UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule14a-101)
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant x Filed by a Party other than the Registrant ¨
Check the appropriate box:
¨ | Preliminary Proxy Statement | |
¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
x | Definitive Proxy Statement | |
¨ | Definitive Additional Materials | |
¨ | Soliciting Material Pursuant to§240.14a-12 |
SCHWAB CAPITAL TRUST
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x | No fee required. | |||
¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
1) | Title of each class of securities to which transaction applies:
| |||
| ||||
2) | Aggregate number of securities to which transaction applies:
| |||
| ||||
3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
| |||
| ||||
4) | Proposed maximum aggregate value of transaction:
| |||
| ||||
5) | Total fee paid: | |||
| ||||
¨ | Fee paid previously with preliminary materials. | |||
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
1) | Amount Previously Paid:
| |||
| ||||
2) | Form, Schedule or Registration Statement No.:
| |||
| ||||
3) | Filing Party:
| |||
| ||||
4) | Date Filed:
| |||
|
Schwab Funds
Shareholder Proxy
September 24, 2015
Dear Fellow Shareholders,
The Charles Schwab Family of Funds, Schwab Investments, and Schwab Capital Trust (the “Trusts”) will hold a Special Meeting of Shareholders on December 11, 2015 at 9:00 a.m. Pacific time. Please read the enclosed material and vote your shares.
Shareholders of all funds are being asked to elect trustees. The trustees of the Trusts believe this proposal is in the best interests of the shareholders, and we recommend a vote FOR each of the nominees.
It has been my pleasure to serve as Chairman of the Trusts since their inception. With the proposed consolidation of the Trusts’ boards with the Boards of Trustees of Laudus Trust, Schwab Annuity Portfolios and Schwab Strategic Trust, as outlined in the proxy statement, I feel that this is a good opportunity to transition leadership of the Boards of Trustees of the Trusts, and I have decided not to continue as Chairman of the Trusts, effective December 31, 2015.
I would like to thank the trustees for the knowledge, expertise, talents and commitment they have brought to the funds and to the incoming trustees for their willingness to serve and help oversee all of the funds underlying the Trusts. As a fellow and ongoing shareholder of the funds, I look forward to their continued success and growth.
No matter how many shares you own, your vote is important. Your prompt response will help reduce proxy costs – which are paid for by the funds and their shareholders – and also will mean that you can avoid receiving follow-up phone calls or mailings.
Thank you for your attention to this important matter.
Sincerely,
|
CHARLES R. SCHWAB CHAIRMAN |
IMPORTANT INFORMATION
The following “Questions and Answers” is a summary of important information relating to the special meeting of shareholders and is not intended to be as detailed as discussions included later in the proxy materials. Accordingly, the information in this section is qualified in its entirety by reference to the remaining proxy materials.
What are shareholders voting on?
The Boards of Trustees are asking you to vote on the election of twelve members to the Boards of Trustees of The Charles Schwab Family of Funds, Schwab Investments, and Schwab Capital Trust (the “Trusts”, and together with Schwab Annuity Portfolios, the “Schwab Funds”).
Why am I being asked to elect trustees?
We propose to elect the same twelve trustees to all the trusts in the Schwab Funds who also are being proposed for election to the shareholders of Laudus Trust (the “Laudus Funds”) and Schwab Strategic Trust (the “Schwab ETFs”), which also are advised by Charles Schwab Investment Management, Inc. By having this election, we will be able to consolidate board oversight of all of the funds in the Schwab Funds with the oversight functions of the Laudus Funds and Schwab ETFs and manage them more efficiently. As described in the proxy statement, federal law requires us, under certain circumstances, to obtain shareholder approval of the election of trustees.
What vote is required to approve the proposal?
Shareholders of all funds within a Trust (the “Funds”) will vote together for the election of the trustees of the Trust. To be elected as a trustee of a Trust, each nominee must receive the affirmative vote of the holders of a plurality of the outstanding voting shares of that Trust.
How do I vote?
You may vote in one of the following ways:
• | by internet, by going to www.proxyvote.com and following the instructions, |
• | by telephone, by calling the toll-free number listed on your proxy card and following the instructions, |
• | by mail, by signing and returning the enclosed proxy card in the enclosed business reply envelope, or |
• | in person, at the shareholder meeting. |
We encourage you to vote by internet or telephone, as those methods cost the Funds less money to process than by mail.
ii
Does my vote make a difference?
Yes. Even if you have very few shares, you help the Funds receive enough votes to act on the proposal by casting your vote as soon as possible. By voting early, you help the Funds avoid the expense of sending additional mailings to try to get shareholders to cast more votes – a process that is costly to the Funds and to you as a shareholder.
Whom do I call if I have questions?
We will be happy to answer any questions you may have about the proxy materials or upcoming special meeting. Please call1-877-777-6017 Monday through Friday between 9:00 am and 10:00 pm Eastern time.
iii
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
THE CHARLES SCHWAB FAMILY OF FUNDS
SCHWAB INVESTMENTS
SCHWAB CAPITAL TRUST
A special meeting of shareholders of all funds in The Charles Schwab Family of Funds, Schwab Investments, and Schwab Capital Trust (the “Trusts”) will be held at 211 Main Street, San Francisco, California on December 11, 2015 at 9:00 a.m. Pacific time.
The purpose of the meeting will be to conduct the following items of business:
• | Elect twelve trustees to serve on the Boards of Trustees of the Trusts, and |
• | Consider any other business properly coming before the meeting. |
Shareholders who owned shares in any fund in the Trusts as of the close of business on September 15, 2015 are entitled to attend and vote at the meeting and any adjournment or postponement of the meeting. If you do not attend the meeting, you may vote by proxy by completing, signing and returning the enclosed proxy card by mail or by submitting your vote by internet or telephone. Proxies may be revoked prior to the meeting by following the procedures detailed in the proxy materials.
IMPORTANT NOTICE REGARDING THE AVAILABLITY OF PROXY MATERIALS FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 11, 2015
The proxy materials are available online at www.proxyvote.com.
By order of the Board of Trustees,
|
Marie A. Chandoha President and Chief Executive Officer |
September 24, 2015
iv
PROXY STATEMENT
THE CHARLES SCHWAB FAMILY OF FUNDS
SCHWAB INVESTMENTS
SCHWAB CAPITAL TRUST
The Boards of Trustees (the “Board”) of The Charles Schwab Family of Funds, Schwab Investments, and Schwab Capital Trust (the “Trusts”) are sending these proxy materials to shareholders of each fund in the Trusts (the “Funds”) (the Trusts, together with Schwab Annuity Portfolios, are referred to as the “Schwab Funds”). The Board is soliciting proxies in connection with the special meeting of shareholders scheduled on December 11, 2015 at 9:00 a.m. Pacific time. The meeting will be conducted at 211 Main Street, San Francisco, California 94105. These proxy materials are being mailed to shareholders on or about October 9, 2015.
The Board has fixed the record date as of the close of business on September 15, 2015. If you were a shareholder of one or more of the Funds at the close of business on the record date, you are entitled to notice of, and to vote at, the meeting. If you have any questions about attending the meeting in person, pleasecall (415) 667-7342. A list of the Funds and the number of issued and outstanding shares of the Trusts and the Funds entitled to vote is contained in a chart in Appendix A.
PROPOSAL – ELECTION OF TRUSTEES
Shareholders of all of the Funds in the Trusts are being asked to vote on the election of trustees.
Proposal Summary | Funds Voting on the Proposal | |
Election of twelve trustees to each of the following Trusts, effective January 1, 2016: The Charles Schwab Family of Funds, Schwab Investments, and Schwab Capital Trust. | Each Fund in The Charles Schwab Family of Funds, Schwab Investments, and Schwab Capital Trust will vote together with all other Funds of such Trust on the proposal. A list of the Funds is contained in Appendix A. |
Assuming that the proposal for the election of the twelve trustees is approved by the Schwab Funds and the shareholders of Laudus Trust (the “Laudus Funds”) and Schwab Strategic Trust (the “Schwab ETFs”), beginning on January 1, 2016, the same trustees will oversee the Schwab Funds, Laudus Funds and Schwab ETFs. All fund groups share the same investment adviser, Charles Schwab Investment Management, Inc. (“CSIM”), and certain other administrative, legal, compliance, marketing and other functions. The Board believes that consolidation of board oversight of the Schwab Funds, Laudus Funds and Schwab ETFs, each of which is a
1
mutual fund or exchange-traded fund family, is expected to result in certain efficiencies and benefits to the Trusts and their shareholders. These benefits include:
• | further aligning oversight of the Schwab Funds, Laudus Funds and Schwab ETFs, |
• | streamlining Board communications by avoiding duplication of Board reporting, |
• | opportunities for enhanced governance by providing comprehensive Board oversight, and |
• | potential simplification of Board process and conservation of management and Board resources. |
Mr. Schwab will retire from the Boards at the end of 2015, having served as a trustee and Chairman since the Trusts’ inception. If approved, the following seven trustees, who currently serve on the Schwab Funds’ and Laudus Funds’ Boards, will continue to serve on the Trusts’ Board: Walter W. Bettinger II, John F. Cogan, David L. Mahoney, Kiran M. Patel, Charles A. Ruffel, Gerald B. Smith and Joseph H. Wender. In addition, if approved, the following two trustees, who currently are trustees of the Schwab ETFs, will join the Trusts’ Board, effective January 1, 2016: Robert W. Burns and Stephen T. Kochis, and the following three trustees will join the Trusts’ Board, effective January 1, 2016: Marie A. Chandoha, Joseph R. Martinetto and Kimberly S. Patmore. While the Board may fill vacancies, it may only do so under applicable law, if, after filling a vacancy, at least two-thirds of the trustees were elected by shareholders. Because the Board may not appoint the additional proposed five trustees and meet this requirement, the Board has determined that it is appropriate to hold an election at this time.
Recommendation to Elect Trustees
The Governance Committee recommended all of the nominees for election included in this proxy statement. Mr. Bettinger, Mr. Cogan, Mr. Smith, and Mr. Wender have been previously elected to the Board. The Board appointed Mr. Mahoney and Mr. Patel as trustees in 2011, and this is the first time they are standing for election since their appointment. The independent trustees recommended Mr. Mahoney and Mr. Patel to the Governance Committee for appointment as trustees. The Board appointed Mr. Ruffel as a trustee, effective February 6, 2015, and this is the first time he is standing for election since his appointment. The independent trustees recommended Mr. Ruffel to the Governance Committee for appointment as a trustee. Mr. Burns and Mr. Kochis currently serve as independent trustees of the Schwab ETFs. With the proposed consolidation of the Boards of the Schwab Funds, the Laudus Funds and the Schwab ETFs, the Governance Committee recommended Mr. Burns and Mr. Kochis for nomination to the Board. The independent trustees recommended Ms. Patmore to the Governance Committee for nomination to the Board. The interested trustees, as defined below, recommended Ms. Chandoha and Mr. Martinetto to the Governance Committee for nomination to the Board. Each nominee has consented to serve as a trustee for the
2
Funds if elected and will serve until the earlier of the next election of trustees or until his or her retirement, resignation or removal. The mailing address for each trustee is c/o CSIM, 211 Main Street, San Francisco, California 94105. Biographical information with respect to each nominee is noted below.
Certain trustees are “interested persons.” A trustee is considered an interested person of a Trust under the Investment Company Act of 1940, as amended (the “1940 Act”), if, among other things, he or she is an officer, director, or an employee of Charles Schwab Investment Management, Inc. (CSIM or the adviser) or Charles Schwab & Co., Inc. (Schwab or the distributor). A trustee also may be considered an interested person of a Trust under the 1940 Act if he or she owns stock of The Charles Schwab Corporation, a publicly traded company and the parent company of the fund’s investment adviser and distributor.
As used herein, the terms “Fund Complex” and “Family of Investment Companies” each refer collectively to The Charles Schwab Family of Funds, Schwab Investments, Schwab Annuity Portfolios, Schwab Capital Trust, Schwab Strategic Trust, Laudus Trust, and Laudus Institutional Trust.
