | | | | 366,966 | |
| Saul Centers, Inc. | | | 5,100 | | | | 217,668 | |
| Senior Housing Properties Trust | | | 14,450 | | | | 345,211 | |
| Simon Property Group, Inc. | | | 31,283 | | | | 3,003,794 | |
| SL Green Realty Corp. | | | 7,750 | | | | 509,330 | |
| Sovran Self Storage, Inc. | | | 3,800 | | | | 148,466 | |
| Starwood Property Trust, Inc. | | | 7,500 | | | | 151,575 | |
Strategic Hotel & Resorts, Inc. * | | | 15,000 | | | | 68,250 | |
| Sun Communities, Inc. | | | 3,000 | | | | 97,830 | |
Sunstone Hotel Investors, Inc. * | | | 10,000 | | | | 108,500 | |
| Tanger Factory Outlet Centers, Inc. | | | 4,600 | | | | 220,432 | |
| Taubman Centers, Inc. | | | 7,100 | | | | 329,582 | |
Tejon Ranch Co. * | | | 3,674 | | | | 81,783 | |
| The Macerich Co. | | | 14,805 | | | | 660,451 | |
The St. Joe Co. * | | | 12,900 | | | | 260,451 | |
U-Store-It Trust | | | 8,000 | | | | 68,880 | |
| UDR, Inc. | | | 18,861 | | | | 423,995 | |
| UMH Properties, Inc. | | | 4,100 | | | | 43,419 | |
| Universal Health Realty Income Trust | | | 3,900 | | | | 144,885 | |
| Urstadt Biddle Properties | | | 500 | | | | 8,245 | |
| Urstadt Biddle Properties, Class A | | | 4,500 | | | | 86,445 | |
| Ventas, Inc. | | | 16,300 | | | | 873,028 | |
| Vornado Realty Trust | | | 21,641 | | | | 1,891,207 | |
| Walter Investment Management Corp. | | | 5,289 | | | | 96,894 | |
| Washington Real Estate Investment Trust | | | 6,100 | | | | 195,383 | |
| Weingarten Realty Investors | | | 14,475 | | | | 349,282 | |
| Weyerhaeuser Co. | | | 44,592 | | | | 723,282 | |
| Winthrop Realty Trust | | | 10,000 | | | | 136,000 | |
| | | | | | | | | |
| | | | | | | | 40,265,841 | |
| |
Retailing 3.7%
|
99 Cents Only Stores * | | | 6,066 | | | | 93,538 | |
| Aaron’s, Inc. | | | 9,375 | | | | 176,812 | |
See financial notes 43
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Abercrombie & Fitch Co., Class A | | | 8,800 | | | | 377,168 | |
| Advance Auto Parts, Inc. | | | 9,540 | | | | 619,909 | |
Aeropostale, Inc. * | | | 9,900 | | | | 241,362 | |
Amazon.com, Inc. * | | | 38,200 | | | | 6,308,348 | |
America’s Car-Mart, Inc. * | | | 3,750 | | | | 100,013 | |
| American Eagle Outfitters, Inc. | | | 21,150 | | | | 338,611 | |
AnnTaylor Stores Corp. * | | | 9,825 | | | | 228,922 | |
Asbury Automotive Group, Inc. * | | | 4,100 | | | | 59,122 | |
Audiovox Corp., Class A * | | | 1,600 | | | | 10,368 | |
AutoNation, Inc. (d)* | | | 21,600 | | | | 501,552 | |
AutoZone, Inc. * | | | 6,100 | | | | 1,449,543 | |
Barnes & Noble, Inc. (d) | | | 7,400 | | | | 110,852 | |
Bed Bath & Beyond, Inc. * | | | 28,700 | | | | 1,259,930 | |
| Best Buy Co., Inc. | | | 39,225 | | | | 1,685,890 | |
Big Lots, Inc. * | | | 11,100 | | | | 348,207 | |
| Brown Shoe Co., Inc. | | | 6,675 | | | | 78,431 | |
Cabela’s, Inc. * | | | 3,500 | | | | 64,890 | |
CarMax, Inc. * | | | 21,546 | | | | 667,711 | |
Charming Shoppes, Inc. * | | | 10,200 | | | | 35,598 | |
| Chico’s FAS, Inc. | | | 19,800 | | | | 192,456 | |
| Christopher & Banks Corp. | | | 2,900 | | | | 17,284 | |
Coldwater Creek, Inc. * | | | 8,502 | | | | 28,652 | |
Collective Brands, Inc. * | | | 5,906 | | | | 90,539 | |
Destination Maternity Corp. * | | | 2,500 | | | | 91,325 | |
Dick’s Sporting Goods, Inc. * | | | 11,000 | | | | 317,020 | |
| Dillard’s, Inc., Class A | | | 8,500 | | | | 216,835 | |
Dollar Tree, Inc. * | | | 12,975 | | | | 665,747 | |
DSW, Inc., Class A * | | | 6,500 | | | | 216,255 | |
Duckwall-ALCO Stores, Inc. * | | | 1,800 | | | | 23,166 | |
| Expedia, Inc. | | | 31,345 | | | | 907,438 | |
| Family Dollar Stores, Inc. | | | 12,700 | | | | 586,359 | |
| Foot Locker, Inc. | | | 17,100 | | | | 272,403 | |
GameStop Corp., Class A * | | | 17,548 | | | | 344,994 | |
Geeknet, Inc. * | | | 4,527 | | | | 9,416 | |
Genesco, Inc. * | | | 4,300 | | | | 140,868 | |
| Genuine Parts Co. | | | 17,500 | | | | 837,550 | |
Group 1 Automotive, Inc. * | | | 1,400 | | | | 49,364 | |
| Guess?, Inc. | | | 7,900 | | | | 307,468 | |
Hibbett Sports, Inc. * | | | 3,543 | | | | 95,484 | |
HSN, Inc. * | | | 6,269 | | | | 187,694 | |
J. Crew Group, Inc. * | | | 5,500 | | | | 175,945 | |
| J.C. Penney Co., Inc. | | | 27,400 | | | | 854,332 | |
Kirkland’s, Inc. * | | | 6,000 | | | | 80,700 | |
Kohl’s Corp. * | | | 33,300 | | | | 1,704,960 | |
Liberty Media Corp. - Interactive, Class A * | | | 55,809 | | | | 823,741 | |
| Limited Brands, Inc. | | | 31,520 | | | | 926,373 | |
| Lithia Motors, Inc., Class A | | | 700 | | | | 7,630 | |
LKQ Corp. * | | | 15,000 | | | | 326,100 | |
| Lowe’s Cos., Inc. | | | 157,500 | | | | 3,359,475 | |
| Macy’s, Inc. | | | 42,952 | | | | 1,015,385 | |
MarineMax, Inc. * | | | 800 | | | | 5,984 | |
Midas, Inc. * | | | 6,800 | | | | 50,048 | |
| Monro Muffler Brake, Inc. | | | 1,575 | | | | 75,191 | |
Netflix, Inc. * | | | 6,000 | | | | 1,041,000 | |
| Nordstrom, Inc. | | | 20,600 | | | | 793,306 | |
O’Reilly Automotive, Inc. * | | | 11,899 | | | | 696,091 | |
Office Depot, Inc. * | | | 26,000 | | | | 116,740 | |
OfficeMax, Inc. * | | | 9,400 | | | | 166,380 | |
Pacific Sunwear of California, Inc. * | | | 7,475 | | | | 44,551 | |
Penske Automotive Group, Inc. * | | | 5,000 | | | | 67,250 | |
| PetSmart, Inc. | | | 14,100 | | | | 527,763 | |
Priceline.com, Inc. * | | | 3,983 | | | | 1,500,834 | |
| RadioShack Corp. | | | 13,700 | | | | 275,781 | |
Rent-A-Center, Inc. | | | 7,750 | | | | 194,835 | |
Retail Ventures, Inc. * | | | 8,000 | | | | 108,720 | |
| Ross Stores, Inc. | | | 13,400 | | | | 790,466 | |
Saks, Inc. * | | | 10,800 | | | | 120,312 | |
Sally Beauty Holdings, Inc. * | | | 9,950 | | | | 121,092 | |
Sears Holdings Corp. (d)* | | | 6,385 | | | | 459,592 | |
Shoe Carnival, Inc. * | | | 4,200 | | | | 96,180 | |
Signet Jewelers Ltd. * | | | 5,000 | | | | 175,900 | |
Sonic Automotive, Inc., Class A * | | | 4,400 | | | | 48,048 | |
| Stage Stores, Inc. | | | 5,700 | | | | 75,981 | |
| Staples, Inc. | | | 76,800 | | | | 1,572,096 | |
Stein Mart, Inc. * | | | 3,800 | | | | 35,682 | |
| Systemax, Inc. | | | 2,500 | | | | 32,375 | |
| Target Corp. | | | 73,800 | | | | 3,833,172 | |
The Buckle, Inc. (d) | | | 5,875 | | | | 170,904 | |
| The Cato Corp., Class A | | | 7,300 | | | | 193,085 | |
The Children’s Place Retail Stores, Inc. * | | | 1,800 | | | | 79,308 | |
The Dress Barn, Inc. * | | | 6,818 | | | | 156,405 | |
| The Finish Line, Inc., Class A | | | 5,061 | | | | 77,433 | |
| The Gap, Inc. | | | 57,900 | | | | 1,100,679 | |
The Gymboree Corp. * | | | 2,500 | | | | 162,650 | |
| The Home Depot, Inc. | | | 182,070 | | | | 5,622,322 | |
| The Men’s Wearhouse, Inc. | | | 6,600 | | | | 161,304 | |
| The Pep Boys - Manny, Moe & Jack | | | 5,000 | | | | 58,450 | |
The Talbots, Inc. * | | | 5,700 | | | | 55,746 | |
| The TJX Cos., Inc. | | | 45,400 | | | | 2,083,406 | |
| Tiffany & Co. | | | 11,500 | | | | 609,500 | |
| Tractor Supply Co. | | | 8,000 | | | | 316,800 | |
Trans World Entertainment Corp. * | | | 1,500 | | | | 2,730 | |
Tuesday Morning Corp. * | | | 2,500 | | | | 11,975 | |
Ulta Salon, Cosmetics & Fragrance, Inc. * | | | 4,000 | | | | 122,760 | |
Urban Outfitters, Inc. * | | | 15,800 | | | | 486,166 | |
West Marine, Inc. * | | | 5,500 | | | | 53,955 | |
Wet Seal, Inc., Class A * | | | 6,000 | | | | 21,000 | |
| Williams-Sonoma, Inc. | | | 9,200 | | | | 297,804 | |
| Winmark Corp. | | | 1,200 | | | | 39,504 | |
Zale Corp. * | | | 5,020 | | | | 12,851 | |
| | | | | | | | | |
| | | | | | | | 54,551,842 | |
| |
Semiconductors & Semiconductor Equipment 2.8%
|
Actel Corp. * | | | 4,600 | | | | 95,956 | |
Advanced Energy Industries, Inc. * | | | 3,900 | | | | 56,004 | |
Advanced Micro Devices, Inc. * | | | 61,200 | | | | 448,596 | |
| Altera Corp. | | | 34,900 | | | | 1,089,229 | |
Amkor Technology, Inc. * | | | 14,400 | | | | 103,824 | |
Amtech Systems, Inc. * | | | 500 | | | | 8,370 | |
ANADIGICS, Inc. * | | | 4,650 | | | | 31,480 | |
| Analog Devices, Inc. | | | 32,200 | | | | 1,084,174 | |
| Applied Materials, Inc. | | | 146,098 | | | | 1,805,771 | |
Applied Micro Circuits Corp. * | | | 7,000 | | | | 70,490 | |
Atheros Communications * | | | 6,500 | | | | 201,760 | |
Atmel Corp. * | | | 50,900 | | | | 450,974 | |
ATMI, Inc. * | | | 1,400 | | | | 24,738 | |
AXT, Inc. * | | | 3,500 | | | | 28,875 | |
| Broadcom Corp., Class A | | | 56,700 | | | | 2,309,958 | |
44 See financial notes
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Brooks Automation, Inc. * | | | 5,585 | | | | 37,922 | |
Cabot Microelectronics Corp. * | | | 2,160 | | | | 83,441 | |
Cavium Networks, Inc. * | | | 4,000 | | | | 127,480 | |
CEVA, Inc. * | | | 433 | | | | 8,015 | |
Cirrus Logic, Inc. (d)* | | | 6,800 | | | | 87,380 | |
| Cohu, Inc. | | | 4,600 | | | | 66,010 | |
Conexant Systems, Inc. * | | | 6,500 | | | | 9,815 | |
Cree, Inc. * | | | 9,000 | | | | 461,610 | |
Cymer, Inc. * | | | 4,200 | | | | 155,190 | |
Cypress Semiconductor Corp. * | | | 16,500 | | | | 232,650 | |
Diodes, Inc. * | | | 6,412 | | | | 140,936 | |
DSP Group, Inc. * | | | 6,300 | | | | 45,108 | |
Energy Conversion Devices, Inc. (d)* | | | 600 | | | | 2,706 | |
Entegris, Inc. * | | | 14,299 | | | | 85,508 | |
Evergreen Solar, Inc. (d)* | | | 1,000 | | | | 930 | |
Exar Corp. * | | | 9,834 | | | | 65,396 | |
Fairchild Semiconductor International, Inc. * | | | 11,600 | | | | 130,732 | |
FEI Co. * | | | 4,500 | | | | 97,920 | |
First Solar, Inc. * | | | 6,200 | | | | 853,616 | |
FormFactor, Inc. * | | | 5,500 | | | | 53,515 | |
GSI Technology, Inc. * | | | 3,000 | | | | 20,850 | |
Hittite Microwave Corp. * | | | 1,500 | | | | 77,505 | |
Integrated Device Technology, Inc. * | | | 16,120 | | | | 94,947 | |
Integrated Silicon Solutions, Inc. * | | | 3,038 | | | | 22,815 | |
| Intel Corp. | | | 614,332 | | | | 12,329,643 | |
International Rectifier Corp. * | | | 6,600 | | | | 153,318 | |
| Intersil Corp., Class A | | | 12,364 | | | | 161,845 | |
IXYS Corp. * | | | 6,900 | | | | 70,656 | |
KLA-Tencor Corp. | | | 17,500 | | | | 625,100 | |
Kopin Corp. * | | | 2,500 | | | | 9,525 | |
Kulicke & Soffa Industries, Inc. * | | | 10,400 | | | | 64,688 | |
Lam Research Corp. * | | | 13,600 | | | | 622,744 | |
Lattice Semiconductor Corp. * | | | 8,600 | | | | 41,796 | |
| Linear Technology Corp. | | | 25,000 | | | | 805,750 | |
LSI Corp. * | | | 67,887 | | | | 355,728 | |
Marvell Technology Group Ltd. * | | | 62,400 | | | | 1,204,944 | |
| Maxim Integrated Products, Inc. | | | 33,000 | | | | 714,780 | |
MEMC Electronic Materials, Inc. * | | | 24,300 | | | | 311,526 | |
| Micrel, Inc. | | | 6,800 | | | | 80,988 | |
| Microchip Technology, Inc. | | | 18,975 | | | | 610,615 | |
Micron Technology, Inc. * | | | 110,199 | | | | 911,346 | |
Microsemi Corp. * | | | 10,652 | | | | 213,040 | |
MIPS Technologies, Inc. * | | | 1,100 | | | | 16,170 | |
MKS Instruments, Inc. * | | | 4,300 | | | | 88,795 | |
Monolithic Power Systems * | | | 3,500 | | | | 56,245 | |
MoSys, Inc. * | | | 1,200 | | | | 5,676 | |
Nanometrics, Inc. * | | | 300 | | | | 4,041 | |
| National Semiconductor Corp. | | | 29,200 | | | | 400,040 | |
Netlogic Microsystems, Inc. * | | | 6,000 | | | | 180,360 | |
Novellus Systems, Inc. * | | | 11,171 | | | | 326,305 | |
NVIDIA Corp. * | | | 59,500 | | | | 715,785 | |
OmniVision Technologies, Inc. * | | | 4,800 | | | | 130,224 | |
ON Semiconductor Corp. * | | | 43,665 | | | | 334,911 | |
Pericom Semiconductor Corp. * | | | 3,600 | | | | 33,912 | |
Photronics, Inc. * | | | 12,900 | | | | 81,012 | |
PLX Technology, Inc. * | | | 1,300 | | | | 4,628 | |
PMC-Sierra, Inc. * | | | 22,800 | | | | 175,332 | |
| Power Integrations, Inc. | | | 3,000 | | | | 102,480 | |
Rambus, Inc. * | | | 13,700 | | | | 270,849 | |
RF Micro Devices, Inc. * | | | 30,020 | | | | 218,846 | |
Rudolph Technologies, Inc. * | | | 1,318 | | | | 9,780 | |
Semtech Corp. * | | | 6,000 | | | | 128,460 | |
Silicon Image, Inc. * | | | 6,500 | | | | 39,975 | |
Silicon Laboratories, Inc. * | | | 5,000 | | | | 199,500 | |
Skyworks Solutions, Inc. * | | | 20,189 | | | | 462,530 | |
Standard Microsystems Corp. * | | | 3,600 | | | | 86,904 | |
SunPower Corp., Class A (d)* | | | 10,300 | | | | 140,492 | |
Supertex, Inc. * | | | 4,900 | | | | 115,101 | |
Teradyne, Inc. * | | | 18,559 | | | | 208,603 | |
Tessera Technologies, Inc. * | | | 6,000 | | | | 118,380 | |
| Texas Instruments, Inc. | | | 143,397 | | | | 4,240,249 | |
Trident Microsystems, Inc. * | | | 5,000 | | | | 9,300 | |
TriQuint Semiconductor, Inc. * | | | 16,310 | | | | 167,993 | |
Ultratech, Inc. * | | | 4,800 | | | | 87,888 | |
Varian Semiconductor Equipment Associates, Inc. * | | | 7,875 | | | | 257,276 | |
Veeco Instruments, Inc. (d)* | | | 3,500 | | | | 146,475 | |
Volterra Semiconductor Corp. * | | | 3,000 | | | | 61,290 | |
| Xilinx, Inc. | | | 27,600 | | | | 739,956 | |
Zoran Corp. * | | | 4,261 | | | | 30,168 | |
| | | | | | | | | |
| | | | | | | | 40,456,159 | |
| |
Software & Services 9.0%
|
| Accenture plc, Class A | | | 70,000 | | | | 3,129,700 | |
ACI Worldwide, Inc. * | | | 5,200 | | | | 126,724 | |
| Activision Blizzard, Inc. | | | 99,732 | | | | 1,143,926 | |
Actuate Corp. * | | | 5,862 | | | | 28,372 | |
Acxiom Corp. * | | | 13,300 | | | | 233,415 | |
Adobe Systems, Inc. * | | | 52,210 | | | | 1,469,711 | |
Advent Software, Inc. * | | | 4,100 | | | | 220,252 | |
Akamai Technologies, Inc. * | | | 12,138 | | | | 627,170 | |
Alliance Data Systems Corp. * | | | 6,600 | | | | 400,752 | |
Ancestry.com, Inc. * | | | 3,000 | | | | 80,010 | |
ANSYS, Inc. * | | | 10,786 | | | | 488,066 | |
AOL, Inc. * | | | 11,122 | | | | 296,735 | |
Ariba, Inc. * | | | 11,570 | | | | 217,285 | |
Autodesk, Inc. * | | | 24,800 | | | | 897,264 | |
| Automatic Data Processing, Inc. | | | 55,100 | | | | 2,447,542 | |
| Blackbaud, Inc. | | | 3,000 | | | | 76,170 | |
BMC Software, Inc. * | | | 29,000 | | | | 1,318,340 | |
Bottomline Technologies, Inc. * | | | 5,000 | | | | 90,100 | |
| Broadridge Financial Solutions, Inc. | | | 15,025 | | | | 330,550 | |
| CA, Inc. | | | 47,508 | | | | 1,102,661 | |
CACI International, Inc., Class A * | | | 4,100 | | | | 205,492 | |
Cadence Design Systems, Inc. * | | | 30,100 | | | | 254,947 | |
CIBER, Inc. * | | | 7,300 | | | | 26,791 | |
Citrix Systems, Inc. * | | | 20,000 | | | | 1,281,400 | |
Cognizant Technology Solutions Corp., Class A * | | | 33,200 | | | | 2,164,308 | |
| Computer Sciences Corp. | | | 16,238 | | | | 796,474 | |
Compuware Corp. * | | | 27,900 | | | | 279,279 | |
Convergys Corp. * | | | 10,500 | | | | 118,860 | |
| CoreLogic, Inc. | | | 10,800 | | | | 189,756 | |
CSG Systems International, Inc. * | | | 5,400 | | | | 104,976 | |
DealerTrack Holdings, Inc. * | | | 3,100 | | | | 59,892 | |
Deltek, Inc. * | | | 3,000 | | | | 23,580 | |
| Diamond Management & Technology Consultants, Inc. | | | 1,000 | | | | 12,470 | |
Digimarc Corp. * | | | 2,142 | | | | 58,712 | |
See financial notes 45
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Digital River, Inc. * | | | 2,100 | | | | 78,246 | |
| DST Systems, Inc. | | | 8,100 | | | | 350,487 | |
Dynamics Research Corp. * | | | 1,200 | | | | 13,560 | |
| EarthLink, Inc. | | | 17,050 | | | | 153,279 | |
EasyLink Services International Corp., Class A * | | | 5,000 | | | | 19,000 | |
eBay, Inc. * | | | 123,348 | | | | 3,677,004 | |
Edgewater Technology, Inc. * | | | 767 | | | | 2,255 | |
Electronic Arts, Inc. * | | | 35,900 | | | | 569,015 | |
eLoyalty Corp. * | | | 190 | | | | 1,328 | |
Epicor Software Corp. * | | | 4,000 | | | | 37,600 | |
| EPIQ Systems, Inc. | | | 825 | | | | 9,669 | |
Equinix, Inc. * | | | 5,565 | | | | 468,796 | |
Euronet Worldwide, Inc. * | | | 5,500 | | | | 99,330 | |
Exlservice Holdings, Inc. * | | | 8,000 | | | | 152,400 | |
| FactSet Research Systems, Inc. | | | 3,750 | | | | 329,175 | |
| Fair Isaac Corp. | | | 7,744 | | | | 186,166 | |
FalconStor Software, Inc. * | | | 1,200 | | | | 3,288 | |
| Fidelity National Information Services, Inc. | | | 38,506 | | | | 1,043,513 | |
Fiserv, Inc. * | | | 15,300 | | | | 834,156 | |
Forrester Research, Inc. * | | | 4,100 | | | | 135,587 | |
Gartner, Inc. * | | | 10,300 | | | | 326,407 | |
Genpact Ltd. * | | | 15,000 | | | | 238,500 | |
Global Cash Access Holdings, Inc. * | | | 15,100 | | | | 54,964 | |
| Global Payments, Inc. | | | 6,240 | | | | 243,110 | |
Google, Inc., Class A * | | | 26,150 | | | | 16,029,688 | |
GSE Systems, Inc. * | | | 2,424 | | | | 8,678 | |
Hackett Group, Inc. * | | | 1,700 | | | | 6,630 | |
IAC/InterActiveCorp * | | | 15,672 | | | | 437,249 | |
| iGATE Corp. | | | 9,600 | | | | 196,224 | |
Informatica Corp. * | | | 6,700 | | | | 272,623 | |
Information Services Group, Inc. * | | | 7,500 | | | | 13,950 | |
InfoSpace, Inc. * | | | 3,872 | | | | 32,680 | |
Interactive Intelligence, Inc. * | | | 7,500 | | | | 185,325 | |
Internap Network Services Corp. * | | | 3,500 | | | | 17,500 | |
| International Business Machines Corp. | | | 142,510 | | | | 20,464,436 | |
Internet Capital Group, Inc. * | | | 350 | | | | 4,372 | |
Intuit, Inc. * | | | 33,430 | | | | 1,604,640 | |
j2 Global Communications, Inc. * | | | 4,000 | | | | 105,400 | |
| Jack Henry & Associates, Inc. | | | 9,300 | | | | 252,588 | |
JDA Software Group, Inc. * | | | 4,500 | | | | 113,850 | |
Lawson Software, Inc. * | | | 14,500 | | | | 129,050 | |
| Lender Processing Services, Inc. | | | 8,157 | | | | 235,248 | |
Lionbridge Technologies, Inc. * | | | 12,400 | | | | 62,000 | |
LookSmart Ltd. * | | | 480 | | | | 1,042 | |
Magma Design Automation, Inc. * | | | 7,200 | | | | 30,888 | |
Manhattan Associates, Inc. * | | | 4,300 | | | | 132,354 | |
ManTech International Corp., Class A * | | | 5,000 | | | | 196,050 | |
Mastech Holdings, Inc. * | | | 640 | | | | 2,355 | |
| MasterCard, Inc., Class A | | | 12,000 | | | | 2,880,720 | |
| MAXIMUS, Inc. | | | 4,200 | | | | 254,646 | |
McAfee, Inc. * | | | 14,445 | | | | 683,248 | |
Mentor Graphics Corp. * | | | 11,200 | | | | 120,960 | |
MICROS Systems, Inc. * | | | 22,000 | | | | 998,580 | |
| Microsoft Corp. | | | 865,850 | | | | 23,066,244 | |
MicroStrategy, Inc., Class A * | | | 856 | | | | 77,579 | |
ModusLink Global Solutions, Inc. * | | | 3,950 | | | | 26,188 | |
MoneyGram International, Inc. * | | | 7,500 | | | | 18,075 | |
Monotype Imaging Holdings, Inc. * | | | 4,500 | | | | 42,885 | |
Monster Worldwide, Inc. * | | | 14,300 | | | | 258,258 | |
Move, Inc. * | | | 5,020 | | | | 11,847 | |
NetScout Systems, Inc. * | | | 7,300 | | | | 171,331 | |
NeuStar, Inc., Class A * | | | 9,300 | | | | 240,033 | |
Novell, Inc. * | | | 37,600 | | | | 222,968 | |
Nuance Communications, Inc. * | | | 25,474 | | | | 400,197 | |
Openwave Systems, Inc. * | | | 7,771 | | | | 16,008 | |
| OPNET Technologies, Inc. | | | 5,100 | | | | 100,521 | |
| Oracle Corp. | | | 425,449 | | | | 12,508,201 | |
Parametric Technology Corp. * | | | 8,680 | | | | 186,360 | |
| Paychex, Inc. | | | 32,400 | | | | 897,480 | |
Phoenix Technologies Ltd. * | | | 4,100 | | | | 16,892 | |
PRGX Global, Inc. * | | | 2,000 | | | | 12,000 | |
Progress Software Corp. * | | | 4,200 | | | | 156,954 | |
Quest Software, Inc. * | | | 7,700 | | | | 201,509 | |
Radiant Systems, Inc. * | | | 6,800 | | | | 132,668 | |
RealNetworks, Inc. * | | | 18,900 | | | | 56,700 | |
Red Hat, Inc. * | | | 20,600 | | | | 870,556 | |
Reis, Inc. * | | | 1,400 | | | | 9,660 | |
| Renaissance Learning, Inc. | | | 2,100 | | | | 29,337 | |
Rovi Corp. * | | | 12,812 | | | | 648,928 | |
S1 Corp. * | | | 12,930 | | | | 75,253 | |
Saba Software, Inc. * | | | 4,549 | | | | 27,112 | |
SAIC, Inc. * | | | 41,000 | | | | 637,140 | |
Salesforce.com, Inc. * | | | 10,500 | | | | 1,218,735 | |
| Sapient Corp. | | | 12,100 | | | | 159,236 | |
SAVVIS, Inc. * | | | 4,000 | | | | 95,960 | |
| Solera Holdings, Inc. | | | 8,000 | | | | 384,400 | |
SRA International, Inc., Class A * | | | 5,000 | | | | 100,050 | |
StarTek, Inc. * | | | 3,900 | | | | 15,912 | |
Support.com, Inc. * | | | 11,600 | | | | 65,772 | |
Symantec Corp. * | | | 93,673 | | | | 1,515,629 | |
Synopsys, Inc. * | | | 16,684 | | | | 426,777 | |
| Syntel, Inc. | | | 2,500 | | | | 122,150 | |
Take-Two Interactive Software, Inc. * | | | 9,000 | | | | 95,940 | |
TechTeam Global, Inc. * | | | 2,500 | | | | 18,275 | |
TeleCommunication Systems, Inc., Class A * | | | 1,300 | | | | 7,033 | |
TeleTech Holdings, Inc. * | | | 5,000 | | | | 75,900 | |
Teradata Corp. * | | | 23,800 | | | | 936,768 | |
The Ultimate Software Group, Inc. * | | | 3,000 | | | | 124,140 | |
THQ, Inc. * | | | 5,425 | | | | 21,700 | |
TIBCO Software, Inc. * | | | 19,000 | | | | 365,180 | |
TiVo, Inc. * | | | 4,500 | | | | 50,130 | |
| Total System Services, Inc. | | | 28,204 | | | | 440,264 | |
Unisys Corp. * | | | 4,000 | | | | 92,200 | |
| United Online, Inc. | | | 8,650 | | | | 53,457 | |
ValueClick, Inc. * | | | 8,500 | | | | 116,960 | |
VeriFone Systems, Inc. * | | | 6,600 | | | | 223,278 | |
VeriSign, Inc. * | | | 20,875 | | | | 725,406 | |
Virtusa Corp. * | | | 3,000 | | | | 42,780 | |
| Visa, Inc., Class A | | | 54,900 | | | | 4,291,533 | |
VMware, Inc., Class A * | | | 15,000 | | | | 1,146,900 | |
Web.com Group, Inc. * | | | 223 | | | | 1,383 | |
WebMD Health Corp. * | | | 4,074 | | | | 212,989 | |
Websense, Inc. * | | | 7,500 | | | | 150,900 | |
| Western Union Co. | | | 65,932 | | | | 1,160,403 | |
Yahoo!, Inc. * | | | 144,144 | | | | 2,379,817 | |
| | | | | | | | | |
| | | | | | | | 132,758,332 | |
46 See financial notes
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Technology Hardware & Equipment 7.1%
|
| ADTRAN, Inc. | | | 7,000 | | | | 225,890 | |
Agilent Technologies, Inc. * | | | 39,317 | | | | 1,368,232 | |
Agilysys, Inc. * | | | 4,860 | | | | 29,160 | |
| Amphenol Corp., Class A | | | 17,600 | | | | 882,288 | |
Anaren, Inc. * | | | 5,300 | | | | 88,669 | |
| Anixter International, Inc. | | | 3,300 | | | | 177,177 | |
Apple, Inc. * | | | 102,000 | | | | 30,688,740 | |
Arris Group, Inc. * | | | 12,775 | | | | 118,935 | |
Arrow Electronics, Inc. * | | | 12,000 | | | | 355,320 | |
Aruba Networks, Inc. * | | | 7,000 | | | | 153,370 | |
Aviat Networks, Inc. * | | | 7,177 | | | | 32,655 | |
Avid Technology, Inc. * | | | 3,756 | | | | 47,401 | |
Avnet, Inc. * | | | 15,788 | | | | 470,167 | |
| AVX Corp. | | | 14,000 | | | | 200,760 | |
Benchmark Electronics, Inc. * | | | 7,830 | | | | 128,647 | |
| Black Box Corp. | | | 1,700 | | | | 56,440 | |
Blue Coat Systems, Inc. * | | | 4,180 | | | | 112,735 | |
Brightpoint, Inc. * | | | 7,454 | | | | 55,830 | |
Brocade Communications Systems, Inc. * | | | 45,035 | | | | 284,621 | |
Checkpoint Systems, Inc. * | | | 4,600 | | | | 101,200 | |
Ciena Corp. (d)* | | | 9,970 | | | | 138,483 | |
Cisco Systems, Inc. * | | | 635,409 | | | | 14,506,387 | |
Cogent, Inc. * | | | 7,500 | | | | 78,900 | |
| Cognex Corp. | | | 2,900 | | | | 77,430 | |
Coherent, Inc. * | | | 2,800 | | | | 117,488 | |
Comarco, Inc. * | | | 500 | | | | 1,050 | |
CommScope, Inc. * | | | 11,323 | | | | 358,486 | |
| Comtech Telecommunications Corp. | | | 2,175 | | | | 67,034 | |
| Corning, Inc. | | | 164,807 | | | | 3,012,672 | |
CPI International, Inc. * | | | 6,000 | | | | 84,720 | |
| CTS Corp. | | | 8,800 | | | | 89,320 | |
| Daktronics, Inc. | | | 8,700 | | | | 95,004 | |
| DDi Corp. | | | 3,501 | | | | 35,990 | |
Dell, Inc. * | | | 189,400 | | | | 2,723,572 | |
DG Fastchannel, Inc. * | | | 3,000 | | | | 70,650 | |
| Diebold, Inc. | | | 7,300 | | | | 223,745 | |
Digi International, Inc. * | | | 3,000 | | | | 28,980 | |
Dolby Laboratories, Inc., Class A * | | | 8,800 | | | | 542,784 | |
Echelon Corp. * | | | 7,200 | | | | 56,664 | |
EchoStar Corp., Class A * | | | 7,540 | | | | 159,848 | |
| Electro Rent Corp. | | | 5,100 | | | | 75,786 | |
Electro Scientific Industries, Inc. * | | | 4,800 | | | | 55,776 | |
Electronics for Imaging, Inc. * | | | 6,400 | | | | 87,616 | |
EMC Corp. * | | | 222,186 | | | | 4,668,128 | |
EMS Technologies, Inc. * | | | 4,500 | | | | 80,280 | |
Emulex Corp. * | | | 8,900 | | | | 101,460 | |
Extreme Networks, Inc. * | | | 14,000 | | | | 44,660 | |
F5 Networks, Inc. * | | | 8,600 | | | | 1,012,220 | |
Finisar Corp. * | | | 6,500 | | | | 110,565 | |
FLIR Systems, Inc. * | | | 18,600 | | | | 517,824 | |
Frequency Electronics, Inc. * | | | 500 | | | | 3,000 | |
Gerber Scientific, Inc. * | | | 8,900 | | | | 59,541 | |
Harmonic, Inc. * | | | 9,842 | | | | 68,697 | |
| Harris Corp. | | | 14,000 | | | | 632,660 | |
| Hewlett-Packard Co. | | | 257,636 | | | | 10,836,170 | |
Hutchinson Technology, Inc. * | | | 6,000 | | | | 20,460 | |
I.D. Systems, Inc. * | | | 5,500 | | | | 12,375 | |
Identive Group, Inc. * | | | 1,200 | | | | 2,664 | |
Imation Corp. * | | | 5,500 | | | | 53,570 | |
Immersion Corp. * | | | 4,300 | | | | 26,445 | |
Infinera Corp. * | | | 10,500 | | | | 85,995 | |
Ingram Micro, Inc., Class A * | | | 16,900 | | | | 298,454 | |
Insight Enterprises, Inc. * | | | 4,650 | | | | 70,308 | |
Intellicheck Mobilisa, Inc. * | | | 500 | | | | 610 | |
InterDigital, Inc. * | | | 4,500 | | | | 151,065 | |
Intermec, Inc. * | | | 5,600 | | | | 65,240 | |
Itron, Inc. * | | | 4,500 | | | | 273,465 | |
Ixia * | | | 8,200 | | | | 128,330 | |
| Jabil Circuit, Inc. | | | 22,400 | | | | 343,616 | |
JDS Uniphase Corp. * | | | 23,053 | | | | 242,287 | |
Juniper Networks, Inc. * | | | 60,565 | | | | 1,961,700 | |
| Keithley Instruments, Inc. | | | 6,700 | | | | 144,586 | |
L-1 Identity Solutions, Inc. * | | | 9,256 | | | | 109,128 | |
LaserCard Corp. * | | | 4,500 | | | | 19,665 | |
LeCroy Corp. * | | | 2,400 | | | | 22,440 | |
Lexmark International, Inc., Class A * | | | 10,900 | | | | 414,527 | |
LightPath Technologies, Inc., Class A * | | | 75 | | | | 209 | |
Littelfuse, Inc. * | | | 2,000 | | | | 84,860 | |
Maxwell Technologies, Inc. * | | | 4,500 | | | | 72,990 | |
Measurement Specialties, Inc. * | | | 3,200 | | | | 71,488 | |
Mercury Computer Systems, Inc. * | | | 3,600 | | | | 57,024 | |
| Methode Electronics, Inc. | | | 6,600 | | | | 61,314 | |
| MOCON, Inc. | | | 600 | | | | 8,100 | |
| Molex, Inc. | | | 16,125 | | | | 327,338 | |
Motorola, Inc. * | | | 220,955 | | | | 1,800,783 | |
| MTS Systems Corp. | | | 4,500 | | | | 147,465 | |
Multi-Fineline Electronix, Inc. * | | | 2,500 | | | | 61,200 | |
| National Instruments Corp. | | | 5,675 | | | | 197,433 | |
NCR Corp. * | | | 23,800 | | | | 326,536 | |
NetApp, Inc. * | | | 36,500 | | | | 1,943,625 | |
Netezza Corp. * | | | 5,500 | | | | 148,280 | |
NETGEAR, Inc. * | | | 3,000 | | | | 92,430 | |
Network Equipment Technologies, Inc. * | | | 8,500 | | | | 26,860 | |
Newport Corp. * | | | 4,200 | | | | 61,026 | |
Oplink Communications, Inc. * | | | 4,157 | | | | 72,664 | |
OSI Systems, Inc. * | | | 3,700 | | | | 133,200 | |
| Park Electrochemical Corp. | | | 3,600 | | | | 97,200 | |
ParkerVision, Inc. * | | | 400 | | | | 180 | |
PC Connection, Inc. * | | | 7,000 | | | | 58,940 | |
PC-Tel, Inc. * | | | 8,900 | | | | 52,688 | |
Performance Technologies, Inc. * | | | 1,600 | | | | 3,232 | |
| Plantronics, Inc. | | | 4,000 | | | | 143,520 | |
Plexus Corp. * | | | 3,700 | | | | 112,295 | |
Polycom, Inc. * | | | 9,200 | | | | 310,776 | |
Power-One, Inc. (d)* | | | 9,500 | | | | 98,895 | |
Presstek, Inc. * | | | 5,100 | | | | 9,435 | |
QLogic Corp. * | | | 17,044 | | | | 299,463 | |
| QUALCOMM, Inc. | | | 182,600 | | | | 8,240,738 | |
RadiSys Corp. * | | | 7,200 | | | | 70,344 | |
Research Frontiers, Inc. (d)* | | | 2,800 | | | | 11,480 | |
| Richardson Electronics Ltd. | | | 4,800 | | | | 51,936 | |
Riverbed Technology, Inc. * | | | 5,500 | | | | 316,470 | |
Rofin-Sinar Technologies, Inc. * | | | 3,800 | | | | 106,134 | |
Rogers Corp. * | | | 2,500 | | | | 89,000 | |
SanDisk Corp. * | | | 28,000 | | | | 1,052,240 | |
Sanmina-SCI Corp. * | | | 8,500 | | | | 112,030 | |
ScanSource, Inc. * | | | 3,200 | | | | 95,808 | |
See financial notes 47
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
SeaChange International, Inc. * | | | 6,350 | | | | 51,054 | |
Seagate Technology * | | | 52,066 | | | | 762,767 | |
Sonus Networks, Inc. * | | | 19,400 | | | | 60,334 | |
STEC, Inc. (d)* | | | 3,500 | | | | 54,600 | |
Stratasys, Inc. * | | | 2,700 | | | | 84,564 | |
| Sycamore Networks, Inc. | | | 2,790 | | | | 85,067 | |
Symmetricom, Inc. * | | | 8,450 | | | | 52,644 | |
Synaptics, Inc. (d)* | | | 5,250 | | | | 141,383 | |
Tech Data Corp. * | | | 5,300 | | | | 227,847 | |
| Technitrol, Inc. | | | 7,500 | | | | 34,500 | |
Tekelec * | | | 8,700 | | | | 113,274 | |
| Tellabs, Inc. | | | 38,064 | | | | 259,597 | |
| TESSCO Technologies, Inc. | | | 4,025 | | | | 60,778 | |
Tollgrade Communications, Inc. * | | | 4,600 | | | | 36,570 | |
TransAct Technologies, Inc. * | | | 1,000 | | | | 7,910 | |
Trimble Navigation Ltd. * | | | 11,792 | | | | 422,625 | |
TTM Technologies, Inc. * | | | 7,900 | | | | 82,792 | |
| Tyco Electronics Ltd. | | | 34,000 | | | | 1,077,120 | |
UTStarcom, Inc. * | | | 16,000 | | | | 32,320 | |
ViaSat, Inc. * | | | 3,500 | | | | 144,095 | |
Vishay Intertechnology, Inc. * | | | 36,688 | | | | 414,574 | |
Vishay Precision Group, Inc. * | | | 2,620 | | | | 44,540 | |
Western Digital Corp. * | | | 23,200 | | | | 742,864 | |
| Xerox Corp. | | | 152,056 | | | | 1,779,055 | |
Xybernaut Corp. (a),(c)* | | | 1,400 | | | | — | |
Zebra Technologies Corp., Class A * | | | 6,375 | | | | 228,098 | |
Zygo Corp. * | | | 7,000 | | | | 74,900 | |
| | | | | | | | | |
| | | | | | | | 104,952,258 | |
| |
Telecommunication Services 2.8%
|
AboveNet, Inc. * | | | 3,000 | | | | 170,670 | |
| Alaska Communication Systems Group, Inc. | | | 5,000 | | | | 50,150 | |
American Tower Corp., Class A * | | | 43,300 | | | | 2,234,713 | |
| AT&T, Inc. | | | 654,556 | | | | 18,654,846 | |
| Atlantic Tele-Network, Inc. | | | 3,250 | | | | 137,345 | |
| CenturyLink, Inc. | | | 25,359 | | | | 1,049,355 | |
Cincinnati Bell, Inc. * | | | 22,268 | | | | 54,557 | |
Clearwire Corp., Class A (d)* | | | 23,100 | | | | 163,779 | |
Cogent Communications Group, Inc. * | | | 3,900 | | | | 42,315 | |
| Consolidated Communications Holdings, Inc. | | | 2,622 | | | | 48,559 | |
Crown Castle International Corp. * | | | 27,776 | | | | 1,197,701 | |
| Frontier Communications Corp. | | | 109,868 | | | | 964,641 | |
General Communication, Inc., Class A * | | | 10,500 | | | | 109,725 | |
Global Crossing Ltd. * | | | 4,600 | | | | 62,560 | |
| HickoryTech Corp. | | | 4,600 | | | | 41,860 | |
Leap Wireless International, Inc. * | | | 5,700 | | | | 65,037 | |
Level 3 Communications, Inc. * | | | 168,000 | | | | 162,574 | |
MetroPCS Communications, Inc. * | | | 33,000 | | | | 343,530 | |
NII Holdings, Inc. * | | | 17,400 | | | | 727,494 | |
| NTELOS Holdings Corp. | | | 3,000 | | | | 54,510 | |
PAETEC Holding Corp. * | | | 8,500 | | | | 35,870 | |
Premiere Global Services, Inc. * | | | 5,100 | | | | 34,833 | |
| Qwest Communications International, Inc. | | | 151,337 | | | | 998,824 | |
SBA Communications Corp., Class A * | | | 12,800 | | | | 502,528 | |
| Shenandoah Telecommunications Co. | | | 2,500 | | | | 45,625 | |
Sprint Nextel Corp. * | | | 301,530 | | | | 1,242,304 | |
SureWest Communications * | | | 5,500 | | | | 44,000 | |
Syniverse Holdings, Inc. * | | | 10,400 | | | | 317,096 | |
| Telephone & Data Systems, Inc. | | | 10,600 | | | | 369,198 | |
tw telecom, Inc. * | | | 17,000 | | | | 312,800 | |
United States Cellular Corp. * | | | 9,100 | | | | 422,786 | |
| USA Mobility, Inc. | | | 5,500 | | | | 92,565 | |
| Verizon Communications, Inc. | | | 314,072 | | | | 10,197,918 | |
| Warwick Valley Telephone Co. | | | 1,100 | | | | 15,730 | |
| Windstream Corp. | | | 51,709 | | | | 654,636 | |
| | | | | | | | | |
| | | | | | | | 41,622,634 | |
| |
Transportation 2.0%
|
AirTran Holdings, Inc. * | | | 14,300 | | | | 105,820 | |
Alaska Air Group, Inc. * | | | 4,400 | | | | 232,320 | |
| Alexander & Baldwin, Inc. | | | 3,400 | | | | 117,062 | |
AMERCO * | | | 3,900 | | | | 321,048 | |
AMR Corp. * | | | 35,700 | | | | 281,316 | |
| Arkansas Best Corp. | | | 1,100 | | | | 27,863 | |
Atlas Air Worldwide Holdings, Inc. * | | | 3,000 | | | | 156,780 | |
| C.H. Robinson Worldwide, Inc. | | | 15,000 | | | | 1,057,200 | |
| Con-way, Inc. | | | 4,500 | | | | 148,545 | |
Covenant Transport Group, Inc., Class A * | | | 3,000 | | | | 21,960 | |
| CSX Corp. | | | 42,700 | | | | 2,623,915 | |
Delta Air Lines, Inc. * | | | 85,000 | | | | 1,180,650 | |
Dollar Thrifty Automotive Group, Inc. * | | | 3,500 | | | | 162,400 | |
| Expeditors International of Washington, Inc. | | | 21,200 | | | | 1,046,432 | |
| FedEx Corp. | | | 31,063 | | | | 2,724,846 | |
| Forward Air Corp. | | | 2,600 | | | | 69,888 | |
Genco Shipping & Trading Ltd. * | | | 5,500 | | | | 91,025 | |
Genesee & Wyoming, Inc., Class A * | | | 3,000 | | | | 138,690 | |
| Heartland Express, Inc. | | | 8,941 | | | | 133,310 | |
Hertz Global Holdings, Inc. * | | | 37,000 | | | | 418,840 | |
| Horizon Lines, Inc., Class A | | | 5,200 | | | | 22,412 | |
Hub Group, Inc., Class A * | | | 4,400 | | | | 142,868 | |
| J.B. Hunt Transport Services, Inc. | | | 13,000 | | | | 467,480 | |
JetBlue Airways Corp. * | | | 23,462 | | | | 163,765 | |
Kansas City Southern * | | | 10,550 | | | | 462,301 | |
Kirby Corp. * | | | 5,600 | | | | 240,744 | |
| Knight Transportation, Inc. | | | 9,050 | | | | 161,724 | |
| Landstar System, Inc. | | | 15,200 | | | | 571,824 | |
MAIR Holdings, Inc. (a),(c)* | | | 1,100 | | | | 3,300 | |
| Norfolk Southern Corp. | | | 40,000 | | | | 2,459,600 | |
Old Dominion Freight Line, Inc. * | | | 6,075 | | | | 170,404 | |
Pacer International, Inc. * | | | 2,800 | | | | 15,596 | |
Park-Ohio Holdings Corp. * | | | 2,600 | | | | 41,314 | |
Pinnacle Airlines Corp. * | | | 7,500 | | | | 43,200 | |
Republic Airways Holdings, Inc. * | | | 7,500 | | | | 69,675 | |
| Ryder System, Inc. | | | 6,400 | | | | 280,000 | |
Saia, Inc. * | | | 6,100 | | | | 88,328 | |
| SkyWest, Inc. | | | 7,000 | | | | 106,120 | |
| Southwest Airlines Co. | | | 85,125 | | | | 1,171,320 | |
| Union Pacific Corp. | | | 54,000 | | | | 4,734,720 | |
United Continental Holdings, Inc. * | | | 30,900 | | | | 897,336 | |
48 See financial notes
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| United Parcel Service, Inc., Class B | | | 82,380 | | | | 5,547,469 | |
US Airways Group, Inc. * | | | 17,400 | | | | 205,146 | |
| UTI Worldwide, Inc. | | | 9,300 | | | | 178,746 | |
| Werner Enterprises, Inc. | | | 5,832 | | | | 124,338 | |
| | | | | | | | | |
| | | | | | | | 29,429,640 | |
| |
Utilities 3.6%
|
| AGL Resources, Inc. | | | 9,800 | | | | 384,748 | |
| Allegheny Energy, Inc. | | | 17,900 | | | | 415,280 | |
| ALLETE, Inc. | | | 5,233 | | | | 190,377 | |
| Alliant Energy Corp. | | | 11,800 | | | | 431,054 | |
| Ameren Corp. | | | 26,100 | | | | 756,378 | |
| American Electric Power Co., Inc. | | | 49,520 | | | | 1,854,029 | |
| American States Water Co. | | | 2,000 | | | | 74,700 | |
| American Water Works Co., Inc. | | | 19,200 | | | | 458,496 | |
| Aqua America, Inc. | | | 15,094 | | | | 324,974 | |
| Atmos Energy Corp. | | | 9,200 | | | | 270,940 | |
| Avista Corp. | | | 7,800 | | | | 170,352 | |
| Black Hills Corp. | | | 3,900 | | | | 124,176 | |
| California Water Service Group | | | 3,000 | | | | 112,020 | |
Calpine Corp. * | | | 39,900 | | | | 498,750 | |
| CenterPoint Energy, Inc. | | | 40,100 | | | | 664,056 | |
| Central Vermont Public Service Corp. | | | 6,200 | | | | 125,364 | |
| CH Energy Group, Inc. | | | 1,900 | | | | 86,355 | |
| Chesapeake Utilities Corp. | | | 647 | | | | 23,738 | |
| Cleco Corp. | | | 6,400 | | | | 200,128 | |
| CMS Energy Corp. | | | 23,900 | | | | 439,282 | |
| Consolidated Edison, Inc. | | | 28,400 | | | | 1,412,048 | |
| Constellation Energy Group, Inc. | | | 19,500 | | | | 589,680 | |
| Dominion Resources, Inc. | | | 65,580 | | | | 2,850,107 | |
| DPL, Inc. | | | 14,452 | | | | 377,197 | |
| DTE Energy Co. | | | 17,301 | | | | 808,995 | |
| Duke Energy Corp. | | | 138,056 | | | | 2,514,000 | |
Dynegy, Inc. * | | | 15,416 | | | | 71,530 | |
| Edison International | | | 37,710 | | | | 1,391,499 | |
El Paso Electric Co. * | | | 5,300 | | | | 130,380 | |
| Energen Corp. | | | 8,200 | | | | 366,048 | |
| Entergy Corp. | | | 21,700 | | | | 1,617,301 | |
| Exelon Corp. | | | 74,474 | | | | 3,040,029 | |
| FirstEnergy Corp. | | | 31,717 | | | | 1,151,961 | |
| Great Plains Energy, Inc. | | | 14,341 | | | | 272,909 | |
| Hawaiian Electric Industries, Inc. | | | 10,700 | | | | 241,178 | |
| IDACORP, Inc. | | | 4,200 | | | | 154,560 | |
| Integrys Energy Group, Inc. | | | 7,540 | | | | 401,053 | |
| ITC Holdings Corp. | | | 5,000 | | | | 313,050 | |
| MDU Resources Group, Inc. | | | 19,425 | | | | 387,140 | |
| MGE Energy, Inc. | | | 2,000 | | | | 81,100 | |
| Middlesex Water Co. | | | 3,000 | | | | 53,580 | |
Mirant Corp. * | | | 17,700 | | | | 187,797 | |
| National Fuel Gas Co. | | | 8,800 | | | | 485,584 | |
| New Jersey Resources Corp. | | | 6,225 | | | | 252,050 | |
| NextEra Energy, Inc. | | | 41,900 | | | | 2,306,176 | |
| Nicor, Inc. | | | 6,000 | | | | 285,780 | |
| NiSource, Inc. | | | 36,864 | | | | 638,116 | |
| Northeast Utilities | | | 20,124 | | | | 629,479 | |
| Northwest Natural Gas Co. | | | 5,700 | | | | 280,953 | |
| NorthWestern Corp. | | | 7,100 | | | | 211,367 | |
NRG Energy, Inc. * | | | 27,600 | | | | 549,516 | |
| NSTAR | | | 10,734 | | | | 447,715 | |
| NV Energy, Inc. | | | 24,976 | | | | 341,172 | |
| OGE Energy Corp. | | | 9,500 | | | | 419,520 | |
| ONEOK, Inc. | | | 12,900 | | | | 642,678 | |
| Ormat Technologies, Inc. | | | 2,800 | | | | 79,828 | |
| Otter Tail Corp. | | | 4,100 | | | | 84,132 | |
| Pepco Holdings, Inc. | | | 23,300 | | | | 448,758 | |
| PG&E Corp. | | | 38,000 | | | | 1,817,160 | |
| Piedmont Natural Gas Co., Inc. | | | 6,300 | | | | 185,787 | |
| Pinnacle West Capital Corp. | | | 17,800 | | | | 732,648 | |
| PNM Resources, Inc. | | | 8,500 | | | | 100,215 | |
| Portland General Electric Co. | | | 8,200 | | | | 171,380 | |
| PPL Corp. | | | 52,700 | | | | 1,417,630 | |
| Progress Energy, Inc. | | | 31,959 | | | | 1,438,155 | |
| Public Service Enterprise Group, Inc. | | | 52,800 | | | | 1,708,080 | |
| Questar Corp. | | | 19,200 | | | | 325,824 | |
RRI Energy, Inc. * | | | 36,125 | | | | 135,830 | |
| SCANA Corp. | | | 12,405 | | | | 506,620 | |
| Sempra Energy | | | 24,675 | | | | 1,319,619 | |
| South Jersey Industries, Inc. | | | 2,500 | | | | 125,900 | |
| Southern Co. | | | 90,100 | | | | 3,412,087 | |
| Southwest Gas Corp. | | | 11,600 | | | | 403,216 | |
| TECO Energy, Inc. | | | 26,700 | | | | 469,653 | |
The AES Corp. * | | | 87,396 | | | | 1,043,508 | |
| The Empire District Electric Co. | | | 3,500 | | | | 73,640 | |
| The Laclede Group, Inc. | | | 3,300 | | | | 115,863 | |
| UGI Corp. | | | 10,700 | | | | 321,963 | |
| UIL Holdings Corp. | | | 3,166 | | | | 91,687 | |
| Unisource Energy Corp. | | | 3,800 | | | | 133,266 | |
| Unitil Corp. | | | 600 | | | | 13,032 | |
| Vectren Corp. | | | 8,766 | | | | 240,013 | |
| Westar Energy, Inc. | | | 11,700 | | | | 296,010 | |
| WGL Holdings, Inc. | | | 6,000 | | | | 231,300 | |
| Wisconsin Energy Corp. | | | 11,400 | | | | 678,756 | |
| Xcel Energy, Inc. | | | 50,395 | | | | 1,202,425 | |
| | | | | | | | | |
| | | | | | | | 52,832,430 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $1,225,735,417) | | | 1,455,937,584 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Rights 0.0% of net assets |
| |
Banks 0.0%
|
Pacific Capital Bancorp (a),(c)* | | | 104,952 | | | | 46,179 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 0.0%
|
Indevus Pharmaceuticals, Inc. (a),(c)* | | | 1,800 | | | | — | |
| | | | | | | | | |
| Total Rights |
| (Cost $—) | | | 46,179 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
See financial notes 49
Schwab Total Stock Market Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Dates | | ($) | | ($) |
| |
Short-Term Investments 0.8% of net assets |
| |
Time Deposit 0.7%
|
| HSBC Bank USA |
0.03% 11/01/10 | | | 10,421,774 | | | | 10,421,774 | |
| |
U.S. Treasury Obligation 0.1%
|
| U.S. Treasury Bill |
0.14% 12/16/10 (e) | | | 1,323,000 | | | | 1,322,777 | |
| | | | | | | | | |
| Total Short-Term Investments |
| (Cost $11,744,551) | | | 11,744,551 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Collateral Invested for Securities on Loan 0.4% of net assets |
| | | | | | | | | |
| | | | | | | | | |
| Invesco Short Term Investments Trust Government & Agency Portfolio | | | 6,043,310 | | | | 6,043,310 | |
| | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $6,043,310) | | | 6,043,310 | |
| | | | | |
| |
|
End of collateral invested for securities on loan. |
At 10/31/10 tax basis cost of the fund’s investments was $1,244,457,327 and the unrealized appreciation and depreciation were $412,059,292 and ($188,788,305), respectively, with a net unrealized appreciation of $223,270,987.