Name, Year of Birth, and Position(s) with the Trusts; (Term of Office and Length of Time Served1) | Principal Occupations During the Past Five Years | Number of Portfolios in Fund Complex Overseen By the Trustee | Other Directorships Held By Trustee | |||
Interested Trustees2 | ||||||
Walter W. Bettinger II 1960 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2008; Schwab Strategic Trust since 2009; Laudus Trust and Laudus Institutional Trust since 2010) | Director, President and Chief Executive Officer, The Charles Schwab Corporation (“CSC”) and Charles Schwab & Co., Inc. (“Schwab”) 2008 – present); Director, Charles Schwab Bank (2006 – present); and Director, Schwab Holdings, Inc. (2008 – present). | 95 | Director, CSC (2008 – present) | |||
Marie A. Chandoha 1961 President and Chief Executive Officer (Officer of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios, Schwab Strategic | Director, President and Chief Executive Officer, CSIM (2010 – present); Chief Investment Officer (2010 – 2011), CSIM; President, Chief Executive Officer (2010 – present), and Chief Investment Officer (2010 – 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Director, Charles Schwab | 95 | None |
3
Name, Year of Birth, and Position(s) with the Trusts; (Term of Office and Length of Time Served1) | Principal Occupations During the Past Five Years | Number of Portfolios in Fund Complex Overseen By the Trustee | Other Directorships Held By Trustee | |||
Interested Trustees2 | ||||||
Trust, Laudus Trust and Laudus Institutional Trust since 2010) | Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (2011 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (2007 – 2010). | |||||
Joseph R. Martinetto 1962 | Senior Executive Vice President and Chief Financial Officer, CSC and Schwab (July 2015 – present); Executive Vice President and Chief Financial Officer of CSC and Schwab (2007 – present); Director, Schwab (2007 – present); Director (2010 – present) and Chief Executive Officer (2013 – 2015), Charles Schwab Bank; Director, Executive Vice President and Chief Financial Officer, Schwab Holdings, Inc. (2007 – present). | 95 | None | |||
Independent Trustees | ||||||
Robert W. Burns 1959 (Trustee of Schwab Strategic Trust since 2009) | Retired/Private Investor (2009 – present); former Managing Director, Pacific Investment Management Company, LLC (PIMCO) and President, PIMCO Funds | 95 | Director, PS Business Parks, Inc. (2005 – 2012) | |||
John F. Cogan 1947 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2008; Laudus Trust and Laudus Institutional Trust since 2010) | Senior Fellow: The Hoover Institution at Stanford University (1979 – present); Senior Fellow, Stanford Institute for Economic Policy Research (2000 – present); Professor of Public Policy, Stanford University (1994 – 2015) | 95 | Director, Gilead Sciences, Inc. (2005 – present) |
4
Name, Year of Birth, and Position(s) with the Trusts; (Term of Office and Length of Time Served1) | Principal Occupations During the Past Five Years | Number of Portfolios in Fund Complex Overseen By the Trustee | Other Directorships Held By Trustee | |||
Stephen T. Kochis 1946 (Trustee of Schwab Strategic Trust since 2012) | CEO and Owner, Kochis Global (wealth management consulting) (2012 – present); Chairman and CEO, Aspiriant, LLC (advisory firm) (2008 – 2012) | 95 | None | |||
David L. Mahoney 1954 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2011) | Private Investor | 95 | Director, Symantec Corporation (2003 – present)
Director, Corcept Therapeutics Incorporated (2004 – present)
Director, Adamas Pharmaceuticals, Inc. (2009 – present) | |||
Kiran M. Patel 1948 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2011) | Retired. Executive Vice President and General Manager of Small Business Group, Intuit, Inc. (financial software and services firm for consumers and small businesses) (2008 – 2013) | 95 | Director, KLA-Tencor Corporation (2008 – present) | |||
Kimberly S. Patmore 1956 | Consultant, Patmore Management Consulting (management consulting) (2008 – present) | 95 | None | |||
Charles A. Ruffel 1956 Trustee (Trustee of Schwab Strategic Trust since 2009; The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios, Laudus Trust and Laudus Institutional Trust since 2015) | Co-Chief Executive Officer, Kudu Investment Management, LLC (financial services) (2015 – present); Partner, Kudu Advisors, LLC (financial services) (2009 –2015); Advisor, Asset International, Inc. (publisher of financial services information) (2008 – 2015) | 95 | None |
5
Name, Year of Birth, and Position(s) with the Trusts; (Term of Office and Length of Time Served1) | Principal Occupations During the Past Five Years | Number of Portfolios in Fund Complex Overseen By the Trustee | Other Directorships Held By Trustee | |||
Gerald B. Smith 1950 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2000; Laudus Trust and Laudus Institutional Trust since 2010) | Chair and Chief Executive Officer and founder of Smith Graham & Co. (investment advisers) (1990 – present) | 95 | Director, Eaton (2012 – present)
Director and Chair of the Audit Committee, Oneok Partners LP (2003 – 2013)
Director, Oneok, Inc. (2009 – 2013)
Lead Independent Director, Board of Cooper Industries (2002 – 2012) | |||
Joseph H. Wender 1944 Trustee (Trustee of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust and Schwab Annuity Portfolios since 2008; Laudus Trust and Laudus Institutional Trust since 2010) | Senior Consultant, Goldman Sachs & Co., Inc. (investment banking and securities firm) (2008 – present); Partner, Colgin Partners, LLC (vineyards) (1998 – present) | 95 | Board Member and Chair of the Audit Committee, Isis Pharmaceuticals (1994 – present)
Lead Independent Director and Chair of Audit Committee, OUTFRONT Media Inc. (2014 – present) |
1) | Trustees remain in office until they resign, retire or are removed by shareholder vote. The Trusts’ retirement policy currently requires that independent trustees retire at age 72 or after twenty years as a trustee, whichever comes first. In addition, the retirement policy requires any independent trustee of the Schwab Funds or Laudus Funds to retire from all Boards upon their required retirement date from any single Board. |
2) | Mr. Bettinger, Ms. Chandoha and Mr. Martinetto are “interested trustees” because they own stock of CSC, the parent company of CSIM. |
BOARD LEADERSHIP STRUCTURE
The description below is of the Board’s current leadership structure. The Chairman of the Board, Charles R. Schwab, is Chairman of the Board of Directors of CSC and an interested person of the Trusts as that term is defined in the 1940 Act. The Trusts do not have a single lead independent trustee. The Board is comprised of
6
a super-majority (75 percent) of trustees who are not interested persons of the Trusts (i.e., “independent trustees”). There are three primary committees of the Board: the Audit, Compliance and Valuation Committee; the Governance Committee; and the Investment Oversight Committee. Each of the Committees is chaired by an independent trustee, and each Committee is comprised solely of independent trustees. The Committee chairs preside at Committee meetings, participate in formulating agendas for those meetings, and coordinate with management to serve as a liaison between the independent trustees and management on matters within the scope of the responsibilities of each Committee as set forth in its Board-approved charter. The Board has determined that this leadership structure is appropriate given the specific characteristics and circumstances of the Trusts. The Board made this determination in consideration of, among other things, the fact that the independent trustees of the Trusts constitute a super-majority of the Board, the fact that Committee chairs are independent trustees, the number of funds (and classes) overseen by the Board, and the total number of trustees on the Board.
BOARD OVERSIGHT OF RISK MANAGEMENT
The description below is of the Board’s current oversight of risk management. Like most mutual funds, fund management and the other service providers have responsibility for day-to-day risk management for the Funds. The Board’s duties, as part of its risk oversight of the Trusts, consist of monitoring risks identified during regular and special reports to the Committees of the Board, as well as regular and special reports to the Board. In addition to monitoring such risks, the Committees and the Board oversee efforts of fund management and the Funds’ service providers to manage risks to which the Funds may be exposed. For example, the Investment Oversight Committee meets with portfolio managers and receives regular reports regarding investment risk and credit risk of a Fund’s portfolio. The Audit, Compliance and Valuation Committee meets with the Funds’ Chief Compliance Officer and Chief Financial Officer and receives regular reports regarding compliance risks, operational risks and risks related to the valuation and liquidity of portfolio securities. From its review of these reports and discussions with management, each Committee receives information about the material risks of the Funds and about how management and service providers mitigate those risks, enabling the independent Committee chairs and other independent members of the Committees to discuss these risks with the Board.
The Board recognizes that not all risks that may affect the Funds can be identified nor can processes and controls be developed to eliminate or mitigate the occurrence or effects of certain risks; some risks are simply beyond the reasonable control of the Funds, their management, and service providers. Although the risk oversight functions of the Board, and the risk management policies of fund management and fund service providers, are designed to be effective, there is no guarantee that they will eliminate or mitigate all risks. In addition, it may be necessary to bear certain risks (such as investment-related risks) to achieve each
7
Fund’s investment objective. As a result of the foregoing and other factors, the Funds’ ability to manage risk is subject to significant limitations.
INDIVIDUAL TRUSTEE NOMINEE QUALIFICATIONS
The Board has concluded that each of the trustees should initially or continue to serve on the Board because of (i) his or her ability to review and understand information about the Trusts provided to them by management, to identify and request other information they may deem relevant to the performance of their duties, to question management regarding material factors bearing on the management of the Trusts, and to exercise their business judgment in a manner that serves the best interests of the Trusts’ shareholders and (ii) the trustee’s experience, qualifications, attributes or skills as described below.
The Board has concluded that Mr. Bettinger should serve as trustee of the Trusts because of the experience he gained as president and chief executive officer of CSC, his knowledge of and experience in the financial services industry, and the experience he has gained serving as trustee of the Schwab Funds since 2008, the Schwab ETFs since 2009 and the Laudus Funds since 2010.
The Board has concluded that Mr. Burns should serve as trustee of the Trusts because of the experience he gained as managing director of Pacific Investment Management Company, LLC (PIMCO) and president of PIMCO Funds as well as the experience he has gained serving as trustee of the Schwab ETFs since 2009.
The Board has concluded that Ms. Chandoha should serve as trustee of the Trusts because of the experience she gained as president and chief executive officer of CSIM, the Schwab Funds, Laudus Funds and the Schwab ETFs as well as her knowledge of and experience of financial and investment management services.
The Board has concluded that Mr. Cogan should serve as trustee of the Trusts because of the experience he gained serving as a senior fellow and professor of public policy at a university and his former service in government, the experience he has gained serving as trustee of the Schwab Funds since 2008, as trustee of the Laudus Funds since 2010, and his service on other public company boards.
The Board has concluded that Mr. Kochis should serve as trustee of the Trusts because of the experience he gained serving as chair and chief executive officer of Aspiriant, LLC, an advisory firm, as well as his knowledge of and experience in wealth management consulting and the experience he has gained serving as trustee of the Schwab ETFs since 2012.
The Board has concluded that Mr. Mahoney should serve as trustee of the Trusts because of the experience he has gained serving as trustee of the Schwab Funds and Laudus Funds since 2011, as co-chief executive officer of a healthcare services company, and his service on other public company boards.
8
The Board has concluded that Mr. Martinetto should serve as trustee of the Trusts because of his experience serving as senior executive vice president and chief financial officer of CSC and Schwab.
The Board has concluded that Mr. Patel should serve as trustee of the Trusts because of the experience he has gained serving as trustee of the Schwab Funds and Laudus Funds since 2011, as executive vice president, general manager and chief financial officer of a software company, his service on other public company boards, and his experience serving as chair of the Trusts’ Audit, Compliance and Valuation Committee.
The Board has concluded that Ms. Patmore should serve as trustee of the Trusts because of her experience serving as chief financial officer and executive vice president of First Data Payment Business and First Data Corporation, as well as her knowledge of and experience in management consulting.
The Board has concluded that Mr. Ruffel should serve as trustee of the Trusts because of the experience he gained as the founder and former chief executive officer of a publisher and information services firm specializing in the retirement plan industry, his experience in and knowledge of the financial services industry, and the experience he has gained serving as trustee of the Schwab ETFs since 2009 and as trustee of the Schwab Funds and Laudus Funds since February 2015.
The Board has concluded that Mr. Smith should serve as trustee of the Trusts because of the experience he has gained as managing partner of his own investment advisory firm, the experience he has gained serving as trustee of the Schwab Funds since 2000 and of the Laudus Funds since 2010, his service on other public company boards, and his experience serving as Chair of the Trusts’ Investment Oversight Committee.
The Board has concluded that Mr. Wender should serve as trustee of the Trusts because of the experience he gained serving as former partner and chairman of the finance committee of an investment bank, the experience he has gained serving as trustee of the Schwab Funds since 2008, as trustee of the Laudus Funds since 2010, and his service on other public company boards.
CORPORATE GOVERNANCE INFORMATION
Board of Trustees and Board Committees
The authorized number of trustees of each Trust is currently eight and each Trust has eight trustees. The Board has authorized an increase in the authorized number of trustees of each Trust to twelve, effective January 1, 2016. There are twelve nominees for election to the Board of the Trusts at the special meeting, effective January 1, 2016.
Currently, the Trusts have an Audit, Compliance and Valuation Committee, an Investment Oversight Committee and a Governance Committee. Each of these committees is composed entirely of “independent trustees.”
9
The Audit, Compliance and Valuation Committee reviews the integrity of the Trusts’ financial reporting processes and compliance policies, procedures and processes, and the Trusts’ overall system of internal controls. The Audit, Compliance and Valuation Committee also reviews and evaluates the qualifications, independence and performance of the Trusts’ independent auditors; and the implementation and operation of the Trusts’ valuation policy and procedures. This Committee is comprised of at least three independent trustees and currently has the following members: Kiran M. Patel (Chair), John F. Cogan and David L. Mahoney. The Board has determined that Mr. Patel is an audit committee financial expert under applicable Securities and Exchange Commission definitions.
The Governance Committee reviews and makes recommendations to the Board regarding trust governance-related matters, including but not limited to Board compensation practices, retirement policies and term limits, Board self-evaluations, the effectiveness and allocation of assignments and functions by the Board, the composition of Committees of the Board, and the training of trustees. The Governance Committee is responsible for selecting and nominating candidates to serve as trustees. The Governance Committee does not have a written policy with respect to consideration of candidates for trustee submitted by shareholders. However, if the Governance Committee determined that it would be in the best interests of the Trusts to fill a vacancy on the Board, and a shareholder submitted a candidate for consideration by the Board to fill the vacancy, the Governance Committee would evaluate that candidate in the same manner as it evaluates nominees identified by the Governance Committee. Nominee recommendations may be submitted to the Secretary of the Trusts at the Trusts’ principal business address. This committee is comprised of at least three independent trustees and currently has the following members: John F. Cogan (Chair), David L. Mahoney and Joseph H. Wender. A copy of the Governance Committee charter is contained in Appendix B to this proxy statement.
The Investment Oversight Committee reviews the investment activities of each Trust and the performance of the Funds’ investment adviser and sub-advisers. This committee is comprised of at least three trustees (at least two-thirds of whom shall be independent trustees) and currently has the following members: Gerald B. Smith (Chair), Charles A. Ruffel, and Joseph H. Wender.
The Board, the Audit, Compliance and Valuation Committee, the Investment Oversight Committee and the Governance Committee held the number of meetings during the last fiscal year of the Trusts as set forth in the table below. Each trustee attended at least 75% of all Board and applicable committee meetings of the Trusts during each Trust’s most recent fiscal year (December 31, 2014 for The Charles Schwab Family of Funds, August 31, 2015 for Schwab Investments and February 28, 2015 for Schwab Capital Trust), with the exception of Mr. Bettinger, who attended less than 75% of the Board meetings for The Charles Schwab Family of Funds and
10
Schwab Investments. The Trusts do not hold annual meetings of shareholders and do not have a policy with regard to the attendance of trustees at such meetings.
Trust | Fiscal Year End | Board/Committee | Meetings | |||
The Charles Schwab Family of Funds | 12/31/14 | Board | 6 | |||
Audit, Compliance and Valuation | 4 | |||||
Investment Oversight | 5 | |||||
Governance | 4 | |||||
Schwab Investments | 8/31/15 | Board | 6 | |||
Audit, Compliance and Valuation | 4 | |||||
Investment Oversight | 5 | |||||
Governance | 4 | |||||
Schwab Capital Trust | 2/28/15 | Board | 6 | |||
Audit, Compliance and Valuation | 4 | |||||
Investment Oversight | 5 | |||||
Governance | 4 |
Evaluating and Nominating Candidates for Trustee
In the event a vacancy exists on the Board, or a vacancy is anticipated, the Governance Committee of the Board shall consider whether it is in the best interests of the Trusts and their shareholders to nominate a disinterested person or an interested person to fill the vacancy. The Governance Committee may consider candidates recommended by members of the Committee, other independent trustees of the Board, or members of the Board who are interested persons of the Trusts. The Governance Committee also may consider candidates recommended by a search firm engaged by the Committee, if the Committee chooses to engage a search firm. If the Governance Committee determines that it is in the best interests of the Trusts and their shareholders to nominate a person who is not an interested person of the Trusts, only those trustees who are not interested persons may select and nominate candidates for that position.
The Governance Committee, when evaluating candidates for trustee, seeks the following, minimum qualifications:
• | the ability to work together with other trustees, with full and open discussion and debate as an effective group, |
11
• | current knowledge and experience in the Trusts’ business or operations, contacts in the industries relevant to the Trusts’ business, or substantial business, financial or industry-related experience, and |
• | the willingness and ability to devote adequate time to the Trusts’ business. |
The Governance Committee also considers the following qualities and skills when making its determination whether a nominee is qualified:
• | relationships that may affect the independence of the trustee or conflicts of interest that may affect the trustee’s ability to discharge his or her duties, |
• | diversity of experience and background, including the need for financial, business, academic, public or other expertise on the Board or Board committees, and |
• | the fit of the individual’s skills and experience with those of the other trustees and potential trustees in comparison to the needs of the Trusts. |
When evaluating a candidate for nomination, the Governance Committee does not assign specific weight to any of these factors nor does the Committee believe that all of the criteria necessarily apply to every candidate.
The Governance Committee does not have a written policy with respect to consideration of candidates for trustee submitted by shareholders. However, if the Governance Committee determined that it would be in the best interests of the Trusts to fill a vacancy on the Board, and a shareholder submitted a candidate for consideration by the Board to fill the vacancy, the Governance Committee would evaluate that candidate in accordance with the qualifications set forth above.
If you wish to communicate with the Board or with the independent trustees of the Trusts, you may send your communication in writing to the Secretary of the Trusts, 211 Main Street, San Francisco, California 94105. You must include your name and address in the written communication and indicate whether you are a shareholder of the Funds. The Secretary will compile all communications, summarize lengthy, repetitive or duplicative communications and forward them to the appropriate trustee or trustees. The Secretary will not forward non-substantive communications or communications that pertain to personal grievances, but instead will forward them to the appropriate department for resolution. In such cases, the Secretary will retain a copy of such communications for review by any trustee upon his or her request.
Diversity
When identifying trustee nominees, the Governance Committee considers the qualifications and skills represented on the Board. As discussed in the “Evaluating and Nominating Candidates for Trustee” section above, one of the considerations evaluated by the Governance Committee is the diversity of experience and background of trustees. Although the Governance Committee has not adopted a
12
formal definition of diversity in this context, factors generally considered by the Governance Committee include each nominee’s professional experience, education, and expertise on relevant matters to the Trusts, general leadership experience and background. These considerations are broad, are consistent with non-discrimination practices, and aim to combine a diversity of skill sets and experience as well as background, including race and gender, in a complementary manner that is beneficial to the Trusts and their shareholders.
Compensation of Trustees
Interested trustees receive no compensation from the Funds for their service as trustees.
Independent trustees receive compensation for their service, which is broken out proportionally to each Fund based on a combination of the number of Funds and the net assets of the Funds in the Trusts. Each independent trustee currently receives the following compensation on an aggregate basis from the Schwab Funds and Laudus Funds:
• | a quarterly retainer of $70,500, |
• | a quarterly retainer of $2,500 for each Independent Trustee who serves as Chair of a Board committee, |
• | $2,000 for each special Board or committee meeting of less than two hours, |
• | $4,000 for each special Board or committee meeting of more than two hours, and |
• | $4,000 per day in connection with preparation for and attendance at special appearances as determined by the trustees and $2,000 per day in connection with travel related to special appearances (the trustees received no compensation in each of the Trusts’ prior fiscal year for special appearances). |
Trustees are reimbursed reasonable out-of-pocket expenses for attending Board and committee meetings.
13
The compensation paid to the trustees is shown in the following table. The Trusts do not offer pension or retirement benefits accrued as part of fund expenses, and so there is no column included for pension or retirement benefits in this table.
Name of Independent Trustee | Aggregate Compensation from Trusts | Total Compensation | ||||||||||||||
The Charles Schwab Family of Funds1 | Schwab Investments2 | Schwab Capital Trust3 | ||||||||||||||
John F. Cogan | $ | 146,297 | $ | 23,551 | $ | 74,026 | $ | 278,000 | ||||||||
David L. Mahoney | $ | 146,297 | $ | 23,551 | $ | 74,026 | $ | 278,000 | ||||||||
Kiran M. Patel | $ | 151,561 | $ | 24,584 | $ | 76,696 | $ | 288,000 | ||||||||
Charles A. Ruffel | - | $ | 9,276 | - | $ | 70,000 | ||||||||||
Gerald B. Smith | $ | 151,561 | $ | 24,485 | $ | 76,696 | $ | 288,000 | ||||||||
Joseph H. Wender | $ | 146,297 | $ | 23,551 | $ | 74,026 | $ | 278,000 |
1) | Fiscal year end reported for Funds in The Charles Schwab Family of Funds is December 31, 2014. |
2) | Fiscal year end reported for Funds in Schwab Investments is August 31, 2015, except for the Schwab Global Real Estate Fund (February 28, 2015) and Schwab 1000 Index Fund (October 31, 2014). |
3) | Fiscal year end reported for Funds in Schwab Capital Trust is February 28, 2015 for Schwab Fundamental Global Real Estate Index Fund, December 31, 2014 for Schwab Monthly Income Fund – Moderate Payout, Schwab Monthly Income Fund – Enhanced Payout and Schwab Monthly Income Fund – Maximum Payout, and October 31, 2014 for the remaining series of Schwab Capital Trust. |
4) | The total reported in this column is for the calendar year ended December 31, 2014. Because the fiscal year ends reported in the prior columns may be different, the total in this column may be different than the sum of the prior columns. |
Deferred Compensation Plan
Independent trustees may enter into a fee deferral plan. Under this plan, deferred fees will be credited to an account established by a Trust as of the date that such fees would have been paid to the trustee. The value of this account will equal the value that the account would have if the fees credited to the account had been invested in the shares of Schwab Funds selected by the trustee. Currently, none of the independent trustees has elected to participate in this plan.
14
Ownership of Fund Securities
The following table shows the dollar range of equity securities beneficially owned by each trustee and trustee nominee in the Funds as of August 31, 2015.
Name of Trustee | Dollar Range of Trustee Ownership of each Fund in The Charles Schwab Family of Funds | |||||||
Schwab Money Market | Schwab Government | Schwab U.S. Treasury | Schwab Investor Money Fund | |||||
Interested Trustees | ||||||||
Walter W. Bettinger II | None | None | None | None | ||||
Marie A. Chandoha | $1 – $10,000 | $10,001 – $50,000 | None | None | ||||
Joseph R. Martinetto | $1 – $10,000 | None | None | None | ||||
Independent Trustees | ||||||||
Robert W. Burns | None | None | None | None | ||||
John F. Cogan | over $100,000 | None | None | None | ||||
Stephen T. Kochis | None | $1 – $10,000 | None | None | ||||
David L. Mahoney | None | $1 – $10,000 | None | None | ||||
Kiran M. Patel | None | None | None | None | ||||
Kimberly S. Patmore | None | None | None | None | ||||
Charles A. Ruffel | None | None | None | None | ||||
Gerald B. Smith | over $100,000 | None | None | None | ||||
Joseph H. Wender | None | None | None | None |
Name of Trustee | Dollar Range of Trustee Ownership of each Fund in The Charles Schwab Family of Funds | |||||||
Schwab Value Advantage Money Fund | Schwab Retirement Advantage Money Fund | Schwab Advisor Cash | Schwab Cash Reserves | |||||
Interested Trustees | ||||||||
Walter W. Bettinger II | None | None | None | over $100,000 | ||||
Marie A. Chandoha | None | None | None | $10,001 – $50,000 | ||||
Joseph R. Martinetto | None | None | None | $10,001 – $50,000 | ||||
Independent Trustees | ||||||||
Robert W. Burns | None | None | None | over $100,000 | ||||
John F. Cogan | over $100,000 | None | None | None | ||||
Stephen T. Kochis | None | None | None | None | ||||
David L. Mahoney | None | None | None | None | ||||
Kiran M. Patel | None | None | None | None | ||||
Kimberly S. Patmore | None | None | over $100,000 | None | ||||
Charles A. Ruffel | None | None | None | None | ||||
Gerald B. Smith | None | None | None | over $100,000 | ||||
Joseph H. Wender | None | None | None | None |
15
Name of Trustee | Dollar Range of Trustee Ownership of each Fund in The Charles Schwab Family of Funds | |||||||
Schwab Municipal Money Fund | Schwab California Municipal Money Fund | Schwab New York Municipal Money Fund | Schwab New Jersey Municipal Money Fund | |||||
Interested Trustees | ||||||||
Walter W. Bettinger II | over $100,000 | None | None | None | ||||
Marie A. Chandoha | None | over $100,000 | None | None | ||||
Joseph R. Martinetto | None | over $100,000 | None | None | ||||
Independent Trustees | ||||||||
Robert W. Burns | None | None | None | None | ||||
John F. Cogan | None | None | None | None | ||||
Stephen T. Kochis | None | None | None | None | ||||
David L. Mahoney | None | None | None | None | ||||
Kiran M. Patel | None | None | None | None | ||||
Kimberly S. Patmore | None | None | None | None | ||||
Charles A. Ruffel | None | None | None | None | ||||
Gerald B. Smith | None | None | None | None | ||||
Joseph H. Wender | None | None | None | None |
Name of Trustee | Dollar Range of Trustee Ownership of each Fund in The Charles Schwab Family of Funds | |||||||
Schwab Pennsylvania Municipal Money Fund | Schwab AMT Tax- Free Money Fund | Schwab Treasury Obligations Money Fund | Schwab Massachusetts Municipal Money Fund | |||||
Interested Trustees | ||||||||
Walter W. Bettinger II | None | None | None | None | ||||
Marie A. Chandoha | None | None | None | None | ||||
Joseph R. Martinetto | None | None | None | None | ||||
Independent Trustees | ||||||||
Robert W. Burns | None | None | None | None | ||||
John F. Cogan | None | None | None | None | ||||
Stephen T. Kochis | None | None | None | None | ||||
David L. Mahoney | None | over $100,000 | None | None | ||||
Kiran M. Patel | None | None | None | None | ||||
Kimberly S. Patmore | None | None | None | None | ||||
Charles A. Ruffel | None | None | None | None | ||||
Gerald B. Smith | None | None | None | None | ||||
Joseph H. Wender | None | None | None | None |
16
Name of Trustee | Dollar Range of Trustee Ownership of each Fund in Schwab Investments | |||||||||
Schwab Short-Term Bond Market Fund | Schwab Total Bond Market Fund | Schwab GNMA Fund | Schwab Treasury Inflation Protected Securities Index Fund | Schwab Intermediate- Term Bond Fund | ||||||
Interested Trustees | ||||||||||
Walter W. Bettinger II | None | None | None | None | None | |||||
Marie A. Chandoha | over $100,000 | None | None | $10,001 – $50,000 | $10,001 – $50,000 | |||||
Joseph R. Martinetto | None | None | None | None | None | |||||
Independent Trustees | ||||||||||
Robert W. Burns | None | None | None | None | None | |||||
John F. Cogan | None | None | None | None | None | |||||
Stephen T. Kochis | None | None | None | None | None | |||||