| | |
| * | | Non-income producing security. |
| (a) | | Fair-valued by Management in accordance with procedures approved by the Board of Trustees. |
| (b) | | Issuer is affiliated with the fund’s adviser. |
| (c) | | Illiquid security. At the period end, the value of these amounted to $49,479 or 0.0% of net assets. |
| (d) | | All or a portion of this security is on loan. |
| (e) | | All or a portion of this security is held as collateral for open futures contracts. |
| | | |
| REIT — | | Real Estate Investment Trust |
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contracts |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Russell 2000 Index, mini, Long, expires 12/17/10 | | | 85 | | | | 5,968,700 | | | | 593,959 | |
S&P 500 Index, e-mini, Long, expires 12/17/10 | | | 85 | | | | 5,013,725 | | | | 362,334 | |
| | | | | | | | | | | | | |
| | | | 956,293 | |
| | | | | |
50 See financial notes
Schwab International Index Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .1% | | Common Stock | | | 1,065,367,784 | | | | 1,457,582,563 | |
| | 0 | .2% | | Preferred Stock | | | 2,548,296 | | | | 3,013,548 | |
| | 0 | .0% | | Rights | | | 217,571 | | | | 494,689 | |
| | 0 | .0% | | Warrants | | | 13,912 | | | | 1,023 | |
| | 0 | .4% | | Other Investment Company | | | 5,742,130 | | | | 5,701,000 | |
| |
| |
| | 99 | .7% | | Total Investments | | | 1,073,889,693 | | | | 1,466,792,823 | |
| | 0 | .5% | | Collateral Invested for Securities on Loan | | | 8,024,266 | | | | 8,024,266 | |
| | (0 | .2)% | | Other Assets and Liabilities, Net | | | | | | | (4,162,140 | ) |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 1,470,654,949 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 99.1% of net assets |
| |
Australia 7.3%
|
| | | | | | | | | |
| |
| Banks 2.7% |
| Australia & New Zealand Banking Group Ltd. | | | 405,912 | | | | 9,902,927 | |
| Commonwealth Bank of Australia | | | 244,428 | | | | 11,750,448 | |
| National Australia Bank Ltd. | | | 338,583 | | | | 8,474,182 | |
| Westpac Banking Corp. | | | 476,406 | | | | 10,608,112 | |
| | | | | | | | | |
| | | | | | | | 40,735,669 | |
| | | | | | | | | |
| |
| Diversified Financials 0.1% |
| Macquarie Group Ltd. | | | 53,287 | | | | 1,894,632 | |
| | | | | | | | | |
| |
| Energy 0.4% |
| Origin Energy Ltd. | | | 137,296 | | | | 2,149,411 | |
| Woodside Petroleum Ltd. | | | 80,731 | | | | 3,452,308 | |
| | | | | | | | | |
| | | | | | | | 5,601,719 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.8% |
| Wesfarmers Ltd. | | | 182,395 | | | | 5,934,529 | |
| Woolworths Ltd. | | | 198,156 | | | | 5,500,996 | |
| | | | | | | | | |
| | | | | | | | 11,435,525 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| Foster’s Group Ltd. | | | 304,146 | | | | 1,743,811 | |
| | | | | | | | | |
| |
| Insurance 0.3% |
| QBE Insurance Group Ltd. | | | 163,410 | | | | 2,748,655 | |
| Suncorp-Metway Ltd. | | | 198,080 | | | | 1,788,179 | |
| | | | | | | | | |
| | | | | | | | 4,536,834 | |
| | | | | | | | | |
| |
| Materials 2.3% |
| BHP Billiton Ltd. | | | 529,706 | | | | 21,888,121 | |
Fortescue Metals Group Ltd. * | | | 178,746 | | | | 1,099,090 | |
| Newcrest Mining Ltd. | | | 120,481 | | | | 4,741,389 | |
| Rio Tinto Ltd. | | | 70,508 | | | | 5,738,107 | |
| | | | | | | | | |
| | | | | | | | 33,466,707 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
| CSL Ltd. | | | 88,346 | | | | 2,849,078 | |
| | | | | | | | | |
| |
| Real Estate 0.3% |
| Westfield Group | | | 341,822 | | | | 4,157,370 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Telstra Corp., Ltd. | | | 350,763 | | | | 919,179 | |
| | | | | | | | | |
| | | | | | | | 107,340,524 | |
| |
Austria 0.2%
|
| | | | | | | | | |
| |
| Banks 0.1% |
| Erste Group Bank AG | | | 36,594 | | | | 1,653,369 | |
| | | | | | | | | |
| |
| Energy 0.1% |
| OMV AG | | | 23,936 | | | | 895,241 | |
| | | | | | | | | |
| |
| Utilities 0.0% |
Verbund AG (b) | | | 11,898 | | | | 475,964 | |
| | | | | | | | | |
| | | | | | | | 3,024,574 | |
| |
Belgium 0.7%
|
| | | | | | | | | |
| |
| Banks 0.1% |
KBC GROEP N.V. * | | | 31,902 | | | | 1,389,150 | |
| | | | | | | | | |
| |
| Diversified Financials 0.1% |
| Groupe Bruxelles Lambert S.A. | | | 12,176 | | | | 1,078,635 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.4% |
| Anheuser-Busch InBev N.V. | | | 119,225 | | | | 7,487,756 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Belgacom S.A. | | | 25,283 | | | | 992,799 | |
| | | | | | | | | |
| | | | | | | | 10,948,340 | |
| |
Canada 9.4%
|
| | | | | | | | | |
| |
| Banks 2.8% |
| Bank of Montreal | | | 88,575 | | | | 5,230,780 | |
| Bank of Nova Scotia | | | 164,804 | | | | 8,834,037 | |
Canadian Imperial Bank of Commerce (b) | | | 62,310 | | | | 4,779,401 | |
| Royal Bank of Canada | | | 224,668 | | | | 11,981,265 | |
| The Toronto-Dominion Bank | | | 138,132 | | | | 9,947,834 | |
| | | | | | | | | |
| | | | | | | | 40,773,317 | |
| | | | | | | | | |
| |
| Energy 2.6% |
| Cameco Corp. | | | 63,109 | | | | 1,952,239 | |
| Canadian Natural Resources Ltd. | | | 173,876 | | | | 6,330,048 | |
| Canadian Oil Sands Trust | | | 37,447 | | | | 938,470 | |
| Cenovus Energy, Inc. | | | 118,700 | | | | 3,302,977 | |
| Enbridge, Inc. | | | 58,680 | | | | 3,245,552 | |
| Encana Corp. | | | 115,562 | | | | 3,264,380 | |
| Husky Energy, Inc. | | | 36,410 | | | | 903,913 | |
| Imperial Oil Ltd. | | | 41,159 | | | | 1,582,759 | |
| Nexen, Inc. | | | 79,674 | | | | 1,695,192 | |
| Suncor Energy, Inc. | | | 248,999 | | | | 7,978,515 | |
| Talisman Energy, Inc. | | | 156,442 | | | | 2,836,173 | |
See financial notes 51
Schwab International Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| TransCanada Corp. | | | 108,582 | | | | 4,010,475 | |
| | | | | | | | | |
| | | | | | | | 38,040,693 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.0% |
| Loblaw Cos., Ltd. | | | 15,800 | | | | 675,129 | |
| | | | | | | | | |
| |
| Insurance 0.6% |
Great-West Lifeco, Inc. (b) | | | 41,000 | | | | 1,070,929 | |
| Manulife Financial Corp. | | | 273,997 | | | | 3,468,282 | |
| Power Corp. of Canada | | | 50,603 | | | | 1,412,061 | |
| Power Financial Corp. | | | 36,366 | | | | 1,095,009 | |
| Sun Life Financial, Inc. | | | 87,057 | | | | 2,463,443 | |
| | | | | | | | | |
| | | | | | | | 9,509,724 | |
| | | | | | | | | |
| |
| Materials 2.1% |
| Agnico-Eagle Mines Ltd. | | | 25,140 | | | | 1,949,774 | |
| Agrium, Inc. | | | 24,800 | | | | 2,193,799 | |
| Barrick Gold Corp. | | | 156,421 | | | | 7,533,483 | |
| Goldcorp, Inc. | | | 117,251 | | | | 5,235,426 | |
Ivanhoe Mines Ltd. * | | | 38,600 | | | | 924,220 | |
| Kinross Gold Corp. | | | 170,891 | | | | 3,074,664 | |
| Potash Corp. of Saskatchewan, Inc. | | | 46,980 | | | | 6,794,343 | |
| Teck Resources Ltd., Class B | | | 75,200 | | | | 3,362,212 | |
| | | | | | | | | |
| | | | | | | | 31,067,921 | |
| | | | | | | | | |
| |
| Media 0.2% |
| Thomson Reuters Corp. | | | 59,900 | | | | 2,287,582 | |
| | | | | | | | | |
| |
| Real Estate 0.2% |
| Brookfield Asset Management, Inc., Class A | | | 76,329 | | | | 2,266,146 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.3% |
Research In Motion Ltd. * | | | 73,648 | | | | 4,188,960 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.3% |
| BCE, Inc. | | | 39,549 | | | | 1,326,572 | |
Rogers Communications, Inc., Class B (b) | | | 75,678 | | | | 2,757,324 | |
| | | | | | | | | |
| | | | | | | | 4,083,896 | |
| | | | | | | | | |
| |
| Transportation 0.3% |
| Canadian National Railway Co. | | | 75,278 | | | | 4,875,836 | |
| | | | | | | | | |
| | | | | | | | 137,769,204 | |
| |
China 0.2%
|
| | | | | | | | | |
| |
| Household & Personal Products 0.1% |
| Hengan International Group Co., Ltd. | | | 122,000 | | | | 1,150,276 | |
| | | | | | | | | |
| |
| Retailing 0.1% |
| Belle International Holdings Ltd. | | | 696,000 | | | | 1,260,635 | |
| | | | | | | | | |
| | | | | | | | 2,410,911 | |
| |
Denmark 0.8%
|
| | | | | | | | | |
| |
| Banks 0.2% |
Danske Bank A/S * | | | 85,665 | | | | 2,275,582 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| Carlsberg A/S, Class B | | | 16,473 | | | | 1,800,999 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.4% |
| Novo Nordisk A/S, Class B | | | 53,846 | | | | 5,653,929 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| AP Moller - Maersk A/S, Series A | | | 85 | | | | 714,423 | |
| AP Moller - Maersk A/S, Series B | | | 168 | | | | 1,457,805 | |
| | | | | | | | | |
| | | | | | | | 2,172,228 | |
| | | | | | | | | |
| | | | | | | | 11,902,738 | |
| |
Finland 0.8%
|
| | | | | | | | | |
| |
| Capital Goods 0.1% |
| Kone Oyj, Class B | | | 32,328 | | | | 1,732,034 | |
| | | | | | | | | |
| |
| Insurance 0.2% |
| Sampo Oyj, Class A | | | 72,768 | | | | 2,037,684 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.4% |
| Nokia Corp. | | | 598,961 | | | | 6,432,469 | |
| | | | | | | | | |
| |
| Utilities 0.1% |
| Fortum Oyj | | | 68,837 | | | | 1,952,351 | |
| | | | | | | | | |
| | | | | | | | 12,154,538 | |
| |
France 10.4%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.2% |
| Cie Generale des Etablissements Michelin, Class B | | | 24,141 | | | | 1,928,910 | |
Renault S.A. * | | | 31,415 | | | | 1,753,790 | |
| | | | | | | | | |
| | | | | | | | 3,682,700 | |
| | | | | | | | | |
| |
| Banks 1.6% |
| BNP Paribas | | | 168,686 | | | | 12,338,614 | |
| Credit Agricole S.A. | | | 168,718 | | | | 2,767,077 | |
Natixis * | | | 134,252 | | | | 824,710 | |
| Societe Generale | | | 118,741 | | | | 7,120,249 | |
| | | | | | | | | |
| | | | | | | | 23,050,650 | |
| | | | | | | | | |
| |
| Capital Goods 1.4% |
| Alstom S.A. | | | 31,808 | | | | 1,606,361 | |
| Areva S.A. | | | 720 | | | | 329,912 | |
| Bouygues S.A. | | | 35,016 | | | | 1,548,695 | |
| Compagnie de Saint-Gobain | | | 69,118 | | | | 3,247,319 | |
| Safran S.A. | | | 32,911 | | | | 1,044,108 | |
| Schneider Electric S.A. | | | 42,444 | | | | 6,030,480 | |
| Vallourec S.A. | | | 16,512 | | | | 1,716,818 | |
| Vinci S.A. | | | 85,628 | | | | 4,591,479 | |
| | | | | | | | | |
| | | | | | | | 20,115,172 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.7% |
| Christian Dior S.A. | | | 8,936 | | | | 1,293,170 | |
| Hermes International | | | 11,517 | | | | 2,446,259 | |
| LVMH Moet Hennessy Louis Vuitton S.A. | | | 41,214 | | | | 6,466,143 | |
| | | | | | | | | |
| | | | | | | | 10,205,572 | |
| | | | | | | | | |
| |
| Energy 1.4% |
| Total S.A. | | | 370,663 | | | | 20,176,637 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.4% |
| Carrefour S.A. | | | 95,694 | | | | 5,181,186 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.6% |
| DANONE S.A. | | | 102,914 | | | | 6,525,290 | |
| Pernod Ricard S.A. | | | 26,749 | | | | 2,377,576 | |
| | | | | | | | | |
| | | | | | | | 8,902,866 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| Essilor International S.A. | | | 33,033 | | | | 2,207,679 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.3% |
| L’Oreal S.A. | | | 38,849 | | | | 4,563,333 | |
52 See financial notes
Schwab International Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| | | | | | | | | |
| |
| Insurance 0.4% |
| AXA S.A. | | | 290,096 | | | | 5,290,456 | |
| CNP Assurances | | | 18,752 | | | | 374,730 | |
| | | | | | | | | |
| | | | | | | | 5,665,186 | |
| | | | | | | | | |
| |
| Materials 0.5% |
| Air Liquide S.A. | | | 45,119 | | | | 5,841,810 | |
| Lafarge S.A. | | | 28,029 | | | | 1,602,849 | |
| | | | | | | | | |
| | | | | | | | 7,444,659 | |
| | | | | | | | | |
| |
| Media 0.4% |
| Vivendi | | | 194,034 | | | | 5,544,522 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.8% |
| Sanofi-Aventis | | | 172,031 | | | | 12,052,762 | |
| | | | | | | | | |
| |
| Real Estate 0.2% |
| Unibail-Rodamco SE | | | 14,287 | | | | 2,980,929 | |
| | | | | | | | | |
| |
| Retailing 0.1% |
| PPR | | | 11,455 | | | | 1,884,034 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.5% |
| France Telecom S.A. | | | 307,725 | | | | 7,383,283 | |
| | | | | | | | | |
| |
| Utilities 0.8% |
| EDF S.A. | | | 44,728 | | | | 2,051,971 | |
| GDF Suez | | | 192,011 | | | | 7,672,172 | |
| Veolia Environnement | | | 79,396 | | | | 2,334,753 | |
| | | | | | | | | |
| | | | | | | | 12,058,896 | |
| | | | | | | | | |
| | | | | | | | 153,100,066 | |
| |
Germany 8.3%
|
| | | | | | | | | |
| |
| Automobiles & Components 1.0% |
| Bayerische Motoren Werke AG | | | 50,462 | | | | 3,616,711 | |
Continental AG * | | | 7,851 | | | | 681,632 | |
Daimler AG - Reg’d * | | | 141,411 | | | | 9,312,478 | |
| Volkswagen AG | | | 5,065 | | | | 664,003 | |
| | | | | | | | | |
| | | | | | | | 14,274,824 | |
| | | | | | | | | |
| |
| Capital Goods 1.1% |
| MAN SE | | | 16,017 | | | | 1,759,336 | |
| Siemens AG - Reg’d | | | 128,695 | | | | 14,686,001 | |
| | | | | | | | | |
| | | | | | | | 16,445,337 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.2% |
| Adidas AG | | | 31,986 | | | | 2,083,305 | |
| | | | | | | | | |
| |
| Diversified Financials 0.7% |
| Deutsche Bank AG - Reg’d | | | 147,521 | | | | 8,498,033 | |
| Deutsche Boerse AG | | | 29,888 | | | | 2,102,572 | |
| | | | | | | | | |
| | | | | | | | 10,600,605 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.1% |
| Metro AG | | | 20,225 | | | | 1,417,280 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| Fresenius Medical Care AG & Co. KGaA | | | 29,500 | | | | 1,877,468 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.1% |
| Beiersdorf AG | | | 16,031 | | | | 1,044,422 | |
| Henkel AG & Co. KGaA | | | 19,449 | | | | 963,821 | |
| | | | | | | | | |
| | | | | | | | 2,008,243 | |
| | | | | | | | | |
| |
| Insurance 0.9% |
| Allianz SE - Reg’d | | | 72,345 | | | | 9,059,553 | |
| Muenchener Rueckversicherungs-Gesellschaft AG - Reg’d | | | 29,539 | | | | 4,616,939 | |
| | | | | | | | | |
| | | | | | | | 13,676,492 | |
| | | | | | | | | |
| |
| Materials 1.2% |
| BASF SE | | | 145,851 | | | | 10,605,034 | |
| K&S AG | | | 22,567 | | | | 1,569,968 | |
| Linde AG | | | 26,142 | | | | 3,761,136 | |
| ThyssenKrupp AG | | | 50,861 | | | | 1,871,241 | |
| | | | | | | | | |
| | | | | | | | 17,807,379 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.7% |
| Bayer AG | | | 131,729 | | | | 9,825,268 | |
| Merck KGaA | | | 10,200 | | | | 849,235 | |
| | | | | | | | | |
| | | | | | | | 10,674,503 | |
| | | | | | | | | |
| |
| Software & Services 0.5% |
| SAP AG | | | 138,629 | | | | 7,222,412 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.5% |
| Deutsche Telekom AG - Reg’d | | | 469,844 | | | | 6,806,317 | |
| | | | | | | | | |
| |
| Transportation 0.2% |
| Deutsche Post AG - Reg’d | | | 135,202 | | | | 2,520,220 | |
| | | | | | | | | |
| |
| Utilities 1.0% |
| E.ON AG | | | 303,065 | | | | 9,486,020 | |
| RWE AG | | | 64,238 | | | | 4,603,277 | |
| | | | | | | | | |
| | | | | | | | 14,089,297 | |
| | | | | | | | | |
| | | | | | | | 121,503,682 | |
| |
Hong Kong 2.5%
|
| | | | | | | | | |
| |
| Banks 0.2% |
| BOC Hong Kong (Holdings) Ltd. | | | 582,000 | | | | 1,830,526 | |
| Hang Seng Bank Ltd. | | | 117,136 | | | | 1,716,335 | |
| | | | | | | | | |
| | | | | | | | 3,546,861 | |
| | | | | | | | | |
| |
| Capital Goods 0.4% |
| Hutchison Whampoa Ltd. | | | 333,370 | | | | 3,292,435 | |
| Jardine Matheson Holdings Ltd. | | | 46,800 | | | | 2,109,721 | |
| Jardine Strategic Holdings Ltd. | | | 32,000 | | | | 838,497 | |
| | | | | | | | | |
| | | | | | | | 6,240,653 | |
| | | | | | | | | |
| |
| Consumer Services 0.1% |
Sands China Ltd. * | | | 377,200 | | | | 822,552 | |
| | | | | | | | | |
| |
| Diversified Financials 0.2% |
| Hong Kong Exchanges & Clearing Ltd. | | | 168,018 | | | | 3,708,769 | |
| | | | | | | | | |
| |
| Real Estate 1.0% |
| Cheung Kong (Holdings) Ltd. | | | 210,656 | | | | 3,217,595 | |
| Hang Lung Properties Ltd. | | | 313,000 | | | | 1,535,375 | |
| Henderson Land Development Co., Ltd. | | | 159,000 | | | | 1,133,257 | |
| Hongkong Land Holdings Ltd. | | | 177,000 | | | | 1,221,972 | |
| Sun Hung Kai Properties Ltd. | | | 236,604 | | | | 4,070,096 | |
| Swire Pacific Ltd., Class A | | | 105,590 | | | | 1,502,959 | |
| The Wharf Holdings Ltd. | | | 221,000 | | | | 1,455,117 | |
| | | | | | | | | |
| | | | | | | | 14,136,371 | |
| | | | | | | | | |
| |
| Retailing 0.1% |
| Li & Fung Ltd. | | | 410,000 | | | | 2,170,877 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Cathay Pacific Airways Ltd. | | | 174,000 | | | | 468,805 | |
See financial notes 53
Schwab International Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| MTR Corp., Ltd. | | | 213,500 | | | | 814,819 | |
| | | | | | | | | |
| | | | | | | | 1,283,624 | |
| | | | | | | | | |
| |
| Utilities 0.4% |
| CLP Holdings Ltd. | | | 300,580 | | | | 2,443,543 | |
| Hong Kong & China Gas Co., Ltd. | | | 656,720 | | | | 1,585,983 | |
| Hongkong Electric Holdings Ltd. | | | 211,000 | | | | 1,341,387 | |
| | | | | | | | | |
| | | | | | | | 5,370,913 | |
| | | | | | | | | |
| | | | | | | | 37,280,620 | |
| |
Ireland 0.3%
|
| | | | | | | | | |
| |
| Materials 0.1% |
| CRH plc | | | 115,056 | | | | 1,987,395 | |
| | | | | | | | | |
| |
| Media 0.2% |
| WPP plc | | | 196,368 | | | | 2,281,973 | |
| | | | | | | | | |
| | | | | | | | 4,269,368 | |
| |
Israel 0.6%
|
| | | | | | | | | |
| |
| Materials 0.1% |
| Israel Chemicals Ltd. | | | 67,342 | | | | 1,027,771 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.5% |
| Teva Pharmaceutical Industries Ltd. | | | 147,169 | | | | 7,632,356 | |
| | | | | | | | | |
| | | | | | | | 8,660,127 | |
| |
Italy 3.0%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.1% |
| Fiat S.p.A. | | | 121,350 | | | | 2,054,964 | |
| | | | | | | | | |
| |
| Banks 0.9% |
| Intesa Sanpaolo | | | 1,478,100 | | | | 5,198,687 | |
| UniCredit S.p.A. | | | 3,071,213 | | | | 8,006,802 | |
| | | | | | | | | |
| | | | | | | | 13,205,489 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.0% |
| Luxottica Group S.p.A. | | | 22,503 | | | | 664,619 | |
| | | | | | | | | |
| |
| Energy 0.9% |
| Eni S.p.A. | | | 443,295 | | | | 9,981,821 | |
| Saipem S.p.A. | | | 37,471 | | | | 1,664,773 | |
| Tenaris S.A. | | | 74,437 | | | | 1,543,382 | |
| | | | | | | | | |
| | | | | | | | 13,189,976 | |
| | | | | | | | | |
| |
| Insurance 0.3% |
| Assicurazioni Generali S.p.A. | | | 208,200 | | | | 4,563,707 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.2% |
| Telecom Italia S.p.A. | | | 1,525,211 | | | | 2,340,835 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Atlantia S.p.A. | | | 46,907 | | | | 1,072,223 | |
| | | | | | | | | |
| |
| Utilities 0.5% |
| Enel S.p.A. | | | 1,034,503 | | | | 5,909,182 | |
| Snam Rete Gas S.p.A. | | | 262,112 | | | | 1,421,013 | |
| | | | | | | | | |
| | | | | | | | 7,330,195 | |
| | | | | | | | | |
| | | | | | | | 44,422,008 | |
| |
Japan 14.6%
|
| | | | | | | | | |
| |
| Automobiles & Components 2.2% |
| Bridgestone Corp. | | | 96,657 | | | | 1,730,285 | |
| Denso Corp. | | | 74,500 | | | | 2,316,807 | |
| Honda Motor Co., Ltd. | | | 247,439 | | | | 8,919,875 | |
Nissan Motor Co., Ltd. * | | | 333,796 | | | | 2,933,668 | |
| Suzuki Motor Corp. | | | 57,800 | | | | 1,410,701 | |
| Toyota Motor Corp. | | | 420,303 | | | | 14,887,243 | |
| | | | | | | | | |
| | | | | | | | 32,198,579 | |
| | | | | | | | | |
| |
| Banks 1.5% |
| Mitsubishi UFJ Financial Group, Inc. | | | 2,230,009 | | | | 10,349,475 | |
| Mizuho Financial Group, Inc. | | | 3,353,934 | | | | 4,864,273 | |
| Sumitomo Mitsui Financial Group, Inc. | | | 220,646 | | | | 6,585,785 | |
| | | | | | | | | |
| | | | | | | | 21,799,533 | |
| | | | | | | | | |
| |
| Capital Goods 2.2% |
| Asahi Glass Co., Ltd. | | | 152,000 | | | | 1,458,101 | |
| Fanuc Ltd. | | | 29,500 | | | | 4,270,705 | |
| Itochu Corp. | | | 216,000 | | | | 1,893,084 | |
| Komatsu Ltd. | | | 140,609 | | | | 3,436,685 | |
| Kubota Corp. | | | 156,000 | | | | 1,383,418 | |
| Marubeni Corp. | | | 242,000 | | | | 1,520,223 | |
| Mitsubishi Corp. | | | 227,800 | | | | 5,471,678 | |
| Mitsubishi Electric Corp. | | | 302,000 | | | | 2,830,390 | |
| Mitsubishi Heavy Industries Ltd. | | | 547,000 | | | | 1,988,356 | |
| Mitsui & Co., Ltd. | | | 268,100 | | | | 4,216,518 | |
| Nidec Corp. | | | 15,300 | | | | 1,510,898 | |
| Sumitomo Corp. | | | 183,000 | | | | 2,316,927 | |
| | | | | | | | | |
| | | | | | | | 32,296,983 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.7% |
| Panasonic Corp. | | | 293,912 | | | | 4,284,436 | |
| Sharp Corp. | | | 128,785 | | | | 1,272,186 | |
| Sony Corp. | | | 160,500 | | | | 5,422,813 | |
| | | | | | | | | |
| | | | | | | | 10,979,435 | |
| | | | | | | | | |
| |
| Diversified Financials 0.2% |
| Nomura Holdings, Inc. | | | 588,200 | | | | 3,022,632 | |
| | | | | | | | | |
| |
| Energy 0.3% |
| Inpex Corp. | | | 337 | | | | 1,755,009 | |
JX Holdings, Inc. * | | | 348,000 | | | | 2,051,375 | |
| | | | | | | | | |
| | | | | | | | 3,806,384 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.2% |
| Seven & i Holdings Co., Ltd. | | | 116,803 | | | | 2,711,351 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.3% |
| Japan Tobacco, Inc. | | | 704 | | | | 2,187,106 | |
| Kirin Holdings Co., Ltd. | | | 136,000 | | | | 1,863,702 | |
| | | | | | | | | |
| | | | | | | | 4,050,808 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| Terumo Corp. | | | 22,500 | | | | 1,142,628 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.1% |
| Kao Corp. | | | 85,619 | | | | 2,176,174 | |
| | | | | | | | | |
| |
| Insurance 0.6% |
| MS&AD Insurance Group Holdings, Inc. | | | 88,262 | | | | 2,114,482 | |
NKSJ Holdings, Inc. * | | | 242,000 | | | | 1,660,711 | |
| The Dai-ichi Life Insurance Co., Ltd. | | | 1,389 | | | | 1,682,612 | |
| Tokio Marine Holdings, Inc. | | | 117,099 | | | | 3,292,337 | |
| | | | | | | | | |
| | | | | | | | 8,750,142 | |
54 See financial notes
Schwab International Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| | | | | | | | | |
| |
| Materials 0.6% |
| JFE Holdings, Inc. | | | 71,700 | | | | 2,235,929 | |
| Nippon Steel Corp. | | | 832,000 | | | | 2,615,079 | |
| Shin-Etsu Chemical Co., Ltd. | | | 57,560 | | | | 2,910,579 | |
| Sumitomo Metal Industries Ltd. | | | 559,000 | | | | 1,297,429 | |
| | | | | | | | | |
| | | | | | | | 9,059,016 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.7% |
| Astellas Pharma, Inc. | | | 67,270 | | | | 2,502,572 | |
| Daiichi Sankyo Co., Ltd. | | | 101,300 | | | | 2,146,711 | |
| Takeda Pharmaceutical Co., Ltd. | | | 114,100 | | | | 5,348,578 | |
| | | | | | | | | |
| | | | | | | | 9,997,861 | |
| | | | | | | | | |
| |
| Real Estate 0.4% |
| Mitsubishi Estate Co., Ltd. | | | 196,502 | | | | 3,442,407 | |
| Mitsui Fudosan Co., Ltd. | | | 132,777 | | | | 2,510,848 | |
| | | | | | | | | |
| | | | | | | | 5,953,255 | |
| | | | | | | | | |
| |
| Retailing 0.1% |
| Fast Retailing Co., Ltd. | | | 9,000 | | | | 1,178,920 | |
| | | | | | | | | |
| |
| Software & Services 0.3% |
| Nintendo Co., Ltd. | | | 17,239 | | | | 4,451,397 | |
| Yahoo! Japan Corp. | | | 2,178 | | | | 760,261 | |
| | | | | | | | | |
| | | | | | | | 5,211,658 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 1.8% |
| Canon, Inc. | | | 174,295 | | | | 8,023,370 | |
| FUJIFILM Holdings Corp. | | | 69,011 | | | | 2,302,317 | |
| Fujitsu Ltd. | | | 293,000 | | | | 1,998,685 | |
Hitachi Ltd. * | | | 692,079 | | | | 3,127,953 | |
| Hoya Corp. | | | 67,307 | | | | 1,572,211 | |
| Keyence Corp. | | | 6,200 | | | | 1,536,066 | |
| Kyocera Corp. | | | 25,100 | | | | 2,501,522 | |
| Murata Manufacturing Co., Ltd. | | | 29,174 | | | | 1,639,468 | |
| Ricoh Co., Ltd. | | | 102,000 | | | | 1,426,838 | |
Toshiba Corp. * | | | 609,178 | | | | 3,049,023 | |
| | | | | | | | | |
| | | | | | | | 27,177,453 | |
| | | | | | | | | |
| |
| Telecommunication Services 1.0% |
| KDDI Corp. | | | 484 | | | | 2,609,161 | |
| Nippon Telegraph & Telephone Corp. | | | 81,678 | | | | 3,683,710 | |
| NTT DoCoMo, Inc. | | | 2,238 | | | | 3,772,539 | |
| SOFTBANK Corp. | | | 134,200 | | | | 4,309,833 | |
| | | | | | | | | |
| | | | | | | | 14,375,243 | |
| | | | | | | | | |
| |
| Transportation 0.4% |
| Central Japan Railway Co. | | | 268 | | | | 2,027,094 | |
| East Japan Railway Co. | | | 53,360 | | | | 3,295,167 | |
| | | | | | | | | |
| | | | | | | | 5,322,261 | |
| | | | | | | | | |
| |
| Utilities 0.9% |
| Chubu Electric Power Co., Inc. | | | 102,300 | | | | 2,585,355 | |
| The Kansai Electric Power Co., Inc. | | | 111,300 | | | | 2,817,034 | |
| The Tokyo Electric Power Co., Inc. | | | 181,990 | | | | 4,345,581 | |
| Tohoku Electric Power Co., Inc. | | | 72,800 | | | | 1,632,783 | |
| Tokyo Gas Co., Ltd. | | | 365,201 | | | | 1,718,228 | |
| | | | | | | | | |
| | | | | | | | 13,098,981 | |
| | | | | | | | | |
| | | | | | | | 214,309,297 | |
| |
Netherlands 2.4%
|
| | | | | | | | | |
| |
| Capital Goods 0.4% |
European Aeronautic Defence & Space Co. * | | | 65,102 | | | | 1,712,598 | |
| Koninklijke Philips Electronics N.V. | | | 156,432 | | | | 4,771,537 | |
| | | | | | | | | |
| | | | | | | | 6,484,135 | |
| | | | | | | | | |
| |
| Diversified Financials 0.4% |
ING Groep N.V. CVA * | | | 606,251 | | | | 6,486,090 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.2% |
| Koninklijke Ahold N.V. | | | 184,569 | | | | 2,551,087 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.7% |
| Heineken Holding N.V. | | | 14,909 | | | | 643,068 | |
| Heineken N.V. | | | 45,420 | | | | 2,305,746 | |
| Unilever N.V. | | | 270,644 | | | | 8,037,327 | |
| | | | | | | | | |
| | | | | | | | 10,986,141 | |
| | | | | | | | | |
| |
| Materials 0.2% |
| Akzo Nobel N.V. | | | 36,795 | | | | 2,185,645 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.2% |
| ASML Holding N.V. | | | 69,218 | | | | 2,294,567 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.3% |
| Koninklijke (Royal) KPN N.V. | | | 245,485 | | | | 4,099,894 | |
| | | | | | | | | |
| | | | | | | | 35,087,559 | |
| |
Norway 0.7%
|
| | | | | | | | | |
| |
| Banks 0.1% |
| DnB NOR A.S.A. | | | 143,336 | | | | 1,968,916 | |
| | | | | | | | | |
| |
| Energy 0.4% |
| Seadrill Ltd. | | | 47,200 | | | | 1,432,799 | |
| Statoil A.S.A. | | | 164,911 | | | | 3,601,960 | |
| | | | | | | | | |
| | | | | | | | 5,034,759 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| Yara International A.S.A. | | | 29,350 | | | | 1,547,561 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Telenor A.S.A. | | | 120,638 | | | | 1,947,227 | |
| | | | | | | | | |
| | | | | | | | 10,498,463 | |
| |
Portugal 0.3%
|
| | | | | | | | | |
| |
| Energy 0.1% |
| Galp Energia, SGPS, S.A., B Shares | | | 44,444 | | | | 857,540 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Portugal Telecom, SGPS, S.A. - Reg’d | | | 127,351 | | | | 1,840,512 | |
| | | | | | | | | |
| |
| Utilities 0.1% |
| EDP - Energias de Portugal S.A. | | | 451,730 | | | | 1,728,138 | |
| | | | | | | | | |
| | | | | | | | 4,426,190 | |
| |
Singapore 1.3%
|
| | | | | | | | | |
| |
| Banks 0.6% |
| DBS Group Holdings Ltd. | | | 264,246 | | | | 2,846,092 | |
| Oversea-Chinese Banking Corp., Ltd. | | | 419,552 | | | | 2,930,741 | |
See financial notes 55
Schwab International Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| United Overseas Bank Ltd. | | | 171,233 | | | | 2,471,561 | |
| | | | | | | | | |
| | | | | | | | 8,248,394 | |
| | | | | | | | | |
| |
| Capital Goods 0.1% |
| Keppel Corp., Ltd. | | | 198,000 | | | | 1,531,433 | |
| | | | | | | | | |
| |
| Consumer Services 0.1% |
Genting Singapore plc * | | | 927,000 | | | | 1,559,659 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| Wilmar International Ltd. | | | 339,000 | | | | 1,684,448 | |
| | | | | | | | | |
| |
| Real Estate 0.1% |
| Capitaland Ltd. | | | 503,000 | | | | 1,517,291 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.2% |
| Singapore Telecommunications Ltd. | | | 1,178,237 | | | | 2,823,058 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Singapore Airlines Ltd. | | | 87,000 | | | | 1,066,966 | |
| | | | | | | | | |
| | | | | | | | 18,431,249 | |
| |
Spain 3.9%
|
| | | | | | | | | |
| |
| Banks 1.7% |
| Banco Bilbao Vizcaya Argentaria S.A. | | | 591,559 | | | | 7,793,448 | |
| Banco Santander S.A. | | | 1,299,125 | | | | 16,674,953 | |
| | | | | | | | | |
| | | | | | | | 24,468,401 | |
| | | | | | | | | |
| |
| Capital Goods 0.1% |
| ACS, Actividades de Construccion y Servicios S.A. | | | 28,975 | | | | 1,521,090 | |
| | | | | | | | | |
| |
| Diversified Financials 0.0% |
| Criteria Caixacorp S.A. | | | 111,160 | | | | 628,016 | |
| | | | | | | | | |
| |
| Energy 0.2% |
| Repsol YPF S.A. | | | 129,353 | | | | 3,587,006 | |
| | | | | | | | | |
| |
| Retailing 0.2% |
| Industria de Diseno Textil S.A. | | | 34,961 | | | | 2,919,957 | |
| | | | | | | | | |
| |
| Telecommunication Services 1.2% |
| Telefonica S.A. | | | 631,033 | | | | 17,052,086 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Abertis Infraestructuras S.A. | | | 47,351 | | | | 936,371 | |
| | | | | | | | | |
| |
| Utilities 0.4% |
| Gas Natural SDG S.A. | | | 42,673 | | | | 625,092 | |
| Iberdrola Renovables S.A. | | | 135,889 | | | | 459,101 | |
| Iberdrola S.A. | | | 639,255 | | | | 5,400,937 | |
| | | | | | | | | |
| | | | | | | | 6,485,130 | |
| | | | | | | | | |
| | | | | | | | 57,598,057 | |
| |
Sweden 2.2%
|
| | | | | | | | | |
| |
| Banks 0.8% |
| Nordea Bank AB | | | 508,535 | | | | 5,599,300 | |
| Skandinaviska Enskilda Banken AB, A Shares | | | 271,211 | | | | 2,102,535 | |
| Svenska Handelsbanken AB, A Shares | | | 73,432 | | | | 2,402,236 | |
Swedbank AB, A Shares * | | | 150,308 | | | | 2,101,840 | |
| | | | | | | | | |
| | | | | | | | 12,205,911 | |
| | | | | | | | | |
| |
| Capital Goods 0.5% |
| Atlas Copco AB, A Shares | | | 107,348 | | | | 2,243,381 | |
| Sandvik AB | | | 171,265 | | | | 2,582,015 | |
Volvo AB, B Shares * | | | 179,083 | | | | 2,424,479 | |
| | | | | | | | | |
| | | | | | | | 7,249,875 | |
| | | | | | | | | |
| |
| Retailing 0.4% |
| Hennes & Mauritz AB, B Shares | | | 150,369 | | | | 5,296,130 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.3% |
| Telefonaktiebolaget LM Ericsson, B Shares | | | 480,667 | | | | 5,286,178 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.2% |
| TeliaSonera AB | | | 356,757 | | | | 2,979,979 | |
| | | | | | | | | |
| | | | | | | | 33,018,073 | |
| |
Switzerland 8.2%
|
| | | | | | | | | |
| |
| Capital Goods 0.5% |
ABB Ltd. - Reg’d * | | | 370,075 | | | | 7,665,624 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.1% |
| SGS S.A. - Reg’d | | | 865 | | | | 1,383,549 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.3% |
| Compagnie Financiere Richemont S.A., Series A | | | 46,837 | | | | 2,336,145 | |
| Swatch Group AG - Bearer Shares | | | 4,868 | | | | 1,860,711 | |
| | | | | | | | | |
| | | | | | | | 4,196,856 | |
| | | | | | | | | |
| |
| Diversified Financials 1.1% |
| Credit Suisse Group AG - Reg’d | | | 158,744 | | | | 6,571,779 | |
UBS AG - Reg’d * | | | 604,632 | | | | 10,271,203 | |
| | | | | | | | | |
| | | | | | | | 16,842,982 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 2.0% |
| Nestle S.A. - Reg’d | | | 546,897 | | | | 29,955,988 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| Alcon, Inc. | | | 10,905 | | | | 1,828,987 | |
| | | | | | | | | |
| |
| Insurance 0.6% |
| Swiss Reinsurance Co., Ltd. - Reg’d | | | 57,489 | | | | 2,762,180 | |
| Zurich Financial Services AG | | | 23,450 | | | | 5,738,619 | |
| | | | | | | | | |
| | | | | | | | 8,500,799 | |
| | | | | | | | | |
| |
| Materials 0.5% |
| Holcim Ltd. - Reg’d | | | 42,300 | | | | 2,635,132 | |
| Syngenta AG - Reg’d | | | 15,116 | | | | 4,185,414 | |
| | | | | | | | | |
| | | | | | | | 6,820,546 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 2.8% |
| Novartis AG - Reg’d | | | 416,308 | | | | 24,122,007 | |
| Roche Holding AG | | | 110,889 | | | | 16,284,513 | |
| Roche Holding AG - Bearer Shares | | | 3,695 | | | | 563,737 | |
| | | | | | | | | |
| | | | | | | | 40,970,257 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Swisscom AG - Reg’d | | | 3,444 | | | | 1,438,285 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Kuehne & Nagel International AG - Reg’d | | | 8,541 | | | | 1,056,598 | |
| | | | | | | | | |
| | | | | | | | 120,660,471 | |
56 See financial notes
Schwab International Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
United Kingdom 20.9%
|
| | | | | | | | | |
| |
| Banks 3.7% |
| Barclays plc | | | 1,910,729 | | | | 8,396,586 | |
| HSBC Holdings plc | | | 2,777,237 | | | | 28,904,486 | |
Lloyds Banking Group plc * | | | 6,308,359 | | | | 6,933,663 | |
Royal Bank of Scotland Group plc * | | | 2,557,366 | | | | 1,829,798 | |
| Standard Chartered plc | | | 265,572 | | | | 7,681,634 | |
| | | | | | | | | |
| | | | | | | | 53,746,167 | |
| | | | | | | | | |
| |
| Capital Goods 0.4% |
| BAE Systems plc | | | 528,238 | | | | 2,915,888 | |
Rolls-Royce Group plc * | | | 282,414 | | | | 2,929,964 | |
Rolls-Royce Group plc, C Shares (a) (c)* | | | 44,796,486 | | | | 71,780 | |
| | | | | | | | | |
| | | | | | | | 5,917,632 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.1% |
| Experian plc | | | 160,692 | | | | 1,867,203 | |
| | | | | | | | | |
| |
| Consumer Services 0.2% |
| Compass Group plc | | | 287,855 | | | | 2,358,967 | |
| | | | | | | | | |
| |
| Energy 4.5% |
| BG Group plc | | | 533,772 | | | | 10,390,478 | |
| BP plc | | | 2,965,852 | | | | 20,159,399 | |
| Royal Dutch Shell plc, B Share | | | 425,492 | | | | 13,616,435 | |
| Royal Dutch Shell plc, Class A | | | 588,320 | | | | 19,083,375 | |
| Tullow Oil plc | | | 139,314 | | | | 2,646,010 | |
| | | | | | | | | |
| | | | | | | | 65,895,697 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.8% |
| J Sainsbury plc | | | 217,364 | | | | 1,357,138 | |
| Tesco plc | | | 1,274,021 | | | | 8,718,918 | |
| William Morrison Supermarkets plc | | | 351,417 | | | | 1,653,852 | |
| | | | | | | | | |
| | | | | | | | 11,729,908 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 2.4% |
| Associated British Foods plc | | | 56,501 | | | | 947,624 | |
| British American Tobacco plc | | | 315,160 | | | | 12,006,427 | |
| Diageo plc | | | 394,892 | | | | 7,284,810 | |
| Imperial Tobacco Group plc | | | 160,071 | | | | 5,126,618 | |
| SABMiller plc | | | 147,821 | | | | 4,795,832 | |
| Unilever plc | | | 204,692 | | | | 5,901,361 | |
| | | | | | | | | |
| | | | | | | | 36,062,672 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.4% |
| Reckitt Benckiser Group plc | | | 97,667 | | | | 5,456,507 | |
| | | | | | | | | |
| |
| Insurance 0.6% |
| Aviva plc | | | 428,961 | | | | 2,735,618 | |
| Old Mutual plc | | | 858,967 | | | | 1,788,860 | |
| Prudential plc | | | 401,870 | | | | 4,064,524 | |
| | | | | | | | | |
| | | | | | | | 8,589,002 | |
| | | | | | | | | |
| |
| Materials 3.1% |
| Anglo American plc | | | 209,439 | | | | 9,758,384 | |
| Antofagasta plc | | | 55,917 | | | | 1,183,605 | |
| BHP Billiton plc | | | 351,291 | | | | 12,444,477 | |
| Fresnillo plc | | | 13,776 | | | | 275,845 | |
| Rio Tinto plc | | | 240,850 | | | | 15,643,271 | |
| Xstrata plc | | | 307,268 | | | | 5,952,789 | |
| | | | | | | | | |
| | | | | | | | 45,258,371 | |
| | | | | | | | | |
| |
| Media 0.2% |
| British Sky Broadcasting Group plc | | | 159,997 | | | | 1,811,394 | |
| Pearson plc | | | 122,113 | | | | 1,870,274 | |
| | | | | | | | | |
| | | | | | | | 3,681,668 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 2.0% |
| AstraZeneca plc | | | 226,301 | | | | 11,383,365 | |
| GlaxoSmithKline plc | | | 819,583 | | | | 16,004,434 | |
| Shire plc | | | 83,987 | | | | 1,970,932 | |
| | | | | | | | | |
| | | | | | | | 29,358,731 | |
| | | | | | | | | |
| |
| Telecommunication Services 1.7% |
| BT Group plc | | | 1,219,910 | | | | 3,008,003 | |
| Vodafone Group plc | | | 8,325,405 | | | | 22,758,350 | |
| | | | | | | | | |
| | | | | | | | 25,766,353 | |
| | | | | | | | | |
| |
| Utilities 0.8% |
| Centrica plc | | | 804,153 | | | | 4,278,955 | |
| National Grid plc | | | 543,094 | | | | 5,135,742 | |
| Scottish & Southern Energy plc | | | 139,654 | | | | 2,580,858 | |
| | | | | | | | | |
| | | | | | | | 11,995,555 | |
| | | | | | | | | |
| | | | | | | | 307,684,433 | |
| |
United States 0.1%
|
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| Synthes, Inc. | | | 9,072 | | | | 1,082,071 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $1,065,367,784) | | | 1,457,582,563 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Preferred Stock 0.2% of net assets |
| |
Germany 0.2%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.2% |
| Volkswagen AG | | | 20,098 | | | | 3,013,548 | |
| | | | | | | | | |
| Total Preferred Stock |
| (Cost $2,548,296) | | | 3,013,548 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Rights 0.0% of net assets |
| |
Spain 0.0%
|
| | | | | | | | | |
| |
| Banks 0.0% |
Banco Santander S.A. * | | | 1,299,125 | | | | 215,167 | |
| |
United Kingdom 0.0%
|
| | | | | | | | | |
| |
| Banks 0.0% |
Standard Chartered plc * | | | 33,196 | | | | 279,522 | |
| | | | | | | | | |
| Total Rights |
| (Cost $217,571) | | | 494,689 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
See financial notes 57
Schwab International Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Warrants 0.0% of net assets |
| |
Italy 0.0%
|
UBI Banca S.C.P.A. * | | | 102,112 | | | | 1,023 | |
| | | | | | | | | |
| Total Warrants |
| (Cost $13,912) | | | 1,023 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Other Investment Company 0.4% of net assets |
| |
United States 0.4%
|
| iShares MSCI EAFE Index Fund | | | 100,000 | | | | 5,701,000 | |
| | | | | | | | | |
| Total Other Investment Company |
| (Cost $5,742,130) | | | 5,701,000 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | |
| | | | | | | | | |
| |
Collateral Invested for Securities on Loan 0.5% of net assets |
| | | | | | | | | |
| | | | | | | | | |
| Invesco Short Term Investments Trust Government & Agency Portfolio | | | 8,024,266 | | | | 8,024,266 | |
| | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $8,024,266) | | | 8,024,266 | |
| | | | | |
| |
|
End of collateral invested for securities on loan. |
At 10/31/10, the tax basis cost of the fund’s investments was $1,092,266,341 and the unrealized appreciation and depreciation were $494,433,465 and ($119,906,983), respectively, with a net unrealized appreciation of $374,526,482.
At 10/31/10, the values of certain foreign securities held by the fund aggregating $1,319,881,718 were adjusted from their closing market values in accordance with procedures approved by the Board of Trustees.
| | |
| * | | Non-income producing security. |
| (a) | | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (b) | | All or a portion of this security is on loan. |
| (c) | | Illiquid security. At the period end, the value of these amounted to $71,780 or 0.0% of net assets. |
| | | |
| CVA — | | Dutch Certificate |
| Reg’d — | | Registered |
58 See financial notes
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .3% | | Common Stock | | | 943,510,516 | | | | 1,012,552,616 | |
| | 0 | .6% | | Other Investment Company | | | 6,235,229 | | | | 6,235,229 | |
| | 0 | .1% | | Short-Term Investment | | | 875,852 | | | | 875,852 | |
| |
| |
| | 100 | .0% | | Total Investments | | | 950,621,597 | | | | 1,019,663,697 | |
| | 1 | .5% | | Collateral Invested for Securities on Loan | | | 15,323,057 | | | | 15,323,057 | |
| | (1 | .5)% | | Other Assets and Liabilities, Net | | | | | | | (15,648,117 | ) |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 1,019,338,637 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 99.3% of net assets |
| |
Automobiles & Components 1.2%
|
| Autoliv, Inc. | | | 9,600 | | | | 684,480 | |
BorgWarner, Inc. * | | | 7,150 | | | | 401,187 | |
Dana Holding Corp. * | | | 15,700 | | | | 222,155 | |
Exide Technologies * | | | 58,400 | | | | 343,976 | |
Federal-Mogul Corp. * | | | 11,200 | | | | 222,096 | |
Ford Motor Co. * | | | 411,674 | | | | 5,816,954 | |
| Harley-Davidson, Inc. | | | 22,960 | | | | 704,413 | |
| Johnson Controls, Inc. | | | 54,010 | | | | 1,896,831 | |
Tenneco, Inc. * | | | 9,560 | | | | 311,847 | |
The Goodyear Tire & Rubber Co. * | | | 68,990 | | | | 705,078 | |
| Thor Industries, Inc. | | | 4,500 | | | | 141,705 | |
TRW Automotive Holdings Corp. * | | | 19,350 | | | | 884,101 | |
| | | | | | | | | |
| | | | | | | | 12,334,823 | |
| |
Banks 3.8%
|
| Associated Banc-Corp | | | 23,360 | | | | 295,971 | |
| Astoria Financial Corp. | | | 10,855 | | | | 134,819 | |
| BancorpSouth, Inc. | | | 13,245 | | | | 174,702 | |
| Bank of Hawaii Corp. | | | 4,220 | | | | 182,262 | |
| BB&T Corp. | | | 74,775 | | | | 1,750,483 | |
| BOK Financial Corp. | | | 3,820 | | | | 176,599 | |
| CapitalSource, Inc. | | | 54,000 | | | | 329,940 | |
| City National Corp. | | | 4,720 | | | | 243,410 | |
| Comerica, Inc. | | | 23,100 | | | | 826,518 | |
| Commerce Bancshares, Inc. | | | 6,689 | | | | 246,423 | |
| Cullen/Frost Bankers, Inc. | | | 3,700 | | | | 194,028 | |
| East West Bancorp, Inc. | | | 10,100 | | | | 178,063 | |
| Fifth Third Bancorp | | | 119,290 | | | | 1,498,282 | |
| First Citizens BancShares, Inc., Class A | | | 900 | | | | 168,102 | |
First Horizon National Corp. * | | | 38,960 | | | | 393,106 | |
| First Niagara Financial Group, Inc. | | | 22,600 | | | | 267,810 | |
| FirstMerit Corp. | | | 8,525 | | | | 146,460 | |
| Fulton Financial Corp. | | | 20,580 | | | | 192,217 | |
| Hudson City Bancorp, Inc. | | | 37,490 | | | | 436,759 | |
| Huntington Bancshares, Inc. | | | 111,427 | | | | 631,791 | |
| International Bancshares Corp. | | | 8,700 | | | | 149,031 | |
| KeyCorp | | | 151,590 | | | | 1,241,522 | |
M&T Bank Corp. (c) | | | 10,586 | | | | 791,304 | |
| Marshall & Ilsley Corp. | | | 106,085 | | | | 626,962 | |
| New York Community Bancorp, Inc. | | | 44,165 | | | | 747,713 | |
| People’s United Financial, Inc. | | | 20,552 | | | | 252,995 | |
| PNC Financial Services Group, Inc. | | | 41,545 | | | | 2,239,275 | |
Popular, Inc. * | | | 367,580 | | | | 1,003,493 | |
| Regions Financial Corp. | | | 256,025 | | | | 1,612,958 | |
| SunTrust Banks, Inc. | | | 87,660 | | | | 2,193,253 | |
| Susquehanna Bancshares, Inc. | | | 23,000 | | | | 181,700 | |
SVB Financial Group * | | | 3,800 | | | | 164,692 | |
| Synovus Financial Corp. | | | 195,110 | | | | 421,438 | |
| TCF Financial Corp. | | | 13,665 | | | | 179,831 | |
| Trustmark Corp. | | | 10,800 | | | | 238,572 | |
| U.S. Bancorp | | | 198,200 | | | | 4,792,476 | |
| Valley National Bancorp | | | 14,905 | | | | 198,833 | |
| Washington Federal, Inc. | | | 8,650 | | | | 130,010 | |
| Webster Financial Corp. | | | 10,225 | | | | 175,052 | |
| Wells Fargo & Co. | | | 477,825 | | | | 12,461,676 | |
| Whitney Holding Corp. | | | 21,500 | | | | 178,020 | |
| Wilmington Trust Corp. | | | 13,430 | | | | 95,487 | |
| Zions Bancorp | | | 30,535 | | | | 630,853 | |
| | | | | | | | | |
| | | | | | | | 39,174,891 | |
| |
Capital Goods 8.7%
|
| 3M Co. | | | 40,075 | | | | 3,375,117 | |
| A.O. Smith Corp. | | | 3,600 | | | | 201,708 | |
| Acuity Brands, Inc. | | | 5,420 | | | | 271,379 | |
Aecom Technology Corp. * | | | 10,700 | | | | 283,443 | |
AerCap Holdings N.V. * | | | 16,000 | | | | 206,560 | |
AGCO Corp. * | | | 11,940 | | | | 507,092 | |
| Albany International Corp., Class A | | | 14,600 | | | | 297,840 | |
Alliant Techsystems, Inc. * | | | 3,120 | | | | 237,869 | |
| AMETEK, Inc. | | | 3,710 | | | | 200,526 | |
Armstrong World Industries, Inc. * | | | 5,250 | | | | 219,188 | |
ArvinMeritor, Inc. * | | | 17,135 | | | | 284,098 | |
Babcock & Wilcox Co. * | | | 5,055 | | | | 115,355 | |
BE Aerospace, Inc. * | | | 5,600 | | | | 205,856 | |
| Briggs & Stratton Corp. | | | 5,535 | | | | 97,416 | |
| Carlisle Cos., Inc. | | | 5,075 | | | | 177,980 | |
| Caterpillar, Inc. | | | 51,945 | | | | 4,082,877 | |
| Cooper Industries plc | | | 10,470 | | | | 548,837 | |
| Crane Co. | | | 4,995 | | | | 191,109 | |
| Cummins, Inc. | | | 14,384 | | | | 1,267,230 | |
| Danaher Corp. | | | 26,300 | | | | 1,140,368 | |
| Deere & Co. | | | 26,686 | | | | 2,049,485 | |
See financial notes 1
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Donaldson Co., Inc. | | | 4,400 | | | | 214,368 | |
| Dover Corp. | | | 13,075 | | | | 694,283 | |
| Eaton Corp. | | | 14,660 | | | | 1,302,248 | |
EMCOR Group, Inc. * | | | 9,540 | | | | 246,609 | |
| Emerson Electric Co. | | | 46,150 | | | | 2,533,635 | |
Esterline Technologies Corp. * | | | 3,700 | | | | 223,628 | |
| Fastenal Co. | | | 6,320 | | | | 325,354 | |
| Flowserve Corp. | | | 2,625 | | | | 262,500 | |
| Fluor Corp. | | | 13,970 | | | | 673,214 | |
Foster Wheeler AG * | | | 8,470 | | | | 198,367 | |
| Gardner Denver, Inc. | | | 5,000 | | | | 289,100 | |
| GATX Corp. | | | 7,035 | | | | 222,728 | |
General Cable Corp. * | | | 8,400 | | | | 234,696 | |
| General Dynamics Corp. | | | 28,325 | | | | 1,929,499 | |
| General Electric Co. | | | 1,391,525 | | | | 22,292,231 | |
| Goodrich Corp. | | | 7,655 | | | | 628,246 | |
| Granite Construction, Inc. | | | 7,800 | | | | 188,604 | |
| Harsco Corp. | | | 7,535 | | | | 174,661 | |
| Honeywell International, Inc. | | | 61,340 | | | | 2,889,727 | |
| Hubbell, Inc., Class B | | | 4,830 | | | | 260,917 | |
| IDEX Corp. | | | 5,500 | | | | 198,440 | |
| Illinois Tool Works, Inc. | | | 33,670 | | | | 1,538,719 | |
| Ingersoll-Rand plc | | | 26,742 | | | | 1,051,228 | |
| ITT Corp. | | | 12,255 | | | | 578,313 | |
Jacobs Engineering Group, Inc. * | | | 12,840 | | | | 495,752 | |
| Joy Global, Inc. | | | 4,000 | | | | 283,800 | |
| KBR, Inc. | | | 16,300 | | | | 414,020 | |
| Kennametal, Inc. | | | 5,740 | | | | 195,964 | |
L-3 Communications Holdings, Inc. | | | 10,235 | | | | 738,865 | |
| Lennox International, Inc. | | | 3,935 | | | | 161,374 | |
| Lincoln Electric Holdings, Inc. | | | 3,100 | | | | 185,256 | |
| Lockheed Martin Corp. | | | 29,935 | | | | 2,134,066 | |
| Masco Corp. | | | 66,150 | | | | 705,159 | |
Moog, Inc., Class A * | | | 4,900 | | | | 184,240 | |
| MSC Industrial Direct Co., Inc., Class A | | | 4,225 | | | | 240,572 | |
Navistar International Corp. * | | | 12,700 | | | | 611,886 | |
| Northrop Grumman Corp. | | | 34,895 | | | | 2,205,713 | |
Oshkosh Corp. * | | | 5,020 | | | | 148,140 | |
Owens Corning, Inc. * | | | 15,750 | | | | 425,880 | |
| PACCAR, Inc. | | | 35,342 | | | | 1,811,631 | |
| Pall Corp. | | | 5,940 | | | | 253,460 | |
| Parker Hannifin Corp. | | | 12,717 | | | | 973,486 | |
| Pentair, Inc. | | | 7,050 | | | | 230,747 | |
| Precision Castparts Corp. | | | 4,316 | | | | 589,479 | |
Quanta Services, Inc. * | | | 13,000 | | | | 255,580 | |
| Raytheon Co. | | | 28,310 | | | | 1,304,525 | |
| Regal-Beloit Corp. | | | 3,000 | | | | 173,130 | |
| Rockwell Automation, Inc. | | | 9,050 | | | | 564,449 | |
| Rockwell Collins, Inc. | | | 6,230 | | | | 376,977 | |
| Roper Industries, Inc. | | | 4,900 | | | | 340,207 | |
RSC Holdings, Inc. * | | | 38,500 | | | | 311,080 | |
| Seaboard Corp. | | | 127 | | | | 235,464 | |
| Snap-on, Inc. | | | 4,030 | | | | 205,530 | |
Spirit AeroSystems Holdings, Inc., Class A * | | | 10,300 | | | | 222,892 | |
| SPX Corp. | | | 5,035 | | | | 337,647 | |
Terex Corp. * | | | 23,125 | | | | 519,156 | |
| Textron, Inc. | | | 36,520 | | | | 760,346 | |
| The Boeing Co. | | | 54,340 | | | | 3,838,578 | |
| The Manitowoc Co., Inc. | | | 14,700 | | | | 163,758 | |
The Shaw Group, Inc. * | | | 7,140 | | | | 218,198 | |
| The Timken Co. | | | 9,665 | | | | 400,324 | |
Thomas & Betts Corp. * | | | 5,200 | | | | 226,460 | |
TransDigm Group, Inc. * | | | 3,400 | | | | 225,318 | |
| Trinity Industries, Inc. | | | 11,225 | | | | 255,144 | |
Tutor Perini Corp. * | | | 8,800 | | | | 204,248 | |
| Tyco International Ltd. | | | 63,365 | | | | 2,425,612 | |
United Rentals, Inc. * | | | 47,200 | | | | 886,888 | |
| United Technologies Corp. | | | 60,515 | | | | 4,524,707 | |
URS Corp. * | | | 7,493 | | | | 291,702 | |
USG Corp. * | | | 17,425 | | | | 220,949 | |
| W.W. Grainger, Inc. | | | 4,235 | | | | 525,267 | |
WESCO International, Inc. * | | | 8,100 | | | | 346,842 | |
| | | | | | | | | |
| | | | | | | | 88,463,116 | |
| |
Commercial & Professional Supplies 0.8%
|
| ABM Industries, Inc. | | | 9,100 | | | | 205,205 | |
| Avery Dennison Corp. | | | 12,450 | | | | 452,557 | |
| Cintas Corp. | | | 11,150 | | | | 306,291 | |
Corrections Corp. of America * | | | 12,290 | | | | 315,484 | |
| Covanta Holding Corp. | | | 14,015 | | | | 221,157 | |
| Deluxe Corp. | | | 5,245 | | | | 107,208 | |
| Equifax, Inc. | | | 5,830 | | | | 193,148 | |
| HNI Corp. | | | 5,020 | | | | 123,793 | |
| Iron Mountain, Inc. | | | 9,255 | | | | 201,666 | |
Kelly Services, Inc., Class A * | | | 17,040 | | | | 253,044 | |
| Manpower, Inc. | | | 13,445 | | | | 735,845 | |
| Pitney Bowes, Inc. | | | 23,005 | | | | 504,730 | |
| R.R. Donnelley & Sons Co. | | | 35,940 | | | | 663,093 | |
| Republic Services, Inc. | | | 18,824 | | | | 561,143 | |
| Robert Half International, Inc. | | | 8,610 | | | | 233,417 | |
| Steelcase, Inc., Class A | | | 30,075 | | | | 252,931 | |
| The Brink’s Co. | | | 10,320 | | | | 243,552 | |
| The Dun & Bradstreet Corp. | | | 2,300 | | | | 171,143 | |
United Stationers, Inc. * | | | 3,925 | | | | 220,585 | |
Waste Connections, Inc. * | | | 5,200 | | | | 211,848 | |
| Waste Management, Inc. | | | 42,155 | | | | 1,505,777 | |
| | | | | | | | | |
| | | | | | | | 7,683,617 | |
| |
Consumer Durables & Apparel 1.3%
|
Beazer Homes USA, Inc. (c)* | | | 35,935 | | | | 145,896 | |
| Brunswick Corp. | | | 14,470 | | | | 228,915 | |
| Coach, Inc. | | | 7,475 | | | | 373,750 | |
| D.R. Horton, Inc. | | | 54,890 | | | | 573,052 | |
Eastman Kodak Co. * | | | 84,140 | | | | 396,299 | |
| Fortune Brands, Inc. | | | 17,700 | | | | 956,685 | |
Garmin Ltd. (c) | | | 7,470 | | | | 245,315 | |
Hanesbrands, Inc. * | | | 11,500 | | | | 285,200 | |
Harman International Industries, Inc. * | | | 4,220 | | | | 141,581 | |
| Hasbro, Inc. | | | 10,865 | | | | 502,506 | |
Hovnanian Enterprises, Inc., Class A (c)* | | | 39,470 | | | | 140,513 | |
| Jarden Corp. | | | 8,777 | | | | 281,391 | |
| KB HOME | | | 12,960 | | | | 136,210 | |
| Leggett & Platt, Inc. | | | 16,320 | | | | 332,602 | |
| Lennar Corp., Class A | | | 24,300 | | | | 352,593 | |
Liz Claiborne, Inc. * | | | 29,245 | | | | 178,979 | |
| M.D.C. Holdings, Inc. | | | 5,035 | | | | 129,651 | |
| Mattel, Inc. | | | 25,435 | | | | 593,399 | |
2 See financial notes
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Mohawk Industries, Inc. * | | | 10,635 | | | | 609,811 | |
| Newell Rubbermaid, Inc. | | | 41,150 | | | | 726,297 | |
| NIKE, Inc., Class B | | | 15,828 | | | | 1,289,032 | |
NVR, Inc. * | | | 503 | | | | 315,587 | |
| Phillips-Van Heusen Corp. | | | 3,200 | | | | 196,288 | |
| Polaris Industries, Inc. | | | 2,900 | | | | 206,161 | |
| Polo Ralph Lauren Corp. | | | 4,720 | | | | 457,274 | |
Pulte Group, Inc. * | | | 34,552 | | | | 271,233 | |
Quiksilver, Inc. * | | | 42,150 | | | | 175,765 | |
| Stanley Black & Decker, Inc. | | | 13,903 | | | | 861,569 | |
| The Jones Group, Inc. | | | 11,075 | | | | 160,145 | |
Toll Brothers, Inc. * | | | 10,295 | | | | 184,692 | |
| Tupperware Brands Corp. | | | 3,700 | | | | 165,797 | |
| VF Corp. | | | 9,345 | | | | 777,878 | |
| Whirlpool Corp. | | | 10,755 | | | | 815,552 | |
| | | | | | | | | |
| | | | | | | | 13,207,618 | |
| |
Consumer Services 1.5%
|
Apollo Group, Inc., Class A * | | | 5,125 | | | | 192,085 | |
Boyd Gaming Corp. * | | | 14,225 | | | | 118,210 | |
| Brinker International, Inc. | | | 11,955 | | | | 221,646 | |
Career Education Corp. * | | | 8,135 | | | | 142,688 | |
| Carnival Corp. | | | 50,345 | | | | 2,173,394 | |
| Darden Restaurants, Inc. | | | 9,445 | | | | 431,731 | |
Domino’s Pizza, Inc. * | | | 10,300 | | | | 152,852 | |
Education Management Corp. (c)* | | | 7,700 | | | | 92,400 | |
| H&R Block, Inc. | | | 23,965 | | | | 282,547 | |
Hyatt Hotels Corp., Class A * | | | 8,600 | | | | 346,580 | |
| International Game Technology | | | 26,455 | | | | 412,433 | |
Jack in the Box, Inc. * | | | 7,440 | | | | 172,310 | |
Las Vegas Sands Corp. * | | | 9,970 | | | | 457,424 | |
| Marriott International, Inc., Class A | | | 22,489 | | | | 833,217 | |
| McDonald’s Corp. | | | 48,380 | | | | 3,762,512 | |
MGM Resorts International * | | | 53,815 | | | | 588,198 | |
Penn National Gaming, Inc. * | | | 11,140 | | | | 370,516 | |
| Regis Corp. | | | 6,675 | | | | 136,504 | |
Royal Caribbean Cruises Ltd. * | | | 18,705 | | | | 739,596 | |
| Service Corp. International | | | 22,000 | | | | 182,160 | |
| Starbucks Corp. | | | 28,790 | | | | 819,939 | |
| Starwood Hotels & Resorts Worldwide, Inc. | | | 14,170 | | | | 767,164 | |
| Wendy’s/Arby’s Group, Inc., Class A | | | 37,900 | | | | 174,340 | |
| Wyndham Worldwide Corp. | | | 14,440 | | | | 415,150 | |
| Wynn Resorts Ltd. | | | 2,500 | | | | 267,925 | |
| Yum! Brands, Inc. | | | 23,930 | | | | 1,185,971 | |
| | | | | | | | | |
| | | | | | | | 15,439,492 | |
| |
Diversified Financials 7.9%
|
Affiliated Managers Group, Inc. * | | | 3,300 | | | | 282,513 | |
| American Express Co. | | | 81,625 | | | | 3,384,173 | |
| Ameriprise Financial, Inc. | | | 18,000 | | | | 930,420 | |
| Bank of America Corp. | | | 1,336,660 | | | | 15,291,390 | |
| Bank of New York Mellon Corp. | | | 86,252 | | | | 2,161,475 | |
| BlackRock, Inc. | | | 3,600 | | | | 615,564 | |
| Capital One Financial Corp. | | | 72,010 | | | | 2,683,813 | |
Citigroup, Inc. * | | | 3,986,135 | | | | 16,622,183 | |
| CME Group, Inc. | | | 3,720 | | | | 1,077,498 | |
| Discover Financial Services | | | 61,722 | | | | 1,089,393 | |
E*TRADE Financial Corp. * | | | 22,897 | | | | 327,427 | |
| Eaton Vance Corp. | | | 7,700 | | | | 221,529 | |
| Federated Investors, Inc., Class B | | | 7,330 | | | | 182,590 | |
Fortress Investment Group L.L.C., Class A * | | | 89,000 | | | | 391,600 | |
| Franklin Resources, Inc. | | | 7,740 | | | | 887,778 | |
Interactive Brokers Group, Inc., Class A * | | | 14,500 | | | | 271,440 | |
IntercontinentalExchange, Inc. * | | | 2,000 | | | | 229,740 | |
| Invesco Ltd. | | | 30,200 | | | | 694,600 | |
| Janus Capital Group, Inc. | | | 15,865 | | | | 167,534 | |
| Jefferies Group, Inc. | | | 7,300 | | | | 174,689 | |
| JPMorgan Chase & Co. | | | 392,342 | | | | 14,763,830 | |
| Legg Mason, Inc. | | | 19,620 | | | | 608,809 | |
Leucadia National Corp. * | | | 8,100 | | | | 205,902 | |
MF Global Holdings Ltd. * | | | 33,700 | | | | 263,871 | |
| Moody’s Corp. | | | 6,470 | | | | 175,078 | |
| Morgan Stanley | | | 172,135 | | | | 4,280,997 | |
MSCI, Inc., Class A * | | | 6,300 | | | | 225,855 | |
| Northern Trust Corp. | | | 13,660 | | | | 677,946 | |
| NYSE Euronext | | | 23,020 | | | | 705,333 | |
PHH Corp. * | | | 12,990 | | | | 250,317 | |
| Raymond James Financial, Inc. | | | 11,135 | | | | 314,230 | |
| SEI Investments Co. | | | 9,800 | | | | 217,070 | |
SLM Corp. * | | | 57,835 | | | | 688,237 | |
| State Street Corp. | | | 32,736 | | | | 1,367,055 | |
| T. Rowe Price Group, Inc. | | | 8,845 | | | | 488,863 | |
TD Ameritrade Holding Corp. * | | | 22,670 | | | | 387,430 | |
The Charles Schwab Corp. (b) | | | 53,415 | | | | 822,591 | |
| The Goldman Sachs Group, Inc. | | | 33,811 | | | | 5,441,880 | |
The NASDAQ OMX Group, Inc. * | | | 18,730 | | | | 393,705 | |
| The Student Loan Corp. | | | 9,008 | | | | 268,619 | |
| | | | | | | | | |
| | | | | | | | 80,234,967 | |
| |
Energy 11.9%
|
Alon USA Energy, Inc. (c) | | | 24,200 | | | | 137,214 | |
Alpha Natural Resources, Inc. * | | | 7,036 | | | | 317,816 | |
| Anadarko Petroleum Corp. | | | 25,115 | | | | 1,546,331 | |
| Apache Corp. | | | 16,420 | | | | 1,658,748 | |
| Arch Coal, Inc. | | | 13,300 | | | | 327,047 | |
| Baker Hughes, Inc. | | | 29,349 | | | | 1,359,739 | |
| Cabot Oil & Gas Corp. | | | 4,400 | | | | 127,512 | |
Cameron International Corp. * | | | 11,580 | | | | 506,625 | |
| Chesapeake Energy Corp. | | | 48,720 | | | | 1,057,224 | |
| Chevron Corp. | | | 233,605 | | | | 19,298,109 | |
| Cimarex Energy Co. | | | 4,245 | | | | 325,804 | |
Complete Production Services, Inc. * | | | 16,000 | | | | 374,880 | |
| ConocoPhillips | | | 256,010 | | | | 15,206,994 | |
| CONSOL Energy, Inc. | | | 6,735 | | | | 247,579 | |
Crosstex Energy, Inc. * | | | 19,700 | | | | 159,767 | |
Denbury Resources, Inc. * | | | 18,500 | | | | 314,870 | |
| Devon Energy Corp. | | | 27,570 | | | | 1,792,601 | |
Diamond Offshore Drilling, Inc. (c) | | | 10,520 | | | | 696,003 | |
Dresser-Rand Group, Inc. * | | | 5,500 | | | | 188,210 | |
| El Paso Corp. | | | 60,520 | | | | 802,495 | |
| EOG Resources, Inc. | | | 9,050 | | | | 866,266 | |
| EQT Corp. | | | 7,180 | | | | 268,819 | |
| EXCO Resources, Inc. | | | 9,200 | | | | 136,436 | |
See financial notes 3
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Exterran Holdings, Inc. * | | | 6,100 | | | | 153,537 | |
| Exxon Mobil Corp. | | | 460,284 | | | | 30,595,077 | |
FMC Technologies, Inc. * | | | 4,040 | | | | 291,284 | |
Forest Oil Corp. * | | | 8,050 | | | | 247,377 | |
| Frontier Oil Corp. | | | 13,830 | | | | 183,248 | |
| General Maritime Corp. | | | 34,384 | | | | 132,035 | |
| Halliburton Co. | | | 50,965 | | | | 1,623,745 | |
Helix Energy Solutions Group, Inc. * | | | 16,100 | | | | 204,309 | |
| Helmerich & Payne, Inc. | | | 5,895 | | | | 252,188 | |
| Hess Corp. | | | 35,050 | | | | 2,209,201 | |
| Holly Corp. | | | 5,400 | | | | 176,742 | |
Key Energy Services, Inc. * | | | 18,600 | | | | 183,210 | |
| Linn Energy L.L.C. | | | 12,200 | | | | 426,756 | |
| Marathon Oil Corp. | | | 126,690 | | | | 4,506,363 | |
Mariner Energy, Inc. (c)* | | | 11,100 | | | | 276,612 | |
| Massey Energy Co. | | | 4,440 | | | | 186,791 | |
McDermott International, Inc. * | | | 10,110 | | | | 155,997 | |
| Murphy Oil Corp. | | | 18,475 | | | | 1,203,831 | |
Nabors Industries Ltd. * | | | 33,700 | | | | 704,330 | |
| National Oilwell Varco, Inc. | | | 32,923 | | | | 1,769,940 | |
Newfield Exploration Co. * | | | 6,900 | | | | 411,378 | |
| Noble Corp. | | | 13,520 | | | | 466,846 | |
| Noble Energy, Inc. | | | 7,235 | | | | 589,508 | |
| Occidental Petroleum Corp. | | | 41,270 | | | | 3,245,060 | |
Oceaneering International, Inc. * | | | 2,800 | | | | 173,236 | |
Oil States International, Inc. * | | | 4,700 | | | | 240,264 | |
| Overseas Shipholding Group, Inc. | | | 4,520 | | | | 151,104 | |
| Patterson-UTI Energy, Inc. | | | 19,100 | | | | 370,731 | |
| Peabody Energy Corp. | | | 10,245 | | | | 541,960 | |
| Penn Virginia Corp. | | | 17,200 | | | | 254,904 | |
Petrohawk Energy Corp. * | | | 12,100 | | | | 205,821 | |
| Pioneer Natural Resources Co. | | | 7,050 | | | | 492,090 | |
Plains Exploration & Production Co. * | | | 9,100 | | | | 253,617 | |
Pride International, Inc. * | | | 21,565 | | | | 653,851 | |
| QEP Resources, Inc. | | | 12,650 | | | | 417,829 | |
| Range Resources Corp. | | | 4,400 | | | | 164,516 | |
Rowan Cos., Inc. * | | | 9,000 | | | | 296,100 | |
| Schlumberger Ltd. | | | 69,300 | | | | 4,843,377 | |
SEACOR Holdings, Inc. * | | | 2,300 | | | | 217,925 | |
| Ship Finance International Ltd. | | | 6,918 | | | | 139,121 | |
| SM Energy Co. | | | 4,800 | | | | 200,064 | |
| Southern Union Co. | | | 13,380 | | | | 336,239 | |
Southwestern Energy Co. * | | | 6,040 | | | | 204,454 | |
| Spectra Energy Corp. | | | 43,760 | | | | 1,040,175 | |
| Sunoco, Inc. | | | 54,590 | | | | 2,045,487 | |
Superior Energy Services, Inc. * | | | 7,300 | | | | 201,626 | |
| Teekay Corp. | | | 9,040 | | | | 287,472 | |
| Tesoro Corp. | | | 62,760 | | | | 813,370 | |
| The Williams Cos., Inc. | | | 50,375 | | | | 1,084,070 | |
| Tidewater, Inc. | | | 4,820 | | | | 222,347 | |
Transocean Ltd. * | | | 19,000 | | | | 1,203,840 | |
Ultra Petroleum Corp. * | | | 3,700 | | | | 152,255 | |
Unit Corp. * | | | 4,710 | | | | 184,773 | |
| Valero Energy Corp. | | | 218,225 | | | | 3,917,139 | |
Weatherford International Ltd. * | | | 54,590 | | | | 917,658 | |
Western Refining, Inc. (c)* | | | 34,850 | | | | 231,753 | |
Whiting Petroleum Corp. * | | | 2,200 | | | | 220,968 | |
| World Fuel Services Corp. | | | 10,300 | | | | 290,769 | |
| | | | | | | | | |
| | | | | | | | 120,883,359 | |
| |
Food & Staples Retailing 3.0%
|
BJ’s Wholesale Club, Inc. * | | | 9,170 | | | | 382,664 | |
| Casey’s General Stores, Inc. | | | 3,312 | | | | 137,316 | |
| Costco Wholesale Corp. | | | 44,115 | | | | 2,769,099 | |
| CVS Caremark Corp. | | | 119,135 | | | | 3,588,346 | |
| Nash Finch Co. | | | 2,830 | | | | 118,577 | |
Rite Aid Corp. * | | | 284,700 | | | | 260,415 | |
| Ruddick Corp. | | | 7,535 | | | | 262,972 | |
| Safeway, Inc. | | | 64,140 | | | | 1,468,806 | |
| SUPERVALU, Inc. | | | 79,020 | | | | 852,626 | |
| Sysco Corp. | | | 59,240 | | | | 1,745,210 | |
The Great Atlantic & Pacific Tea Co., Inc. (c)* | | | 27,900 | | | | 95,976 | |
| The Kroger Co. | | | 107,420 | | | | 2,363,240 | |
The Pantry, Inc. * | | | 12,220 | | | | 237,679 | |
United Natural Foods, Inc. * | | | 6,200 | | | | 221,712 | |
| Wal-Mart Stores, Inc. | | | 230,625 | | | | 12,492,956 | |
| Walgreen Co. | | | 75,570 | | | | 2,560,312 | |
| Weis Markets, Inc. | | | 4,000 | | | | 155,840 | |
Whole Foods Market, Inc. * | | | 10,850 | | | | 431,287 | |
Winn-Dixie Stores, Inc. * | | | 9,800 | | | | 65,660 | |
| | | | | | | | | |
| | | | | | | | 30,210,693 | |
| |
Food, Beverage & Tobacco 5.2%
|
| Altria Group, Inc. | | | 416,780 | | | | 10,594,548 | |
| Archer-Daniels-Midland Co. | | | 82,405 | | | | 2,745,735 | |
| Brown-Forman Corp., Class B | | | 6,300 | | | | 383,103 | |
| Bunge Ltd. | | | 25,175 | | | | 1,512,262 | |
| Campbell Soup Co. | | | 15,230 | | | | 552,088 | |
Chiquita Brands International, Inc. * | | | 9,900 | | | | 131,373 | |
| Coca-Cola Enterprises, Inc. | | | 27,595 | | | | 662,556 | |
| ConAgra Foods, Inc. | | | 43,405 | | | | 976,178 | |
Constellation Brands, Inc., Class A * | | | 25,705 | | | | 507,160 | |
| Corn Products International, Inc. | | | 7,200 | | | | 306,360 | |
Dean Foods Co. * | | | 52,790 | | | | 549,016 | |
| Del Monte Foods Co. | | | 15,930 | | | | 228,436 | |
Dole Food Co., Inc. (c)* | | | 14,800 | | | | 136,456 | |
| Dr Pepper Snapple Group, Inc. | | | 10,900 | | | | 398,395 | |
| Flowers Foods, Inc. | | | 7,100 | | | | 180,908 | |
Fresh Del Monte Produce, Inc. * | | | 11,840 | | | | 262,019 | |
| General Mills, Inc. | | | 37,410 | | | | 1,404,371 | |
| H.J. Heinz Co. | | | 20,375 | | | | 1,000,616 | |
| Hormel Foods Corp. | | | 7,260 | | | | 333,379 | |
| Kellogg Co. | | | 15,680 | | | | 788,077 | |
| Kraft Foods, Inc., Class A | | | 142,592 | | | | 4,601,444 | |
| Lorillard, Inc. | | | 11,918 | | | | 1,017,082 | |
| McCormick & Co., Inc. - Non Voting Shares | | | 7,040 | | | | 311,309 | |
| Molson Coors Brewing Co., Class B | | | 15,280 | | | | 721,674 | |
| PepsiCo, Inc. | | | 77,008 | | | | 5,028,622 | |
| Philip Morris International, Inc. | | | 67,720 | | | | 3,961,620 | |
Ralcorp Holdings, Inc. * | | | 4,500 | | | | 279,270 | |
| Reynolds American, Inc. | | | 23,075 | | | | 1,497,567 | |
| Sara Lee Corp. | | | 72,150 | | | | 1,033,909 | |
Smithfield Foods, Inc. * | | | 33,506 | | | | 561,226 | |
| The Coca-Cola Co. | | | 126,165 | | | | 7,736,438 | |
| The Hershey Co. | | | 14,550 | | | | 720,080 | |
4 See financial notes
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| The JM Smucker Co. | | | 8,625 | | | | 554,415 | |
| Tyson Foods, Inc., Class A | | | 57,980 | | | | 901,589 | |
| Universal Corp. | | | 3,220 | | | | 133,437 | |
| | | | | | | | | |
| | | | | | | | 52,712,718 | |
| |
Health Care Equipment & Services 3.9%
|
| Aetna, Inc. | | | 40,260 | | | | 1,202,163 | |
| Alcon, Inc. | | | 1,595 | | | | 267,513 | |
Alere, Inc. * | | | 7,100 | | | | 209,805 | |
AMERIGROUP Corp. * | | | 6,600 | | | | 275,418 | |
| AmerisourceBergen Corp. | | | 64,940 | | | | 2,131,331 | |
| Baxter International, Inc. | | | 21,260 | | | | 1,082,134 | |
| Beckman Coulter, Inc. | | | 3,820 | | | | 203,377 | |
| Becton, Dickinson & Co. | | | 10,855 | | | | 819,770 | |
Boston Scientific Corp. * | | | 158,165 | | | | 1,009,093 | |
Brookdale Senior Living, Inc. * | | | 10,100 | | | | 189,678 | |
| C.R. Bard, Inc. | | | 3,700 | | | | 307,544 | |
| Cardinal Health, Inc. | | | 83,920 | | | | 2,911,185 | |
CareFusion Corp. * | | | 18,110 | | | | 437,175 | |
Centene Corp. * | | | 9,300 | | | | 207,576 | |
Cerner Corp. * | | | 1,505 | | | | 132,184 | |
| CIGNA Corp. | | | 23,609 | | | | 830,801 | |
Community Health Systems, Inc. * | | | 10,250 | | | | 308,320 | |
Coventry Health Care, Inc. * | | | 28,750 | | | | 673,325 | |
| Covidien plc | | | 20,170 | | | | 804,178 | |
DaVita, Inc. * | | | 7,280 | | | | 522,340 | |
| DENTSPLY International, Inc. | | | 9,135 | | | | 286,748 | |
Edwards Lifesciences Corp. * | | | 3,600 | | | | 230,076 | |
Emergency Medical Services Corp., Class A * | | | 3,200 | | | | 174,016 | |
Express Scripts, Inc. * | | | 17,040 | | | | 826,781 | |
Health Management Associates, Inc., Class A * | | | 24,095 | | | | 193,001 | |
Health Net, Inc. * | | | 26,070 | | | | 701,022 | |
Healthspring, Inc. * | | | 9,600 | | | | 280,224 | |
Henry Schein, Inc. * | | | 5,230 | | | | 293,664 | |
| Hill-Rom Holdings, Inc. | | | 6,000 | | | | 232,500 | |
Hologic, Inc. * | | | 10,200 | | | | 163,404 | |
Hospira, Inc. * | | | 5,850 | | | | 347,958 | |
Humana, Inc. * | | | 28,040 | | | | 1,634,451 | |
Intuitive Surgical, Inc. * | | | 500 | | | | 131,475 | |
Kindred Healthcare, Inc. * | | | 15,600 | | | | 214,032 | |
Kinetic Concepts, Inc. * | | | 4,600 | | | | 174,938 | |
Laboratory Corp. of America Holdings * | | | 6,830 | | | | 555,416 | |
LifePoint Hospitals, Inc. * | | | 6,130 | | | | 207,930 | |
| Lincare Holdings, Inc. | | | 7,402 | | | | 194,080 | |
Magellan Health Services, Inc. * | | | 6,200 | | | | 297,600 | |
| McKesson Corp. | | | 48,700 | | | | 3,213,226 | |
Medco Health Solutions, Inc. * | | | 30,410 | | | | 1,597,437 | |
MEDNAX, Inc. * | | | 3,200 | | | | 189,472 | |
| Medtronic, Inc. | | | 49,665 | | | | 1,748,705 | |
| Omnicare, Inc. | | | 11,210 | | | | 270,385 | |
| Owens & Minor, Inc. | | | 7,702 | | | | 219,353 | |
| Patterson Cos., Inc. | | | 5,475 | | | | 151,384 | |
| Quest Diagnostics, Inc. | | | 9,955 | | | | 489,189 | |
St. Jude Medical, Inc. * | | | 11,860 | | | | 454,238 | |
| Stryker Corp. | | | 9,745 | | | | 482,280 | |
| Teleflex, Inc. | | | 3,120 | | | | 173,940 | |
Tenet Healthcare Corp. * | | | 62,775 | | | | 273,699 | |
| UnitedHealth Group, Inc. | | | 105,975 | | | | 3,820,399 | |
| Universal American Financial Corp. | | | 6,000 | | | | 96,480 | |
| Universal Health Services, Inc., Class B | | | 10,450 | | | | 431,271 | |
Varian Medical Systems, Inc. * | | | 3,520 | | | | 222,534 | |
WellCare Health Plans, Inc. * | | | 5,900 | | | | 163,902 | |
WellPoint, Inc. * | | | 63,570 | | | | 3,454,394 | |
Zimmer Holdings, Inc. * | | | 13,040 | | | | 618,618 | |
| | | | | | | | | |
| | | | | | | | 39,735,132 | |
| |
Household & Personal Products 1.6%
|
| Alberto-Culver Co. | | | 17,370 | | | | 647,727 | |
| Avon Products, Inc. | | | 24,025 | | | | 731,561 | |
| Church & Dwight Co., Inc. | | | 3,700 | | | | 243,645 | |
| Colgate-Palmolive Co. | | | 18,630 | | | | 1,436,746 | |
Energizer Holdings, Inc. * | | | 5,720 | | | | 427,742 | |
| Kimberly-Clark Corp. | | | 30,520 | | | | 1,933,137 | |
| The Clorox Co. | | | 8,610 | | | | 572,995 | |
| The Estee Lauder Cos., Inc., Class A | | | 7,460 | | | | 530,928 | |
| The Procter & Gamble Co. | | | 158,195 | | | | 10,056,456 | |
| | | | | | | | | |
| | | | | | | | 16,580,937 | |
| |
Insurance 6.1%
|
| ACE Ltd. | | | 36,100 | | | | 2,145,062 | |
| Aflac, Inc. | | | 23,640 | | | | 1,321,240 | |
Alleghany Corp. * | | | 808 | | | | 242,788 | |
| Allied World Assurance Co. Holdings Ltd. | | | 5,340 | | | | 305,501 | |
| American Financial Group, Inc. | | | 5,340 | | | | 163,297 | |
American International Group, Inc. (c)* | | | 233,380 | | | | 9,804,294 | |
| American National Insurance Co. | | | 1,100 | | | | 86,284 | |
| Aon Corp. | | | 20,136 | | | | 800,406 | |
Arch Capital Group Ltd. * | | | 4,225 | | | | 364,998 | |
| Arthur J. Gallagher & Co. | | | 10,740 | | | | 302,438 | |
| Aspen Insurance Holdings Ltd. | | | 8,825 | | | | 250,365 | |
| Assurant, Inc. | | | 20,755 | | | | 820,653 | |
| Axis Capital Holdings Ltd. | | | 12,250 | | | | 416,622 | |
Berkshire Hathaway, Inc., Class A * | | | 51 | | | | 6,084,300 | |
Berkshire Hathaway, Inc., Class B * | | | 35,211 | | | | 2,801,387 | |
| Brown & Brown, Inc. | | | 10,100 | | | | 225,129 | |
| Cincinnati Financial Corp. | | | 23,080 | | | | 679,475 | |
CNA Financial Corp. * | | | 5,500 | | | | 152,460 | |
CNO Financial Group, Inc. * | | | 78,800 | | | | 428,672 | |
| Delphi Financial Group, Inc., Class A | | | 7,300 | | | | 197,611 | |
| Endurance Specialty Holdings Ltd. | | | 4,330 | | | | 179,262 | |
| Erie Indemnity Co., Class A | | | 5,125 | | | | 293,048 | |
| Everest Re Group Ltd. | | | 5,125 | | | | 431,935 | |
| Fidelity National Financial, Inc., Class A | | | 64,625 | | | | 865,329 | |
| First American Financial Corp. | | | 11,760 | | | | 165,110 | |
Genworth Financial, Inc., Class A * | | | 62,600 | | | | 709,884 | |
| Hanover Insurance Group, Inc. | | | 4,030 | | | | 182,358 | |
See financial notes 5
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| HCC Insurance Holdings, Inc. | | | 10,235 | | | | 271,023 | |
| Lincoln National Corp. | | | 45,180 | | | | 1,106,006 | |
| Loews Corp. | | | 40,482 | | | | 1,598,229 | |
Markel Corp. * | | | 613 | | | | 205,367 | |
| Marsh & McLennan Cos., Inc. | | | 42,850 | | | | 1,070,393 | |
MBIA, Inc. * | | | 33,210 | | | | 372,284 | |
| Mercury General Corp. | | | 2,430 | | | | 103,226 | |
| MetLife, Inc. | | | 104,505 | | | | 4,214,687 | |
| Montpelier Re Holdings Ltd. | | | 8,180 | | | | 149,858 | |
| Old Republic International Corp. | | | 37,560 | | | | 495,792 | |
| PartnerRe Ltd. | | | 6,230 | | | | 494,164 | |
| Platinum Underwriters Holdings Ltd. | | | 6,700 | | | | 288,435 | |
| Principal Financial Group, Inc. | | | 28,185 | | | | 756,485 | |
ProAssurance Corp. * | | | 3,100 | | | | 178,219 | |
| Protective Life Corp. | | | 13,165 | | | | 315,565 | |
| Prudential Financial, Inc. | | | 44,140 | | | | 2,320,881 | |
| Reinsurance Group of America, Inc. | | | 6,700 | | | | 335,469 | |
| RenaissanceRe Holdings Ltd. | | | 5,325 | | | | 320,885 | |
| Selective Insurance Group, Inc. | | | 10,800 | | | | 182,736 | |
| StanCorp Financial Group, Inc. | | | 4,225 | | | | 181,253 | |
| The Allstate Corp. | | | 87,555 | | | | 2,669,552 | |
| The Chubb Corp. | | | 31,575 | | | | 1,831,981 | |
| The Hartford Financial Services Group, Inc. | | | 109,510 | | | | 2,626,050 | |
The Phoenix Cos., Inc. * | | | 66,680 | | | | 140,028 | |
| The Progressive Corp. | | | 61,645 | | | | 1,304,408 | |
| The Travelers Cos., Inc. | | | 73,695 | | | | 4,067,964 | |
| Torchmark Corp. | | | 10,540 | | | | 603,731 | |
| Transatlantic Holdings, Inc. | | | 6,225 | | | | 327,435 | |
| Unitrin, Inc. | | | 10,050 | | | | 244,215 | |
| Unum Group | | | 39,025 | | | | 874,940 | |
| W. R. Berkley Corp. | | | 21,660 | | | | 596,083 | |
| Wesco Financial Corp. | | | 457 | | | | 166,074 | |
| White Mountains Insurance Group Ltd. | | | 1,029 | | | | 328,457 | |
| Willis Group Holdings plc | | | 11,145 | | | | 354,411 | |
| XL Group plc | | | 43,785 | | | | 926,053 | |
| | | | | | | | | |
| | | | | | | | 62,442,247 | |
| |
Materials 3.9%
|
| Air Products & Chemicals, Inc. | | | 14,275 | | | | 1,212,947 | |
| Airgas, Inc. | | | 2,700 | | | | 191,511 | |
| AK Steel Holding Corp. | | | 10,145 | | | | 127,725 | |
| Albemarle Corp. | | | 3,700 | | | | 185,481 | |
| Alcoa, Inc. | | | 154,705 | | | | 2,031,277 | |
| Allegheny Technologies, Inc. | | | 7,711 | | | | 406,292 | |
| AptarGroup, Inc. | | | 4,400 | | | | 197,472 | |
| Ashland, Inc. | | | 12,235 | | | | 631,693 | |
| Ball Corp. | | | 5,840 | | | | 375,862 | |
| Bemis Co., Inc. | | | 8,655 | | | | 274,883 | |
| Cabot Corp. | | | 7,530 | | | | 256,171 | |
| Celanese Corp., Series A | | | 11,600 | | | | 413,540 | |
Century Aluminum Co. * | | | 16,300 | | | | 220,376 | |
| CF Industries Holdings, Inc. | | | 2,771 | | | | 339,531 | |
| Cliffs Natural Resources, Inc. | | | 3,100 | | | | 202,120 | |
| Commercial Metals Co. | | | 18,245 | | | | 253,241 | |
Crown Holdings, Inc. * | | | 17,420 | | | | 560,750 | |
| Cytec Industries, Inc. | | | 3,920 | | | | 194,118 | |
| Domtar Corp. | | | 6,491 | | | | 515,126 | |
| E.I. du Pont de Nemours & Co. | | | 82,245 | | | | 3,888,543 | |
| Eastman Chemical Co. | | | 7,860 | | | | 617,560 | |
| Ecolab, Inc. | | | 10,060 | | | | 496,159 | |
| FMC Corp. | | | 5,340 | | | | 390,354 | |
| Freeport-McMoRan Copper & Gold, Inc. | | | 26,585 | | | | 2,517,068 | |
Graphic Packaging Holding Co. * | | | 81,495 | | | | 298,272 | |
| Greif, Inc., Class A | | | 4,612 | | | | 270,909 | |
| Huntsman Corp. | | | 21,915 | | | | 303,523 | |
| International Flavors & Fragrances, Inc. | | | 5,435 | | | | 272,620 | |
| International Paper Co. | | | 69,995 | | | | 1,769,473 | |
Louisiana-Pacific Corp. * | | | 21,185 | | | | 163,972 | |
Martin Marietta Materials, Inc. (c) | | | 3,110 | | | | 250,293 | |
| MeadWestvaco Corp. | | | 23,640 | | | | 608,257 | |
| Monsanto Co. | | | 17,495 | | | | 1,039,553 | |
| Nalco Holding Co. | | | 8,370 | | | | 235,867 | |
| Newmont Mining Corp. | | | 17,710 | | | | 1,078,008 | |
| Nucor Corp. | | | 36,580 | | | | 1,398,088 | |
| Olin Corp. | | | 8,955 | | | | 179,010 | |
Owens-Illinois, Inc. * | | | 17,845 | | | | 500,195 | |
| Packaging Corp. of America | | | 5,445 | | | | 133,021 | |
Pactiv Corp. * | | | 8,960 | | | | 297,293 | |
| PPG Industries, Inc. | | | 14,800 | | | | 1,135,160 | |
| Praxair, Inc. | | | 15,085 | | | | 1,377,864 | |
| Reliance Steel & Aluminum Co. | | | 6,320 | | | | 264,492 | |
| Rock-Tenn Co., Class A | | | 3,300 | | | | 187,605 | |
Rockwood Holdings, Inc. * | | | 8,100 | | | | 274,752 | |
| RPM International, Inc. | | | 11,065 | | | | 229,156 | |
| Sealed Air Corp. | | | 12,975 | | | | 300,371 | |
| Sigma-Aldrich Corp. | | | 4,530 | | | | 287,293 | |
| Silgan Holdings, Inc. | | | 7,240 | | | | 244,350 | |
| Sonoco Products Co. | | | 8,755 | | | | 293,292 | |
| Southern Copper Corp. | | | 17,865 | | | | 764,622 | |
| Steel Dynamics, Inc. | | | 20,050 | | | | 291,126 | |
| Temple-Inland, Inc. | | | 24,545 | | | | 508,572 | |
| The Dow Chemical Co. | | | 140,200 | | | | 4,322,366 | |
| The Lubrizol Corp. | | | 4,535 | | | | 464,792 | |
| The Mosaic Co. | | | 5,110 | | | | 373,848 | |
| The Scotts Miracle-Gro Co., Class A | | | 5,820 | | | | 310,788 | |
| The Sherwin-Williams Co. | | | 8,445 | | | | 616,232 | |
| The Valspar Corp. | | | 15,750 | | | | 505,575 | |
United States Steel Corp. (c) | | | 15,695 | | | | 671,589 | |
| Vulcan Materials Co. | | | 10,123 | | | | 369,591 | |
W.R. Grace & Co. * | | | 6,100 | | | | 195,566 | |
| Westlake Chemical Corp. | | | 10,700 | | | | 341,972 | |
| Worthington Industries, Inc. | | | 7,065 | | | | 108,801 | |
| | | | | | | | | |
| | | | | | | | 39,737,929 | |
| |
Media 3.8%
|
| Cablevision Systems Corp., Class A | | | 12,865 | | | | 344,010 | |
| CBS Corp., Class B - Non Voting Shares | | | 120,190 | | | | 2,034,817 | |
Central European Media Enterprises, Ltd., Class A (c)* | | | 6,300 | | | | 145,215 | |
Clear Channel Outdoor Holdings, Inc., Class A * | | | 43,570 | | | | 517,612 | |
| Comcast Corp., Class A | | | 215,140 | | | | 4,427,581 | |
| Comcast Corp., Special Class A | | | 75,620 | | | | 1,461,735 | |
6 See financial notes
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
DIRECTV, Class A * | | | 35,740 | | | | 1,553,260 | |
Discovery Communications, Inc., Class A * | | | 10,167 | | | | 453,550 | |
Discovery Communications, Inc., Class C * | | | 12,907 | | | | 501,566 | |
| DISH Network Corp., Class A | | | 29,770 | | | | 591,232 | |
DreamWorks Animation SKG, Inc., Class A * | | | 5,800 | | | | 204,740 | |
| Gannett Co., Inc. | | | 50,330 | | | | 596,410 | |
Lamar Advertising Co., Class A * | | | 5,320 | | | | 180,827 | |
Liberty Global, Inc., Class C * | | | 14,870 | | | | 538,145 | |
Liberty Global, Inc., Series A (c)* | | | 15,210 | | | | 574,786 | |
Live Nation Entertainment, Inc. * | | | 13,114 | | | | 124,452 | |
| Meredith Corp. | | | 3,300 | | | | 112,035 | |
| News Corp., Class A | | | 126,320 | | | | 1,826,587 | |
| News Corp., Class B | | | 41,290 | | | | 663,943 | |
| Omnicom Group, Inc. | | | 22,304 | | | | 980,484 | |
| Regal Entertainment Group, Class A | | | 35,585 | | | | 480,398 | |
| Scripps Networks Interactive, Class A | | | 3,245 | | | | 165,138 | |
The E.W. Scripps Co., Class A * | | | 24,815 | | | | 216,883 | |
The Interpublic Group of Cos., Inc. * | | | 57,105 | | | | 591,037 | |
| The McGraw-Hill Cos., Inc. | | | 23,480 | | | | 884,022 | |
The New York Times Co., Class A * | | | 16,600 | | | | 127,322 | |
| The Walt Disney Co. | | | 118,950 | | | | 4,295,284 | |
The Washington Post Co., Class B (c) | | | 228 | | | | 91,690 | |
| Time Warner Cable, Inc. | | | 80,009 | | | | 4,630,121 | |
| Time Warner, Inc. | | | 202,188 | | | | 6,573,132 | |
| Viacom Inc., Class B | | | 48,100 | | | | 1,856,179 | |
| Virgin Media, Inc. | | | 41,210 | | | | 1,047,970 | |
Warner Music Group Corp. * | | | 22,210 | | | | 115,492 | |
| | | | | | | | | |
| | | | | | | | 38,907,655 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 5.1%
|
| Abbott Laboratories | | | 73,045 | | | | 3,748,669 | |
| Allergan, Inc. | | | 7,530 | | | | 545,247 | |
Amgen, Inc. * | | | 50,755 | | | | 2,902,679 | |
Bio-Rad Laboratories, Inc., Class A * | | | 1,800 | | | | 163,116 | |
Biogen Idec, Inc. * | | | 13,150 | | | | 824,637 | |
| Bristol-Myers Squibb Co. | | | 152,950 | | | | 4,114,355 | |
Celgene Corp. * | | | 4,600 | | | | 285,522 | |
Cephalon, Inc. * | | | 3,835 | | | | 254,797 | |
Charles River Laboratories International, Inc. * | | | 3,420 | | | | 112,073 | |
Covance, Inc. * | | | 4,420 | | | | 207,696 | |
| Eli Lilly & Co. | | | 102,955 | | | | 3,624,016 | |
Endo Pharmaceuticals Holdings, Inc. * | | | 10,500 | | | | 385,770 | |
Forest Laboratories, Inc. * | | | 15,355 | | | | 507,483 | |
Furiex Pharmaceuticals, Inc. * | | | 675 | | | | 7,769 | |
Genzyme Corp. * | | | 11,350 | | | | 818,676 | |
Gilead Sciences, Inc. * | | | 17,660 | | | | 700,572 | |
| Johnson & Johnson | | | 148,395 | | | | 9,448,310 | |
King Pharmaceuticals, Inc. * | | | 29,300 | | | | 414,302 | |
Life Technologies Corp. * | | | 6,519 | | | | 327,123 | |
| Merck & Co., Inc. | | | 162,957 | | | | 5,912,080 | |
Mettler-Toledo International, Inc. * | | | 1,500 | | | | 195,840 | |
Mylan, Inc. * | | | 6,875 | | | | 139,700 | |
| PerkinElmer, Inc. | | | 7,600 | | | | 178,220 | |
| Pfizer, Inc. | | | 828,999 | | | | 14,424,583 | |
| Pharmaceutical Product Development, Inc. | | | 8,100 | | | | 209,061 | |
Thermo Fisher Scientific, Inc. * | | | 27,045 | | | | 1,390,654 | |
| Warner Chilcott plc, Class A | | | 5,700 | | | | 137,028 | |
Waters Corp. * | | | 2,000 | | | | 148,260 | |
Watson Pharmaceuticals, Inc. * | | | 6,365 | | | | 296,927 | |
| | | | | | | | | |
| | | | | | | | 52,425,165 | |
| |
Real Estate 2.3%
|
| Alexandria Real Estate Equities, Inc. | | | 3,864 | | | | 283,927 | |
| AMB Property Corp. | | | 12,740 | | | | 359,141 | |
| Annaly Capital Management, Inc. | | | 64,285 | | | | 1,138,487 | |
| Apartment Investment & Management Co., Class A | | | 27,454 | | | | 639,953 | |
| AvalonBay Communities, Inc. | | | 5,599 | | | | 595,230 | |
| BioMed Realty Trust, Inc. | | | 10,700 | | | | 196,345 | |
| Boston Properties, Inc. | | | 11,290 | | | | 973,085 | |
| Brandywine Realty Trust | | | 20,525 | | | | 245,684 | |
| BRE Properties, Inc. | | | 8,520 | | | | 365,764 | |
| Camden Property Trust | | | 5,720 | | | | 283,655 | |
CB Richard Ellis Group, Inc., Class A * | | | 23,130 | | | | 424,435 | |
| CBL & Associates Properties, Inc. | | | 17,336 | | | | 271,828 | |
| Colonial Properties Trust | | | 13,325 | | | | 238,917 | |
| CommonWealth REIT | | | 14,262 | | | | 362,968 | |
| Corporate Office Properties Trust | | | 4,400 | | | | 156,156 | |
| Developers Diversified Realty Corp. | | | 38,752 | | | | 499,901 | |
| Douglas Emmett, Inc. | | | 16,100 | | | | 288,834 | |
| Duke Realty Corp. | | | 39,875 | | | | 497,241 | |
| Equity Residential | | | 23,745 | | | | 1,154,719 | |
| Essex Property Trust, Inc. | | | 1,900 | | | | 214,624 | |
| Federal Realty Investment Trust | | | 2,970 | | | | 243,481 | |
First Industrial Realty Trust, Inc. (c)* | | | 28,830 | | | | 211,324 | |
| HCP, Inc. | | | 18,065 | | | | 650,521 | |
| Health Care REIT, Inc. | | | 7,330 | | | | 374,563 | |
| Highwoods Properties, Inc. | | | 5,435 | | | | 180,062 | |
| Home Properties, Inc. | | | 5,600 | | | | 304,920 | |
| Hospitality Properties Trust | | | 13,855 | | | | 316,033 | |
| Host Hotels & Resorts, Inc. | | | 58,778 | | | | 933,982 | |
iStar Financial, Inc. (c)* | | | 73,670 | | | | 336,672 | |
| Jones Lang LaSalle, Inc. | | | 2,500 | | | | 195,150 | |
| Kimco Realty Corp. | | | 30,860 | | | | 531,718 | |
| Lexington Realty Trust | | | 27,500 | | | | 213,950 | |
| Liberty Property Trust | | | 9,150 | | | | 306,159 | |
| Mack-Cali Realty Corp. | | | 8,350 | | | | 280,393 | |
| MFA Financial, Inc. | | | 25,600 | | | | 202,496 | |
| National Retail Properties, Inc. | | | 7,800 | | | | 211,380 | |
| Nationwide Health Properties, Inc. | | | 5,535 | | | | 225,994 | |
| Pennsylvania Real Estate Investment Trust | | | 17,300 | | | | 246,871 | |
| Plum Creek Timber Co., Inc. | | | 12,795 | | | | 471,368 | |
| ProLogis | | | 64,360 | | | | 878,514 | |
See financial notes 7
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Public Storage | | | 5,630 | | | | 558,609 | |
| Rayonier, Inc. | | | 5,935 | | | | 309,807 | |
| Realty Income Corp. | | | 8,140 | | | | 279,039 | |
| Redwood Trust, Inc. | | | 11,525 | | | | 163,424 | |
| Regency Centers Corp. | | | 5,220 | | | | 220,180 | |
| Senior Housing Properties Trust | | | 10,640 | | | | 254,190 | |
| Simon Property Group, Inc. | | | 14,476 | | | | 1,389,985 | |
| SL Green Realty Corp. | | | 6,307 | | | | 414,496 | |
| The Macerich Co. | | | 10,402 | | | | 464,033 | |
| UDR, Inc. | | | 18,187 | | | | 408,844 | |
| Ventas, Inc. | | | 6,325 | | | | 338,767 | |
| Vornado Realty Trust | | | 12,528 | | | | 1,094,822 | |
| Weingarten Realty Investors | | | 15,735 | | | | 379,685 | |
| Weyerhaeuser Co. | | | 68,557 | | | | 1,111,994 | |
| | | | | | | | | |
| | | | | | | | 23,894,320 | |
| |
Retailing 3.6%
|
| Aaron’s, Inc. | | | 8,250 | | | | 155,595 | |
| Abercrombie & Fitch Co., Class A | | | 7,810 | | | | 334,737 | |
| Advance Auto Parts, Inc. | | | 6,245 | | | | 405,800 | |
Amazon.com, Inc. * | | | 6,150 | | | | 1,015,611 | |
| American Eagle Outfitters, Inc. | | | 14,035 | | | | 224,700 | |
AnnTaylor Stores Corp. * | | | 10,930 | | | | 254,669 | |
Asbury Automotive Group, Inc. * | | | 16,945 | | | | 244,347 | |
AutoNation, Inc. (c)* | | | 33,715 | | | | 782,862 | |
AutoZone, Inc. * | | | 1,723 | | | | 409,436 | |
Barnes & Noble, Inc. (c) | | | 5,240 | | | | 78,495 | |
Bed Bath & Beyond, Inc. * | | | 11,365 | | | | 498,924 | |
| Best Buy Co., Inc. | | | 45,050 | | | | 1,936,249 | |
Big Lots, Inc. * | | | 6,565 | | | | 205,944 | |
Cabela’s, Inc. * | | | 10,300 | | | | 190,962 | |
CarMax, Inc. * | | | 17,540 | | | | 543,565 | |
Charming Shoppes, Inc. * | | | 26,890 | | | | 93,846 | |
| Chico’s FAS, Inc. | | | 8,400 | | | | 81,648 | |
Collective Brands, Inc. * | | | 6,340 | | | | 97,192 | |
Core-Mark Holding Co., Inc. * | | | 5,100 | | | | 168,300 | |
Dick’s Sporting Goods, Inc. * | | | 7,900 | | | | 227,678 | |
| Dillard’s, Inc., Class A | | | 22,575 | | | | 575,888 | |
Dollar Tree, Inc. * | | | 9,517 | | | | 488,317 | |
| Expedia, Inc. | | | 15,930 | | | | 461,174 | |
| Family Dollar Stores, Inc. | | | 12,475 | | | | 575,971 | |
| Foot Locker, Inc. | | | 21,595 | | | | 344,008 | |
GameStop Corp., Class A * | | | 18,190 | | | | 357,615 | |
| Genuine Parts Co. | | | 16,000 | | | | 765,760 | |
Group 1 Automotive, Inc. * | | | 7,335 | | | | 258,632 | |
| J.C. Penney Co., Inc. | | | 38,200 | | | | 1,191,076 | |
Kohl’s Corp. * | | | 22,095 | | | | 1,131,264 | |
Liberty Media Corp. - Interactive, Class A * | | | 50,220 | | | | 741,247 | |
| Limited Brands, Inc. | | | 36,420 | | | | 1,070,384 | |
| Lowe’s Cos., Inc. | | | 118,755 | | | | 2,533,044 | |
| Macy’s, Inc. | | | 69,920 | | | | 1,652,909 | |
| Nordstrom, Inc. | | | 13,455 | | | | 518,152 | |
O’Reilly Automotive, Inc. * | | | 7,830 | | | | 458,055 | |
Office Depot, Inc. * | | | 92,050 | | | | 413,305 | |
OfficeMax, Inc. * | | | 17,655 | | | | 312,494 | |
Penske Automotive Group, Inc. * | | | 14,395 | | | | 193,613 | |
| PetSmart, Inc. | | | 7,140 | | | | 267,250 | |
| RadioShack Corp. | | | 14,380 | | | | 289,469 | |
Rent-A-Center, Inc. | | | 15,370 | | | | 386,402 | |
| Ross Stores, Inc. | | | 5,345 | | | | 315,302 | |
Saks, Inc. * | | | 57,435 | | | | 639,826 | |
Sears Holdings Corp. (c)* | | | 12,021 | | | | 865,272 | |
Signet Jewelers Ltd. * | | | 6,300 | | | | 221,634 | |
Sonic Automotive, Inc., Class A * | | | 18,860 | | | | 205,951 | |
| Staples, Inc. | | | 39,950 | | | | 817,776 | |
| Target Corp. | | | 58,195 | | | | 3,022,648 | |
| The Gap, Inc. | | | 34,675 | | | | 659,172 | |
| The Home Depot, Inc. | | | 161,596 | | | | 4,990,084 | |
| The TJX Cos., Inc. | | | 19,630 | | | | 900,821 | |
| Tiffany & Co. | | | 5,535 | | | | 293,355 | |
| Tractor Supply Co. | | | 6,000 | | | | 237,600 | |
Urban Outfitters, Inc. * | | | 4,900 | | | | 150,773 | |
| Williams-Sonoma, Inc. | | | 8,045 | | | | 260,417 | |
| | | | | | | | | |
| | | | | | | | 36,517,220 | |
| |
Semiconductors & Semiconductor Equipment 1.7%
|
Advanced Micro Devices, Inc. * | | | 32,630 | | | | 239,178 | |
| Altera Corp. | | | 5,750 | | | | 179,457 | |
Amkor Technology, Inc. * | | | 30,580 | | | | 220,482 | |
| Analog Devices, Inc. | | | 14,865 | | | | 500,504 | |
| Applied Materials, Inc. | | | 80,025 | | | | 989,109 | |
| Broadcom Corp., Class A | | | 13,345 | | | | 543,675 | |
Fairchild Semiconductor International, Inc. * | | | 13,760 | | | | 155,075 | |
First Solar, Inc. * | | | 1,600 | | | | 220,288 | |
| Intel Corp. | | | 372,610 | | | | 7,478,283 | |
KLA-Tencor Corp. | | | 8,280 | | | | 295,762 | |
Lam Research Corp. * | | | 8,500 | | | | 389,215 | |
| Linear Technology Corp. | | | 9,955 | | | | 320,850 | |
LSI Corp. * | | | 25,040 | | | | 131,210 | |
Marvell Technology Group Ltd. * | | | 16,130 | | | | 311,470 | |
| Maxim Integrated Products, Inc. | | | 20,400 | | | | 441,864 | |
MEMC Electronic Materials, Inc. * | | | 32,700 | | | | 419,214 | |
| Microchip Technology, Inc. | | | 10,780 | | | | 346,900 | |
Micron Technology, Inc. * | | | 81,175 | | | | 671,317 | |
| National Semiconductor Corp. | | | 14,550 | | | | 199,335 | |
Novellus Systems, Inc. * | | | 4,000 | | | | 116,840 | |
NVIDIA Corp. * | | | 16,237 | | | | 195,331 | |
ON Semiconductor Corp. * | | | 22,200 | | | | 170,274 | |
| Texas Instruments, Inc. | | | 76,270 | | | | 2,255,304 | |
| Xilinx, Inc. | | | 12,660 | | | | 339,415 | |
| | | | | | | | | |
| | | | | | | | 17,130,352 | |
| |
Software & Services 5.0%
|
| Accenture plc, Class A | | | 30,795 | | | | 1,376,844 | |
| Activision Blizzard, Inc. | | | 33,300 | | | | 381,951 | |
Adobe Systems, Inc. * | | | 11,240 | | | | 316,406 | |
Akamai Technologies, Inc. * | | | 5,700 | | | | 294,519 | |
Alliance Data Systems Corp. * | | | 3,580 | | | | 217,378 | |
Amdocs Ltd. * | | | 10,000 | | | | 306,800 | |
AOL, Inc. * | | | 29,380 | | | | 783,858 | |
Autodesk, Inc. * | | | 7,000 | | | | 253,260 | |
| Automatic Data Processing, Inc. | | | 26,180 | | | | 1,162,916 | |
BMC Software, Inc. * | | | 7,540 | | | | 342,768 | |
| Broadridge Financial Solutions, Inc. | | | 13,487 | | | | 296,714 | |
| CA, Inc. | | | 13,705 | | | | 318,093 | |
CACI International, Inc., Class A * | | | 5,400 | | | | 270,648 | |
8 See financial notes
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Check Point Software Technologies Ltd. * | | | 5,400 | | | | 230,850 | |
Citrix Systems, Inc. * | | | 3,970 | | | | 254,358 | |
Cognizant Technology Solutions Corp., Class A * | | | 5,700 | | | | 371,583 | |
| Computer Sciences Corp. | | | 22,245 | | | | 1,091,117 | |
Convergys Corp. * | | | 15,365 | | | | 173,932 | |
| CoreLogic, Inc. | | | 11,760 | | | | 206,623 | |
| DST Systems, Inc. | | | 6,500 | | | | 281,255 | |
eBay, Inc. * | | | 70,775 | | | | 2,109,803 | |
Electronic Arts, Inc. * | | | 16,050 | | | | 254,393 | |
| Fidelity National Information Services, Inc. | | | 29,623 | | | | 802,783 | |
Fiserv, Inc. * | | | 9,650 | | | | 526,118 | |
Google, Inc., Class A * | | | 5,559 | | | | 3,407,611 | |
IAC/InterActiveCorp * | | | 11,962 | | | | 333,740 | |
| International Business Machines Corp. | | | 58,995 | | | | 8,471,682 | |
Intuit, Inc. * | | | 13,855 | | | | 665,040 | |
| MasterCard, Inc., Class A | | | 2,468 | | | | 592,468 | |
McAfee, Inc. * | | | 6,935 | | | | 328,025 | |
| Microsoft Corp. | | | 567,415 | | | | 15,115,936 | |
Monster Worldwide, Inc. * | | | 10,600 | | | | 191,436 | |
Nuance Communications, Inc. * | | | 10,600 | | | | 166,526 | |
| Oracle Corp. | | | 111,160 | | | | 3,268,104 | |
| Paychex, Inc. | | | 17,060 | | | | 472,562 | |
SAIC, Inc. * | | | 21,800 | | | | 338,772 | |
Symantec Corp. * | | | 46,245 | | | | 748,244 | |
Synopsys, Inc. * | | | 9,900 | | | | 253,242 | |
Teradata Corp. * | | | 7,400 | | | | 291,264 | |
| Total System Services, Inc. | | | 18,570 | | | | 289,878 | |
Unisys Corp. * | | | 4,500 | | | | 103,725 | |
VeriSign, Inc. * | | | 8,960 | | | | 311,360 | |
| Visa, Inc., Class A | | | 16,800 | | | | 1,313,256 | |
VMware, Inc., Class A * | | | 4,000 | | | | 305,840 | |
| Western Union Co. | | | 28,510 | | | | 501,776 | |
Yahoo!, Inc. * | | | 70,705 | | | | 1,167,340 | |
| | | | | | | | | |
| | | | | | | | 51,262,797 | |
| |
Technology Hardware & Equipment 4.1%
|
Agilent Technologies, Inc. * | | | 13,405 | | | | 466,494 | |
| Amphenol Corp., Class A | | | 6,000 | | | | 300,780 | |
| Anixter International, Inc. | | | 4,820 | | | | 258,786 | |
Apple, Inc. * | | | 18,430 | | | | 5,545,034 | |
Arrow Electronics, Inc. * | | | 25,095 | | | | 743,063 | |
Avnet, Inc. * | | | 25,780 | | | | 767,728 | |
| AVX Corp. | | | 11,880 | | | | 170,359 | |
Benchmark Electronics, Inc. * | | | 5,140 | | | | 84,450 | |
Brightpoint, Inc. * | | | 23,000 | | | | 172,270 | |
Brocade Communications Systems, Inc. * | | | 25,300 | | | | 159,896 | |
Cisco Systems, Inc. * | | | 199,765 | | | | 4,560,635 | |
CommScope, Inc. * | | | 8,900 | | | | 281,774 | |
| Corning, Inc. | | | 60,760 | | | | 1,110,693 | |
Dell, Inc. * | | | 215,310 | | | | 3,096,158 | |
| Diebold, Inc. | | | 9,030 | | | | 276,770 | |
Dolby Laboratories, Inc., Class A * | | | 2,000 | | | | 123,360 | |
EchoStar Corp., Class A * | | | 9,300 | | | | 197,160 | |
EMC Corp. * | | | 98,010 | | | | 2,059,190 | |
Flextronics International Ltd. * | | | 135,300 | | | | 968,748 | |
FLIR Systems, Inc. * | | | 4,200 | | | | 116,928 | |
| Harris Corp. | | | 6,025 | | | | 272,270 | |
| Hewlett-Packard Co. | | | 125,275 | | | | 5,269,067 | |
Ingram Micro, Inc., Class A * | | | 49,755 | | | | 878,673 | |
Insight Enterprises, Inc. * | | | 12,600 | | | | 190,512 | |
| Jabil Circuit, Inc. | | | 28,395 | | | | 435,579 | |
Juniper Networks, Inc. * | | | 18,170 | | | | 588,526 | |
Lexmark International, Inc., Class A * | | | 8,345 | | | | 317,360 | |
| Molex, Inc. | | | 8,930 | | | | 181,279 | |
| Molex, Inc., Class A | | | 12,630 | | | | 215,594 | |
Motorola, Inc. * | | | 278,120 | | | | 2,266,678 | |
NCR Corp. * | | | 20,545 | | | | 281,877 | |
NetApp, Inc. * | | | 7,230 | | | | 384,998 | |
| QUALCOMM, Inc. | | | 62,785 | | | | 2,833,487 | |
SanDisk Corp. * | | | 12,565 | | | | 472,193 | |
Sanmina-SCI Corp. * | | | 17,482 | | | | 230,413 | |
Seagate Technology * | | | 28,935 | | | | 423,898 | |
SYNNEX Corp. * | | | 8,920 | | | | 259,037 | |
Tech Data Corp. * | | | 19,340 | | | | 831,427 | |
| Tellabs, Inc. | | | 22,760 | | | | 155,223 | |
Trimble Navigation Ltd. * | | | 4,300 | | | | 154,112 | |
| Tyco Electronics Ltd. | | | 37,015 | | | | 1,172,635 | |
Vishay Intertechnology, Inc. * | | | 18,540 | | | | 209,502 | |
Vishay Precision Group, Inc. * | | | 15,324 | | | | 260,508 | |
Western Digital Corp. * | | | 13,000 | | | | 416,260 | |
| Xerox Corp. | | | 109,626 | | | | 1,282,624 | |
| | | | | | | | | |
| | | | | | | | 41,444,008 | |
| |
Telecommunication Services 4.9%
|
American Tower Corp., Class A * | | | 6,265 | | | | 323,337 | |
| AT&T, Inc. | | | 821,085 | | | | 23,400,922 | |
| CenturyLink, Inc. | | | 8,950 | | | | 370,351 | |
Crown Castle International Corp. * | | | 10,580 | | | | 456,210 | |
| Frontier Communications Corp. | | | 95,598 | | | | 839,350 | |
Leap Wireless International, Inc. * | | | 7,000 | | | | 79,870 | |
Level 3 Communications, Inc. * | | | 149,200 | | | | 144,381 | |
MetroPCS Communications, Inc. * | | | 59,400 | | | | 618,354 | |
| Millicom International Cellular S.A. | | | 4,000 | | | | 378,400 | |
NII Holdings, Inc. * | | | 9,170 | | | | 383,398 | |
| Qwest Communications International, Inc. | | | 192,880 | | | | 1,273,008 | |
Sprint Nextel Corp. * | | | 869,000 | | | | 3,580,280 | |
| Telephone & Data Systems, Inc. | | | 16,800 | | | | 585,144 | |
tw telecom, Inc. * | | | 9,900 | | | | 182,160 | |
United States Cellular Corp. * | | | 7,635 | | | | 354,722 | |
| Verizon Communications, Inc. | | | 510,830 | | | | 16,586,650 | |
| Windstream Corp. | | | 43,300 | | | | 548,178 | |
| | | | | | | | | |
| | | | | | | | 50,104,715 | |
| |
Transportation 2.2%
|
Alaska Air Group, Inc. * | | | 5,825 | | | | 307,560 | |
| Alexander & Baldwin, Inc. | | | 8,120 | | | | 279,572 | |
AMERCO * | | | 1,820 | | | | 149,822 | |
AMR Corp. * | | | 83,720 | | | | 659,714 | |
Avis Budget Group, Inc. * | | | 49,690 | | | | 576,901 | |
| C.H. Robinson Worldwide, Inc. | | | 7,280 | | | | 513,094 | |
See financial notes 9
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Con-way, Inc. | | | 4,830 | | | | 159,438 | |
| CSX Corp. | | | 29,470 | | | | 1,810,931 | |
Delta Air Lines, Inc. * | | | 28,600 | | | | 397,254 | |
Dollar Thrifty Automotive Group, Inc. * | | | 6,700 | | | | 310,880 | |
| Expeditors International of Washington, Inc. | | | 6,025 | | | | 297,394 | |
| FedEx Corp. | | | 24,862 | | | | 2,180,895 | |
Hertz Global Holdings, Inc. * | | | 106,500 | | | | 1,205,580 | |
| J.B. Hunt Transport Services, Inc. | | | 5,845 | | | | 210,186 | |
JetBlue Airways Corp. * | | | 47,990 | | | | 334,970 | |
Kansas City Southern * | | | 7,290 | | | | 319,448 | |
| Norfolk Southern Corp. | | | 33,850 | | | | 2,081,436 | |
| Ryder System, Inc. | | | 11,510 | | | | 503,563 | |
| SkyWest, Inc. | | | 10,200 | | | | 154,632 | |
| Southwest Airlines Co. | | | 49,775 | | | | 684,904 | |
| Union Pacific Corp. | | | 31,156 | | | | 2,731,758 | |
United Continental Holdings, Inc. * | | | 51,043 | | | | 1,482,289 | |
| United Parcel Service, Inc., Class B | | | 65,780 | | | | 4,429,625 | |
US Airways Group, Inc. * | | | 28,350 | | | | 334,247 | |
| UTI Worldwide, Inc. | | | 11,800 | | | | 226,796 | |
| Werner Enterprises, Inc. | | | 7,540 | | | | 160,753 | |
| | | | | | | | | |
| | | | | | | | 22,503,642 | |
| |
Utilities 5.8%
|
| AGL Resources, Inc. | | | 8,540 | | | | 335,280 | |
| Allegheny Energy, Inc. | | | 23,155 | | | | 537,196 | |
| Alliant Energy Corp. | | | 15,075 | | | | 550,690 | |
| Ameren Corp. | | | 46,290 | | | | 1,341,484 | |
| American Electric Power Co., Inc. | | | 53,845 | | | | 2,015,957 | |
| American Water Works Co., Inc. | | | 13,800 | | | | 329,544 | |
| Aqua America, Inc. | | | 11,600 | | | | 249,748 | |
| Atmos Energy Corp. | | | 13,660 | | | | 402,287 | |
| Avista Corp. | | | 8,300 | | | | 181,272 | |
| Black Hills Corp. | | | 8,825 | | | | 280,988 | |
Calpine Corp. * | | | 36,150 | | | | 451,875 | |
| CenterPoint Energy, Inc. | | | 56,770 | | | | 940,111 | |
| Cleco Corp. | | | 6,700 | | | | 209,509 | |
| CMS Energy Corp. | | | 30,810 | | | | 566,288 | |
| Consolidated Edison, Inc. | | | 36,225 | | | | 1,801,107 | |
| Constellation Energy Group, Inc. | | | 28,680 | | | | 867,283 | |
| Dominion Resources, Inc. | | | 58,110 | | | | 2,525,461 | |
| DPL, Inc. | | | 6,920 | | | | 180,612 | |
| DTE Energy Co. | | | 23,665 | | | | 1,106,575 | |
| Duke Energy Corp. | | | 178,445 | | | | 3,249,483 | |
Dynegy, Inc. (c)* | | | 62,680 | | | | 290,835 | |
| Edison International | | | 46,290 | | | | 1,708,101 | |
| Energen Corp. | | | 7,010 | | | | 312,926 | |
| Entergy Corp. | | | 18,317 | | | | 1,365,166 | |
| Exelon Corp. | | | 74,355 | | | | 3,035,171 | |
| FirstEnergy Corp. | | | 53,190 | | | | 1,931,861 | |
| Great Plains Energy, Inc. | | | 17,770 | | | | 338,163 | |
| Hawaiian Electric Industries, Inc. | | | 13,070 | | | | 294,598 | |
| IDACORP, Inc. | | | 4,640 | | | | 170,752 | |
| Integrys Energy Group, Inc. | | | 11,235 | | | | 597,590 | |
| MDU Resources Group, Inc. | | | 16,780 | | | | 334,425 | |
Mirant Corp. * | | | 30,745 | | | | 326,204 | |
| National Fuel Gas Co. | | | 13,345 | | | | 736,377 | |
| New Jersey Resources Corp. | | | 6,180 | | | | 250,228 | |
| NextEra Energy, Inc. | | | 44,580 | | | | 2,453,683 | |
| Nicor, Inc. | | | 4,940 | | | | 235,292 | |
| NiSource, Inc. | | | 52,235 | | | | 904,188 | |
| Northeast Utilities | | | 18,915 | | | | 591,661 | |
| NorthWestern Corp. | | | 6,700 | | | | 199,459 | |
NRG Energy, Inc. * | | | 39,660 | | | | 789,631 | |
| NSTAR | | | 13,580 | | | | 566,422 | |
| NV Energy, Inc. | | | 28,500 | | | | 389,310 | |
| OGE Energy Corp. | | | 9,665 | | | | 426,806 | |
| ONEOK, Inc. | | | 15,610 | | | | 777,690 | |
| Pepco Holdings, Inc. | | | 41,265 | | | | 794,764 | |
| PG&E Corp. | | | 49,215 | | | | 2,353,461 | |
| Piedmont Natural Gas Co., Inc. | | | 6,250 | | | | 184,313 | |
| Pinnacle West Capital Corp. | | | 18,785 | | | | 773,191 | |
| PNM Resources, Inc. | | | 23,995 | | | | 282,901 | |
| Portland General Electric Co. | | | 9,745 | | | | 203,671 | |
| PPL Corp. | | | 57,555 | | | | 1,548,230 | |
| Progress Energy, Inc. | | | 40,465 | | | | 1,820,925 | |
| Public Service Enterprise Group, Inc. | | | 52,980 | | | | 1,713,903 | |
| Questar Corp. | | | 12,650 | | | | 214,671 | |
RRI Energy, Inc. * | | | 153,540 | | | | 577,310 | |
| SCANA Corp. | | | 17,785 | | | | 726,339 | |
| Sempra Energy | | | 22,615 | | | | 1,209,450 | |
| Southern Co. | | | 94,935 | | | | 3,595,189 | |
| Southwest Gas Corp. | | | 4,925 | | | | 171,193 | |
| TECO Energy, Inc. | | | 24,325 | | | | 427,877 | |
The AES Corp. * | | | 176,340 | | | | 2,105,500 | |
| UGI Corp. | | | 17,320 | | | | 521,159 | |
| Unisource Energy Corp. | | | 7,200 | | | | 252,504 | |
| Vectren Corp. | | | 11,965 | | | | 327,602 | |
| Westar Energy, Inc. | | | 14,870 | | | | 376,211 | |
| WGL Holdings, Inc. | | | 5,945 | | | | 229,180 | |
| Wisconsin Energy Corp. | | | 9,720 | | | | 578,729 | |
| Xcel Energy, Inc. | | | 57,990 | | | | 1,383,641 | |
| | | | | | | | | |
| | | | | | | | 59,521,203 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $943,510,516) | | | 1,012,552,616 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Other Investment Company 0.6% of net assets |
| |
Money Fund 0.6%
|
| State Street Institutional Liquid Reserves Fund - Institutional Class | | | 6,235,229 | | | | 6,235,229 | |
| | | | | | | | | |
| Total Other Investment Company |
| (Cost $6,235,229) | | | 6,235,229 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
10 See financial notes
Schwab Fundamental US Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
Security
| | Face Amount
| | Value
|
| Rate, Maturity Date | | ($) | | ($) |
| |
Short-Term Investment 0.1% of net assets |
| |
U.S. Treasury Obligation 0.1%
|
| U.S. Treasury Bill |
0.14%, 12/16/10 (a) | | | 876,000 | | | | 875,852 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $875,852) | | | 875,852 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Collateral Invested for Securities on Loan 1.5% of net assets |
| | | | | | | | | |
| | | | | | | | | |
| State Street Navigator Security Lending Prime Portfolio | | | 15,323,057 | | | | 15,323,057 | |
| | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $15,323,057) | | | 15,323,057 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
End of collateral invested for securities on loan.
At 10/31/10 tax basis cost of the fund’s investments was $968,473,431 and the unrealized appreciation and depreciation were $103,007,616 and ($51,817,350), respectively, with a net unrealized appreciation of $51,190,266.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is held as collateral for open futures contracts. |
| (b) | | Issuer is affiliated with the fund’s adviser. |
| (c) | | All or a portion of this security is on loan. |
| | | |
| REIT — | | Real Estate Investment Trust |
In addition to the above, the fund held the following at 10/31/10.
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contract |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
S&P 500 Index, e-mini, Long, expires 12/17/10 | | | 75 | | | | 4,423,875 | | | | 319,706 | |
See financial notes 11
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 99 | .1% | | Common Stock | | | 339,415,995 | | | | 408,569,785 | |
| | 0 | .3% | | Rights | | | — | | | | 1,287,876 | |
| | 0 | .5% | | Other Investment Company | | | 2,016,466 | | | | 2,016,466 | |
| | 0 | .1% | | Short-Term Investments | | | 346,744 | | | | 346,744 | |
| |
| |
| | 100 | .0% | | Total Investments | | | 341,779,205 | | | | 412,220,871 | |
| | 3 | .7% | | Collateral Invested for Securities on Loan | | | 15,374,683 | | | | 15,374,683 | |
| | (3 | .7)% | | Other Assets and Liabilities, Net | | | | | | | (15,256,332 | ) |
| |
| |
| | 100 | .0% | | Net Assets | | | | | | | 412,339,222 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 99.1% of net assets |
| |
Automobiles & Components 1.0%
|
American Axle & Manufacturing Holdings, Inc. * | | | 27,200 | | | | 250,784 | |
| Cooper Tire & Rubber Co. | | | 35,100 | | | | 688,311 | |
Dorman Products, Inc. * | | | 5,600 | | | | 204,344 | |
Drew Industries, Inc. * | | | 11,195 | | | | 235,879 | |
Fuel Systems Solutions, Inc. (b)* | | | 2,900 | | | | 118,842 | |
| Gentex Corp. | | | 31,410 | | | | 627,572 | |
Modine Manufacturing Co. * | | | 45,755 | | | | 618,608 | |
| Spartan Motors, Inc. | | | 25,200 | | | | 128,016 | |
| Standard Motor Products, Inc. | | | 24,200 | | | | 257,246 | |
Stoneridge, Inc. * | | | 12,200 | | | | 134,200 | |
| Superior Industries International, Inc. | | | 22,260 | | | | 399,567 | |
Winnebago Industries, Inc. * | | | 16,165 | | | | 161,650 | |
Wonder Auto Technology, Inc. (b)* | | | 7,100 | | | | 68,444 | |
| | | | | | | | | |
| | | | | | | | 3,893,463 | |
| |
Banks 7.5%
|
| 1st Source Corp. | | | 12,140 | | | | 214,514 | |
| Abington Bancorp, Inc. | | | 11,400 | | | | 122,436 | |
Ameris Bancorp * | | | 15,834 | | | | 146,781 | |
Ames National Corp. (b) | | | 4,700 | | | | 91,227 | |
Anchor BanCorp Wisconsin, Inc. (b)* | | | 115,645 | | | | 77,482 | |
| Arrow Financial Corp. | | | 5,093 | | | | 124,218 | |
| BancFirst Corp. | | | 1,775 | | | | 72,953 | |
| Banco Latinoamericano de Comercio Exterior, S.A., Class E | | | 32,400 | | | | 499,284 | |
BancTrust Financial Group, Inc. (b)* | | | 21,400 | | | | 62,488 | |
| Bank Mutual Corp. | | | 30,260 | | | | 145,853 | |
| Bank of the Ozarks, Inc. | | | 4,000 | | | | 152,040 | |
BankAtlantic Bancorp, Inc., Class A (b)* | | | 194,900 | | | | 176,385 | |
| BankFinancial Corp. | | | 9,200 | | | | 84,180 | |
| Banner Corp. | | | 64,460 | | | | 107,004 | |
Beneficial Mutual Bancorp, Inc. * | | | 7,950 | | | | 58,353 | |
| Berkshire Hills Bancorp, Inc. | | | 7,950 | | | | 153,753 | |
| Boston Private Financial Holdings, Inc. | | | 51,740 | | | | 295,435 | |
| Brookline Bancorp, Inc. | | | 33,710 | | | | 328,335 | |
| Camden National Corp. | | | 3,900 | | | | 133,536 | |
Capital City Bank Group, Inc. (b) | | | 12,095 | | | | 144,535 | |
Capitol Bancorp Ltd. (b)* | | | 56,480 | | | | 64,387 | |
Capitol Federal Financial (b) | | | 4,500 | | | | 105,300 | |
| Cathay General Bancorp | | | 53,100 | | | | 722,160 | |
Center Financial Corp. * | | | 20,200 | | | | 105,444 | |
Central Pacific Financial Corp. (b)* | | | 123,345 | | | | 187,484 | |
| Chemical Financial Corp. | | | 16,930 | | | | 343,340 | |
| Citizens & Northern Corp. | | | 8,000 | | | | 117,040 | |
Citizens Republic Bancorp, Inc. * | | | 803,200 | | | | 554,208 | |
| City Holding Co. | | | 7,990 | | | | 253,283 | |
| CoBiz Financial, Inc. | | | 17,700 | | | | 85,668 | |
| Columbia Banking System, Inc. | | | 12,935 | | | | 235,546 | |
| Community Bank System, Inc. | | | 14,770 | | | | 345,175 | |
| Community Trust Bancorp, Inc. | | | 8,495 | | | | 231,998 | |
CVB Financial Corp. (b) | | | 41,580 | | | | 316,424 | |
| Danvers Bancorp, Inc. | | | 6,600 | | | | 99,198 | |
| Dime Community Bancshares | | | 17,550 | | | | 256,055 | |
| Enterprise Financial Services Corp. | | | 9,800 | | | | 96,726 | |
| F.N.B. Corp. | | | 83,803 | | | | 712,325 | |
| Financial Institutions, Inc. | | | 8,705 | | | | 157,125 | |
| First Bancorp | | | 10,900 | | | | 145,951 | |
First BanCorp Puerto Rico (b)* | | | 394,890 | | | | 120,441 | |
| First Bancorp, Inc. | | | 5,900 | | | | 81,892 | |
| First Busey Corp. | | | 50,815 | | | | 235,782 | |
| First Commonwealth Financial Corp. | | | 94,490 | | | | 549,932 | |
| First Community Bancshares, Inc. | | | 10,575 | | | | 142,340 | |
First Defiance Financial Corp. * | | | 10,500 | | | | 116,970 | |
| First Financial Bancorp | | | 13,790 | | | | 232,224 | |
First Financial Bankshares, Inc. (b) | | | 5,800 | | | | 274,108 | |
| First Financial Corp. | | | 4,800 | | | | 140,304 | |
| First Financial Holdings, Inc. | | | 17,545 | | | | 183,345 | |
| First Merchants Corp. | | | 39,365 | | | | 327,517 | |
| First Midwest Bancorp, Inc. | | | 43,295 | | | | 463,689 | |
First South Bancorp, Inc. (b) | | | 7,100 | | | | 71,284 | |
| Flushing Financial Corp. | | | 13,755 | | | | 180,878 | |
| Glacier Bancorp, Inc. | | | 34,380 | | | | 446,940 | |
| Great Southern Bancorp, Inc. | | | 4,700 | | | | 105,703 | |
Greene Bancshares, Inc. (b)* | | | 16,216 | | | | 62,594 | |
| Hancock Holding Co. | | | 11,250 | | | | 353,475 | |
Hanmi Financial Corp. (b)* | | | 141,870 | | | | 165,988 | |
| Heartland Financial USA, Inc. | | | 7,350 | | | | 113,558 | |
| Home Bancshares, Inc. | | | 4,840 | | | | 99,559 | |
| IBERIABANK Corp. | | | 6,150 | | | | 320,107 | |
| Independent Bank Corp. | | | 7,795 | | | | 183,105 | |
Investors Bancorp, Inc. * | | | 10,065 | | | | 120,780 | |
| Kearny Financial Corp. | | | 6,000 | | | | 52,380 | |
| Lakeland Bancorp, Inc. | | | 18,837 | | | | 174,619 | |
| Lakeland Financial Corp. | | | 6,700 | | | | 127,233 | |
| MainSource Financial Group, Inc. | | | 22,600 | | | | 186,902 | |
| MB Financial, Inc. | | | 22,745 | | | | 338,673 | |
MGIC Investment Corp. * | | | 42,100 | | | | 371,322 | |
12 See financial notes
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Nara Bancorp, Inc. * | | | 12,313 | | | | 96,534 | |
NASB Financial, Inc. (b) | | | 1,503 | | | | 24,920 | |
| National Penn Bancshares, Inc. | | | 68,223 | | | | 442,767 | |
| NBT Bancorp, Inc. | | | 16,155 | | | | 356,218 | |
| NewAlliance Bancshares, Inc. | | | 42,575 | | | | 548,792 | |
Northfield Bancorp, Inc. (b) | | | 8,100 | | | | 91,935 | |
| Northwest Bancshares, Inc. | | | 41,892 | | | | 475,055 | |
| OceanFirst Financial Corp. | | | 8,200 | | | | 97,908 | |
Ocwen Financial Corp. * | | | 31,945 | | | | 275,685 | |
| Old National Bancorp | | | 49,225 | | | | 465,668 | |
Old Second Bancorp, Inc. (b) | | | 27,375 | | | | 53,929 | |
| Oriental Financial Group, Inc. | | | 37,535 | | | | 496,588 | |
| PacWest Bancorp | | | 18,480 | | | | 322,106 | |
Park National Corp. (b) | | | 11,710 | | | | 765,248 | |
| Peoples Bancorp, Inc. | | | 8,675 | | | | 114,337 | |
Pinnacle Financial Partners, Inc. * | | | 14,200 | | | | 162,022 | |
| PrivateBancorp, Inc. | | | 23,315 | | | | 274,884 | |
| Prosperity Bancshares, Inc. | | | 9,600 | | | | 298,464 | |
| Provident Financial Services, Inc. | | | 36,090 | | | | 456,178 | |
| Provident New York Bancorp | | | 20,885 | | | | 185,250 | |
| Radian Group, Inc. | | | 52,600 | | | | 399,234 | |
| Renasant Corp. | | | 18,700 | | | | 305,745 | |
| Republic Bancorp, Inc., Class A | | | 11,600 | | | | 237,104 | |
S&T Bancorp, Inc. (b) | | | 20,590 | | | | 403,564 | |
| S.Y. Bancorp, Inc. | | | 5,815 | | | | 142,468 | |
| Sandy Spring Bancorp, Inc. | | | 17,895 | | | | 311,373 | |
| SCBT Financial Corp. | | | 4,000 | | | | 122,120 | |
Seacoast Banking Corp. of Florida (b)* | | | 59,290 | | | | 74,113 | |
| Shore Bancshares, Inc. | | | 6,800 | | | | 67,048 | |
Sierra Bancorp (b) | | | 8,200 | | | | 85,362 | |
Signature Bank * | | | 9,580 | | | | 404,659 | |
| Simmons First National Corp., Class A | | | 7,400 | | | | 201,206 | |
| Southside Bancshares, Inc. | | | 5,145 | | | | 96,777 | |
| Southwest Bancorp, Inc. | | | 20,500 | | | | 202,950 | |
| StellarOne Corp. | | | 12,542 | | | | 160,287 | |
| Sterling Bancorp | | | 22,595 | | | | 212,167 | |
| Sterling Bancshares, Inc. | | | 52,925 | | | | 285,266 | |
Sterling Financial Corp. (b)* | | | 109,940 | | | | 59,368 | |
| Suffolk Bancorp | | | 3,815 | | | | 98,809 | |
Sun Bancorp, Inc. * | | | 30,531 | | | | 120,597 | |
Superior Bancorp (b)* | | | 16,400 | | | | 13,743 | |
Taylor Capital Group, Inc. (b)* | | | 9,900 | | | | 119,394 | |
Texas Capital Bancshares, Inc. * | | | 12,420 | | | | 225,423 | |
| TFS Financial Corp. | | | 16,680 | | | | 145,950 | |
The Bancorp, Inc. * | | | 13,000 | | | | 97,370 | |
The PMI Group, Inc. * | | | 174,300 | | | | 583,905 | |
| Tompkins Financial Corp. | | | 2,731 | | | | 105,417 | |
TowneBank (b) | | | 12,900 | | | | 187,050 | |
Tree.com, Inc. * | | | 10,680 | | | | 79,032 | |
| TriCo Bancshares | | | 5,900 | | | | 91,981 | |
| TrustCo Bank Corp. NY | | | 55,010 | | | | 296,504 | |
| UMB Financial Corp. | | | 9,901 | | | | 366,931 | |
| Umpqua Holdings Corp. | | | 52,890 | | | | 581,790 | |
| Union First Market Bankshares Corp. | | | 12,100 | | | | 155,606 | |
United Bankshares, Inc. (b) | | | 24,695 | | | | 659,850 | |
United Community Banks, Inc. * | | | 80,299 | | | | 157,386 | |
| United Financial Bancorp, Inc. | | | 6,600 | | | | 89,364 | |
| Univest Corp. of Pennsylvania | | | 9,600 | | | | 181,056 | |
Virginia Commerce Bancorp, Inc. * | | | 14,900 | | | | 79,119 | |
| Washington Trust Bancorp, Inc. | | | 10,085 | | | | 202,608 | |
| WesBanco, Inc. | | | 21,290 | | | | 353,627 | |
West Coast Bancorp (b)* | | | 53,327 | | | | 140,250 | |
| Westamerica Bancorp | | | 7,970 | | | | 398,659 | |
Western Alliance Bancorp * | | | 41,165 | | | | 248,637 | |
| Westfield Financial, Inc. | | | 11,927 | | | | 100,783 | |
| Wilshire Bancorp, Inc. | | | 10,000 | | | | 67,100 | |
| Wintrust Financial Corp. | | | 15,040 | | | | 450,298 | |
| WSFS Financial Corp. | | | 4,735 | | | | 184,854 | |
| | | | | | | | | |
| | | | | | | | 31,027,665 | |
| |
Capital Goods 10.9%
|
| AAON, Inc. | | | 4,080 | | | | 100,164 | |
AAR CORP. * | | | 21,980 | | | | 484,439 | |
| Aceto Corp. | | | 20,900 | | | | 154,033 | |
| Actuant Corp., Class A | | | 26,400 | | | | 593,208 | |
Aerovironment, Inc. * | | | 4,000 | | | | 93,840 | |
| Aircastle Ltd. | | | 48,400 | | | | 445,764 | |
| Alamo Group, Inc. | | | 5,400 | | | | 129,600 | |
Altra Holdings, Inc. * | | | 16,200 | | | | 239,760 | |
American Railcar Industries, Inc. * | | | 7,250 | | | | 111,723 | |
| American Science & Engineering, Inc. | | | 1,200 | | | | 98,820 | |
| American Woodmark Corp. | | | 5,595 | | | | 99,032 | |
| Ameron International Corp. | | | 3,840 | | | | 264,038 | |
| Ampco-Pittsburgh Corp. | | | 2,460 | | | | 63,591 | |
| Apogee Enterprises, Inc. | | | 17,495 | | | | 183,523 | |
| Applied Industrial Technologies, Inc. | | | 24,020 | | | | 730,448 | |
| Applied Signal Technology, Inc. | | | 5,100 | | | | 171,156 | |
Astec Industries, Inc. * | | | 12,850 | | | | 378,690 | |
| AZZ, Inc. | | | 4,300 | | | | 159,702 | |
| Badger Meter, Inc. | | | 3,100 | | | | 128,743 | |
| Baldor Electric Co. | | | 18,650 | | | | 783,673 | |
| Barnes Group, Inc. | | | 22,365 | | | | 406,819 | |
Beacon Roofing Supply, Inc. * | | | 26,680 | | | | 393,797 | |
| Belden, Inc. | | | 23,740 | | | | 662,346 | |
Blount International, Inc. * | | | 17,705 | | | | 265,575 | |
| Brady Corp., Class A | | | 22,555 | | | | 693,566 | |
Broadwind Energy, Inc. (b)* | | | 18,600 | | | | 35,340 | |
| Bucyrus International, Inc. | | | 8,750 | | | | 596,400 | |
Builders FirstSource, Inc. * | | | 55,855 | | | | 112,827 | |
| Cascade Corp. | | | 7,255 | | | | 256,754 | |
Ceradyne, Inc. * | | | 22,730 | | | | 541,201 | |
Chart Industries, Inc. * | | | 15,710 | | | | 366,043 | |
China BAK Battery, Inc. (b)* | | | 38,000 | | | | 72,580 | |
| CIRCOR International, Inc. | | | 4,390 | | | | 154,001 | |
| CLARCOR, Inc. | | | 13,425 | | | | 532,436 | |
Colfax Corp. * | | | 8,000 | | | | 128,560 | |
Columbus McKinnon Corp. * | | | 16,460 | | | | 289,038 | |
| Comfort Systems USA, Inc. | | | 18,400 | | | | 210,680 | |
Commercial Vehicle Group, Inc. * | | | 45,260 | | | | 607,842 | |
| Cubic Corp. | | | 6,390 | | | | 278,412 | |
| Curtiss-Wright Corp. | | | 17,105 | | | | 528,202 | |
| Ducommun, Inc. | | | 6,300 | | | | 135,261 | |
DXP Enterprises, Inc. * | | | 8,400 | | | | 159,936 | |
Dycom Industries, Inc. * | | | 43,070 | | | | 460,849 | |
| Encore Wire Corp. | | | 13,440 | | | | 279,014 | |
EnerSys * | | | 26,055 | | | | 686,810 | |
EnPro Industries, Inc. * | | | 11,970 | | | | 420,626 | |
| ESCO Technologies, Inc. | | | 9,300 | | | | 318,804 | |
| Federal Signal Corp. | | | 50,200 | | | | 283,630 | |
See financial notes 13
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Force Protection, Inc. * | | | 32,300 | | | | 181,203 | |
| Franklin Electric Co., Inc. | | | 7,380 | | | | 266,492 | |
| FreightCar America, Inc. | | | 10,035 | | | | 265,526 | |
Furmanite Corp. * | | | 24,700 | | | | 142,025 | |
Fushi Copperweld, Inc. * | | | 6,600 | | | | 61,380 | |
GeoEye, Inc. * | | | 6,600 | | | | 292,182 | |
Gibraltar Industries, Inc. * | | | 24,955 | | | | 227,839 | |
| Graco, Inc. | | | 17,440 | | | | 600,110 | |
GrafTech International Ltd. * | | | 42,030 | | | | 692,234 | |
| Great Lakes Dredge & Dock Co. | | | 27,000 | | | | 167,130 | |
Griffon Corp. * | | | 31,108 | | | | 366,763 | |
H&E Equipment Services, Inc. * | | | 35,520 | | | | 345,254 | |
Harbin Electric, Inc. * | | | 4,200 | | | | 90,552 | |
| Hardinge, Inc. | | | 13,700 | | | | 109,326 | |
Hawk Corp., Class A * | | | 5,300 | | | | 264,099 | |
HEICO Corp. (b) | | | 1,575 | | | | 78,404 | |
| HEICO Corp., Class A | | | 3,993 | | | | 148,300 | |
Herley Industries, Inc. * | | | 5,600 | | | | 93,016 | |
Hexcel Corp. * | | | 46,085 | | | | 818,931 | |
| Houston Wire & Cable Co. | | | 8,200 | | | | 94,546 | |
Hurco Cos., Inc. * | | | 6,400 | | | | 117,760 | |
II-VI, Inc. * | | | 6,765 | | | | 266,135 | |
Insituform Technologies, Inc., Class A * | | | 8,215 | | | | 177,444 | |
| Insteel Industries, Inc. | | | 8,900 | | | | 76,451 | |
Integrated Electrical Services, Inc. * | | | 29,300 | | | | 106,945 | |
Interline Brands, Inc. * | | | 16,360 | | | | 328,672 | |
| John Bean Technologies Corp. | | | 11,640 | | | | 199,044 | |
Kadant, Inc. * | | | 10,900 | | | | 214,294 | |
| Kaman Corp. | | | 12,880 | | | | 347,116 | |
| Kaydon Corp. | | | 10,435 | | | | 363,868 | |
| KHD Humboldt Wedag International AG | | | 3,990 | | | | 36,596 | |
L.B. Foster Co., Class A * | | | 5,980 | | | | 197,460 | |
LaBarge, Inc. * | | | 7,800 | | | | 98,982 | |
Ladish Co., Inc. * | | | 9,780 | | | | 312,862 | |
| Lawson Products, Inc. | | | 3,530 | | | | 65,058 | |
Layne Christensen Co. * | | | 11,300 | | | | 315,722 | |
| Lindsay Corp. | | | 3,200 | | | | 184,480 | |
LMI Aerospace, Inc. * | | | 6,500 | | | | 106,145 | |
| LSI Industries, Inc. | | | 21,302 | | | | 197,044 | |
Lydall, Inc. * | | | 15,100 | | | | 112,193 | |
MasTec, Inc. * | | | 19,310 | | | | 235,582 | |
Michael Baker Corp. * | | | 5,200 | | | | 169,936 | |
| Miller Industries, Inc. | | | 9,700 | | | | 130,562 | |
| Mueller Industries, Inc. | | | 28,200 | | | | 829,080 | |
| Mueller Water Products, Inc., Class A | | | 103,900 | | | | 313,778 | |
MYR Group, Inc. * | | | 6,300 | | | | 98,217 | |
| NACCO Industries, Inc., Class A | | | 12,140 | | | | 1,205,016 | |
NCI Building Systems, Inc. * | | | 215,851 | | | | 2,139,083 | |
| Nordson Corp. | | | 5,575 | | | | 434,962 | |
Northwest Pipe Co. * | | | 7,600 | | | | 143,032 | |
Orbital Sciences Corp. * | | | 18,955 | | | | 307,829 | |
Orion Marine Group, Inc. * | | | 4,940 | | | | 61,799 | |
Pike Electric Corp. * | | | 17,420 | | | | 131,695 | |
Polypore International, Inc. * | | | 21,400 | | | | 711,978 | |
Powell Industries, Inc. * | | | 4,870 | | | | 150,288 | |
| Preformed Line Products Co. | | | 3,044 | | | | 130,070 | |
| Quanex Building Products Corp. | | | 13,850 | | | | 249,577 | |
| Raven Industries, Inc. | | | 4,265 | | | | 175,377 | |
RBC Bearings, Inc. * | | | 7,700 | | | | 256,564 | |
| Robbins & Myers, Inc. | | | 8,200 | | | | 238,046 | |
Rush Enterprises, Inc., Class A * | | | 25,960 | | | | 412,504 | |
Rush Enterprises, Inc., Class B * | | | 9,600 | | | | 144,096 | |
Sauer-Danfoss, Inc. * | | | 15,740 | | | | 348,011 | |
| Simpson Manufacturing Co., Inc. | | | 12,485 | | | | 331,851 | |
| Standex International Corp. | | | 7,950 | | | | 214,094 | |
Sterling Construction Co., Inc. * | | | 6,000 | | | | 73,200 | |
| Sun Hydraulics Corp. | | | 3,500 | | | | 108,745 | |
| TAL International Group, Inc. | | | 9,590 | | | | 268,712 | |
Tecumseh Products Co., Class A * | | | 19,930 | | | | 258,094 | |
Tecumseh Products Co., Class B * | | | 7,700 | | | | 93,632 | |
Teledyne Technologies, Inc. * | | | 16,290 | | | | 677,175 | |
| Tennant Co. | | | 7,580 | | | | 254,309 | |
| Textainer Group Holdings Ltd. | | | 5,050 | | | | 131,199 | |
| The Gorman-Rupp Co. | | | 6,400 | | | | 190,848 | |
The Greenbrier Cos., Inc. * | | | 38,920 | | | | 708,344 | |
The Middleby Corp. * | | | 3,508 | | | | 261,907 | |
| The Toro Co. | | | 12,210 | | | | 693,040 | |
Thermadyne Holdings Corp. * | | | 14,800 | | | | 223,184 | |
Titan International, Inc. (b) | | | 23,475 | | | | 356,116 | |
Titan Machinery, Inc. * | | | 8,000 | | | | 155,520 | |
| Tredegar Corp. | | | 17,775 | | | | 342,880 | |
Trex Co., Inc. * | | | 3,300 | | | | 59,235 | |
TriMas Corp. * | | | 20,150 | | | | 318,975 | |
| Triumph Group, Inc. | | | 10,830 | | | | 905,280 | |
| Twin Disc, Inc. | | | 6,400 | | | | 130,304 | |
| Universal Forest Products, Inc. | | | 10,770 | | | | 324,608 | |
| Valmont Industries, Inc. | | | 4,850 | | | | 382,423 | |
| Vicor Corp. | | | 9,661 | | | | 172,062 | |
Wabash National Corp. * | | | 72,345 | | | | 583,101 | |
WABCO Holdings, Inc. * | | | 22,800 | | | | 1,058,376 | |
| Wabtec Corp. | | | 10,560 | | | | 494,630 | |
| Watsco, Inc. | | | 9,345 | | | | 523,040 | |
| Watts Water Technologies, Inc., Class A | | | 16,955 | | | | 596,307 | |
Willis Lease Finance Corp. * | | | 6,700 | | | | 82,209 | |
| Woodward Governor Co. | | | 16,200 | | | | 507,708 | |
| | | | | | | | | |
| | | | | | | | 44,919,069 | |
| |
Commercial & Professional Supplies 4.4%
|
Acco Brands Corp. * | | | 58,445 | | | | 364,112 | |
| Administaff, Inc. | | | 17,860 | | | | 468,111 | |
American Reprographics Co. * | | | 31,850 | | | | 226,772 | |
| Barrett Business Services, Inc. | | | 7,300 | | | | 112,055 | |
| Bowne & Co., Inc. | | | 19,624 | | | | 222,732 | |
Casella Waste Systems, Inc., Class A * | | | 27,000 | | | | 133,110 | |
CBIZ, Inc. * | | | 35,295 | | | | 208,946 | |
| CDI Corp. | | | 14,460 | | | | 207,212 | |
Cenveo, Inc. * | | | 53,708 | | | | 295,394 | |
Clean Harbors, Inc. * | | | 6,365 | | | | 448,732 | |
Consolidated Graphics, Inc. * | | | 7,920 | | | | 368,676 | |
Copart, Inc. * | | | 13,465 | | | | 455,925 | |
CoStar Group, Inc. * | | | 3,040 | | | | 150,966 | |
| Courier Corp. | | | 9,655 | | | | 142,894 | |
CRA International, Inc. * | | | 6,345 | | | | 118,334 | |
Dolan Co. * | | | 9,900 | | | | 105,930 | |
| EnergySolutions, Inc. | | | 45,500 | | | | 213,395 | |
| Ennis, Inc. | | | 16,640 | | | | 300,186 | |
Exponent, Inc. * | | | 3,900 | | | | 124,488 | |
Franklin Covey Co. * | | | 15,700 | | | | 131,566 | |
14 See financial notes
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
FTI Consulting, Inc. * | | | 16,545 | | | | 586,686 | |
| G & K Services, Inc., Class A | | | 12,090 | | | | 298,865 | |
GP Strategies Corp. * | | | 11,900 | | | | 103,292 | |
| Healthcare Services Group, Inc. | | | 10,770 | | | | 258,803 | |
| Heidrick & Struggles International, Inc. | | | 7,170 | | | | 154,012 | |
| Herman Miller, Inc. | | | 25,610 | | | | 492,480 | |
Hill International, Inc. * | | | 16,000 | | | | 85,920 | |
Hudson Highland Group, Inc. * | | | 26,785 | | | | 94,283 | |
Huron Consulting Group, Inc. * | | | 7,000 | | | | 139,370 | |
ICF International, Inc. * | | | 5,100 | | | | 130,662 | |
IHS, Inc., Class A * | | | 7,710 | | | | 556,970 | |
Innerworkings, Inc. * | | | 18,800 | | | | 129,156 | |
| Interface, Inc., Class A | | | 30,885 | | �� | | 444,435 | |
KAR Auction Services, Inc. * | | | 6,600 | | | | 85,008 | |
Kforce, Inc. * | | | 21,000 | | | | 315,210 | |
| Kimball International, Inc., Class B | | | 29,325 | | | | 178,296 | |
| Knoll, Inc. | | | 26,300 | | | | 398,971 | |
Korn/Ferry International * | | | 18,230 | | | | 321,395 | |
M&F Worldwide Corp. * | | | 11,333 | | | | 304,631 | |
| McGrath Rentcorp | | | 10,625 | | | | 268,919 | |
Metalico, Inc. * | | | 29,700 | | | | 128,898 | |
| Mine Safety Appliances Co. | | | 12,325 | | | | 347,072 | |
Mobile Mini, Inc. * | | | 22,925 | | | | 399,583 | |
Navigant Consulting, Inc. * | | | 27,725 | | | | 253,684 | |
On Assignment, Inc. * | | | 22,100 | | | | 124,865 | |
| Resources Connection, Inc. | | | 16,260 | | | | 263,249 | |
| Rollins, Inc. | | | 8,615 | | | | 224,421 | |
| Schawk, Inc. | | | 4,860 | | | | 94,381 | |
School Specialty, Inc. * | | | 19,200 | | | | 257,280 | |
SFN Group, Inc. * | | | 59,410 | | | | 450,328 | |
Standard Parking Corp. * | | | 7,400 | | | | 126,466 | |
Stericycle, Inc. * | | | 11,590 | | | | 831,467 | |
Sykes Enterprises, Inc. * | | | 11,555 | | | | 191,929 | |
Team, Inc. * | | | 8,200 | | | | 162,688 | |
Tetra Tech, Inc. * | | | 21,395 | | | | 450,579 | |
The Advisory Board Co. * | | | 2,530 | | | | 118,429 | |
| The Corporate Executive Board Co. | | | 15,570 | | | | 486,407 | |
The Geo Group, Inc. * | | | 32,080 | | | | 822,852 | |
| The Standard Register Co. | | | 21,850 | | | | 70,139 | |
| Towers Watson & Co., Class A | | | 9,915 | | | | 509,829 | |
TrueBlue, Inc. * | | | 28,930 | | | | 406,467 | |
| UniFirst Corp. | | | 7,705 | | | | 354,661 | |
| US Ecology, Inc. | | | 5,900 | | | | 95,698 | |
Verisk Analytics, Inc., Class A * | | | 5,000 | | | | 149,050 | |
| Viad Corp. | | | 15,465 | | | | 308,681 | |
Volt Information Sciences, Inc. * | | | 20,500 | | | | 165,640 | |
| VSE Corp. | | | 2,100 | | | | 74,025 | |
| | | | | | | | | |
| | | | | | | | 18,015,668 | |
| |
Consumer Durables & Apparel 3.6%
|
American Apparel, Inc. * | | | 30,300 | | | | 29,391 | |
| American Greetings Corp., Class A | | | 28,200 | | | | 546,234 | |
Arctic Cat, Inc. * | | | 18,300 | | | | 243,573 | |
| Blyth, Inc. | | | 10,072 | | | | 404,089 | |
Brookfield Homes Corp. * | | | 16,600 | | | | 138,444 | |
| Callaway Golf Co. | | | 51,755 | | | | 356,074 | |
Carter’s, Inc. * | | | 8,465 | | | | 210,779 | |
Cavco Industries, Inc. * | | | 2,500 | | | | 79,225 | |
| Cherokee, Inc. | | | 6,400 | | | | 118,272 | |
| Columbia Sportswear Co. | | | 4,980 | | | | 260,205 | |
Crocs, Inc. * | | | 28,660 | | | | 399,234 | |
| CSS Industries, Inc. | | | 3,375 | | | | 56,464 | |
Deckers Outdoor Corp. * | | | 8,250 | | | | 479,325 | |
| Ethan Allen Interiors, Inc. | | | 24,265 | | | | 368,100 | |
Fossil, Inc. * | | | 8,965 | | | | 528,845 | |
Furniture Brands International, Inc. * | | | 73,400 | | | | 367,734 | |
G-III Apparel Group Ltd. * | | | 6,800 | | | | 179,520 | |
Helen of Troy Ltd. * | | | 10,830 | | | | 277,789 | |
| Hooker Furniture Corp. | | | 5,200 | | | | 54,964 | |
Iconix Brand Group, Inc. * | | | 18,930 | | | | 331,275 | |
JAKKS Pacific, Inc. * | | | 34,925 | | | | 658,336 | |
K-Swiss, Inc., Class A * | | | 28,730 | | | | 349,357 | |
Kenneth Cole Productions, Inc., Class A * | | | 16,240 | | | | 218,428 | |
La-Z-Boy, Inc. * | | | 31,420 | | | | 244,133 | |
Leapfrog Enterprises, Inc. * | | | 18,835 | | | | 105,288 | |
Lifetime Brands, Inc. * | | | 15,800 | | | | 202,872 | |
Lululemon Athletica, Inc. (b)* | | | 2,700 | | | | 119,664 | |
M/I Homes, Inc. * | | | 17,400 | | | | 184,092 | |
Maidenform Brands, Inc. * | | | 8,400 | | | | 224,784 | |
Marine Products Corp. * | | | 14,180 | | | | 88,058 | |
Meritage Homes Corp. * | | | 27,140 | | | | 496,933 | |
Movado Group, Inc. * | | | 14,420 | | | | 162,081 | |
| National Presto Industries, Inc. | | | 1,345 | | | | 150,546 | |
Nautilus, Inc. * | | | 42,657 | | | | 63,132 | |
| Oxford Industries, Inc. | | | 13,430 | | | | 309,293 | |
Perry Ellis International, Inc. * | | | 10,000 | | | | 224,800 | |
| Pool Corp. | | | 22,880 | | | | 460,803 | |
RC2 Corp. * | | | 13,520 | | | | 285,272 | |
Sealy Corp. (b)* | | | 50,570 | | | | 132,999 | |
Skechers U.S.A., Inc., Class A * | | | 15,445 | | | | 300,251 | |
| Skyline Corp. | | | 7,485 | | | | 133,458 | |
Smith & Wesson Holding Corp. * | | | 24,200 | | | | 90,750 | |
Standard Pacific Corp. * | | | 87,100 | | | | 316,173 | |
Stanley Furniture Co., Inc. * | | | 9,600 | | | | 37,056 | |
Steinway Musical Instruments, Inc. * | | | 6,500 | | | | 110,565 | |
Steven Madden Ltd. * | | | 8,632 | | | | 365,134 | |
Tempur-Pedic International, Inc. * | | | 11,815 | | | | 407,617 | |
| The Ryland Group, Inc. | | | 29,000 | | | | 434,420 | |
The Timberland Co., Class A * | | | 20,100 | | | | 421,698 | |
The Warnaco Group, Inc. * | | | 15,680 | | | | 832,765 | |
True Religion Apparel, Inc. * | | | 3,300 | | | | 67,485 | |
Under Armour, Inc., Class A (b)* | | | 8,115 | | | | 378,808 | |
Unifi, Inc. * | | | 57,300 | | | | 271,029 | |
Universal Electronics, Inc. * | | | 4,500 | | | | 94,770 | |
Volcom, Inc. * | | | 6,900 | | | | 118,473 | |
| Wolverine World Wide, Inc. | | | 15,690 | | | | 456,893 | |
| | | | | | | | | |
| | | | | | | | 14,947,752 | |
| |
Consumer Services 5.0%
|
AFC Enterprises, Inc. * | | | 24,800 | | | | 315,208 | |
| Ambassadors Group, Inc. | | | 9,600 | | | | 106,464 | |
| Ameristar Casinos, Inc. | | | 11,375 | | | | 203,385 | |
Bally Technologies, Inc. * | | | 8,375 | | | | 302,170 | |
Benihana, Inc. * | | | 15,300 | | | | 128,137 | |
Benihana, Inc., Class A * | | | 24,800 | | | | 209,064 | |
Biglari Holdings, Inc. * | | | 648 | | | | 216,037 | |
BJ’s Restaurants, Inc. * | | | 5,900 | | | | 195,585 | |
| Bob Evans Farms, Inc. | | | 18,555 | | | | 532,528 | |
Buffalo Wild Wings, Inc. * | | | 2,400 | | | | 112,872 | |
California Pizza Kitchen, Inc. * | | | 13,000 | | | | 214,630 | |
See financial notes 15
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Capella Education Co. (b)* | | | 1,440 | | | | 78,955 | |
Carrols Restaurant Group, Inc. * | | | 21,300 | | | | 143,988 | |
CEC Entertainment, Inc. * | | | 9,580 | | | | 318,056 | |
Chipotle Mexican Grill, Inc. * | | | 4,960 | | | | 1,042,642 | |
| Choice Hotels International, Inc. | | | 12,240 | | | | 465,487 | |