David L. Mahoney | None | None | None | None | None | |||||
Kiran M. Patel | None | None | None | None | None | |||||
Kimberly S. Patmore | None | None | None | None | None | |||||
Charles A. Ruffel | None | None | None | None | None | |||||
Gerald B. Smith | None | None | None | None | None | |||||
Joseph H. Wender | None | None | None | None | None |
Name of Trustee | Dollar Range of Trustee Ownership of each Fund in Schwab Investments | |||||||
Schwab Global Real Estate Fund | Schwab Tax-Free Bond Fund | Schwab California Tax-Tree Bond Fund | Schwab 1000 Index Fund | |||||
Interested Trustees | ||||||||
Walter W. Bettinger II | None | None | None | over $100,000 | ||||
Marie A. Chandoha | None | over $100,000 | over $100,000 | None | ||||
Joseph R. Martinetto | None | None | None | $10,001 – $50,000 | ||||
Independent Trustees | ||||||||
Robert W. Burns | None | None | None | None | ||||
John F. Cogan | None | None | None | None | ||||
Stephen T. Kochis | None | None | None | None | ||||
David L. Mahoney | None | None | None | None | ||||
Kiran M. Patel | None | None | None | None | ||||
Kimberly S. Patmore | None | None | None | None | ||||
Charles A. Ruffel | None | None | None | None | ||||
Gerald B. Smith | None | None | None | None | ||||
Joseph H. Wender | None | None | over $100,000 | None |
17
Name of Trustee | Dollar Range of Trustee Ownership of each Fund in Schwab Capital Trust | |||||||||||||
Schwab Large-Cap Growth Fund | Schwab Core Equity Fund | Schwab Dividend Equity Fund | Schwab Small- Cap Equity Fund | Schwab Hedged Equity Fund | Schwab Fund | Schwab Health Care Fund | ||||||||
Interested Trustees | ||||||||||||||
Walter W. Bettinger II | None | None | None | None | None | None | None | |||||||
Marie A. Chandoha | None | None | None | $50,001 – $100,000 | $10,001 – $50,000 | None | None | |||||||
Joseph R. Martinetto | None | None | None | None | None | None | None | |||||||
Independent Trustees | ||||||||||||||
Robert W. Burns | None | None | None | None | None | None | None | |||||||
John F. Cogan | None | None | None | None | None | None | None | |||||||
Stephen T. Kochis | None | None | None | None | None | None | None | |||||||
David L. Mahoney | None | None | None | None | None | None | None | |||||||
Kiran M. Patel | None | None | over $100,000 | None | None | over $100,000 | over $100,000 | |||||||
Kimberly S. Patmore | None | None | None | None | None | None | None | |||||||
Charles A. Ruffel | None | None | None | None | None | None | None | |||||||
Gerald B. Smith | None | None | None | None | None | None | None | |||||||
Joseph H. Wender | None | None | None | None | None | None | None |
Name of Trustee | Dollar Range of Trustee Ownership of each Fund in Schwab Capital Trust | |||||||||||||||
Schwab S&P 500 Index Fund | Schwab Small- Cap Index Fund | Schwab Total Stock Market Index Fund | Schwab tional Index | Schwab Track | Schwab Track | Schwab Track | Schwab Market Track Conser- vative Portfolio | |||||||||
Interested Trustees | ||||||||||||||||
Walter W. Bettinger II | $1 – $10,000 | $1 – $10,000 | None | $1 – $10,000 | None | None | None | None | ||||||||
Marie A. Chandoha | $10,001 – $50,000 | None | None | None | None | None | None | None | ||||||||
Joseph R. Martinetto | None | None | None | None | None | None | None | None | ||||||||
Independent Trustees | ||||||||||||||||
Robert W. Burns | None | None | None | None | None | None | None | None | ||||||||
John F. Cogan | None | None | over $100,000 | None | None | None | None | None | ||||||||
Stephen T. Kochis | None | None | None | None | None | None | None | None | ||||||||
David L. Mahoney | None | None | None | None | None | None | None | None | ||||||||
Kiran M. Patel | None | None | None | None | None | None | None | None | ||||||||
Kimberly S. Patmore | None | None | None | None | None | None | None | None | ||||||||
Charles A. Ruffel | None | None | None | None | None | None | None | None | ||||||||
Gerald B. Smith | None | None | None | None | None | None | None | None | ||||||||
Joseph H. Wender | None | None | None | None | None | None | None | None |
18
Name of Trustee | Dollar Range of Trustee Ownership of each Fund in Schwab Capital Trust | |||||||||||||
Schwab International Core Equity Fund | Schwab Balanced Fund | Schwab Target 2010 Fund | Schwab 2015 | Schwab 2020 | Schwab 2025 | Schwab 2030 | ||||||||
Interested Trustees | ||||||||||||||
Walter W. Bettinger II | None | None | None | None | None | None | None | |||||||
Marie A. Chandoha | $10,001 – $50,000 | $10,001 – $50,000 | None | None | None | None | over $100,000 | |||||||
Joseph R. Martinetto | None | None | None | None | None | None | None | |||||||
Independent Trustees | ||||||||||||||
Robert W. Burns | None | None | None | None | None | None | None | |||||||
John F. Cogan | None | None | None | None | None | None | None | |||||||
Stephen T. Kochis | None | None | None | None | None | None | None | |||||||
David L. Mahoney | None | None | None | None | None | None | None | |||||||
Kiran M. Patel | None | None | None | None | None | None | None | |||||||
Kimberly S. Patmore | None | None | None | None | None | None | None | |||||||
Charles A. Ruffel | None | None | None | None | None | None | None | |||||||
Gerald B. Smith | None | None | None | None | None | None | None | |||||||
Joseph H. Wender | None | None | None | None | None | None | None |
Name of Trustee | Dollar Range of Trustee Ownership of the Funds in Schwab Capital Trust | |||||||||||||||
Schwab 2035 Fund | Schwab 2040 Fund | Schwab Target 2045 Fund | Schwab Target 2050 Fund | Schwab Target 2055 Fund | Schwab Monthly Income Fund- Moderate Payout | Schwab Monthly Income Fund- Enhanced Payout | Schwab Monthly Income Fund- Maximum Payout | |||||||||
Interested Trustees | ||||||||||||||||
Walter W. Bettinger II | None | None | None | None | None | None | None | None | ||||||||
Marie A. Chandoha | None | None | None | None | None | None | None | None | ||||||||
Joseph R. Martinetto | None | None | None | None | None | None | None | None | ||||||||
Independent Trustees | ||||||||||||||||
Robert W. Burns | None | $10,001 – $50,000 | None | None | None | None | None | None | ||||||||
John F. Cogan | None | None | None | None | None | None | None | None | ||||||||
Stephen T. Kochis | None | None | None | None | None | None | None | None | ||||||||
David L. Mahoney | None | None | None | None | None | None | None | None | ||||||||
Kiran M. Patel | None | None | None | None | None | None | None | None | ||||||||
Kimberly S. Patmore | None | None | None | None | None | None | None | None | ||||||||
Charles A. Ruffel | None | None | None | None | None | None | None | None | ||||||||
Gerald B. Smith | None | None | None | None | None | None | None | None | ||||||||
Joseph H. Wender | None | None | None | None | None | None | None | None |
19
Name of Trustee | Dollar Range of Trustee Ownership of the Funds in Schwab Capital Trust | |||||||||||||||
Laudus Small- Cap Market- Masters Fund | Laudus Inter- national Market- Masters Fund | Schwab Fund | Schwab Fund | Schwab Fund | Schwab Funda- mental Emerging Markets Large Company Index Fund | Schwab Fund | Schwab Funda- mental Global Real Estate Index Fund | |||||||||
Interested Trustees | ||||||||||||||||
Walter W. Bettinger II | None | None | $1 – $10,000 | $1 – $10,000 | $1 – $10,000 | $1 – $10,000 | $1 – $10,000 | None | ||||||||
Marie A. Chandoha | None | $50,001 – $100,000 | over $100,000 | $50,001 – $100,000 | over $100,000 | $50,001 – $100,000 | over $100,000 | $10,001 – $50,000 | ||||||||
Joseph R. Martinetto | None | None | None | None | None | None | None | None | ||||||||
Independent Trustees | ||||||||||||||||
Robert W. Burns | None | None | None | None | None | None | None | None | ||||||||
John F. Cogan | None | None | None | None | None | None | None | None | ||||||||
Stephen T. Kochis | None | None | None | None | None | None | None | None | ||||||||
David L. Mahoney | None | None | None | None | None | None | None | None | ||||||||
Kiran M. Patel | None | over $100,000 | None | None | None | $50,001 – $100,000 | None | None | ||||||||
Kimberly S. Patmore | None | None | None | None | None | None | None | None | ||||||||
Charles A. Ruffel | None | None | None | None | None | None | None | None | ||||||||
Gerald B. Smith | None | $50,001 – $100,000 | over $100,000 | over $100,000 | $50,001 – $100,000 | $10,001 – $50,000 | $10,001 – $50,000 | None | ||||||||
Joseph H. Wender | None | None | None | None | None | None | None | None |
The following table shows the aggregate dollar range of trustee ownership in the Family of Investment Companies.
Name of Trustee | Aggregate Dollar Range of Trustee Ownership in the Family of Investment Companies | |
Interested Trustees | ||
Walter W. Bettinger II | over $100,000 | |
Marie A. Chandoha | over $100,000 | |
Joseph R. Martinetto | over $100,000 | |
Independent Trustees | ||
Robert W. Burns | over $100,000 | |
John F. Cogan | over $100,000 | |
Stephen T. Kochis | over $100,000 | |
David L. Mahoney | over $100,000 | |
Kiran M. Patel | over $100,000 | |
Kimberly S. Patmore | over $100,000 | |
Charles A. Ruffel | over $100,000 | |
Gerald B. Smith | over $100,000 | |
Joseph H. Wender | over $100,000 |
20
Officers of the Funds
The table below provides information regarding the Trusts’ officers. The mailing address for each of the officers is c/o CSIM, 211 Main Street, San Francisco, California 94105.
Name of Officer, Year of Birth, and Positions(s) with the Trust; (Term of Office and Length of Time Served1) | Principal Occupation(s) During the Past Five Years | |
Marie A. Chandoha 1961 President and Chief Executive Officer (Officer of the Trusts since 2010) | Director, President and Chief Executive Officer (December 2010 – present), Chief Investment Officer (September 2010 – October 2011), Charles Schwab Investment Management, Inc.; President, Chief Executive Officer (December 2010 – present), and Chief Investment Officer (September 2010 – October 2011), Schwab Funds, Laudus Funds and Schwab ETFs; Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (January 2011 – present); Global Head of Fixed Income Business Division, BlackRock, Inc. (formerly Barclays Global Investors) (March 2007 – August 2010). | |
George Pereira 1964 Treasurer and Principal Financial Officer (Officer of the Trusts since 2004) | Senior Vice President and Chief Financial Officer (November 2004 – present), Chief Operating Officer (January 2011 – present), Charles Schwab Investment Management, Inc.; Treasurer and Chief Financial Officer, Laudus Funds (June 2006 – present); Treasurer and Principal Financial Officer, Schwab Funds (November 2004 – present) and Schwab ETFs (October 2009 – present); Director, Charles Schwab Worldwide Funds plc and Charles Schwab Asset Management (Ireland) Limited (April 2005 – present). | |
Omar Aguilar 1970 Senior Vice President and Chief Investment Officer – Equities (Officer of the Trusts since 2011) | Senior Vice President and Chief Investment Officer – Equities, Charles Schwab Investment Management, Inc. (April 2011 – present); Senior Vice President and Chief Investment Officer – Equities, Schwab Funds, Laudus Funds and Schwab ETFs (June 2011 – present); Head of the Portfolio Management Group and Vice President of Portfolio Management, Financial Engines, Inc. (May 2009 – April 2011); Head of Quantitative Equity, ING Investment Management (July 2004 – January 2009). |
21
Name of Officer, Year of Birth, and Positions(s) with the Trust; (Term of Office and Length of Time Served1) | Principal Occupation(s) During the Past Five Years | |
Brett Wander 1961 Senior Vice President and Chief Investment Officer – Fixed Income (Officer of the Trusts since 2011) | Senior Vice President and Chief Investment Officer – Fixed Income, Charles Schwab Investment Management, Inc. (April 2011 – present); Senior Vice President and Chief Investment Officer – Fixed Income, Schwab Funds, Laudus Funds and Schwab ETFs (June 2011 – present); Senior Managing Director, Global Head of Active Fixed-Income Strategies, State Street Global Advisors (January 2008 – October 2010); Director of Alpha Strategies Loomis, Sayles & Company (April 2006 – January 2008). | |
David Lekich 1964 Chief Legal Officer and Secretary (Officer of the Trusts since 2011) | Senior Vice President (September 2011 – present), Vice President (March 2004 – September 2011), Charles Schwab & Co., Inc.; Senior Vice President and Chief Counsel (September 2011 – present), Vice President (January 2011 – September 2011), Charles Schwab Investment Management, Inc.; Secretary (April 2011 – present) and Chief Legal Officer (December 2011 – present), Schwab Funds; Vice President and Assistant Clerk, Laudus Funds (April 2011 – present); Secretary (May 2011 – present) and Chief Legal Officer (November 2011 – present), Schwab ETFs. | |
Catherine MacGregor 1964 Vice President and Assistant Secretary (Officer of the Trusts since 2005). | Vice President, Charles Schwab & Co., Inc., Charles Schwab Investment Management, Inc. (July 2005 –present); Vice President (December 2005-present), Chief Legal Officer and Clerk (March 2007-present), Laudus Funds; Vice President (November 2005 – present) and Assistant Secretary (June 2007 – present), Schwab Funds; Vice President and Assistant Secretary, Schwab ETFs (October 2009-present). |
1) | 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. |
22
AUDITOR SELECTION AND FEES
The Audit, Compliance and Valuation Committee of each Trust has selected PricewaterhouseCoopers LLP (“PwC”) as the independent registered accounting firm for the Trusts. PwC has served in this capacity since 1990 for The Charles Schwab Family of Funds, 1991 for Schwab Investments, and 1993 for Schwab Capital Trust. PwC conducts annual audits of each Fund’s financial statements, assists in the preparation of each Fund’s federal and state income tax returns and each Trust’s filings with the SEC, and consults with the Trusts as to matters of accounting and federal and state taxation. The Audit, Compliance and Valuation Committee has considered whether the provision by PwC of non-audit services to the Funds or of professional services to the Funds’ investment adviser and entities that control, are controlled by or are under common control with the investment adviser is compatible with maintaining PwC’s independence and has discussed PwC’s independence with them. A representative of PwC will be available by phone during the meeting, if needed, to make a statement if desired and to respond to appropriate questions from shareholders.
Audit Fees
The aggregate fees billed by PwC for the audit of the Funds’ annual financial statements and services that are normally provided by PwC in connection with statutory and regulatory filings or engagements were:
Trust | Fiscal Year End | Fees | ||||||
The Charles Schwab Family of Funds | 12/31/14 | $429,210 | ||||||
12/31/13 | $510,054 | |||||||
Schwab Investments | 8/31/15 | $429,750 | 1 | |||||
8/31/14 | $324,518 | 2 | ||||||
Schwab Capital Trust | 2/28/15 | $1,326,885 | 3 | |||||
12/31/13 | $1,256,737 | 4 |
(1) | Includes audit fees for the February 28, 2015 fiscal year end of the Schwab Global Real Estate Fund and the October 31, 2014 fiscal year end of the Schwab 1000 Index Fund. |
(2) | Includes audit fees for the February 28, 2014 fiscal year end of the Schwab Global Real Estate Fund and the October 31, 2013 fiscal year end of the Schwab 1000 Index Fund. |
(3) | Includes audit fees for the February 28, 2015 fiscal year end of the Schwab Fundamental Global Real Estate Index Fund, which commenced operations in October of 2014, the December 31, 2014 fiscal year end of each of the Monthly Income Fund – Moderate Payout, Monthly Income Fund – Enhanced Payout and Monthly Income Fund – Maximum Payout and the October 31, 2014 fiscal year end of the remaining series of Schwab Capital Trust. |
23
(4) | Includes audit fees for the December 31, 2013 fiscal year end of each of the Monthly Income Fund – Moderate Payout, Monthly Income Fund – Enhanced Payout and Monthly Income Fund – Maximum Payout and the October 31, 2013 fiscal year end of the remaining series of Schwab Capital Trust. |
Audit-Related Fees
“Audit-Related” fees include review of tax provisions as part of the audit of the Funds’ financial statements and are not reported under “Audit Fees” above. The aggregate fees billed by PwC for such services were:
Trust | Fiscal Year End | Fees | ||||||
The Charles Schwab Family of Funds | 12/31/14 | $ | 34,879 | |||||
12/31/13 | $ | 33,857 | ||||||
Schwab Investments | 8/31/15 | $ | 21,519 | 1 | ||||
8/31/14 | $ | 20,955 | 2 | |||||
Schwab Capital Trust | 2/28/15 | $ | 92,456 | 3 | ||||
12/31/13 | $ | 88,042 | 4 |
1) | Includes audit-related fees for the February 28, 2015 fiscal year end of the Schwab Global Real Estate Fund and the October 31, 2014 fiscal year end of the Schwab 1000 Index Fund. |
2) | Includes audit-related fees for the February 28, 2014 fiscal year end of the Schwab Global Real Estate Fund and the October 31, 2013 fiscal year end of the Schwab 1000 Index Fund. |
3) | Includes audit-related fees for the February 28, 2015 fiscal year end of the Schwab Fundamental Global Real Estate Index Fund, which commenced operations in October of 2014, the December 31, 2014 fiscal year end of each of the Monthly Income Fund – Moderate Payout, Monthly Income Fund – Enhanced Payout and Monthly Income Fund – Maximum Payout and the October 31, 2014 fiscal year end of the remaining series of Schwab Capital Trust. |
4) | Includes audit-related fees for the December 31, 2013 fiscal year end of each of the Monthly Income Fund – Moderate Payout, Monthly Income Fund – Enhanced Payout and Monthly Income Fund – Maximum Payout and the October 31, 2013 fiscal year end of the remaining series of Schwab Capital Trust. |
24
Tax Fees
“Tax” fees include preparation and review of tax returns. The aggregate fees billed by PwC for such services were:
Trust | Fiscal Year End | Fees1 | ||||||
The Charles Schwab Family of Funds | 12/31/14 | $39,831 | ||||||
12/31/13 | $38,675 | |||||||
Schwab Investments | 8/31/15 | $23,825 | 2 | |||||
8/31/14 | $23,203 | 3 | ||||||
Schwab Capital Trust | 2/28/15 | $101,804 | 4 | |||||
12/31/13 | $98,495 | 5 |
1) | While the fees for preparation and review of tax returns shown above were performed on behalf of the Funds, those fees were not an expense of the Funds because they were paid for by Schwab. |
2) | Includes tax fees for the February 28, 2015 fiscal year end of the Schwab Global Real Estate Fund and the October 31, 2014 fiscal year end of the Schwab 1000 Index Fund. |
3) | Includes tax fees for the February 28, 2014 fiscal year end of the Schwab Global Real Estate Fund and the October 31, 2013 fiscal year end of the Schwab 1000 Index Fund. |
4) | Includes tax fees for the February 28, 2015 fiscal year end of the Schwab Fundamental Global Real Estate Index Fund, which commenced operations in October of 2014, the December 31, 2014 fiscal year end of each of the Monthly Income Fund – Moderate Payout, Monthly Income Fund – Enhanced Payout and Monthly Income Fund – Maximum Payout and the October 31, 2014 fiscal year end of the remaining series of Schwab Capital Trust. |
5) | Includes tax fees for the December 31, 2013 fiscal year end of each of the Monthly Income Fund – Moderate Payout, Monthly Income Fund – Enhanced Payout and Monthly Income Fund – Maximum Payout and the October 31, 2013 fiscal year end of the remaining series of Schwab Capital Trust. |
All Other Fees
“All Other” fees include attestation in connection with Section 15(c) board reporting under the 1940 Act for all Trusts, Form N-14 related fees for The Charles Schwab Family of Funds for the fiscal year ended December 31, 2013 and tax consulting for Schwab Capital Trust, and represent fees not included in “audit fees,” “audit-related fees,” and “tax fees.” There are fees billed in the table below for other
25
services by PwC to CSIM, CSC, Schwab or other entities under CSC’s common control. The aggregate fees billed by PwC for such services were:
Trust | Fiscal Year End | Fees | ||||||
The Charles Schwab Family of Funds | 12/31/14 | $ | 165,822 | |||||
12/31/13 | $ | 223,239 | ||||||
Schwab Investments | 8/31/15 | $ | 163,253 | 1 | ||||
8/31/14 | $ | 215,608 | 2 | |||||
Schwab Capital Trust | 2/28/15 | $ | 192,984 | 3 | ||||
12/31/13 | $ | 246,403 | 4 |
1) | Includes all other fees for the February 28, 2015 fiscal year end of the Schwab Global Real Estate Fund and the October 31, 2014 fiscal year end of the Schwab 1000 Index Fund. |
2) | Includes all other fees for the February 28, 2014 fiscal year end of the Schwab Global Real Estate Fund and the October 31, 2013 fiscal year end of the Schwab 1000 Index Fund. |
3) | Includes all other fees for the February 28, 2015 fiscal year end of the Schwab Fundamental Global Real Estate Index Fund, which commenced operations in October of 2014, the December 31, 2014 fiscal year end of each of the Monthly Income Fund – Moderate Payout, Monthly Income Fund – Enhanced Payout and Monthly Income Fund – Maximum Payout and the October 31, 2014 fiscal year end of the remaining series of Schwab Capital Trust. |
4) | Includes all other fees for the December 31, 2013 fiscal year end of each of the Monthly Income Fund – Moderate Payout, Monthly Income Fund – Enhanced Payout and Monthly Income Fund – Maximum Payout and the October 31, 2013 fiscal year end of the remaining series of Schwab Capital Trust. |
Pre-Approval Policies and Procedures
The Trusts do not have pre-approval policies and procedures as described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X.
Non-Audit Services
In the fiscal years included in the tables above, PwC did not provide any non-audit services to the Trusts except for those included in the tables above under “audit-related fees”, “tax fees” and “all other fees”. In the fiscal years shown in the tables above, PwC did not provide any non-audit services, or any other services to CSIM, CSC, Schwab, or other entities under CSC’s common control except for those included in the table above under “all other fees”.
26
INFORMATION ABOUT THE PROXY AND SPECIAL MEETING
Quorum Requirement
To take action on the proposal to elect trustees, a quorum (a majority of shares entitled to vote) must be present in person or by proxy.
If a quorum is not present at the meeting, the persons named as proxies may propose one or more adjournments of such meeting to permit further solicitation of proxies. Any adjournment(s) of a meeting with respect to the Trusts will require the affirmative vote of a majority of those shares of the Funds of the Trusts present at the meeting in person or by proxy, whether or not a quorum is present. The meeting may be held as adjourned within a reasonable time after the date set for the original meeting without further notice.
Votes Required to Elect Trustees
Shareholders of all Funds within a Trust will vote together for the election of the trustees of the Trust (a list of the Funds of each Trust is included in Appendix A). To be elected as a trustee of a Trust, each nominee must receive the affirmative vote of the holders of a plurality of the outstanding voting shares of that Trust.
Voting Rights
As a shareholder, you are entitled to one vote for each full share of a Fund outstanding as of the close of business on the record date and a proportionate fractional vote for each fractional share held.
Revoking a Proxy
You may revoke your proxy and change your vote by:
�� | • | signing a proxy card with a later date and returning it before the polls close at the meeting, |
• | voting by telephone or on the Internet before 9:00 p.m. Pacific time on December 10, 2015, or |
• | voting at the meeting. |
Signing a Proxy Without Specifying Voting Instructions
If you sign the proxy without giving instructions how to vote, your proxy will be voted:
• | for the election of each of the twelve nominees as trustees, and |
• | according to the best judgment of the persons named as proxies for any other matters coming before the meeting. |
27
Unvoted Shares
Abstentions and broker non-votes will be counted in determining a quorum for the transaction of business at the special meeting. A broker “non-vote” on a proposal results from a proxy submitted by a broker that does not indicate a vote for the proposal because the broker declined to vote on the particular matter and the broker’s customer did not send the broker instructions on how to vote on the proposal. For purposes of the proposal scheduled to be presented at the special meeting, abstentions and broker non-votes will not be counted as votes cast and, accordingly, will not have an effect on this proposal.
Brokerage firms have authority to vote clients’ unvoted shares on some “routine” matters. When a brokerage firm votes its clients’ unvoted shares on routine matters, these shares are counted to determine if a quorum exists to conduct business at the meeting. The proposal to elect trustees of the Trusts is considered a routine matter.
As a brokerage firm, Schwab may vote its clients’ unvoted shares on routine matters. However, as an affiliate of CSIM, the investment adviser to the Funds, when voting on a Fund proposal, Schwab can vote unvoted shares held in brokerage accounts only in the same proportion as all other shareholders vote.
If you have an investment adviser, your investment adviser may be able to vote your shares depending on the terms of your agreement with your investment adviser.
Vote of Shares by other Schwab and Laudus Funds
Shares of a Fund may be held by other investment companies advised by CSIM. In the event that these investment companies are entitled to vote on the proposal, these investment companies will vote any shares of a Fund in proportion to the votes of all other shareholders in such Fund.
Other Business
We know of no business other than the proposal contained in this proxy statement to be considered at the meeting. However, if other matters are properly presented at the meeting, or at any adjournment or postponement of the meeting, and you have properly submitted your proxy, then the persons named as proxies will vote your shares on those matters according to their best judgment.
Proxy Solicitation
Each Fund has retained Broadridge Financial Solutions, Inc., a proxy solicitation firm, at an estimated total cost to the Trusts of $2,700,000 to assist in the solicitation of proxies. Each Fund will bear its pro rata share of costs of solicitation and expenses incurred in connection with solicitation costs based on the net assets of the Fund.