| Churchill Downs, Inc. | | | 1,395 | | | | 50,541 | |
Coinstar, Inc. (b)* | | | 9,625 | | | | 554,207 | |
Corinthian Colleges, Inc. (b)* | | | 26,385 | | | | 137,730 | |
| CPI Corp. | | | 9,800 | | | | 241,668 | |
| Cracker Barrel Old Country Store, Inc. | | | 13,220 | | | | 712,426 | |
Denny’s Corp. * | | | 67,900 | | | | 219,317 | |
| DeVry, Inc. | | | 7,345 | | | | 351,532 | |
DineEquity, Inc. * | | | 9,430 | | | | 419,163 | |
| Dover Downs Gaming & Entertainment, Inc. | | | 17,740 | | | | 61,735 | |
Einstein Noah Restaurant Group, Inc. * | | | 5,700 | | | | 63,042 | |
Gaylord Entertainment Co. * | | | 24,980 | | | | 832,833 | |
Great Wolf Resorts, Inc. * | | | 44,400 | | | | 104,784 | |
| Hillenbrand, Inc. | | | 10,700 | | | | 229,943 | |
| International Speedway Corp., Class A | | | 23,350 | | | | 533,314 | |
Interval Leisure Group, Inc. * | | | 11,832 | | | | 169,789 | |
Isle of Capri Casinos, Inc. * | | | 32,315 | | | | 259,813 | |
ITT Educational Services, Inc. * | | | 5,735 | | | | 370,080 | |
Jackson Hewitt Tax Service, Inc. (b)* | | | 101,145 | | | | 100,134 | |
K12, Inc. * | | | 4,600 | | | | 128,386 | |
Krispy Kreme Doughnuts, Inc. * | | | 47,135 | | | | 263,956 | |
LIFE TIME FITNESS, Inc. * | | | 9,585 | | | | 346,306 | |
Lincoln Educational Services Corp. * | | | 5,960 | | | | 74,262 | |
Luby’s, Inc. * | | | 29,200 | | | | 148,044 | |
| Matthews International Corp., Class A | | | 9,315 | | | | 307,581 | |
McCormick & Schmick’s Seafood Restaurants, Inc. * | | | 23,500 | | | | 209,855 | |
Monarch Casino & Resort, Inc. * | | | 12,200 | | | | 140,910 | |
Morgans Hotel Group * | | | 36,400 | | | | 293,748 | |
Morton’s Restaurant Group, Inc. (b)* | | | 20,800 | | | | 116,480 | |
Multimedia Games, Inc. * | | | 27,380 | | | | 107,330 | |
O’Charley’s, Inc. * | | | 27,275 | | | | 204,562 | |
Orient-Express Hotels Ltd., Class A * | | | 27,190 | | | | 344,225 | |
| P.F. Chang’s China Bistro, Inc. | | | 8,055 | | | | 369,886 | |
Panera Bread Co., Class A * | | | 5,575 | | | | 499,018 | |
Papa John’s International, Inc. * | | | 9,510 | | | | 245,643 | |
Peet’s Coffee & Tea, Inc. * | | | 2,700 | | | | 103,275 | |
Pinnacle Entertainment, Inc. * | | | 57,175 | | | | 731,840 | |
Pre-Paid Legal Services, Inc. (b)* | | | 2,360 | | | | 142,025 | |
Red Lion Hotels Corp. * | | | 16,800 | | | | 132,216 | |
Red Robin Gourmet Burgers, Inc. * | | | 9,680 | | | | 196,504 | |
Ruby Tuesday, Inc. * | | | 53,250 | | | | 644,325 | |
Ruth’s Hospitality Group, Inc. * | | | 33,200 | | | | 151,392 | |
Scientific Games Corp., Class A * | | | 23,270 | | | | 183,833 | |
Shuffle Master, Inc. * | | | 18,300 | | | | 172,203 | |
Sonic Corp. * | | | 35,580 | | | | 315,950 | |
| Sotheby’s | | | 16,820 | | | | 737,389 | |
| Speedway Motorsports, Inc. | | | 5,915 | | | | 90,499 | |
Steiner Leisure Ltd. * | | | 3,060 | | | | 118,636 | |
| Stewart Enterprises, Inc., Class A | | | 53,640 | | | | 298,238 | |
Strayer Education, Inc. (b) | | | 1,400 | | | | 195,762 | |
Texas Roadhouse, Inc. * | | | 15,610 | | | | 239,770 | |
The Cheesecake Factory, Inc. * | | | 20,935 | | | | 609,627 | |
| The Marcus Corp. | | | 17,430 | | | | 223,453 | |
Town Sports International Holdings, Inc. * | | | 29,400 | | | | 88,200 | |
| Universal Technical Institute, Inc. | | | 5,380 | | | | 104,103 | |
Vail Resorts, Inc. * | | | 15,860 | | | | 643,282 | |
| Weight Watchers International, Inc. | | | 11,692 | | | | 391,565 | |
WMS Industries, Inc. * | | | 10,312 | | | | 449,913 | |
| | | | | | | | | |
| | | | | | | | 20,761,451 | |
| |
Diversified Financials 2.7%
|
| Advance America Cash Advance Centers, Inc. | | | 53,595 | | | | 267,439 | |
| Arlington Asset Investment Corp., Class A | | | 14,200 | | | | 336,398 | |
| Artio Global Investors, Inc. | | | 4,000 | | | | 62,280 | |
Asset Acceptance Capital Corp. * | | | 23,910 | | | | 138,200 | |
| BGC Partners, Inc., Class A | | | 54,880 | | | | 380,867 | |
| Calamos Asset Management, Inc., Class A | | | 19,515 | | | | 233,985 | |
Cardtronics, Inc. * | | | 25,900 | | | | 439,005 | |
| Cash America International, Inc. | | | 9,905 | | | | 348,953 | |
| Cohen & Steers, Inc. | | | 3,340 | | | | 83,734 | |
| Compass Diversified Holdings | | | 22,360 | | | | 380,791 | |
CompuCredit Holdings Corp. (b) | | | 31,500 | | | | 177,345 | |
Cowen Group, Inc., Class A * | | | 11,000 | | | | 38,500 | |
Credit Acceptance Corp. * | | | 2,675 | | | | 157,317 | |
Dollar Financial Corp. * | | | 13,625 | | | | 340,898 | |
| Duff & Phelps Corp., Class A | | | 1,000 | | | | 13,940 | |
Encore Capital Group, Inc. * | | | 13,755 | | | | 279,502 | |
| Evercore Partners, Inc., Class A | | | 5,400 | | | | 163,944 | |
EZCORP, Inc., Class A * | | | 12,700 | | | | 272,796 | |
FBR Capital Markets Corp. * | | | 19,300 | | | | 68,322 | |
First Cash Financial Services, Inc. * | | | 7,090 | | | | 206,106 | |
| GAMCO Investors, Inc., Class A | | | 6,435 | | | | 275,675 | |
| GFI Group, Inc. | | | 32,720 | | | | 156,729 | |
Gleacher & Co., Inc. * | | | 10,000 | | | | 22,500 | |
| Greenhill & Co., Inc. | | | 3,035 | | | | 235,728 | |
International Assets Holding Corp. * | | | 5,774 | | | | 127,317 | |
Investment Technology Group, Inc. * | | | 29,955 | | | | 426,559 | |
| KBW, Inc. | | | 4,000 | | | | 101,200 | |
Knight Capital Group, Inc., Class A * | | | 38,305 | | | | 499,114 | |
LaBranche & Co., Inc. * | | | 36,775 | | | | 119,519 | |
| Lazard Ltd., Class A | | | 18,745 | | | | 691,690 | |
| MarketAxess Holdings, Inc. | | | 6,500 | | | | 118,105 | |
| Medallion Financial Corp. | | | 13,100 | | | | 105,193 | |
| Nelnet, Inc., Class A | | | 22,640 | | | | 508,721 | |
NewStar Financial, Inc. * | | | 29,500 | | | | 224,495 | |
| Oppenheimer Holdings, Inc., Class A | | | 7,700 | | | | 195,965 | |
optionsXpress Holdings, Inc. * | | | 10,290 | | | | 164,331 | |
Penson Worldwide, Inc. (b)* | | | 13,900 | | | | 71,585 | |
PICO Holdings, Inc. * | | | 3,295 | | | | 101,288 | |
Piper Jaffray Cos., Inc. * | | | 8,005 | | | | 247,915 | |
Portfolio Recovery Associates, Inc. * | | | 3,645 | | | | 244,397 | |
Rewards Network, Inc. * | | | 2,451 | | | | 33,579 | |
| Sanders Morris Harris Group, Inc. | | | 1,800 | | | | 10,440 | |
Stifel Financial Corp. * | | | 8,940 | | | | 423,667 | |
| SWS Group, Inc. | | | 20,620 | | | | 141,659 | |
The First Marblehead Corp. * | | | 64,600 | | | | 144,058 | |
TradeStation Group, Inc. * | | | 5,000 | | | | 27,450 | |
| W.P. Carey & Co., L.L.C. | | | 17,225 | | | | 536,731 | |
16 See financial notes
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Waddell & Reed Financial, Inc., Class A | | | 16,420 | | | | 477,329 | |
World Acceptance Corp. * | | | 5,560 | | | | 239,914 | |
| | | | | | | | | |
| | | | | | | | 11,063,175 | |
| |
Energy 5.9%
|
| Adams Resources & Energy, Inc. | | | 4,200 | | | | 82,320 | |
Allis-Chalmers Energy, Inc. * | | | 68,000 | | | | 349,520 | |
| Apco Oil & Gas International, Inc. | | | 4,100 | | | | 151,249 | |
Approach Resources, Inc. * | | | 6,300 | | | | 97,335 | |
Atlas Energy, Inc. * | | | 14,896 | | | | 433,772 | |
ATP Oil & Gas Corp. (b)* | | | 13,685 | | | | 196,517 | |
Atwood Oceanics, Inc. * | | | 16,500 | | | | 536,415 | |
Basic Energy Services, Inc. * | | | 48,085 | | | | 531,820 | |
| Berry Petroleum Co., Class A | | | 17,520 | | | | 599,359 | |
Bill Barrett Corp. * | | | 7,740 | | | | 292,185 | |
Brigham Exploration Co. * | | | 6,035 | | | | 127,278 | |
Bristow Group, Inc. * | | | 15,605 | | | | 605,162 | |
Bronco Drilling Co., Inc. * | | | 23,805 | | | | 100,457 | |
Cal Dive International, Inc. * | | | 69,543 | | | | 351,888 | |
| CARBO Ceramics, Inc. | | | 3,080 | | | | 258,012 | |
Carrizo Oil & Gas, Inc. * | | | 8,705 | | | | 205,612 | |
Clayton Williams Energy, Inc. * | | | 5,385 | | | | 321,592 | |
Cloud Peak Energy, Inc. * | | | 33,300 | | | | 578,421 | |
Cobalt International Energy, Inc. * | | | 6,900 | | | | 63,825 | |
Comstock Resources, Inc. * | | | 15,855 | | | | 354,359 | |
Concho Resources, Inc. * | | | 10,840 | | | | 744,383 | |
Contango Oil & Gas Co. * | | | 2,660 | | | | 139,889 | |
Continental Resources, Inc. * | | | 3,600 | | | | 171,108 | |
| Copano Energy L.L.C. | | | 25,740 | | | | 719,690 | |
| Core Laboratories N.V. | | | 4,690 | | | | 364,741 | |
CVR Energy, Inc. * | | | 19,400 | | | | 184,688 | |
Dawson Geophysical Co. * | | | 4,600 | | | | 114,264 | |
| Delek US Holdings, Inc. | | | 17,900 | | | | 131,565 | |
Delta Petroleum Corp. * | | | 59,635 | | | | 43,653 | |
| DHT Holdings, Inc. | | | 62,100 | | | | 267,030 | |
Dril-Quip, Inc. * | | | 5,485 | | | | 379,014 | |
Endeavour International Corp. * | | | 81,200 | | | | 112,056 | |
Energy XXI (Bermuda) Ltd. * | | | 9,200 | | | | 200,008 | |
ENGlobal Corp. * | | | 33,000 | | | | 95,370 | |
Geokinetics, Inc. (b)* | | | 12,400 | | | | 84,568 | |
Global Industries Ltd. * | | | 61,165 | | | | 354,145 | |
GMX Resources, Inc. (b)* | | | 11,800 | | | | 52,864 | |
Goodrich Petroleum Corp. * | | | 9,500 | | | | 129,580 | |
Gran Tierra Energy, Inc. * | | | 43,400 | | | | 323,764 | |
| Gulf Island Fabrication, Inc. | | | 6,900 | | | | 157,596 | |
GulfMark Offshore, Inc., Class A * | | | 16,305 | | | | 482,791 | |
Gulfport Energy Corp. * | | | 8,100 | | | | 134,946 | |
Harvest Natural Resources, Inc. * | | | 25,850 | | | | 322,608 | |
Hercules Offshore, Inc. * | | | 148,300 | | | | 349,988 | |
Hornbeck Offshore Services, Inc. * | | | 22,480 | | | | 499,955 | |
International Coal Group, Inc. * | | | 132,955 | | | | 747,207 | |
InterOil Corp. (b)* | | | 1,500 | | | | 106,770 | |
ION Geophysical Corp. * | | | 67,805 | | | | 331,566 | |
James River Coal Co. * | | | 7,200 | | | | 124,632 | |
| Knightsbridge Tankers Ltd. | | | 22,590 | | | | 490,881 | |
| Lufkin Industries, Inc. | | | 7,510 | | | | 366,864 | |
Matrix Service Co. * | | | 16,600 | | | | 150,728 | |
McMoRan Exploration Co. * | | | 28,260 | | | | 475,898 | |
Newpark Resources, Inc. * | | | 54,240 | | | | 318,931 | |
Nordic American Tanker Shipping Ltd. (b) | | | 22,185 | | | | 577,476 | |
Omega Navigation Enterprises, Inc., Class A * | | | 1,200 | | | | 1,452 | |
Pacific Ethanol, Inc. (b)* | | | 74,000 | | | | 62,389 | |
Parker Drilling Co. * | | | 102,710 | | | | 434,463 | |
Patriot Coal Corp. * | | | 28,100 | | | | 379,069 | |
Petroleum Development Corp. * | | | 14,855 | | | | 463,625 | |
PetroQuest Energy, Inc. * | | | 31,285 | | | | 174,570 | |
PHI, Inc. - Non Voting Shares * | | | 10,785 | | | | 188,414 | |
Pioneer Drilling Co. * | | | 44,400 | | | | 273,504 | |
PrimeEnergy Corp. * | | | 3,500 | | | | 68,215 | |
Quicksilver Resources, Inc. * | | | 15,500 | | | | 232,035 | |
REX American Resources Corp. * | | | 5,800 | | | | 96,222 | |
Rex Energy Corp. * | | | 7,000 | | | | 86,240 | |
Rosetta Resources, Inc. * | | | 20,010 | | | | 478,439 | |
| RPC, Inc. | | | 11,865 | | | | 261,149 | |
SandRidge Energy, Inc. * | | | 73,065 | | | | 399,666 | |
StealthGas, Inc. * | | | 17,800 | | | | 85,262 | |
Stone Energy Corp. * | | | 34,800 | | | | 543,924 | |
Swift Energy Co. * | | | 17,105 | | | | 544,794 | |
T-3 Energy Services, Inc. * | | | 4,900 | | | | 164,003 | |
Teekay Tankers Ltd., Class A (b) | | | 29,400 | | | | 349,272 | |
Tesco Corp. * | | | 15,700 | | | | 198,762 | |
TETRA Technologies, Inc. * | | | 42,460 | | | | 414,410 | |
| Tsakos Energy Navigation Ltd. | | | 31,230 | | | | 322,918 | |
Union Drilling, Inc. * | | | 16,100 | | | | 73,577 | |
USEC, Inc. * | | | 146,000 | | | | 784,020 | |
VAALCO Energy, Inc. * | | | 26,240 | | | | 154,291 | |
Venoco, Inc. * | | | 6,800 | | | | 105,264 | |
| W&T Offshore, Inc. | | | 28,400 | | | | 308,992 | |
Willbros Group, Inc. * | | | 20,300 | | | | 179,858 | |
| | | | | | | | | |
| | | | | | | | 24,317,114 | |
| |
Food & Staples Retailing 0.5%
|
| Arden Group, Inc., Class A | | | 1,100 | | | | 96,866 | |
| Ingles Markets, Inc., Class A | | | 10,900 | | | | 200,124 | |
| PriceSmart, Inc. | | | 11,340 | | | | 332,602 | |
| Spartan Stores, Inc. | | | 28,400 | | | | 424,580 | |
Susser Holdings Corp. * | | | 13,600 | | | | 185,912 | |
| The Andersons, Inc. | | | 14,025 | | | | 552,164 | |
| Village Super Market, Inc., Class A | | | 5,902 | | | | 172,339 | |
| | | | | | | | | |
| | | | | | | | 1,964,587 | |
| |
Food, Beverage & Tobacco 1.7%
|
| Alico, Inc. | | | 3,600 | | | | 92,160 | |
Alliance One International, Inc. * | | | 85,730 | | | | 378,927 | |
Cal-Maine Foods, Inc. (b) | | | 6,600 | | | | 191,202 | |
Calavo Growers, Inc. (b) | | | 5,300 | | | | 116,229 | |
Central European Distribution Corp. * | | | 15,900 | | | | 397,023 | |
| Coca-Cola Bottling Co. | | | 4,600 | | | | 245,272 | |
Darling International, Inc. * | | | 24,820 | | | | 248,448 | |
| Diamond Foods, Inc. | | | 5,700 | | | | 251,940 | |
| Farmer Brothers Co. | | | 3,409 | | | | 55,942 | |
Green Mountain Coffee Roasters, Inc. * | | | 9,780 | | | | 322,642 | |
Hansen Natural Corp. * | | | 6,355 | | | | 325,440 | |
Heckmann Corp. * | | | 30,100 | | | | 123,109 | |
| Imperial Sugar Co. | | | 14,400 | | | | 182,880 | |
See financial notes 17
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| J & J Snack Foods Corp. | | | 3,135 | | | | 134,397 | |
| Lancaster Colony Corp. | | | 6,965 | | | | 347,414 | |
| Lance, Inc. | | | 13,860 | | | | 315,176 | |
| Mead Johnson Nutrition Co. | | | 5,800 | | | | 341,156 | |
| MGP Ingredients, Inc. | | | 13,050 | | | | 117,711 | |
| National Beverage Corp. | | | 5,000 | | | | 71,500 | |
Omega Protein Corp. * | | | 19,900 | | | | 112,435 | |
Reddy Ice Holdings, Inc. * | | | 36,810 | | | | 128,467 | |
| Sanderson Farms, Inc. | | | 8,900 | | | | 373,622 | |
Smart Balance, Inc. * | | | 25,400 | | | | 90,424 | |
The Boston Beer Co., Inc., Class A * | | | 3,000 | | | | 214,770 | |
The Hain Celestial Group, Inc. * | | | 26,870 | | | | 664,495 | |
| Tootsie Roll Industries, Inc. | | | 9,364 | | | | 245,805 | |
TreeHouse Foods, Inc. * | | | 9,985 | | | | 466,300 | |
Vector Group Ltd. (b) | | | 20,936 | | | | 391,503 | |
Zhongpin, Inc. (b)* | | | 7,700 | | | | 155,694 | |
| | | | | | | | | |
| | | | | | | | 7,102,083 | |
| |
Health Care Equipment & Services 4.7%
|
Air Methods Corp. * | | | 5,400 | | | | 220,860 | |
Align Technology, Inc. * | | | 9,400 | | | | 160,082 | |
Alliance HealthCare Services, Inc. * | | | 29,275 | | | | 115,344 | |
Allied Healthcare International, Inc. * | | | 39,100 | | | | 110,653 | |
Allscripts Healthcare Solutions, Inc. * | | | 22,744 | | | | 434,183 | |
Amedisys, Inc. * | | | 5,870 | | | | 149,450 | |
| America Service Group, Inc. | | | 4,900 | | | | 74,970 | |
American Dental Partners, Inc. * | | | 10,400 | | | | 121,264 | |
American Medical Systems Holdings, Inc. * | | | 11,015 | | | | 222,503 | |
AMN Healthcare Services, Inc. * | | | 32,945 | | | | 174,608 | |
AmSurg Corp. * | | | 20,125 | | | | 363,860 | |
| Analogic Corp. | | | 4,265 | | | | 194,612 | |
AngioDynamics, Inc. * | | | 8,400 | | | | 119,448 | |
Assisted Living Concepts, Inc., Class A * | | | 4,620 | | | | 148,995 | |
Bio-Reference Laboratories, Inc. * | | | 5,400 | | | | 116,424 | |
BioScrip, Inc. * | | | 29,600 | | | | 166,648 | |
| Cantel Medical Corp. | | | 5,000 | | | | 92,600 | |
Capital Senior Living Corp. * | | | 23,600 | | | | 140,656 | |
Catalyst Health Solutions, Inc. * | | | 10,100 | | | | 382,285 | |
| Chemed Corp. | | | 5,895 | | | | 347,451 | |
| Computer Programs & Systems, Inc. | | | 2,500 | | | | 114,175 | |
CONMED Corp. * | | | 17,295 | | | | 380,663 | |
CorVel Corp. * | | | 2,601 | | | | 116,525 | |
Cross Country Healthcare, Inc. * | | | 18,265 | | | | 133,335 | |
Emdeon, Inc., Class A * | | | 7,000 | | | | 95,410 | |
Emeritus Corp. (b)* | | | 14,600 | | | | 272,290 | |
| Ensign Group, Inc. | | | 6,420 | | | | 120,503 | |
Five Star Quality Care, Inc. * | | | 52,800 | | | | 286,704 | |
Gen-Probe, Inc. * | | | 10,015 | | | | 485,026 | |
Gentiva Health Services, Inc. * | | | 13,825 | | | | 321,846 | |
Greatbatch, Inc. * | | | 10,220 | | | | 222,285 | |
Haemonetics Corp. * | | | 6,000 | | | | 327,900 | |
Hanger Orthopedic Group, Inc. * | | | 10,100 | | | | 189,072 | |
Healthways, Inc. * | | | 19,160 | | | | 200,797 | |
HMS Holdings Corp. * | | | 2,000 | | | | 120,220 | |
ICU Medical, Inc. * | | | 3,650 | | | | 133,225 | |
IDEXX Laboratories, Inc. * | | | 8,500 | | | | 509,660 | |
Immucor, Inc. * | | | 12,300 | | | | 214,020 | |
Integra LifeSciences Holdings * | | | 4,520 | | | | 194,450 | |
| Invacare Corp. | | | 15,965 | | | | 431,055 | |
| Landauer, Inc. | | | 2,350 | | | | 143,561 | |
LCA-Vision, Inc. * | | | 12,530 | | | | 87,209 | |
LHC Group, Inc. * | | | 3,760 | | | | 101,144 | |
| Masimo Corp. | | | 4,700 | | | | 141,799 | |
MedAssets, Inc. * | | | 6,000 | | | | 111,240 | |
MedCath Corp. * | | | 30,080 | | | | 298,093 | |
Medical Action Industries, Inc. * | | | 4,400 | | | | 43,648 | |
| MedQuist, Inc. | | | 10,200 | | | | 86,496 | |
| Meridian Bioscience, Inc. | | | 6,125 | | | | 140,201 | |
Merit Medical Systems, Inc. * | | | 7,820 | | | | 123,634 | |
Molina Healthcare, Inc. * | | | 11,005 | | | | 285,250 | |
MWI Veterinary Supply, Inc. * | | | 5,100 | | | | 291,720 | |
| National Healthcare Corp. | | | 4,650 | | | | 169,306 | |
Natus Medical, Inc. * | | | 6,800 | | | | 89,080 | |
Omnicell, Inc. * | | | 8,200 | | | | 114,554 | |
Orthofix International N.V. * | | | 5,960 | | | | 166,940 | |
PharMerica Corp. * | | | 18,340 | | | | 184,134 | |
Providence Service Corp. * | | | 6,800 | | | | 111,724 | |
PSS World Medical, Inc. * | | | 22,770 | | | | 538,055 | |
Psychiatric Solutions, Inc. * | | | 20,595 | | | | 694,051 | |
| Quality Systems, Inc. | | | 2,430 | | | | 156,152 | |
RehabCare Group, Inc. * | | | 6,945 | | | | 154,387 | |
Res-Care, Inc. * | | | 33,225 | | | | 439,567 | |
ResMed, Inc. * | | | 15,840 | | | | 504,821 | |
RTI Biologics, Inc. * | | | 27,400 | | | | 67,678 | |
Select Medical Holdings Corp. * | | | 11,900 | | | | 89,012 | |
Sirona Dental Systems, Inc. * | | | 8,690 | | | | 327,178 | |
Skilled Healthcare Group, Inc., Class A * | | | 36,960 | | | | 138,600 | |
SonoSite, Inc. * | | | 3,380 | | | | 105,355 | |
| STERIS Corp. | | | 15,010 | | | | 513,642 | |
Sun Healthcare Group, Inc. * | | | 72,100 | | | | 685,671 | |
Sunrise Senior Living, Inc. * | | | 125,600 | | | | 430,808 | |
SurModics, Inc. * | | | 4,160 | | | | 49,754 | |
Symmetry Medical, Inc. * | | | 15,670 | | | | 138,680 | |
Syneron Medical Ltd. * | | | 10,000 | | | | 105,300 | |
Team Health Holdings, Inc. * | | | 6,400 | | | | 85,440 | |
| The Cooper Cos., Inc. | | | 15,585 | | | | 768,964 | |
Thoratec Corp. * | | | 6,700 | | | | 218,688 | |
TomoTherapy, Inc. * | | | 29,600 | | | | 113,072 | |
Triple-S Management Corp., Class B * | | | 26,700 | | | | 450,429 | |
VCA Antech, Inc. * | | | 23,775 | | | | 491,429 | |
Volcano Corp. * | | | 4,000 | | | | 97,680 | |
| West Pharmaceutical Services, Inc. | | | 9,940 | | | | 354,759 | |
Wright Medical Group, Inc. * | | | 7,840 | | | | 104,586 | |
Zoll Medical Corp. * | | | 6,225 | | | | 202,499 | |
| | | | | | | | | |
| | | | | | | | 19,442,047 | |
| |
Household & Personal Products 0.8%
|
American Oriental Bioengineering, Inc. (b)* | | | 29,300 | | | | 79,696 | |
Cellu Tissue Holdings, Inc. * | | | 300 | | | | 3,582 | |
Central Garden & Pet Co. * | | | 12,000 | | | | 124,200 | |
Central Garden & Pet Co., Class A * | | | 40,630 | | | | 424,583 | |
Elizabeth Arden, Inc. * | | | 19,270 | | | | 394,071 | |
| Herbalife Ltd. | | | 14,305 | | | | 913,517 | |
| Inter Parfums, Inc. | | | 5,050 | | | | 88,325 | |
Mannatech, Inc. (b)* | | | 36,600 | | | | 68,442 | |
| Nu Skin Enterprises, Inc., Class A | | | 17,010 | | | | 520,506 | |
Nutraceutical International Corp. * | | | 6,400 | | | | 104,000 | |
18 See financial notes
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Prestige Brands Holdings, Inc. * | | | 17,210 | | | | 185,008 | |
Revlon, Inc., Class A * | | | 6,300 | | | | 71,946 | |
USANA Health Sciences, Inc. * | | | 3,530 | | | | 155,038 | |
WD-40 Co. | | | 5,915 | | | | 218,204 | |
| | | | | | | | | |
| | | | | | | | 3,351,118 | |
| |
Insurance 2.7%
|
| Alterra Capital Holdings Ltd. | | | 22,855 | | | | 461,671 | |
| American Equity Investment Life Holding Co. | | | 46,715 | | | | 506,858 | |
American Safety Insurance Holdings Ltd. * | | | 7,800 | | | | 144,846 | |
AMERISAFE, Inc. * | | | 11,500 | | | | 219,535 | |
| AmTrust Financial Services, Inc. | | | 8,180 | | | | 122,455 | |
| Argo Group International Holdings Ltd. | | | 13,959 | | | | 484,238 | |
| Assured Guaranty Ltd. | | | 26,855 | | | | 511,588 | |
| Baldwin & Lyons, Inc., Class B | | | 4,900 | | | | 122,500 | |
Citizens, Inc. * | | | 11,680 | | | | 80,826 | |
CNA Surety Corp. * | | | 9,520 | | | | 183,260 | |
Crawford & Co., Class B * | | | 12,515 | | | | 32,038 | |
| Donegal Group, Inc., Class A | | | 5,800 | | | | 80,330 | |
| EMC Insurance Group, Inc. | | | 4,600 | | | | 97,244 | |
| Employers Holdings, Inc. | | | 25,100 | | | | 406,369 | |
Enstar Group Ltd. * | | | 2,210 | | | | 177,220 | |
| FBL Financial Group, Inc., Class A | | | 12,100 | | | | 316,536 | |
| First Mercury Financial Corp. | | | 3,800 | | | | 61,940 | |
| Flagstone Reinsurance Holdings S.A. | | | 18,800 | | | | 204,920 | |
FPIC Insurance Group, Inc. * | | | 7,125 | | | | 252,367 | |
Global Indemnity plc * | | | 15,870 | | | | 267,886 | |
Greenlight Capital Re Ltd., Class A * | | | 6,000 | | | | 171,360 | |
Hallmark Financial Services, Inc. * | | | 13,400 | | | | 119,796 | |
| Harleysville Group, Inc. | | | 13,535 | | | | 464,656 | |
Hilltop Holdings, Inc. * | | | 11,970 | | | | 119,580 | |
| Horace Mann Educators Corp. | | | 27,790 | | | | 519,395 | |
| Infinity Property & Casualty Corp. | | | 9,165 | | | | 474,289 | |
| Kansas City Life Insurance Co. | | | 1,677 | | | | 53,261 | |
| Maiden Holdings Ltd. | | | 14,600 | | | | 111,690 | |
| Meadowbrook Insurance Group, Inc. | | | 26,800 | | | | 231,284 | |
National Financial Partners Corp. * | | | 34,185 | | | | 471,753 | |
| National Interstate Corp. | | | 5,200 | | | | 111,644 | |
| National Western Life Insurance Co., Class A | | | 1,700 | | | | 272,017 | |
| Presidential Life Corp. | | | 18,645 | | | | 178,433 | |
| RLI Corp. | | | 8,650 | | | | 496,683 | |
| Safety Insurance Group, Inc. | | | 10,005 | | | | 464,832 | |
| Seabright Holdings, Inc. | | | 20,400 | | | | 170,748 | |
| State Auto Financial Corp. | | | 10,930 | | | | 171,164 | |
| Stewart Information Services Corp. | | | 24,700 | | | | 267,254 | |
| Symetra Financial Corp. | | | 15,200 | | | | 167,960 | |
The Navigators Group, Inc. * | | | 7,065 | | | | 324,778 | |
| Tower Group, Inc. | | | 7,200 | | | | 174,816 | |
| United Fire & Casualty Co. | | | 14,460 | | | | 289,634 | |
| Universal Insurance Holdings, Inc. | | | 15,400 | | | | 70,070 | |
| Validus Holdings Ltd. | | | 22,800 | | | | 646,608 | |
| | | | | | | | | |
| | | | | | | | 11,278,332 | |
| |
Materials 5.8%
|
| A. Schulman, Inc. | | | 20,133 | | | | 436,886 | |
A.M. Castle & Co. * | | | 18,678 | | | | 287,641 | |
AEP Industries, Inc. * | | | 4,740 | | | | 115,514 | |
| AMCOL International Corp. | | | 9,220 | | | | 255,763 | |
| American Vanguard Corp. | | | 12,100 | | | | 89,177 | |
| Arch Chemicals, Inc. | | | 14,490 | | | | 514,540 | |
Boise, Inc. * | | | 73,300 | | | | 531,425 | |
Brush Engineered Materials, Inc. * | | | 13,660 | | | | 452,829 | |
| Buckeye Technologies, Inc. | | | 22,380 | | | | 403,959 | |
Calgon Carbon Corp. * | | | 8,200 | | | | 123,082 | |
| Carpenter Technology Corp. | | | 19,680 | | | | 701,789 | |
Clearwater Paper Corp. * | | | 3,380 | | | | 272,935 | |
Coeur d’Alene Mines Corp. * | | | 40,800 | | | | 840,888 | |
| Compass Minerals International, Inc. | | | 5,130 | | | | 404,603 | |
| Deltic Timber Corp. | | | 2,200 | | | | 102,696 | |
| Eagle Materials, Inc. | | | 19,570 | | | | 459,112 | |
Ferro Corp. * | | | 73,930 | | | | 1,014,320 | |
General Steel Holdings, Inc. (b)* | | | 24,000 | | | | 71,280 | |
Georgia Gulf Corp. * | | | 35,224 | | | | 712,582 | |
| Globe Specialty Metals, Inc. | | | 10,100 | | | | 156,954 | |
| H.B. Fuller Co. | | | 22,480 | | | | 463,987 | |
| Haynes International, Inc. | | | 9,176 | | | | 332,722 | |
Headwaters, Inc. * | | | 85,280 | | | | 289,952 | |
Hecla Mining Co. * | | | 61,145 | | | | 421,289 | |
Horsehead Holding Corp. * | | | 20,200 | | | | 220,786 | |
| Innophos Holdings, Inc. | | | 7,450 | | | | 273,564 | |
Innospec, Inc. * | | | 23,180 | | | | 392,437 | |
Intrepid Potash, Inc. * | | | 8,000 | | | | 274,640 | |
| Kaiser Aluminum Corp. | | | 6,480 | | | | 291,535 | |
KapStone Paper & Packaging Corp. * | | | 8,300 | | | | 106,240 | |
| Koppers Holdings, Inc. | | | 10,060 | | | | 280,473 | |
Kraton Performance Polymers, Inc. * | | | 11,200 | | | | 363,552 | |
Landec Corp. * | | | 13,900 | | | | 87,431 | |
LSB Industries, Inc. * | | | 8,620 | | | | 192,657 | |
Mercer International, Inc. * | | | 75,600 | | | | 400,680 | |
| Minerals Technologies, Inc. | | | 8,210 | | | | 481,681 | |
| Myers Industries, Inc. | | | 23,005 | | | | 203,134 | |
| Neenah Paper, Inc. | | | 13,365 | | | | 205,153 | |
| NewMarket Corp. | | | 4,695 | | | | 556,451 | |
| NL Industries, Inc. | | | 9,565 | | | | 109,902 | |
| Olympic Steel, Inc. | | | 9,400 | | | | 210,748 | |
OM Group, Inc. * | | | 19,035 | | | | 633,294 | |
Omnova Solutions, Inc. * | | | 27,680 | | | | 220,886 | |
| P.H. Glatfelter Co. | | | 21,445 | | | | 266,776 | |
Penford Corp. * | | | 11,300 | | | | 67,122 | |
PolyOne Corp. * | | | 76,500 | | | | 988,380 | |
Qiao Xing Universal Resources, Inc. (b)* | | | 58,100 | | | | 102,837 | |
| Quaker Chemical Corp. | | | 10,700 | | | | 389,694 | |
| Royal Gold, Inc. | | | 4,950 | | | | 245,075 | |
RTI International Metals, Inc. * | | | 14,580 | | | | 453,438 | |
| Schnitzer Steel Industries, Inc., Class A | | | 14,510 | | | | 750,022 | |
| Schweitzer-Mauduit International, Inc. | | | 7,786 | | | | 499,705 | |
| Sensient Technologies Corp. | | | 23,345 | | | | 754,277 | |
ShengdaTech, Inc. (b)* | | | 13,900 | | | | 87,987 | |
Solutia, Inc. * | | | 35,740 | | | | 647,251 | |
Spartech Corp. * | | | 32,765 | | | | 277,192 | |
| Stepan Co. | | | 6,265 | | | | 422,512 | |
Stillwater Mining Co. * | | | 13,070 | | | | 232,646 | |
STR Holdings, Inc. (b)* | | | 5,200 | | | | 129,220 | |
See financial notes 19
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Sutor Technology Group Ltd. * | | | 4,000 | | | | 8,400 | |
Terra Nova Royalty Corp. * | | | 9,500 | | | | 74,860 | |
Texas Industries, Inc. (b) | | | 11,785 | | | | 402,693 | |
Titanium Metals Corp. * | | | 24,850 | | | | 488,551 | |
United States Lime & Minerals, Inc. * | | | 2,500 | | | | 101,250 | |
Universal Stainless & Alloy Products, Inc. * | | | 3,800 | | | | 109,972 | |
US Gold Corp. * | | | 33,400 | | | | 174,682 | |
| Valhi, Inc. | | | 4,900 | | | | 98,882 | |
Verso Paper Corp. * | | | 29,600 | | | | 108,336 | |
| Walter Energy, Inc. | | | 4,575 | | | | 402,417 | |
Wausau Paper Corp. * | | | 40,010 | | | | 337,684 | |
| Zep, Inc. | | | 7,200 | | | | 130,608 | |
Zoltek Cos., Inc. * | | | 13,900 | | | | 133,440 | |
| | | | | | | | | |
| | | | | | | | 23,847,078 | |
| |
Media 2.1%
|
AH Belo Corp., Class A * | | | 19,000 | | | | 138,130 | |
Alloy, Inc. * | | | 12,100 | | | | 117,975 | |
| Arbitron, Inc. | | | 6,860 | | | | 173,695 | |
Belo Corp., Class A * | | | 79,200 | | | | 458,568 | |
Carmike Cinemas, Inc. * | | | 13,175 | | | | 105,532 | |
| Cinemark Holdings, Inc. | | | 10,700 | | | | 187,785 | |
CKX, Inc. * | | | 27,995 | | | | 114,220 | |
| CTC Media, Inc. | | | 6,800 | | | | 160,480 | |
Entercom Communications Corp., Class A * | | | 36,000 | | | | 300,600 | |
Entravision Communications Corp., Class A * | | | 63,955 | | | | 135,585 | |
Fisher Communications, Inc. * | | | 3,800 | | | | 69,464 | |
Global Sources Ltd. * | | | 12,368 | | | | 94,491 | |
Gray Television, Inc. * | | | 129,400 | | | | 252,330 | |
| Harte-Hanks, Inc. | | | 31,835 | | | | 384,567 | |
| John Wiley & Sons, Inc., Class A | | | 13,515 | | | | 583,307 | |
Journal Communications, Inc., Class A * | | | 55,015 | | | | 253,619 | |
Knology, Inc. * | | | 6,700 | | | | 97,485 | |
Lee Enterprises, Inc. * | | | 108,450 | | | | 199,548 | |
Liberty Media Corp - Capital, Series A * | | | 9,200 | | | | 529,368 | |
LIN TV Corp., Class A * | | | 37,033 | | | | 154,057 | |
Lions Gate Entertainment Corp. (b)* | | | 76,100 | | | | 550,203 | |
LodgeNet Interactive Corp. * | | | 20,050 | | | | 51,127 | |
Martha Stewart Living Omnimedia, Inc., Class A (b)* | | | 17,700 | | | | 77,172 | |
Media General, Inc., Class A * | | | 40,770 | | | | 224,643 | |
Mediacom Communications Corp., Class A * | | | 57,340 | | | | 395,646 | |
Morningstar, Inc. * | | | 3,435 | | | | 167,697 | |
Playboy Enterprises, Inc., Class B * | | | 26,900 | | | | 130,465 | |
| PRIMEDIA, Inc. | | | 25,000 | | | | 91,750 | |
Radio One, Inc., Class D (b)* | | | 60,330 | | | | 69,983 | |
Scholastic Corp. (b) | | | 20,200 | | | | 594,890 | |
Sinclair Broadcast Group, Inc., Class A * | | | 50,819 | | | | 406,044 | |
The McClatchy Co., Class A (b)* | | | 134,600 | | | | 371,496 | |
Valassis Communications, Inc. * | | | 16,785 | | | | 553,905 | |
| World Wrestling Entertainment, Inc., Class A | | | 29,800 | | | | 412,432 | |
| | | | | | | | | |
| | | | | | | | 8,608,259 | |
| |
Pharmaceuticals, Biotechnology & Life Sciences 1.7%
|
Accelrys, Inc. * | | | 20,776 | | | | 150,626 | |
Affymetrix, Inc. * | | | 25,690 | | | | 115,091 | |
Albany Molecular Research, Inc. * | | | 16,100 | | | | 103,040 | |
Alexion Pharmaceuticals, Inc. * | | | 3,600 | | | | 245,880 | |
Alkermes, Inc. * | | | 16,300 | | | | 188,591 | |
Bruker Corp. * | | | 10,185 | | | | 152,673 | |
Cambrex Corp. * | | | 83,029 | | | | 376,121 | |
Caraco Pharmaceutical Laboratories Ltd. * | | | 18,900 | | | | 97,524 | |
Celera Corp. * | | | 21,785 | | | | 124,175 | |
Cubist Pharmaceuticals, Inc. * | | | 8,840 | | | | 205,795 | |
Dionex Corp. * | | | 2,750 | | | | 245,383 | |
Emergent Biosolutions, Inc. * | | | 4,700 | | | | 84,929 | |
Enzon Pharmaceuticals, Inc. * | | | 9,600 | | | | 108,000 | |
eResearch Technology, Inc. * | | | 17,000 | | | | 129,540 | |
Illumina, Inc. * | | | 10,360 | | | | 562,652 | |
K-V Pharmaceutical Co., Class A (b)* | | | 92,164 | | | | 214,742 | |
Kendle International, Inc. * | | | 9,400 | | | | 85,634 | |
Luminex Corp. * | | | 5,500 | | | | 99,055 | |
Martek Biosciences Corp. * | | | 14,440 | | | | 316,958 | |
| Medicis Pharmaceutical Corp., Class A | | | 11,825 | | | | 351,794 | |
Myriad Genetics, Inc. * | | | 7,240 | | | | 144,293 | |
Onyx Pharmaceuticals, Inc. * | | | 3,100 | | | | 83,173 | |
Par Pharmaceutical Cos., Inc. * | | | 12,670 | | | | 411,902 | |
PAREXEL International Corp. * | | | 18,320 | | | | 393,880 | |
| PDL BioPharma, Inc. | | | 53,050 | | | | 277,451 | |
| Perrigo Co. | | | 12,280 | | | | 809,006 | |
Salix Pharmaceuticals Ltd. * | | | 3,795 | | | | 143,565 | |
| Techne Corp. | | | 3,565 | | | | 217,180 | |
The Medicines Co. * | | | 11,120 | | | | 142,002 | |
United Therapeutics Corp. * | | | 3,020 | | | | 181,200 | |
ViroPharma, Inc. * | | | 23,060 | | | | 377,262 | |
| | | | | | | | | |
| | | | | | | | 7,139,117 | |
| |
Real Estate 8.0%
|
| Acadia Realty Trust | | | 17,274 | | | | 329,588 | |
| Agree Realty Corp. | | | 4,900 | | | | 124,950 | |
| Alexander’s, Inc. | | | 320 | | | | 120,269 | |
| American Campus Communities, Inc. | | | 15,360 | | | | 485,837 | |
| American Capital Agency Corp. | | | 16,800 | | | | 482,496 | |
| Anworth Mortgage Asset Corp. | | | 50,055 | | | | 350,886 | |
Arbor Realty Trust, Inc. * | | | 66,200 | | | | 350,860 | |
Ashford Hospitality Trust * | | | 113,585 | | | | 1,152,888 | |
| Associated Estates Realty Corp. | | | 14,500 | | | | 201,405 | |
Avatar Holdings, Inc. * | | | 12,045 | | | | 219,701 | |
Capital Trust, Inc., Class A (b)* | | | 91,500 | | | | 133,590 | |
| CapLease, Inc. | | | 60,400 | | | | 353,944 | |
| Capstead Mortgage Corp. | | | 42,350 | | | | 482,790 | |
| Cedar Shopping Centers, Inc. | | | 43,345 | | | | 273,507 | |
| Chimera Investment Corp. | | | 188,500 | | | | 772,850 | |
| Cogdell Spencer, Inc. | | | 17,100 | | | | 112,347 | |
| Cohen & Co., Inc. | | | 16,900 | | | | 81,120 | |
| Cousins Properties, Inc. | | | 63,391 | | | | 469,727 | |
| DCT Industrial Trust, Inc. | | | 116,500 | | | | 583,665 | |
DiamondRock Hospitality Co. * | | | 74,187 | | | | 784,898 | |
| Digital Realty Trust, Inc. | | | 11,610 | | | | 693,465 | |
| DuPont Fabros Technology, Inc. | | | 11,200 | | | | 281,120 | |
20 See financial notes
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| EastGroup Properties, Inc. | | | 9,750 | | | | 394,680 | |
| Education Realty Trust, Inc. | | | 32,500 | | | | 243,750 | |
| Entertainment Properties Trust | | | 16,530 | | | | 764,182 | |
| Equity Lifestyle Properties, Inc. | | | 4,770 | | | | 271,508 | |
| Equity One, Inc. | | | 19,100 | | | | 357,170 | |
| Extra Space Storage, Inc. | | | 41,065 | | | | 665,253 | |
FelCor Lodging Trust, Inc. * | | | 222,550 | | | | 1,368,682 | |
| First Potomac Realty Trust | | | 22,500 | | | | 370,800 | |
Forest City Enterprises, Inc., Class A * | | | 49,460 | | | | 721,621 | |
Forestar Group, Inc. * | | | 15,560 | | | | 266,076 | |
| Franklin Street Properties Corp. | | | 29,320 | | | | 391,422 | |
| Getty Realty Corp. | | | 6,960 | | | | 198,430 | |
| Gladstone Commercial Corp. | | | 6,600 | | | | 123,288 | |
| Glimcher Realty Trust | | | 117,225 | | | | 880,360 | |
| Government Properties Income Trust | | | 5,700 | | | | 152,133 | |
Grubb & Ellis Co. (b)* | | | 61,600 | | | | 65,912 | |
| Hatteras Financial Corp. | | | 11,200 | | | | 327,936 | |
| Healthcare Realty Trust, Inc. | | | 30,000 | | | | 724,200 | |
| Hersha Hospitality Trust | | | 81,640 | | | | 498,004 | |
HomeBanc Corp. (c),(d)* | | | 6,875 | | | | — | |
| Inland Real Estate Corp. | | | 52,430 | | | | 455,617 | |
| Investors Real Estate Trust | | | 31,425 | | | | 276,540 | |
| Kilroy Realty Corp. | | | 26,015 | | | | 888,933 | |
| Kite Realty Group Trust | | | 43,480 | | | | 207,834 | |
| LaSalle Hotel Properties | | | 28,540 | | | | 676,113 | |
| LTC Properties, Inc. | | | 6,830 | | | | 190,215 | |
| Medical Properties Trust, Inc. | | | 38,600 | | | | 431,934 | |
| Mid-America Apartment Communities, Inc. | | | 12,545 | | | | 765,621 | |
| Mission West Properties, Inc. | | | 17,300 | | | | 115,910 | |
| Monmouth Real Estate Investment Corp., Class A | | | 12,100 | | | | 99,462 | |
MPG Office Trust, Inc. * | | | 196,420 | | | | 532,298 | |
| National Health Investors, Inc. | | | 10,635 | | | | 492,400 | |
| NorthStar Realty Finance Corp. | | | 135,232 | | | | 605,839 | |
| OMEGA Healthcare Investors, Inc. | | | 25,590 | | | | 588,570 | |
| One Liberty Properties, Inc. | | | 9,803 | | | | 156,456 | |
| Parkway Properties, Inc. | | | 20,020 | | | | 311,511 | |
| Post Properties, Inc. | | | 33,920 | | | | 1,032,525 | |
| Potlatch Corp. | | | 10,600 | | | | 360,930 | |
| PS Business Parks, Inc. | | | 5,750 | | | | 340,745 | |
RAIT Financial Trust * | | | 248,063 | | | | 416,746 | |
| Ramco-Gershenson Properties Trust | | | 34,670 | | | | 401,479 | |
| Resource Capital Corp. | | | 37,200 | | | | 235,476 | |
| Saul Centers, Inc. | | | 4,505 | | | | 192,273 | |
| Sovran Self Storage, Inc. | | | 13,170 | | | | 514,552 | |
Strategic Hotel & Resorts, Inc. * | | | 175,555 | | | | 798,775 | |
| Sun Communities, Inc. | | | 14,455 | | | | 471,378 | |
Sunstone Hotel Investors, Inc. * | | | 68,065 | | | | 738,505 | |
| Tanger Factory Outlet Centers, Inc. | | | 7,990 | | | | 382,881 | |
| Taubman Centers, Inc. | | | 11,495 | | | | 533,598 | |
The St. Joe Co. (b)* | | | 19,370 | | | | 391,080 | |
U-Store-It Trust | | | 56,275 | | | | 484,528 | |
| Universal Health Realty Income Trust | | | 3,400 | | | | 126,310 | |
| Urstadt Biddle Properties | | | 6,500 | | | | 107,185 | |
| Urstadt Biddle Properties, Class A | | | 9,495 | | | | 182,399 | |
| Washington Real Estate Investment Trust | | | 23,155 | | | | 741,655 | |
| Winthrop Realty Trust | | | 7,700 | | | | 104,720 | |
| | | | | | | | | |
| | | | | | | | 32,980,303 | |
| |
Retailing 5.6%
|
1-800-FLOWERS.COM, Inc., Class A * | | | 98,547 | | | | 177,385 | |
99 Cents Only Stores * | | | 18,240 | | | | 281,261 | |
Aeropostale, Inc. * | | | 14,255 | | | | 347,537 | |
| AMCON Distributing Co. | | | 100 | | | | 6,915 | |
America’s Car-Mart, Inc. * | | | 2,400 | | | | 64,008 | |
Audiovox Corp., Class A * | | | 29,920 | | | | 193,882 | |
| bebe stores, Inc. | | | 15,090 | | | | 98,990 | |
| Big 5 Sporting Goods Corp. | | | 14,140 | | | | 191,173 | |
Blue Nile, Inc. (b)* | | | 1,700 | | | | 72,420 | |
Books-A-Million, Inc. (b) | | | 22,700 | | | | 144,145 | |
Borders Group, Inc. * | | | 280,000 | | | | 341,600 | |
| Brown Shoe Co., Inc. | | | 35,942 | | | | 422,318 | |
Build-A-Bear Workshop, Inc. * | | | 27,050 | | | | 190,161 | |
Cache, Inc. * | | | 19,600 | | | | 97,804 | |
Casual Male Retail Group, Inc. * | | | 37,600 | | | | 165,816 | |
| Christopher & Banks Corp. | | | 35,840 | | | | 213,606 | |
Citi Trends, Inc. * | | | 3,900 | | | | 81,822 | |
Coldwater Creek, Inc. * | | | 54,860 | | | | 184,878 | |
Conn’s, Inc. (b)* | | | 46,465 | | | | 204,446 | |
Destination Maternity Corp. * | | | 6,200 | | | | 226,486 | |
drugstore.com, Inc. * | | | 27,500 | | | | 44,000 | |
DSW, Inc., Class A * | | | 18,325 | | | | 609,673 | |
| Fred’s, Inc., Class A | | | 33,570 | | | | 402,169 | |
Genesco, Inc. * | | | 19,700 | | | | 645,372 | |
| Guess?, Inc. | | | 5,155 | | | | 200,633 | |
| Haverty Furniture Cos., Inc. | | | 15,200 | | | | 162,488 | |
hhgregg, Inc. * | | | 6,300 | | | | 145,152 | |
Hibbett Sports, Inc. * | | | 7,885 | | | | 212,501 | |
| Hot Topic, Inc. | | | 39,100 | | | | 224,043 | |
HSN, Inc. * | | | 22,100 | | | | 661,674 | |
J. Crew Group, Inc. * | | | 6,750 | | | | 215,932 | |
Jo-Ann Stores, Inc. * | | | 10,450 | | | | 451,962 | |
Jos. A. Bank Clothiers, Inc. * | | | 8,685 | | | | 378,666 | |
Kirkland’s, Inc. * | | | 4,522 | | | | 60,821 | |
| Lithia Motors, Inc., Class A | | | 78,535 | | | | 856,031 | |
LKQ Corp. * | | | 29,100 | | | | 632,634 | |
Lumber Liquidators Holdings, Inc. * | | | 3,800 | | | | 91,504 | |
MarineMax, Inc. * | | | 23,500 | | | | 175,780 | |
| Monro Muffler Brake, Inc. | | | 4,160 | | | | 198,598 | |
Netflix, Inc. * | | | 7,855 | | | | 1,362,842 | |
New York & Co, Inc. * | | | 45,600 | | | | 142,272 | |
| NutriSystem, Inc. | | | 6,930 | | | | 132,502 | |
Orbitz Worldwide, Inc. * | | | 24,500 | | | | 166,600 | |
Overstock.com, Inc. (b)* | | | 6,960 | | | | 93,334 | |
Pacific Sunwear of California, Inc. * | | | 104,830 | | | | 624,787 | |
Pier 1 Imports, Inc. * | | | 50,285 | | | | 436,474 | |
Priceline.com, Inc. * | | | 2,620 | | | | 987,242 | |
Retail Ventures, Inc. * | | | 40,700 | | | | 553,113 | |
Sally Beauty Holdings, Inc. * | | | 33,365 | | | | 406,052 | |
Select Comfort Corp. * | | | 22,470 | | | | 186,726 | |
Shoe Carnival, Inc. * | | | 7,800 | | | | 178,620 | |
Shutterfly, Inc. * | | | 5,600 | | | | 168,560 | |
| Stage Stores, Inc. | | | 36,255 | | | | 483,279 | |
Stein Mart, Inc. * | | | 31,515 | | | | 295,926 | |
Syms Corp. * | | | 2,800 | | | | 20,412 | |
| Systemax, Inc. | | | 9,145 | | | | 118,428 | |
See financial notes 21
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
The Bon-Ton Stores, Inc. (b)* | | | 35,811 | | | | 411,110 | |
The Buckle, Inc. (b) | | | 7,722 | | | | 224,633 | |
| The Cato Corp., Class A | | | 15,195 | | | | 401,908 | |
The Children’s Place Retail Stores, Inc. * | | | 14,760 | | | | 650,325 | |
The Dress Barn, Inc. * | | | 23,871 | | | | 547,601 | |
| The Finish Line, Inc., Class A | | | 27,852 | | | | 426,136 | |
The Gymboree Corp. * | | | 7,760 | | | | 504,866 | |
| The Men’s Wearhouse, Inc. | | | 29,155 | | | | 712,548 | |
| The Pep Boys - Manny, Moe & Jack | | | 51,515 | | | | 602,210 | |
The Talbots, Inc. * | | | 15,880 | | | | 155,306 | |
TravelCenters of America L.L.C. * | | | 106,100 | | | | 312,995 | |
Tuesday Morning Corp. * | | | 30,230 | | | | 144,802 | |
Ulta Salon, Cosmetics & Fragrance, Inc. * | | | 14,000 | | | | 429,660 | |
ValueVision Media, Inc., Class A * | | | 27,720 | | | | 65,696 | |
Vitamin Shoppe, Inc. * | | | 4,200 | | | | 116,802 | |
West Marine, Inc. * | | | 15,280 | | | | 149,897 | |
Wet Seal, Inc., Class A * | | | 38,060 | | | | 133,210 | |
| Weyco Group, Inc. | | | 3,300 | | | | 82,335 | |
Zale Corp. (b)* | | | 110,400 | | | | 282,624 | |
Zumiez, Inc. * | | | 7,080 | | | | 185,638 | |
| | | | | | | | | |
| | | | | | | | 22,973,757 | |
| |
Semiconductors & Semiconductor Equipment 4.1%
|
Actel Corp. * | | | 6,830 | | | | 142,474 | |
Advanced Energy Industries, Inc. * | | | 14,520 | | | | 208,507 | |
ANADIGICS, Inc. * | | | 31,600 | | | | 213,932 | |
Applied Micro Circuits Corp. * | | | 13,240 | | | | 133,327 | |
Atheros Communications * | | | 8,345 | | | | 259,029 | |
Atmel Corp. * | | | 155,600 | | | | 1,378,616 | |
ATMI, Inc. * | | | 12,615 | | | | 222,907 | |
Avago Technologies Ltd. * | | | 16,400 | | | | 404,752 | |
Axcelis Technologies, Inc. * | | | 102,260 | | | | 219,859 | |
Brooks Automation, Inc. * | | | 29,490 | | | | 200,237 | |
Cabot Microelectronics Corp. * | | | 6,730 | | | | 259,980 | |
Canadian Solar, Inc. * | | | 5,300 | | | | 74,041 | |
Cirrus Logic, Inc. * | | | 12,535 | | | | 161,075 | |
| Cohu, Inc. | | | 7,410 | | | | 106,334 | |
Cree, Inc. * | | | 9,195 | | | | 471,612 | |
Cymer, Inc. * | | | 10,020 | | | | 370,239 | |
Cypress Semiconductor Corp. * | | | 30,605 | | | | 431,530 | |
Diodes, Inc. * | | | 8,397 | | | | 184,566 | |
DSP Group, Inc. * | | | 13,140 | | | | 94,082 | |
Energy Conversion Devices, Inc. (b)* | | | 32,130 | | | | 144,906 | |
Entegris, Inc. * | | | 53,745 | | | | 321,395 | |
Evergreen Solar, Inc. (b)* | | | 103,000 | | | | 95,790 | |
Exar Corp. * | | | 11,815 | | | | 78,570 | |
FEI Co. * | | | 12,120 | | | | 263,731 | |
FormFactor, Inc. * | | | 10,265 | | | | 99,878 | |
Hittite Microwave Corp. * | | | 3,255 | | | | 168,186 | |
Integrated Device Technology, Inc. * | | | 74,380 | | | | 438,098 | |
International Rectifier Corp. * | | | 29,900 | | | | 694,577 | |
| Intersil Corp., Class A | | | 42,000 | | | | 549,780 | |
IXYS Corp. * | | | 7,300 | | | | 74,752 | |
Kulicke & Soffa Industries, Inc. * | | | 19,980 | | | | 124,276 | |
Lattice Semiconductor Corp. * | | | 37,200 | | | | 180,792 | |
| Micrel, Inc. | | | 9,850 | | | | 117,314 | |
Microsemi Corp. * | | | 20,745 | | | | 414,900 | |
MKS Instruments, Inc. * | | | 20,350 | | | | 420,227 | |
Monolithic Power Systems * | | | 4,600 | | | | 73,922 | |
Netlogic Microsystems, Inc. * | | | 4,290 | | | | 128,957 | |
OmniVision Technologies, Inc. * | | | 19,880 | | | | 539,344 | |
Pericom Semiconductor Corp. * | | | 9,900 | | | | 93,258 | |
Photronics, Inc. * | | | 66,725 | | | | 419,033 | |
PMC-Sierra, Inc. * | | | 46,025 | | | | 353,932 | |
| Power Integrations, Inc. | | | 3,360 | | | | 114,778 | |
RF Micro Devices, Inc. * | | | 66,345 | | | | 483,655 | |
Semtech Corp. * | | | 14,205 | | | | 304,129 | |
Sigma Designs, Inc. * | | | 10,450 | | | | 119,234 | |
Silicon Image, Inc. * | | | 62,760 | | | | 385,974 | |
Silicon Laboratories, Inc. * | | | 4,190 | | | | 167,181 | |
Skyworks Solutions, Inc. * | | | 38,310 | | | | 877,682 | |
Standard Microsystems Corp. * | | | 9,890 | | | | 238,745 | |
SunPower Corp., Class A (b)* | | | 13,700 | | | | 186,868 | |
SunPower Corp., Class B * | | | 10,469 | | | | 138,191 | |
Supertex, Inc. * | | | 3,600 | | | | 84,564 | |
Teradyne, Inc. * | | | 45,400 | | | | 510,296 | |
Tessera Technologies, Inc. * | | | 16,190 | | | | 319,429 | |
Trident Microsystems, Inc. * | | | 34,500 | | | | 64,170 | |
TriQuint Semiconductor, Inc. * | | | 44,560 | | | | 458,968 | |
Ultra Clean Holdings, Inc. * | | | 10,800 | | | | 81,324 | |
Ultratech, Inc. * | | | 7,200 | | | | 131,832 | |
Varian Semiconductor Equipment Associates, Inc. * | | | 12,612 | | | | 412,034 | |
Veeco Instruments, Inc. (b)* | | | 5,860 | | | | 245,241 | |
Verigy Ltd. * | | | 21,620 | | | | 198,039 | |
Zoran Corp. * | | | 20,235 | | | | 143,264 | |
| | | | | | | | | |
| | | | | | | | 16,998,315 | |
| |
Software & Services 7.3%
|
ACI Worldwide, Inc. * | | | 9,100 | | | | 221,767 | |
Acxiom Corp. * | | | 35,115 | | | | 616,268 | |
Advent Software, Inc. * | | | 2,560 | | | | 137,523 | |
Ancestry.com, Inc. * | | | 5,300 | | | | 141,351 | |
ANSYS, Inc. * | | | 11,500 | | | | 520,375 | |
Ariba, Inc. * | | | 12,745 | | | | 239,351 | |
AsiaInfo-Linkage, Inc. * | | | 7,500 | | | | 166,650 | |
| Blackbaud, Inc. | | | 5,600 | | | | 142,184 | |
Blackboard, Inc. (b)* | | | 2,720 | | | | 113,533 | |
Cadence Design Systems, Inc. * | | | 79,100 | | | | 669,977 | |
| Cass Information Systems, Inc. | | | 3,100 | | | | 107,043 | |
CDC Corp., Class A * | | | 18,063 | | | | 82,367 | |
CIBER, Inc. * | | | 95,570 | | | | 350,742 | |
Compuware Corp. * | | | 84,300 | | | | 843,843 | |
Concur Technologies, Inc. * | | | 5,500 | | | | 283,910 | |
CSG Systems International, Inc. * | | | 11,545 | | | | 224,435 | |
DealerTrack Holdings, Inc. * | | | 9,595 | | | | 185,375 | |
Deltek, Inc. * | | | 11,800 | | | | 92,748 | |
| Diamond Management & Technology Consultants, Inc. | | | 17,100 | | | | 213,237 | |
Dice Holdings, Inc. * | | | 12,700 | | | | 114,935 | |
Digital River, Inc. * | | | 12,650 | | | | 471,339 | |
Dynamics Research Corp. * | | | 4,200 | | | | 47,460 | |
| EarthLink, Inc. | | | 62,475 | | | | 561,650 | |
Epicor Software Corp. * | | | 24,065 | | | | 226,211 | |
| EPIQ Systems, Inc. | | | 12,970 | | | | 152,008 | |
Equinix, Inc. * | | | 8,607 | | | | 725,054 | |
Euronet Worldwide, Inc. * | | | 18,495 | | | | 334,020 | |
Exlservice Holdings, Inc. * | | | 2,700 | | | | 51,435 | |
| FactSet Research Systems, Inc. | | | 4,865 | | | | 427,050 | |
| Fair Isaac Corp. | | | 14,705 | | | | 353,508 | |
22 See financial notes
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Forrester Research, Inc. * | | | 2,725 | | | | 90,116 | |
Gartner, Inc. * | | | 9,500 | | | | 301,055 | |
Genpact Ltd. * | | | 31,750 | | | | 504,825 | |
GigaMedia Ltd. * | | | 29,500 | | | | 51,035 | |
Global Cash Access Holdings, Inc. * | | | 23,735 | | | | 86,395 | |
| Global Payments, Inc. | | | 13,570 | | | | 528,687 | |
GSI Commerce, Inc. * | | | 11,980 | | | | 292,552 | |
| Heartland Payment Systems, Inc. | | | 16,665 | | | | 237,976 | |
| iGATE Corp. | | | 10,400 | | | | 212,576 | |
Informatica Corp. * | | | 10,755 | | | | 437,621 | |
InfoSpace, Inc. * | | | 11,900 | | | | 100,436 | |
Internap Network Services Corp. * | | | 23,200 | | | | 116,000 | |
Internet Brands, Inc., Class A * | | | 11,500 | | | | 152,260 | |
j2 Global Communications, Inc. * | | | 8,485 | | | | 223,580 | |
| Jack Henry & Associates, Inc. | | | 24,180 | | | | 656,729 | |
JDA Software Group, Inc. * | | | 10,185 | | | | 257,680 | |
Kenexa Corp. * | | | 11,400 | | | | 208,506 | |
Lawson Software, Inc. * | | | 40,600 | | | | 361,340 | |
| Lender Processing Services, Inc. | | | 15,800 | | | | 455,672 | |
Lionbridge Technologies, Inc. * | | | 41,200 | | | | 206,000 | |
Liquidity Services, Inc. * | | | 7,700 | | | | 123,200 | |
Manhattan Associates, Inc. * | | | 5,095 | | | | 156,824 | |
ManTech International Corp., Class A * | | | 10,200 | | | | 399,942 | |
| MAXIMUS, Inc. | | | 4,145 | | | | 251,311 | |
Mentor Graphics Corp. * | | | 43,020 | | | | 464,616 | |
MICROS Systems, Inc. * | | | 15,140 | | | | 687,205 | |
MicroStrategy, Inc., Class A * | | | 2,728 | | | | 247,239 | |
ModusLink Global Solutions, Inc. * | | | 31,275 | | | | 207,353 | |
Monotype Imaging Holdings, Inc. * | | | 10,100 | | | | 96,253 | |
NCI, Inc., Class A * | | | 3,400 | | | | 63,376 | |
Ness Technologies, Inc. * | | | 29,400 | | | | 141,708 | |
Net 1 UEPS Technologies, Inc. * | | | 14,760 | | | | 181,991 | |
NetScout Systems, Inc. * | | | 7,000 | | | | 164,290 | |
NeuStar, Inc., Class A * | | | 12,575 | | | | 324,561 | |
Novell, Inc. * | | | 103,115 | | | | 611,472 | |
Openwave Systems, Inc. * | | | 56,435 | | | | 116,256 | |
Parametric Technology Corp. * | | | 28,040 | | | | 602,019 | |
Perficient, Inc. * | | | 8,600 | | | | 90,816 | |
PRGX Global, Inc. * | | | 16,400 | | | | 98,400 | |
Progress Software Corp. * | | | 11,250 | | | | 420,412 | |
Quest Software, Inc. * | | | 20,380 | | | | 533,345 | |
Rackspace Hosting, Inc. (b)* | | | 9,020 | | | | 225,139 | |
Radiant Systems, Inc. * | | | 10,200 | | | | 199,002 | |
RealNetworks, Inc. * | | | 35,545 | | | | 106,635 | |
Red Hat, Inc. * | | | 12,000 | | | | 507,120 | |
| Renaissance Learning, Inc. | | | 7,840 | | | | 109,525 | |
Rovi Corp. * | | | 17,369 | | | | 879,740 | |
S1 Corp. * | | | 17,400 | | | | 101,268 | |
Salesforce.com, Inc. * | | | 3,735 | | | | 433,521 | |
| Sapient Corp. | | | 20,980 | | | | 276,097 | |
SAVVIS, Inc. * | | | 12,260 | | | | 294,117 | |
SINA Corp. * | | | 7,280 | | | | 409,864 | |
Sohu.com, Inc. * | | | 5,000 | | | | 372,500 | |
| Solera Holdings, Inc. | | | 10,660 | | | | 512,213 | |
SRA International, Inc., Class A * | | | 20,815 | | | | 416,508 | |
StarTek, Inc. * | | | 19,400 | | | | 79,152 | |
Synchronoss Technologies, Inc. * | | | 4,800 | | | | 102,288 | |
| Syntel, Inc. | | | 3,955 | | | | 193,241 | |
Take-Two Interactive Software, Inc. * | | | 41,255 | | | | 439,778 | |
Taleo Corp., Class A * | | | 5,300 | | | | 152,057 | |
TeleCommunication Systems, Inc., Class A * | | | 13,100 | | | | 70,871 | |
TeleTech Holdings, Inc. * | | | 16,210 | | | | 246,068 | |
Telvent GIT, S.A. (b)* | | | 3,300 | | | | 83,721 | |
The Knot, Inc. * | | | 12,900 | | | | 116,616 | |
THQ, Inc. * | | | 66,710 | | | | 266,840 | |
TIBCO Software, Inc. * | | | 45,330 | | | | 871,243 | |
TNS, Inc. * | | | 8,495 | | | | 162,594 | |
Tyler Technologies, Inc. * | | | 1,980 | | | | 40,412 | |
| United Online, Inc. | | | 49,927 | | | | 308,549 | |
ValueClick, Inc. * | | | 27,880 | | | | 383,629 | |
VeriFone Systems, Inc. * | | | 8,500 | | | | 287,555 | |
VistaPrint N.V. * | | | 2,420 | | | | 101,809 | |
WebMD Health Corp. * | | | 5,684 | | | | 297,160 | |
Websense, Inc. * | | | 5,590 | | | | 112,471 | |
Wright Express Corp. * | | | 19,100 | | | | 720,261 | |
| | | | | | | | | |
| | | | | | | | 30,160,543 | |
| |
Technology Hardware & Equipment 5.9%
|
Acme Packet, Inc. * | | | 5,100 | | | | 201,705 | |
| ADTRAN, Inc. | | | 15,345 | | | | 495,183 | |
Agilysys, Inc. * | | | 15,322 | | | | 91,932 | |
Anaren, Inc. * | | | 3,800 | | | | 63,574 | |
Arris Group, Inc. * | | | 53,305 | | | | 496,269 | |
Aviat Networks, Inc. * | | | 30,560 | | | | 139,048 | |
Avid Technology, Inc. * | | | 22,025 | | | | 277,955 | |
| Bel Fuse, Inc., Class B | | | 4,300 | | | | 98,083 | |
| Black Box Corp. | | | 11,140 | | | | 369,848 | |
Blue Coat Systems, Inc. * | | | 4,500 | | | | 121,365 | |
Checkpoint Systems, Inc. * | | | 19,480 | | | | 428,560 | |
China Security & Surveillance Technology, Inc. (b)* | | | 19,900 | | | | 107,460 | |
Ciena Corp. * | | | 16,560 | | | | 230,018 | |
Cogent, Inc. * | | | 11,580 | | | | 121,822 | |
| Cognex Corp. | | | 11,065 | | | | 295,435 | |
Cogo Group, Inc. * | | | 13,500 | | | | 102,735 | |
Coherent, Inc. * | | | 11,040 | | | | 463,238 | |
| Comtech Telecommunications Corp. | | | 10,670 | | | | 328,849 | |
CPI International, Inc. * | | | 8,000 | | | | 112,960 | |
| CTS Corp. | | | 25,395 | | | | 257,759 | |
| Daktronics, Inc. | | | 15,265 | | | | 166,694 | |
DG Fastchannel, Inc. * | | | 4,000 | | | | 94,200 | |
Digi International, Inc. * | | | 11,100 | | | | 107,226 | |
| Electro Rent Corp. | | | 6,905 | | | | 102,608 | |
Electro Scientific Industries, Inc. * | | | 12,735 | | | | 147,981 | |
Electronics for Imaging, Inc. * | | | 22,802 | | | | 312,159 | |
EMS Technologies, Inc. * | | | 9,900 | | | | 176,616 | |
Emulex Corp. * | | | 27,865 | | | | 317,661 | |
Extreme Networks, Inc. * | | | 38,065 | | | | 121,427 | |
F5 Networks, Inc. * | | | 7,540 | | | | 887,458 | |
FARO Technologies, Inc. * | | | 4,200 | | | | 101,388 | |
Finisar Corp. * | | | 9,230 | | | | 157,002 | |
Gerber Scientific, Inc. * | | | 38,900 | | | | 260,241 | |
Globecomm Systems, Inc. * | | | 1,000 | | | | 8,950 | |
Harmonic, Inc. * | | | 34,000 | | | | 237,320 | |
Hughes Communications, Inc. * | | | 4,130 | | | | 117,251 | |
Hutchinson Technology, Inc. * | | | 30,200 | | | | 102,982 | |
Hypercom Corp. * | | | 25,000 | | | | 149,000 | |
Imation Corp. * | | | 61,085 | | | | 594,968 | |
Infinera Corp. * | | | 14,700 | | | | 120,393 | |
InterDigital, Inc. * | | | 6,000 | | | | 201,420 | |
See financial notes 23
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Intermec, Inc. * | | | 16,835 | | | | 196,128 | |
Intevac, Inc. * | | | 5,600 | | | | 56,560 | |
IPG Photonics Corp. * | | | 6,960 | | | | 156,600 | |
Itron, Inc. * | | | 8,825 | | | | 536,295 | |
Ixia * | | | 10,215 | | | | 159,865 | |
JDS Uniphase Corp. * | | | 41,600 | | | | 437,216 | |
L-1 Identity Solutions, Inc. * | | | 36,560 | | | | 431,042 | |
Littelfuse, Inc. * | | | 8,845 | | | | 375,293 | |
Loral Space & Communications, Inc. * | | | 6,250 | | | | 347,687 | |
Measurement Specialties, Inc. * | | | 10,200 | | | | 227,868 | |
Mercury Computer Systems, Inc. * | | | 11,500 | | | | 182,160 | |
| Methode Electronics, Inc. | | | 24,030 | | | | 223,239 | |
| MTS Systems Corp. | | | 5,480 | | | | 179,580 | |
Multi-Fineline Electronix, Inc. * | | | 4,820 | | | | 117,994 | |
Nam Tai Electronics, Inc. * | | | 64,240 | | | | 309,637 | |
| National Instruments Corp. | | | 10,295 | | | | 358,163 | |
NETGEAR, Inc. * | | | 7,350 | | | | 226,453 | |
Newport Corp. * | | | 20,130 | | | | 292,489 | |
Novatel Wireless, Inc. * | | | 17,300 | | | | 181,304 | |
Oplink Communications, Inc. * | | | 5,800 | | | | 101,384 | |
Opnext, Inc. * | | | 52,000 | | | | 78,520 | |
Orbotech Ltd. * | | | 21,100 | | | | 205,303 | |
OSI Systems, Inc. * | | | 5,090 | | | | 183,240 | |
| Park Electrochemical Corp. | | | 8,610 | | | | 232,470 | |
PC Connection, Inc. * | | | 20,000 | | | | 168,400 | |
PC Mall, Inc. * | | | 24,300 | | | | 151,146 | |
| Plantronics, Inc. | | | 11,310 | | | | 405,803 | |
Plexus Corp. * | | | 14,680 | | | | 445,538 | |
Polycom, Inc. * | | | 21,270 | | | | 718,501 | |
Power-One, Inc. (b)* | | | 40,000 | | | | 416,400 | |
Powerwave Technologies, Inc. (b)* | | | 119,620 | | | | 260,772 | |
QLogic Corp. * | | | 29,280 | | | | 514,450 | |
Quantum Corp. * | | | 71,000 | | | | 239,980 | |
RadiSys Corp. * | | | 10,000 | | | | 97,700 | |
Riverbed Technology, Inc. * | | | 5,000 | | | | 287,700 | |
Rofin-Sinar Technologies, Inc. * | | | 12,710 | | | | 354,990 | |
Rogers Corp. * | | | 5,720 | | | | 203,632 | |
ScanSource, Inc. * | | | 19,340 | | | | 579,040 | |
SeaChange International, Inc. * | | | 12,000 | | | | 96,480 | |
Silicon Graphics International Corp. * | | | 15,860 | | | | 120,060 | |
Smart Modular Technologies (WWH), Inc. * | | | 26,300 | | | | 194,357 | |
Sonus Networks, Inc. * | | | 76,570 | | | | 238,133 | |
STEC, Inc. (b)* | | | 5,400 | | | | 84,240 | |
Super Micro Computer, Inc. * | | | 10,100 | | | | 112,312 | |
| Sycamore Networks, Inc. | | | 10,000 | | | | 304,900 | |
Symmetricom, Inc. * | | | 13,200 | | | | 82,236 | |
Synaptics, Inc. (b)* | | | 5,605 | | | | 150,943 | |
| Technitrol, Inc. | | | 53,010 | | | | 243,846 | |
Tekelec * | | | 17,635 | | | | 229,608 | |
| TESSCO Technologies, Inc. | | | 4,200 | | | | 63,420 | |
TTM Technologies, Inc. * | | | 32,800 | | | | 343,744 | |
UTStarcom, Inc. * | | | 219,900 | | | | 444,198 | |
ViaSat, Inc. * | | | 10,015 | | | | 412,318 | |
Westell Technologies, Inc., Class A * | | | 90,533 | | | | 265,262 | |
X-Rite, Inc. * | | | 1,800 | | | | 7,290 | |
Xyratex Ltd. * | | | 19,425 | | | | 300,699 | |
Zebra Technologies Corp., Class A * | | | 17,220 | | | | 616,132 | |
| | | | | | | | | |
| | | | | | | | 24,239,463 | |
| |
Telecommunication Services 1.4%
|
AboveNet, Inc. * | | | 2,700 | | | | 153,603 | |
| Alaska Communication Systems Group, Inc. | | | 42,440 | | | | 425,673 | |
| Atlantic Tele-Network, Inc. | | | 2,200 | | | | 92,972 | |
Cbeyond, Inc. * | | | 9,760 | | | | 132,248 | |
Cincinnati Bell, Inc. * | | | 196,615 | | | | 481,707 | |
Clearwire Corp., Class A (b)* | | | 15,000 | | | | 106,350 | |
Cogent Communications Group, Inc. * | | | 6,900 | | | | 74,865 | |
| Consolidated Communications Holdings, Inc. | | | 13,300 | | | | 246,316 | |
General Communication, Inc., Class A * | | | 51,860 | | | | 541,937 | |
Global Crossing Ltd. * | | | 17,885 | | | | 243,236 | |
Globalstar, Inc. (b)* | | | 46,080 | | | | 73,728 | |
IDT Corp., Class B * | | | 36,100 | | | | 529,948 | |
Iridium Communications, Inc. * | | | 12,200 | | | | 100,650 | |
Neutral Tandem, Inc. * | | | 5,300 | | | | 77,486 | |
| NTELOS Holdings Corp. | | | 11,340 | | | | 206,048 | |
PAETEC Holding Corp. * | | | 53,900 | | | | 227,458 | |
Premiere Global Services, Inc. * | | | 34,700 | | | | 237,001 | |
SBA Communications Corp., Class A * | | | 10,005 | | | | 392,796 | |
| Shenandoah Telecommunications Co. | | | 6,800 | | | | 124,100 | |
SureWest Communications * | | | 21,870 | | | | 174,960 | |
Syniverse Holdings, Inc. * | | | 19,165 | | | | 584,341 | |
| USA Mobility, Inc. | | | 34,505 | | | | 580,719 | |
| | | | | | | | | |
| | | | | | | | 5,808,142 | |
| |
Transportation 3.8%
|
| Aegean Marine Petroleum Network, Inc. | | | 5,800 | | | | 92,858 | |
Air Transport Services Group, Inc. * | | | 73,730 | | | | 495,466 | |
AirTran Holdings, Inc. * | | | 124,895 | | | | 924,223 | |
| Allegiant Travel Co. | | | 2,080 | | | | 97,947 | |
American Commercial Lines, Inc. * | | | 5,261 | | | | 174,402 | |
| Arkansas Best Corp. | | | 20,440 | | | | 517,745 | |
Atlas Air Worldwide Holdings, Inc. * | | | 13,000 | | | | 679,380 | |
Celadon Group, Inc. * | | | 15,980 | | | | 207,261 | |
| Copa Holdings S.A., Class A | | | 7,500 | | | | 380,475 | |
Danaos Corp. * | | | 26,100 | | | | 118,233 | |
Diana Shipping, Inc. * | | | 25,635 | | | | 349,918 | |
DryShips, Inc. * | | | 116,420 | | | | 479,650 | |
Dynamex, Inc. * | | | 7,600 | | | | 160,664 | |
Eagle Bulk Shipping, Inc. * | | | 49,960 | | | | 256,295 | |
| Euroseas Ltd. | | | 34,500 | | | | 139,035 | |
Excel Maritime Carriers Ltd. (b)* | | | 42,124 | | | | 245,162 | |
ExpressJet Holdings, Inc. * | | | 75,100 | | | | 505,423 | |
| Forward Air Corp. | | | 8,325 | | | | 223,776 | |
Genco Shipping & Trading Ltd. * | | | 25,445 | | | | 421,115 | |
Genesee & Wyoming, Inc., Class A * | | | 12,165 | | | | 562,388 | |
Global Ship Lease, Inc., Class A * | | | 39,300 | | | | 180,780 | |
Hawaiian Holdings, Inc. * | | | 19,840 | | | | 145,229 | |
| Heartland Express, Inc. | | | 22,965 | | | | 342,408 | |
| Horizon Lines, Inc., Class A | | | 58,450 | | | | 251,919 | |
Hub Group, Inc., Class A * | | | 16,610 | | | | 539,327 | |
| International Shipholding Corp. | | | 3,500 | | | | 97,895 | |
Kirby Corp. * | | | 19,620 | | | | 843,464 | |
24 See financial notes
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Knight Transportation, Inc. | | | 13,525 | | | | 241,692 | |
| Landstar System, Inc. | | | 13,170 | | | | 495,455 | |
Macquarie Infrastructure Co. L.L.C. * | | | 40,000 | | | | 723,200 | |
| Marten Transport Ltd. | | | 10,600 | | | | 225,144 | |
| Navios Maritime Holdings, Inc. | | | 46,200 | | | | 276,738 | |
OceanFreight, Inc., Class A (b)* | | | 78,533 | | | | 77,748 | |
Old Dominion Freight Line, Inc. * | | | 27,150 | | | | 761,557 | |
Pacer International, Inc. * | | | 69,160 | | | | 385,221 | |
| Paragon Shipping, Inc., Class A | | | 23,600 | | | | 88,028 | |
Park-Ohio Holdings Corp. * | | | 14,600 | | | | 231,994 | |
Patriot Transportation Holding, Inc. * | | | 1,100 | | | | 74,811 | |
Pinnacle Airlines Corp. * | | | 25,700 | | | | 148,032 | |
RailAmerica, Inc. * | | | 7,900 | | | | 91,640 | |
Republic Airways Holdings, Inc. * | | | 69,630 | | | | 646,863 | |
| Safe Bulkers, Inc. | | | 12,100 | | | | 102,245 | |
Saia, Inc. * | | | 21,300 | | | | 308,424 | |
| Seaspan Corp. | | | 38,600 | | | | 519,942 | |
Star Bulk Carriers Corp. (b) | | | 52,900 | | | | 154,468 | |
TBS International plc, Class A * | | | 47,500 | | | | 196,650 | |
Ultrapetrol Bahamas Ltd. * | | | 31,900 | | | | 207,669 | |
Universal Truckload Services, Inc. * | | | 6,000 | | | | 86,100 | |
USA Truck, Inc. * | | | 7,200 | | | | 98,784 | |
YRC Worldwide, Inc. (b)* | | | 20,111 | | | | 88,689 | |
| | | | | | | | | |
| | | | | | | | 15,663,532 | |
| |
Utilities 2.0%
|
| ALLETE, Inc. | | | 19,920 | | | | 724,690 | |
| American States Water Co. | | | 8,415 | | | | 314,300 | |
| California Water Service Group | | | 8,440 | | | | 315,150 | |
| Central Vermont Public Service Corp. | | | 8,045 | | | | 162,670 | |
| CH Energy Group, Inc. | | | 12,005 | | | | 545,627 | |
| Chesapeake Utilities Corp. | | | 3,850 | | | | 141,257 | |
| Connecticut Water Service, Inc. | | | 4,000 | | | | 97,640 | |
El Paso Electric Co. * | | | 26,390 | | | | 649,194 | |
| ITC Holdings Corp. | | | 9,370 | | | | 586,656 | |
| MGE Energy, Inc. | | | 11,400 | | | | 462,270 | |
| Middlesex Water Co. | | | 6,400 | | | | 114,304 | |
| Northwest Natural Gas Co. | | | 13,005 | | | | 641,016 | |
| Ormat Technologies, Inc. | | | 4,600 | | | | 131,146 | |
| Otter Tail Corp. | | | 27,780 | | | | 570,046 | |
| SJW Corp. | | | 7,320 | | | | 177,144 | |
| South Jersey Industries, Inc. | | | 11,540 | | | | 581,154 | |
| The Empire District Electric Co. | | | 25,310 | | | | 532,522 | |
| The Laclede Group, Inc. | | | 18,240 | | | | 640,406 | |
| UIL Holdings Corp. | | | 19,225 | | | | 556,756 | |
| Unitil Corp. | | | 5,700 | | | | 123,804 | |
| | | | | | | | | |
| | | | | | | | 8,067,752 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $339,415,995) | | | 408,569,785 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Rights 0.3% of net assets |
| |
Banks 0.3%
|
Pacific Capital Bancorp (b),(c),(d)* | | | 2,926,991 | | | | 1,287,876 | |
| | | | | | | | | |
| Total Rights |
| (Cost $—) | | | 1,287,876 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Other Investment Company 0.5% of net assets |
| |
Money Fund 0.5%
|
| State Street Institutional Liquid Reserves Fund - Institutional Class | | | 2,016,466 | | | | 2,016,466 | |
| | | | | | | | | |
| Total Other Investment Company |
| (Cost $2,016,466) | | | 2,016,466 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Dates | | ($) | | ($) |
| |
Short-Term Investments 0.1% of net assets |
| |
U.S. Treasury Obligations 0.1%
|
| U.S. Treasury Bills |
0.14%, 12/16/10 (a) | | | 226,800 | | | | 226,763 | |
0.17%, 12/16/10 (a) | | | 30,000 | | | | 29,995 | |
0.13%, 12/16/10 (a) | | | 25,000 | | | | 24,996 | |
0.11%, 12/16/10 (a) | | | 65,000 | | | | 64,990 | |
| | | | | | | | | |
| Total Short-Term Investments |
| (Cost $346,744) | | | 346,744 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Collateral Invested for Securities on Loan 3.7% of net assets |
| | | | | | | | | |
| | | | | | | | | |
| State Street Navigator Security Lending Prime Portfolio | | | 15,374,683 | | | | 15,374,683 | |
| | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $15,374,683) | | | 15,374,683 | |
| | | | | |
| |
|
End of Collateral Invested for Securities on Loan |
See financial notes 25
Schwab Fundamental US Small-Mid Company Index Fund
Portfolio Holdings continued
At 10/31/10 tax basis cost of the fund’s investments was $343,109,916 and the unrealized appreciation and depreciation were $97,982,129 and ($28,871,174), respectively, with a net unrealized appreciation of $69,110,955.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is held as collateral for open futures contracts. |
| (b) | | All or a portion of this security is on loan. |
| (c) | | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (d) | | Illiquid security. At the period end, the value of these amounted to $1,287,876 or 0.3% of net assets. |
In addition to the above, the fund held the following at 10/31/10.