28
As described in the Funds’ prospectuses, CSIM and/or Schwab have agreed to waive fees and/or reimburse expenses of certain Funds through a specified period of time when the net operating expenses of these Funds reach a certain percentage of the Fund’s daily net assets. For purposes of the fee waiver and/or reimbursement, net operating expenses do not include interest, taxes, and certain non-routine expenses. As non-routine expenses, expenses related to this proxy solicitation and the preparation and distribution of the proxy statement will be excluded from the calculations of each Fund’s total operating expenses for purposes of CSIM’s and its affiliates’ fee waiver and/or reimbursement obligations.
In addition to the solicitation of proxies by mail, officers of the Trusts and officers and employees of CSIM and Schwab also may solicit proxies electronically, by telephone, by fax, in person or by other means. These employees and officers do not receive additional compensation for soliciting proxies.
Shareholder Proposals
The Trusts do not hold annual shareholder meetings. Shareholders wishing to submit proposals to be included in the proxy statement for a Fund’s next meeting of shareholders must submit the proposal to the Fund within a reasonable period of time prior to that meeting. Proposals not received within a reasonable time before the proxy materials are printed and mailed will be considered untimely. None of the Funds currently plan to hold a meeting of shareholders in 2016.
Householding
“Householding” means that we deliver a single set of proxy materials to households with multiple shareholders, provided such shareholders give their affirmative or implied consent and certain other conditions are met.
Some households with multiple shareholders already may have provided their affirmative consent or given a general consent to householding. Although generally we will provide only one set of proxy materials to each such household, unless we receive contrary instructions, you may receive multiple sets if you own shares of a Schwab money fund and another Fund in the Trusts.
We will promptly deliver separate copies of the proxy statement at the request of any shareholder who is in a household that participates in the householding of the Funds’ proxy materials. You may call 1-800-542-1061 and provide your Fund name or send your request to House Holding: Attention Banks/Brokers Department, 51 Mercedes Way, Edgewood, NY 11717.
If you currently receive multiple copies of your Fund’s proxy materials and would like to participate in householding, please contact your financial intermediary.
Reports to Shareholders
Each Fund will furnish, without charge, copies of such Fund’s most recent annual and, if applicable, semi-annual reports to shareholders to any shareholder upon request.
29
Each Fund’s annual and, if applicable, semi-annual reports to shareholders may be obtained from the applicable Trust by calling Schwab Funds at (800) 435-4000, by the Internet:https://www.csimfunds.com/schwabfunds_prospectus, or by writing to the Funds at 211 Main Street, San Francisco, California 94105.
INFORMATION REGARDING THE SCHWAB FUNDS
Investment Adviser and Administrator
CSIM, 211 Main Street, San Francisco, California 94105 serves as the investment adviser and administrator to all of the Trusts’ Funds. CSIM is a wholly-owned subsidiary of CSC. Charles R. Schwab is the founder, Chair and a Director and significant shareholder of CSC. As a result of his positions and share ownership, Mr. Schwab may be deemed to be a controlling person of CSC and its subsidiaries.
Investment Sub-Advisers
The Laudus MarketMasters Funds employ investment sub-advisers as listed below:
Laudus Small-Cap MarketMasters Fund: BMO Asset Management Corp., 115 South LaSalle Street, Chicago, IL 60603; Mellon Capital Management Corp., 50 Fremont Street, Suite 3900, San Francisco, CA 94105; and Wellington Management Company LLP, 280 Congress Street, Boston, MA 02210.
Laudus International MarketMasters Fund: American Century Investment Management, Inc., 4500 Main Street, Kansas City, MO 64111; Harris Associates LP, 111 S. Wacker Drive, Suite 4600, Chicago, Illinois 60602; Mellon Capital Management Corp., 50 Fremont Street, Suite 3900, San Francisco, CA 94105; Mondrian Investment Partners Limited, Fifth Floor, 10 Gresham St., London, United Kingdom, EC2V 7JD; and William Blair & Company, LLC, 222 West Adams Street, Chicago, Illinois 60606.
Custodians
Brown Brothers Harriman & Co., 50 Post Office Square, Boston, Massachusetts, 02110 serves as custodian for the following Funds:
Schwab Large-Cap Growth Fund | Schwab MarketTrack Growth Portfolio | |
Schwab Dividend Equity Fund | Schwab MarketTrack Balanced Portfolio | |
Schwab Small-Cap Equity Fund | Schwab MarketTrack Conservative Portfolio | |
Schwab Financial Services Fund | Schwab Target 2010 Fund | |
Schwab Health Care Fund | Schwab Target 2015 Fund | |
Schwab S&P 500 Index Fund | Schwab Target 2020 Fund | |
Schwab Small-Cap Index Fund | Schwab Target 2025 Fund |
30
Schwab Total Stock Market Index Fund | Schwab Target 2030 Fund | |
Schwab International Index Fund | Schwab Target 2035 Fund | |
Schwab MarketTrack All Equity Portfolio | Schwab Target 2040 Fund | |
Schwab Fundamental Emerging Markets Large Company Index Fund | Schwab Fundamental International Large Company Index Fund | |
Schwab Fundamental International Small Company Index Fund | Schwab Fundamental Global Real Estate Index Fund | |
Schwab Target 2050 Fund | Schwab Target 2045 Fund | |
Schwab Global Real Estate Fund | Schwab Target 2055 Fund |
State Street Bank and Trust Company, One Lincoln Street, Boston, Massachusetts 02111, serves as custodian for the following Funds:
Schwab Advisor Cash Reserves | Schwab AMT Tax-Free Money Fund | |
Schwab California Municipal Money Fund | Schwab Cash Reserves | |
Schwab Government Money Fund | Schwab Investor Money Fund | |
Schwab Massachusetts Municipal Money Fund | Schwab Pennsylvania Municipal Money Fund | |
Schwab Money Market Fund | Schwab Municipal Money Fund | |
Schwab New York Municipal Money Fund | Schwab New Jersey Municipal Money Fund | |
Schwab U.S. Treasury Money Fund | Schwab Retirement Advantage Money Fund | |
Schwab Value Advantage Money Fund | Schwab Treasury Obligations Money Fund | |
Schwab 1000 Index Fund | Schwab Core Equity Fund | |
Schwab Short-Term Bond Market Fund | Laudus International MarketMasters Fund | |
Schwab Total Bond Market Fund | Laudus Small-Cap MarketMasters Fund | |
Schwab GNMA Fund | Schwab Balanced Fund | |
Schwab Tax-Free Bond Fund | Schwab Fundamental US Large Company Index Fund | |
Schwab California Tax-Free Bond Fund | Schwab International Core Equity Fund | |
Schwab Treasury Inflation Protected Securities Index Fund | Schwab Fundamental US Small Company Index Fund | |
Schwab Intermediate-Term Bond Fund | Schwab Monthly Income Fund –Moderate Payout | |
Schwab Monthly Income Fund –Enhanced Payout | Schwab Monthly Income Fund –Maximum Payout | |
Schwab Hedged Equity Fund |
31
Distributor
Schwab serves as distributor for each of the Funds.
Beneficial Ownership
Each of the trustees and executive officers of the Funds, and collectively as a group, own less than 1% of each class of shares of each of the Funds as of August 31, 2015.
To the knowledge of each Trust, persons with record and/or beneficial ownership of more than 5% of any class of shares of a Fund as of September 15, 2015 are included in Appendix C.
32
APPENDIX A
Funds and Outstanding Shares as of September 15, 2015
The Charles Schwab Family of Funds
Fund and Class | Outstanding Shares1 | |||
Schwab California Municipal Money Fund – Value Advantage Shares | 706,527,963.419 | |||
Schwab California Municipal Money Fund – Sweep Shares | 6,264,596,760.400 | |||
Schwab Municipal Money Fund – Value Advantage Shares | 558,586,045.903 | |||
Schwab Municipal Money Fund – Select Shares | 323,632,242.035 | |||
Schwab Municipal Money Fund – Institutional Shares | 938,798,761.520 | |||
Schwab Municipal Money Fund – Sweep Shares | 11,109,773,075.010 | |||
Schwab New York Municipal Money Fund – Value Advantage Shares | 224,532,101.088 | |||
Schwab New York Municipal Money Fund – Sweep Shares | 1,643,249,486.490 | |||
Schwab New Jersey Municipal Money Fund | 588,531,954.350 | |||
Schwab Pennsylvania Municipal Money Fund | 457,764,089.820 | |||
Schwab AMT Tax-Free Money Fund – Value Advantage Shares | 418,660,726.378 | |||
Schwab AMT Tax-Free Money Fund – Sweep Shares | 3,541,389,222.200 | |||
Schwab Massachusetts Municipal Money Fund | 421,346,255.820 | |||
Schwab Value Advantage Money Fund – Investor Shares | 6,581,492,069.321 | |||
Schwab Value Advantage Money Fund – Select Shares | 1,086,217,148.711 | |||
Schwab Value Advantage Money Fund – Institutional Shares | 724,126,274.842 | |||
Schwab Value Advantage Money Fund – Institutional Prime Shares | 1,779,728,148.374 | |||
Schwab Government Money Fund – Sweep Shares | 23,998,071,607.260 | |||
Schwab Government Money Fund – Purchased Shares | 14,735,084.930 | |||
Schwab Money Market Fund | 15,349,130,799.770 | |||
Schwab U.S. Treasury Money Fund | 20,226,926,578.260 | |||
Schwab Retirement Advantage Money Fund | 711,212,726.531 | |||
Schwab Investor Money Fund | 1,060,853,042.423 | |||
Schwab Cash Reserves | 39,431,666,259.970 | |||
Schwab Advisor Cash Reserves – Sweep Shares | 5,431,804,297.560 | |||
Schwab Advisor Cash Reserves – Premier Sweep Shares | 16,843,751,452.650 | |||
Schwab Treasury Obligations Money Fund – Sweep Shares | 1,150,885,717.330 | |||
Schwab Treasury Obligations Money Fund – Value Advantage Shares | 56,389,482.400 | |||
Total for The Charles Schwab Family of Funds | 161,644,379,374.765 |
A-1
1 | The number of outstanding shares represents the number of votes to which each Fund is entitled. |
Schwab Investments
Fund | Outstanding Shares1 | |||
Schwab California Tax-Free Bond Fund | 35,201,778.803 | |||
Schwab Tax-Free Bond Fund | 53,940,342.474 | |||
Schwab Short-Term Bond Market Fund | 42,091,102.146 | |||
Schwab Total Bond Market Fund | 135,218,355.779 | |||
Schwab GNMA Fund | 28,875,974.745 | |||
Schwab Treasury Inflation Protected Securities Index Fund | 24,921,935.771 | |||
Schwab Intermediate-Term Bond Fund | 33,818,145.660 | |||
Schwab Global Real Estate Fund | 36,673,668.828 | |||
Schwab 1000 Index Fund | 122,599,716.322 | |||
Total for Schwab Investments | 513,341,020.528 |
1 | The number of outstanding shares represents the number of votes to which each Fund is entitled. |
Schwab Capital Trust
Fund and Class | Outstanding Shares1 | |||
Schwab International Core Equity Fund | 69,631,890.908 | |||
Schwab Core Equity Fund | 102,478,054.969 | |||
Schwab Financial Services Fund | 4,659,762.499 | |||
Schwab Health Care Fund | 42,726,007.334 | |||
Schwab Hedged Equity Fund | 12,166,952.219 | |||
Schwab Small-Cap Equity Fund | 30,005,882.928 | |||
Schwab Dividend Equity Fund | 115,697,410.346 | |||
Schwab Large-Cap Growth Fund | 14,373,348.241 | |||
Schwab MarketTrack Balanced Portfolio | 27,921,402.006 | |||
Schwab MarketTrack Conservative Portfolio | 14,259,387.836 | |||
Schwab MarketTrack Growth Portfolio | 31,675,683.253 | |||
Schwab MarketTrack All Equity Portfolio | 34,501,003.066 | |||
Schwab Balanced Fund | 17,519,568.957 | |||
Schwab Target 2010 Fund | 5,261,597.657 | |||
Schwab Target 2015 Fund | 9,555,261.186 |
A-2
Fund and Class | Outstanding Shares1 | |||
Schwab Target 2020 Fund | 37,523,032.901 | |||
Schwab Target 2025 Fund | 28,810,495.169 | |||
Schwab Target 2030 Fund | 50,333,024.551 | |||
Schwab Target 2035 Fund | 22,647,024.052 | |||
Schwab Target 2040 Fund | 50,403,257.767 | |||
Schwab Target 2045 Fund | 5,184,783.241 | |||
Schwab Target 2050 Fund | 4,095,156.446 | |||
Schwab Target 2055 Fund | 2,185,461.177 | |||
Schwab Monthly Income Fund – Moderate Payout | 4,428,097.371 | |||
Schwab Monthly Income Fund – Enhanced Payout | 8,809,780.233 | |||
Schwab Monthly Income Fund – Maximum Payout | 4,883,166.044 | |||
Laudus International MarketMasters Fund – Investor Shares | 23,838,610.856 | |||
Laudus International MarketMasters Fund – Select Shares | 61,285,934.136 | |||
Laudus Small-Cap MarketMasters Fund – Investor Shares | 3,612,209.478 | |||
Laudus Small-Cap MarketMasters Fund – Select Shares | 5,695,722.834 | |||
Schwab S&P 500 Index Fund | 656,673,464.714 | |||
Schwab Small-Cap Index Fund | 97,692,328.270 | |||
Schwab Total Stock Market Index Fund | 118,086,375.364 | |||
Schwab International Index Fund | 148,332,978.145 | |||
Schwab Fundamental US Large Company Index Fund | 326,088,082.387 | |||
Schwab Fundamental US Small Company Index Fund | 110,728,342.766 | |||
Schwab Fundamental International Large Company Index Fund | 143,076,499.641 | |||
Schwab Fundamental Emerging Markets Large Company Index Fund | 45,579,648.442 | |||
Schwab Fundamental International Small Company Index Fund | 38,658,941.612 | |||
Schwab Fundamental Global Real Estate Index Fund | 9,546,680.424 | |||
Total for Schwab Capital Trust | 2,540,632,311.426 |
1 | The number of outstanding shares represents the number of votes to which each Fund is entitled. |
A-3
APPENDIX B
GOVERNANCE COMMITTEE CHARTER
THE CHARLES SCHWAB FAMILY OF FUNDS,
SCHWAB INVESTMENTS,
SCHWAB CAPITAL TRUST,
SCHWAB ANNUITY PORTFOLIOS,
LAUDUS TRUST
AND LAUDUS INSTITUTIONAL TRUST
Adopted August 31, 2005, as amended through February 16, 2011
PURPOSE
The Governance Committee (the “Committee”) of the Boards of Trustees (the “Board”) of The Charles Schwab Family of Funds, Schwab Investments, Schwab Capital Trust, Schwab Annuity Portfolios and Laudus Trust, each a Massachusetts business trust, and Laudus Institutional Trust, a Delaware statutory trust (the “Trusts”), assists the Board in fulfilling its oversight responsibilities by reviewing governance-related matters and recommending candidates to serve as trustees.