| | | | | | | | | | | | | |
| | | | | Contract
| | Unrealized
|
| | | Number of
| | Value
| | Gains
|
| | | Contracts | | ($) | | ($) |
| |
Futures Contract |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Russell 2000 Index, mini, Long, expires 12/17/10 | | | 25 | | | | 1,755,500 | | | | 174,694 | |
26 See financial notes
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 98 | .7% | | Common Stock | | | 267,360,710 | | | | 296,635,667 | |
| | 0 | .5% | | Preferred Stock | | | 1,206,105 | | | | 1,618,476 | |
| | 0 | .0% | | Rights | | | 44,772 | | | | 71,458 | |
| | 0 | .0% | | Warrants | | | 2,575 | | | | 2,477 | |
| | 0 | .4% | | Other Investment Company | | | 1,105,428 | | | | 1,311,230 | |
| | 0 | .5% | | Short-Term Investment | | | 1,475,084 | | | | 1,475,084 | |
| |
| |
| | 100 | .1% | | Total Investments | | | 271,194,674 | | | | 301,114,392 | |
| | 0 | .2% | | Collateral Invested for Securities on Loan | | | 571,678 | | | | 571,678 | |
| | (0 | .3)% | | Other Assets and Liabilities, Net | | | | | | | (1,010,149 | ) |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 300,675,921 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 98.7% of net assets |
| |
Australia 5.0%
|
| | | | | | | | | |
| |
| Banks 1.4% |
| Australia & New Zealand Banking Group Ltd. | | | 43,489 | | | | 1,060,990 | |
| Commonwealth Bank of Australia | | | 23,598 | | | | 1,134,432 | |
| National Australia Bank Ltd. | | | 49,193 | | | | 1,231,221 | |
| Westpac Banking Corp. | | | 39,773 | | | | 885,624 | |
| | | | | | | | | |
| | | | | | | | 4,312,267 | |
| | | | | | | | | |
| |
| Capital Goods 0.0% |
| Leighton Holdings Ltd. | | | 1,928 | | | | 69,379 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.0% |
| Brambles Ltd. | | | 17,995 | | | | 112,535 | |
| | | | | | | | | |
| |
| Consumer Services 0.1% |
| Crown Ltd. | | | 7,173 | | | | 58,743 | |
| TABCORP Holdings Ltd. | | | 27,383 | | | | 198,090 | |
| Tatts Group Ltd. | | | 34,854 | | | | 85,359 | |
| | | | | | | | | |
| | | | | | | | 342,192 | |
| | | | | | | | | |
| |
| Diversified Financials 0.1% |
BGP Holdings plc (a),(b)* | | | 453,854 | | | | — | |
| Macquarie Group Ltd. | | | 6,531 | | | | 232,211 | |
| | | | | | | | | |
| | | | | | | | 232,211 | |
| | | | | | | | | |
| |
| Energy 0.2% |
| Caltex Australia Ltd. | | | 8,316 | | | | 94,734 | |
| Origin Energy Ltd. | | | 11,110 | | | | 173,930 | |
| Santos Ltd. | | | 8,369 | | | | 103,482 | |
| Woodside Petroleum Ltd. | | | 4,184 | | | | 178,921 | |
| WorleyParsons Ltd. | | | 2,762 | | | | 62,246 | |
| | | | | | | | | |
| | | | | | | | 613,313 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.4% |
| Metcash Ltd. | | | 20,141 | | | | 86,223 | |
| Wesfarmers Ltd. | | | 16,228 | | | | 528,005 | |
| Wesfarmers Ltd., Price Protected Shares | | | 2,598 | | | | 85,100 | |
| Woolworths Ltd. | | | 19,670 | | | | 546,058 | |
| | | | | | | | | |
| | | | | | | | 1,245,386 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| Coca-Cola Amatil Ltd. | | | 7,923 | | | | 94,438 | |
| Foster’s Group Ltd. | | | 31,527 | | | | 180,759 | |
| | | | | | | | | |
| | | | | | | | 275,197 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.0% |
| Sonic Healthcare Ltd. | | | 5,522 | | | | 58,915 | |
| | | | | | | | | |
| |
| Insurance 0.4% |
| AMP Ltd. | | | 37,443 | | | | 196,095 | |
| AXA Asia Pacific Holdings Ltd. | | | 13,351 | | | | 71,097 | |
| Insurance Australia Group Ltd. | | | 47,110 | | | | 176,193 | |
| QBE Insurance Group Ltd. | | | 15,324 | | | | 257,759 | |
| Suncorp-Metway Ltd. | | | 41,730 | | | | 376,720 | |
| | | | | | | | | |
| | | | | | | | 1,077,864 | |
| | | | | | | | | |
| |
| Materials 1.4% |
| Alumina Ltd. | | | 44,300 | | | | 88,520 | |
| Amcor Ltd. | | | 25,178 | | | | 165,912 | |
| BHP Billiton Ltd. | | | 50,982 | | | | 2,106,641 | |
| BlueScope Steel Ltd. | | | 71,607 | | | | 140,709 | |
| Boral Ltd. | | | 24,278 | | | | 104,538 | |
DuluxGroup Ltd. * | | | 18,483 | | | | 48,884 | |
| Incitec Pivot Ltd. | | | 27,993 | | | | 102,502 | |
| Newcrest Mining Ltd. | | | 4,052 | | | | 159,462 | |
| OneSteel Ltd. | | | 29,978 | | | | 79,568 | |
| Orica Ltd. | | | 5,142 | | | | 127,057 | |
| Rio Tinto Ltd. | | | 12,620 | | | | 1,027,045 | |
| Sims Metal Management Ltd. | | | 4,577 | | | | 73,511 | |
| | | | | | | | | |
| | | | | | | | 4,224,349 | |
| | | | | | | | | |
| |
| Media 0.0% |
| Fairfax Media Ltd. | | | 45,941 | | | | 65,268 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| CSL Ltd. | | | 3,733 | | | | 120,386 | |
| | | | | | | | | |
| |
| Real Estate 0.4% |
| CFS Retail Property Trust | | | 37,412 | | | | 68,117 | |
| Dexus Property Group | | | 116,220 | | | | 94,654 | |
| Goodman Group | | | 131,503 | | | | 81,341 | |
| GPT Group | | | 37,567 | | | | 102,903 | |
| Lend Lease Corp., Ltd. | | | 19,266 | | | | 136,015 | |
| Mirvac Group | | | 69,806 | | | | 88,824 | |
| Stockland | | | 48,937 | | | | 181,223 | |
| Westfield Group | | | 39,103 | | | | 475,586 | |
| | | | | | | | | |
| | | | | | | | 1,228,663 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.2% |
| Telstra Corp., Ltd. | | | 158,469 | | | | 415,270 | |
| | | | | | | | | |
| |
| Transportation 0.2% |
| Intoll Group | | | 72,731 | | | | 107,163 | |
| MAP Group | | | 20,464 | | | | 61,153 | |
Qantas Airways Ltd. * | | | 46,082 | | | | 128,658 | |
See financial notes 27
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Toll Holdings Ltd. | | | 13,299 | | | | 80,901 | |
| Transurban Group | | | 14,681 | | | | 75,109 | |
| | | | | | | | | |
| | | | | | | | 452,984 | |
| | | | | | | | | |
| |
| Utilities 0.0% |
| AGL Energy Ltd. | | | 6,456 | | | | 101,935 | |
| | | | | | | | | |
| | | | | | | | 14,948,114 | |
| |
Austria 0.5%
|
| | | | | | | | | |
| |
| Banks 0.1% |
| Erste Group Bank AG | | | 6,216 | | | | 280,848 | |
| Raiffeisen International Bank-Holding AG | | | 1,400 | | | | 79,067 | |
| | | | | | | | | |
| | | | | | | | 359,915 | |
| | | | | | | | | |
| |
| Capital Goods 0.1% |
| Strabag SE | | | 2,225 | | | | 57,552 | |
Wienerberger AG * | | | 5,248 | | | | 88,444 | |
| | | | | | | | | |
| | | | | | | | 145,996 | |
| | | | | | | | | |
| |
| Energy 0.1% |
| OMV AG | | | 5,490 | | | | 205,334 | |
| | | | | | | | | |
| |
| Insurance 0.0% |
| Vienna Insurance Group AG | | | 645 | | | | 34,678 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| Voestalpine AG | | | 6,422 | | | | 255,013 | |
| | | | | | | | | |
| |
| Real Estate 0.0% |
Immofinanz AG * | | | 34,033 | | | | 134,217 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Telekom Austria AG | | | 14,893 | | | | 228,069 | |
| | | | | | | | | |
| |
| Utilities 0.0% |
| Verbund AG | | | 1,010 | | | | 40,404 | |
| | | | | | | | | |
| | | | | | | | 1,403,626 | |
| |
Belgium 1.1%
|
| | | | | | | | | |
| |
| Banks 0.2% |
Dexia S.A. * | | | 52,834 | | | | 235,432 | |
KBC GROEP N.V. * | | | 7,109 | | | | 309,556 | |
| | | | | | | | | |
| | | | | | | | 544,988 | |
| | | | | | | | | |
| |
| Diversified Financials 0.1% |
| Banque Nationale de Belgique | | | 9 | | | | 45,368 | |
| Compagnie Nationale a Portefeuille / Nationale Portefeuille Maatschappij | | | 604 | | | | 32,318 | |
| Groupe Bruxelles Lambert S.A. | | | 1,535 | | | | 135,981 | |
KBC Ancora * | | | 1,927 | | | | 43,364 | |
| | | | | | | | | |
| | | | | | | | 257,031 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.1% |
| Colruyt S.A. | | | 1,120 | | | | 63,217 | |
| Delhaize Group | | | 3,515 | | | | 245,686 | |
| | | | | | | | | |
| | | | | | | | 308,903 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.2% |
| Anheuser-Busch InBev N.V. | | | 7,356 | | | | 461,983 | |
| | | | | | | | | |
| |
| Insurance 0.3% |
| Ageas | | | 289,640 | | | | 891,818 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| Solvay S.A. | | | 1,287 | | | | 136,383 | |
| Umicore | | | 3,969 | | | | 187,016 | |
| | | | | | | | | |
| | | | | | | | 323,399 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| UCB S.A. | | | 2,419 | | | | 93,837 | |
| | | | | | | | | |
| |
| Retailing 0.0% |
| S.A. D’Ieteren N.V. | | | 98 | | | | 53,487 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Belgacom S.A. | | | 4,734 | | | | 185,892 | |
| Mobistar S.A. | | | 515 | | | | 34,093 | |
| | | | | | | | | |
| | | | | | | | 219,985 | |
| | | | | | | | | |
| | | | | | | | 3,155,431 | |
| |
Canada 5.3%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.2% |
| Magna International, Inc., Class A | | | 4,959 | | | | 448,493 | |
| | | | | | | | | |
| |
| Banks 1.5% |
| Bank of Montreal | | | 11,013 | | | | 650,371 | |
| Bank of Nova Scotia | | | 16,748 | | | | 897,748 | |
| Canadian Imperial Bank of Commerce | | | 7,077 | | | | 542,831 | |
| National Bank of Canada | | | 2,930 | | | | 192,853 | |
| Royal Bank of Canada | | | 20,144 | | | | 1,074,254 | |
| The Toronto-Dominion Bank | | | 13,859 | | | | 998,082 | |
| | | | | | | | | |
| | | | | | | | 4,356,139 | |
| | | | | | | | | |
| |
| Capital Goods 0.1% |
| Bombardier, Inc., Class A | | | 15,700 | | | | 78,046 | |
| Bombardier, Inc., Class B | | | 23,168 | | | | 115,397 | |
| Finning International, Inc. | | | 3,780 | | | | 88,876 | |
| | | | | | | | | |
| | | | | | | | 282,319 | |
| | | | | | | | | |
| |
| Diversified Financials 0.1% |
| CI Financial Corp. | | | 3,500 | | | | 73,267 | |
| IGM Financial, Inc. | | | 2,020 | | | | 85,482 | |
| Onex Corp. | | | 5,761 | | | | 168,724 | |
| | | | | | | | | |
| | | | | | | | 327,473 | |
| | | | | | | | | |
| |
| Energy 1.0% |
| Cameco Corp. | | | 2,600 | | | | 80,429 | |
| Canadian Natural Resources Ltd. | | | 10,700 | | | | 389,539 | |
| Cenovus Energy, Inc. | | | 4,709 | | | | 131,034 | |
| Enbridge, Inc. | | | 6,019 | | | | 332,907 | |
| Encana Corp. | | | 20,109 | | | | 568,036 | |
| Husky Energy, Inc. | | | 6,167 | | | | 153,102 | |
| Imperial Oil Ltd. | | | 3,923 | | | | 150,858 | |
| Nexen, Inc. | | | 7,426 | | | | 158,000 | |
| Suncor Energy, Inc. | | | 10,745 | | | | 344,295 | |
| Talisman Energy, Inc. | | | 14,081 | | | | 255,278 | |
| TransCanada Corp. | | | 11,435 | | | | 422,352 | |
| | | | | | | | | |
| | | | | | | | 2,985,830 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.3% |
| Alimentation Couche-Tard, Inc., Class B | | | 5,037 | | | | 119,616 | |
| Empire Co., Ltd, Class A | | | 2,533 | | | | 144,966 | |
| George Weston Ltd. | | | 1,805 | | | | 145,034 | |
| Loblaw Cos., Ltd. | | | 3,264 | | | | 139,470 | |
| Metro, Inc., Class A | | | 2,240 | | | | 102,786 | |
| Shoppers Drug Mart Corp. | | | 2,959 | | | | 112,569 | |
28 See financial notes
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| The Jean Coutu Group (PJC), Inc., Class A | | | 6,123 | | | | 55,052 | |
| | | | | | | | | |
| | | | | | | | 819,493 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.0% |
| Saputo, Inc. | | | 1,800 | | | | 68,795 | |
Viterra, Inc. * | | | 8,100 | | | | 77,593 | |
| | | | | | | | | |
| | | | | | | | 146,388 | |
| | | | | | | | | |
| |
| Insurance 0.6% |
| Fairfax Financial Holdings Ltd. | | | 362 | | | | 148,076 | |
| Great-West Lifeco, Inc. | | | 5,420 | | | | 141,572 | |
| Intact Financial Corp. | | | 2,123 | | | | 96,148 | |
| Manulife Financial Corp. | | | 40,048 | | | | 506,932 | |
| Power Corp. of Canada | | | 14,615 | | | | 407,827 | |
| Power Financial Corp. | | | 6,214 | | | | 187,108 | |
| Sun Life Financial, Inc. | | | 15,790 | | | | 446,808 | |
| | | | | | | | | |
| | | | | | | | 1,934,471 | |
| | | | | | | | | |
| |
| Materials 0.5% |
| Agrium, Inc. | | | 1,712 | | | | 151,443 | |
| Barrick Gold Corp. | | | 7,658 | | | | 368,821 | |
| Goldcorp, Inc. | | | 5,110 | | | | 228,169 | |
| Kinross Gold Corp. | | | 5,853 | | | | 105,307 | |
| Potash Corp. of Saskatchewan, Inc. | | | 1,814 | | | | 262,344 | |
| Teck Resources Ltd., Class B | | | 8,357 | | | | 373,644 | |
| Yamana Gold, Inc. | | | 6,676 | | | | 73,443 | |
| | | | | | | | | |
| | | | | | | | 1,563,171 | |
| | | | | | | | | |
| |
| Media 0.2% |
| Quebecor, Inc., Class B | | | 2,692 | | | | 97,106 | |
| Shaw Communications, Inc., Class B | | | 5,777 | | | | 123,878 | |
| Thomson Reuters Corp. | | | 6,007 | | | | 229,408 | |
| | | | | | | | | |
| | | | | | | | 450,392 | |
| | | | | | | | | |
| |
| Real Estate 0.2% |
| Brookfield Asset Management, Inc., Class A | | | 10,555 | | | | 313,370 | |
| Brookfield Properties Corp. | | | 5,891 | | | | 101,774 | |
| RioCan Real Estate Investment Trust | | | 3,772 | | | | 85,248 | |
| | | | | | | | | |
| | | | | | | | 500,392 | |
| | | | | | | | | |
| |
| Retailing 0.0% |
| Canadian Tire Corp., Ltd., Class A | | | 2,119 | | | | 123,807 | |
| | | | | | | | | |
| |
| Software & Services 0.0% |
CGI Group, Inc., Class A * | | | 4,717 | | | | 72,566 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.1% |
Celestica, Inc. * | | | 8,412 | | | | 70,849 | |
Research In Motion Ltd. * | | | 2,206 | | | | 125,473 | |
| | | | | | | | | |
| | | | | | | | 196,322 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.2% |
| BCE, Inc. | | | 7,353 | | | | 246,638 | |
| Manitoba Telecom Services, Inc. | | | 2,500 | | | | 71,404 | |
| Rogers Communications, Inc., Class B | | | 6,904 | | | | 251,547 | |
| Telus Corp. | | | 2,378 | | | | 105,388 | |
| Telus Corp. - Non Voting | | | 1,331 | | | | 56,299 | |
| | | | | | | | | |
| | | | | | | | 731,276 | |
| | | | | | | | | |
| |
| Transportation 0.2% |
| Canadian National Railway Co. | | | 6,123 | | | | 396,593 | |
| Canadian Pacific Railway Ltd. | | | 3,232 | | | | 210,671 | |
| | | | | | | | | |
| | | | | | | | 607,264 | |
| | | | | | | | | |
| |
| Utilities 0.1% |
| ATCO Ltd., Class I | | | 2,033 | | | | 103,952 | |
| Canadian Utilities Ltd., Class A | | | 2,280 | | | | 109,518 | |
| Fortis, Inc. | | | 3,000 | | | | 95,215 | |
| TransAlta Corp. | | | 5,069 | | | | 102,633 | |
| | | | | | | | | |
| | | | | | | | 411,318 | |
| | | | | | | | | |
| | | | | | | | 15,957,114 | |
| |
China 0.0%
|
| | | | | | | | | |
| |
| Materials 0.0% |
| China Zhongwang Holdings Ltd. | | | 73,200 | | | | 43,768 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.0% |
| Kingboard Chemical Holdings Ltd. | | | 7,000 | | | | 34,114 | |
| TPV Technology Ltd. | | | 46,000 | | | | 28,364 | |
| | | | | | | | | |
| | | | | | | | 62,478 | |
| | | | | | | | | |
| | | | | | | | 106,246 | |
| |
Denmark 0.7%
|
| | | | | | | | | |
| |
| Banks 0.2% |
Danske Bank A/S * | | | 24,968 | | | | 663,243 | |
| | | | | | | | | |
| |
| Capital Goods 0.0% |
Vestas Wind Systems A/S * | | | 2,686 | | | | 85,624 | |
| | | | | | | | | |
| |
| Energy 0.0% |
Torm A/S * | | | 6,924 | | | | 52,124 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| Carlsberg A/S, Class B | | | 2,438 | | | | 266,548 | |
| Danisco A/S | | | 971 | | | | 83,754 | |
| | | | | | | | | |
| | | | | | | | 350,302 | |
| | | | | | | | | |
| |
| Insurance 0.0% |
| Tryg A/S | | | 1,032 | | | | 52,000 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
| Novo Nordisk A/S, Class B | | | 4,625 | | | | 485,634 | |
| | | | | | | | | |
| |
| Transportation 0.2% |
| AP Moller - Maersk A/S, Series A | | | 18 | | | | 151,289 | |
| AP Moller - Maersk A/S, Series B | | | 46 | | | | 399,161 | |
| | | | | | | | | |
| | | | | | | | 550,450 | |
| | | | | | | | | |
| | | | | | | | 2,239,377 | |
| |
Finland 1.3%
|
| | | | | | | | | |
| |
| Capital Goods 0.2% |
| Kone Oyj, Class B | | | 1,942 | | | | 104,046 | |
| Metso Corp. Oyj | | | 4,566 | | | | 216,479 | |
| Wartsila Corp. Oyj | | | 2,450 | | | | 171,812 | |
| YIT Oyj | | | 3,007 | | | | 72,698 | |
| | | | | | | | | |
| | | | | | | | 565,035 | |
| | | | | | | | | |
| |
| Diversified Financials 0.0% |
| Pohjola Bank plc | | | 5,736 | | | | 72,569 | |
| | | | | | | | | |
| |
| Energy 0.0% |
| Neste Oil Oyj | | | 6,002 | | | | 99,565 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.1% |
| Kesko Oyj, Class B | | | 3,767 | | | | 186,934 | |
| | | | | | | | | |
| |
| Insurance 0.1% |
| Sampo Oyj, Class A | | | 13,444 | | | | 376,465 | |
See financial notes 29
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| | | | | | | | | |
| |
| Materials 0.4% |
| Outokumpu Oyj | | | 5,141 | | | | 92,350 | |
| Rautaruukki Oyj | | | 4,719 | | | | 93,779 | |
| Stora Enso Oyj, Class R | | | 36,896 | | | | 366,601 | |
UPM-Kymmene Oyj | | | 28,456 | | | | 472,807 | |
| | | | | | | | | |
| | | | | | | | 1,025,537 | |
| | | | | | | | | |
| |
| Media 0.0% |
| Sanoma Oyj | | | 3,132 | | | | 70,668 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.4% |
| Nokia Corp. | | | 94,830 | | | | 1,018,415 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.0% |
| Elisa Oyj | | | 4,381 | | | | 93,693 | |
| | | | | | | | | |
| |
| Utilities 0.1% |
| Fortum Oyj | | | 9,920 | | | | 281,351 | |
| | | | | | | | | |
| | | | | | | | 3,790,232 | |
| |
France 10.8%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.8% |
| Cie Generale des Etablissements Michelin, Class B | | | 4,264 | | | | 340,701 | |
Faurecia * | | | 3,363 | | | | 91,230 | |
PSA Peugeot Citroen S.A. * | | | 22,356 | | | | 894,258 | |
Renault S.A. * | | | 14,722 | | | | 821,878 | |
Valeo S.A. * | | | 4,345 | | | | 234,865 | |
| | | | | | | | | |
| | | | | | | | 2,382,932 | |
| | | | | | | | | |
| |
| Banks 1.5% |
| BNP Paribas | | | 25,050 | | | | 1,832,294 | |
| Credit Agricole S.A. | | | 44,257 | | | | 725,841 | |
Natixis * | | | 25,838 | | | | 158,723 | |
| Societe Generale | | | 27,914 | | | | 1,673,850 | |
| | | | | | | | | |
| | | | | | | | 4,390,708 | |
| | | | | | | | | |
| |
| Capital Goods 1.3% |
| Alstom S.A. | | | 3,915 | | | | 197,715 | |
| Bouygues S.A. | | | 9,097 | | | | 402,344 | |
| Compagnie de Saint-Gobain | | | 18,556 | | | | 871,802 | |
| Eiffage S.A. | | | 2,849 | | | | 140,848 | |
| Legrand S.A. | | | 2,877 | | | | 111,091 | |
| Nexans S.A. | | | 1,453 | | | | 103,637 | |
Rexel S.A. * | | | 2,998 | | | | 56,618 | |
| Safran S.A. | | | 3,596 | | | | 114,084 | |
| Schneider Electric S.A. | | | 5,275 | | | | 749,477 | |
| Thales S.A. | | | 2,528 | | | | 103,156 | |
| Vallourec S.A. | | | 2,306 | | | | 239,764 | |
| Vinci S.A. | | | 11,911 | | | | 638,682 | |
| Wendel | | | 974 | | | | 75,553 | |
| | | | | | | | | |
| | | | | | | | 3,804,771 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.0% |
Edenred * | | | 4,490 | | | | 94,050 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.4% |
| Christian Dior S.A. | | | 1,739 | | | | 251,659 | |
| Hermes International | | | 463 | | | | 98,343 | |
| LVMH Moet Hennessy Louis Vuitton S.A. | | | 4,536 | | | | 711,662 | |
| Nexity | | | 1,928 | | | | 85,609 | |
| | | | | | | | | |
| | | | | | | | 1,147,273 | |
| | | | | | | | | |
| |
| Consumer Services 0.1% |
| Accor S.A. | | | 4,490 | | | | 184,259 | |
| Sodexo | | | 2,555 | | | | 166,278 | |
| | | | | | | | | |
| | | | | | | | 350,537 | |
| | | | | | | | | |
| |
| Diversified Financials 0.0% |
| Eurazeo | | | 1,020 | | | | 77,568 | |
| | | | | | | | | |
| |
| Energy 1.5% |
Compagnie Generale de Geophysique-Veritas * | | | 4,436 | | | | 103,619 | |
| Esso S.A.F | | | 495 | | | | 66,483 | |
| Technip S.A. | | | 1,776 | | | | 149,616 | |
| Total S.A. | | | 76,238 | | | | 4,149,932 | |
| | | | | | | | | |
| | | | | | | | 4,469,650 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.5% |
| Carrefour S.A. | | | 24,172 | | | | 1,308,751 | |
| Casino Guichard-Perrachon S.A. | | | 1,858 | | | | 174,802 | |
| Rallye S.A. | | | 2,484 | | | | 97,166 | |
| | | | | | | | | |
| | | | | | | | 1,580,719 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.3% |
| DANONE S.A. | | | 7,867 | | | | 498,809 | |
| Pernod Ricard S.A. | | | 3,649 | | | | 324,340 | |
| | | | | | | | | |
| | | | | | | | 823,149 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.0% |
| Essilor International S.A. | | | 1,720 | | | | 114,952 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.1% |
| L’Oreal S.A. | | | 3,468 | | | | 407,363 | |
| | | | | | | | | |
| |
| Insurance 0.7% |
| AXA S.A. | | | 98,783 | | | | 1,801,497 | |
| CNP Assurances | | | 7,300 | | | | 145,879 | |
Euler Hermes S.A. * | | | 1,144 | | | | 107,745 | |
| SCOR SE | | | 4,603 | | | | 113,179 | |
| | | | | | | | | |
| | | | | | | | 2,168,300 | |
| | | | | | | | | |
| |
| Materials 0.5% |
| Air Liquide S.A. | | | 3,806 | | | | 492,784 | |
| Arkema | | | 2,896 | | | | 187,134 | |
| Ciments Francais S.A. | | | 677 | | | | 62,424 | |
| Eramet | | | 208 | | | | 72,207 | |
| Imerys S.A. | | | 973 | | | | 58,133 | |
| Lafarge S.A. | | | 7,252 | | | | 414,708 | |
| SA des Ciments Vicat | | | 654 | | | | 51,358 | |
| Sequana | | | 2,935 | | | | 42,547 | |
| | | | | | | | | |
| | | | | | | | 1,381,295 | |
| | | | | | | | | |
| |
| Media 0.6% |
JC Decaux S.A. * | | | 1,740 | | | | 51,108 | |
| Lagardere S.C.A. | | | 5,613 | | | | 239,796 | |
| Metropole Television S.A. | | | 1,932 | | | | 47,293 | |
| PagesJaunes Groupe | | | 5,525 | | | | 60,909 | |
| Publicis Groupe | | | 2,060 | | | | 102,619 | |
| Societe Television Francaise 1 | | | 4,998 | | | | 81,917 | |
Technicolor - Reg’d (c)* | | | 14,716 | | | | 92,695 | |
| Vivendi | | | 41,679 | | | | 1,190,978 | |
| | | | | | | | | |
| | | | | | | | 1,867,315 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.5% |
| Sanofi-Aventis | | | 20,140 | | | | 1,411,040 | |
| | | | | | | | | |
| |
| Real Estate 0.2% |
| Fonciere des Regions | | | 735 | | | | 84,023 | |
| Gecina S.A. | | | 487 | | | | 59,137 | |
| ICADE | | | 646 | | | | 71,004 | |
| Klepierre | | | 1,232 | | | | 47,960 | |
30 See financial notes
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Unibail-Rodamco SE | | | 1,622 | | | | 338,424 | |
| | | | | | | | | |
| | | | | | | | 600,548 | |
| | | | | | | | | |
| |
| Retailing 0.2% |
| PPR | | | 2,997 | | | | 492,924 | |
| | | | | | | | | |
| |
| Software & Services 0.1% |
Atos Origin S.A. * | | | 1,731 | | | | 80,105 | |
| Cap Gemini S.A. | | | 3,452 | | | | 176,218 | |
| | | | | | | | | |
| | | | | | | | 256,323 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.1% |
Alcatel-Lucent * | | | 74,494 | | | | 261,892 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.6% |
| France Telecom S.A. | | | 82,618 | | | | 1,982,264 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Aeroports de Paris | | | 498 | | | | 42,319 | |
Air France-KLM * | | | 15,608 | | | | 284,970 | |
| | | | | | | | | |
| | | | | | | | 327,289 | |
| | | | | | | | | |
| |
| Utilities 0.7% |
| EDF S.A. | | | 5,250 | | | | 240,853 | |
| GDF Suez | | | 32,952 | | | | 1,316,661 | |
| Suez Environnement Co. | | | 6,295 | | | | 123,170 | |
| Veolia Environnement | | | 17,701 | | | | 520,523 | |
| | | | | | | | | |
| | | | | | | | 2,201,207 | |
| | | | | | | | | |
| | | | | | | | 32,594,069 | |
| |
Germany 8.9%
|
| | | | | | | | | |
| |
| Automobiles & Components 1.6% |
| Bayerische Motoren Werke AG | | | 14,636 | | | | 1,048,991 | |
Daimler AG - Reg’d * | | | 56,656 | | | | 3,731,023 | |
| Volkswagen AG | | | 1,565 | | | | 205,166 | |
| | | | | | | | | |
| | | | | | | | 4,985,180 | |
| | | | | | | | | |
| |
| Banks 0.2% |
Commerzbank AG * | | | 50,976 | | | | 459,082 | |
Deutsche Postbank AG * | | | 2,692 | | | | 93,628 | |
| | | | | | | | | |
| | | | | | | | 552,710 | |
| | | | | | | | | |
| |
| Capital Goods 1.0% |
| BayWa AG | | | 1,025 | | | | 42,822 | |
| Bilfinger Berger AG | | | 1,119 | | | | 81,449 | |
| GEA Group AG | | | 3,716 | | | | 97,134 | |
| Hochtief AG | | | 1,804 | | | | 156,435 | |
Kloeckner & Co., SE * | | | 2,833 | | | | 62,609 | |
| MAN SE | | | 4,151 | | | | 455,953 | |
| Rheinmetall AG | | | 673 | | | | 48,432 | |
| Siemens AG - Reg’d | | | 18,426 | | | | 2,102,679 | |
| | | | | | | | | |
| | | | | | | | 3,047,513 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
| Adidas AG | | | 3,705 | | | | 241,313 | |
| | | | | | | | | |
| |
| Consumer Services 0.1% |
TUI AG * | | | 20,934 | | | | 244,112 | |
| | | | | | | | | |
| |
| Diversified Financials 0.5% |
| Deutsche Bank AG - Reg’d | | | 26,560 | | | | 1,530,004 | |
| Deutsche Boerse AG | | | 2,461 | | | | 173,128 | |
| | | | | | | | | |
| | | | | | | | 1,703,132 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.2% |
| Metro AG | | | 7,243 | | | | 507,558 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.0% |
| Suedzucker AG | | | 3,190 | | | | 75,318 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| Celesio AG | | | 4,178 | | | | 99,574 | |
| Fresenius Medical Care AG & Co. KGaA | | | 2,451 | | | | 155,989 | |
| Fresenius SE | | | 675 | | | | 59,527 | |
| | | | | | | | | |
| | | | | | | | 315,090 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.1% |
| Beiersdorf AG | | | 1,043 | | | | 67,952 | |
| Henkel AG & Co. KGaA | | | 1,750 | | | | 86,723 | |
| | | | | | | | | |
| | | | | | | | 154,675 | |
| | | | | | | | | |
| |
| Insurance 1.2% |
| Allianz SE - Reg’d | | | 18,383 | | | | 2,302,049 | |
| Generali Deutschland Holding AG | | | 554 | | | | 72,308 | |
| Hannover Rueckversicherung AG - Reg’d | | | 1,600 | | | | 80,928 | |
| Muenchener Rueckversicherungs-Gesellschaft AG - Reg’d | | | 6,995 | | | | 1,093,317 | |
| | | | | | | | | |
| | | | | | | | 3,548,602 | |
| | | | | | | | | |
| |
| Materials 1.2% |
| Aurubis AG | | | 1,774 | | | | 91,166 | |
| BASF SE | | | 25,039 | | | | 1,820,621 | |
| HeidelbergCement AG | | | 5,432 | | | | 283,639 | |
| K&S AG | | | 2,252 | | | | 156,670 | |
| Lanxess AG | | | 2,588 | | | | 179,876 | |
| Linde AG | | | 2,004 | | | | 288,322 | |
| Salzgitter AG | | | 1,576 | | | | 113,079 | |
| ThyssenKrupp AG | | | 17,344 | | | | 638,108 | |
| Wacker Chemie AG | | | 278 | | | | 57,330 | |
| | | | | | | | | |
| | | | | | | | 3,628,811 | |
| | | | | | | | | |
| |
| Media 0.0% |
| Axel Springer AG | | | 386 | | | | 57,404 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.4% |
| Bayer AG | | | 12,839 | | | | 957,622 | |
| Merck KGaA | | | 3,221 | | | | 268,175 | |
| | | | | | | | | |
| | | | | | | | 1,225,797 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.1% |
Infineon Technologies AG * | | | 23,364 | | | | 183,808 | |
| | | | | | | | | |
| |
| Software & Services 0.1% |
| SAP AG | | | 7,899 | | | | 411,529 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.7% |
| Deutsche Telekom AG - Reg’d | | | 150,801 | | | | 2,184,554 | |
| | | | | | | | | |
| |
| Transportation 0.4% |
Deutsche Lufthansa AG - Reg’d * | | | 13,702 | | | | 292,913 | |
| Deutsche Post AG - Reg’d | | | 40,856 | | | | 761,573 | |
| Fraport AG | | | 811 | | | | 51,447 | |
| | | | | | | | | |
| | | | | | | | 1,105,933 | |
| | | | | | | | | |
| |
| Utilities 0.9% |
| E.ON AG | | | 58,209 | | | | 1,821,958 | |
| RWE AG | | | 11,139 | | | | 798,218 | |
| | | | | | | | | |
| | | | | | | | 2,620,176 | |
| | | | | | | | | |
| | �� | | | | | | 26,793,215 | |
See financial notes 31
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Greece 0.4%
|
| | | | | | | | | |
| |
| Banks 0.2% |
Alpha Bank A.E. * | | | 17,803 | | | | 117,605 | |
EFG Eurobank Ergasias * | | | 17,740 | | | | 109,495 | |
National Bank of Greece S.A. * | | | 26,579 | | | | 291,739 | |
Piraeus Bank S.A. * | | | 13,449 | | | | 69,845 | |
| | | | | | | | | |
| | | | | | | | 588,684 | |
| | | | | | | | | |
| |
| Consumer Services 0.1% |
| OPAP S.A. | | | 7,984 | | | | 150,407 | |
| | | | | | | | | |
| |
| Diversified Financials 0.0% |
Marfin Financial Group S.A. * | | | 11,443 | | | | 12,886 | |
| | | | | | | | | |
| |
| Energy 0.0% |
| Hellenic Petroleum S.A. | | | 5,545 | | | | 44,413 | |
| Motor Oil (Hellas) Corinth Refineries S.A. | | | 5,063 | | | | 55,569 | |
| | | | | | | | | |
| | | | | | | | 99,982 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.0% |
| Coca Cola Hellenic Bottling Co., S.A. | | | 2,269 | | | | 58,612 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Hellenic Telecommunications Organization S.A. (OTE) | | | 14,727 | | | | 117,637 | |
| | | | | | | | | |
| |
| Utilities 0.0% |
| Public Power Corp. S.A. | | | 5,333 | | | | 89,245 | |
| | | | | | | | | |
| | | | | | | | 1,117,453 | |
| |
Hong Kong 1.9%
|
| | | | | | | | | |
| |
| Banks 0.2% |
| BOC Hong Kong (Holdings) Ltd. | | | 74,500 | | | | 234,320 | |
| Hang Seng Bank Ltd. | | | 12,300 | | | | 180,226 | |
| The Bank of East Asia Ltd. | | | 28,270 | | | | 121,204 | |
| | | | | | | | | |
| | | | | | | | 535,750 | |
| | | | | | | | | |
| |
| Capital Goods 0.4% |
| Hutchison Whampoa Ltd. | | | 84,000 | | | | 829,602 | |
| Jardine Matheson Holdings Ltd. | | | 4,000 | | | | 180,318 | |
| Jardine Strategic Holdings Ltd. | | | 3,000 | | | | 78,609 | |
| NWS Holdings Ltd. | | | 29,000 | | | | 68,497 | |
| | | | | | | | | |
| | | | | | | | 1,157,026 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.0% |
| Yue Yuen Industrial Holdings Ltd. | | | 17,000 | | | | 60,977 | |
| | | | | | | | | |
| |
| Consumer Services 0.0% |
| Shangri-La Asia Ltd. | | | 20,000 | | | | 45,095 | |
| SJM Holdings Ltd. | | | 58,000 | | | | 86,263 | |
| | | | | | | | | |
| | | | | | | | 131,358 | |
| | | | | | | | | |
| |
| Diversified Financials 0.0% |
| Guoco Group Ltd. | | | 4,000 | | | | 48,942 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.0% |
| Tingyi (Cayman Islands) Holding Corp. | | | 22,000 | | | | 59,976 | |
| | | | | | | | | |
| |
| Materials 0.0% |
| Fosun International | | | 66,500 | | | | 54,665 | |
| | | | | | | | | |
| |
| Real Estate 0.8% |
| Cheung Kong (Holdings) Ltd. | | | 23,500 | | | | 358,943 | |
| Chinese Estates Holdings Ltd. | | | 12,500 | | | | 21,389 | |
| Country Garden Holdings Co. | | | 108,500 | | | | 38,431 | |
| Great Eagle Holdings Ltd. | | | 11,000 | | | | 32,962 | |
| Hang Lung Group Ltd. | | | 14,000 | | | | 93,097 | |
| Hang Lung Properties Ltd. | | | 18,000 | | | | 88,296 | |
| Henderson Land Development Co., Ltd. | | | 16,569 | | | | 118,094 | |
| Hongkong Land Holdings Ltd. | | | 28,000 | | | | 193,306 | |
| Kerry Properties Ltd. | | | 10,500 | | | | 58,332 | |
| New World Development Co., Ltd. | | | 60,000 | | | | 118,915 | |
| Sino Land Co., Ltd. | | | 34,000 | | | | 71,283 | |
| Sun Hung Kai Properties Ltd. | | | 26,600 | | | | 457,577 | |
| Swire Pacific Ltd., Class A | | | 26,000 | | | | 370,082 | |
| The Link REIT | | | 28,500 | | | | 87,964 | |
| The Wharf Holdings Ltd. | | | 21,000 | | | | 138,269 | |
| Wheelock & Co., Ltd. | | | 11,000 | | | | 38,629 | |
| | | | | | | | | |
| | | | | | | | 2,285,569 | |
| | | | | | | | | |
| |
| Retailing 0.1% |
| Esprit Holdings Ltd. | | | 21,684 | | | | 117,033 | |
| Li & Fung Ltd. | | | 22,000 | | | | 116,486 | |
| | | | | | | | | |
| | | | | | | | 233,519 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.0% |
Semiconductor Manufacturing International Corp. * | | | 476,000 | | | | 39,894 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.1% |
Foxconn International Holdings Ltd. * | | | 76,000 | | | | 56,142 | |
| Lenovo Group Ltd. | | | 120,000 | | | | 77,948 | |
| | | | | | | | | |
| | | | | | | | 134,090 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.0% |
| PCCW Ltd. | | | 325,000 | | | | 124,361 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Cathay Pacific Airways Ltd. | | | 37,800 | | | | 101,844 | |
| MTR Corp., Ltd. | | | 16,000 | | | | 61,064 | |
| Orient Overseas International Ltd. | | | 9,500 | | | | 83,487 | |
| | | | | | | | | |
| | | | | | | | 246,395 | |
| | | | | | | | | |
| |
| Utilities 0.2% |
| Cheung Kong Infrastructure Holdings Ltd. | | | 12,000 | | | | 50,180 | |
| CLP Holdings Ltd. | | | 36,500 | | | | 296,724 | |
| Hong Kong & China Gas Co., Ltd. | | | 43,219 | | | | 104,374 | |
| Hongkong Electric Holdings Ltd. | | | 24,000 | | | | 152,575 | |
| | | | | | | | | |
| | | | | | | | 603,853 | |
| | | | | | | | | |
| | | | | | | | 5,716,375 | |
| |
Ireland 0.5%
|
| | | | | | | | | |
| |
| Banks 0.2% |
Allied Irish Banks plc * | | | 187,656 | | | | 89,120 | |
Anglo Irish Bank Corp., Ltd. (a),(b)* | | | 9,106 | | | | — | |
The Governor & Company of the Bank of Ireland * | | | 433,959 | | | | 324,115 | |
| | | | | | | | | |
| | | | | | | | 413,235 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.0% |
| Kerry Group plc, Class A | | | 1,700 | | | | 62,582 | |
| | | | | | | | | |
| |
| Insurance 0.0% |
Irish Life & Permament Group Holdings plc * | | | 36,225 | | | | 76,652 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| CRH plc | | | 18,158 | | | | 313,649 | |
32 See financial notes
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Smurfit Kappa Group plc * | | | 6,661 | | | | 71,320 | |
| | | | | | | | | |
| | | | | | | | 384,969 | |
| | | | | | | | | |
| |
| Media 0.2% |
| WPP plc | | | 37,815 | | | | 439,444 | |
| | | | | | | | | |
| |
| Transportation 0.0% |
| Ryanair Holdings plc | | | 8,996 | | | | 51,847 | |
| | | | | | | | | |
| | | | | | | | 1,428,729 | |
| |
Israel 0.3%
|
| | | | | | | | | |
| |
| Banks 0.1% |
Bank Hapoalim B.M. * | | | 49,742 | | | | 225,407 | |
Bank Leumi Le-israel * | | | 13,539 | | | | 62,301 | |
| | | | | | | | | |
| | | | | | | | 287,708 | |
| | | | | | | | | |
| |
| Capital Goods 0.0% |
| Delek Group Ltd. | | | 178 | | | | 49,664 | |
| Discount Investment Corp. - Reg’d | | | 1,135 | | | | 26,045 | |
| IDB Holding Corp., Ltd. | | | 97 | | | | 3,520 | |
| | | | | | | | | |
| | | | | | | | 79,229 | |
| | | | | | | | | |
| |
| Energy 0.0% |
| Oil Refineries Ltd. | | | 65,877 | | | | 39,149 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| Israel Chemicals Ltd. | | | 4,778 | | | | 72,922 | |
The Israel Corp., Ltd. * | | | 66 | | | | 70,794 | |
| | | | | | | | | |
| | | | | | | | 143,716 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Teva Pharmaceutical Industries Ltd. | | | 5,745 | | | | 297,943 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.0% |
| Bezeq Israeli Telecommunication Corp., Ltd. | | | 36,873 | | | | 96,935 | |
| | | | | | | | | |
| | | | | | | | 944,680 | |
| |
Italy 4.9%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.3% |
| Fiat S.p.A. | | | 52,758 | | | | 893,414 | |
| Pirelli & C. S.p.A. | | | 13,866 | | | | 118,472 | |
| | | | | | | | | |
| | | | | | | | 1,011,886 | |
| | | | | | | | | |
| |
| Banks 1.4% |
| Banca Carige S.p.A. (Cassa di Risparmio di Genova e Imperia) | | | 14,285 | | | | 34,589 | |
Banca Monte dei Paschi di Siena S.p.A. * | | | 141,641 | | | | 199,365 | |
| Banca Popolare Di Milano Scarl | | | 18,882 | | | | 88,283 | |
| Banco Popolare Societa Cooperativa | | | 32,869 | | | | 176,650 | |
| Credito Emiliano S.p.A. | | | 6,597 | | | | 46,908 | |
| Intesa Sanpaolo | | | 376,197 | | | | 1,323,138 | |
| UniCredit S.p.A. | | | 766,752 | | | | 1,998,960 | |
| Unione di Banche Italiane S.C.P.A. | | | 22,399 | | | | 236,503 | |
| | | | | | | | | |
| | | | | | | | 4,104,396 | |
| | | | | | | | | |
| |
| Capital Goods 0.1% |
C.I.R. S.p.A. - Compagnie Industriali Riunite * | | | 30,579 | | | | 69,503 | |
| Finmeccanica S.p.A. | | | 15,283 | | | | 213,565 | |
| | | | | | | | | |
| | | | | | | | 283,068 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.0% |
| Benetton Group S.p.A. | | | 4,166 | | | | 33,855 | |
| Luxottica Group S.p.A. | | | 1,686 | | | | 49,795 | |
| | | | | | | | | |
| | | | | | | | 83,650 | |
| | | | | | | | | |
| |
| Consumer Services 0.0% |
Autogrill S.p.A. * | | | 3,407 | | | | 45,439 | |
| Lottomatica S.p.A. | | | 3,539 | | | | 59,081 | |
| | | | | | | | | |
| | | | | | | | 104,520 | |
| | | | | | | | | |
| |
| Diversified Financials 0.1% |
| Exor S.p.A. | | | 2,910 | | | | 74,813 | |
Mediobanca S.p.A. * | | | 16,645 | | | | 172,544 | |
| | | | | | | | | |
| | | | | | | | 247,357 | |
| | | | | | | | | |
| |
| Energy 1.0% |
| Eni S.p.A. | | | 114,352 | | | | 2,574,902 | |
| ERG S.p.A. | | | 4,494 | | | | 62,075 | |
| Saipem S.p.A. | | | 3,613 | | | | 160,520 | |
Saras S.p.A. * | | | 17,072 | | | | 37,786 | |
| Tenaris S.A. | | | 6,019 | | | | 124,798 | |
| | | | | | | | | |
| | | | | | | | 2,960,081 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.0% |
| Parmalat S.p.A. | | | 31,641 | | | | 86,979 | |
| | | | | | | | | |
| |
| Insurance 0.4% |
| Assicurazioni Generali S.p.A. | | | 46,872 | | | | 1,027,426 | |
| Fondiaria-Sai S.p.A. | | | 8,433 | | | | 100,210 | |
| Fondiaria-Sai S.p.A. - RSP | | | 3,813 | | | | 28,434 | |
| Mediolanum S.p.A. | | | 9,148 | | | | 42,999 | |
| Milano Assicurazioni S.p.A. | | | 8,855 | | | | 19,150 | |
Premafin Finanziaria S.p.A. * | | | 26,105 | | | | 39,041 | |
| Unipol Gruppo Finanziario S.p.A. | | | 104,436 | | | | 82,110 | |
| | | | | | | | | |
| | | | | | | | 1,339,370 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| Buzzi Unicem S.p.A. | | | 5,174 | | | | 59,522 | |
| Italcementi S.p.A. | | | 5,311 | | | | 44,792 | |
| Italcementi S.p.A. - RSP | | | 5,810 | | | | 28,074 | |
| Italmobiliare S.p.A. | | | 539 | | | | 19,084 | |
| Italmobiliare S.p.A. - RSP | | | 1,974 | | | | 50,671 | |
| | | | | | | | | |
| | | | | | | | 202,143 | |
| | | | | | | | | |
| |
| Media 0.1% |
| Mediaset S.p.A. | | | 25,793 | | | | 190,434 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.6% |
| Telecom Italia S.p.A. | | | 921,230 | | | | 1,413,868 | |
| Telecom Italia S.p.A. - RSP | | | 414,838 | | | | 509,000 | |
| | | | | | | | | |
| | | | | | | | 1,922,868 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Atlantia S.p.A. | | | 6,750 | | | | 154,295 | |
| | | | | | | | | |
| |
| Utilities 0.7% |
| A2A S.p.A. | | | 46,782 | | | | 76,279 | |
Acea S.p.A. * | | | 2,958 | | | | 35,294 | |
| Edison S.p.A. | | | 42,075 | | | | 51,832 | |
| Enel S.p.A. | | | 270,899 | | | | 1,547,402 | |
| Hera S.p.A. | | | 31,901 | | | | 67,517 | |
| Snam Rete Gas S.p.A. | | | 19,764 | | | | 107,148 | |
| Terna - Rete Elettrica Nationale S.p.A. | | | 23,081 | | | | 106,507 | |
| | | | | | | | | |
| | | | | | | | 1,991,979 | |
| | | | | | | | | |
| | | | | | | | 14,683,026 | |
See financial notes 33
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Japan 15.0%
|
| | | | | | | | | |
| |
| Automobiles & Components 2.2% |
| Aisin Seiki Co., Ltd. | | | 5,100 | | | | 159,799 | |
| Bridgestone Corp. | | | 15,200 | | | | 272,100 | |
| Daihatsu Motor Co., Ltd. | | | 6,000 | | | | 81,051 | |
| Denso Corp. | | | 9,100 | | | | 282,993 | |
Fuji Heavy Industries Ltd. * | | | 24,000 | | | | 165,396 | |
| Honda Motor Co., Ltd. | | | 30,800 | | | | 1,110,303 | |
| Isuzu Motors Ltd. | | | 42,000 | | | | 161,319 | |
| Mazda Motor Corp. | | | 65,000 | | | | 165,194 | |
Mitsubishi Motors Corp. * | | | 76,000 | | | | 90,282 | |
Nissan Motor Co., Ltd. * | | | 81,700 | | | | 718,046 | |
| Nok Corp. | | | 3,600 | | | | 64,106 | |
| Sumitomo Rubber Industries Ltd. | | | 4,600 | | | | 49,440 | |
| Suzuki Motor Corp. | | | 10,400 | | | | 253,829 | |
| Toyoda Gosei Co., Ltd. | | | 2,200 | | | | 47,409 | |
| Toyota Auto Body Co., Ltd. | | | 3,100 | | | | 46,584 | |
| Toyota Boshoku Corp. | | | 4,100 | | | | 69,446 | |
| Toyota Industries Corp. | | | 3,500 | | | | 98,711 | |
| Toyota Motor Corp. | | | 69,400 | | | | 2,458,166 | |
Yamaha Motor Co., Ltd. * | | | 10,800 | | | | 165,711 | |
| | | | | | | | | |
| | | | | | | | 6,459,885 | |
| | | | | | | | | |
| |
| Banks 1.0% |
| Chuo Mitsui Trust Holdings, Inc. | | | 21,000 | | | | 75,759 | |
| Fukuoka Financial Group, Inc. | | | 19,000 | | | | 73,692 | |
| Hokuhoku Financial Group, Inc. | | | 34,000 | | | | 62,875 | |
| Mitsubishi UFJ Financial Group, Inc. | | | 253,934 | | | | 1,178,508 | |
| Mizuho Financial Group, Inc. | | | 251,916 | | | | 365,358 | |
| Resona Holdings, Inc. | | | 5,658 | | | | 45,002 | |
Shinsei Bank Ltd. (c)* | | | 77,000 | | | | 61,024 | |
| Sumitomo Mitsui Financial Group, Inc. | | | 25,410 | | | | 758,431 | |
| The Bank of Yokohama Ltd. | | | 20,000 | | | | 98,061 | |
| The Chiba Bank Ltd. | | | 12,000 | | | | 74,086 | |
| The Hachijuni Bank Ltd. | | | 10,000 | | | | 51,316 | |
| The Joyo Bank Ltd. | | | 13,000 | | | | 56,549 | |
| The Shizuoka Bank Ltd. | | | 8,000 | | | | 68,498 | |
| The Sumitomo Trust & Banking Co., Ltd. | | | 25,000 | | | | 136,495 | |
| | | | | | | | | |
| | | | | | | | 3,105,654 | |
| | | | | | | | | |
| |
| Capital Goods 2.1% |
| Amada Co., Ltd. | | | 7,000 | | | | 46,061 | |
| Asahi Glass Co., Ltd. | | | 20,000 | | | | 191,855 | |
| Daikin Industries Ltd. | | | 2,600 | | | | 90,457 | |
| Fanuc Ltd. | | | 1,600 | | | | 231,631 | |
| Fuji Electric Holdings Co., Ltd. | | | 24,000 | | | | 57,249 | |
| Fujikura Ltd. | | | 11,000 | | | | 51,186 | |
| Hankyu Hanshin Holdings, Inc. | | | 23,000 | | | | 110,257 | |
| Hanwa Co., Ltd. | | | 21,000 | | | | 82,948 | |
| Hino Motors Ltd. | | | 11,800 | | | | 50,978 | |
| Hitachi Construction Machinery Co., Ltd. | | | 2,000 | | | | 42,525 | |
| IHI Corp. | | | 38,000 | | | | 72,167 | |
| Itochu Corp. | | | 31,000 | | | | 271,693 | |
| JFE Shoji Holdings, Inc. | | | 15,000 | | | | 58,143 | |
| JGC Corp. | | | 4,000 | | | | 76,507 | |
| JS Group Corp. | | | 5,300 | | | | 104,165 | |
| JTEKT Corp. | | | 9,700 | | | | 97,184 | |
| Kajima Corp. | | | 39,000 | | | | 91,452 | |
| Kawasaki Heavy Industries Ltd. | | | 36,000 | | | | 99,397 | |
| Kinden Corp. | | | 6,000 | | | | 51,576 | |
| Komatsu Ltd. | | | 16,800 | | | | 410,616 | |
| Kubota Corp. | | | 9,000 | | | | 79,812 | |
| Makita Corp. | | | 1,700 | | | | 59,607 | |
| Marubeni Corp. | | | 40,000 | | | | 251,277 | |
| Matsushita Electric Works Ltd. | | | 5,000 | | | | 65,540 | |
| Mitsubishi Corp. | | | 22,900 | | | | 550,050 | |
| Mitsubishi Electric Corp. | | | 35,000 | | | | 328,025 | |
| Mitsubishi Heavy Industries Ltd. | | | 96,000 | | | | 348,962 | |
| Mitsui & Co., Ltd. | | | 30,000 | | | | 471,822 | |
| NGK Insulators Ltd. | | | 4,000 | | | | 60,562 | |
| Nidec Corp. | | | 700 | | | | 69,126 | |
| Nippon Sheet Glass Co., Ltd. | | | 41,000 | | | | 89,973 | |
| NSK Ltd. | | | 9,000 | | | | 68,044 | |
| NTN Corp. | | | 13,000 | | | | 58,802 | |
| Obayashi Corp. | | | 26,000 | | | | 105,933 | |
| Shimizu Corp. | | | 25,000 | | | | 96,508 | |
| SMC Corp. | | | 600 | | | | 91,595 | |
| Sojitz Corp. | | | 174,300 | | | | 320,383 | |
| Sumitomo Corp. | | | 29,700 | | | | 376,026 | |
| Sumitomo Electric Industries Ltd. | | | 15,700 | | | | 199,779 | |
| Sumitomo Heavy Industries Ltd. | | | 11,000 | | | | 62,521 | |
| Taisei Corp. | | | 45,000 | | | | 96,074 | |
| The Furukawa Electric Co., Ltd. | | | 15,000 | | | | 55,897 | |
| Toyota Tsusho Corp. | | | 9,700 | | | | 150,169 | |
| | | | | | | | | |
| | | | | | | | 6,344,534 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.1% |
| Dai Nippon Printing Co., Ltd. | | | 14,000 | | | | 176,599 | |
| Secom Co., Ltd. | | | 2,300 | | | | 104,645 | |
| Toppan Printing Co., Ltd. | | | 18,000 | | | | 144,592 | |
| | | | | | | | | |
| | | | | | | | 425,836 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.9% |
| Casio Computer Co., Ltd. | | | 7,500 | | | | 52,602 | |
| NAMCO BANDAI Holdings, Inc. | | | 5,700 | | | | 52,522 | |
| Nikon Corp. | | | 4,000 | | | | 75,543 | |
| Panasonic Corp. | | | 68,900 | | | | 1,004,374 | |
| Sankyo Co., Ltd. | | | 1,000 | | | | 53,279 | |
Sanyo Electric Co., Ltd. * | | | 39,000 | | | | 63,473 | |
| Sega Sammy Holdings, Inc. | | | 3,900 | | | | 63,627 | |
| Sekisui Chemical Co., Ltd. | | | 12,000 | | | | 76,237 | |
| Sekisui House Ltd. | | | 15,000 | | | | 140,976 | |
| Sharp Corp. | | | 24,000 | | | | 237,081 | |
| Sony Corp. | | | 24,900 | | | | 841,296 | |
| Sumitomo Forestry Co., Ltd. | | | 6,600 | | | | 48,752 | |
| Yamaha Corp. | | | 5,200 | | | | 63,620 | |
| | | | | | | | | |
| | | | | | | | 2,773,382 | |
| | | | | | | | | |
| |
| Consumer Services 0.0% |
| Oriental Land Co., Ltd. | | | 500 | | | | 48,427 | |
| | | | | | | | | |
| |
| Diversified Financials 0.3% |
| Acom Co., Ltd. | | | 2,610 | | | | 29,672 | |
Aiful Corp. (c)* | | | 56,400 | | | | 32,144 | |
| Credit Saison Co., Ltd. | | | 7,900 | | | | 112,051 | |
| Daiwa Securities Group, Inc. | | | 36,000 | | | | 146,780 | |
| Nomura Holdings, Inc. | | | 45,800 | | | | 235,356 | |
| ORIX Corp. | | | 3,260 | | | | 296,944 | |
| Promise Co., Ltd. | | | 10,550 | | | | 43,906 | |
| SBI Holdings, Inc. | | | 390 | | | | 47,504 | |
| | | | | | | | | |
| | | | | | | | 944,357 | |
| | | | | | | | | |
| |
| Energy 0.4% |
| Cosmo Oil Co., Ltd. | | | 63,000 | | | | 169,649 | |
34 See financial notes
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Idemitsu Kosan Co., Ltd. | | | 1,800 | | | | 151,632 | |
| Inpex Corp. | | | 11 | | | | 57,285 | |
JX Holdings, Inc. * | | | 120,530 | | | | 710,495 | |
| Showa Shell Sekiyu K.K. | | | 8,100 | | | | 68,192 | |
| TonenGeneral Sekiyu K.K. | | | 14,000 | | | | 124,798 | |
| | | | | | | | | |
| | | | | | | | 1,282,051 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.3% |
| Aeon Co., Ltd. | | | 27,200 | | | | 320,341 | |
| Lawson, Inc. | | | 1,300 | | | | 59,057 | |
| Ryoshoku Ltd. | | | 2,100 | | | | 45,206 | |
| Seven & i Holdings Co., Ltd. | | | 16,200 | | | | 376,051 | |
| Uny Co., Ltd. | | | 9,200 | | | | 76,665 | |
| | | | | | | | | |
| | | | | | | | 877,320 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.3% |
| Ajinomoto Co., Inc. | | | 12,000 | | | | 114,360 | |
| Asahi Breweries Ltd. | | | 7,200 | | | | 145,219 | |
| Japan Tobacco, Inc. | | | 84 | | | | 260,962 | |
| Kirin Holdings Co., Ltd. | | | 16,000 | | | | 219,259 | |
| Nippon Meat Packers, Inc. | | | 5,000 | | | | 58,136 | |
| Nisshin Seifun Group, Inc. | | | 3,500 | | | | 43,335 | |
| Nissin Food Holdings Co., Ltd. | | | 1,300 | | | | 47,081 | |
| Yamazaki Baking Co., Ltd. | | | 5,000 | | | | 60,989 | |
| | | | | | | | | |
| | | | | | | | 949,341 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| Alfresa Holdings Corp. | | | 1,900 | | | | 79,885 | |
| Medipal Holdings Corp. | | | 9,700 | | | | 113,135 | |
| Olympus Corp. | | | 2,500 | | | | 65,504 | |
| Suzuken Co., Ltd. | | | 2,100 | | | | 66,020 | |
| Terumo Corp. | | | 900 | | | | 45,705 | |
| | | | | | | | | |
| | | | | | | | 370,249 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.1% |
| Kao Corp. | | | 8,000 | | | | 203,336 | |
| Shiseido Co., Ltd. | | | 4,000 | | | | 83,510 | |
| | | | | | | | | |
| | | | | | | | 286,846 | |
| | | | | | | | | |
| |
| Insurance 0.3% |
| MS&AD Insurance Group Holdings, Inc. | | | 7,890 | | | | 189,020 | |
NKSJ Holdings, Inc. * | | | 39,900 | | | | 273,811 | |
| T&D Holdings, Inc. | | | 5,950 | | | | 121,495 | |
| Tokio Marine Holdings, Inc. | | | 9,700 | | | | 272,724 | |
| | | | | | | | | |
| | | | | | | | 857,050 | |
| | | | | | | | | |
| |
| Materials 1.3% |
| Asahi Kasei Corp. | | | 29,000 | | | | 170,604 | |
| DIC Corp. | | | 43,000 | | | | 79,919 | |
| Hitachi Chemical Co., Ltd. | | | 3,600 | | | | 66,782 | |
| Hitachi Metals Ltd. | | | 6,000 | | | | 68,293 | |
| JFE Holdings, Inc. | | | 11,300 | | | | 352,385 | |
| JSR Corp. | | | 2,800 | | | | 48,297 | |
| Kaneka Corp. | | | 11,000 | | | | 68,041 | |
| Kobe Steel Ltd. | | | 97,000 | | | | 213,183 | |
| Kuraray Co., Ltd. | | | 6,000 | | | | 85,934 | |
| Mitsubhishi Gas Chemical Co., Inc. | | | 8,000 | | | | 49,458 | |
| Mitsubishi Chemical Holdings Corp. | | | 38,000 | | | | 195,456 | |
Mitsubishi Materials Corp. * | | | 40,000 | | | | 125,219 | |
| Mitsui Chemicals, Inc. | | | 40,000 | | | | 117,173 | |
| Nippon Paper Group, Inc. | | | 4,443 | | | | 112,807 | |
| Nippon Steel Corp. | | | 135,000 | | | | 424,322 | |
| Nisshin Steel Co., Ltd. | | | 41,000 | | | | 73,859 | |
| Nitto Denko Corp. | | | 2,400 | | | | 89,807 | |
| Oji Paper Co., Ltd. | | | 27,000 | | | | 124,547 | |
| Shin-Etsu Chemical Co., Ltd. | | | 4,400 | | | | 222,490 | |
| Showa Denko K.K. | | | 36,000 | | | | 65,825 | |
| Sumitomo Chemical Co., Ltd. | | | 36,000 | | | | 156,952 | |
| Sumitomo Metal Industries Ltd. | | | 85,000 | | | | 197,284 | |
| Sumitomo Metal Mining Co., Ltd. | | | 10,000 | | | | 159,133 | |
Taiheiyo Cement Corp. * | | | 52,000 | | | | 56,129 | |
| Teijin Ltd. | | | 28,000 | | | | 103,673 | |
| Toray Industries, Inc. | | | 29,000 | | | | 168,009 | |
| Tosoh Corp. | | | 20,000 | | | | 53,493 | |
| Toyo Seikan Kaisha Ltd. | | | 5,000 | | | | 85,319 | |
| Ube Industries Ltd. | | | 19,000 | | | | 46,613 | |
| | | | | | | | | |
| | | | | | | | 3,781,006 | |
| | | | | | | | | |
| |
| Media 0.1% |
| Dentsu, Inc. | | | 3,801 | | | | 89,568 | |
| Fuji Television Network, Inc. | | | 33 | | | | 43,681 | |
| Hakuhodo Dy Holdings, Inc. | | | 1,400 | | | | 69,923 | |
| Nippon Television Network Corp. | | | 340 | | | | 44,877 | |
| Tokyo Broadcasting System Holdings, Inc. | | | 5,400 | | | | 66,528 | |
| | | | | | | | | |
| | | | | | | | 314,577 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.5% |
| Astellas Pharma, Inc. | | | 5,400 | | | | 200,890 | |
| Chugai Pharmaceutical Co., Ltd. | | | 2,600 | | | | 45,585 | |
| Daiichi Sankyo Co., Ltd. | | | 8,100 | | | | 171,652 | |
| Dainippon Sumitomo Pharma Co., Ltd. | | | 5,800 | | | | 52,381 | |
| Eisai Co., Ltd. | | | 3,000 | | | | 103,208 | |
| Kyowa Hakko Kirin Co., Ltd. | | | 4,000 | | | | 39,223 | |
| Mitsubishi Tanabe Pharma Corp. | | | 4,000 | | | | 65,440 | |
| Ono Pharmaceutical Co., Ltd. | | | 1,500 | | | | 63,738 | |
| Shionogi & Co., Ltd. | | | 4,000 | | | | 69,819 | |
| Taisho Pharmaceutical Co., Ltd. | | | 4,000 | | | | 84,228 | |
| Takeda Pharmaceutical Co., Ltd. | | | 10,800 | | | | 506,263 | |
| | | | | | | | | |
| | | | | | | | 1,402,427 | |
| | | | | | | | | |
| |
| Real Estate 0.3% |
| Daito Trust Construction Co., Ltd. | | | 1,600 | | | | 96,753 | |
| Daiwa House Industry Co., Ltd. | | | 13,000 | | | | 140,093 | |
Leopalace21 Corp. (c)* | | | 27,200 | | | | 30,633 | |
| Mitsubishi Estate Co., Ltd. | | | 11,000 | | | | 192,703 | |
| Mitsui Fudosan Co., Ltd. | | | 13,000 | | | | 245,833 | |
| Sumitomo Realty & Development Co., Ltd. | | | 6,500 | | | | 141,594 | |
| Tokyu Land Corp. | | | 15,000 | | | | 68,358 | |
| | | | | | | | | |
| | | | | | | | 915,967 | |
| | | | | | | | | |
| |
| Retailing 0.2% |
| Canon Marketing Japan, Inc. | | | 3,100 | | | | 38,615 | |
| Fast Retailing Co., Ltd. | | | 1,100 | | | | 144,090 | |
| Isetan Mitsukoshi Holdings Ltd. | | | 4,400 | | | | 48,549 | |
| Marui Group Co., Ltd. | | | 9,300 | | | | 73,082 | |
| Takashimaya Co., Ltd. | | | 8,000 | | | | 60,221 | |
The Daiei, Inc. * | | | 27,500 | | | | 99,515 | |
| Yamada Denki Co., Ltd. | | | 1,810 | | | | 117,449 | |
| | | | | | | | | |
| | | | | | | | 581,521 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.1% |
| Rohm Co., Ltd. | | | 2,300 | | | | 143,435 | |
Sumco Corp. * | | | 2,800 | | | | 43,298 | |
| Tokyo Electron Ltd. | | | 1,700 | | | | 95,920 | |
| | | | | | | | | |
| | | | | | | | 282,653 | |
See financial notes 35
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| | | | | | | | | |
| |
| Software & Services 0.2% |
| Nintendo Co., Ltd. | | | 1,230 | | | | 317,606 | |
| Nomura Research Institute Ltd. | | | 2,200 | | | | 41,505 | |
| NTT Data Corp. | | | 25 | | | | 76,870 | |
| Oracle Corp. Japan | | | 900 | | | | 40,825 | |
| Yahoo! Japan Corp. | | | 194 | | | | 67,718 | |
| | | | | | | | | |
| | | | | | | | 544,524 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 1.7% |
| Alps Electric Co., Ltd. | | | 8,500 | | | | 76,162 | |
| Brother Industries Ltd. | | | 6,400 | | | | 81,702 | |
| Canon, Inc. | | | 22,300 | | | | 1,026,542 | |
| FUJIFILM Holdings Corp. | | | 9,300 | | | | 310,263 | |
| Fujitsu Ltd. | | | 51,000 | | | | 347,894 | |
| Hitachi High-Technologies Corp. | | | 2,900 | | | | 56,358 | |
Hitachi Ltd. * | | | 199,000 | | | | 899,410 | |
| Hoya Corp. | | | 6,100 | | | | 142,489 | |
| Ibiden Co., Ltd. | | | 2,600 | | | | 63,969 | |
| Keyence Corp. | | | 230 | | | | 56,983 | |
| Konica Minolta Holdings, Inc. | | | 9,900 | | | | 95,663 | |
| Kyocera Corp. | | | 2,900 | | | | 289,020 | |
| Murata Manufacturing Co., Ltd. | | | 3,000 | | | | 168,589 | |
| NEC Corp. | | | 150,000 | | | | 417,369 | |
| Nippon Electric Glass Co., Ltd. | | | 6,000 | | | | 77,123 | |
| OMRON Corp. | | | 4,700 | | | | 108,882 | |
| Ricoh Co., Ltd. | | | 15,000 | | | | 209,829 | |
| Seiko Epson Corp. | | | 6,200 | | | | 98,858 | |
| Tdk Corp. | | | 1,700 | | | | 96,993 | |
Toshiba Corp. * | | | 80,000 | | | | 400,411 | |
| | | | | | | | | |
| | | | | | | | 5,024,509 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.8% |
| KDDI Corp. | | | 91 | | | | 490,566 | |
| Nippon Telegraph & Telephone Corp. | | | 22,904 | | | | 1,032,979 | |
| NTT DoCoMo, Inc. | | | 418 | | | | 704,612 | |
| SOFTBANK Corp. | | | 7,000 | | | | 224,805 | |
| | | | | | | | | |
| | | | | | | | 2,452,962 | |
| | | | | | | | | |
| |
| Transportation 0.7% |
All Nippon Airways Co., Ltd. * | | | 15,000 | | | | 56,742 | |
| Central Japan Railway Co. | | | 40 | | | | 302,551 | |
| East Japan Railway Co. | | | 5,918 | | | | 365,457 | |
| Kawasaki Kisen Kaisha Ltd. | | | 33,000 | | | | 128,140 | |
| Keio Corp. | | | 8,100 | | | | 56,634 | |
| Kintetsu Corp. | | | 22,000 | | | | 69,668 | |
| Mitsui O.S.K. Lines Ltd. | | | 30,000 | | | | 191,860 | |
| Nagoya Railroad Co., Ltd. | | | 22,000 | | | | 60,398 | |
| Nippon Express Co., Ltd. | | | 33,000 | | | | 131,121 | |
| Nippon Yusen Kabushiki Kaisha | | | 53,000 | | | | 222,327 | |
| Odakyu Electric Railway Co., Ltd. | | | 8,000 | | | | 73,734 | |
| Tobu Railway Co., Ltd. | | | 11,000 | | | | 61,768 | |
| Tokyu Corp. | | | 26,000 | | | | 116,223 | |
| West Japan Railway Co. | | | 44 | | | | 163,349 | |
| Yamato Holdings Co., Ltd. | | | 8,000 | | | | 100,855 | |
| | | | | | | | | |
| | | | | | | | 2,100,827 | |
| | | | | | | | | |
| |
| Utilities 1.0% |
| Chubu Electric Power Co., Inc. | | | 14,300 | | | | 361,394 | |
| Electric Power Development Co., Ltd. | | | 4,900 | | | | 144,988 | |
| Hokkaido Electric Power Co., Inc. | | | 4,500 | | | | 94,654 | |
| Hokuriku Electric Power Co. | | | 4,600 | | | | 111,616 | |
| Kyushu Electric Power Co., Inc. | | | 10,700 | | | | 253,299 | |
| Osaka Gas Co., Ltd. | | | 38,000 | | | | 143,503 | |
| Shikoku Electric Power Co., Inc. | | | 3,100 | | | | 91,634 | |
| The Chugoku Electric Power Co., Inc. | | | 7,300 | | | | 147,121 | |
| The Kansai Electric Power Co., Inc. | | | 18,400 | | | | 465,709 | |
| The Tokyo Electric Power Co., Inc. | | | 31,700 | | | | 756,937 | |
| Toho Gas Co., Ltd. | | | 8,000 | | | | 42,148 | |
| Tohoku Electric Power Co., Inc. | | | 10,800 | | | | 242,226 | |
| Tokyo Gas Co., Ltd. | | | 41,000 | | | | 192,900 | |
| | | | | | | | | |
| | | | | | | | 3,048,129 | |
| | | | | | | | | |
| | | | | | | | 45,174,034 | |
| |
Luxembourg 0.4%
|
| | | | | | | | | |
| |
| Materials 0.3% |
| ArcelorMittal N.V. | | | 31,390 | | | | 1,015,730 | |
| | | | | | | | | |
| |
| Media 0.1% |
| RTL Group | | | 534 | | | | 48,243 | |
| SES FDR | | | 4,757 | | | | 122,163 | |
| | | | | | | | | |
| | | | | | | | 170,406 | |
| | | | | | | | | |
| | | | | | | | 1,186,136 | |
| |
Netherlands 3.9%
|
| | | | | | | | | |
| |
| Capital Goods 0.4% |
European Aeronautic Defence & Space Co. * | | | 11,417 | | | | 300,340 | |
| Koninklijke BAM Groep N.V. | | | 15,760 | | | | 106,751 | |
| Koninklijke Philips Electronics N.V. | | | 22,348 | | | | 681,666 | |
| | | | | | | | | |
| | | | | | | | 1,088,757 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.0% |
Randstad Holding N.V. * | | | 2,452 | | | | 116,810 | |
| | | | | | | | | |
| |
| Diversified Financials 1.8% |
ING Groep N.V. CVA * | | | 504,266 | | | | 5,394,985 | |
SNS Reaal * | | | 15,966 | | | | 73,906 | |
| | | | | | | | | |
| | | | | | | | 5,468,891 | |
| | | | | | | | | |
| |
| Energy 0.0% |
| SBM Offshore N.V. | | | 3,569 | | | | 72,845 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.2% |
| Koninklijke Ahold N.V. | | | 32,454 | | | | 448,575 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.5% |
| Heineken Holding N.V. | | | 2,780 | | | | 119,910 | |
| Heineken N.V. | | | 3,667 | | | | 186,155 | |
| Nutreco Holding N.V. | | | 996 | | | | 72,557 | |
| Unilever N.V. | | | 42,190 | | | | 1,252,918 | |
| | | | | | | | | |
| | | | | | | | 1,631,540 | |
| | | | | | | | | |
| |
| Insurance 0.3% |
Aegon N.V. * | | | 117,953 | | | | 747,558 | |
| | | | | | | | | |
| |
| Materials 0.2% |
| Akzo Nobel N.V. | | | 7,168 | | | | 425,783 | |
| Koninklijke DSM N.V. | | | 5,265 | | | | 281,773 | |
| | | | | | | | | |
| | | | | | | | 707,556 | |
| | | | | | | | | |
| |
| Media 0.1% |
| Reed Elsevier N.V. | | | 5,548 | | | | 72,477 | |
| Wolters Kluwer N.V. | | | 5,778 | | | | 131,708 | |
| | | | | | | | | |
| | | | | | | | 204,185 | |
| | | | | | | | | |
| |
| Real Estate 0.0% |
| Corio N.V. | | | 1,677 | | | | 123,266 | |
36 See financial notes
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.1% |
| ASML Holding N.V. | | | 2,655 | | | | 88,013 | |
| STMicroelectronics N.V. | | | 16,652 | | | | 146,023 | |
| | | | | | | | | |
| | | | | | | | 234,036 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.2% |
| Koninklijke (Royal) KPN N.V. | | | 42,470 | | | | 709,300 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| TNT N.V. | | | 8,781 | | | | 233,522 | |
| | | | | | | | | |
| | | | | | | | 11,786,841 | |
| |
New Zealand 0.1%
|
| | | | | | | | | |
| |
| Materials 0.0% |
| Fletcher Building Ltd. | | | 14,877 | | | | 93,213 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Telecom Corp. of New Zealand Ltd. | | | 110,009 | | | | 171,702 | |
| | | | | | | | | |
| |
| Utilities 0.0% |
| Vector Ltd. | | | 19,957 | | | | 37,038 | |
| | | | | | | | | |
| | | | | | | | 301,953 | |
| |
Norway 1.0%
|
| | | | | | | | | |
| |
| Banks 0.1% |
| DnB NOR A.S.A. | | | 26,427 | | | | 363,011 | |
| | | | | | | | | |
| |
| Capital Goods 0.1% |
| Orkla A.S.A. | | | 27,814 | | | | 269,556 | |
| | | | | | | | | |
| |
| Energy 0.4% |
| Aker A.S.A., Class A | | | 1,700 | | | | 34,890 | |
| Aker Solutions A.S.A. | | | 5,550 | | | | 84,638 | |
| Frontline Ltd. | | | 2,734 | | | | 78,066 | |
| Statoil A.S.A. | | | 42,823 | | | | 935,333 | |
| | | | | | | | | |
| | | | | | | | 1,132,927 | |
| | | | | | | | | |
| |
| Insurance 0.1% |
Storebrand A.S.A. * | | | 14,977 | | | | 109,190 | |
| | | | | | | | | |
| |
| Materials 0.2% |
| Norsk Hydro A.S.A. | | | 83,510 | | | | 512,613 | |
| Yara International A.S.A. | | | 3,100 | | | | 163,456 | |
| | | | | | | | | |
| | | | | | | | 676,069 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Telenor A.S.A. | | | 19,984 | | | | 322,563 | |
| | | | | | | | | |
| | | | | | | | 2,873,316 | |
| |
Portugal 0.4%
|
| | | | | | | | | |
| |
| Banks 0.1% |
| Banco BPI S.A. - Reg’d | | | 13,679 | | | | 30,326 | |
| Banco Comercial Portugues S.A. - Reg’d | | | 137,845 | | | | 125,399 | |
| Banco Espirito Santo, S.A. - Reg’d | | | 9,535 | | | | 47,352 | |
| | | | | | | | | |
| | | | | | | | 203,077 | |
| | | | | | | | | |
| |
| Capital Goods 0.0% |
| Sonae | | | 30,905 | | | | 36,660 | |
| | | | | | | | | |
| |
| Energy 0.0% |
| Galp Energia, SGPS, S.A., B Shares | | | 3,725 | | | | 71,873 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.0% |
| Jeronimo Martins, SGPS, S.A. | | | 3,234 | | | | 48,566 | |
| | | | | | | | | |
| |
| Materials 0.0% |
| Cimpor-Cimentos de Portugal, SGPS, S.A. | | | 3,549 | | | | 24,670 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.2% |
| Portugal Telecom, SGPS, S.A. - Reg’d | | | 29,388 | | | | 424,724 | |
| | | | | | | | | |
| |
| Transportation 0.0% |
| Brisa Auto-Estradas de Portugal S.A. | | | 9,348 | | | | 70,829 | |
| | | | | | | | | |
| |
| Utilities 0.1% |
| EDP - Energias de Portugal S.A. | | | 72,310 | | | | 276,629 | |
| | | | | | | | | |
| | | | | | | | 1,157,028 | |
| |
Republic of Korea 4.1%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.5% |
| Hyundai Mobis | | | 878 | | | | 218,649 | |
| Hyundai Motor Co. | | | 5,354 | | | | 810,514 | |
| Kia Motors Corp. | | | 8,230 | | | | 329,294 | |
| | | | | | | | | |
| | | | | | | | 1,358,457 | |
| | | | | | | | | |
| |
| Banks 0.4% |
| Hana Financial Group, Inc. | | | 4,220 | | | | 119,915 | |
| Industrial Bank Of Korea | | | 4,390 | | | | 63,080 | |
| KB Financial Group, Inc. | | | 4,722 | | | | 210,247 | |
| Korea Exchange Bank | | | 7,910 | | | | 94,292 | |
| Shinhan Financial Group Co., Ltd. | | | 11,150 | | | | 431,953 | |
| Woori Finance Holdings Co., Ltd. | | | 13,370 | | | | 168,587 | |
| | | | | | | | | |
| | | | | | | | 1,088,074 | |
| | | | | | | | | |
| |
| Capital Goods 1.1% |
| CJ Corp. | | | 710 | | | | 50,047 | |
| Daelim Industrial Co., Ltd. | | | 1,368 | | | | 111,694 | |
| Daewoo Engineering & Construction Co., Ltd. | | | 6,380 | | | | 59,798 | |
| Daewoo Shipbuilding & Marine Engineering Co., Ltd. | | | 3,820 | | | | 101,667 | |
| Doosan Corp. | | | 1,258 | | | | 169,735 | |
| Doosan Heavy Industries & Construction Co., Ltd. | | | 719 | | | | 56,668 | |
| GS Engineering & Construction Corp. | | | 807 | | | | 68,581 | |
| Hyundai Engineering & Construction Co., Ltd. | | | 1,067 | | | | 71,688 | |
| Hyundai Heavy Industries Co., Ltd. | | | 1,037 | | | | 338,269 | |
| KCC Corp. | | | 182 | | | | 60,353 | |
| LG Corp. | | | 7,212 | | | | 515,958 | |
| LG International Corp. | | | 2,970 | | | | 94,204 | |
| LS Corp. | | | 968 | | | | 98,225 | |
| Samsung C&T Corp. | | | 3,150 | | | | 184,991 | |
| Samsung Heavy Industries Co., Ltd. | | | 4,070 | | | | 114,373 | |
| SK Holdings Co., Ltd. | | | 8,636 | | | | 899,850 | |
| SK Networks Co., Ltd. | | | 4,550 | | | | 43,743 | |
STX Corp. * | | | 4,510 | | | | 138,482 | |
| STX Offshore & Shipbuilding Co., Ltd. | | | 4,730 | | | | 114,432 | |
| | | | | | | | | |
| | | | | | | | 3,292,758 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
| LG Electronics, Inc. | | | 4,322 | | | | 380,581 | |
| | | | | | | | | |
| |
| Diversified Financials 0.0% |
| Samsung Card Co., Ltd. | | | 1,450 | | | | 69,389 | |
| | | | | | | | | |
| |
| Energy 0.2% |
| GS Holdings | | | 3,220 | | | | 169,048 | |
S-Oil Corp. | | | 4,279 | | | | 264,195 | |
See financial notes 37
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| SK Energy Co., Ltd. | | | 1,365 | | | | 183,684 | |
| | | | | | | | | |
| | | | | | | | 616,927 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.0% |
| Shinsegae Co., Ltd. | | | 184 | | | | 93,279 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.0% |
| KT&G Corp. | | | 1,333 | | | | 81,949 | |
| | | | | | | | | |
| |
| Insurance 0.1% |
| Samsung Fire & Marine Insurance Co., Ltd. | | | 744 | | | | 127,591 | |
| | | | | | | | | |
| |
| Materials 0.6% |
| Dongkuk Steel Mill Co., Ltd. | | | 3,150 | | | | 72,584 | |
| Hanwha Chemical Corp. | | | 2,390 | | | | 65,089 | |
| Hanwha Corp. | | | 4,210 | | | | 158,982 | |
| Honam Petrochemical Corp. | | | 399 | | | | 88,198 | |
| Hyosung Corp. | | | 1,005 | | | | 111,709 | |
| Hyundai Steel Co. | | | 743 | | | | 72,145 | |
Korea Kumho Petrochemical Co., Ltd. * | | | 3,710 | | | | 245,757 | |
| LG Chem Ltd. | | | 667 | | | | 206,392 | |
| POSCO | | | 1,654 | | | | 682,651 | |
| | | | | | | | | |
| | | | | | | | 1,703,507 | |
| | | | | | | | | |
| |
| Retailing 0.0% |
| Lotte Shopping Co., Ltd. | | | 179 | | | | 73,332 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.6% |
Hynix Semiconductor, Inc. * | | | 10,180 | | | | 209,658 | |
| Samsung Electronics Co., Ltd. | | | 2,580 | | | | 1,711,638 | |
| | | | | | | | | |
| | | | | | | | 1,921,296 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.1% |
| LG Display Co., Ltd. | | | 6,140 | | | | 210,543 | |
| Samsung SDI Co., Ltd. | | | 688 | | | | 94,503 | |
| | | | | | | | | |
| | | | | | | | 305,046 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.2% |
| KT Corp. | | | 6,590 | | | | 259,646 | |
| LG Uplus Corp. | | | 9,250 | | | | 60,021 | |
| SK Telecom Co., Ltd. | | | 1,478 | | | | 224,960 | |
| | | | | | | | | |
| | | | | | | | 544,627 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Hyundai Merchant Marine Co., Ltd. | | | 1,800 | | | | 63,705 | |
Korea Express Co., Ltd. * | | | 1,296 | | | | 82,014 | |
Korean Air Lines Co., Ltd. * | | | 1,060 | | | | 67,525 | |
| | | | | | | | | |
| | | | | | | | 213,244 | |
| | | | | | | | | |
| |
| Utilities 0.1% |
Korea Electric Power Corp. * | | | 10,070 | | | | 265,046 | |
| Korea Gas Corp. | | | 1,120 | | | | 45,887 | |
| | | | | | | | | |
| | | | | | | | 310,933 | |
| | | | | | | | | |
| | | | | | | | 12,180,990 | |
| |
Singapore 0.8%
|
| | | | | | | | | |
| |
| Banks 0.2% |
| DBS Group Holdings Ltd. | | | 29,056 | | | | 312,951 | |
| Oversea-Chinese Banking Corp., Ltd. | | | 33,897 | | | | 236,784 | |
| United Overseas Bank Ltd. | | | 17,238 | | | | 248,812 | |
| | | | | | | | | |
| | | | | | | | 798,547 | |
| | | | | | | | | |
| |
| Capital Goods 0.2% |
| Fraser & Neave Ltd. | | | 31,000 | | | | 149,804 | |
| Keppel Corp., Ltd. | | | 20,000 | | | | 154,690 | |
| Noble Group Ltd. | | | 72,879 | | | | 105,240 | |
| SembCorp Industries Ltd. | | | 15,000 | | | | 53,234 | |
| Singapore Technologies Engineering Ltd. | | | 28,100 | | | | 72,047 | |
| | | | | | | | | |
| | | | | | | | 535,015 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| Golden Agri-Resources Ltd. | | | 155,000 | | | | 78,260 | |
| Wilmar International Ltd. | | | 16,166 | | | | 80,327 | |
| | | | | | | | | |
| | | | | | | | 158,587 | |
| | | | | | | | | |
| |
| Media 0.0% |
| Singapore Press Holdings Ltd. | | | 31,000 | | | | 99,602 | |
| | | | | | | | | |
| |
| Real Estate 0.1% |
| Capitaland Ltd. | | | 45,000 | | | | 135,742 | |
| City Developments Ltd. | | | 8,000 | | | | 78,940 | |
| | | | | | | | | |
| | | | | | | | 214,682 | |
| | | | | | | | | |
| |
| Retailing 0.0% |
| Jardine Cycle & Carriage Ltd. | | | 2,000 | | | | 60,934 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Singapore Telecommunications Ltd. | | | 131,486 | | | | 315,041 | |
| StarHub Ltd. | | | 35,000 | | | | 71,892 | |
| | | | | | | | | |
| | | | | | | | 386,933 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
Neptune Orient Lines Ltd. (c)* | | | 33,146 | | | | 55,094 | |
| Singapore Airlines Ltd. | | | 13,270 | | | | 162,743 | |
| | | | | | | | | |
| | | | | | | | 217,837 | |
| | | | | | | | | |
| | | | | | | | 2,472,137 | |
| |
Spain 4.3%
|
| | | | | | | | | |
| |
| Banks 2.0% |
| Banco Bilbao Vizcaya Argentaria S.A. | | | 132,349 | | | | 1,743,621 | |
Banco de Sabadell S.A. (c) | | | 42,105 | | | | 204,932 | |
| Banco Espanol de Credito S.A. | | | 4,642 | | | | 46,584 | |
| Banco Popular Espanol S.A. | | | 43,933 | | | | 284,517 | |
| Banco Santander S.A. | | | 268,766 | | | | 3,449,753 | |
| Bankinter S.A. | | | 8,022 | | | | 53,514 | |
| Caja de Ahorros del Mediterraneo | | | 9,753 | | | | 99,719 | |
| | | | | | | | | |
| | | | | | | | 5,882,640 | |
| | | | | | | | | |
| |
| Capital Goods 0.2% |
| ACS, Actividades de Construccion y Servicios S.A. | | | 5,176 | | | | 271,723 | |
| Fomento de Construcciones y Contratas S.A. | | | 2,551 | | | | 68,876 | |
Gamesa Corp. Tecnologica S.A. * | | | 5,482 | | | | 38,183 | |
Sacyr Vallehermoso S.A. (c)* | | | 5,489 | | | | 36,046 | |
| Zardoya Otis S.A. | | | 1,744 | | | | 29,075 | |
| | | | | | | | | |
| | | | | | | | 443,903 | |
| | | | | | | | | |
| |
| Diversified Financials 0.0% |
| Criteria Caixacorp S.A. | | | 17,031 | | | | 96,219 | |
| | | | | | | | | |
| |
| Energy 0.5% |
| Repsol YPF S.A. | | | 54,246 | | | | 1,504,261 | |
| | | | | | | | | |
| |
| Insurance 0.0% |
| Mapfre S.A. | | | 23,917 | | | | 79,475 | |
| | | | | | | | | |
| |
| Materials 0.0% |
| Acerinox S.A. | | | 6,696 | | | | 109,835 | |
38 See financial notes
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Cementos Portland Valderrivas S.A. | | | 944 | | | | 19,393 | |
| | | | | | | | | |
| | | | | | | | 129,228 | |
| | | | | | | | | |
| |
| Media 0.0% |
| Gestevision Telecinco S.A. | | | 2,668 | | | | 34,046 | |
Promotora de Informaciones S.A. (Prisa) * | | | 3,424 | | | | 8,856 | |
| | | | | | | | | |
| | | | | | | | 42,902 | |
| | | | | | | | | |
| |
| Retailing 0.1% |
| Industria de Diseno Textil S.A. | | | 2,173 | | | | 181,490 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.9% |
| Telefonica S.A. | | | 98,634 | | | | 2,665,337 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Abertis Infraestructuras S.A. | | | 5,603 | | | | 110,800 | |
Iberia Lineas Aereas de Espana S.A. * | | | 65,366 | | | | 287,132 | |
| | | | | | | | | |
| | | | | | | | 397,932 | |
| | | | | | | | | |
| |
| Utilities 0.5% |
| Acciona S.A. | | | 850 | | | | 74,832 | |
EDP Renovaveis S.A. * | | | 8,795 | | | | 51,016 | |
| Enagas | | | 1,445 | | | | 31,872 | |
| Endesa S.A. | | | 3,918 | | | | 108,668 | |
| Gas Natural SDG S.A. | | | 10,620 | | | | 155,566 | |
| Iberdrola Renovables S.A. | | | 11,000 | | | | 37,164 | |
| Iberdrola S.A. | | | 116,788 | | | | 986,718 | |
| Red Electrica Corporacion S.A. | | | 1,430 | | | | 71,859 | |
| | | | | | | | | |
| | | | | | | | 1,517,695 | |
| | | | | | | | | |
| | | | | | | | 12,941,082 | |
| |
Sweden 2.7%
|
| | | | | | | | | |
| |
| Banks 0.7% |
| Nordea Bank AB | | | 86,523 | | | | 952,674 | |
| Skandinaviska Enskilda Banken AB, A Shares | | | 56,703 | | | | 439,584 | |
| Svenska Handelsbanken AB, A Shares | | | 12,980 | | | | 424,625 | |
Swedbank AB, A Shares * | | | 21,689 | | | | 303,289 | |
| | | | | | | | | |
| | | | | | | | 2,120,172 | |
| | | | | | | | | |
| |
| Capital Goods 0.9% |
| AB SKF, B Shares | | | 9,978 | | | | 257,929 | |
| Alfa Laval AB | | | 4,419 | | | | 76,691 | |
| Assa Abloy AB, B Shares | | | 5,972 | | | | 153,136 | |
| Atlas Copco AB, A Shares | | | 8,132 | | | | 169,944 | |
| Atlas Copco AB, B Shares | | | 6,160 | | | | 117,527 | |
| NCC AB, B Shares | | | 7,286 | | | | 155,464 | |
| Sandvik AB | | | 22,411 | | | | 337,871 | |
| Scania AB, B Shares | | | 14,722 | | | | 313,025 | |
| Skanska AB, B Shares | | | 14,797 | | | | 283,169 | |
Volvo AB, A Shares * | | | 21,176 | | | | 280,158 | |
Volvo AB, B Shares * | | | 47,312 | | | | 640,524 | |
| | | | | | | | | |
| | | | | | | | 2,785,438 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.0% |
| Securitas AB, B Shares | | | 9,000 | | | | 98,460 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
| Electrolux AB, B Shares | | | 7,537 | | | | 182,561 | |
| | | | | | | | | |
| |
| Diversified Financials 0.2% |
| Industrivarden AB, A Shares | | | 7,528 | | | | 114,462 | |
| Industrivarden AB, C Shares | | | 4,689 | | | | 69,409 | |
| Investor AB, B Shares | | | 17,288 | | | | 354,848 | |
| L E Lundbergforetagen AB, B Shares | | | 1,118 | | | | 71,746 | |
| Ratos AB | | | 2,427 | | | | 86,531 | |
| | | | | | | | | |
| | | | | | | | 696,996 | |
| | | | | | | | | |
| |
| Materials 0.3% |
| Boliden AB | | | 7,982 | | | | 135,529 | |
| Holmen AB, B Shares | | | 2,870 | | | | 91,107 | |
| SSAB AB, A Shares | | | 5,456 | | | | 76,511 | |
| SSAB AB, B Shares | | | 4,342 | | | | 53,711 | |
| Svenska Cellulosa AB, B Shares | | | 22,355 | | | | 346,569 | |
| | | | | | | | | |
| | | | | | | | 703,427 | |
| | | | | | | | | |
| |
| Retailing 0.1% |
| Hennes & Mauritz AB, B Shares | | | 6,572 | | | | 231,472 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.2% |
| Telefonaktiebolaget LM Ericsson, B Shares | | | 62,166 | | | | 683,676 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.2% |
| Tele2 AB, B Shares | | | 8,705 | | | | 191,311 | |
| TeliaSonera AB | | | 53,932 | | | | 450,492 | |
| | | | | | | | | |
| | | | | | | | 641,803 | |
| | | | | | | | | |
| |
| Transportation 0.0% |
SAS AB (c)* | | | 15,173 | | | | 57,624 | |
| | | | | | | | | |
| | | | | | | | 8,201,629 | |
| |
Switzerland 4.3%
|
| | | | | | | | | |
| |
| Capital Goods 0.2% |
ABB Ltd. - Reg’d * | | | 19,258 | | | | 398,904 | |
| Geberit AG - Reg’d | | | 400 | | | | 76,666 | |
| Schindler Holding AG - Reg’d | | | 690 | | | | 75,029 | |
| | | | | | | | | |
| | | | | | | | 550,599 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.1% |
| Adecco S.A. - Reg’d | | | 3,649 | | | | 204,168 | |
| SGS S.A. - Reg’d | | | 64 | | | | 102,367 | |
| | | | | | | | | |
| | | | | | | | 306,535 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
| Compagnie Financiere Richemont S.A., Series A | | | 4,941 | | | | 246,448 | |
| Swatch Group AG - Bearer Shares | | | 292 | | | | 111,612 | |
| Swatch Group AG - Reg’d | | | 776 | | | | 53,958 | |
| | | | | | | | | |
| | | | | | | | 412,018 | |
| | | | | | | | | |
| |
| Diversified Financials 0.9% |
| Credit Suisse Group AG - Reg’d | | | 24,624 | | | | 1,019,399 | |
GAM Holding Ltd. * | | | 9,717 | | | | 153,518 | |
| Julius Baer Group Ltd. | | | 2,158 | | | | 91,066 | |
| Pargesa Holding S.A. | | | 1,062 | | | | 84,187 | |
UBS AG - Reg’d * | | | 83,077 | | | | 1,411,273 | |
| | | | | | | | | |
| | | | | | | | 2,759,443 | |
| | | | | | | | | |
| |
| Energy 0.0% |
Petroplus Holdings AG * | | | 4,773 | | | | 56,383 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.7% |
| Nestle S.A. - Reg’d | | | 39,804 | | | | 2,180,242 | |
| | | | | | | | | |
| |
| Insurance 0.8% |
| Baloise Holding AG - Reg’d | | | 1,517 | | | | 140,166 | |
| Helvetia Holding AG - Reg’d | | | 187 | | | | 65,867 | |
Swiss Life Holding AG - Reg’d * | | | 2,364 | | | | 289,292 | |
| Swiss Reinsurance Co., Ltd. - Reg’d | | | 14,002 | | | | 672,756 | |
See financial notes 39
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Zurich Financial Services AG | | | 4,440 | | | | 1,086,545 | |
| | | | | | | | | |
| | | | | | | | 2,254,626 | |
| | | | | | | | | |
| |
| Materials 0.3% |
Clariant AG - Reg’d * | | | 8,541 | | | | 144,447 | |
| Givaudan S.A. - Reg’d | | | 98 | | | | 100,979 | |
| Holcim Ltd. - Reg’d | | | 5,078 | | | | 316,340 | |
| Syngenta AG - Reg’d | | | 921 | | | | 255,012 | |
| | | | | | | | | |
| | | | | | | | 816,778 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 1.1% |
| Novartis AG - Reg’d | | | 31,917 | | | | 1,849,357 | |
| Roche Holding AG | | | 9,316 | | | | 1,368,093 | |
| | | | | | | | | |
| | | | | | | | 3,217,450 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Swisscom AG - Reg’d | | | 443 | | | | 185,006 | |
| | | | | | | | | |
| |
| Transportation 0.0% |
| Kuehne & Nagel International AG - Reg’d | | | 616 | | | | 76,205 | |
| | | | | | | | | |
| |
| Utilities 0.0% |
| BKW FMB Energie AG | | | 624 | | | | 42,524 | |
| | | | | | | | | |
| | | | | | | | 12,857,809 | |
| |
United Kingdom 20.1%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.1% |
| GKN plc | | | 58,928 | | | | 167,430 | |
| | | | | | | | | |
| |
| Banks 2.9% |
| Barclays plc | | | 405,609 | | | | 1,782,425 | |
Bradford & Bingley plc (a),(b)* | | | 87,225 | | | | — | |
| HSBC Holdings plc | | | 387,751 | | | | 4,035,573 | |
Lloyds Banking Group plc * | | | 991,721 | | | | 1,090,023 | |
Royal Bank of Scotland Group plc * | | | 1,553,288 | | | | 1,111,379 | |
| Standard Chartered plc | | | 28,835 | | | | 834,049 | |
| | | | | | | | | |
| | | | | | | | 8,853,449 | |
| | | | | | | | | |
| |
| Capital Goods 0.5% |
| BAE Systems plc | | | 78,935 | | | | 435,723 | |
| Balfour Beatty plc | | | 20,256 | | | | 89,814 | |
| Bunzl plc | | | 7,222 | | | | 85,504 | |
Rolls-Royce Group plc * | | | 23,217 | | | | 240,870 | |
Rolls-Royce Group plc, C Shares (a),(b)* | | | 4,346,898 | | | | 6,965 | |
| Smiths Group plc | | | 7,660 | | | | 146,196 | |
| Travis Perkins plc | | | 7,206 | | | | 95,514 | |
Wolseley plc * | | | 13,439 | | | | 357,471 | |
| | | | | | | | | |
| | | | | | | | 1,458,057 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.1% |
| Capita Group plc | | | 5,603 | | | | 68,796 | |
| Experian plc | | | 9,445 | | | | 109,749 | |
| G4S plc | | | 24,020 | | | | 100,699 | |
| Hays plc | | | 39,008 | | | | 69,081 | |
Rentokil Initial plc * | | | 45,078 | | | | 71,532 | |
| | | | | | | | | |
| | | | | | | | 419,857 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
Barratt Developments plc * | | | 62,872 | | | | 78,584 | |
Persimmon plc * | | | 18,907 | | | | 103,281 | |
Taylor Wimpey plc * | | | 209,377 | | | | 74,731 | |
| | | | | | | | | |
| | | | | | | | 256,596 | |
| | | | | | | | | |
| |
| Consumer Services 0.6% |
| Carnival plc | | | 16,270 | | | | 702,950 | |
| Compass Group plc | | | 39,048 | | | | 319,998 | |
Enterprise Inns plc * | | | 49,717 | | | | 90,920 | |
| InterContinental Hotels Group plc | | | 6,616 | | | | 127,775 | |
| Ladbrokes plc | | | 39,503 | | | | 83,367 | |
Mitchells & Butlers plc * | | | 25,622 | | | | 132,241 | |
Punch Taverns plc * | | | 77,589 | | | | 89,099 | |
| Thomas Cook Group plc | | | 33,336 | | | | 96,629 | |
| Tui Travel plc | | | 22,217 | | | | 75,179 | |
| Whitbread plc | | | 4,814 | | | | 130,593 | |
| William Hill plc | | | 22,615 | | | | 58,179 | |
| | | | | | | | | |
| | | | | | | | 1,906,930 | |
| | | | | | | | | |
| |
| Diversified Financials 0.3% |
| 3i Group plc | | | 19,288 | | | | 92,657 | |
| ICAP plc | | | 17,655 | | | | 128,983 | |
| Investec plc | | | 22,511 | | | | 179,659 | |
| London Stock Exchange Group plc | | | 7,918 | | | | 93,070 | |
| Man Group plc | | | 52,533 | | | | 219,567 | |
| Schroders plc | | | 2,638 | | | | 66,686 | |
| Schroders plc - Non Voting Shares | | | 4,102 | | | | 82,977 | |
| | | | | | | | | |
| | | | | | | | 863,599 | |
| | | | | | | | | |
| |
| Energy 4.3% |
| AMEC plc | | | 6,069 | | | | 105,564 | |
| BG Group plc | | | 36,994 | | | | 720,130 | |
| BP plc | | | 634,380 | | | | 4,311,989 | |
| Royal Dutch Shell plc, A Share | | | 135,617 | | | | 4,401,211 | |
| Royal Dutch Shell plc, B Share | | | 102,825 | | | | 3,290,567 | |
| | | | | | | | | |
| | | | | | | | 12,829,461 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.7% |
| J Sainsbury plc | | | 72,654 | | | | 453,624 | |
| Tesco plc | | | 180,730 | | | | 1,236,848 | |
| William Morrison Supermarkets plc | | | 63,946 | | | | 300,945 | |
| | | | | | | | | |
| | | | | | | | 1,991,417 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 1.5% |
| Associated British Foods plc | | | 8,519 | | | | 142,879 | |
| British American Tobacco plc | | | 29,833 | | | | 1,136,527 | |
| Diageo plc | | | 43,613 | | | | 804,555 | |
| Imperial Tobacco Group plc | | | 15,676 | | | | 502,057 | |
| SABMiller plc | | | 14,161 | | | | 459,432 | |
| Tate & Lyle plc | | | 16,115 | | | | 129,766 | |
| Unilever plc | | | 43,327 | | | | 1,249,137 | |
| | | | | | | | | |
| | | | | | | | 4,424,353 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.0% |
| Smith & Nephew plc | | | 8,332 | | | | 73,209 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.1% |
| Reckitt Benckiser Group plc | | | 7,023 | | | | 392,364 | |
| | | | | | | | | |
| |
| Insurance 1.1% |
| Amlin plc | | | 10,883 | | | | 70,879 | |
| Aviva plc | | | 191,792 | | | | 1,223,118 | |
| Legal & General Group plc | | | 274,180 | | | | 440,798 | |
| Old Mutual plc | | | 234,380 | | | | 488,113 | |
| Prudential plc | | | 64,672 | | | | 654,094 | |
| RSA Insurance Group plc | | | 119,606 | | | | 250,929 | |
| Standard Life plc | | | 67,394 | | | | 245,000 | |
| | | | | | | | | |
| | | | | | | | 3,372,931 | |
| | | | | | | | | |
| |
| Materials 2.3% |
| Anglo American plc | | | 25,992 | | | | 1,211,044 | |
40 See financial notes
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Antofagasta plc | | | 5,368 | | | | 113,625 | |
| BHP Billiton plc | | | 62,665 | | | | 2,219,907 | |
| Eurasian Natural Resources Corp. | | | 5,715 | | | | 79,728 | |
| Johnson Matthey plc | | | 5,031 | | | | 154,285 | |
| Kazakhmys plc | | | 3,572 | | | | 75,266 | |
Lonmin plc * | | | 2,740 | | | | 76,691 | |
| Mondi plc | | | 19,185 | | | | 159,742 | |
| Rexam plc | | | 33,473 | | | | 170,492 | |
| Rio Tinto plc | | | 26,769 | | | | 1,738,654 | |
| Vedanta Resources plc | | | 1,974 | | | | 65,644 | |
| Xstrata plc | | | 37,889 | | | | 734,034 | |
| | | | | | | | | |
| | | | | | | | 6,799,112 | |
| | | | | | | | | |
| |
| Media 0.3% |
| British Sky Broadcasting Group plc | | | 17,867 | | | | 202,280 | |
ITV plc * | | | 105,099 | | | | 115,121 | |
| Pearson plc | | | 17,452 | | | | 267,294 | |
| Reed Elsevier plc | | | 12,946 | | | | 111,068 | |
| United Business Media Ltd. | | | 15,822 | | | | 166,745 | |
Yell Group plc * | | | 189,229 | | | | 42,879 | |
| | | | | | | | | |
| | | | | | | | 905,387 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 1.2% |
| AstraZeneca plc | | | 30,525 | | | | 1,535,465 | |
| GlaxoSmithKline plc | | | 114,148 | | | | 2,229,029 | |
| | | | | | | | | |
| | | | | | | | 3,764,494 | |
| | | | | | | | | |
| |
| Real Estate 0.2% |
| British Land Co. plc | | | 18,980 | | | | 154,960 | |
| Capital & Counties Properties plc | | | 31,227 | | | | 74,704 | |
| Capital Shopping Entres Group | | | 12,045 | | | | 74,167 | |
| Hammerson plc | | | 14,710 | | | | 98,830 | |
| Land Securities Group plc | | | 22,519 | | | | 244,190 | |
| Segro plc | | | 16,026 | | | | 76,140 | |
| | | | | | | | | |
| | | | | | | | 722,991 | |
| | | | | | | | | |
| |
| Retailing 0.5% |
DSG International plc * | | | 318,709 | | | | 136,737 | |
| Home Retail Group plc | | | 40,070 | | | | 140,515 | |
Inchcape plc * | | | 25,161 | | | | 140,606 | |
| Kesa Electricals plc | | | 46,497 | | | | 118,218 | |
| Kingfisher plc | | | 86,505 | | | | 329,549 | |
| Marks & Spencer Group plc | | | 59,432 | | | | 407,308 | |
| Next plc | | | 3,800 | | | | 139,134 | |
| | | | | | | | | |
| | | | | | | | 1,412,067 | |
| | | | | | | | | |
| |
| Software & Services 0.1% |
| Logica plc | | | 50,100 | | | | 103,888 | |
| The Sage Group plc | | | 21,195 | | | | 91,456 | |
| | | | | | | | | |
| | | | | | | | 195,344 | |
| | | | | | | | | |
| |
| Telecommunication Services 2.2% |
| BT Group plc | | | 511,592 | | | | 1,261,462 | |
| Cable & Wireless Communications plc | | | 68,806 | | | | 58,981 | |
| Cable & Wireless Worldwide | | | 71,668 | | | | 80,616 | |
TalkTalk Telecom Group plc * | | | 20,338 | | | | 42,983 | |
| Vodafone Group plc | | | 1,883,651 | | | | 5,149,153 | |
| | | | | | | | | |
| | | | | | | | 6,593,195 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
British Airways plc (c)* | | | 29,567 | | | | 128,126 | |
easyJet plc * | | | 10,857 | | | | 79,338 | |
| FirstGroup plc | | | 18,023 | | | | 117,857 | |
National Express Group plc * | | | 21,965 | | | | 87,766 | |
| | | | | | | | | |
| | | | | | | | 413,087 | |
| | | | | | | | | |
| |
| Utilities 0.9% |
| Centrica plc | | | 123,442 | | | | 656,844 | |
| Drax Group plc | | | 19,110 | | | | 116,459 | |
| International Power plc | | | 36,608 | | | | 244,256 | |
| National Grid plc | | | 77,734 | | | | 735,088 | |
| Pennon Group plc | | | 7,677 | | | | 76,614 | |
| Scottish & Southern Energy plc | | | 26,015 | | | | 480,767 | |
| Severn Trent plc | | | 7,606 | | | | 170,038 | |
| United Utilities Group plc | | | 28,247 | | | | 276,551 | |
| | | | | | | | | |
| | | | | | | | 2,756,617 | |
| | | | | | | | | |
| | | | | | | | 60,571,947 | |
| |
United States 0.0%
|
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.0% |
| Synthes, Inc. | | | 445 | | | | 53,078 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $267,360,710) | | | 296,635,667 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Preferred Stock 0.5% of net assets |
| |
Germany 0.5%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.4% |
| Volkswagen AG | | | 6,995 | | | | 1,048,849 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.0% |
| Fresenius SE | | | 1,549 | | | | 138,835 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.1% |
| Henkel AG & Co. | | | 2,417 | | | | 142,566 | |
| | | | | | | | | |
| |
| Media 0.0% |
| ProSiebenSat.1 Media AG | | | 4,461 | | | | 117,489 | |
| | | | | | | | | |
| | | | | | | | 1,447,739 | |
| |
Italy 0.0%
|
| | | | | | | | | |
| |
| Diversified Financials 0.0% |
| EXOR S.p.A. | | | 2,289 | | | | 45,214 | |
| | | | | | | | | |
| |
| Insurance 0.0% |
| Unipol Gruppo Finanziario S.p.A. | | | 128,655 | | | | 75,798 | |
| | | | | | | | | |
| | | | | | | | 121,012 | |
| |
Switzerland 0.0%
|
| | | | | | | | | |
| |
| Capital Goods 0.0% |
| Schindler Holding AG | | | 464 | | | | 49,725 | |
| | | | | | | | | |
| Total Preferred Stock |
| (Cost $1,206,105) | | | 1,618,476 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Rights 0.0% of net assets |
| |
Spain 0.0%
|
Banco Santander S.A. * | | | 267,336 | | | | 44,277 | |
See financial notes 41
Schwab Fundamental International Large Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
United Kingdom 0.0%
|
Standard Chartered plc * | | | 3,228 | | | | 27,181 | |
| | | | | | | | | |
| Total Rights |
| (Cost $44,772) | | | 71,458 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Warrants 0.0% of net assets |
| |
China 0.0%
|
Kingboard Chemical Holdings Ltd. * | | | 700 | | | | 401 | |
| |
France 0.0%
|
Fonciere Des Regions * | | | 929 | | | | 1,653 | |
| |
Italy 0.0%
|
Mediobanca S.p.A. * | | | 8,339 | | | | 260 | |
UBI Banca S.C.P.A. * | | | 16,309 | | | | 163 | |
| | | | | | | | | |
| | | | | | | | 423 | |
| | | | | | | | | |
| Total Warrants |
| (Cost $2,575) | | | 2,477 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Other Investment Company 0.4% of net assets |
| |
United States 0.4%
|
| iShares MSCI EAFE Index Fund | | | 23,000 | | | | 1,311,230 | |
| | | | | | | | | |
| Total Other Investment Company |
| (Cost $1,105,428) | | | 1,311,230 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Dates | | ($) | | ($) |
| |
Short-Term Investment 0.5% of net assets |
| |
Time Deposit 0.5%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 1,475,084 | | | | 1,475,084 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $1,475,084) | | | 1,475,084 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Collateral Invested for Securities on Loan 0.2% of net assets |
| | | | | | | | | |
| | | | | | | | | |
| Invesco Short Term Investments Trust Government & Agency Portfolio | | | 571,678 | | | | 571,678 | |
| | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $571,678) | | | 571,678 | |
| | | | | |
| |
|
End of Collateral Invested for Securities on Loan |
At 10/31/10, the tax basis cost of the fund’s investments was $298,281,150 and the unrealized appreciation and depreciation were $21,213,292 and ($18,380,050), respectively, with a net unrealized appreciation of $2,833,242.
At 10/31/10, the values of certain foreign securities held by the fund aggregating $281,503,710 were adjusted from their closing market values in accordance with procedures approved by the Board of Trustees.
| | |
| * | | Non-income producing security. |
| (a) | | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (b) | | Illiquid security. At the period end, the value of these amounted to $6,965 or 0.0% of net assets. |
| (c) | | All or a portion of this security is on loan. |
| | | |
| CVA — | | Dutch Certificate |
| FDR — | | Fiduciary Depositary Receipt |
| IDB — | | Industrial development board |
| Reg’d — | | Registered |
| REIT — | | Real Estate Investment Trust |
42 See financial notes
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 98 | .7% | | Common Stock | | | 64,704,961 | | | | 72,923,354 | |
| | 0 | .5% | | Preferred Stock | | | 186,195 | | | | 373,024 | |
| | 0 | .0% | | Rights | | | — | | | | 4,354 | |
| | 0 | .0% | | Warrants | | | 662 | | | | 1,505 | |
| | 0 | .1% | | Other Investment Company | | | 83,368 | | | | 92,263 | |
| | 0 | .1% | | Short-Term Investment | | | 70,033 | | | | 70,033 | |
| |
| |
| | 99 | .4% | | Total Investments | | | 65,045,219 | | | | 73,464,533 | |
| | 0 | .7% | | Collateral Invested for Securities on Loan | | | 526,521 | | | | 526,521 | |
| | (0 | .1)% | | Other Assets and Liabilities, Net | | | | | | | (117,282 | ) |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 73,873,772 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 98.7% of net assets |
| |
Australia 5.6%
|
| | | | | | | | | |
| |
| Banks 0.3% |
| Bank of Queensland Ltd. | | | 8,748 | | | | 89,214 | |
| Bendigo & Adelaide Bank Ltd. | | | 13,307 | | | | 118,171 | |
| | | | | | | | | |
| | | | | | | | 207,385 | |
| | | | | | | | | |
| |
| Capital Goods 0.7% |
| Alesco Corp., Ltd. | | | 7,076 | | | | 17,267 | |
| Boart Longyear Group | | | 7,765 | | | | 27,556 | |
| Bradken Ltd. | | | 5,657 | | | | 45,493 | |
| Crane Group Ltd. | | | 6,489 | | | | 48,266 | |
| CSR Ltd. | | | 64,357 | | | | 115,024 | |
| Emeco Holdings Ltd. | | | 42,343 | | | | 36,999 | |
| GWA International Ltd. | | | 10,701 | | | | 32,222 | |
| Hills Industries Ltd. | | | 12,147 | | | | 25,701 | |
| Monadelphous Group Ltd. | | | 2,755 | | | | 45,141 | |
| Seven Network Ltd. | | | 5,226 | | | | 37,825 | |
| UGL Ltd. | | | 6,467 | | | | 93,484 | |
| | | | | | | | | |
| | | | | | | | 524,978 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.3% |
| Campbell Brothers Ltd. | | | 1,277 | | | | 43,988 | |
| Downer EDI Ltd. | | | 9,529 | | | | 47,321 | |
Skilled Group Ltd. * | | | 20,380 | | | | 29,302 | |
| Spotless Group Ltd. | | | 15,441 | | | | 34,571 | |
| Transfield Services Ltd. | | | 15,140 | | | | 51,421 | |
| | | | | | | | | |
| | | | | | | | 206,603 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
| Billabong International Ltd. | | | 6,203 | | | | 49,431 | |
| | | | | | | | | |
| |
| Consumer Services 0.2% |
| Aristocrat Leisure Ltd. | | | 21,242 | | | | 73,190 | |
| Flight Centre Ltd. | | | 2,697 | | | | 60,348 | |
| | | | | | | | | |
| | | | | | | | 133,538 | |
| | | | | | | | | |
| |
| Diversified Financials 0.4% |
| ASX Ltd. | | | 3,447 | | | | 125,588 | |
| Challenger Financial Services Group Ltd. | | | 14,521 | | | | 65,495 | |
| IOOF Holdings Ltd. | | | 4,198 | | | | 29,567 | |
| Perpetual Ltd. | | | 2,356 | | | | 87,474 | |
| Platinum Asset Management Ltd. | | | 4,941 | | | | 23,284 | |
| | | | | | | | | |
| | | | | | | | 331,408 | |
| | | | | | | | | |
| |
| Energy 0.4% |
AWE Ltd. * | | | 12,140 | | | | 17,955 | |
| Beach Energy Ltd. | | | 52,927 | | | | 34,762 | |
Centennial Coal Co., Ltd. (a) | | | 13,442 | | | | 81,636 | |
| Energy Resources of Australia Ltd. | | | 1,898 | | | | 24,298 | |
| New Hope Corp., Ltd. | | | 6,478 | | | | 31,050 | |
| Oil Search Ltd. | | | 16,244 | | | | 101,564 | |
| | | | | | | | | |
| | | | | | | | 291,265 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.1% |
AWB Ltd. * | | | 79,428 | | | | 115,627 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.2% |
Elders Ltd. * | | | 37,183 | | | | 23,468 | |
| Goodman Fielder Ltd. | | | 64,661 | | | | 94,009 | |
| | | | | | | | | |
| | | | | | | | 117,477 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.4% |
| Ansell Ltd. | | | 5,318 | | | | 70,692 | |
| Australian Pharmaceutical Industries Ltd. | | | 61,964 | | | | 31,329 | |
| Cochlear Ltd. | | | 938 | | | | 65,342 | |
| Primary Health Care Ltd. | | | 15,737 | | | | 48,155 | |
| Ramsay Health Care Ltd. | | | 4,158 | | | | 63,801 | |
Sigma Pharmaceuticals Ltd. * | | | 56,165 | | | | 24,863 | |
| | | | | | | | | |
| | | | | | | | 304,182 | |
| | | | | | | | | |
| |
| Materials 0.8% |
| Adelaide Brighton Ltd. | | | 16,879 | | | | 59,154 | |
Gunns Ltd. * | | | 90,803 | | | | 60,479 | |
Iluka Resources Ltd. * | | | 13,245 | | | | 87,665 | |
| Macarthur Coal Ltd. | | | 4,694 | | | | 55,342 | |
Minara Resources Ltd. * | | | 72,429 | | | | 53,922 | |
Mount Gibson Iron Ltd. * | | | 16,573 | | | | 32,927 | |
| OZ Minerals Ltd. | | | 97,745 | | | | 150,752 | |
PaperlinX Ltd. * | | | 169,795 | | | | 74,077 | |
| Straits Resources Ltd. | | | 28,536 | | | | 52,313 | |
| | | | | | | | | |
| | | | | | | | 626,631 | |
| | | | | | | | | |
| |
| Media 0.2% |
| APN News & Media Ltd. | | | 15,368 | | | | 29,144 | |
| Consolidated Media Holdings Ltd. | | | 15,167 | | | | 49,831 | |
| Ten Network Holdings Ltd. | | | 33,068 | | | | 46,692 | |
West Australian Newspapers Holdings Ltd. (c) | | | 4,744 | | | | 33,265 | |
| | | | | | | | | |
| | | | | | | | 158,932 | |
| | | | | | | | | |
| |
| Real Estate 0.5% |
| Abacus Property Group | | | 49,865 | | | | 20,969 | |
See financial notes 43
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Australand Property Group | | | 19,227 | | | | 52,348 | |
| Charter Hall Retail REIT | | | 11,861 | | | | 35,541 | |
| Commonwealth Property Office Fund | | | 79,321 | | | | 71,210 | |
| FKP Property Group | | | 33,284 | | | | 30,633 | |
| ING Industrial Fund | | | 130,191 | | | | 67,153 | |
| ING Office Fund | | | 99,884 | | | | 60,368 | |
| Macquarie Office Trust | | | 23,504 | | | | 60,712 | |
| | | | | | | | | |
| | | | | | | | 398,934 | |
| | | | | | | | | |
| |
| Retailing 0.4% |
| Automotive Holdings Group Ltd. | | | 12,015 | | | | 26,890 | |
| David Jones Ltd. | | | 16,365 | | | | 76,226 | |
| Harvey Norman Holdings Ltd. | | | 19,917 | | | | 64,994 | |
| JB Hi-Fi Ltd. | | | 1,871 | | | | 36,462 | |
Pacific Brands Ltd. * | | | 64,655 | | | | 68,858 | |
| | | | | | | | | |
| | | | | | | | 273,430 | |
| | | | | | | | | |
| |
| Software & Services 0.1% |
| Computershare Ltd. | | | 8,265 | | | | 82,066 | |
| | | | | | | | | |
| |
| Transportation 0.2% |
Asciano Group * | | | 41,671 | | | | 64,018 | |
| ConnectEast Group | | | 64,378 | | | | 27,394 | |
Virgin Blue Holdings Ltd. * | | | 92,312 | | | | 38,989 | |
| | | | | | | | | |
| | | | | | | | 130,401 | |
| | | | | | | | | |
| |
| Utilities 0.3% |
| APA Group | | | 26,678 | | | | 102,122 | |
| Babcock & Brown Wind Partners | | | 25,856 | | | | 18,683 | |
| Envestra Ltd. | | | 71,014 | | | | 36,243 | |
| SP Ausnet | | | 40,702 | | | | 37,016 | |
| | | | | | | | | |
| | | | | | | | 194,064 | |
| | | | | | | | | |
| | | | | | | | 4,146,352 | |
| |
Austria 1.2%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.0% |
| Semperit AG Holding | | | 485 | | | | 21,263 | |
| | | | | | | | | |
| |
| Capital Goods 0.2% |
A-TEC Industries AG * | | | 2,258 | | | | 12,257 | |
| Andritz AG | | | 1,172 | | | | 89,817 | |
Palfinger AG * | | | 1,141 | | | | 34,807 | |
| Zumtobel AG | | | 1,009 | | | | 20,651 | |
| | | | | | | | | |
| | | | | | | | 157,532 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| Mayr-Melnhof Karton AG | | | 356 | | | | 38,499 | |
RHI AG * | | | 1,507 | | | | 50,012 | |
| | | | | | | | | |
| | | | | | | | 88,511 | |
| | | | | | | | | |
| |
| Real Estate 0.7% |
| Atrium European Real Estate Ltd. | | | 14,646 | | | | 88,065 | |
CA Immobilien Anlagen AG * | | | 5,434 | | | | 81,696 | |
| Conwert Immobilien Invest SE | | | 4,630 | | | | 70,093 | |
Immofinanz AG * | | | 68,765 | | | | 271,191 | |
| | | | | | | | | |
| | | | | | | | 511,045 | |
| | | | | | | | | |
| |
| Transportation 0.2% |
| Flughafen Wien AG | | | 704 | | | | 43,665 | |
| Oesterreichische Post AG | | | 1,762 | | | | 53,335 | |
| | | | | | | | | |
| | | | | | | | 97,000 | |
| | | | | | | | | |
| | | | | | | | 875,351 | |
| |
Belgium 1.4%
|
| | | | | | | | | |
| |
| Capital Goods 0.3% |
| Bekaert N.V. | | | 529 | | | | 162,165 | |
| Compagnie d’Enterprises CFE | | | 666 | | | | 41,548 | |
| | | | | | | | | |
| | | | | | | | 203,713 | |
| | | | | | | | | |
| |
| Diversified Financials 0.3% |
| Ackermans & van Haaren N.V. | | | 964 | | | | 83,168 | |
| Gimv N.V. | | | 450 | | | | 24,907 | |
RHJ International * | | | 9,263 | | | | 72,203 | |
| Sofina S.A. | | | 657 | | | | 61,970 | |
| | | | | | | | | |
| | | | | | | | 242,248 | |
| | | | | | | | | |
| |
| Energy 0.0% |
| Euronav S.A. | | | 2,080 | | | | 34,774 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
Agfa Gevaert N.V. (c)* | | | 15,647 | | | | 91,377 | |
| Omega Pharma S.A. | | | 527 | | | | 24,651 | |
| | | | | | | | | |
| | | | | | | | 116,028 | |
| | | | | | | | | |
| |
| Materials 0.2% |
| Nyrstar | | | 4,322 | | | | 63,754 | |
| Recticel S.A. | | | 2,016 | | | | 21,142 | |
| Tessenderlo Chemie N.V. | | | 2,540 | | | | 86,919 | |
| | | | | | | | | |
| | | | | | | | 171,815 | |
| | | | | | | | | |
| |
| Real Estate 0.2% |
| Befimmo S.C.A. | | | 610 | | | | 56,322 | |
| Cofinimmo | | | 526 | | | | 75,115 | |
| | | | | | | | | |
| | | | | | | | 131,437 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.1% |
Barco N.V. * | | | 918 | | | | 54,376 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
Telenet Group Holding N.V. * | | | 1,655 | | | | 69,306 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Compagnie Maritime Belge S.A. | | | 1,656 | | | | 50,094 | |
| | | | | | | | | |
| | | | | | | | 1,073,791 | |
| |
Canada 8.3%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.1% |
| Linamar Corp. | | | 3,633 | | | | 80,041 | |
Martinrea International, Inc. * | | | 4,078 | | | | 34,386 | |
| | | | | | | | | |
| | | | | | | | 114,427 | |
| | | | | | | | | |
| |
| Banks 0.2% |
| Canadian Western Bank | | | 1,921 | | | | 47,766 | |
| Genworth MI Canada, Inc. | | | 1,300 | | | | 34,734 | |
| Home Capital Group, Inc. | | | 800 | | | | 37,674 | |
| Laurentian Bank of Canada | | | 1,363 | | | | 59,136 | |
| | | | | | | | | |
| | | | | | | | 179,310 | |
| | | | | | | | | |
| |
| Capital Goods 0.6% |
| CAE, Inc. | | | 6,399 | | | | 71,776 | |
| Russel Metals, Inc. | | | 4,703 | | | | 92,594 | |
SNC-Lavalin Group, Inc. | | | 2,217 | | | | 113,252 | |
| Superior Plus Corp. | | | 7,700 | | | | 91,730 | |
| Toromont Industries Ltd. | | | 1,916 | | | | 54,611 | |
| | | | | | | | | |
| | | | | | | | 423,963 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.4% |
IESI-BFC Ltd. | | | 4,500 | | | | 105,319 | |
44 See financial notes
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Ritchie Bros. Auctioneers, Inc. | | | 1,500 | | | | 31,871 | |
Stantec, Inc. * | | | 1,300 | | | | 35,932 | |
| Transcontinental, Inc., Class A | | | 6,137 | | | | 92,124 | |
| | | | | | | | | |
| | | | | | | | 265,246 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.2% |
| Dorel Industries, Inc., Class B | | | 1,710 | | | | 57,643 | |
Gildan Activewear, Inc., Sub Voting, Class A * | | | 2,102 | | | | 60,572 | |
| | | | | | | | | |
| | | | | | | | 118,215 | |
| | | | | | | | | |
| |
| Consumer Services 0.2% |
| Tim Hortons, Inc. | | | 2,300 | | | | 86,461 | |
Transat A.T., Inc., Class A * | | | 3,400 | | | | 51,939 | |
| | | | | | | | | |
| | | | | | | | 138,400 | |
| | | | | | | | | |
| |
| Diversified Financials 0.4% |
| AGF Management Ltd., Class B | | | 4,572 | | | | 74,280 | |
Dundee Corp., Class A * | | | 3,787 | | | | 56,439 | |
| DundeeWealth, Inc. | | | 1,736 | | | | 28,085 | |
| GMP Capital, Inc. | | | 3,500 | | | | 39,465 | |
| TMX Group, Inc. | | | 2,426 | | | | 80,684 | |
| | | | | | | | | |
| | | | | | | | 278,953 | |
| | | | | | | | | |
| |
| Energy 1.0% |
Advantage Oil & Gas Ltd. * | | | 10,800 | | | | 66,924 | |
| Crescent Point Energy Corp. | | | 3,100 | | | | 122,796 | |
| Ensign Energy Services, Inc. | | | 5,346 | | | | 66,360 | |
Fairborne Energy Ltd. * | | | 7,862 | | | | 31,143 | |
Flint Energy Services Ltd. * | | | 2,628 | | | | 41,047 | |
| Mullen Group Ltd. | | | 4,800 | | | | 72,007 | |
| Nuvista Energy Ltd. | | | 1,700 | | | | 15,385 | |
OPTI Canada, Inc. * | | | 15,327 | | | | 10,519 | |
Pacific Rubiales Energy Corp. * | | | 2,600 | | | | 82,877 | |
Paramount Resources Ltd., Class A * | | | 1,300 | | | | 26,092 | |
Petrobank Energy & Resources Ltd. * | | | 700 | | | | 27,859 | |
| Progress Energy Resources Corp. | | | 4,100 | | | | 43,537 | |
| ShawCor Ltd., Class A | | | 1,222 | | | | 37,598 | |
| Trican Well Service Ltd. | | | 2,641 | | | | 45,782 | |
| Trinidad Drilling Ltd. | | | 8,751 | | | | 43,759 | |
| | | | | | | | | |
| | | | | | | | 733,685 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.2% |
Cott Corp. * | | | 6,700 | | | | 55,116 | |
| Maple Leaf Foods, Inc. | | | 10,714 | | | | 129,946 | |
| | | | | | | | | |
| | | | | | | | 185,062 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| CML Healthcare Income Fund | | | 3,962 | | | | 48,365 | |
| | | | | | | | | |
| |
| Insurance 0.2% |
| Industrial Alliance Insurance & Financial Services, Inc. | | | 3,728 | | | | 116,968 | |
| | | | | | | | | |
| |
| Materials 2.0% |
| Agnico-Eagle Mines Ltd. | | | 1,173 | | | | 90,974 | |
Canfor Corp. * | | | 7,098 | | | | 67,020 | |
| Cascades, Inc. | | | 7,645 | | | | 50,372 | |
| CCL Industries, Inc., Class B | | | 1,727 | | | | 50,630 | |
| Centerra Gold, Inc. | | | 2,780 | | | | 55,469 | |
| First Quantum Minerals Ltd. | | | 1,031 | | | | 90,282 | |
| Franco-Nevada Corp. | | | 1,097 | | | | 37,839 | |
Harry Winston Diamond Corp. * | | | 4,145 | | | | 52,955 | |
| HudBay Minerals, Inc. | | | 5,596 | | | | 88,338 | |
| IAMGOLD Corp. | | | 3,565 | | | | 65,050 | |
| Inmet Mining Corp. | | | 1,396 | | | | 83,467 | |
Lundin Mining Corp. * | | | 16,209 | | | | 102,667 | |
| Methanex Corp. | | | 4,089 | | | | 113,862 | |
New Gold, Inc. * | | | 7,700 | | | | 57,001 | |
Norbord, Inc. * | | | 2,695 | | | | 30,758 | |
| PAN American Silver Corp. | | | 1,400 | | | | 44,791 | |
Quadra FNX Mining Ltd. * | | | 4,865 | | | | 68,689 | |
| Sherritt International Corp. | | | 15,690 | | | | 121,994 | |
Silver Wheaton Corp. * | | | 2,074 | | | | 59,623 | |
Sino-Forest Corp. * | | | 3,492 | | | | 69,025 | |
Thompson Creek Metals Co., Inc. * | | | 3,117 | | | | 37,530 | |
| West Fraser Timber Co., Ltd. | | | 1,723 | | | | 74,840 | |
| | | | | | | | | |
| | | | | | | | 1,513,176 | |
| | | | | | | | | |
| |
| Media 0.5% |
| Astral Media, Inc., Class A | | | 1,552 | | | | 62,238 | |
| Cogeco Cable, Inc. | | | 1,453 | | | | 55,561 | |
| Corus Entertainment, Inc., Class B | | | 1,183 | | | | 25,542 | |
| Groupe Aeroplan, Inc. | | | 5,894 | | | | 71,660 | |
| Torstar Corp., Class B | | | 9,706 | | | | 122,574 | |
| | | | | | | | | |
| | | | | | | | 337,575 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.6% |
Nordion, Inc. * | | | 3,503 | | | | 39,224 | |
| Valeant Pharmaceuticals International, Inc. | | | 15,100 | | | | 417,807 | |
| | | | | | | | | |
| | | | | | | | 457,031 | |
| | | | | | | | | |
| |
| Real Estate 1.0% |
| Boardwalk Real Estate Investment Trust | | | 1,070 | | | | 44,955 | |
| Calloway Real Estate Investment Trust | | | 3,670 | | | | 86,361 | |
| Canadian Apartment Properties Real Estate Investment Trust | | | 2,675 | | | | 45,716 | |
| Canadian Real Estate Investment Trust | | | 1,932 | | | | 60,712 | |
| Chartwell Seniors Housing Real Estate Investment Trust | | | 5,508 | | | | 50,495 | |
| Cominar Real Estate Investment Trust | | | 2,192 | | | | 46,617 | |
| Dundee Real Estate Investment Trust | | | 2,018 | | | | 57,796 | |
| Extendicare Real Estate Investment Trust | | | 4,477 | | | | 48,067 | |
| First Capital Realty, Inc. | | | 2,279 | | | | 34,121 | |
| H&R Real Estate Investment Trust | | | 6,231 | | | | 124,754 | |
| InnVest Real Estate Investment Trust | | | 7,423 | | | | 49,856 | |
| Morguard Real Estate Investment Trust | | | 1,600 | | | | 21,257 | |
| Primaris Retail Real Estate Investment Trust | | | 2,792 | | | | 53,272 | |
| | | | | | | | | |
| | | | | | | | 723,979 | |
| | | | | | | | | |
| |
| Retailing 0.2% |
| Reitmans (Canada) Ltd., Class A | | | 2,625 | | | | 50,395 | |
RONA, Inc. * | | | 7,735 | | | | 98,593 | |
| | | | | | | | | |
| | | | | | | | 148,988 | |
| | | | | | | | | |
| |
| Software & Services 0.1% |
MacDonald, Dettwiler & Associates Ltd. * | | | 1,032 | | | | 51,413 | |
Open Text Corp. * | | | 823 | | | | 36,409 | |
| | | | | | | | | |
| | | | | | | | 87,822 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| TransForce, Inc. | | | 8,700 | | | | 103,045 | |
| | | | | | | | | |
| |
| Utilities 0.2% |
| Emera, Inc. | | | 4,840 | | | | 140,848 | |
| | | | | | | | | |
| | | | | | | | 6,115,058 | |
See financial notes 45
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
China 0.2%
|
| | | | | | | | | |
| |
| Capital Goods 0.0% |
CITIC Resources Holdings Ltd. * | | | 118,000 | | | | 30,260 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.0% |
| Li Ning Co., Ltd. | | | 5,000 | | | | 14,293 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| China Yurun Food Group Ltd. | | | 9,000 | | | | 35,125 | |
| | | | | | | | | |
| |
| Real Estate 0.0% |
| Renhe Commercial Holdings | | | 70,000 | | | | 13,390 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.1% |
| Digital China Holdings Ltd. | | | 21,700 | | | | 39,285 | |
| | | | | | | | | |
| | | | | | | | 132,353 | |
| |
Cyprus 0.1%
|
| | | | | | | | | |
| |
| Energy 0.1% |
| Prosafe SE | | | 10,184 | | | | 67,162 | |
| |
Denmark 1.5%
|
| | | | | | | | | |
| |
| Banks 0.3% |
Jyske Bank A/S - Reg’d * | | | 3,244 | | | | 145,399 | |
Sydbank A/S * | | | 2,694 | | | | 70,923 | |
| | | | | | | | | |
| | | | | | | | 216,322 | |
| | | | | | | | | |
| |
| Capital Goods 0.3% |
| FLSmidth & Co. A/S | | | 1,242 | | | | 91,859 | |
| NKT Holding A/S | | | 620 | | | | 33,393 | |
| Rockwool International A/S, B Shares | | | 449 | | | | 50,620 | |
| Schouw & Co., A/S | | | 931 | | | | 19,887 | |
| | | | | | | | | |
| | | | | | | | 195,759 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.0% |
Bang & Olufsen A/S * | | | 2,317 | | | | 25,144 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| East Asiatic Co., Ltd. A/S | | | 3,383 | | | | 91,851 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.2% |
| Coloplast A/S, Class B | | | 340 | | | | 42,102 | |
GN Store Nord A/S * | | | 7,482 | | | | 62,477 | |
William Demant Holdings A/S * | | | 333 | | | | 24,962 | |
| | | | | | | | | |
| | | | | | | | 129,541 | |
| | | | | | | | | |
| |
| Insurance 0.1% |
Alm. Brand A/S * | | | 1,397 | | | | 10,915 | |
Topdanmark A/S * | | | 519 | | | | 62,175 | |
| | | | | | | | | |
| | | | | | | | 73,090 | |
| | | | | | | | | |
| |
| Materials 0.2% |
| Auriga Industries A/S, Class B | | | 1,706 | | | | 33,445 | |
| Novozymes A/S, Class B | | | 763 | | | | 101,657 | |
| | | | | | | | | |
| | | | | | | | 135,102 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Alk-Abello A/S | | | 691 | | | | 43,812 | |
| H. Lundbeck A/S | | | 1,567 | | | | 31,312 | |
| | | | | | | | | |
| | | | | | | | 75,124 | |
| | | | | | | | | |
| |
| Software & Services 0.0% |
| SimCorp A/S | | | 133 | | | | 23,140 | |
| | | | | | | | | |
| |
| Transportation 0.2% |
| D/S Norden A/S | | | 626 | | | | 24,309 | |
| DSV A/S | | | 6,039 | | | | 123,830 | |
| | | | | | | | | |
| | | | | | | | 148,139 | |
| | | | | | | | | |
| | | | | | | | 1,113,212 | |
| |
Finland 2.1%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.2% |
| Nokian Renkaat Oyj | | | 4,495 | | | | 155,843 | |
| | | | | | | | | |
| |
| Capital Goods 0.7% |
| Cargotec Corp., B Shares | | | 2,902 | | | | 131,972 | |
Cramo Oyj * | | | 1,913 | | | | 39,864 | |
| Konecranes Oyj | | | 2,451 | | | | 97,724 | |
Lemminkainen Oyj * | | | 835 | | | | 28,985 | |
| Outotec Oyj | | | 2,413 | | | | 112,672 | |
| Ramirent Oyj | | | 4,098 | | | | 46,104 | |
| Uponor Oyj | | | 3,753 | | | | 67,309 | |
| | | | | | | | | |
| | | | | | | | 524,630 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.1% |
| Lassila & Tikanoja Oyj | | | 938 | | | | 17,736 | |
| Poyry Oyj | | | 2,507 | | | | 30,479 | |
| | | | | | | | | |
| | | | | | | | 48,215 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
Amer Sports Oyj, A Shares (c) | | | 5,957 | | | | 80,322 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| HKScan Oyj, A Shares | | | 2,731 | | | | 27,595 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.0% |
| Oriola-KD Oyj, Class B | | | 4,104 | | | | 21,761 | |
| | | | | | | | | |
| |
| Materials 0.5% |
| Huhtamaki Oyj | | | 7,881 | | | | 99,907 | |
| Kemira Oyj | | | 5,786 | | | | 85,177 | |
M-real Oyj, Class B * | | | 35,355 | | | | 120,994 | |
Tikkurila Oy * | | | 1,446 | | | | 31,159 | |
| | | | | | | | | |
| | | | | | | | 337,237 | |
| | | | | | | | | |
| |
| Media 0.0% |
| Alma Media Corp. | | | 2,234 | | | | 23,071 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Orion Oyj, Class B | | | 3,589 | | | | 76,335 | |
| | | | | | | | | |
| |
| Real Estate 0.1% |
| Citycon Oyj | | | 5,817 | | | | 26,068 | |
| Sponda Oyj | | | 11,546 | | | | 58,162 | |
| | | | | | | | | |
| | | | | | | | 84,230 | |
| | | | | | | | | |
| |
| Retailing 0.1% |
| Stockmann Oyj Abp, B Shares | | | 2,328 | | | | 82,689 | |
| | | | | | | | | |
| |
| Software & Services 0.1% |
| Tieto Oyj | | | 3,308 | | | | 63,264 | |
| | | | | | | | | |
| | | | | | | | 1,525,192 | |
| |
France 3.4%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.1% |
| Plastic Omnium S.A. | | | 891 | | | | 53,946 | |
| Societe Fonciere Financiere et de Participations (FFP) | | | 535 | | | | 37,405 | |
| | | | | | | | | |
| | | | | | | | 91,351 | |
| | | | | | | | | |
| |
| Capital Goods 0.4% |
| Delachaux S.A. | | | 288 | | | | 23,520 | |
46 See financial notes
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Faiveley Transport | | | 207 | | | | 17,503 | |
IMS International Metal Service * | | | 2,143 | | | | 37,809 | |
Manitou BF * | | | 1,325 | | | | 27,958 | |
| Mersen S.A. | | | 932 | | | | 40,904 | |
| Zodiac Aerospace | | | 1,907 | | | | 134,848 | |
| | | | | | | | | |
| | | | | | | | 282,542 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.4% |
| Bureau Veritas S.A. | | | 649 | | | | 47,971 | |
Derichebourg S.A. * | | | 10,192 | | | | 50,438 | |
| GL Events S.A. | | | 941 | | | | 32,708 | |
| Seche Environnement S.A. | | | 223 | | | | 17,983 | |
| Societe BIC S.A. | | | 1,069 | | | | 94,888 | |
| Teleperformance | | | 2,182 | | | | 68,952 | |
| | | | | | | | | |
| | | | | | | | 312,940 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.2% |
Beneteau * | | | 1,275 | | | | 27,407 | |
| SEB S.A. | | | 755 | | | | 72,394 | |
Trigano S.A. * | | | 1,025 | | | | 26,406 | |
| | | | | | | | | |
| | | | | | | | 126,207 | |
| | | | | | | | | |
| |
| Consumer Services 0.1% |
Club Mediterranee S.A. * | | | 3,052 | | | | 59,749 | |
| Pierre & Vacances | | | 319 | | | | 23,231 | |
| | | | | | | | | |
| | | | | | | | 82,980 | |
| | | | | | | | | |
| |
| Diversified Financials 0.1% |
Boursorama * | | | 1,840 | | | | 22,382 | |
| Financiere Marc de Lacharriere S.A. | | | 550 | | | | 23,670 | |
| | | | | | | | | |
| | | | | | | | 46,052 | |
| | | | | | | | | |
| |
| Energy 0.3% |
| Bourbon S.A. | | | 2,828 | | | | 128,881 | |
| Maurel et Prom | | | 4,807 | | | | 70,891 | |
| | | | | | | | | |
| | | | | | | | 199,772 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| Bonduelle S.C.A. | | | 173 | | | | 15,507 | |
| Remy Cointreau S.A. | | | 607 | | | | 42,742 | |
| Vilmorin & Cie | | | 300 | | | | 31,886 | |
| | | | | | | | | |
| | | | | | | | 90,135 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| bioMerieux | | | 275 | | | | 26,511 | |
| Orpea | | | 488 | | | | 24,607 | |
| | | | | | | | | |
| | | | | | | | 51,118 | |
| | | | | | | | | |
| |
| Insurance 0.0% |
| April Group | | | 728 | | | | 21,886 | |
| | | | | | | | | |
| |
| Materials 0.2% |
| Rhodia S.A. | | | 5,991 | | | | 167,024 | |
| | | | | | | | | |
| |
| Media 0.3% |
| Canal Plus | | | 4,232 | | | | 31,206 | |
| Eutelsat Communications | | | 1,402 | | | | 52,767 | |
| Havas S.A. | | | 17,096 | | | | 90,078 | |
| Ipsos | | | 719 | | | | 34,661 | |
| | | | | | | | | |
| | | | | | | | 208,712 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| Ipsen S.A. | | | 604 | | | | 21,285 | |
| | | | | | | | | |
| |
| Real Estate 0.1% |
| Mercialys | | | 706 | | | | 28,108 | |
| Societe Immobilliere de Location pour l’Industrie et le Commerce | | | 282 | | | | 37,908 | |
| | | | | | | | | |
| | | | | | | | 66,016 | |
| | | | | | | | | |
| |
| Retailing 0.1% |
Etam Development S.A. * | | | 700 | | | | 33,125 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.0% |
Silicon-On-Insulator Technologies (c)* | | | 1,751 | | | | 18,075 | |
| | | | | | | | | |
| |
| Software & Services 0.3% |
| Alten | | | 686 | | | | 22,946 | |
Altran Technologies S.A. * | | | 7,779 | | | | 33,405 | |
| Dassault Systemes S.A. | | | 861 | | | | 66,092 | |
| Groupe Steria S.C.A. | | | 1,199 | | | | 32,331 | |
| Sopra Group | | | 243 | | | | 20,235 | |
UbiSoft Entertainment S.A. * | | | 5,226 | | | | 68,084 | |
| | | | | | | | | |
| | | | | | | | 243,093 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.2% |
Bull * | | | 7,468 | | | | 35,377 | |
| Ingenico S.A. | | | 733 | | | | 22,125 | |
| Neopost S.A. | | | 1,311 | | | | 108,902 | |
| | | | | | | | | |
| | | | | | | | 166,404 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.0% |
| Iliad S.A. | | | 234 | | | | 26,360 | |
| | | | | | | | | |
| |
| Transportation 0.2% |
| Groupe Eurotunnel S.A. - Reg’d | | | 11,558 | | | | 114,983 | |
| | | | | | | | | |
| |
| Utilities 0.2% |
| EDF Energies Nouvelles S.A. | | | 494 | | | | 21,450 | |
| Rubis | | | 573 | | | | 63,531 | |
| Sechilienne S.A. | | | 864 | | | | 25,105 | |
| | | | | | | | | |
| | | | | | | | 110,086 | |
| | | | | | | | | |
| | | | | | | | 2,480,146 | |
| |
Germany 3.6%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.2% |
| ElringKlinger AG | | | 1,472 | | | | 48,997 | |
Leoni AG * | | | 3,328 | | | | 121,174 | |
| | | | | | | | | |
| | | | | | | | 170,171 | |
| | | | | | | | | |
| |
| Banks 0.1% |
Aareal Bank AG * | | | 3,156 | | | | 77,050 | |
| comdirect bank AG | | | 2,824 | | | | 28,190 | |
| | | | | | | | | |
| | | | | | | | 105,240 | |
| | | | | | | | | |
| |
| Capital Goods 1.3% |
| Bauer AG | | | 565 | | | | 26,031 | |
Demag Cranes AG * | | | 922 | | | | 46,062 | |
Deutz AG * | | | 10,892 | | | | 93,800 | |
Duerr AG * | | | 1,131 | | | | 34,309 | |
| Gildemeister AG | | | 3,627 | | | | 64,845 | |
Heidelberger Druckmaschinen AG * | | | 38,729 | | | | 178,183 | |
| Indus Holding AG | | | 1,083 | | | | 28,865 | |
Krones AG * | | | 677 | | | | 37,511 | |
KUKA AG * | | | 2,974 | | | | 62,212 | |
| MTU Aero Engines Holding AG | | | 1,345 | | | | 81,162 | |
Nordex AG * | | | 2,830 | | | | 27,261 | |
Pfleiderer AG - Reg’d * | | | 3,925 | | | | 19,928 | |
| Rational AG | | | 136 | | | | 30,399 | |
SGL Carbon SE * | | | 2,902 | | | | 107,970 | |
| Tognum AG | | | 3,133 | | | | 76,287 | |
See financial notes 47
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Vossloh AG | | | 385 | | | | 44,774 | |
| | | | | | | | | |
| | | | | | | | 959,599 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
| Puma AG Rudolf Dassler Sport | | | 135 | | | | 44,807 | |
| | | | | | | | | |
| |
| Diversified Financials 0.1% |
| MLP AG | | | 4,022 | | | | 42,672 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.0% |
| KWS Saat AG | | | 144 | | | | 25,814 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| Carl Zeiss Meditec AG | | | 1,253 | | | | 21,790 | |
| Rhoen-klinikum AG | | | 1,418 | | | | 33,145 | |
| | | | | | | | | |
| | | | | | | | 54,935 | |
| | | | | | | | | |
| |
| Materials 0.2% |
| Fuchs Petrolub AG | | | 336 | | | | 43,243 | |
| H&R WASAG AG | | | 857 | | | | 25,487 | |
| Symrise AG | | | 2,973 | | | | 90,292 | |
| | | | | | | | | |
| | | | | | | | 159,022 | |
| | | | | | | | | |
| |
| Media 0.1% |
| GfK SE | | | 491 | | | | 20,714 | |
Sky Deutschland AG * | | | 11,921 | | | | 19,362 | |
| | | | | | | | | |
| | | | | | | | 40,076 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
QIAGEN N.V. * | | | 3,808 | | | | 72,159 | |
| Stada Arzneimittel AG | | | 2,011 | | | | 61,829 | |
| | | | | | | | | |
| | | | | | | | 133,988 | |
| | | | | | | | | |
| |
| Real Estate 0.3% |
Alstria Office REIT-AG | | | 2,086 | | | | 29,062 | |
| Deutsche Euroshop AG | | | 1,407 | | | | 53,970 | |
Deutsche Wohnen AG * | | | 3,514 | | | | 42,511 | |
| DIC Asset AG | | | 2,410 | | | | 25,298 | |
IVG Immobilien AG * | | | 7,649 | | | | 58,151 | |
| | | | | | | | | |
| | | | | | | | 208,992 | |
| | | | | | | | | |
| |
| Retailing 0.4% |
| Douglas Holding AG | | | 2,200 | | | | 122,785 | |
| Fielmann AG | | | 221 | | | | 22,315 | |
| Medion AG | | | 1,948 | | | | 30,501 | |
| Praktiker Bau- und Heimwerkermaerkte Holding AG | | | 10,280 | | | | 97,477 | |
| Takkt AG | | | 1,966 | | | | 26,515 | |
| | | | | | | | | |
| | | | | | | | 299,593 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.1% |
Q-Cells SE * | | | 8,804 | | | | 37,690 | |
| Solarworld AG | | | 3,137 | | | | 45,469 | |
| | | | | | | | | |
| | | | | | | | 83,159 | |
| | | | | | | | | |
| |
| Software & Services 0.1% |
| Bechtle AG | | | 1,010 | | | | 37,958 | |
| Software AG | | | 334 | | | | 46,783 | |
| United Internet AG - Reg’d | | | 1,321 | | | | 23,660 | |
| | | | | | | | | |
| | | | | | | | 108,401 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.1% |
Jenoptik AG * | | | 4,997 | | | | 33,276 | |
| Wincor Nixdorf AG | | | 1,320 | | | | 96,560 | |
| | | | | | | | | |
| | | | | | | | 129,836 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Freenet AG | | | 3,704 | | | | 46,965 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Hamburger Hafen und Logistik AG | | | 851 | | | | 37,233 | |
| Sixt AG | | | 1,192 | | | | 46,244 | |
| | | | | | | | | |
| | | | | | | | 83,477 | |
| | | | | | | | | |
| | | | | | | | 2,696,747 | |
| |
Greece 0.5%
|
| | | | | | | | | |
| |
| Banks 0.1% |
Agricultural Bank of Greece * | | | 11,705 | | | | 14,137 | |
TT Hellenic Postbank S.A. * | | | 3,861 | | | | 20,665 | |
| | | | | | | | | |
| | | | | | | | 34,802 | |
| | | | | | | | | |
| |
| Capital Goods 0.0% |
| Ellaktor S.A. | | | 6,681 | | | | 30,990 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.0% |
| Folli-Follie S.A. | | | 879 | | | | 21,409 | |
| | | | | | | | | |
| |
| Consumer Services 0.1% |
| Intralot S.A. Integrated Lottery | | | 7,911 | | | | 34,590 | |
| | | | | | | | | |
| |
| Materials 0.3% |
Mytilineos Holdings S.A. * | | | 8,037 | | | | 49,209 | |
Sidenor Steel Products Manufacturing Co., S.A. * | | | 5,945 | | | | 21,043 | |
| Titan Cement Co. | | | 3,208 | | | | 68,612 | |
Viohalco, Hellenic Copper & Aluminum Industry S.A. * | | | 8,981 | | | | 50,758 | |
| | | | | | | | | |
| | | | | | | | 189,622 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| Alapis Holding Industrial and Commercial S.A. | | | 7,238 | | | | 12,691 | |
| | | | | | | | | |
| |
| Retailing 0.0% |
| Jumbo S.A. | | | 2,134 | | | | 16,447 | |
| | | | | | | | | |
| |
| Utilities 0.0% |
| EYDAP Athens Water Supply & Sewage Co., S.A. | | | 1,971 | | | | 13,250 | |
| | | | | | | | | |
| | | | | | | | 353,801 | |
| |
Hong Kong 3.8%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.1% |
| Xinyi Glass Holdings Co., Ltd. | | | 54,000 | | | | 42,919 | |
| | | | | | | | | |
| |
| Banks 0.3% |
| Dah Sing Banking Group Ltd. | | | 16,600 | | | | 28,469 | |
| Dah Sing Financial Group | | | 7,600 | | | | 52,848 | |
| Fubon Bank (Hong Kong) Ltd. | | | 30,000 | | | | 14,066 | |
| Industrial & Commercial Bank of China (Asia) Ltd. | | | 15,000 | | | | 55,630 | |
| Wing Hang Bank Ltd. | | | 8,000 | | | | 93,713 | |
| | | | | | | | | |
| | | | | | | | 244,726 | |
| | | | | | | | | |
| |
| Capital Goods 0.1% |
| China State Construction International Holdings Ltd. | | | 34,000 | | | | 25,954 | |
HKC Holdings Ltd. * | | | 143,990 | | | | 9,032 | |
| Johnson Electric Holdings Ltd. | | | 59,000 | | | | 31,085 | |
| Lonking Holdings Ltd. | | | 54,000 | | | | 28,980 | |
| | | | | | | | | |
| | | | | | | | 95,051 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.4% |
| Anta Sports Products Ltd. | | | 10,000 | | | | 20,709 | |
48 See financial notes
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Bosideng International Holdings Ltd. | | | 74,000 | | | | 37,466 | |
| China Dongxiang Group Co. | | | 34,000 | | | | 19,061 | |
| Pacific Textile Holdings Ltd. | | | 21,000 | | | | 11,905 | |
| Shenzhou International Group | | | 13,000 | | | | 15,132 | |
Skyworth Digital Holdings Ltd. (c) | | | 24,000 | | | | 14,113 | |
| Stella International Holdings Ltd. | | | 14,000 | | | | 29,438 | |
| Techtronic Industries Co., Ltd. | | | 89,500 | | | | 90,765 | |
| Texwinca Holdings Ltd. | | | 24,000 | | | | 26,203 | |
| | | | | | | | | |
| | | | | | | | 264,792 | |
| | | | | | | | | |
| |
| Consumer Services 0.2% |
| Cafe De Coral Holdings Ltd. | | | 8,000 | | | | 22,524 | |
China Travel International Investment Hong Kong Ltd. * | | | 106,000 | | | | 25,358 | |
Galaxy Entertainment Group Ltd. * | | | 33,000 | | | | 31,176 | |
Sands China Ltd. * | | | 12,400 | | | | 27,040 | |
| The Hongkong & Shanghai Hotels Ltd. | | | 25,500 | | | | 44,914 | |
| | | | | | | | | |
| | | | | | | | 151,012 | |
| | | | | | | | | |
| |
| Diversified Financials 0.3% |
| First Pacific Co., Ltd. | | | 109,000 | | | | 101,006 | |
| Hong Kong Exchanges & Clearing Ltd. | | | 6,300 | | | | 139,064 | |
| | | | | | | | | |
| | | | | | | | 240,070 | |
| | | | | | | | | |
| |
| Energy 0.0% |
Mongolia Energy Co., Ltd. * | | | 47,000 | | | | 18,057 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.3% |
| Chaoda Modern Agriculture (Holdings) Ltd. | | | 73,320 | | | | 59,929 | |
| China Mengniu Dairy Co., Ltd. | | | 14,000 | | | | 40,112 | |
Global Bio-chem Technology Group Co., Ltd. * | | | 104,000 | | | | 16,929 | |
| Uni-President China Holdings Ltd. | | | 22,000 | | | | 15,672 | |
| Want Want China Holdings Ltd. | | | 57,000 | | | | 52,684 | |
| | | | | | | | | |
| | | | | | | | 185,326 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.1% |
| Hengan International Group Co., Ltd. | | | 6,000 | | | | 56,571 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| Fushan International Energy Group Ltd. | | | 34,000 | | | | 22,880 | |
| Hidili Industry International Development Ltd. | | | 19,000 | | | | 20,332 | |
| Lee & Man Paper Manufacturing Ltd. | | | 19,000 | | | | 15,942 | |
| Nine Dragons Paper Holdings Ltd. | | | 14,000 | | | | 22,651 | |
| | | | | | | | | |
| | | | | | | | 81,805 | |
| | | | | | | | | |
| |
| Media 0.1% |
| Television Broadcasts Ltd. | | | 10,000 | | | | 53,457 | |
| | | | | | | | | |
| |
| Real Estate 0.8% |
| Agile Property Holdings Ltd. | | | 32,000 | | | | 42,209 | |
| Champion Real Estate Investment Trust | | | 78,000 | | | | 42,979 | |
| Greentown China Holdings Ltd. | | | 14,000 | | | | 16,260 | |
| HKR International Ltd. | | | 34,400 | | | | 17,664 | |
| Hopewell Holdings Ltd. | | | 19,500 | | | | 61,431 | |
Hopson Development Holdings Ltd. * | | | 23,000 | | | | 25,745 | |
| Hysan Development Co., Ltd. | | | 29,000 | | | | 112,315 | |
| K Wah International Holdings Ltd. | | | 39,000 | | | | 14,743 | |
| Kowloon Development Co., Ltd. | | | 26,000 | | | | 28,908 | |
| KWG Property Holding Ltd. | | | 19,500 | | | | 15,495 | |
| New World China Land Ltd. | | | 71,200 | | | | 26,431 | |
| Shimao Property Holdings Ltd. | | | 19,000 | | | | 31,479 | |
| Shui On Land Ltd. | | | 76,400 | | | | 38,397 | |