COMPOSITION AND MEMBERSHIP
The Committee shall be composed of at least three members of the Board. Members of the Committee shall not be “interested persons” (as defined in the Investment Company Act of 1940, as amended) of the Trusts (“Independent Trustees”). The Committee shall appoint one of its members to serve as its Chair. Each member of the Committee shall serve until a successor is appointed.
AUTHORITY
The Committee shall have the resources and authority appropriate for purposes of discharging its responsibilities under this charter, including the authority to consult with counsel and/or to retain, at the Trusts’ expense, such other experts or consultants as the Committee deems necessary or appropriate to fulfill its responsibilities. The role of the Chair of the Committee shall include consulting with management with respect to matters to be considered at meetings of the Trusts’ Boards and committees.
The Board has delegated authority to the Committee to perform the activities set forth herein. Unless otherwise required by law, any decisions of the Committee shall be deemed to be recommendations to the Board and shall not be binding upon the Board or the Trusts. While the Committee has the responsibilities and powers set forth in this charter, this charter shall not be read to impose on the Committee or any member thereof any duty to take any action or supervise any activity of any Trust not
B-1
otherwise specifically imposed by applicable law on the Committee (acting as a body) or any member of the Committee (acting individually). The Committee and members thereof shall be held to the same standard of care, as applicable, generally applied to the Board or a trustee under applicable law, and service on the Committee shall not cause any member thereof to be held to a standard of care different from that applicable to his or her service on the Board generally.
MEETINGS
The Committee shall meet at such times and with such frequency as is deemed necessary or appropriate by the Committee.
RESPONSIBILITIES
The responsibilities of the Committee include, but are not limited to, the following:
Governance-Related Matters
1. | To review the composition and size of the Board to assure that the proper skills and experience are represented on the Board; |
2. | To recommend policies regarding retirement and term limits of trustees; |
3. | To plan and administer the Board’s self-evaluation process annually; |
4. | To oversee the selection of the Trusts’ legal counsel and independent legal counsel to the Independent Trustees, and to review reports from legal counsel regarding potential conflicts of interest; |
5. | To review on a periodic basis the allocation of responsibilities and functions to each of the Board’s committees and to recommend any changes in such responsibilities and functions that the Committee deems necessary or appropriate; |
6. | To review periodically Independent Trustee compensation and to recommend to the Board any changes the Committee may deem appropriate; |
7. | To establish policies and guidelines (if any) for the training of the trustees. |
8. | To review on a periodic basis the Trusts’ insurance programs and to recommend to the Board any changes it may deem appropriate; |
Board Candidates and Nominees
9. | To evaluate and nominate candidates to serve as trustees; |
10. | To set any appropriate standards or qualifications for service as a trustee; |
11. | To establish procedures for the consideration and evaluation of candidates to serve as trustees; |
B-2
Miscellaneous
12. | To review this charter periodically and recommend any changes to the Board; |
13. | To consider such other matters pertinent to the Committee’s purposes as the Committee deems necessary or appropriate; and |
14. | To report its activities to the Board on a periodic basis and to make such determinations or recommendations with respect to the foregoing matters as the Committee may deem appropriate. |
B-3
Appendix C
The Charles Schwab Family of Funds
Title of Class | Name of Record or Beneficial Owner | Amount and Nature of Beneficial Ownership Shares Held | Percent of Class/ Fund | |||||
Schwab California Municipal Money Fund – Value Advantage Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 706,527,963.419 Record |
| 100.00% | |||
Schwab California Municipal Money Fund – Sweep Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 6,264,596,760.400 Record |
| 100.00% | |||
Schwab Municipal Money Fund – Value Advantage Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 558,586,045.903 Record |
| 100.00% | |||
Schwab Municipal Money Fund – Select Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 323,632,242.035 Record |
| 100.00% | |||
Schwab Municipal Money Fund – Institutional Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 938,798,761.520 Record |
| 100.00% | |||
Frank Theodore Barr & Melza c/o Charles Schwab & Co 211 Main St (SF215FMT-05-127) San Francisco, CA 94105 |
| 147,294,044.250 Beneficial |
| 15.69%1 | ||||
Jimmy L Allen c/o Charles Schwab & Co 211 Main St (SF215FMT-05-127) San Francisco, CA 94105 |
| 60,534,097.410 Beneficial |
| 6.45%1 | ||||
Stephen Andrew Brobst c/o Charles Schwab & Co 211 Main St (SF215FMT-05-127) San Francisco, CA 94105 |
| 49,294,700.070 Beneficial |
| 5.25%1 | ||||
Schwab Municipal Money Fund – Sweep Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 11,109,773,075.010 Record |
| 100.00% | |||
Schwab New York Municipal Money Fund – Value Advantage Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 224,532,101.088 Record |
| 100.00% | |||
Schwab New York Municipal Money Fund – Sweep Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 1,643,249,486.490 Record |
| 100.00% |
C-1
Title of Class | Name of Record or Beneficial Owner | Amount and Nature of Beneficial Ownership Shares Held | Percent of Class/ Fund | |||||
Schwab New Jersey Municipal Money Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 588,531,954.350 Record |
| 100.00% | |||
Schwab Pennsylvania Municipal Money Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 457,764,089.820 Record |
| 100.00% | |||
Schwab AMT Tax-Free Money Fund – Value Advantage Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 418,660,726.378 Record |
| 100.00% | |||
Schwab AMT Tax-Free Money Fund – Sweep Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 3,541,389,222.200 Record |
| 100.00% | |||
Schwab Massachusetts Municipal Money Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 421,346,255.820 Record |
| 100.00% | |||
Schwab Value Advantage Money Fund – Investor Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 6,581,492,069.321 Record |
| 100.00% | |||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 541,643,423.899 Record |
| 8.23%1 | ||||
Schwab Value Advantage Money Fund – Select Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 1,086,217,148.711 Record |
| 100.00% | |||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 202,493,204.891 Record |
| 18.64%1 | ||||
Schwab Value Advantage Money Fund – Institutional Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 724,126,274.842 Record |
| 100.00% | |||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 255,946,850.356 Record |
| 35.35%1 |
C-2
Title of Class | Name of Record or Beneficial Owner | Amount and Nature of Beneficial Ownership Shares Held | Percent of Class/ Fund | |||||
Schwab Value Advantage Money Fund – Institutional Prime Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 1,422,350,168.064 Record |
| 79.92% | |||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 683,528,934.40 Record |
| 38.41%1 | ||||
Michael Lynn Sapir c/o Charles Schwab & Co 211 Main St (SF215FMT-05-127) San Francisco, CA 94105 |
| 90,747,625.240 Beneficial |
| 5.10%1 | ||||
Schwab Government Money Fund – Sweep Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 23,998,071,607.260 Record |
| 100.00% | |||
Schwab Government Money Fund – Purchased Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 14,735,084.930 Record |
| 100.00% | |||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 3,525,195.120 Record |
| 23.92%1 | ||||
Nicholas A Quarantillo & C Quarantillo JT Ten c/o Charles Schwab & Co 211 Main St (SF215FMT-05-127) San Francisco, CA 94105 |
| 1,100,000.000 Beneficial |
| 7.47%1 | ||||
Schwab Money Market Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 15,349,130,799.770 Record |
| 100.00% | |||
Schwab U.S. Treasury Money Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 20,226,926,578.260 Record |
| 100.00% | |||
Schwab Retirement Advantage Money Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 711,212,726.531 Record |
| 100.00% | |||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 639,762,260.566 Record |
| 89.95%1 |
C-3
Title of Class | Name of Record or Beneficial Owner | Amount and Nature of Beneficial Ownership Shares Held | Percent of Class/ Fund | |||||
Schwab Investor Money Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 1,060,836,151.033 Record |
| 100.00% | |||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 371,207,338.762 Record |
| 34.99%1 | ||||
Schwab Cash Reserves | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 39,431,666,259.970 Record |
| 100.00% | |||
Schwab Advisor Cash Reserves – Sweep Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 5,431,804,297.560 Record |
| 100.00% | |||
Schwab Advisor Cash Reserves – Premier Sweep Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 16,843,751,452.650 Record |
| 100.00% | |||
Schwab Treasury Obligations Money Fund – Sweep Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 1,150,885,717.330 Record |
| 100.00% | |||
FS Partners II LLC c/o Charles Schwab & Co 211 Main St (SF215FMT-05-127) San Francisco, CA 94105 |
| 150,441,574.470 Beneficial |
| 13.07%1 | ||||
Schwab Treasury Obligations Money Fund – Value Advantage Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 56,389,482.400 Record |
| 100.00% | |||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 6,420,990.113 Record |
| 11.39%1 | ||||
Sean Michael Traynor c/o Charles Schwab & Co 211 Main St (SF215FMT-05-127) San Francisco, CA 94105 |
| 5,000,000.000 Beneficial |
| 8.87%1 | ||||
Robert Gant Walton & Pamela P Walton c/o Charles Schwab & Co 211 Main St (SF215FMT-05-127) San Francisco, CA 94105 |
| 3,415,799.020 Beneficial |
| 6.06%1 |
C-4
Schwab Investments
Title of Class | Name of Record or Beneficial Owner | Amount and Nature of Beneficial Ownership Shares Held | Percent of Class | |||||
Schwab California Tax-Free Bond Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 34,152,613.553 Record |
| 97.02% | |||
Schwab Tax-Free Bond Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 51,129,566.151 Record |
| 94.79% | |||
Schwab Short-Term Bond Market Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 41,509,849.660 Record |
| 98.62% | |||
Schwab Target 2020 Fund 211 Main St San Francisco, CA 94105 |
| 3,060,340.763 Beneficial |
| 7.27%1 | ||||
Schwab Total Bond Market Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 134,407,603.710 Record |
| 99.40% | |||
Schwab MarketTrack Balanced Portfolio 211 Main St San Francisco, CA 94105 |
| 19,569,815.506 Beneficial |
| 14.47%1 | ||||
Schwab MarketTrack Conservative Portfolio 211 Main St San Francisco, CA 94105 |
| 13,151,352.068 Beneficial |
| 9.73%1 | ||||
Schwab MarketTrack Growth Portfolio 211 Main St San Francisco, CA 94105 |
| 11,433,242.360 Beneficial |
| 8.46%1 | ||||
Schwab Target 2020 Fund 211 Main St San Francisco, CA 94105 |
| 9,396,201.438 Beneficial |
| 6.95%1 | ||||
Schwab Target 2030 Fund 211 Main St San Francisco, CA 94105 |
| 7,446,909.347 Beneficial |
| 5.51%1 | ||||
Schwab Balanced Fund 211 Main St San Francisco, CA 94105 |
| 6,991,573.378 Beneficial |
| 5.17%1 | ||||
Schwab GNMA Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 28,363,748.749 Record |
| 98.23% | |||
Schwab Treasury Inflation Protected Securities Index Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 23,369,632.687 Record |
| 93.77% |
C-5
Title of Class | Name of Record or Beneficial Owner | Amount and Nature of Beneficial Ownership Shares Held | Percent of Class | |||||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 3,238,192.680 Record |
| 12.99%1 | ||||
Schwab Intermediate-Term Bond Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 33,075,781.944 Record |
| 97.80% | |||
Schwab Balanced Fund 211 Main St San Francisco, CA 94105 |
| 3,092,158.274 Beneficial |
| 9.14%1 | ||||
Schwab Monthly Income Fund – Enhanced Payout 211 Main St San Francisco, CA 94105 |
| 2,480,915.758 Beneficial |
| 7.34%1 | ||||
Schwab Global Real Estate Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 36,199,521.148 Record |
| 98.71% | |||
Schwab Target 2040 Fund 211 Main St San Francisco, CA 94105 |
| 5,252,425.253 Beneficial |
| 14.32%1 | ||||
Schwab Target 2030 Fund 211 Main St San Francisco, CA 94105 |
| 4,278,243.971 Beneficial |
| 11.67%1 | ||||
Schwab Target 2020 Fund 211 Main St San Francisco, CA 94105 |
| 2,179,184.689 Beneficial |
| 5.94%1 | ||||
Schwab Target 2035 Fund 211 Main St San Francisco, CA 94105 |
| 1,975,388.767 Beneficial |
| 5.39%1 | ||||
Schwab Target 2025 Fund 211 Main St San Francisco, CA 94105 |