| Sinolink Worldwide Holdings Ltd. | | | 185,000 | | | | 27,021 | |
| Soho China Ltd. | | | 49,000 | | | | 41,720 | |
| Tian An China Investments Co., Ltd. | | | 45,000 | | | | 34,861 | |
| Tomson Group Ltd. | | | 32,000 | | | | 12,432 | |
| | | | | | | | | |
| | | | | | | | 590,090 | |
| | | | | | | | | |
| |
| Retailing 0.5% |
| Belle International Holdings Ltd. | | | 47,000 | | | | 85,129 | |
| Chow Sang Sang Holdings International Ltd. | | | 27,000 | | | | 71,090 | |
| Dah Chong Hong Holdings Ltd. | | | 38,000 | | | | 44,802 | |
| Giordano International Ltd. | | | 101,000 | | | | 60,690 | |
GOME Electrical Appliances Holdings Ltd. * | | | 212,000 | | | | 71,551 | |
| Lifestyle International Holdings Ltd. | | | 11,000 | | | | 25,602 | |
| Parkson Retail Group Ltd. | | | 13,500 | | | | 24,440 | |
| | | | | | | | | |
| | | | | | | | 383,304 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.0% |
| ASM Pacific Technology Ltd. | | | 3,100 | | | | 28,031 | |
| | | | | | | | | |
| |
| Software & Services 0.0% |
| Tencent Holdings Ltd. | | | 1,400 | | | | 32,182 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.2% |
| BYD Electronic International Co., Ltd. | | | 45,500 | | | | 24,034 | |
| Kingboard Laminates Holding Ltd. | | | 42,000 | | | | 40,584 | |
| Truly International Holdings Ltd. | | | 10,000 | | | | 14,219 | |
| VTech Holdings Ltd. | | | 6,000 | | | | 62,618 | |
| | | | | | | | | |
| | | | | | | | 141,455 | |
| | | | | | | | | |
| |
| Transportation 0.3% |
| Hong Kong Aircraft Engineering Co., Ltd. | | | 1,600 | | | | 26,864 | |
| Hopewell Highway Infrastructure Ltd. | | | 21,900 | | | | 16,373 | |
| Pacific Basin Shipping Ltd. | | | 123,000 | | | | 89,900 | |
| Road King Infrastructure Ltd. | | | 22,000 | | | | 19,940 | |
| Shun Tak Holdings Ltd. | | | 61,000 | | | | 40,307 | |
| | | | | | | | | |
| | | | | | | | 193,384 | |
| | | | | | | | | |
| |
| Utilities 0.0% |
| Xinao Gas Holdings Ltd. | | | 8,000 | | | | 24,155 | |
| | | | | | | | | |
| | | | | | | | 2,826,387 | |
| |
Ireland 1.0%
|
| | | | | | | | | |
| |
| Capital Goods 0.4% |
| DCC plc | | | 4,595 | | | | 132,794 | |
| Grafton Group plc | | | 33,425 | | | | 142,690 | |
| Kingspan Group plc | | | 9,898 | | | | 82,753 | |
| | | | | | | | | |
| | | | | | | | 358,237 | |
| | | | | | | | | |
| |
| Consumer Services 0.1% |
| Paddy Power plc | | | 951 | | | | 38,387 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.0% |
| Fyffes plc | | | 37,875 | | | | 16,078 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.2% |
| C&C Group plc | | | 16,139 | | | | 74,799 | |
| Glanbia plc | | | 8,418 | | | | 39,835 | |
| Greencore Group plc | | | 24,933 | | | | 37,855 | |
| | | | | | | | | |
| | | | | | | | 152,489 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| United Drug plc | | | 14,874 | | | | 47,200 | |
| | | | | | | | | |
| |
| Insurance 0.0% |
| FBD Holdings plc | | | 4,121 | | | | 35,192 | |
See financial notes 49
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| | | | | | | | | |
| |
| Media 0.1% |
Independent News & Media plc * | | | 77,897 | | | | 66,785 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
Aer Lingus Group plc * | | | 29,705 | | | | 47,503 | |
| | | | | | | | | |
| | | | | | | | 761,871 | |
| |
Israel 0.8%
|
| | | | | | | | | |
| |
| Banks 0.2% |
| First International Bank of Israel Ltd. | | | 659 | | | | 9,284 | |
Israel Discount Bank Ltd., Class A * | | | 31,264 | | | | 63,430 | |
| Mizrahi Tefahot Bank Ltd. | | | 3,772 | | | | 35,213 | |
| | | | | | | | | |
| | | | | | | | 107,927 | |
| | | | | | | | | |
| |
| Capital Goods 0.1% |
| Clal Industries Ltd. | | | 2,802 | | | | 21,011 | |
| Elbit Systems Ltd. | | | 279 | | | | 14,815 | |
| Koor Industries Ltd. | | | 957 | | | | 24,215 | |
| | | | | | | | | |
| | | | | | | | 60,041 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.0% |
| Elco Holdings Ltd. | | | 1,147 | | | | 16,840 | |
| | | | | | | | | |
| |
| Energy 0.0% |
| Paz Oil Co., Ltd. | | | 143 | | | | 22,569 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.0% |
| Blue Square-Israel Ltd. | | | 986 | | | | 8,971 | |
| Shufersal Ltd. | | | 2,654 | | | | 16,290 | |
| | | | | | | | | |
| | | | | | | | 25,261 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| Osem Investments Ltd. | | | 1,213 | | | | 19,090 | |
| Strauss Group Ltd. | | | 1,045 | | | | 16,443 | |
| | | | | | | | | |
| | | | | | | | 35,533 | |
| | | | | | | | | |
| |
| Insurance 0.1% |
Clal Insurance Enterprise Holdings Ltd. * | | | 530 | | | | 14,239 | |
| Harel Insurance Investments & Finances Service Ltd. | | | 288 | | | | 16,355 | |
| Migdal Insurance & Financial Ltd. Holdings | | | 7,572 | | | | 15,725 | |
| | | | | | | | | |
| | | | | | | | 46,319 | |
| | | | | | | | | |
| |
| Materials 0.1% |
Makhteshim-Agan Industries Ltd. * | | | 7,302 | | | | 36,844 | |
| | | | | | | | | |
| |
| Media 0.0% |
Hot Telecommunication System Ltd. * | | | 836 | | | | 11,022 | |
| | | | | | | | | |
| |
| Real Estate 0.1% |
Africa Israel Investments Ltd. * | | | 2,731 | | | | 19,066 | |
Elbit Imaging Ltd. * | | | 712 | | | | 10,118 | |
| Gazit-Globe Ltd. | | | 1,441 | | | | 17,567 | |
Jerusalem Economy Ltd. * | | | 1,581 | | | | 17,454 | |
| | | | | | | | | |
| | | | | | | | 64,205 | |
| | | | | | | | | |
| |
| Retailing 0.0% |
| Delek Automotive Systems Ltd. | | | 1,017 | | | | 12,524 | |
| | | | | | | | | |
| |
| Software & Services 0.0% |
NICE Systems Ltd. * | | | 978 | | | | 32,286 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Cellcom Israel Ltd. | | | 1,563 | | | | 52,519 | |
| Partner Communications Co., Ltd. | | | 1,754 | | | | 35,619 | |
| | | | | | | | | |
| | | | | | | | 88,138 | |
| | | | | | | | | |
| | | | | | | | 559,509 | |
| |
Italy 2.3%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.1% |
| Brembo S.p.A. | | | 3,059 | | | | 33,606 | |
| Immsi S.p.A. | | | 18,781 | | | | 23,010 | |
| Piaggio & C. S.p.A. | | | 7,614 | | | | 27,768 | |
Sogefi S.p.A. * | | | 5,738 | | | | 19,876 | |
| | | | | | | | | |
| | | | | | | | 104,260 | |
| | | | | | | | | |
| |
| Banks 0.2% |
| Banca Piccolo Credito Valtellinese Scarl | | | 16,639 | | | | 84,405 | |
Banca Popolare dell’Etruria e del Lazio S.c.r.l. * | | | 5,533 | | | | 25,665 | |
| Banco di Desio e della Brianza S.p.A. | | | 3,479 | | | | 19,972 | |
| | | | | | | | | |
| | | | | | | | 130,042 | |
| | | | | | | | | |
| |
| Capital Goods 0.6% |
| Astaldi S.p.A. | | | 2,879 | | | | 21,210 | |
Cofide S.p.A. - Compagnia Finanziaria De Benedetti * | | | 90,317 | | | | 85,995 | |
| Danieli S.p.A. - Officine Meccaniche Danieli & C. | | | 939 | | | | 24,779 | |
| Danieli S.p.A. - Officine Meccaniche Danieli & C. - RSP | | | 1,614 | | | | 24,093 | |
Impregilo S.p.A. * | | | 24,881 | | | | 79,814 | |
| Industria Macchine Automatiche S.p.A. | | | 1,586 | | | | 33,508 | |
Interpump Group S.p.A. * | | | 2,895 | | | | 18,882 | |
| Maire Tecnimont S.p.A. | | | 3,827 | | | | 16,551 | |
| Prysmian S.p.A. | | | 6,084 | | | | 117,922 | |
| | | | | | | | | |
| | | | | | | | 422,754 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.3% |
| Bulgari S.p.A | | | 5,365 | | | | 57,458 | |
| Geox S.p.A. | | | 4,107 | | | | 24,715 | |
| Indesit Co., S.p.A. | | | 3,735 | | | | 46,182 | |
Safilo Group S.p.A. * | | | 4,897 | | | | 77,272 | |
| Tod’s S.p.A. | | | 372 | | | | 36,089 | |
| | | | | | | | | |
| | | | | | | | 241,716 | |
| | | | | | | | | |
| |
| Diversified Financials 0.0% |
| Azimut Holding S.p.A. | | | 2,924 | | | | 29,821 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.0% |
| Marr S.p.A. | | | 2,169 | | | | 23,561 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| Davide Campari - Milano S.p.A. | | | 5,148 | | | | 32,651 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.0% |
Sorin S.p.A. * | | | 10,056 | | | | 24,446 | |
| | | | | | | | | |
| |
| Insurance 0.2% |
| Societa Cattolica di Assicurazioni S.c.r.l. | | | 3,943 | | | | 107,290 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| Cementir Holding S.p.A. | | | 5,136 | | | | 17,863 | |
KME Group * | | | 51,543 | | | | 23,884 | |
| | | | | | | | | |
| | | | | | | | 41,747 | |
| | | | | | | | | |
| |
| Media 0.2% |
Gruppo Editoriale L’Espresso S.p.A. * | | | 12,820 | | | | 34,056 | |
Mondadori (Arnoldo) Editore S.p.A. * | | | 10,461 | | | | 36,907 | |
RCS MediaGroup S.p.A. * | | | 19,927 | | | | 31,750 | |
50 See financial notes
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
Seat Pagine Gialle S.p.A. * | | | 213,383 | | | | 38,981 | |
| | | | | | | | | |
| | | | | | | | 141,694 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| Recordati S.p.A. | | | 2,918 | | | | 28,746 | |
| | | | | | | | | |
| |
| Real Estate 0.2% |
| Beni Stabili S.p.A. | | | 55,099 | | | | 56,025 | |
| Immobiliare Grande Distribuzione | | | 11,012 | | | | 22,067 | |
Pirelli & C. Real Estate S.p.A. * | | | 87,106 | | | | 51,159 | |
| | | | | | | | | |
| | | | | | | | 129,251 | |
| | | | | | | | | |
| |
| Retailing 0.0% |
Gruppo Coin S.p.A. * | | | 2,930 | | | | 30,814 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.0% |
| Esprinet S.p.A. | | | 2,554 | | | | 25,409 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.0% |
Fastweb * | | | 1,018 | | | | 25,466 | |
| | | | | | | | | |
| |
| Transportation 0.2% |
Alitalia S.p.A. (a),(b)* | | | 14,782 | | | | — | |
| Ansaldo STS S.p.A. | | | 1,285 | | | | 17,726 | |
| Autostrada Torino-Milano S.p.A. | | | 3,715 | | | | 53,339 | |
Gemina S.p.A. * | | | 35,045 | | | | 28,142 | |
| Societa Iniziative Autostradali e Servizi S.p.A. | | | 3,463 | | | | 32,765 | |
| | | | | | | | | |
| | | | | | | | 131,972 | |
| | | | | | | | | |
| |
| Utilities 0.1% |
| Iren S.p.A. | | | 39,137 | | | | 68,780 | |
| | | | | | | | | |
| | | | | | | | 1,740,420 | |
| |
Japan 26.0%
|
| | | | | | | | | |
| |
| Automobiles & Components 1.8% |
| Aichi Machine Industry Co., Ltd. | | | 7,000 | | | | 23,882 | |
| Aisan Industry Co., Ltd. | | | 2,400 | | | | 18,020 | |
| Akebono Brake Industry Co., Ltd. | | | 4,900 | | | | 29,164 | |
Calsonic Kansei Corp. * | | | 14,000 | | | | 46,978 | |
| EXEDY Corp. | | | 1,300 | | | | 40,567 | |
| F.C.C. Co., Ltd. | | | 1,000 | | | | 21,423 | |
Futaba Industrial Co., Ltd. * | | | 5,400 | | | | 28,697 | |
| Kanto Auto Works, Ltd. | | | 5,100 | | | | 32,742 | |
| Kayaba Industry Co., Ltd. | | | 14,000 | | | | 82,106 | |
| Keihin Corp. | | | 2,400 | | | | 51,093 | |
| Koito Manufacturing Co., Ltd. | | | 4,000 | | | | 52,067 | |
Mitsuba Corp. * | | | 5,000 | | | | 32,105 | |
| Musashi Seimitsu Industry Co., Ltd. | | | 1,300 | | | | 30,999 | |
| NGK Spark Plug Co., Ltd. | | | 5,000 | | | | 69,555 | |
| NHK Spring Co., Ltd. | | | 8,000 | | | | 67,834 | |
| Nifco, Inc. | | | 1,700 | | | | 42,771 | |
| Nippon Seiki Co., Ltd. | | | 2,000 | | | | 20,216 | |
| Nissan Shatai Co., Ltd. | | | 4,000 | | | | 31,003 | |
| Nissin Kogyo Co., Ltd. | | | 2,300 | | | | 39,120 | |
Press Kogyo Co., Ltd. * | | | 14,000 | | | | 52,816 | |
| Riken Corp. | | | 4,000 | | | | 13,522 | |
| Sanden Corp. | | | 9,000 | | | | 36,275 | |
Showa Corp. * | | | 7,100 | | | | 47,244 | |
| Stanley Electric Co., Ltd. | | | 4,600 | | | | 77,102 | |
| Tachi-S Co., Ltd. | | | 2,000 | | | | 29,157 | |
| Takata Corp. | | | 2,400 | | | | 58,821 | |
| The Yokohama Rubber Co., Ltd. | | | 20,000 | | | | 99,973 | |
| Tokai Rika Co., Ltd. | | | 2,200 | | | | 36,888 | |
| Tokai Rubber Industries Ltd. | | | 1,700 | | | | 19,855 | |
| Topre Corp. | | | 2,200 | | | | 16,045 | |
| Toyo Tire & Rubber Co., Ltd. | | | 23,000 | | | | 47,341 | |
| TS Tech Co., Ltd. | | | 1,700 | | | | 27,817 | |
| Unipres Corp. | | | 1,000 | | | | 17,271 | |
| | | | | | | | | |
| | | | | | | | 1,340,469 | |
| | | | | | | | | |
| |
| Banks 2.6% |
| Aichi Bank Ltd. | | | 300 | | | | 16,794 | |
| Aozora Bank Ltd. | | | 34,000 | | | | 56,835 | |
| Bank of The Ryukyus Ltd. | | | 2,800 | | | | 32,493 | |
| Kansai Urban Banking Corp. | | | 16,000 | | | | 24,758 | |
| Kiyo Holdings, Inc. | | | 20,000 | | | | 26,899 | |
Mizuho Trust & Banking Co., Ltd. * | | | 23,000 | | | | 20,536 | |
| Sapporo Hokuyo Holdings, Inc. | | | 7,700 | | | | 31,748 | |
| Suruga Bank Ltd. | | | 6,000 | | | | 54,025 | |
| The 77 Bank Ltd. | | | 14,000 | | | | 65,927 | |
| The Akita Bank Ltd. | | | 6,000 | | | | 16,919 | |
| The Aomori Bank Ltd. | | | 10,000 | | | | 24,350 | |
| The Awa Bank Ltd. | | | 7,000 | | | | 47,587 | |
| The Bank of Iwate Ltd. | | | 500 | | | | 21,131 | |
| The Bank of Kyoto Ltd. | | | 10,000 | | | | 89,302 | |
| The Bank of Nagoya Ltd. | | | 9,000 | | | | 27,230 | |
| The Bank of Okinawa Ltd. | | | 1,000 | | | | 38,474 | |
| The Bank of Saga Ltd. | | | 7,000 | | | | 18,415 | |
| The Chugoku Bank Ltd. | | | 7,000 | | | | 81,195 | |
| The Chukyo Bank Ltd. | | | 5,000 | | | | 14,770 | |
| The Daishi Bank Ltd. | | | 15,000 | | | | 46,361 | |
| The Ehime Bank Ltd. | | | 9,000 | | | | 23,474 | |
| The Eighteenth Bank Ltd. | | | 9,000 | | | | 22,293 | |
| The Fukui Bank Ltd. | | | 6,000 | | | | 18,502 | |
| The Gunma Bank, Ltd. | | | 15,000 | | | | 75,229 | |
| The Higashi-Nippon Bank Ltd. | | | 13,000 | | | | 23,340 | |
| The Higo Bank Ltd. | | | 7,000 | | | | 32,673 | |
| The Hiroshima Bank Ltd. | | | 19,000 | | | | 77,606 | |
| The Hokkoku Bank Ltd. | | | 13,000 | | | | 52,335 | |
| The Hokuetsu Bank Ltd. | | | 15,000 | | | | 26,404 | |
| The Hyakugo Bank Ltd. | | | 11,000 | | | | 46,306 | |
| The Hyakujushi Bank Ltd. | | | 14,000 | | | | 50,338 | |
| The Iyo Bank Ltd. | | | 8,000 | | | | 59,559 | |
| The Juroku Bank Ltd. | | | 12,000 | | | | 36,251 | |
| The Kagoshima Bank Ltd. | | | 8,000 | | | | 47,841 | |
| The Keiyo Bank Ltd. | | | 5,000 | | | | 22,649 | |
| The Mie Bank Ltd. | | | 5,000 | | | | 13,104 | |
| The Minato Bank Ltd. | | | 11,000 | | | | 16,228 | |
| The Musashino Bank Ltd. | | | 1,600 | | | | 46,457 | |
| The Nanto Bank Ltd. | | | 9,000 | | | | 47,100 | |
| The Nishi-Nippon City Bank Ltd. | | | 33,000 | | | | 89,921 | |
| The Ogaki Kyoritsu Bank Ltd. | | | 13,000 | | | | 36,490 | |
| The Oita Bank Ltd. | | | 6,000 | | | | 18,899 | |
| The San-in Godo Bank Ltd. | | | 7,000 | | | | 48,433 | |
| The Shiga Bank Ltd. | | | 8,000 | | | | 42,131 | |
| The Shikoku Bank Ltd. | | | 7,000 | | | | 19,615 | |
| The Tochigi Bank Ltd. | | | 6,000 | | | | 24,866 | |
| The Toho Bank Ltd. | | | 9,000 | | | | 23,892 | |
| The Tokyo Tomin Bank Ltd. | | | 1,500 | | | | 14,153 | |
| The Yamagata Bank Ltd. | | | 4,000 | | | | 17,349 | |
| The Yamanashi Chuo Bank Ltd. | | | 7,000 | | | | 27,002 | |
Tomony Holdings, Inc. * | | | 10,000 | | | | 34,762 | |
| Yamaguchi Financial Group, Inc. | | | 6,000 | | | | 54,320 | |
| | | | | | | | | |
| | | | | | | | 1,945,271 | |
| | | | | | | | | |
| |
| Capital Goods 4.3% |
| Aica Kogyo Co., Ltd. | | | 2,400 | | | | 26,965 | |
See financial notes 51
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Amano Corp. | | | 2,800 | | | | 23,050 | |
| Central Glass Co., Ltd. | | | 10,000 | | | | 43,067 | |
| Chiyoda Corp. | | | 7,000 | | | | 57,985 | |
| Chudenko Corp. | | | 1,800 | | | | 18,478 | |
| Comsys Holdings Corp. | | | 6,000 | | | | 53,254 | |
| Daifuku Co., Ltd. | | | 4,500 | | | | 21,378 | |
Ebara Corp. * | | | 14,000 | | | | 59,956 | |
| Fujitec Co., Ltd. | | | 3,000 | | | | 13,466 | |
Furukawa Co., Ltd. * | | | 22,000 | | | | 22,715 | |
| Futaba Corp. | | | 2,300 | | | | 40,413 | |
| Glory Ltd. | | | 2,200 | | | | 48,591 | |
| GS Yuasa Corp. | | | 5,000 | | | | 33,346 | |
| Hitachi Cable Ltd. | | | 15,000 | | | | 35,769 | |
Hitachi Zosen Corp. (c) | | | 48,000 | | | | 69,169 | |
| Hoshizaki Electric Co., Ltd. | | | 2,400 | | | | 47,246 | |
| Inaba Denki Sangyo Co., Ltd. | | | 1,900 | | | | 47,866 | |
| Inabata & Co., Ltd. | | | 11,800 | | | | 59,014 | |
Iseki & Co., Ltd. * | | | 6,000 | | | | 14,599 | |
| Iwatani Corp. | | | 24,000 | | | | 69,523 | |
| Japan Pulp & Paper Co., Ltd. | | | 6,000 | | | | 20,237 | |
| Kandenko Co., Ltd. | | | 5,000 | | | | 29,139 | |
Kanematsu Corp. * | | | 111,000 | | | | 90,879 | |
| Keihan Electric Railway Co., Ltd. | | | 19,000 | | | | 83,602 | |
| Kitz Corp. | | | 5,000 | | | | 22,093 | |
| Komori Corp. | | | 3,000 | | | | 29,457 | |
Kumagai Gumi Co., Ltd. * | | | 43,000 | | | | 26,632 | |
| Kurita Water Industries Ltd. | | | 2,100 | | | | 54,396 | |
| Kuroda Electric Co., Ltd. | | | 1,800 | | | | 20,893 | |
| Kyowa Exeo Corp. | | | 5,600 | | | | 49,222 | |
| Kyudenko Corp. | | | 5,000 | | | | 25,735 | |
| Mabuchi Motor Co., Ltd. | | | 900 | | | | 47,643 | |
| Maeda Corp. | | | 19,000 | | | | 51,479 | |
| Maeda Road Construction Co., Ltd. | | | 4,000 | | | | 27,727 | |
Makino Milling Machine Co., Ltd. * | | | 6,000 | | | | 41,301 | |
| Max Co., Ltd. | | | 2,000 | | | | 22,069 | |
| Meidensha Corp. | | | 7,000 | | | | 24,937 | |
| Minebea Co., Ltd. | | | 15,000 | | | | 82,372 | |
| Misumi Group, Inc. | | | 1,300 | | | | 27,772 | |
| Mitsui Engineering & Shipbuilding Co., Ltd. | | | 35,000 | | | | 79,044 | |
| Miura Co., Ltd. | | | 1,100 | | | | 24,862 | |
| Mori Seiki Co., Ltd. | | | 4,200 | | | | 41,016 | |
| Nabtesco Corp. | | | 2,000 | | | | 35,437 | |
| Nachi-Fujikoshi Corp. | | | 13,000 | | | | 38,864 | |
| Nagase & Co., Ltd. | | | 5,000 | | | | 58,538 | |
| NEC Networks & System Integration Corp. | | | 1,800 | | | | 20,998 | |
| Nichias Corp. | | | 5,000 | | | | 21,559 | |
| Nippo Corp. | | | 4,000 | | | | 24,766 | |
| Nippon Densetsu Kogyo Co., Ltd. | | | 3,000 | | | | 27,094 | |
| Nishimatsu Construction Co., Ltd. | | | 53,000 | | | | 56,465 | |
| Nitto Boseki Co., Ltd. | | | 11,000 | | | | 25,551 | |
| Noritake Co., Ltd. | | | 5,000 | | | | 15,703 | |
| Noritz Corp. | | | 2,400 | | | | 44,068 | |
Okuma Corp. * | | | 7,000 | | | | 41,522 | |
| Okumura Corp. | | | 11,000 | | | | 38,418 | |
| OSG Corp. | | | 2,700 | | | | 28,126 | |
| Penta-Ocean Construction Co., Ltd. | | | 42,500 | | | | 63,865 | |
Ryobi Ltd. * | | | 11,000 | | | | 40,293 | |
| Sanki Engineering Co., Ltd. | | | 4,000 | | | | 24,936 | |
Sankyo-Tateyama Holdings, Inc. * | | | 31,000 | | | | 35,515 | |
| Sanwa Holdings Corp. | | | 18,000 | | | | 51,209 | |
| Shima Seiki Mfg., Ltd. | | | 1,700 | | | | 32,473 | |
| ShinMaywa Industries Ltd. | | | 6,000 | | | | 20,878 | |
| Sintokogio Ltd. | | | 2,900 | | | | 21,986 | |
| Sumikin Bussan Corp. | | | 8,000 | | | | 15,934 | |
Swcc Showa Holdings Co., Ltd. * | | | 20,000 | | | | 15,631 | |
| Tadano Ltd. | | | 6,000 | | | | 26,814 | |
| Taihei Kogyo Co., Ltd. | | | 6,000 | | | | 25,461 | |
| Taikisha Ltd. | | | 1,400 | | | | 18,784 | |
| Takara Standard Co., Ltd. | | | 3,000 | | | | 18,447 | |
| Takasago Thermal Engineering Co., Ltd. | | | 4,000 | | | | 28,266 | |
| The Japan Steel Works Ltd. | | | 4,000 | | | | 38,164 | |
| The Nippon Road Co., Ltd. | | | 10,000 | | | | 20,361 | |
| THK Co., Ltd. | | | 4,200 | | | | 80,629 | |
| TOA Corp. | | | 17,000 | | | | 14,361 | |
| Toda Corp. | | | 19,000 | | | | 64,018 | |
| Toshiba Machine Co., Ltd. | | | 4,000 | | | | 16,420 | |
| Toshiba Plant Systems & Services Corp. | | | 2,000 | | | | 26,291 | |
| Toto Ltd. | | | 13,000 | | | | 86,370 | |
| Toyo Engineering Corp. | | | 6,000 | | | | 19,131 | |
| Trusco Nakayama Corp. | | | 1,800 | | | | 26,233 | |
| Tsubakimoto Chain Co. | | | 8,000 | | | | 35,363 | |
| Ushio, Inc. | | | 3,000 | | | | 49,863 | |
| Yamazen Corp. | | | 5,100 | | | | 20,816 | |
Yuasa Trading Co., Ltd. * | | | 28,000 | | | | 23,253 | |
| | | | | | | | | |
| | | | | | | | 3,167,231 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.4% |
| Duskin Co., Ltd. | | | 3,300 | | | | 58,009 | |
| Kokuyo Co., Ltd. | | | 7,900 | | | | 60,388 | |
| Matsuda Sangyo Co., Ltd. | | | 1,800 | | | | 31,077 | |
Meitec Corp. * | | | 2,000 | | | | 39,914 | |
| Nissha Printing Co., Ltd. | | | 700 | | | | 15,436 | |
| Okamura Corp. | | | 3,000 | | | | 15,795 | |
| Park24 Co., Ltd. | | | 2,100 | | | | 20,292 | |
| Sohgo Security Services Co., Ltd. | | | 2,600 | | | | 27,219 | |
| Toppan Forms Co., Ltd. | | | 2,200 | | | | 19,524 | |
| | | | | | | | | |
| | | | | | | | 287,654 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 1.7% |
| Alpine Electronics, Inc. | | | 2,200 | | | | 27,572 | |
| Asics Corp. | | | 4,000 | | | | 43,070 | |
| Chofu Seisakusho Co., Ltd. | | | 1,300 | | | | 26,219 | |
Clarion Co., Ltd. * | | | 11,000 | | | | 17,080 | |
| Cleanup Corp. | | | 4,300 | | | | 25,997 | |
| Fujitsu General Ltd. | | | 4,000 | | | | 19,258 | |
| Funai Electric Co., Ltd. | | | 600 | | | | 18,418 | |
| Gunze Ltd. | | | 9,000 | | | | 31,249 | |
Haseko Corp. * | | | 94,500 | | | | 81,063 | |
| Heiwa Corp. | | | 1,600 | | | | 20,136 | |
| Hitachi Koki Co., Ltd. | | | 3,000 | | | | 25,449 | |
JVC KENWOOD Holdings, Inc. * | | | 4,460 | | | | 16,330 | |
| Kurabo Industries Ltd. | | | 14,000 | | | | 21,581 | |
| Mars Engineering Corp. | | | 1,000 | | | | 15,713 | |
Misawa Homes Co., Ltd. * | | | 11,100 | | | | 41,704 | |
| Mitsui Home Co., Ltd. | | | 3,000 | | | | 13,458 | |
| Mizuno Corp. | | | 5,000 | | | | 21,383 | |
| Nisshinbo Holdings, Inc. | | | 6,000 | | | | 60,736 | |
Noritsu Koki Co., Ltd. * | | | 2,400 | | | | 13,743 | |
| Onward Holdings Co., Ltd. | | | 9,000 | | | | 67,235 | |
| PanaHome Corp. | | | 3,000 | | | | 18,297 | |
Pioneer Corp. * | | | 36,900 | | | | 127,314 | |
| Rinnai Corp. | | | 900 | | | | 54,756 | |
| Roland Corp. | | | 1,600 | | | | 16,569 | |
52 See financial notes
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Sangetsu Co., Ltd. | | | 1,900 | | | | 41,457 | |
| Sanyo Shokai Ltd. | | | 6,000 | | | | 23,555 | |
Seiko Holdings Corp. * | | | 12,000 | | | | 40,522 | |
| Shimano, Inc. | | | 1,500 | | | | 74,744 | |
| Takamatsu Construction Group Co., Ltd. | | | 1,800 | | | | 23,345 | |
| The Japan Wool Textile Co., Ltd. | | | 3,000 | | | | 22,946 | |
| Token Corp. | | | 660 | | | | 20,268 | |
| Tokyo Style Co., Ltd. | | | 4,000 | | | | 31,813 | |
| Tomy Co., Ltd. | | | 2,900 | | | | 22,287 | |
| Toyobo Co., Ltd. | | | 44,000 | | | | 73,337 | |
Unitika Ltd. * | | | 31,000 | | | | 25,778 | |
| Wacoal Holdings Corp. | | | 4,000 | | | | 58,259 | |
| | | | | | | | | |
| | | | | | | | 1,282,641 | |
| | | | | | | | | |
| |
| Consumer Services 0.4% |
| Benesse Holdings, Inc. | | | 1,900 | | | | 91,186 | |
| H.I.S. Co., Ltd. | | | 1,300 | | | | 27,699 | |
| PGM Holdings K.K. | | | 34 | | | | 22,254 | |
| Plenus Co., Ltd. | | | 1,800 | | | | 26,010 | |
| Resorttrust, Inc. | | | 1,500 | | | | 23,241 | |
| Round One Corp. | | | 4,200 | | | | 15,613 | |
| Tokyo Dome Corp. | | | 7,000 | | | | 17,471 | |
| Yoshinoya Holdings Co., Ltd. | | | 25 | | | | 30,612 | |
| Zensho Co., Ltd. | | | 2,100 | | | | 19,421 | |
| | | | | | | | | |
| | | | | | | | 273,507 | |
| | | | | | | | | |
| |
| Diversified Financials 0.7% |
| Aeon Credit Service Co., Ltd. | | | 5,300 | | | | 60,874 | |
Cedyna Financial Corp. * | | | 20,650 | | | | 28,656 | |
| Fuyo General Lease Co., Ltd. | | | 800 | | | | 22,703 | |
| Hitachi Capital Corp. | | | 2,500 | | | | 33,268 | |
| IBJ Leasing Co., Ltd. | | | 1,600 | | | | 33,627 | |
| Jaccs Co., Ltd. | | | 27,000 | | | | 50,927 | |
| JAFCO Co., Ltd. | | | 800 | | | | 16,722 | |
| Japan Securities Finance Co., Ltd. | | | 3,900 | | | | 23,826 | |
| Matsui Securities Co., Ltd. | | | 3,600 | | | | 20,362 | |
| Mitsubishi UFJ Lease & Finance Co., Ltd. | | | 1,410 | | | | 47,016 | |
Mizuho Investors Securities Co., Ltd. * | | | 14,000 | | | | 12,840 | |
| Mizuho Securities Co., Ltd. | | | 8,000 | | | | 16,998 | |
| Monex Group, Inc. | | | 45 | | | | 10,674 | |
| Okasan Securities Group, Inc. | | | 5,000 | | | | 16,187 | |
Orient Corp. (c)* | | | 39,000 | | | | 26,550 | |
| Ricoh Leasing | | | 1,200 | | | | 29,822 | |
| Tokai Tokyo Financial Holdings, Inc. | | | 9,000 | | | | 31,278 | |
| | | | | | | | | |
| | | | | | | | 482,330 | |
| | | | | | | | | |
| |
| Energy 0.2% |
AOC Holdings, Inc. * | | | 8,100 | | | | 35,592 | |
| Itohchu Enex Co., Ltd. | | | 8,100 | | | | 37,213 | |
| Japan Petroleum Exploration Co., Ltd. | | | 1,200 | | | | 45,796 | |
| San-Ai Oil Co., Ltd. | | | 4,000 | | | | 16,870 | |
| Sinanen Co., Ltd. | | | 6,000 | | | | 22,853 | |
| | | | | | | | | |
| | | | | | | | 158,324 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.7% |
| Arcs Co., Ltd. | | | 1,500 | | | | 19,410 | |
| Cawachi Ltd. | | | 1,600 | | | | 28,287 | |
| Circle K Sunkus Co., Ltd. | | | 2,300 | | | | 32,595 | |
| FamilyMart Co., Ltd. | | | 2,400 | | | | 85,102 | |
| Heiwado Co., Ltd. | | | 2,300 | | | | 28,321 | |
| Izumiya Co., Ltd. | | | 9,000 | | | | 30,468 | |
| Kasumi Co., Ltd. | | | 2,900 | | | | 14,771 | |
| Kato Sangyo Co., Ltd. | | | 2,300 | | | | 32,822 | |
| Matsumotokiyoshi Holdings Co., Ltd. | | | 1,200 | | | | 22,527 | |
| Ministop Co., Ltd. | | | 1,300 | | | | 19,216 | |
| Okuwa Co., Ltd. | | | 2,000 | | | | 18,825 | |
| San-A Co., Ltd. | | | 700 | | | | 27,875 | |
| Sugi Holdings Co., Ltd. | | | 1,000 | | | | 22,343 | |
| Sundrug Co., Ltd. | | | 1,000 | | | | 27,775 | |
| The Maruetsu, Inc. | | | 6,000 | | | | 21,239 | |
| Tsuruha Holdings, Inc. | | | 700 | | | | 30,090 | |
| Valor Co., Ltd. | | | 2,500 | | | | 18,566 | |
| Yaoko Co., Ltd. | | | 700 | | | | 19,146 | |
| | | | | | | | | |
| | | | | | | | 499,378 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 1.7% |
| Coca-Cola Central Japan Co., Ltd. | | | 1,800 | | | | 22,661 | |
| Coca-Cola West Co., Ltd. | | | 3,600 | | | | 55,088 | |
| DyDo Drinco, Inc. | | | 600 | | | | 19,918 | |
| Ezaki Glico Co., Ltd. | | | 4,000 | | | | 49,137 | |
| Fuji Oil Co., Ltd. | | | 2,400 | | | | 34,456 | |
| House Food Corp. | | | 2,000 | | | | 29,535 | |
| Ito En Ltd. | | | 3,400 | | | | 54,579 | |
| Itoham Foods, Inc. | | | 9,000 | | | | 29,084 | |
J-Oil Mills, Inc. | | | 6,000 | | | | 15,864 | |
| Kagome Co., Ltd. | | | 2,600 | | | | 48,998 | |
| Kewpie Corp. | | | 6,500 | | | | 82,692 | |
| Kikkoman Corp. | | | 6,000 | | | | 64,661 | |
| Marudai Food Co., Ltd. | | | 7,000 | | | | 19,996 | |
| Maruha Nichiro Holdings, Inc. | | | 52,000 | | | | 85,475 | |
| Mikuni Coca-Cola Bottling Co., Ltd. | | | 2,900 | | | | 24,830 | |
| Morinaga & Co., Ltd. | | | 10,000 | | | | 22,856 | |
| Morinaga Milk Industry Co., Ltd. | | | 17,000 | | | | 69,353 | |
| Nichirei Corp. | | | 17,000 | | | | 74,042 | |
| Nippon Flour Mills Co., Ltd. | | | 6,000 | | | | 28,706 | |
| Nippon Suisan Kaisha Ltd. | | | 21,000 | | | | 66,804 | |
| Prima Meat Packers Ltd. | | | 21,000 | | | | 21,633 | |
| Sapporo Holdings Ltd. | | | 14,000 | | | | 55,088 | |
| Showa Sangyo Co., Ltd. | | | 6,000 | | | | 16,109 | |
| Takara Holdings, Inc. | | | 6,000 | | | | 34,178 | |
| The Nisshin Oillio Group Ltd. | | | 7,000 | | | | 30,807 | |
| Toyo Suisan Kaisha Ltd. | | | 3,000 | | | | 64,284 | |
| Yakult Honsha Co., Ltd. | | | 3,100 | | | | 90,710 | |
| Yonekyu Corp. | | | 2,000 | | | | 14,955 | |
| | | | | | | | | |
| | | | | | | | 1,226,499 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.3% |
| Hitachi Medical Corp. | | | 2,000 | | | | 12,808 | |
| Miraca Holdings, Inc. | | | 1,300 | | | | 46,649 | |
| Nichii Gakkan Co. | | | 2,000 | | | | 17,220 | |
| Nihon Kohden Corp. | | | 1,500 | | | | 28,512 | |
| Nipro Corp. | | | 1,800 | | | | 36,697 | |
| Sysmex Corp. | | | 400 | | | | 27,428 | |
| Toho Holdings Co., Ltd. | | | 5,000 | | | | 69,968 | |
| | | | | | | | | |
| | | | | | | | 239,282 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.3% |
Aderans Holdings Co., Ltd. * | | | 2,400 | | | | 28,097 | |
| Fancl Corp. | | | 1,800 | | | | 27,667 | |
| Kobayashi Pharmaceutical Co., Ltd. | | | 700 | | | | 32,595 | |
| Kose Corp. | | | 900 | | | | 21,602 | |
| Lion Corp. | | | 11,000 | | | | 59,371 | |
| Unicharm Corp. | | | 1,500 | | | | 57,301 | |
| | | | | | | | | |
| | | | | | | | 226,633 | |
| | | | | | | | | |
| |
| Insurance 0.1% |
| Sony Financial Holdings, Inc. | | | 14 | | | | 48,687 | |
See financial notes 53
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
The Fuji Fire & Marine Insurance Co., Ltd. * | | | 19,000 | | | | 23,505 | |
| | | | | | | | | |
| | | | | | | | 72,192 | |
| | | | | | | | | |
| |
| Materials 3.9% |
| Adeka Corp. | | | 4,000 | | | | 42,639 | |
| Aichi Steel Corp. | | | 5,000 | | | | 27,772 | |
| Air Water, Inc. | | | 6,000 | | | | 69,914 | |
| Daicel Chemical Industries Ltd. | | | 13,000 | | | | 90,305 | |
| Daido Steel Co., Ltd. | | | 22,000 | | | | 112,105 | |
| Daiken Corp. | | | 7,000 | | | | 16,097 | |
| Dainichiseika Color & Chemical Mfg. Co., Ltd. | | | 4,000 | | | | 16,864 | |
| Daio Paper Corp. | | | 9,000 | | | | 58,452 | |
| Denki Kagaku Kogyo Kabushiki Kaisha | | | 24,000 | | | | 105,622 | |
| Dowa Holdings Co., Ltd. | | | 16,000 | | | | 97,145 | |
| FP Corp. | | | 600 | | | | 33,123 | |
| Furukawa-Sky Aluminum Corp. | | | 8,000 | | | | 21,182 | |
| Godo Steel Ltd. | | | 13,000 | | | | 24,456 | |
| Hokuetsu Kishu Paper Co., Ltd. | | | 6,500 | | | | 30,062 | |
Ishihara Sangyo Kaisha Ltd. * | | | 23,000 | | | | 16,578 | |
| Kansai Paint Co., Ltd. | | | 7,000 | | | | 65,298 | |
| Kureha Corp. | | | 8,000 | | | | 45,409 | |
Kurimoto Ltd. * | | | 14,000 | | | | 16,026 | |
| Kyoei Steel Ltd. | | | 1,300 | | | | 15,832 | |
| Lintec Corp. | | | 1,300 | | | | 29,194 | |
| Maruichi Steel Tube Ltd. | | | 2,800 | | | | 55,460 | |
Mitsubishi Paper Mills Ltd. * | | | 27,000 | | | | 27,493 | |
| Mitsubishi Steel Mfg. Co., Ltd. | | | 11,000 | | | | 26,222 | |
| Mitsui Mining & Smelting Co., Ltd. | | | 42,000 | | | | 128,094 | |
Nakayama Steel Works Ltd. * | | | 20,000 | | | | 24,802 | |
| Nihon Parkerizing Co., Ltd. | | | 2,000 | | | | 26,202 | |
| Nippon Coke & Engineering Co., Ltd. | | | 17,000 | | | | 27,717 | |
| Nippon Denko Co., Ltd. | | | 3,000 | | | | 22,227 | |
| Nippon Kayaku Co., Ltd. | | | 5,000 | | | | 48,633 | |
Nippon Light Metal Co., Ltd. * | | | 64,000 | | | | 107,522 | |
Nippon Metal Industry Co., Ltd. * | | | 12,000 | | | | 14,605 | |
| Nippon Paint Co., Ltd. | | | 7,000 | | | | 51,725 | |
| Nippon Shokubai Co., Ltd. | | | 8,000 | | | | 75,548 | |
| Nippon Soda Co., Ltd. | | | 6,000 | | | | 25,898 | |
Nippon Yakin Kogyo Co., Ltd. * | | | 10,000 | | | | 29,308 | |
| Nissan Chemical Industries Ltd. | | | 5,000 | | | | 57,413 | |
| Nittetsu Mining Co., Ltd. | | | 4,000 | | | | 15,049 | |
| Nof Corp. | | | 7,000 | | | | 32,276 | |
| Osaka Steel Co., Ltd. | | | 1,800 | | | | 26,816 | |
| Osaka Titanium technologies Co., Ltd. | | | 500 | | | | 23,350 | |
| Pacific Metals Co., Ltd. | | | 6,000 | | | | 49,891 | |
| Rengo Co., Ltd. | | | 11,000 | | | | 69,977 | |
| Sakai Chemical Industry Co., Ltd. | | | 4,000 | | | | 16,873 | |
| Sanyo Chemical Industries Ltd. | | | 4,000 | | | | 29,815 | |
| Sanyo Special Steel Co., Ltd. | | | 8,000 | | | | 39,373 | |
| Shin-Etsu Polymer Co., Ltd. | | | 4,500 | | | | 23,788 | |
| Sumitomo Bakelite Co., Ltd. | | | 11,000 | | | | 59,590 | |
Sumitomo Light Metal Industries Ltd. * | | | 35,000 | | | | 38,723 | |
| Sumitomo Osaka Cement Co., Ltd. | | | 37,000 | | | | 71,705 | |
| Taiyo Nippon Sanso Corp. | | | 10,000 | | | | 80,211 | |
| Takasago International Corp. | | | 3,000 | | | | 14,490 | |
| Toagosei Co., Ltd. | | | 10,000 | | | | 43,847 | |
| Toho Zinc Co., Ltd. | | | 4,000 | | | | 16,825 | |
| Tokai Carbon Co., Ltd. | | | 7,000 | | | | 41,274 | |
| Tokuyama Corp. | | | 13,000 | | | | 71,161 | |
| Tokyo Ohka Kogyo Co., Ltd. | | | 2,200 | | | | 40,599 | |
| Tokyo Steel Manufacturing Co., Ltd. | | | 7,100 | | | | 70,264 | |
| Topy Industries Ltd. | | | 25,000 | | | | 61,465 | |
| Toyo Ink Mfg. Co., Ltd. | | | 9,000 | | | | 36,715 | |
| Toyo Kohan Co., Ltd. | | | 3,000 | | | | 15,108 | |
| Yamato Kogyo Co., Ltd. | | | 2,000 | | | | 51,156 | |
| Yodogawa Steel Works Ltd. | | | 11,000 | | | | 40,681 | |
| Zeon Corp. | | | 10,000 | | | | 82,492 | |
| | | | | | | | | |
| | | | | | | | 2,846,458 | |
| | | | | | | | | |
| |
| Media 0.3% |
| Asatsu-DK, Inc. | | | 2,600 | | | | 59,882 | |
| Avex Group Holdings, Inc. | | | 2,100 | | | | 30,245 | |
| Kadokawa Group Holdings, Inc. | | | 1,200 | | | | 28,131 | |
| SKY Perfect JSAT Holdings, Inc. | | | 47 | | | | 15,535 | |
| Toei Co., Ltd. | | | 4,000 | | | | 16,531 | |
| Toho Co., Ltd. | | | 3,900 | | | | 60,278 | |
| TV Asahi Corp. | | | 19 | | | | 26,778 | |
TV Tokyo Holdings Corp. * | | | 900 | | | | 13,007 | |
| | | | | | | | | |
| | | | | | | | 250,387 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.4% |
| Hisamitsu Pharmaceutical Co., Inc. | | | 900 | | | | 36,856 | |
| Kaken Pharmaceutical Co., Ltd. | | | 3,000 | | | | 32,870 | |
| Kissei Pharmaceutical Co., Ltd. | | | 2,000 | | | | 39,809 | |
| Kyorin Co., Ltd. | | | 2,000 | | | | 31,058 | |
| Mochida Pharmaceutical Co., Ltd. | | | 2,000 | | | | 21,715 | |
| Nippon Shinyaku Co., Ltd. | | | 2,000 | | | | 28,372 | |
| Rohto Pharmaceutical Co., Ltd. | | | 2,000 | | | | 24,778 | |
| Santen Pharmaceutical Co., Ltd. | | | 1,600 | | | | 55,135 | |
| Tsumura & Co. | | | 1,200 | | | | 36,889 | |
| | | | | | | | | |
| | | | | | | | 307,482 | |
| | | | | | | | | |
| |
| Real Estate 0.4% |
| Aeon Mall Co., Ltd. | | | 2,200 | | | | 51,577 | |
| Daibiru Corp. | | | 2,100 | | | | 16,227 | |
Daikyo, Inc. * | | | 11,000 | | | | 17,087 | |
| Goldcrest Co., Ltd. | | | 1,410 | | | | 30,456 | |
| Heiwa Real Estate Co., Ltd. | | | 8,000 | | | | 21,140 | |
Joint Corp. (a),(b) | | | 4,000 | | | | — | |
| Nomura Real Estate Holdings, Inc. | | | 3,400 | | | | 52,150 | |
| NTT Urban Development Corp. | | | 38 | | | | 34,813 | |
| Sumitomo Real Estate Sales Co., Ltd. | | | 630 | | | | 28,229 | |
| Tokyo Tatemono Co., Ltd. | | | 19,000 | | | | 76,558 | |
| | | | | | | | | |
| | | | | | | | 328,237 | |
| | | | | | | | | |
| |
| Retailing 1.9% |
ABC-Mart, Inc. | | | 500 | | | | 16,978 | |
| Alpen Co., Ltd. | | | 1,800 | | | | 27,843 | |
| AOKI Holdings, Inc. | | | 1,500 | | | | 21,188 | |
| Aoyama Trading Co., Ltd. | | | 3,800 | | | | 61,886 | |
| ASKUL Corp. | | | 1,000 | | | | 20,802 | |
| Autobacs Seven Co., Ltd. | | | 1,700 | | | | 63,684 | |
| Belluna Co., Ltd. | | | 3,700 | | | | 17,621 | |
Best Denki Co., Ltd. * | | | 19,500 | | | | 54,601 | |
| Bic Camera, Inc. | | | 83 | | | | 32,963 | |
| Chiyoda Co., Ltd. | | | 1,800 | | | | 21,768 | |
| Chori Co., Ltd. | | | 17,000 | | | | 18,342 | |
| Culture Convenience Club Co., Ltd. | | | 4,100 | | | | 18,219 | |
| DCM Holdings Co., Ltd. | | | 3,200 | | | | 16,254 | |
| Don Quijote Co., Ltd. | | | 2,300 | | | | 62,992 | |
| Edion Corp. | | | 7,500 | | | | 55,494 | |
| Fuji Co., Ltd. | | | 1,600 | | | | 31,397 | |
| GEO Corp. | | | 28 | | | | 29,479 | |
Gulliver International Co., Ltd. (c) | | | 600 | | | | 29,320 | |
| H2O Retailing Corp. | | | 6,000 | | | | 39,304 | |
54 See financial notes
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Hikari Tsushin, Inc. | | | 1,600 | | | | 30,155 | |
| Izumi Co., Ltd. | | | 2,900 | | | | 38,359 | |
| J. Front Retailing Co., Ltd. | | | 15,000 | | | | 76,876 | |
| Joshin Denki Co., Ltd. | | | 3,000 | | | | 27,800 | |
| K’s Holdings Corp. | | | 2,540 | | | | 63,122 | |
Keiyo Co., Ltd. (c) | | | 3,000 | | | | 14,471 | |
| Kohnan Shoji Co., Ltd. | | | 1,600 | | | | 18,505 | |
| Kojima Co., Ltd. | | | 3,000 | | | | 14,481 | |
| Komeri Co., Ltd. | | | 1,600 | | | | 33,235 | |
| Nishimatsuya Chain Co., Ltd. | | | 2,900 | | | | 27,853 | |
| Nissen Holdings Co., Ltd. | | | 5,900 | | | | 25,475 | |
| Nitori Co., Ltd. | | | 400 | | | | 35,196 | |
| Parco Co., Ltd. | | | 2,800 | | | | 21,561 | |
| Paris Miki Holdings, Inc. | | | 2,000 | | | | 16,016 | |
| Ryohin Keikaku Co., Ltd. | | | 1,400 | | | | 49,686 | |
| Senshukai Co., Ltd. | | | 3,100 | | | | 17,318 | |
| Shimachu Co., Ltd. | | | 2,300 | | | | 47,134 | |
| Shimamura Co., Ltd. | | | 600 | | | | 57,511 | |
T-Gaia Corp. | | | 14 | | | | 20,489 | |
| USS Co., Ltd. | | | 760 | | | | 59,040 | |
| Xebio Co., Ltd. | | | 900 | | | | 17,639 | |
| Yokohama Reito Co., Ltd. | | | 4,000 | | | | 25,462 | |
| | | | | | | | | |
| | | | | | | | 1,377,519 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.4% |
| Advantest Corp. | | | 2,900 | | | | 55,081 | |
Dainippon Screen Mfg. Co., Ltd. * | | | 10,000 | | | | 56,904 | |
| Disco Corp. | | | 400 | | | | 23,160 | |
Elpida Memory, Inc. (c)* | | | 4,700 | | | | 48,113 | |
| Mimasu Semiconductor Industry Co., Ltd. | | | 1,400 | | | | 13,746 | |
| Sanken Electric Co., Ltd. | | | 11,000 | | | | 39,330 | |
| Shinko Electric Industries Co., Ltd. | | | 2,300 | | | | 22,389 | |
| Tokyo Seimitsu Co., Ltd. | | | 1,400 | | | | 18,108 | |
| ULVAC, Inc. | | | 2,000 | | | | 40,265 | |
| | | | | | | | | |
| | | | | | | | 317,096 | |
| | | | | | | | | |
| |
| Software & Services 0.7% |
| Capcom Co., Ltd. | | | 1,200 | | | | 18,862 | |
CSK Holdings Corp. * | | | 8,400 | | | | 28,151 | |
| Fuji Soft, Inc. | | | 2,800 | | | | 41,445 | |
| IT Holdings Corp. | | | 2,100 | | | | 23,186 | |
| Itochu Techno-Solutions Corp. | | | 1,000 | | | | 34,152 | |
| Konami Corp. | | | 4,100 | | | | 72,149 | |
| NEC Fielding Ltd. | | | 1,900 | | | | 20,407 | |
| Net One Systems Co., Ltd. | | | 27 | | | | 37,598 | |
| Nihon Unisys Ltd. | | | 4,400 | | | | 27,999 | |
| NS Solutions Corp. | | | 1,000 | | | | 18,616 | |
| OBIC Co., Ltd. | | | 120 | | | | 22,152 | |
| Otsuka Corp. | | | 700 | | | | 44,447 | |
| Square Enix Holdings Co., Ltd. | | | 2,000 | | | | 41,771 | |
| Sumisho Computer Systems Corp. | | | 1,900 | | | | 28,144 | |
| Transcosmos, Inc. | | | 2,500 | | | | 19,655 | |
| Trend Micro, Inc. | | | 2,000 | | | | 56,586 | |
| | | | | | | | | |
| | | | | | | | 535,320 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 1.7% |
| Canon Electronics, Inc. | | | 900 | | | | 23,624 | |
| Citizen Watch Co., Ltd. | | | 13,000 | | | | 74,715 | |
| Cmk Corp. | | | 3,100 | | | | 12,225 | |
| Eizo Nanao Corp. | | | 1,300 | | | | 26,501 | |
| Hamamatsu Photonics K.K. | | | 1,600 | | | | 51,752 | |
| Hirose Electric Co., Ltd. | | | 700 | | | | 70,360 | |
| Hitachi Kokusai Electric, Inc. | | | 3,000 | | | | 27,255 | |
| Horiba Ltd. | | | 1,400 | | | | 34,382 | |
| Hosiden Corp. | | | 5,600 | | | | 55,566 | |
| Japan Aviation Electronics Industry Ltd. | | | 4,000 | | | | 26,546 | |
| Japan Radio Co., Ltd. | | | 10,000 | | | | 22,559 | |
| Kaga Electronics Co., Ltd. | | | 2,600 | | | | 27,819 | |
| Macnica, Inc. | | | 800 | | | | 15,369 | |
| Mitsumi Electric Co., Ltd. | | | 3,900 | | | | 66,312 | |
| Nichicon Corp. | | | 3,000 | | | | 33,358 | |
| Nidec Sankyo Corp. | | | 2,000 | | | | 14,167 | |
Nippon Chemi-Con Corp. * | | | 9,000 | | | | 36,065 | |
Oki Electric Industry Co., Ltd. * | | | 106,000 | | | | 92,056 | |
| Ryoden Trading Co., Ltd. | | | 5,000 | | | | 26,762 | |
| Ryosan Co., Ltd. | | | 2,600 | | | | 64,038 | |
| Ryoyo Electro Corp. | | | 2,600 | | | | 24,031 | |
| Sanshin Electronics Co., Ltd. | | | 3,200 | | | | 25,893 | |
| Shimadzu Corp. | | | 7,000 | | | | 52,546 | |
| Shinko Shoji Co., Ltd. | | | 3,300 | | | | 24,417 | |
| Star Micronics Co., Ltd. | | | 1,700 | | | | 16,215 | |
| Taiyo Yuden Co., Ltd. | | | 5,000 | | | | 64,238 | |
| Topcon Corp. | | | 4,600 | | | | 17,692 | |
| Toshiba Tec Corp. | | | 8,000 | | | | 31,426 | |
| Yamatake Corp. | | | 2,500 | | | | 60,740 | |
| YASKAWA Electric Corp. | | | 7,000 | | | | 54,645 | |
| Yokogawa Electric Corp. | | | 9,400 | | | | 61,668 | |
| | | | | | | | | |
| | | | | | | | 1,234,942 | |
| | | | | | | | | |
| |
| Transportation 1.0% |
Daiichi Chuo Kisen Kaisha * | | | 9,000 | | | | 20,424 | |
| Fukuyama Transporting Co., Ltd. | | | 5,000 | | | | 24,753 | |
| Hitachi Transport System Ltd. | | | 1,500 | | | | 23,222 | |
| Iino Kaiun Kaisha Ltd. | | | 2,900 | | | | 12,928 | |
| Japan Airport Terminal Co., Ltd. | | | 2,600 | | | | 42,646 | |
| Kamigumi Co., Ltd. | | | 8,000 | | | | 62,487 | |
| Keihin Electric Express Railway Co., Ltd. | | | 10,000 | | | | 94,523 | |
| Keisei Electric Railway Co., Ltd. | | | 10,000 | | | | 66,772 | |
| Kintetsu World Express, Inc. | | | 700 | | | | 16,246 | |
| Mitsubishi Logistics Corp. | | | 5,000 | | | | 60,472 | |
| Mitsui-Soko Co., Ltd. | | | 4,000 | | | | 15,039 | |
| Nippon Konpo Unyu Soko Co., Ltd. | | | 2,000 | | | | 21,674 | |
| Nishi-Nippon Railroad Co., Ltd. | | | 14,000 | | | | 60,000 | |
| Sankyu, Inc. | | | 11,000 | | | | 46,130 | |
| Seino Holdings Co., Ltd. | | | 12,000 | | | | 73,063 | |
| Senko Co., Ltd. | | | 8,000 | | | | 24,390 | |
| Shinwa Kaiun Kaisha Ltd. | | | 8,000 | | | | 20,315 | |
| Sotetsu Holdings, Inc. | | | 9,000 | | | | 28,520 | |
| The Sumitomo Warehouse Co., Ltd. | | | 6,000 | | | | 31,125 | |
| Yusen Air & Sea Service Co., Ltd. | | | 1,200 | | | | 16,600 | |
| | | | | | | | | |
| | | | | | | | 761,329 | |
| | | | | | | | | |
| |
| Utilities 0.1% |
| Saibu Gas Co., Ltd. | | | 7,000 | | | | 19,953 | |
| Shizuoka Gas Co., Ltd. | | | 3,500 | | | | 20,468 | |
| The Okinawa Electric Power Co., Inc. | | | 900 | | | | 41,354 | |
| | | | | | | | | |
| | | | | | | | 81,775 | |
| | | | | | | | | |
| | | | | | | | 19,241,956 | |
| |
Liechtenstein 0.1%
|
| | | | | | | | | |
| |
| Banks 0.0% |
| Liechtensteinische Landesbank AG | | | 356 | | | | 24,146 | |
See financial notes 55
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| | | | | | | | | |
| |
| Diversified Financials 0.1% |
| Verwaltungs-und Privat-Bank AG | | | 256 | | | | 27,798 | |
| | | | | | | | | |
| | | | | | | | 51,944 | |
| |
Luxembourg 0.1%
|
| | | | | | | | | |
| |
| Real Estate 0.1% |
| Gagfah S.A. | | | 3,464 | | | | 30,402 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.0% |
Colt Group S.A. * | | | 14,914 | | | | 28,916 | |
| | | | | | | | | |
| | | | | | | | 59,318 | |
| |
Netherlands 2.7%
|
| | | | | | | | | |
| |
| Capital Goods 0.7% |
| Aalberts Industries N.V. | | | 4,545 | | | | 83,366 | |
| Arcadis N.V. | | | 1,424 | | | | 31,776 | |
Draka Holdings N.V. * | | | 2,962 | | | | 63,161 | |
Heijmans N.V., CVA * | | | 4,498 | | | | 84,883 | |
| Imtech N.V. | | | 3,600 | | | | 120,943 | |
| Koninklijke Boskalis Westminster N.V. | | | 2,530 | | | | 102,788 | |
Wavin N.V. * | | | 3,181 | | | | 43,983 | |
| | | | | | | | | |
| | | | | | | | 530,900 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.1% |
USG People N.V. * | | | 6,053 | | | | 112,476 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
| Koninklijke Ten Cate N.V. | | | 1,619 | | | | 53,449 | |
TomTom N.V. * | | | 4,174 | | | | 36,659 | |
| | | | | | | | | |
| | | | | | | | 90,108 | |
| | | | | | | | | |
| |
| Energy 0.2% |
| Fugro N.V., CVA | | | 2,023 | | | | 143,217 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.0% |
| Sligro Food Group N.V. | | | 1,049 | | | | 34,391 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.3% |
| CSM N.V. | | | 4,199 | | | | 133,049 | |
Koninklijike Wessanen N.V. * | | | 17,872 | | | | 67,292 | |
| | | | | | | | | |
| | | | | | | | 200,341 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| Mediq N.V. | | | 4,141 | | | | 79,281 | |
| | | | | | | | | |
| |
| Insurance 0.2% |
Brit Insurance Holdings N.V. * | | | 9,214 | | | | 154,218 | |
| | | | | | | | | |
| |
| Materials 0.1% |
AMG Advanced Metallurgical Group N.V. * | | | 3,009 | | | | 27,951 | |
James Hardie Industries N.V. CDI * | | | 8,092 | | | | 42,889 | |
| | | | | | | | | |
| | | | | | | | 70,840 | |
| | | | | | | | | |
| |
| Real Estate 0.5% |
| Eurocommercial Properties N.V. | | | 1,844 | | | | 91,278 | |
| Nieuwe Steen Investments N.V. | | | 1,728 | | | | 35,679 | |
| Vastned Offices/Industrial N.V. | | | 2,182 | | | | 36,940 | |
| VastNed Retail N.V. | | | 1,060 | | | | 73,723 | |
| Wereldhave N.V. | | | 1,040 | | | | 105,750 | |
| | | | | | | | | |
| | | | | | | | 343,370 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.1% |
ASM International N.V. * | | | 1,829 | | | | 46,713 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.2% |
| Gemalto N.V. | | | 1,832 | | | | 83,492 | |
| TKH Group N.V. CVA | | | 1,577 | | | | 39,312 | |
| | | | | | | | | |
| | | | | | | | 122,804 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Koninklijke Vopak N.V. | | | 1,145 | | | | 57,283 | |
| | | | | | | | | |
| | | | | | | | 1,985,942 | |
| |
New Zealand 0.6%
|
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
Fisher & Paykel Appliances Holdings Ltd. * | | | 67,704 | | | | 31,003 | |
| | | | | | | | | |
| |
| Consumer Services 0.1% |
| Sky City Entertainment Group Ltd. | | | 27,260 | | | | 62,866 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.0% |
| Fisher & Paykel Healthcare Corp., Ltd. | | | 10,370 | | | | 25,633 | |
| | | | | | | | | |
| |
| Materials 0.1% |
Nufarm Ltd. * | | | 8,132 | | | | 36,247 | |
| Nuplex Industries Ltd. | | | 13,364 | | | | 34,606 | |
| | | | | | | | | |
| | | | | | | | 70,853 | |
| | | | | | | | | |
| |
| Media 0.0% |
| Sky Network Television Ltd. | | | 5,722 | | | | 23,707 | |
| | | | | | | | | |
| |
| Real Estate 0.0% |
| Kiwi Income Property Trust | | | 38,433 | | | | 30,790 | |
| | | | | | | | | |
| |
| Retailing 0.1% |
| The Warehouse Group Ltd. | | | 11,873 | | | | 36,205 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Air New Zealand Ltd. | | | 37,380 | | | | 38,550 | |
| Auckland International Airport Ltd. | | | 33,141 | | | | 53,105 | |
| | | | | | | | | |
| | | | | | | | 91,655 | |
| | | | | | | | | |
| |
| Utilities 0.1% |
Contact Energy Ltd. * | | | 13,423 | | | | 59,947 | |
| | | | | | | | | |
| | | | | | | | 432,659 | |
| |
Norway 1.5%
|
| | | | | | | | | |
| |
| Banks 0.1% |
| Sparebanken 1 SMN | | | 5,893 | | | | 53,363 | |
| Sparebanken Rogaland | | | 5,734 | | | | 54,910 | |
| | | | | | | | | |
| | | | | | | | 108,273 | |
| | | | | | | | | |
| |
| Capital Goods 0.1% |
| Veidekke A.S.A. | | | 5,880 | | | | 48,694 | |
| | | | | | | | | |
| |
| Energy 0.5% |
| Fred. Olsen Energy A.S.A. | | | 927 | | | | 34,880 | |
Petroleum Geo-Services A.S.A. * | | | 7,784 | | | | 97,471 | |
| Seadrill Ltd. | | | 4,000 | | | | 121,424 | |
Songa Offshore SE * | | | 5,500 | | | | 25,333 | |
Subsea 7, Inc. * | | | 3,579 | | | | 75,453 | |
| TGS Nopec Geophysical Co., A.S.A. | | | 2,561 | | | | 44,381 | |
| | | | | | | | | |
| | | | | | | | 398,942 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.2% |
Cermaq A.S.A. * | | | 3,708 | | | | 47,154 | |
| Leroy Seafood Group A.S.A. | | | 1,449 | | | | 38,374 | |
| Marine Harvest | | | 71,110 | | | | 70,736 | |
| | | | | | | | | |
| | | | | | | | 156,264 | |
| | | | | | | | | |
| |
| Materials 0.2% |
Norske Skogindustrier A.S.A. * | | | 77,500 | | | | 158,298 | |
56 See financial notes
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| | | | | | | | | |
| |
| Media 0.1% |
| Schibsted A.S.A. | | | 2,252 | | | | 61,855 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.1% |
Renewable Energy Corp. A.S.A. * | | | 25,400 | | | | 88,462 | |
| | | | | | | | | |
| |
| Software & Services 0.1% |
| Atea A.S.A. | | | 3,208 | | | | 27,137 | |
EDB ErgoGroup A.S.A. * | | | 10,929 | | | | 33,403 | |
| | | | | | | | | |
| | | | | | | | 60,540 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Stolt-Nielsen S.A. | | | 2,467 | | | | 44,143 | |
| | | | | | | | | |
| | | | | | | | 1,125,471 | |
| |
Portugal 0.4%
|
| | | | | | | | | |
| |
| Banks 0.0% |
| Banif, SGPS, S.A. - Reg’d | | | 13,962 | | | | 20,596 | |
| | | | | | | | | |
| |
| Capital Goods 0.1% |
| Mota-Engil, SGPS, S.A. | | | 8,123 | | | | 24,276 | |
| Teixeira Duarte S.A. | | | 22,112 | | | | 30,468 | |
| | | | | | | | | |
| | | | | | | | 54,744 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| Portucel-Empresa Produtora de Pasta e Papel, S.A. | | | 9,747 | | | | 32,456 | |
| Semapa-Sociedade de Investimento e Gestao, SGPS, S.A. | | | 3,396 | | | | 40,141 | |
Sonae Industria-SGPS, S.A. * | | | 9,087 | | | | 28,060 | |
| | | | | | | | | |
| | | | | | | | 100,657 | |
| | | | | | | | | |
| |
| Media 0.1% |
| Zon Multimedia-Servicos de Telecomunicacoes e Multimedia SGPS, S.A. | | | 14,546 | | | | 77,661 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.0% |
Sonaecom, SGPS, S.A. * | | | 10,562 | | | | 23,884 | |
| | | | | | | | | |
| |
| Utilities 0.1% |
| Redes Energeticas Nacionais S.A. | | | 7,428 | | | | 27,884 | |
| | | | | | | | | |
| | | | | | | | 305,426 | |
| |
Republic of Korea 7.8%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.4% |
| Halla Climate Control Corp. | | | 1,740 | | | | 32,339 | |
| Hankook Tire Co., Ltd. | | | 4,160 | | | | 108,355 | |
Kumho Tire Co., Inc. (a),(b)* | | | 10,290 | | | | 64,927 | |
| S&T Dynamics Co., Ltd. | | | 1,630 | | | | 35,483 | |
Ssangyong Motor Co. * | | | 5,860 | | | | 54,769 | |
| | | | | | | | | |
| | | | | | | | 295,873 | |
| | | | | | | | | |
| |
| Banks 0.3% |
| Busan Bank | | | 9,140 | | | | 113,881 | |
| Daegu Bank | | | 6,470 | | | | 84,892 | |
| | | | | | | | | |
| | | | | | | | 198,773 | |
| | | | | | | | | |
| |
| Capital Goods 1.7% |
| Daewoo International Corp. | | | 2,580 | | | | 80,448 | |
| Dongbu Corp. | | | 3,130 | | | | 22,267 | |
| Doosan Engineering & Construction Co., Ltd. | | | 4,990 | | | | 32,863 | |
Doosan Infracore Co., Ltd. * | | | 3,660 | | | | 90,572 | |
| Hanjin Heavy Industries & Construction Co., Ltd. | | | 2,160 | | | | 82,343 | |
| Hanjin Heavy Industries & Construction Holdings Co., Ltd. | | | 7,420 | | | | 127,058 | |
| Hyundai Development Co. | | | 3,900 | | | | 109,685 | |
| Hyundai Mipo Dockyard Co., Ltd. | | | 750 | | | | 125,444 | |
Keangnam Enterprises Ltd. * | | | 3,890 | | | | 39,455 | |
| Kolon Engineering & Construction Co., Ltd. | | | 6,860 | | | | 28,967 | |
Kumho Industrial Co., Ltd. * | | | 15,740 | | | | 61,054 | |
| Kyeryong Construction Industrial Co., Ltd. | | | 1,740 | | | | 29,356 | |
| LS Industrial Systems Co., Ltd. | | | 407 | | | | 32,672 | |
| Samsung Engineering Co., Ltd. | | | 498 | | | | 79,587 | |
| Samsung Techwin Co., Ltd. | | | 993 | | | | 92,830 | |
| STX Engine Co., Ltd. | | | 1,700 | | | | 61,569 | |
| Taeyoung Engineering & Construction | | | 4,280 | | | | 25,782 | |
Taihan Electric Wire Co., Ltd. * | | | 16,627 | | | | 105,651 | |
| | | | | | | | | |
| | | | | | | | 1,227,603 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.1% |
| Kepco Plant Service & Engineering Co., Ltd. | | | 370 | | | | 20,447 | |
| S1 Corp. | | | 826 | | | | 45,542 | |
| | | | | | | | | |
| | | | | | | | 65,989 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
| Woongjin Coway Co., Ltd. | | | 1,720 | | | | 62,415 | |
| | | | | | | | | |
| |
| Consumer Services 0.2% |
| Kangwon Land, Inc. | | | 6,060 | | | | 142,710 | |
| | | | | | | | | |
| |
| Diversified Financials 0.8% |
| Daewoo Securities Co., Ltd. | | | 4,170 | | | | 90,662 | |
| Daishin Securities Co., Ltd. | | | 2,680 | | | | 36,752 | |
| Hyundai Securities Co., Ltd. | | | 6,870 | | | | 90,047 | |
| Korea Investment Holdings Co., Ltd. | | | 2,360 | | | | 74,546 | |
| Mirae Asset Securities Co., Ltd. | | | 623 | | | | 32,654 | |
| Samsung Securities Co., Ltd. | | | 1,985 | | | | 113,695 | |
| Tong Yang Securities, Inc. | | | 6,930 | | | | 70,153 | |
| Woori Investment & Securities Co., Ltd. | | | 6,640 | | | | 117,420 | |
| | | | | | | | | |
| | | | | | | | 625,929 | |
| | | | | | | | | |
| |
| Energy 0.1% |
| SK Gas Co., Ltd. | | | 1,232 | | | | 45,479 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.5% |
| CJ CheilJedang Corp. | | | 158 | | | | 30,442 | |
Daesang Corp. * | | | 2,880 | | | | 21,188 | |
| Hite Holdings Co., Ltd. | | | 1,280 | | | | 24,162 | |
| Lotte Chilsung Beverage Co., Ltd. | | | 75 | | | | 51,389 | |
| Lotte Confectionery Co., Ltd. | | | 39 | | | | 42,570 | |
| Nong Shim Co., Ltd. | | | 234 | | | | 42,990 | |
| ORION Corp. | | | 148 | | | | 49,540 | |
| Ottogi Corp. | | | 345 | | | | 44,763 | |
| Samyang Corp. | | | 900 | | | | 51,227 | |
| | | | | | | | | |
| | | | | | | | 358,271 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.2% |
| Amorepacific Corp. | | | 46 | | | | 42,515 | |
| LG Household & Health Care Ltd. | | | 129 | | | | 43,096 | |
| Pacific Corp. | | | 554 | | | | 86,687 | |
| | | | | | | | | |
| | | | | | | | 172,298 | |
| | | | | | | | | |
| |
| Insurance 0.5% |
| Dongbu Insurance Co., Ltd. | | | 4,060 | | | | 143,496 | |
See financial notes 57
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Hyundai Marine & Fire Insurance Co., Ltd. | | | 3,960 | | | | 84,683 | |
| Korean Reinsurance Co. | | | 5,155 | | | | 58,108 | |
| LIG Insurance Co., Ltd. | | | 3,090 | | | | 63,989 | |
| Meritz Fire & Marine Insurance Co., Ltd. | | | 4,110 | | | | 28,231 | |
| | | | | | | | | |
| | | | | | | | 378,507 | |
| | | | | | | | | |
| |
| Materials 1.6% |
| Cheil Industries, Inc. | | | 1,760 | | | | 148,018 | |
Dongbu HiTek Co., Ltd. * | | | 5,790 | | | | 57,433 | |
| Dongbu Steel Co., Ltd. | | | 6,130 | | | | 53,539 | |
| Hanil Cement Co., Ltd. | | | 684 | | | | 37,080 | |
| Hansol Paper Co., Ltd. | | | 4,300 | | | | 42,864 | |
| Hyundai Hysco | | | 1,790 | | | | 36,356 | |
| Kolon Corp. | | | 1,640 | | | | 54,431 | |
| Korea Zinc Co., Ltd. | | | 457 | | | | 115,670 | |
| KP Chemical Corp. | | | 2,750 | | | | 41,013 | |
| OCI Co., Ltd. | | | 486 | | | | 143,138 | |
| Samsung Fine Chemicals Co., Ltd. | | | 670 | | | | 39,793 | |
| Seah Besteel Corp. | | | 3,570 | | | | 93,071 | |
| SK Chemicals Co., Ltd. | | | 1,917 | | | | 107,036 | |
| SKC Co., Ltd. | | | 1,000 | | | | 34,119 | |
Ssangyong Cement Industrial Co., Ltd. * | | | 5,160 | | | | 30,128 | |
| Taekwang Industrial Co., Ltd. | | | 65 | | | | 74,343 | |
Tong Yang Major Corp. * | | | 21,920 | | | | 44,878 | |
| Young Poong Corp. | | | 60 | | | | 34,926 | |
| | | | | | | | | |
| | | | | | | | 1,187,836 | |
| | | | | | | | | |
| |
| Media 0.1% |
| Cheil Worldwide, Inc. | | | 1,925 | | | | 20,952 | |
| Daekyo Co., Ltd. | | | 4,210 | | | | 22,032 | |
Woongjin Holdings Co., Ltd. * | | | 1,800 | | | | 18,386 | |
| | | | | | | | | |
| | | | | | | | 61,370 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.0% |
| Yuhan Corp. | | | 207 | | | | 29,338 | |
| | | | | | | | | |
| |
| Retailing 0.2% |
CJ O Shopping Co., Ltd. * | | | 129 | | | | 29,112 | |
Daewoo Motor Sales Corp. * | | | 8,100 | | | | 21,779 | |
| GS Home Shopping, Inc. | | | 280 | | | | 28,954 | |
| Hyundai Department Store Co., Ltd. | | | 970 | | | | 107,498 | |
| | | | | | | | | |
| | | | | | | | 187,343 | |
| | | | | | | | | |
| |
| Software & Services 0.1% |
NHN Corp. * | | | 342 | | | | 60,509 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.2% |
| Lg Innotek | | | 209 | | | | 24,229 | |
| Samsung Electro-Mechanics Co., Ltd. | | | 913 | | | | 100,300 | |
| Sindoh Co., Ltd. | | | 689 | | | | 33,310 | |
| | | | | | | | | |
| | | | | | | | 157,839 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
SK Broadband Co., Ltd. * | | | 13,091 | | | | 65,633 | |
| | | | | | | | | |
| |
| Transportation 0.5% |
Asiana Airlines * | | | 10,940 | | | | 89,085 | |
| Glovis Co., Ltd. | | | 193 | | | | 27,366 | |
Hanjin Shipping Holdings Co., Ltd. * | | | 12,360 | | | | 177,193 | |
Korea Line Corp. * | | | 1,230 | | | | 44,464 | |
| STX Pan Ocean Co., Ltd. | | | 2,040 | | | | 21,725 | |
| | | | | | | | | |
| | | | | | | | 359,833 | |
| | | | | | | | | |
| |
| Utilities 0.1% |
| E1 Corp. | | | 461 | | | | 23,388 | |
| Samchully Co., Ltd. | | | 315 | | | | 34,452 | |
| | | | | | | | | |
| | | | | | | | 57,840 | |
| | | | | | | | | |
| | | | | | | | 5,741,388 | |
| |
Singapore 2.2%
|
| | | | | | | | | |
| |
| Capital Goods 0.2% |
| Cosco Corp.(Singapore) Ltd. | | | 25,431 | | | | 36,789 | |
| Haw Par Corp., Ltd. | | | 4,000 | | | | 18,618 | |
| Hong Leong Asia Ltd. | | | 5,000 | | | | 13,356 | |
Jaya Holdings Ltd. * | | | 38,000 | | | | 20,807 | |
| SembCorp Marine Ltd. | | | 15,096 | | | | 53,831 | |
| Yangzijiang Shipbuilding Holdings Ltd. | | | 23,000 | | | | 33,335 | |
| | | | | | | | | |
| | | | | | | | 176,736 | |
| | | | | | | | | |
| |
| Consumer Services 0.2% |
Genting Singapore plc * | | | 59,000 | | | | 99,266 | |
| Hotel Properties Ltd. | | | 12,000 | | | | 26,003 | |
| | | | | | | | | |
| | | | | | | | 125,269 | |
| | | | | | | | | |
| |
| Diversified Financials 0.1% |
| Singapore Exchange Ltd. | | | 10,000 | | | | 68,139 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.1% |
| Olam International Ltd. | | | 31,704 | | | | 77,064 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
Indofood Agri Resources Ltd. * | | | 9,000 | | | | 18,201 | |
| People’s Food Holdings Ltd. | | | 59,000 | | | | 32,005 | |
| | | | | | | | | |
| | | | | | | | 50,206 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
Parkway Holdings Ltd. (a),(b) | | | 13,866 | | | | 42,317 | |
| | | | | | | | | |
| |
| Real Estate 1.0% |
| Allgreen Properties Ltd. | | | 43,000 | | | | 39,659 | |
| Ascendas Real Estate Investment Trust | | | 45,000 | | | | 71,828 | |
| CapitaCommercial Trust | | | 75,302 | | | | 87,052 | |
| CapitaMall Trust | | | 65,000 | | | | 99,848 | |
| Fortune REIT | | | 58,000 | | | | 29,933 | |
| Guocoland Ltd. | | | 12,000 | | | | 22,112 | |
K-REIT Asia | | | 23,000 | | | | 24,062 | |
| Keppel Land Ltd. | | | 15,000 | | | | 51,570 | |
| Mapletree Logistics Trust | | | 69,000 | | | | 48,041 | |
| Singapore Land Ltd. | | | 3,000 | | | | 16,521 | |
| Suntec Real Estate Investment Trust | | | 60,000 | | | | 72,368 | |
| UOL Group Ltd. | | | 20,000 | | | | 70,485 | |
Wheelock Properties (S) Ltd. | | | 16,000 | | | | 24,142 | |
| Wing Tai Holdings Ltd. | | | 23,000 | | | | 31,215 | |
| Yanlord Land Group Ltd. | | | 14,000 | | | | 18,715 | |
| | | | | | | | | |
| | | | | | | | 707,551 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.0% |
STATS ChipPAC Ltd. * | | | 27,000 | | | | 19,873 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.1% |
| Venture Corp., Ltd. | | | 16,368 | | | | 114,833 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.0% |
| M1 Ltd. | | | 13,000 | | | | 22,333 | |
| | | | | | | | | |
| |
| Transportation 0.3% |
| ComfortDelGro Corp., Ltd. | | | 99,102 | | | | 113,707 | |
| SATS Ltd. | | | 25,749 | | | | 56,772 | |
| SIA Engineering Co., Ltd. | | | 7,205 | | | | 24,175 | |
| Singapore Post Ltd. | | | 42,000 | | | | 38,306 | |
58 See financial notes
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| SMRT Corp., Ltd. | | | 18,000 | | | | 28,570 | |
| | | | | | | | | |
| | | | | | | | 261,530 | |
| | | | | | | | | |
| | | | | | | | 1,665,851 | |
| |
Spain 1.5%
|
| | | | | | | | | |
| |
| Banks 0.1% |
Banco de Valencia S.A. (c) | | | 6,668 | | | | 37,637 | |
| Banco Pastor S.A. | | | 4,076 | | | | 19,912 | |
| | | | | | | | | |
| | | | | | | | 57,549 | |
| | | | | | | | | |
| |
| Capital Goods 0.3% |
| Abengoa S.A. | | | 1,913 | | | | 53,009 | |
| Construcciones y Auxiliar de Ferrocarriles S.A. | | | 60 | | | | 33,841 | |
| Ferrovial S.A. | | | 4,999 | | | | 57,038 | |
| Obrascon Huarte Lain S.A. | | | 3,294 | | | | 107,867 | |
| | | | | | | | | |
| | | | | | | | 251,755 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.1% |
| Prosegur, Compania de Seguridad S.A. - Reg’d | | | 858 | | | | 51,363 | |
| | | | | | | | | |
| |
| Consumer Services 0.2% |
Codere S.A. * | | | 2,072 | | | | 23,048 | |
NH Hoteles S.A. * | | | 15,463 | | | | 81,195 | |
| Sol Melia S.A. | | | 3,563 | | | | 35,543 | |
| | | | | | | | | |
| | | | | | | | 139,786 | |
| | | | | | | | | |
| |
| Diversified Financials 0.1% |
| Bolsas y Mercados Espanoles | | | 2,472 | | | | 67,452 | |
| Corporacion Financiera Alba S.A. | | | 995 | | | | 52,656 | |
| | | | | | | | | |
| | | | | | | | 120,108 | |
| | | | | | | | | |
| |
| Energy 0.0% |
| Tecnicas Reunidas S.A. | | | 471 | | | | 29,301 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.2% |
| Campofrio Food Group S.A. | | | 2,654 | | | | 27,187 | |
| Ebro Foods S.A. | | | 4,134 | | | | 90,913 | |
| Pescanova S.A. | | | 839 | | | | 27,370 | |
SOS Corp. Alimentaria S.A. (c)* | | | 10,114 | | | | 22,241 | |
| | | | | | | | | |
| | | | | | | | 167,711 | |
| | | | | | | | | |
| |
| Insurance 0.1% |
| Grupo Catalana Occidente S.A. | | | 2,235 | | | | 46,625 | |
| | | | | | | | | |
| |
| Materials 0.1% |
Grupo Empresarial Ence S.A. * | | | 7,307 | | | | 26,631 | |
Tubos Reunidos S.A. * | | | 5,480 | | | | 14,673 | |
| | | | | | | | | |
| | | | | | | | 41,304 | |
| | | | | | | | | |
| |
| Media 0.1% |
| Antena 3 de Television S.A. | | | 4,233 | | | | 43,368 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Almirall S.A. | | | 3,232 | | | | 30,645 | |
| Grifols S.A. | | | 1,851 | | | | 30,005 | |
| | | | | | | | | |
| | | | | | | | 60,650 | |
| | | | | | | | | |
| |
| Software & Services 0.1% |
| Indra Sistemas S.A. | | | 5,256 | | | | 102,989 | |
| | | | | | | | | |
| | | | | | | | 1,112,509 | |
| |
Sweden 2.7%
|
| | | | | | | | | |
| |
| Capital Goods 0.7% |
| Cardo AB | | | 858 | | | | 33,106 | |
| Hexagon AB, Class B | | | 4,808 | | | | 97,835 | |
Lindab International AB * | | | 3,919 | | | | 55,708 | |
| Peab AB | | | 11,748 | | | | 93,637 | |
| Saab AB, B Shares | | | 3,281 | | | | 51,335 | |
| Trelleborg AB, B Shares | | | 17,264 | | | | 162,706 | |
| | | | | | | | | |
| | | | | | | | 494,327 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 0.1% |
| Intrum Justitia AB | | | 1,826 | | | | 25,183 | |