| 1,973,239.764 Beneficial |
| 5.38%1 | ||||
Schwab 1000 Index Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 117,704,103.515 Record |
| 96.01% |
Schwab Capital Trust
Title of Class | Name of Record or Beneficial Owner | Amount and Nature of Beneficial Ownership Shares Held | Percent of Class | |||||
Schwab International Core Equity Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 68,019,081.452 Record |
| 97.68% | |||
Schwab Target 2040 Fund 211 Main St San Francisco, CA 94105 |
| 7,277,852.771 Beneficial |
| 10.45%1 |
C-6
Title of Class | Name of Record or Beneficial Owner | Amount and Nature of Beneficial Ownership Shares Held | Percent of Class | |||||
Schwab Target 2030 Fund 211 Main St San Francisco, CA 94105 |
| 5,873,243.104 Beneficial |
| 8.44%1 | ||||
Schwab Core Equity Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 99,022,042.044 Record |
| 96.63% | |||
Schwab Financial Services Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 4,157,499.996 Record |
| 89.22% | |||
Schwab Health Care Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 38,409,468.086 Record |
| 89.90% | |||
Schwab Hedged Equity Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 10,747,419.402 Record |
| 88.33% | |||
Schwab Small-Cap Equity Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 28,933,817.349 Record |
| 96.43% | |||
Schwab Target 2040 Fund 211 Main St San Francisco, CA 94105 |
| 2,025,489.228 Beneficial |
| 6.75%1 | ||||
Schwab Dividend Equity Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 112,604,115.321 Record |
| 97.33% | |||
Schwab Large-Cap Growth Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 13,952,609.116 Record |
| 97.07% | |||
Schwab MarketTrack Balanced Portfolio | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 27,266,784.569 Record |
| 97.66% | |||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 2,373,725.660 Record |
| 8.50%1 | ||||
Schwab MarketTrack Conservative Portfolio | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 14,011,159.356 Record |
| 98.26% | |||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 1,684,744.064 Record |
| 11.82%1 |
C-7
Title of Class | Name of Record or Beneficial Owner | Amount and Nature of Beneficial Ownership Shares Held | Percent of Class | |||||
Schwab MarketTrack Growth Portfolio | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 30,842,628.163 Record |
| 97.37% | |||
Schwab MarketTrack All Equity Portfolio | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 33,377,748.041 Record |
| 96.74% | |||
Schwab Balanced Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 17,046,950.267 Record |
| 97.30% | |||
Schwab Target 2010 Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 5,115,798.791 Record |
| 97.23% | |||
Schwab Target 2015 Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 8,702,879.322 Record |
| 91.08% | |||
Great-West Trust Company LLC TTEE F The Childrens Hospital Assoc c/o Fascore LLC 8515 E Orchard Rd 2T2 Greenwood Village, CO 80111-5002 |
| 504,876.928 Beneficial |
| 5.28% | ||||
Schwab Target 2020 Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 35,406,536.871 Record |
| 94.36% | |||
Schwab Target 2025 Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 26,997,355.109 Record |
| 93.71% | |||
Schwab Target 2030 Fund | Charles Schwab & Co 211 Main St San Francisco, CA 94105-1905 |
| 47,697,278.661 Record |
| 94.76% | |||
Schwab Target 2035 Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 20,995,813.676 Record |
| 92.71% | |||
Schwab Target 2040 Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 48,021,420.450 Record |
| 95.27% | |||
Schwab Target 2045 Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 4,022,814.518 Record |
| 77.59% |
C-8
Title of Class | Name of Record or Beneficial Owner | Amount and Nature of Beneficial Ownership Shares Held | Percent of Class | |||||
Great-West Trust Company LLC TTEE F The Childrens Hospital Assoc c/o Fascore LLC 8515 E Orchard Rd 2T2 Greenwood Village, CO 80111-5002 |
| 918,732.732 Beneficial |
| 17.72% | ||||
Schwab Target 2050 Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 3,214,869.053 Record |
| 78.50% | |||
Great-West Trust Company LLC TTEE F The Childrens Hospital Assoc c/o Fascore LLC 8515 E Orchard Rd 2T2 Greenwood Village, CO 80111-5002 |
| 771,995.266 Beneficial |
| 18.85% | ||||
Schwab Target 2055 Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 2,087,433.919 Record |
| 95.51% | |||
Schwab Monthly Income Fund – Moderate Payout | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 4,315,752.352 Record |
| 97.46% | |||
Schwab Monthly Income Fund – Enhanced Payout | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 8,550,899.641 Record |
| 97.06% | |||
Schwab Monthly Income Fund – Maximum Payout | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 4,828,956.280 Record |
| 98.89% | |||
Laudus International MarketMasters Fund – Investor Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 20,329,618.005 Record |
| 85.28% | |||
National Financial Services LLC For Exclusive Benefit of Customers Attn: Mutual Funds Dept 5th Fl 200 Liberty Street One World Financial Center New York, NY 10281-1003 |
| 1,716,644.004 Record |
| 7.20% | ||||
Laudus International MarketMasters Fund – Select Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 32,245,897.377 Record |
| 52.62% | |||
Band & Co c/o US Bank NA PO Box 1787 Milwaukee, WI 53201-1787 |
| 18,662,145.157 Beneficial |
| 30.45% | ||||
Schwab Target 2040 Fund 211 Main St San Francisco, CA 94105 |
| 4,565,946.895 Beneficial |
| 7.45%1 |
C-9
Title of Class | Name of Record or Beneficial Owner | Amount and Nature of Beneficial Ownership Shares Held | Percent of Class | |||||
Schwab Target 2030 Fund 211 Main St San Francisco, CA 94105 |
| 3,669,819.248 Beneficial |
| 5.99%1 | ||||
Laudus Small-Cap MarketMasters Fund – Investor Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 3,442,646.167 Record |
| 95.31% | |||
Laudus Small-Cap MarketMasters Fund – Select Shares | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 5,583,408.013 Record |
| 98.03% | |||
Schwab Balanced Fund 211 Main St San Francisco, CA 94105 |
| 1,526,810.271 Beneficial |
| 26.81%1 | ||||
Schwab Target 2040 Fund 211 Main St San Francisco, CA 94105 |
| 1,274,631.383 Beneficial |
| 22.38%1 | ||||
Schwab Target 2030 Fund 211 Main St San Francisco, CA 94105 |
| 884,555.628 Beneficial |
| 15.53%1 | ||||
Schwab Target 2035 Fund 211 Main St San Francisco, CA 94105 |
| 442,695.021 Beneficial |
| 7.77%1 | ||||
Schwab Target 2020 Fund 211 Main St San Francisco, CA 94105 |
| 387,155.146 Beneficial |
| 6.80%1 | ||||
Schwab S&P 500 Index Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 615,912,719.854 Record |
| 93.79% | |||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 164,322,347.963 Record |
| 25.02%1 | ||||
Schwab Small-Cap Index Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 92,052,856.038 Record |
| 94.23% | |||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 11,528,816.308 Record |
| 11.80%1 | ||||
Schwab Total Stock Market Index Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 111,533,572.307 Record |
| 94.45% | |||
Schwab Charitable Fund 211 Main St San Francisco, CA 94105 |
| 8,323,663.443 Beneficial |
| 7.05%1 | ||||
Schwab International Index Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 138,937,017.313 Record |
| 93.67% | |||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 23,920,784.218 Record |
| 16.13%1 |
C-10
Title of Class | Name of Record or Beneficial Owner | Amount and Nature of Beneficial Ownership Shares Held | Percent of Class | |||||
Schwab Fundamental US Large Company Index Fund | Pershing LLC P.O. Box 2052 Jersey City, NJ 07303-2052 |
| 37,468,973.403 Record |
| 11.49% | |||
Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 203,983,813.639 Record |
| 62.55% | ||||
Schwab Fundamental US Small Company Index Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 98,538,393.835 Record |
| 88.99% | |||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 19,898,828.674 Record |
| 17.97%1 | ||||
Schwab Fundamental International Large Company Index Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 97,561,932.107 Record |
| 68.19% | |||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 12,120,126.591 Record |
| 8.47%1 | ||||
Schwab Fundamental Emerging Markets Large Company Index Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 34,321,175.587 Record |
| 75.30% | |||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 2,937,458.956 Record |
| 6.45%1 | ||||
Schwab MarketTrack All Equity Portfolio 211 Main St San Francisco, CA 94105 |
| 3,966,573.845 Beneficial |
| 8.70%1 | ||||
Schwab MarketTrack Growth Portfolio 211 Main St San Francisco, CA 94105 |
| 3,117,094.118 Beneficial |
| 6.84%1 | ||||
Schwab Fundamental International Small Company Index Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 33,502,808.612 Record |
| 86.66% | |||
Charles Schwab Bank Omnibus Account FBO Same Day Exchange 211 Main St San Francisco, CA 94105 |
| 8,821,319.605 Record |
| 22.82%1 | ||||
Schwab MarketTrack All Equity Portfolio 211 Main St San Francisco, CA 94105 |
| 2,597,673.252 Beneficial |
| 6.72%1 | ||||
Schwab MarketTrack Growth Portfolio 211 Main St San Francisco, CA 94105 |
| 2,102,903.058 Beneficial |
| 5.44%1 | ||||
Schwab Fundamental Global Real Estate Index Fund | Charles Schwab & Co FBO Customers Attn SchwabFunds Team N 211 Main St San Francisco, CA 94105-1905 |
| 9,516,909.798 Record |
| 99.69% |
1 | These shares are held within the Charles Schwab & Co., Inc. account listed elsewhere in the table. |
C-11
PROXY TABULATOR P.O. BOX 9112 FARMINGDALE, NY 11735 | TovotebyInternet
1) Read the Proxy Statement and have the proxy card below at hand. 2) Go to websitewww.proxyvote.com 3) Follow the instructions provided on the website.
TovotebyTelephone
1) Read the Proxy Statement and have the proxy card below at hand. 2) Call1-800-690-6903 3) Follow the instructions.
TovotebyMail
1) Read the Proxy Statement. 2) Check the appropriate boxes on the proxy card below. 3) Sign and date the proxy card. 4) Return the proxy card in the envelope provided.
| |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
| M96301-S37035-S37039 KEEP THIS PORTION FOR YOUR RECORDS | |
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — | ||
DETACH AND RETURN THIS PORTION ONLY |
The Boards of Trustees recommend that you vote FOR each of the nominees listed below:
| For All | Withhold All | For All Except | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the name(s) of the nominee(s) on the line below. | ||||||||||||||||||||
1. | To elect trustees for each Trust | |||||||||||||||||||||||
¨ | ¨ | ¨ |
| |||||||||||||||||||||
01) | Walter W. Bettinger II | 07) | David L. Mahoney | |||||||||||||||||||||
02) | Marie A. Chandoha | 08) | Kiran M. Patel | |||||||||||||||||||||
03) | Joseph R. Martinetto | 09) | Kimberly S. Patmore | |||||||||||||||||||||
04) | Robert W. Burns | 10) | Charles A. Ruffel | |||||||||||||||||||||
05) | John F. Cogan | 11) | Gerald B. Smith | |||||||||||||||||||||
06) | Stephen T. Kochis | 12) | Joseph H. Wender | |||||||||||||||||||||
In their discretion, the proxies are authorized to vote upon and to transact such other business as may properly come before the Meeting | ||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator or other fiduciary, please give full |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature [Joint Owners] | Date |
Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to Be Held on December 11, 2015
The proxy materials for this meeting are available atwww.proxyvote.com
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — |
M96302-S37035-S37039
SCHWAB FUNDS (THE “FUNDS”)
PROXY FOR A SPECIAL MEETING OF SHAREHOLDERS TO BE HELD DECEMBER 11, 2015
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARDS OF TRUSTEES OF THE FUNDS
This proxy is for your use in voting on the election of trustees to the Boards of Trustees of The Charles Schwab Family of Funds, Schwab Investments and Schwab Capital Trust. The undersigned hereby appoint(s) Tamu Dawson, Jennifer Hafner,Catherine MacGregor and Alexandra Riedel, and each of them, as Proxies of the undersigned, with full power of substitution, to vote and act with respect to all interests in each of the Funds with respect to which the undersigned is entitled to vote at the Special Meeting of Shareholders (“Special Meeting”) of each such Fund to be held on December 11, 2015 at 211 Main Street, San Francisco, California, at 9:00 a.m., Pacific time, and at any adjournments or postponements thereof.
The undersigned acknowledges receipt of the Notice of the Special Meeting and of the accompanying Proxy Statement, and revokes any proxy previously given with respect to such Special Meeting.
This proxy, when properly executed, will be voted as instructed.If you sign without otherwise indicating a vote on the proposal, this proxy will be voted FOR the proposal. As to any other matter that may properly come before the Special Meeting or any adjournments or postponements thereof, the shares will be voted by the Proxies in accordance with their judgment.