| Niscayah Group AB | | | 11,002 | | | | 18,969 | |
| | | | | | | | | |
| | | | | | | | 44,152 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.3% |
| Husqvarna AB, A Shares | | | 3,532 | | | | 24,802 | |
| Husqvarna AB, B Shares | | | 11,809 | | | | 83,101 | |
| JM AB | | | 2,626 | | | | 57,005 | |
Nobia AB * | | | 6,695 | | | | 52,119 | |
| | | | | | | | | |
| | | | | | | | 217,027 | |
| | | | | | | | | |
| |
| Diversified Financials 0.2% |
D. Carnegie & Co. AB (a),(b)* | | | 851 | | | | — | |
| Investment AB Oresund | | | 1,914 | | | | 32,092 | |
| Kinnevik Investment AB, B Shares | | | 6,047 | | | | 124,835 | |
| | | | | | | | | |
| | | | | | | | 156,927 | |
| | | | | | | | | |
| |
| Energy 0.1% |
Lundin Petroleum AB * | | | 7,078 | | | | 67,036 | |
PA Resources AB * | | | 22,000 | | | | 17,614 | |
| | | | | | | | | |
| | | | | | | | 84,650 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.1% |
| Axfood AB | | | 1,642 | | | | 57,606 | |
| Hakon Invest AB | | | 1,605 | | | | 29,480 | |
| | | | | | | | | |
| | | | | | | | 87,086 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.2% |
| AarhusKarlshamn AB | | | 1,042 | | | | 24,547 | |
| Swedish Match AB | | | 3,963 | | | | 110,864 | |
| | | | | | | | | |
| | | | | | | | 135,411 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| Getinge AB, B Shares | | | 5,009 | | | | 106,060 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| Billerud | | | 4,675 | | | | 37,625 | |
| Hoganas AB, B Shares | | | 1,387 | | | | 48,836 | |
| | | | | | | | | |
| | | | | | | | 86,461 | |
| | | | | | | | | |
| |
| Media 0.1% |
Eniro AB (c)* | | | 17,913 | | | | 11,616 | |
| Modern Times Group, B Shares | | | 1,137 | | | | 81,690 | |
| | | | | | | | | |
| | | | | | | | 93,306 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Meda AB, A Shares | | | 5,808 | | | | 47,762 | |
| | | | | | | | | |
| |
| Real Estate 0.6% |
| Castellum AB | | | 7,008 | | | | 91,820 | |
| Fabege AB | | | 10,545 | | | | 110,309 | |
| Hufvudstaden AB, A Shares | | | 4,363 | | | | 48,788 | |
| Kungsleden AB | | | 10,268 | | | | 81,385 | |
| Wallenstam AB, Class B | | | 1,899 | | | | 48,378 | |
See financial notes 59
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Wihlborgs Fastigheter AB | | | 1,474 | | | | 41,461 | |
| | | | | | | | | |
| | | | | | | | 422,141 | |
| | | | | | | | | |
| |
| Retailing 0.0% |
| Clas Ohlson AB, B Shares | | | 1,938 | | | | 33,262 | |
| | | | | | | | | |
| | | | | | | | 2,008,572 | |
| |
Switzerland 3.8%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.1% |
Rieter Holding AG - Reg’d * | | | 282 | | | | 81,647 | |
| | | | | | | | | |
| |
| Banks 0.3% |
Banque Cantonale Vaudoise - Reg’d * | | | 93 | | | | 45,205 | |
| Basler Kantonalbank | | | 649 | | | | 93,784 | |
| St. Galler Kantonalbank AG - Reg’d | | | 69 | | | | 32,473 | |
| Valiant Holding AG - Reg’d | | | 275 | | | | 42,973 | |
| | | | | | | | | |
| | | | | | | | 214,435 | |
| | | | | | | | | |
| |
| Capital Goods 0.9% |
Bobst Group AG - Reg’d * | | | 881 | | | | 39,392 | |
| Bucher Industries AG - Reg’d | | | 456 | | | | 70,031 | |
| Daetwyler Holding AG - BR | | | 487 | | | | 36,138 | |
Georg Fischer AG - Reg’d * | | | 290 | | | | 124,270 | |
| Kaba Holding AG - Reg’d, Series B | | | 125 | | | | 41,919 | |
OC Oerlikon Corp. AG - Reg’d * | | | 37,342 | | | | 195,255 | |
| Sulzer AG - Reg’d | | | 1,067 | | | | 129,915 | |
| | | | | | | | | |
| | | | | | | | 636,920 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.2% |
AFG Arbonia-Forster Holding AG - Reg’d * | | | 1,599 | | | | 38,223 | |
| Forbo Holding AG - Reg’d | | | 135 | | | | 72,712 | |
| | | | | | | | | |
| | | | | | | | 110,935 | |
| | | | | | | | | |
| |
| Consumer Services 0.1% |
| Kuoni Reisen Holding AG - Reg’d, Series B | | | 174 | | | | 74,618 | |
| | | | | | | | | |
| |
| Diversified Financials 0.2% |
| Bank Sarasin & Cie AG - Reg’d, Series B | | | 1,193 | | | | 43,644 | |
| Compagnie Financiere Tradition S.A. - BR | | | 217 | | | | 23,816 | |
| EFG International AG | | | 1,584 | | | | 19,495 | |
| Partners Group Holding AG | | | 232 | | | | 42,443 | |
| Vontobel Holding AG - Reg’d | | | 1,531 | | | | 52,848 | |
| | | | | | | | | |
| | | | | | | | 182,246 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.4% |
| Aryzta AG | | | 2,649 | | | | 117,390 | |
Barry Callebaut AG - Reg’d * | | | 65 | | | | 52,398 | |
| Emmi AG - Reg’d | | | 139 | | | | 23,142 | |
| Lindt & Spruengli AG | | | 14 | | | | 38,066 | |
| Lindt & Spruengli AG - Reg’d | | | 2 | | | | 57,333 | |
| | | | | | | | | |
| | | | | | | | 288,329 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.2% |
| Galenica AG - Reg’d | | | 115 | | | | 55,578 | |
| Nobel Biocare Holding AG - Reg’d | | | 2,525 | | | | 41,746 | |
| Sonova Holding AG - Reg’d | | | 550 | | | | 63,702 | |
| Straumann Holding AG - Reg’d | | | 90 | | | | 18,841 | |
| | | | | | | | | |
| | | | | | | | 179,867 | |
| | | | | | | | | |
| |
| Materials 0.3% |
| Ems-Chemie Holding AG - Reg’d | | | 515 | | | | 80,072 | |
Schmolz & Bickenbach AG - Reg’d (c)* | | | 2,454 | | | | 45,497 | |
| Sika AG - Bearer Shares | | | 36 | | | | 71,385 | |
| | | | | | | | | |
| | | | | | | | 196,954 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.2% |
Actelion Ltd. - Reg’d * | | | 627 | | | | 31,324 | |
| BB Biotech AG - Reg’d | | | 366 | | | | 22,707 | |
| Lonza Group AG - Reg’d | | | 1,454 | | | | 127,287 | |
| | | | | | | | | |
| | | | | | | | 181,318 | |
| | | | | | | | | |
| |
| Real Estate 0.2% |
| Allreal Holding AG - Reg’d | | | 256 | | | | 35,302 | |
PSP Swiss Property AG - Reg’d * | | | 1,082 | | | | 83,156 | |
Swiss Prime Site AG - Reg’d * | | | 531 | | | | 38,118 | |
| | | | | | | | | |
| | | | | | | | 156,576 | |
| | | | | | | | | |
| |
| Retailing 0.2% |
Charles Voegele Holding AG - BR * | | | 814 | | | | 43,052 | |
Dufry Group - Reg’d * | | | 535 | | | | 62,254 | |
| Valora Holding AG - Reg’d | | | 220 | | | | 58,107 | |
| | | | | | | | | |
| | | | | | | | 163,413 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.2% |
| Kudelski S.A. - BR | | | 1,055 | | | | 26,984 | |
Logitech International S.A. - Reg’d * | | | 5,078 | | | | 96,271 | |
| | | | | | | | | |
| | | | | | | | 123,255 | |
| | | | | | | | | |
| |
| Transportation 0.3% |
| Flughafen Zuerich AG - Reg’d | | | 95 | | | | 35,024 | |
Panalpina Welttransport Holding AG - Reg’d * | | | 1,262 | | | | 157,641 | |
| | | | | | | | | |
| | | | | | | | 192,665 | |
| | | | | | | | | |
| | | | | | | | 2,783,178 | |
| |
United Kingdom 13.5%
|
| | | | | | | | | |
| |
| Banks 0.1% |
| Paragon Group Cos. plc | | | 23,808 | | | | 57,952 | |
| | | | | | | | | |
| |
| Capital Goods 3.0% |
| Ashtead Group plc | | | 64,158 | | | | 129,154 | |
| Bodycote plc | | | 24,091 | | | | 102,082 | |
| BSS Group plc | | | 10,123 | | | | 71,820 | |
| Carillion plc | | | 27,488 | | | | 151,647 | |
| Charter International plc | | | 6,559 | | | | 77,658 | |
| Chemring Group plc | | | 788 | | | | 37,854 | |
| Cobham plc | | | 29,272 | | | | 108,630 | |
Cookson Group plc * | | | 13,950 | | | | 115,166 | |
| Fenner plc | | | 11,506 | | | | 48,159 | |
| Galliford Try plc | | | 10,169 | | | | 49,693 | |
| IMI plc | | | 13,965 | | | | 176,596 | |
| Interserve plc | | | 18,919 | | | | 60,860 | |
| Invensys plc | | | 18,926 | | | | 87,431 | |
| Keller Group plc | | | 5,426 | | | | 54,992 | |
| Kier Group plc | | | 3,965 | | | | 84,138 | |
| Meggitt plc | | | 25,321 | | | | 133,859 | |
| Melrose plc | | | 17,378 | | | | 78,406 | |
| Morgan Crucible Co. plc | | | 15,003 | | | | 54,997 | |
| Morgan Sindall plc | | | 5,597 | | | | 60,439 | |
| Qinetiq Group plc | | | 39,135 | | | | 67,338 | |
| Rotork plc | | | 1,749 | | | | 46,899 | |
SIG plc * | | | 55,768 | | | | 101,337 | |
| Speedy Hire plc | | | 67,419 | | | | 26,692 | |
| Spirax-Sarco Engineering plc | | | 2,230 | | | | 64,586 | |
60 See financial notes
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| The Weir Group plc | | | 6,659 | | | | 166,200 | |
| Ultra Electronics Holdings plc | | | 1,655 | | | | 49,322 | |
| | | | | | | | | |
| | | | | | | | 2,205,955 | |
| | | | | | | | | |
| |
| Commercial & Professional Supplies 1.2% |
| Aggreko plc | | | 4,755 | | | | 119,985 | |
| Babcock International Group plc | | | 10,633 | | | | 98,816 | |
| De La Rue plc | | | 8,716 | | | | 89,074 | |
| Homeserve plc | | | 7,205 | | | | 52,328 | |
| Intertek Group plc | | | 2,814 | | | | 83,638 | |
| Michael Page International plc | | | 8,563 | | | | 64,630 | |
| Mitie Group plc | | | 14,897 | | | | 48,494 | |
| Regus plc | | | 23,460 | | | | 32,489 | |
| Serco Group plc | | | 11,952 | | | | 117,581 | |
| Shanks Group plc | | | 18,066 | | | | 32,179 | |
| The Davis Service Group plc | | | 15,126 | | | | 100,732 | |
| WS Atkins plc | | | 5,526 | | | | 66,722 | |
| | | | | | | | | |
| | | | | | | | 906,668 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.6% |
| Bellway plc | | | 10,210 | | | | 87,329 | |
Bovis Homes Group plc * | | | 12,028 | | | | 67,045 | |
| Burberry Group plc | | | 9,626 | | | | 157,193 | |
Redrow plc * | | | 24,165 | | | | 42,758 | |
The Berkeley Group Holdings plc * | | | 5,462 | | | | 73,664 | |
| | | | | | | | | |
| | | | | | | | 427,989 | |
| | | | | | | | | |
| |
| Consumer Services 0.8% |
| Greene King plc | | | 14,062 | | | | 94,243 | |
| J.D. Wetherspoon plc | | | 7,154 | | | | 47,026 | |
| Marston’s plc | | | 70,399 | | | | 113,516 | |
| Millennium & Copthorne Hotels plc | | | 9,008 | | | | 78,663 | |
PartyGaming plc * | | | 7,953 | | | | 32,076 | |
| Rank Group plc | | | 73,839 | | | | 151,072 | |
| Restaurant Group plc | | | 9,559 | | | | 43,232 | |
| | | | | | | | | |
| | | | | | | | 559,828 | |
| | | | | | | | | |
| |
| Diversified Financials 1.2% |
| Aberdeen Asset Management plc | | | 41,107 | | | | 117,081 | |
| Ashmore Group plc | | | 8,661 | | | | 53,157 | |
Cattles plc (a),(b)* | | | 247,655 | | | | 3,968 | |
| Close Brothers Group plc | | | 10,347 | | | | 127,899 | |
| F&C Asset Management plc | | | 78,769 | | | | 84,633 | |
| Hargreaves Lansdown plc | | | 5,919 | | | | 44,455 | |
| Henderson Group plc | | | 40,228 | | | | 84,667 | |
| IG Group Holdings plc | | | 7,806 | | | | 66,041 | |
| Intermediate Capital Group plc | | | 22,590 | | | | 116,794 | |
| Provident Financial plc | | | 8,434 | | | | 105,379 | |
| Tullett Prebon plc | | | 11,263 | | | | 71,632 | |
| | | | | | | | | |
| | | | | | | | 875,706 | |
| | | | | | | | | |
| |
| Energy 0.7% |
| Acergy S.A. | | | 2,800 | | | | 56,707 | |
Cairn Energy plc * | | | 9,853 | | | | 60,896 | |
Enquest plc * | | | 9,350 | | | | 19,330 | |
| Hunting plc | | | 5,918 | | | | 61,087 | |
| John Wood Group plc | | | 12,354 | | | | 86,202 | |
| Petrofac Ltd. | | | 3,130 | | | | 73,347 | |
Premier Oil plc * | | | 2,435 | | | | 65,588 | |
| Tullow Oil plc | | | 5,465 | | | | 103,797 | |
| | | | | | | | | |
| | | | | | | | 526,954 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.4% |
| Britvic plc | | | 9,687 | | | | 74,874 | |
| Dairy Crest Group plc | | | 13,500 | | | | 80,290 | |
| Greggs plc | | | 6,562 | | | | 48,136 | |
| Northern Foods plc | | | 62,795 | | | | 47,543 | |
Premier Foods plc * | | | 201,807 | | | | 56,994 | |
| Robert Wiseman Dairies plc | | | 4,274 | | | | 22,353 | |
| | | | | | | | | |
| | | | | | | | 330,190 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.0% |
| SSL International plc | | | 564 | | | | 10,474 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.1% |
| McBride plc | | | 8,393 | | | | 24,042 | |
| PZ Cussons plc | | | 8,191 | | | | 52,903 | |
| | | | | | | | | |
| | | | | | | | 76,945 | |
| | | | | | | | | |
| |
| Insurance 0.8% |
| Admiral Group plc | | | 4,153 | | | | 108,374 | |
| Beazley plc | | | 32,836 | | | | 63,478 | |
| Catlin Group Ltd. | | | 16,430 | | | | 91,740 | |
| Chaucer Holdings plc | | | 39,164 | | | | 31,973 | |
| Chesnara plc | | | 6,903 | | | | 24,003 | |
| Hiscox Ltd. | | | 16,222 | | | | 92,076 | |
| Jardine Lloyd Thompson Group plc | | | 6,154 | | | | 58,337 | |
| Lancashire Holdings Ltd. | | | 6,703 | | | | 60,942 | |
| St. James’s Place plc | | | 6,228 | | | | 27,619 | |
| | | | | | | | | |
| | | | | | | | 558,542 | |
| | | | | | | | | |
| |
| Materials 0.8% |
| Aquarius Platinum Ltd. | | | 10,679 | | | | 61,773 | |
| Croda International plc | | | 3,571 | | | | 82,277 | |
| DS Smith plc | | | 55,225 | | | | 148,973 | |
| Ferrexpo plc | | | 7,381 | | | | 38,349 | |
| Filtrona plc | | | 10,203 | | | | 40,741 | |
| Fresnillo plc | | | 1,486 | | | | 29,755 | |
| Marshalls plc | | | 26,353 | | | | 45,499 | |
| Petropavlovsk plc | | | 3,139 | | | | 48,651 | |
| Randgold Resources Ltd. | | | 604 | | | | 56,610 | |
| Yule Catto & Co. plc | | | 7,262 | | | | 30,022 | |
| | | | | | | | | |
| | | | | | | | 582,650 | |
| | | | | | | | | |
| |
| Media 0.7% |
| Aegis Group plc | | | 55,317 | | | | 111,496 | |
| Daily Mail & General Trust | | | 10,611 | | | | 91,441 | |
| Euromoney Institutional Investor plc | | | 2,538 | | | | 26,328 | |
| Informa plc | | | 21,820 | | | | 152,565 | |
Johnston Press plc * | | | 139,897 | | | | 28,572 | |
Trinity Mirror plc * | | | 47,712 | | | | 81,296 | |
| | | | | | | | | |
| | | | | | | | 491,698 | |
| | | | | | | | | |
| |
| Pharmaceuticals, Biotechnology & Life Sciences 0.1% |
| Shire plc | | | 3,782 | | | | 88,753 | |
| | | | | | | | | |
| |
| Real Estate 0.3% |
| Derwent London plc | | | 2,469 | | | | 60,157 | |
| Great Portland Estates plc | | | 9,214 | | | | 51,025 | |
Mapeley Ltd. (a),(b)* | | | 2,199 | | | | — | |
| Savills plc | | | 8,248 | | | | 43,474 | |
| Shaftesbury plc | | | 7,777 | | | | 55,583 | |
| St. Modwen Properties plc | | | 10,974 | | | | 28,450 | |
| | | | | | | | | |
| | | | | | | | 238,689 | |
| | | | | | | | | |
| |
| Retailing 0.8% |
| Carpetright plc | | | 2,647 | | | | 29,966 | |
Debenhams plc * | | | 103,479 | | | | 126,650 | |
Galiform plc * | | | 24,695 | | | | 30,742 | |
| Game Group plc | | | 38,013 | | | | 42,957 | |
| Halfords Group plc | | | 8,107 | | | | 55,018 | |
See financial notes 61
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Headlam Group plc | | | 9,693 | | | | 49,701 | |
| HMV Group plc | | | 72,792 | | | | 52,650 | |
JJB Sports plc * | | | 116,104 | | | | 17,934 | |
| Mothercare plc | | | 2,925 | | | | 24,639 | |
| N Brown Group plc | | | 10,610 | | | | 51,097 | |
| Smiths News plc | | | 14,478 | | | | 26,815 | |
Sports Direct International * | | | 18,312 | | | | 41,075 | |
| WH Smith plc | | | 7,745 | | | | 60,081 | |
| | | | | | | | | |
| | | | | | | | 609,325 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 0.2% |
| ARM Holdings plc | | | 15,180 | | | | 88,624 | |
CSR plc * | | | 6,310 | | | | 32,210 | |
| | | | | | | | | |
| | | | | | | | 120,834 | |
| | | | | | | | | |
| |
| Software & Services 0.3% |
Autonomy Corp. plc * | | | 2,581 | | | | 60,431 | |
| Computacenter plc | | | 13,403 | | | | 78,547 | |
Misys plc * | | | 15,467 | | | | 69,639 | |
| | | | | | | | | |
| | | | | | | | 208,617 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.6% |
| Electrocomponents plc | | | 33,978 | | | | 132,928 | |
| Halma plc | | | 11,853 | | | | 62,053 | |
| Laird plc | | | 33,863 | | | | 80,848 | |
| Premier Farnell plc | | | 18,185 | | | | 79,218 | |
| Spectris plc | | | 4,752 | | | | 85,895 | |
| | | | | | | | | |
| | | | | | | | 440,942 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Inmarsat plc | | | 7,264 | | | | 75,847 | |
| | | | | | | | | |
| |
| Transportation 0.6% |
Air Berlin plc (c)* | | | 6,922 | | | | 32,756 | |
| BBA Aviation plc | | | 33,466 | | | | 107,972 | |
| Forth Ports plc | | | 2,365 | | | | 49,977 | |
| Go-Ahead Group plc | | | 3,728 | | | | 81,453 | |
| Stagecoach Group plc | | | 32,249 | | | | 108,018 | |
| Wincanton plc | | | 18,439 | | | | 70,244 | |
| | | | | | | | | |
| | | | | | | | 450,420 | |
| | | | | | | | | |
| |
| Utilities 0.1% |
| Northumbrian Water Group plc | | | 17,066 | | | | 96,810 | |
| | | | | | | | | |
| | | | | | | | 9,941,788 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $64,704,961) | | | 72,923,354 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Preferred Stock 0.5% of net assets |
| |
Germany 0.5%
|
| | | | | | | | | |
| |
| Capital Goods 0.2% |
| Jungheinrich AG | | | 3,498 | | | | 132,422 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.1% |
| Hugo Boss AG | | | 1,290 | | | | 85,233 | |
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.1% |
| Draegerwerk AG & Co. KGAA | | | 985 | | | | 82,512 | |
| | | | | | | | | |
| |
| Materials 0.0% |
| Fuchs Petrolub AG | | | 175 | | | | 23,492 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Sixt AG | | | 1,038 | | | | 30,114 | |
| | | | | | | | | |
| | | | | | | | 353,773 | |
| |
Republic of Korea 0.0%
|
| | | | | | | | | |
| |
| Diversified Financials 0.0% |
| Daishin Securities Co., Ltd. | | | 2,090 | | | | 19,251 | |
| | | | | | | | | |
| Total Preferred Stock |
| (Cost $186,195) | | | 373,024 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Rights 0.0% of net assets |
| |
Belgium 0.0%
|
| | | | | | | | | |
| |
| Health Care Equipment & Services 0.0% |
Agfa Gevaert N.V. (c)* | | | 12,981 | | | | 4,354 | |
| | | | | | | | | |
| Total Rights |
| (Cost $—) | | | 4,354 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Warrants 0.0% of net assets |
| |
France 0.0%
|
| | | | | | | | | |
| |
| Energy 0.0% |
Maurel et Prom * | | | 4,079 | | | | 1,096 | |
| |
Hong Kong 0.0%
|
| | | | | | | | | |
| |
| Capital Goods 0.0% |
HKC Holdings Ltd. * | | | 20,690 | | | | 261 | |
| | | | | | | | | |
| |
| Energy 0.0% |
Hong Kong Energy Holdings Ltd. * | | | 1,317 | | | | 32 | |
| | | | | | | | | |
| | | | | | | | 293 | |
| |
Italy 0.0%
|
| | | | | | | | | |
| |
| Software & Services 0.0% |
Tiscali S.p.A. * | | | 33,436 | | | | 116 | |
| | | | | | | | | |
| Total Warrants |
| (Cost $662) | | | 1,505 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Other Investment Company 0.1% of net assets |
| |
United States 0.1%
|
| iShares MSCI EAFE Small Cap Index Fund | | | 2,300 | | | | 92,263 | |
| | | | | | | | | |
| Total Other Investment Company |
| (Cost $83,368) | | | 92,263 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
62 See financial notes
Schwab Fundamental International Small-Mid Company Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Dates | | ($) | | ($) |
| |
Short-Term Investment 0.1% of net assets |
| |
Time Deposit 0.1%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 70,033 | | | | 70,033 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $70,033) | | | 70,033 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Collateral Invested for Securities on Loan 0.7% of net assets |
| | | | | | | | | |
| | | | | | | | | |
| Invesco Short Term Investments Trust Government & Agency Portfolio | | | 526,521 | | | | 526,521 | |
| | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $526,521) | | | 526,521 | |
| | | | | |
| |
|
End of collateral invested for securities on loan. |
At 10/31/10, the tax basis cost of the fund’s investments was $66,508,390 and the unrealized appreciation and depreciation were $10,708,667 and ($3,752,524), respectively, with a net unrealized appreciation of $6,956,143.
At 10/31/10, the values of certain foreign securities held by the fund aggregating $64,288,986 were adjusted from their closing market values in accordance with procedures approved by the Board of Trustees.
| | |
| * | | Non-income producing security. |
| (a) | | Fair-valued by management in accordance with procedures approved by the Board of Trustees. |
| (b) | | Illiquid security. At the period end, the value of these amounted to $111,212 or 0.2% of net assets. |
| (c) | | All or a portion of this security is on loan. |
| | | |
| CVA — | | Dutch Certificate |
| Reg’d — | | Registered |
| REIT — | | Real Estate Investment Trust |
See financial notes 63
Schwab Fundamental Emerging Markets Index Fund
Portfolio Holdings as of October 31, 2010
This section shows all the securities in the fund’s portfolio and their values as of the report date.
The fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The fund’s Form N-Q is available on the SEC’s website at http://www.sec.gov and may be viewed and copied at the SEC’s Public Reference Room in Washington, D.C. Call 1-800-SEC-0330 for information on the operation of the Public Reference Room. The schedule of portfolio holdings filed on a fund’s most recent Form N-Q is also available by visiting Schwab’s website at www.schwabfunds.com/prospectus.
| | | | | | | | | | | | | |
| | | | | Cost
| | Value
|
| Holdings by Category | | ($) | | ($) |
| |
| | 89 | .9% | | Common Stock | | | 224,797,906 | | | | 264,442,270 | |
| | 9 | .9% | | Preferred Stock | | | 24,558,267 | | | | 29,080,959 | |
| | 0 | .2% | | Other Investment Company | | | 682,545 | | | | 691,950 | |
| | 0 | .1% | | Short-Term Investment | | | 379,268 | | | | 379,268 | |
| |
| |
| | 100 | .1% | | Total Investments | | | 250,417,986 | | | | 294,594,447 | |
| | 0 | .8% | | Collateral Invested for Securities on Loan | | | 2,267,550 | | | | 2,267,550 | |
| | (0 | .9)% | | Other Assets and Liabilities, Net | | | | | | | (2,526,510 | ) |
| |
| |
| | 100 | .0% | | Total Net Assets | | | | | | | 294,335,487 | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Common Stock 89.9% of net assets |
| |
Brazil 4.6%
|
| | | | | | | | | |
| |
| Banks 1.2% |
| Banco do Brasil S.A. | | | 49,100 | | | | 955,838 | |
| Banco Santander Brasil S.A. | | | 177,100 | | | | 2,512,293 | |
| | | | | | | | | |
| | | | | | | | 3,468,131 | |
| | | | | | | | | |
| |
| Capital Goods 0.2% |
| Empresa Brasileira de Aeronautica S.A. | | | 98,900 | | | | 704,393 | |
| | | | | | | | | |
| |
| Diversified Financials 0.2% |
| BM&F BOVESPA S.A. | | | 66,600 | | | | 558,166 | |
| | | | | | | | | |
| |
| Energy 1.0% |
| Petroleo Brasileiro S.A. - Petrobras | | | 175,900 | | | | 2,953,564 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.2% |
| Companhia de Bebidas das Americas | | | 1,500 | | | | 170,467 | |
| JBS S.A. | | | 19,200 | | | | 73,850 | |
| Souza Cruz S.A. | | | 3,700 | | | | 190,212 | |
| | | | | | | | | |
| | | | | | | | 434,529 | |
| | | | | | | | | |
| |
| Materials 1.0% |
| Companhia Siderurgica Nacional S.A. | | | 41,200 | | | | 684,526 | |
Fibria Celulose S.A. * | | | 5,042 | | | | 90,325 | |
| Gerdau S.A. | | | 9,500 | | | | 94,425 | |
| Usinas Siderurgicas de Minas Gerais S.A. | | | 14,200 | | | | 207,116 | |
| Vale S.A. | | | 60,200 | | | | 1,897,736 | |
| | | | | | | | | |
| | | | | | | | 2,974,128 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Tele Norte Leste Participacoes S.A. | | | 11,800 | | | | 236,999 | |
Tim Participacoes S.A. * | | | 36,700 | | | | 151,091 | |
| | | | | | | | | |
| | | | | | | | 388,090 | |
| | | | | | | | | |
| |
| Utilities 0.7% |
| Centrais Eletricas Brasileiras S.A. | | | 62,700 | | | | 862,895 | |
| Companhia de Saneamento Basico do Estado de Sao Paulo | | | 9,200 | | | | 206,422 | |
| Companhia Energetica de Minas Gerais | | | 13,425 | | | | 177,653 | |
| CPFL Energia S.A. | | | 6,800 | | | | 159,532 | |
| EDP - Energias do Brasil S.A. | | | 5,500 | | | | 120,655 | |
| Light S.A. | | | 7,100 | | | | 89,444 | |
| Tractebel Energia S.A. | | | 21,100 | | | | 321,408 | |
| | | | | | | | | |
| | | | | | | | 1,938,009 | |
| | | | | | | | | |
| | | | | | | | 13,419,010 | |
| |
Chile 0.9%
|
| | | | | | | | | |
| |
| Banks 0.1% |
| Banco de Chile | | | 1,518,125 | | | | 217,873 | |
| Banco Santander Chile S.A. | | | 1,799,696 | | | | 160,230 | |
| | | | | | | | | |
| | | | | | | | 378,103 | |
| | | | | | | | | |
| |
| Capital Goods 0.1% |
| Empresas Copec S.A. | | | 20,029 | | | | 377,936 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.1% |
| Cencosud S.A. | | | 51,751 | | | | 404,042 | |
| | | | | | | | | |
| |
| Retailing 0.1% |
| S.A.C.I. Falabella S.A. | | | 38,497 | | | | 385,639 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Empresa Nacional de Telecomunicaciones S.A. | | | 7,053 | | | | 112,179 | |
| | | | | | | | | |
| |
| Utilities 0.4% |
| Empresa Nacional de Electricidad S.A. | | | 203,223 | | | | 357,712 | |
| Enersis S.A. | | | 1,443,818 | | | | 659,673 | |
| | | | | | | | | |
| | | | | | | | 1,017,385 | |
| | | | | | | | | |
| | | | | | | | 2,675,284 | |
| |
China 30.3%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.1% |
| Dongfeng Motor Group Co., Ltd., Class H | | | 128,000 | | | | 278,413 | |
| | | | | | | | | |
| |
| Banks 8.9% |
| Bank of China Ltd., Class H | | | 14,017,000 | | | | 8,419,054 | |
| Bank of Communications Co., Ltd., Class H | | | 776,000 | | | | 850,206 | |
| China CITIC Bank Corp. Ltd., Class H | | | 1,392,000 | | | | 1,014,934 | |
| China Construction Bank Corp., Class H | | | 3,926,000 | | | | 3,753,268 | |
| China Merchants Bank Co., Ltd., Class H | | | 556,850 | | | | 1,586,719 | |
| China Minsheng Banking Corp., Ltd., Class H | | | 927,200 | | | | 863,183 | |
64 See financial notes
Schwab Fundamental Emerging Markets Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Industrial & Commercial Bank of China Ltd., Class H | | | 11,993,000 | | | | 9,689,064 | |
| | | | | | | | | |
| | | | | | | | 26,176,428 | |
| | | | | | | | | |
| |
| Capital Goods 1.6% |
| Beijing Enterprises Holdings Ltd. | | | 23,000 | | | | 157,602 | |
| China Communications Construction Co., Ltd., Class H | | | 306,000 | | | | 293,445 | |
| China International Marine Containers (Group) Co., Ltd., Class B | | | 270,705 | | | | 548,670 | |
| China Railway Construction Corp., Ltd., Class H | | | 740,000 | | | | 926,535 | |
| China Railway Group Ltd., Class H | | | 1,787,000 | | | | 1,443,283 | |
| China South Locomotive & Rolling Stock Corp., Ltd., Class H | | | 400,000 | | | | 407,217 | |
Metallurgical Corp. of China Ltd., Class H * | | | 829,000 | | | | 402,099 | |
| Shanghai Electric Group Co., Ltd., Class H | | | 932,000 | | | | 625,590 | |
| | | | | | | | | |
| | | | | | | | 4,804,441 | |
| | | | | | | | | |
| |
| Energy 14.2% |
| China Coal Energy Co., Class H | | | 514,000 | | | | 893,707 | |
| China Oilfield Services Ltd., Class H | | | 196,000 | | | | 319,064 | |
| China Petroleum & Chemical Corp., Class H | | | 11,940,000 | | | | 11,360,470 | |
| China Shenhua Energy Co., Ltd., Class H | | | 840,000 | | | | 3,749,976 | |
| PetroChina Co., Ltd., Class H | | | 20,031,000 | | | | 24,656,846 | |
| Yanzhou Coal Mining Co., Ltd., Class H | | | 266,000 | | | | 769,609 | |
| | | | | | | | | |
| | | | | | | | 41,749,672 | |
| | | | | | | | | |
| |
| Insurance 1.7% |
| China Life Insurance Co., Ltd., Class H | | | 660,000 | | | | 2,901,548 | |
| China Pacific Insurance Group Co., Ltd., Class H | | | 80,200 | | | | 333,624 | |
PICC Property & Casualty Co., Ltd., Class H * | | | 150,000 | | | | 221,473 | |
| Ping An Insurance (Group) Co., of China Ltd., Class H | | | 134,000 | | | | 1,448,767 | |
| | | | | | | | | |
| | | | | | | | 4,905,412 | |
| | | | | | | | | |
| |
| Materials 1.5% |
Aluminum Corp. of China Ltd., Class H (a)* | | | 1,173,000 | | | | 1,113,770 | |
Angang Steel Co., Ltd., Class H (a) | | | 542,000 | | | | 855,742 | |
| Anhui Conch Cement Co., Ltd., Class H | | | 116,000 | | | | 488,246 | |
| Jiangxi Copper Co., Ltd., Class H | | | 203,000 | | | | 568,192 | |
Maanshan Iron & Steel Co., Ltd., Class H (a) | | | 901,000 | | | | 517,964 | |
| Sinopec Shanghai Petrochemical Co., Ltd., Class H | | | 1,038,000 | | | | 467,045 | |
| Zijin Mining Group Co., Ltd., Class H | | | 432,000 | | | | 408,377 | |
| | | | | | | | | |
| | | | | | | | 4,419,336 | |
| | | | | | | | | |
| |
| Real Estate 0.0% |
Guangzhou R&F Properties Co., Ltd., Class H (a) | | | 79,200 | | | | 113,417 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 0.1% |
| ZTE Corp., Class H | | | 67,200 | | | | 250,874 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.4% |
| China Telecom Corp., Ltd., Class H | | | 1,964,000 | | | | 1,025,671 | |
| | | | | | | | | |
| |
| Transportation 1.2% |
Air China Ltd., Class H * | | | 374,000 | | | | 504,363 | |
China COSCO Holdings Co., Ltd., Class H * | | | 907,000 | | | | 1,062,908 | |
China Shipping Container Lines Co., Ltd., Class H * | | | 1,363,000 | | | | 556,567 | |
| China Shipping Development Co., Ltd., Class H | | | 243,000 | | | | 355,226 | |
China Southern Airlines Co., Ltd., Class H (a)* | | | 951,500 | | | | 648,147 | |
| Jiangsu Expressway Co., Ltd., Class H | | | 336,000 | | | | 407,125 | |
| Zhejiang Expressway Co., Ltd., Class H | | | 126,000 | | | �� | 127,357 | |
| | | | | | | | | |
| | | | | | | | 3,661,693 | |
| | | | | | | | | |
| |
| Utilities 0.6% |
| Datang International Power Generation Co., Ltd., Class H | | | 1,474,000 | | | | 594,678 | |
Huadian Power International Corp., Ltd., Class H (a) | | | 1,380,000 | | | | 316,948 | |
| Huaneng Power International, Inc., Class H | | | 1,687,000 | | | | 965,057 | |
| | | | | | | | | |
| | | | | | | | 1,876,683 | |
| | | | | | | | | |
| | | | | | | | 89,262,040 | |
| |
Colombia 0.3%
|
| | | | | | | | | |
| |
| Banks 0.1% |
| Bancolombia S.A. | | | 9,445 | | | | 151,999 | |
| | | | | | | | | |
| |
| Diversified Financials 0.1% |
| Grupo de Inversiones Suramericana | | | 10,948 | | | | 244,043 | |
| | | | | | | | | |
| |
| Energy 0.1% |
| Ecopetrol S.A. | | | 163,393 | | | | 391,759 | |
| | | | | | | | | |
| | | | | | | | 787,801 | |
| |
Czech Republic 0.5%
|
| | | | | | | | | |
| |
| Banks 0.1% |
| Komercni Banka A/S | | | 1,011 | | | | 229,504 | |
| | | | | | | | | |
| |
| Materials 0.1% |
Unipetrol A/S * | | | 18,110 | | | | 204,623 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Telefonica 02 Czech Republic A/S | | | 19,004 | | | | 417,714 | |
| | | | | | | | | |
| |
| Utilities 0.2% |
| CEZ A/S | | | 15,475 | | | | 684,331 | |
| | | | | | | | | |
| | | | | | | | 1,536,172 | |
| |
Egypt 0.2%
|
| | | | | | | | | |
| |
| Capital Goods 0.1% |
| Orascom Construction Industries GDR | | | 5,497 | | | | 255,195 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
Orascom Telecom Holding S.A.E. GDR - Reg’d * | | | 56,919 | | | | 220,853 | |
| | | | | | | | | |
| | | | | | | | 476,048 | |
See financial notes 65
Schwab Fundamental Emerging Markets Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Hong Kong 2.9%
|
| | | | | | | | | |
| |
| Capital Goods 0.2% |
| Citic Pacific Ltd. | | | 112,000 | | | | 299,462 | |
| Shanghai Industrial Holdings Ltd. | | | 38,000 | | | | 175,458 | |
| | | | | | | | | |
| | | | | | | | 474,920 | |
| | | | | | | | | |
| |
| Energy 0.7% |
| CNOOC Ltd. | | | 927,000 | | | | 1,935,315 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.1% |
| China Resources Enterprise Ltd. | | | 82,000 | | | | 347,600 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.0% |
| China Foods Ltd. | | | 94,000 | | | | 78,130 | |
| | | | | | | | | |
| |
| Real Estate 0.3% |
| China Overseas Land & Investment Ltd. | | | 110,000 | | | | 231,876 | |
| China Vanke Co., Ltd., Class B | | | 399,433 | | | | 573,413 | |
| | | | | | | | | |
| | | | | | | | 805,289 | |
| | | | | | | | | |
| |
| Telecommunication Services 1.5% |
| China Mobile Ltd. | | | 334,500 | | | | 3,416,019 | |
| China Unicom Ltd. | | | 820,056 | | | | 1,153,329 | |
| | | | | | | | | |
| | | | | | | | 4,569,348 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| China Merchants Holdings International Co., Ltd. | | | 48,000 | | | | 168,795 | |
| | | | | | | | | |
| |
| Utilities 0.0% |
| China Resources Power Holdings Co., Ltd. | | | 75,000 | | | | 144,600 | |
| | | | | | | | | |
| | | | | | | | 8,523,997 | |
| |
Hungary 0.7%
|
| | | | | | | | | |
| |
| Banks 0.3% |
OTP Bank Nyrt. * | | | 31,523 | | | | 936,168 | |
| | | | | | | | | |
| |
| Energy 0.3% |
MOL Hungarian Oil & Gas Nyrt. * | | | 8,974 | | | | 953,534 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Magyar Telekom Telecommunications plc | | | 77,246 | | | | 222,750 | |
| | | | | | | | | |
| | | | | | | | 2,112,452 | |
| |
India 5.4%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.1% |
| Mahindra & Mahindra Ltd. | | | 11,917 | | | | 195,495 | |
| | | | | | | | | |
| |
| Banks 1.3% |
| Axis Bank Ltd. | | | 30,211 | | | | 1,002,275 | |
| Bank of Baroda | | | 4,243 | | | | 97,414 | |
| Bank of India | | | 19,889 | | | | 218,092 | |
| Canara Bank Ltd. | | | 11,030 | | | | 179,590 | |
| HDFC Bank Ltd. | | | 4,689 | | | | 239,926 | |
| Housing Development Finance Corp., Ltd. | | | 29,541 | | | | 457,153 | |
| ICICI Bank Ltd. | | | 30,437 | | | | 802,135 | |
| Punjab National Bank Ltd. | | | 4,782 | | | | 139,113 | |
| State Bank of India | | | 9,821 | | | | 700,230 | |
| | | | | | | | | |
| | | | | | | | 3,835,928 | |
| | | | | | | | | |
| |
| Capital Goods 0.3% |
| Bharat Heavy Electricals Ltd. | | | 2,407 | | | | 132,702 | |
| Larsen & Toubro Ltd. | | | 10,389 | | | | 473,059 | |
| Tata Motors Ltd. | | | 11,852 | | | | 311,666 | |
| | | | | | | | | |
| | | | | | | | 917,427 | |
| | | | | | | | | |
| |
| Diversified Financials 0.1% |
| Infrastructure Development Finance Co., Ltd. | | | 102,244 | | | | 462,589 | |
| | | | | | | | | |
| |
| Energy 1.3% |
| Bharat Petroleum Corp., Ltd. | | | 22,540 | | | | 369,811 | |
| Hindustan Petroleum Corp., Ltd. | | | 50,936 | | | | 560,184 | |
| Indian Oil Corp., Ltd. | | | 19,115 | | | | 177,631 | |
| Mangalore Refinery & Petrochemicals Ltd. | | | 92,840 | | | | 170,244 | |
| Oil & Natural Gas Corp., Ltd. | | | 24,855 | | | | 729,780 | |
| Oil India Ltd. | | | 2,485 | | | | 81,195 | |
| Reliance Industries Ltd. | | | 65,905 | | | | 1,628,947 | |
| | | | | | | | | |
| | | | | | | | 3,717,792 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.4% |
| Balrampur Chini Mills Ltd. | | | 197,120 | | | | 376,816 | |
| ITC Ltd. | | | 206,993 | | | | 793,512 | |
| | | | | | | | | |
| | | | | | | | 1,170,328 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.1% |
| Hindustan Unilever Ltd. | | | 24,331 | | | | 161,902 | |
| | | | | | | | | |
| |
| Materials 0.9% |
| Grasim Industries Ltd. | | | 4,334 | | | | 218,670 | |
| Hindalco Industries Ltd. | | | 111,395 | | | | 533,127 | |
| Hindustan Zinc Ltd. | | | 6,415 | | | | 178,762 | |
| National Aluminium Co., Ltd. | | | 6,957 | | | | 62,889 | |
| Steel Authority of India Ltd. | | | 31,080 | | | | 135,656 | |
| Sterlite Industries (India) Ltd. | | | 66,870 | | | | 256,014 | |
| Tata Steel Ltd. | | | 75,363 | | | | 999,032 | |
| Ultra Tech Cement Ltd. | | | 7,643 | | | | 188,882 | |
| Welspun Gujarat Stahl Rohren Ltd. | | | 22,805 | | | | 128,631 | |
| | | | | | | | | |
| | | | | | | | 2,701,663 | |
| | | | | | | | | |
| |
| Real Estate 0.0% |
| DLF Ltd. | | | 16,133 | | | | 127,439 | |
| | | | | | | | | |
| |
| Software & Services 0.4% |
| Infosys Technologies Ltd. | | | 12,211 | | | | 817,589 | |
| Tata Consultancy Services | | | 5,427 | | | | 128,555 | |
| Wipro Ltd. | | | 13,363 | | | | 126,226 | |
| | | | | | | | | |
| | | | | | | | 1,072,370 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.3% |
| Bharti Airtel Ltd. | | | 50,134 | | | | 369,332 | |
Idea Cellular Ltd. * | | | 91,233 | | | | 138,637 | |
| Reliance Communications Ltd. | | | 71,711 | | | | 291,333 | |
| | | | | | | | | |
| | | | | | | | 799,302 | |
| | | | | | | | | |
| |
| Utilities 0.2% |
| Gail India Ltd. | | | 19,748 | | | | 218,211 | |
| National Hydroelectric Power Corp., Ltd. | | | 92,303 | | | | 64,951 | |
| NTPC Ltd. | | | 76,993 | | | | 338,110 | |
| Power Grid Corp. of India Ltd. | | | 64,322 | | | | 145,543 | |
| | | | | | | | | |
| | | | | | | | 766,815 | |
| | | | | | | | | |
| | | | | | | | 15,929,050 | |
66 See financial notes
Schwab Fundamental Emerging Markets Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Indonesia 1.3%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.3% |
| PT Astra International Tbk | | | 135,000 | | | | 864,352 | |
| | | | | | | | | |
| |
| Banks 0.5% |
| PT Bank Central Asia Tbk | | | 468,000 | | | | 367,688 | |
| PT Bank Danamon Indonesia Tbk | | | 246,500 | | | | 185,388 | |
| PT Bank Mandiri | | | 248,000 | | | | 194,956 | |
| PT Bank Negara Indonesia (Persero) Tbk | | | 485,500 | | | | 212,277 | |
| PT Bank Rakyat Indonesia | | | 362,000 | | | | 463,459 | |
| | | | | | | | | |
| | | | | | | | 1,423,768 | |
| | | | | | | | | |
| |
| Energy 0.1% |
| PT Bumi Resources Tbk | | | 1,167,500 | | | | 292,333 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| PT Gudang Garam Tbk | | | 35,000 | | | | 187,254 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.0% |
| PT Unilever Indonesia Tbk | | | 37,000 | | | | 72,468 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.3% |
| PT Indosat Tbk | | | 216,000 | | | | 145,358 | |
| PT Telekomunikasi Indonesia Tbk | | | 696,000 | | | | 706,566 | |
| | | | | | | | | |
| | | | | | | | 851,924 | |
| | | | | | | | | |
| | | | | | | | 3,692,099 | |
| |
Malaysia 2.6%
|
| | | | | | | | | |
| |
| Banks 1.2% |
| CIMB Group Holdings Berhad | | | 386,800 | | | | 1,032,947 | |
| Malayan Banking Berhad | | | 476,100 | | | | 1,379,605 | |
| Public Bank Berhad | | | 264,000 | | | | 1,082,642 | |
| | | | | | | | | |
| | | | | | | | 3,495,194 | |
| | | | | | | | | |
| |
| Capital Goods 0.3% |
| Sime Darby Berhad | | | 253,500 | | | | 720,656 | |
| | | | | | | | | |
| |
| Consumer Services 0.3% |
| Genting Berhad | | | 200,500 | | | | 674,038 | |
| Resorts World Berhad | | | 218,600 | | | | 246,470 | |
| | | | | | | | | |
| | | | | | | | 920,508 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.2% |
| British American Tobacco Malaysia Berhad | | | 10,500 | | | | 157,085 | |
| IOI Corp. Berhad | | | 186,200 | | | | 348,762 | |
| Ppb Group Berhad | | | 29,800 | | | | 183,967 | |
| | | | | | | | | |
| | | | | | | | 689,814 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.3% |
Axiata Group Berhad * | | | 275,500 | | | | 398,432 | |
| Digi.com Berhad | | | 30,400 | | | | 247,577 | |
| Telekom Malaysia Berhad | | | 314,700 | | | | 344,543 | |
| | | | | | | | | |
| | | | | | | | 990,552 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| PLUS Expressways Berhad | | | 107,900 | | | | 152,757 | |
| | | | | | | | | |
| |
| Utilities 0.2% |
| Petronas Gas Berhad | | | 34,300 | | | | 124,068 | |
| Tenaga Nasional Berhad | | | 117,900 | | | | 334,035 | |
| YTL Power International Berhad | | | 208,607 | | | | 157,014 | |
| | | | | | | | | |
| | | | | | | | 615,117 | |
| | | | | | | | | |
| | | | | | | | 7,584,598 | |
| |
Mexico 6.3%
|
| | | | | | | | | |
| |
| Banks 0.2% |
| Grupo Financiero Banorte S.A.B. de C.V., Class O | | | 100,000 | | | | 427,842 | |
| Grupo Financiero Inbursa S.A.B. de C.V., Class O | | | 27,600 | | | | 119,359 | |
| | | | | | | | | |
| | | | | | | | 547,201 | |
| | | | | | | | | |
| |
| Capital Goods 0.2% |
| Alfa S.A.B., Class A | | | 32,300 | | | | 269,481 | |
| Grupo Carso S.A.B de C.V., Series A1 | | | 55,400 | | | | 319,263 | |
| | | | | | | | | |
| | | | | | | | 588,744 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.2% |
| Organizacion Soriana S.A.B de C.V., Series B | | | 31,400 | | | | 95,640 | |
| Wal-Mart de Mexico S.A.B. de C.V., Series V | | | 206,200 | | | | 564,428 | |
| | | | | | | | | |
| | | | | | | | 660,068 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 1.0% |
| Coca-Cola Femsa S.A.B. de C.V. (Femsa), Series L | | | 79,800 | | | | 636,564 | |
| Fomento Economico Mexicano S.A.B. de C.V. | | | 224,300 | | | | 1,233,396 | |
| Grupo Bimbo S.A.B. de C.V., Series A | | | 15,700 | | | | 121,285 | |
| Grupo Modelo S.A. de C.V., Series C | | | 176,400 | | | | 988,571 | |
| | | | | | | | | |
| | | | | | | | 2,979,816 | |
| | | | | | | | | |
| |
| Household & Personal Products 0.1% |
| Kimberly-Clark de Mexico S.A.B. de C.V., Class A | | | 41,000 | | | | 257,163 | |
| | | | | | | | | |
| |
| Materials 1.4% |
Cemex S.A.B. de C.V. * | | | 2,541,928 | | | | 2,233,554 | |
| Grupo Mexico S.A.B. de C.V., Series B | | | 467,274 | | | | 1,539,037 | |
| Industrias Penoles S.A. de C.V. | | | 6,400 | | | | 181,385 | |
| | | | | | | | | |
| | | | | | | | 3,953,976 | |
| | | | | | | | | |
| |
| Media 0.3% |
| Grupo Televisa S.A., Series CPO | | | 186,500 | | | | 837,045 | |
| | | | | | | | | |
| |
| Retailing 0.0% |
| Grupo Elektra, S.A. de C.V. | | | 2,350 | | | | 86,231 | |
| | | | | | | | | |
| |
| Telecommunication Services 2.9% |
| America Movil S.A.B. de C.V., Series L | | | 2,269,800 | | | | 6,505,363 | |
Carso Global Telecom S.A.B. de C.V., Class A1 * | | | 79,300 | | | | 411,014 | |
| Telefonos de Mexico S.A.B. de C.V. | | | 2,198,500 | | | | 1,703,891 | |
| | | | | | | | | |
| | | | | | | | 8,620,268 | |
| | | | | | | | | |
| | | | | | | | 18,530,512 | |
| |
Philippines 0.2%
|
| | | | | | | | | |
| |
| Banks 0.0% |
| Bank of the Philippine Islands | | | 120,200 | | | | 163,992 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Globe Telecom, Inc. | | | 5,160 | | | | 107,984 | |
See financial notes 67
Schwab Fundamental Emerging Markets Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| Philippine Long Distance Telephone Co. | | | 2,780 | | | | 172,845 | |
| | | | | | | | | |
| | | | | | | | 280,829 | |
| | | | | | | | | |
| |
| Utilities 0.1% |
First Gen Corp. * | | | 782,000 | | | | 247,639 | |
| | | | | | | | | |
| | | | | | | | 692,460 | |
| |
Poland 1.6%
|
| | | | | | | | | |
| |
| Banks 0.4% |
| Bank Handlowy w Warszawie S.A. | | | 3,638 | | | | 114,851 | |
| Bank Pekao S.A. | | | 6,458 | | | | 421,527 | |
| Bank Zachodni WBK S.A. | | | 1,225 | | | | 90,545 | |
| Powszechna Kasa Oszczednosci Bank Polski S.A. | | | 38,399 | | | | 605,820 | |
| | | | | | | | | |
| | | | | | | | 1,232,743 | |
| | | | | | | | | |
| |
| Energy 0.5% |
Polski Koncern Naftowy Orlen S.A. * | | | 94,525 | | | | 1,332,809 | |
| Polskie Gornictwo Naftowe I Gazownictwo S.A. | | | 151,601 | | | | 196,804 | |
| | | | | | | | | |
| | | | | | | | 1,529,613 | |
| | | | | | | | | |
| |
| Materials 0.4% |
| KGHM Polska Miedz S.A. | | | 24,484 | | | | 1,099,568 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.3% |
| Telekomunikacja Polska S.A. | | | 132,968 | | | | 846,695 | |
| | | | | | | | | |
| |
| Utilities 0.0% |
| Polska Grupa Energetyczna S.A. | | | 15,964 | | | | 122,457 | |
| | | | | | | | | |
| | | | | | | | 4,831,076 | |
| |
Russia 8.6%
|
| | | | | | | | | |
| |
| Banks 0.7% |
| Sberbank GDR - Reg’d | | | 4,640 | | | | 1,742,425 | |
| VTB Bank OJSC GDR - Reg’d | | | 53,105 | | | | 351,055 | |
| | | | | | | | | |
| | | | | | | | 2,093,480 | |
| | | | | | | | | |
| |
| Energy 6.9% |
| Gazprom ADR | | | 332,719 | | | | 7,284,894 | |
| Gazprom Neft ADR | | | 25,694 | | | | 499,107 | |
| LUKOIL ADR | | | 102,803 | | | | 5,732,799 | |
Rosneft Oil Co. GDR * | | | 149,480 | | | | 1,040,101 | |
| Surgutneftegaz ADR | | | 483,303 | | | | 4,732,623 | |
| Tatneft ADR | | | 34,342 | | | | 1,081,364 | |
| | | | | | | | | |
| | | | | | | | 20,370,888 | |
| | | | | | | | | |
| |
| Materials 0.7% |
Magnitogorsk Iron & Steel Works GDR - Reg’d * | | | 9,926 | | | | 123,858 | |
| Mining & Metallurgical Co., Norilsk Nickel ADR | | | 56,217 | | | | 1,046,215 | |
| Novolipetsk Steel OJSC GDR - Reg’d | | | 14,295 | | | | 487,982 | |
Severstal GDR - Reg’d * | | | 33,255 | | | | 447,710 | |
| | | | | | | | | |
| | | | | | | | 2,105,765 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.3% |
| Mobile TeleSystems ADR | | | 32,054 | | | | 693,969 | |
| Sistema JSFC - Reg’d GDR | | | 4,887 | | | | 125,842 | |
| | | | | | | | | |
| | | | | | | | 819,811 | |
| | | | | | | | | |
| | | | | | | | 25,389,944 | |
| |
South Africa 7.6%
|
| | | | | | | | | |
| |
| Banks 1.1% |
| ABSA Group Ltd. | | | 33,630 | | | | 651,507 | |
| Nedbank Group Ltd. | | | 25,609 | | | | 478,246 | |
| Standard Bank Group Ltd. | | | 137,902 | | | | 2,029,335 | |
| | | | | | | | | |
| | | | | | | | 3,159,088 | |
| | | | | | | | | |
| |
| Capital Goods 0.5% |
| Barloworld Ltd. | | | 86,786 | | | | 651,564 | |
| Bidvest Group Ltd. | | | 38,436 | | | | 818,655 | |
| | | | | | | | | |
| | | | | | | | 1,470,219 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.2% |
Steinhoff International Holdings Ltd. * | | | 190,251 | | | | 596,952 | |
| | | | | | | | | |
| |
| Diversified Financials 1.0% |
| African Bank Investments Ltd. | | | 84,079 | | | | 430,937 | |
| FirstRand Ltd. | | | 440,334 | | | | 1,290,952 | |
| Investec Ltd. | | | 38,228 | | | | 314,397 | |
| Remgro Ltd. | | | 46,564 | | | | 721,475 | |
| RMB Holdings Ltd. | | | 70,902 | | | | 364,912 | |
| | | | | | | | | |
| | | | | | | | 3,122,673 | |
| | | | | | | | | |
| |
| Energy 0.8% |
| Sasol | | | 50,436 | | | | 2,271,250 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.4% |
| Massmart Holdings Ltd. | | | 23,180 | | | | 472,016 | |
| Pick’n Pay Stores Ltd. | | | 29,299 | | | | 192,752 | |
| Shoprite Holdings Ltd. | | | 31,247 | | | | 441,845 | |
| | | | | | | | | |
| | | | | | | | 1,106,613 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.1% |
| Tiger Brands Ltd. | | | 8,615 | | | | 230,942 | |
| | | | | | | | | |
| |
| Insurance 0.3% |
| Sanlam Ltd. | | | 264,080 | | | | 988,754 | |
| | | | | | | | | |
| |
| Materials 1.7% |
Anglo Platinum Ltd. * | | | 7,707 | | | | 761,437 | |
| AngloGold Ashanti Ltd. | | | 10,006 | | | | 469,285 | |
| ArcelorMittal South Africa Ltd. | | | 18,208 | | | | 208,910 | |
| Exxaro Resources Ltd. | | | 8,985 | | | | 169,044 | |
| Gold Fields Ltd. | | | 53,682 | | | | 842,818 | |
Highveld Steel & Vanadium Corp., Ltd. * | | | 21,212 | | | | 268,186 | |
| Impala Platinum Holdings Ltd. | | | 52,837 | | | | 1,491,700 | |
| Kumba Iron Ore Ltd. | | | 3,628 | | | | 205,967 | |
| Mondi Ltd. | | | 33,250 | | | | 276,253 | |
Sappi Ltd. * | | | 88,494 | | | | 438,098 | |
| | | | | | | | | |
| | | | | | | | 5,131,698 | |
| | | | | | | | | |
| |
| Media 0.2% |
| Naspers Ltd., Class N | | | 11,578 | | | | 607,293 | |
| | | | | | | | | |
| |
| Retailing 0.2% |
| Imperial Holdings Ltd. | | | 32,907 | | | | 537,870 | |
| | | | | | | | | |
| |
| Telecommunication Services 1.1% |
| MTN Group Ltd. | | | 102,306 | | | | 1,840,479 | |
| Telkom South Africa Ltd. | | | 193,776 | | | | 1,001,157 | |
| Vodacom Group (Pty) Ltd. | | | 31,911 | | | | 306,545 | |
| | | | | | | | | |
| | | | | | | | 3,148,181 | |
| | | | | | | | | |
| | | | | | | | 22,371,533 | |
68 See financial notes
Schwab Fundamental Emerging Markets Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Taiwan 12.3%
|
| | | | | | | | | |
| |
| Banks 1.5% |
| Chang Hwa Commercial Bank | | | 592,000 | | | | 391,168 | |
| China Development Financial Holding Corp. | | | 953,927 | | | | 283,512 | |
| Chinatrust Financial Holding Co., Ltd. | | | 1,188,760 | | | | 742,128 | |
| First Financial Holding Co., Ltd. | | | 754,575 | | | | 497,667 | |
| Hua Nan Financial Holdings Co., Ltd. | | | 630,335 | | | | 415,531 | |
| Mega Financial Holding Co., Ltd. | | | 1,175,000 | | | | 814,624 | |
| SinoPac Financial Holdings Co., Ltd. | | | 1,090,000 | | | | 410,693 | |
Taishin Financial Holding Co., Ltd. * | | | 1,356,690 | | | | 593,379 | |
| Taiwan Cooperative Bank | | | 401,600 | | | | 286,851 | |
| | | | | | | | | |
| | | | | | | | 4,435,553 | |
| | | | | | | | | |
| |
| Capital Goods 0.2% |
| Far Eastern New Century Corp. | | | 390,335 | | | | 561,411 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.3% |
| Pou Chen Corp. | | | 536,267 | | | | 508,171 | |
Tatung Co., Ltd. * | | | 2,014,000 | | | | 474,702 | |
| | | | | | | | | |
| | | | | | | | 982,873 | |
| | | | | | | | | |
| |
| Diversified Financials 0.2% |
| Fubon Financial Holding Co., Ltd. | | | 438,333 | | | | 536,247 | |
| | | | | | | | | |
| |
| Energy 0.2% |
| Formosa Petrochemical Corp. | | | 184,030 | | | | 500,213 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.2% |
| Uni-President Enterprises Corp. | | | 426,533 | | | | 554,315 | |
| | | | | | | | | |
| |
| Insurance 0.2% |
| Cathay Financial Holding Co., Ltd. | | | 334,342 | | | | 511,063 | |
Shin Kong Financial Holding Co., Ltd. * | | | 573,000 | | | | 210,685 | |
| | | | | | | | | |
| | | | | | | | 721,748 | |
| | | | | | | | | |
| |
| Materials 2.6% |
| Asia Cement Corp. | | | 145,330 | | | | 149,709 | |
| China Steel Corp. | | | 1,524,556 | | | | 1,544,175 | |
| Formosa Chemicals & Fibre Corp. | | | 438,420 | | | | 1,253,765 | |
| Formosa Plastics Corp. | | | 984,820 | | | | 2,821,703 | |
| Nan Ya Plastics Corp. | | | 672,160 | | | | 1,493,162 | |
| Taiwan Cement Corp. | | | 218,100 | | | | 231,906 | |
| | | | | | | | | |
| | | | | | | | 7,494,420 | |
| | | | | | | | | |
| |
| Semiconductors & Semiconductor Equipment 2.3% |
| Advanced Semiconductor Engineering, Inc. | | | 528,843 | | | | 460,195 | |
| MediaTek, Inc. | | | 37,138 | | | | 467,208 | |
Powerchip Semiconductor Corp. * | | | 1,991,940 | | | | 494,270 | |
| Siliconware Precision Industries Co. | | | 407,270 | | | | 447,935 | |
| Taiwan Semiconductor Manufacturing Co., Ltd. ADR | | | 2,102,689 | | | | 4,325,885 | |
| United Microelectronics Corp. | | | 1,242,965 | | | | 596,231 | |
| | | | | | | | | |
| | | | | | | | 6,791,724 | |
| | | | | | | | | |
| |
| Technology Hardware & Equipment 3.7% |
| Acer, Inc. | | | 246,496 | | | | 717,823 | |
| Asustek Computer, Inc. | | | 83,231 | | | | 675,413 | |
AU Optronics Corp. * | | | 1,231,800 | | | | 1,228,956 | |
Chimei InnoLux Corp. * | | | 430,357 | | | | 577,496 | |
Chunghwa Picture Tubes Ltd. * | | | 980,486 | | | | 148,027 | |
| Compal Electronics, Inc. | | | 527,305 | | | | 672,747 | |
| Delta Electronics, Inc. | | | 135,025 | | | | 557,820 | |
| Hon Hai Precision Industry Co., Ltd. | | | 664,311 | | | | 2,512,448 | |
| HTC Corp. | | | 68,070 | | | | 1,543,650 | |
| Inventec Co., Ltd. | | | 708,207 | | | | 372,434 | |
| Lite-On Technology Corp. | | | 389,815 | | | | 514,903 | |
Pegatron Corp. * | | | 232,264 | | | | 314,398 | |
| Quanta Computer, Inc. | | | 236,500 | | | | 434,333 | |
| Wistron Corp. | | | 230,602 | | | | 474,438 | |
| | | | | | | | | |
| | | | | | | | 10,744,886 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.7% |
| Chunghwa Telecom Co., Ltd. | | | 637,133 | | | | 1,490,336 | |
| Far EasTone Telecommunications Co., Ltd. | | | 242,622 | | | | 349,406 | |
| Taiwan Mobile Co., Ltd. | | | 144,000 | | | | 321,015 | |
| | | | | | | | | |
| | | | | | | | 2,160,757 | |
| | | | | | | | | |
| |
| Transportation 0.2% |
Evergreen Marine Corp. * | | | 274,000 | | | | 228,354 | |
Yang Ming Marine Transport * | | | 481,699 | | | | 366,558 | |
| | | | | | | | | |
| | | | | | | | 594,912 | |
| | | | | | | | | |
| | | | | | | | 36,079,059 | |
| |
Thailand 1.6%
|
| | | | | | | | | |
| |
| Banks 0.4% |
| Bangkok Bank Public Co., Ltd. - Reg’d | | | 82,800 | | | | 427,638 | |
| Kasikornbank Public Co., Ltd. | | | 78,900 | | | | 332,247 | |
| Krung Thai Bank Public Co., Ltd. | | | 364,400 | | | | 205,415 | |
| Siam Commercial Bank Public Co., Ltd. | | | 91,900 | | | | 314,201 | |
| | | | | | | | | |
| | | | | | | | 1,279,501 | |
| | | | | | | | | |
| |
| Energy 0.8% |
| IRPC PCL | | | 1,349,300 | | | | 190,828 | |
| PTT Exploration & Production Public Co., Ltd. - Reg’d | | | 82,300 | | | | 469,423 | |
| PTT PCL | | | 131,100 | | | | 1,324,994 | |
| Thai Oil Public Co., Ltd. | | | 154,400 | | | | 272,955 | |
| | | | | | | | | |
| | | | | | | | 2,258,200 | |
| | | | | | | | | |
| |
| Materials 0.1% |
| PTT Chemical PCL | | | 43,600 | | | | 205,057 | |
| The Siam Cement Public Co., Ltd. | | | 14,200 | | | | 156,230 | |
| | | | | | | | | |
| | | | | | | | 361,287 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.2% |
| Advanced Info Service Public Co. Ltd. NVDR | | | 108,500 | | | | 325,717 | |
| Total Access Communication Public Co. Ltd. NVDR | | | 88,000 | | | | 123,685 | |
| | | | | | | | | |
| | | | | | | | 449,402 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
| Thai Airways International Public Co., Ltd. NVDR | | | 141,600 | | | | 220,704 | |
| | | | | | | | | |
| | | | | | | | 4,569,094 | |
| |
Turkey 2.0%
|
| | | | | | | | | |
| |
| Automobiles & Components 0.1% |
| Ford Otomotiv Sanayi A/S | | | 15,636 | | | | 137,045 | |
See financial notes 69
Schwab Fundamental Emerging Markets Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| | | | | | | | | |
| |
| Banks 0.9% |
| Akbank T.A.S. | | | 121,747 | | | | 754,690 | |
| Turkiye Garanti Bankasi A/S | | | 78,614 | | | | 474,551 | |
| Turkiye Halk Bankasi A/S | | | 23,129 | | | | 229,754 | |
| Turkiye Is Bankasi, Class C | | | 136,284 | | | | 603,443 | |
| Turkiye Vakiflar Bankasi T.A.O., Class D | | | 84,949 | | | | 269,656 | |
Yapi ve Kredi Bankasi A/S * | | | 51,765 | | | | 195,249 | |
| | | | | | | | | |
| | | | | | | | 2,527,343 | |
| | | | | | | | | |
| |
| Capital Goods 0.4% |
Dogan Sirketler Grubu Holdings A/S * | | | 294,892 | | | | 213,817 | |
| Enka Insaat ve Sanayi A/S | | | 20,391 | | | | 92,038 | |
| Koc Holding A/S | | | 205,569 | | | | 967,651 | |
| | | | | | | | | |
| | | | | | | | 1,273,506 | |
| | | | | | | | | |
| |
| Consumer Durables & Apparel 0.0% |
| Arcelik A/S | | | 23,738 | | | | 129,665 | |
| | | | | | | | | |
| |
| Diversified Financials 0.1% |
| Haci Omer Sabanci Holding A/S | | | 47,190 | | | | 255,669 | |
| | | | | | | | | |
| |
| Energy 0.2% |
| Tupras-Turkiye Petrol Rafinerileri A/S | | | 24,795 | | | | 659,241 | |
| | | | | | | | | |
| |
| Materials 0.1% |
Eregli Demir ve Celik Fabrikalari T.A.S. (Erdemir) * | | | 82,728 | | | | 306,089 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.1% |
| Turk Telekomunikasyon A/S | | | 27,654 | | | | 129,167 | |
| Turkcell Iletisim Hizmetleri A/S | | | 31,617 | | | | 226,254 | |
| | | | | | | | | |
| | | | | | | | 355,421 | |
| | | | | | | | | |
| |
| Transportation 0.1% |
Turk Hava Yollari Anonim Ortakligi * | | | 81,870 | | | | 336,062 | |
| | | | | | | | | |
| | | | | | | | 5,980,041 | |
| | | | | | | | | |
| Total Common Stock |
| (Cost $224,797,906) | | | 264,442,270 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Preferred Stock 9.9% of net assets |
| |
Brazil 9.8%
|
| | | | | | | | | |
| |
| Banks 4.2% |
| Banco Bradesco S.A. | | | 256,038 | | | | 5,277,970 | |
| Itau Unibanco Holding S.A. | | | 262,665 | | | | 6,410,985 | |
| Itausa - Investimentos Itau S.A. | | | 81,200 | | | | 644,232 | |
| | | | | | | | | |
| | | | | | | | 12,333,187 | |
| | | | | | | | | |
| |
| Energy 1.5% |
| Petroleo Brasileiro S.A. | | | 261,900 | | | | 3,981,718 | |
| Ultrapar Participacoes S.A. | | | 9,100 | | | | 552,861 | |
| | | | | | | | | |
| | | | | | | | 4,534,579 | |
| | | | | | | | | |
| |
| Food & Staples Retailing 0.2% |
| Compania Brasileira de Distribuicao Grupo Pao de Acucar, Class A | | | 12,600 | | | | 493,537 | |
| | | | | | | | | |
| |
| Food, Beverage & Tobacco 0.3% |
| Companhia de Bebidas das Americas | | | 6,620 | | | | 920,757 | |
| | | | | | | | | |
| |
| Materials 1.9% |
| Bradespar S.A. | | | 14,500 | | | | 371,561 | |
Braskem S.A., Class A * | | | 53,800 | | | | 551,827 | |
| Gerdau S.A. | | | 52,500 | | | | 679,292 | |
| Metalurgica Gerdau S.A. | | | 80,200 | | | | 1,235,334 | |
| Usinas Siderurgicas de Minas Gerais S.A., Class A | | | 43,000 | | | | 536,899 | |
| Vale S.A., Class A | | | 78,000 | | | | 2,190,496 | |
| | | | | | | | | |
| | | | | | | | 5,565,409 | |
| | | | | | | | | |
| |
| Telecommunication Services 0.8% |
Brasil Telecom S.A. * | | | 81,711 | | | | 605,035 | |
| Tele Norte Leste Participacoes S.A. | | | 52,700 | | | | 807,408 | |
| Telecomunicacoes de Sao Paulo S.A. | | | 6,600 | | | | 157,246 | |
Telemar Norte Leste S.A., Class A * | | | 10,100 | | | | 286,374 | |
| Tim Participacoes S.A. | | | 27,100 | | | | 88,777 | |
| Vivo Participacoes S.A. | | | 9,350 | | | | 269,452 | |
| | | | | | | | | |
| | | | | | | | 2,214,292 | |
| | | | | | | | | |
| |
| Utilities 0.9% |
| Companhia Energetica de Minas Gerais | | | 83,108 | | | | 1,463,420 | |
| Companhia Paranaense de Energia-Copel, Class B | | | 24,600 | | | | 578,432 | |
| Compania Energetica de Sao Paulo, Class B | | | 21,000 | | | | 334,088 | |
| Eletropaulo Metropolitana S.A., Class B | | | 20,500 | | | | 358,084 | |
| | | | | | | | | |
| | | | | | | | 2,734,024 | |
| | | | | | | | | |
| | | | | | | | 28,795,785 | |
| |
Colombia 0.1%
|
| | | | | | | | | |
| |
| Banks 0.1% |
| Bancolombia S.A. | | | 16,484 | | | | 285,174 | |
| | | | | | | | | |
| Total Preferred Stock |
| (Cost $24,558,267) | | | 29,080,959 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
| |
Other Investment Company 0.2% of net assets |
| |
United States 0.2%
|
| iShares MSCI Emerging Markets Index Fund | | | 15,000 | | | | 691,950 | |
| | | | | | | | | |
| Total Other Investment Company |
| (Cost $682,545) | | | 691,950 | |
| | | | | |
| | | | | | | | | |
| | | | | | | | | |
70 See financial notes
Schwab Fundamental Emerging Markets Index Fund
Portfolio Holdings continued
| | | | | | | | | |
| | | Face
| | |
Security
| | Amount
| | Value
|
| Rate, Maturity Dates | | ($) | | ($) |
| |
Short-Term Investment 0.1% of net assets |
| |
Time Deposit 0.1%
|
| HSBC Bank USA |
0.03%, 11/01/10 | | | 379,268 | | | | 379,268 | |
| | | | | | | | | |
| Total Short-Term Investment |
| (Cost $379,268) | | | 379,268 | |
| | | | | |
| |
|
End of Investments. |
| | | | | | | | | |
| | | | | | | | | |
| | | Number
| | Value
|
| Security | | of Shares | | ($) |
| |
Collateral Invested for Securities on Loan 0.8% of net assets |
| | | | | | | | | |
| | | | | | | | | |
| Invesco Short Term Investments Trust Government & Agency Portfolio | | | 2,267,550 | | | | 2,267,550 | |
| | | | | | | | | |
| Total Collateral Invested for Securities on Loan |
| (Cost $2,267,550) | | | 2,267,550 | |
| | | | | |
| |
|
End of Collateral Invested for Securities on Loan |
At 10/31/10, the tax basis cost of the fund’s investments was $255,459,918 and the unrealized appreciation and depreciation were $42,337,339 and ($3,202,810), respectively, with a net unrealized appreciation of $39,134,529.
At 10/31/10, the values of certain foreign securities held by the fund aggregating $222,892,417 were adjusted from their market values in accordance with procedures approved by the Board of Trustees.
| | |
| * | | Non-income producing security. |
| (a) | | All or a portion of this security is on loan. |
| | | |
| ADR — | | American Depositary Receipt |
| GDR — | | Global Depositary Receipt |
| NVDR — | | Non-Voting Depositary Receipt |
| Reg’d — | | Registered |
See financial notes 71
| | |
| Item 7: Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not applicable.
| | |
| Item 8: Portfolio Managers of Closed-End Management Investment Companies. |
Not applicable.
| | |
| Item 9: Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
Not applicable.
| | |
| Item 10: Submission of Matters to a Vote of Security Holders. |
Not applicable.
| | |
| Item 11: Controls and Procedures. |
| (a) | | Based on their evaluation of Registrant’s disclosure controls and procedures, as of a date within 90 days of the filing date, Registrant’s Chief Executive Officer, Marie Chandoha and Registrant’s Principal Financial Officer, George Pereira, have concluded that Registrant’s disclosure controls and procedures are: (i) reasonably designed to ensure that information required to be disclosed in this report is appropriately communicated to Registrant’s officers to allow timely decisions regarding disclosures required in this report; (ii) reasonably designed to ensure that information required to be disclosed in this report is recorded, processed, summarized and reported in a timely manner; and (iii) are effective in achieving the goals described in (i) and (ii) above. |
| |
| (b) | | During the second fiscal quarter of the period covered by this report, there have been no changes in Registrant’s internal control over financial reporting that the above officers believe to have materially affected, or to be reasonably likely to materially affect, Registrant’s internal control over financial reporting. |
| (a) | (1) | Registrant’s code of ethics (that is the subject of the disclosure required by Item 2(a)) is attached. |
| |
| (2)�� | Separate certifications for Registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(a) under the 1940 Act, are attached. |
| |
| (3) | Not applicable. |
| (b) | | A certification for Registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(b) under the 1940 Act, is attached. This certification is being furnished to the Securities and Exchange Commission solely pursuant to 18 U.S.C. section 1350 and is not being filed as part of the Form N-CSR with the Commission. |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | |
| | (Registrant) Schwab Capital Trust
| |
| | By: | /s/ Marie Chandoha | |
| | | Marie Chandoha | |
| | | Chief Executive Officer | |
Date: 12/16/2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| | | | | |
| | By: | /s/ Marie Chandoha | |
| | | Marie Chandoha | |
| | | Chief Executive Officer | |
Date: 12/16/2010
| | | | | |
| | By: | /s/ George Pereira | |
| | | George Pereira | |
| | | Principal Financial Officer | |
Date: 12/16/2010
